The team’s spirits have soared this week; not only have we been able to book a garden table at our favourite restaurant for 13th April, it looks as if we might not need to take the 1CL umbrellas with us. Yes, it’s Spring, and the new season brings renewed vigour and optimism to the gang. Of course, not all optimism is justified; the Appellant in Banga v Dale [2021] 2 WLUK 352, for example, failed in her attempt to persuade the Court of Appeal to consider fresh evidence adduced after trial, which, she said, showed that the judgment at first instance had been obtained by fraud, reminding us all of just how difficult it is to rely on additional evidence on appeal. And the solicitors in Chevalier-Firescu v Ashfords LLP [2021] 1 WLUK 434 saw a clause in their retainer that required the client to pay costs on an indemnity basis if she failed to pay her invoice in time struck down, on the basis that the provision contravened the principles of good faith.

But never mind about that; the vagaries of litigation are many and varied, but to paraphrase A.A.Milne:

The Spring is really springing,

You can see a skylark singing,

And the bluebells, which are ringing,

Can be heard.

And the cuckoo isn’t cooing,

But he’s cucking and he’s ooing,

And 1CL are suing –

A win’s assured.

Think you can do better? Send us your Spring themed poetry, from haikus to limericks (bearing in mind that this is a family publication), and there’ll be a small prize for the best of them.

New Beginnings: Adjourning Trials

In Bilta (UK) Ltd (In Liquidation) v Tradition Financial Services Ltd [2021] EWCA Civ 221 the Court of Appeal identified the principles that apply when deciding whether to adjourn a trial because of the illness of a party or important witness.

Background

In Bilta, the underlying action arose out of the spot trading of carbon credits known as European Union Emissions Trading Allowances. The allegation was that this trading was part of a large-scale VAT fraud of the type known as “missing trader intra-community”. The claim against Tradition Financial Services Ltd (“TFS”), a broker, was a claim in dishonest assistance and/or a claim under s.213 of the Insolvency Act 1986 for fraudulent trading. TFS denied that it acted dishonestly and the question of whether it did or not was likely to be a central issue. The allegations were made against a number of individuals at TFS and it was submitted that the individuals’ dishonesty was to be attributed to TFS.

The application to adjourn

One of these individuals (“LM”) was diagnosed with a serious illness in August 2020 and it became clear that she would not be able to give evidence at the trial listed for 25th January 2021 or at all. TFS did not then seek an adjournment and instead served a hearsay notice in respect of her witness statement and prepared to conduct the trial without her giving live evidence. In late December 2020, TFS’s other employees expressed concern about attending court to give evidence in light of the deteriorating situation with the pandemic. In the course of investigating the position, TFS contacted LM and learnt she had received a much-improved prognosis and that although it was still quite impossible for her to attend trial in January 2021, there was good reason to expect her to be fully recovered by September 2021 and she could give live evidence then. TFS’s application to adjourn was based not only on the concerns of the other witnesses but also on the change in LM’s circumstances. It was supported by a witness statement from LM stating she did not want the allegations of dishonesty against her to be resolved by a judge without hearing from her directly [22]. The Judge denied the application. TFS appealed the decision on the sole basis that the Judge had not considered whether a trial would be fair in the absence of live evidence from LM; that he should have concluded that it would not be fair; and that he should therefore have granted an adjournment [27].

Decision

TFS relied on Gloster LJ’s recent articulation of the relevant principles in Solanki v Intercity Telecom Ltd [2018] EWCA Civ 101 at [32]-[35]. However, the claimants’ central submission was that there was a significant difference between an application to adjourn based on a party’s own availability and one based on the unavailability of a witness and that the principles in Solanki were dealing with the former not the latter. Further, although the trial judge had not expressly considered whether the trial would be fair in the absence of live evidence from LM, it was submitted that it was implicit that he considered it would [29].

Nugee LJ, having reviewed the case law, outlined the applicable principles at [30]. The key points are as follows: –

  • The guiding principle in an application to adjourn on account of the unavailability of a witness/party is whether if the trial goes ahead it will be fair in all the circumstances;
  • The test of what is fair is a fact sensitive one and cannot be judged by a mechanistic application of any particular checklist;
  • The inability of a party itself to attend trial through illness will almost always be a highly material consideration;
  • It is artificial to seek to draw a sharp distinction between that scenario and a scenario where an important witness is unable to attend through illness (see, also, [50]-[54]);
  • The significance to be attached to the inability of an important witness to give evidence will vary from case to be case but will usually be material and may be decisive; and
  • If the refusal of an adjournment would make the resulting trial unfair, an adjournment should ordinarily be granted, regardless of inconvenience to the other party or other court users, unless this were outweighed by injustice to the other party that could not be compensated for.

Applying those principles to the present case, Nugee LJ found:

  • The trial judge had erred by balancing the importance of the evidence to TFS against the inconvenience of an adjournment rather than focusing on whether the trial would be fair: [61].
  • The trial would not be fair in the absence of oral evidence from LM – 1) the claim involved allegations of dishonesty against LM and it was important that she be cross-examined on her written evidence; 2) the case against LM was heavily based on inferences from transcripts of recordings of telephone conversations and TFS were justified in wanting her to give oral evidence to explain why those inferences should not be drawn; and 3) to proceed without oral evidence and without that evidence being tested in cross-examination would undoubtedly limit the weight that the trial judge could give it: [62].
  • It was not suggested that there would be any uncompensatable prejudice to the claimants if the trial was adjourned [63].

Conclusion

In an area of the law that had become unnecessarily complex, the decision in Bilta provides welcome clarity as to the principles that apply in the event a party or important witness cannot attend a trial. Bilta also makes clear that in cases where dishonesty is alleged against a witness, the inability of that witness to attend a trial and give oral evidence will understandably be a highly material consideration when deciding an application to adjourn made on that basis.

