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The end of premature issue of proceedings to recover interest on general damages?

9 February 2011

A recent decision in a case handled by Browne Jacobson may mean the end to the practice among claimant solicitors of issuing proceedings prematurely in order to recover interest on general damages, a practice seemingly endorsed following Pelling v Don Valley Construction (19 February 2010).

Facts

In the case of Kyle v Cedar Grange (25 January 2011 - Halifax County Court), the claimant was injured in an accident at work on 2 February 2010. Following receipt of her letter of claim, just three weeks later, the defendants representatives admitted liability on 12 May 2010, prior to the expiry of the protocol period.

Kyles solicitors disclosed her medical evidence in September 2010 which recommended she undergo surgery. In the same letter, they invited the defendant to fund the treatment and sought confirmation that, in consideration from refraining from issuing court proceedings the defendant would agree to pay interest on general damages, to be calculated from the date of their letter. If this offer was not accepted, the claimants solicitors stated that they would issue court proceedings.

In an attempt to prevent the issue of proceedings, the defendants representatives offered to agree general damages and to issue a cheque in settlement of the claim for general damages, or an interim payment on account of general damages. They argued that it was premature to issue proceedings while the claimant was still undergoing medical treatment and where liability and limitation were not an issue.

Kyles solicitors accepted the offer of an interim payment but nevertheless issued proceedings contending that they were entitled to do so to secure their clients entitlement to interest on general damages.

Arguments

The defendant appointed solicitors who applied to the court seeking the sanctions set out at section 4.6 of the Pre-action Conduct Protocol contending that the Practice Direction encourages parties to settle claims without the need to start proceedings and that proceedings, which should be a step of last resort, should not normally be started when settlement is still actively being explored.

The claimant relied on the case of Jefford v Gee [1972] 2 WLR 202, arguing that claimants should issue proceedings promptly but the judge in the present case agreed that the spirit and purpose of the Pre-action Protocols and the CPR was to encourage parties to resolve cases without the need for proceedings to be issued and that the issue of interest on general damages often gets lost in the ether as part of the overall settlement negotiations. The claimants solicitors conduct was criticised as being abrasive, unnecessary and disproportionate.

The judge approved the defendants application and ordered that the action be stayed until such time as the claimant had served a medical report after the conclusion of her surgery. The case would then be listed for a Case Management conference.

The Judge did not deprive the claimant of interest on general damages, believing that it was her solicitors, not her, who were at fault and that to make such an order would be too draconian. However, it was recognised that this would largely be offset by the pre-issue interim payment on account of general damages.

Costs

The defendants solicitors requested not only the costs of the application but also the costs of the action until the date of the Case Management Conference, on the basis that Kyles premature issue of proceedings had caused the defendant to instruct solicitors in a case where they may never have needed to. The judge agreed and the defendants costs were awarded in full, with the costs to the Case Management Conference to be assessed if not agreed at a later date.

Implications

This is a welcome decision for defendants seeking to contest the premature issue of proceedings and should deter claimants solicitors from issuing proceedings to recover interest on general damages, where there is no other need for proceedings to be issued.

It is also encouraging that the courts are willing, in appropriate cases, to penalise misconduct by imposing the sanctions set out in the Pre-Action Conduct Practice Direction and awarding costs against claimants who issue prematurely.

Steven Conway acted for the defendant on the instructions of New India Assurance Co Ltd.

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