About the Author

Henk Soede was called to the Bar in 2019. Since April 2020, he has been instructed by solicitors for both Claimants and Defendants in cross border disputes, package travel and other related claims. He is eager to build on his experience in these areas​, but accepts briefs in all chambers’ areas of work.

Unhappy Endings? The Decision in Vnuk Revisited

The Government Actuary’s Department has released its report into the impact of the decision in Vnuk v Zavarovalnica Triglav (Case C-162/13), and the response has been nothing if not mixed.

Readers will recall that in Vnuk the Court of Justice of the European Union determined that Article 3(1) of Council Directive 72/166/EEC (the First Motor Insurance Directive) should be interpreted so as to provide for compulsory insurance for use of motor vehicles consistent with the normal function of the vehicle, including, crucially, its use on private land. This rendered the Road Traffic Act 1988, which provided for compulsory insurance for motor vehicles used on a road or other public place, non-compliant with the Directive. In an attempt to square the circle, at least in some circumstances, the courts of England and Wales have classified the Motor Insurers’ Bureau as an emanation of the state, and, as such, subject to the Vnuk interpretation of the Directive (cf the decisions in MIB v Lewis [2019] WLR 1015, uninsured car used on private land; and Colley v Shuker [2020] 12 WLUK 183, passengers in vehicles known to be uninsured).

The GAD was asked to consider the UK government’s options in the light of the CJEU ruling:

Option 1a – Comprehensive Option with unlimited TPI liability: To modify domestic legislation to comply with the new interpretation of the Directive. This would mean extending compulsory insurance to cover additional types of vehicle and to also cover the use of vehicles whilst on private land.

Option 1b – Comprehensive Option with limited TPI liability, Directive minimum scenario: In addition to the modifications described in option 1a, further modify legislation to remove the requirement to provide unlimited liability for claims, and instead replace it with a defined upper limit. The level of the cap is based on the minimum amount as set out in the Directive; £1.1million per claimant and £5.3million per claim.

Option 1c – Comprehensive Option with limited TPI liability, £5m / £10m scenario: In addition to the modifications described in option 1a, further modify legislation to remove the requirement to provide unlimited liability for claims, and instead replace it with a defined upper limit of £5m per claimant and £10m per claim.

Option 1d – Comprehensive Option with limited TPI liability, £25m / £50m scenario: In addition to the modifications described in option 1a, further modify legislation to remove the requirement to provide unlimited liability for claims, and instead replace it with a defined upper limit of £25m per claimant and £50m per claim.

Option 2a – Amended Option with unlimited TPI liability: To modify the Road Traffic Act to comply with the proposals by the European Commission, in anticipation that the Directive will be amended in the near future. Coverage would only be required to the extent that the vehicles operate on a road or other public place. The vehicles impacted are generally contained in the Miscellaneous vehicle category and include electric bikes and mobility scooters.

Quite why they couldn’t have named these Options 1 to 5 remains a mystery.

Anyway, the GAD calculations showed that covering claims falling outside the existing Road Traffic Act but within the Vnuk interpretation of the Directive would be enormously expensive, not least due to a high level of anticipated fraud. However, the authors of the report do point out that their figures are subject to ‘a high level of uncertainty’ and that ‘alternative reasonable assumptions could produce very different results’. The analysis, although produced no doubt in good faith, is only as good as its underlying assumptions, and reading between the lines, it appears that even the GAD regard these with some dubiety.

In response, the UK government has announced that it will ‘bin the EU’s Vnuk motor insurance law’, but it is unclear what is meant by this statement. It may simply indicate that the Road Traffic Act will not be amended to align it with the decision of the CJEU and with the 2019 amending Directive which followed; or it may signal an intention to legislate to overturn the decisions in Colley and Lewis, which currently remain good law notwithstanding the announcement. Whatever the intention, the government has stated that its consignment of Vnuk to the dustbin will spare every British driver ‘an estimated £50 annual increase in insurance premiums’. If there are, say, 20 million car insurance policyholders, and each will now save £50 a year, the resultant saving amounts to a billion pounds, by the author’s calculation.

Readers will, it is hoped, forgive the author a little cynicism here. If it is really true that Vnuk claims were to cost policyholders a billion pounds a year, it can only be concluded that as a result of this decision there is a plethora of catastrophically injured victims of ride-on lawnmowers and errant tractors, who will now not be compensated for what, at this cost, must be claims of very significant value. And it is difficult to regard this as A Good Thing; for what is insurance, if not a form of reverse socialism, whereby the many pay into a fund designed to assist the few who really require it?

The alternative analysis, of course, is that there is not in fact a plague of runaway mobility scooters besetting the UK, but rather that there is an army of would-be fraudsters champing at the bit in the expectation of making fraudulent tractor-based claims. And there’s the rub: the whiplash reforms coming into force on 31st May, the courts’ approach to holiday sickness claims, and now the resistance to the extension of compensable motor accidents, are all underpinned by the assumption that many if not most of these claims are fraudulent.

But are they?

It may be that they are. But it is one of the foundation stones of the civil justice system that claimants should be compensated in full in respect of such losses as they may prove to have been incurred as a result of the acts or omissions of tortfeasors, who may or may not be insured against any such losses. Before removing the footings of the compensatory regime, it is worth considering whether it is actually necessary to do so. Whether the government believes that it is right for insurers to be forced to compensate claimants in Vnuk claims or not, it is unfortunate that its decision appears to be founded on the continued assumption that claims made against insurers are largely fraudulent. It is suggested that this assumption, if it is to underpin future decisions regarding the incidence or quantification of compensation, ought to be tested, and that the true cost of satisfying fraudulent claims – and of undercompensation of valid claims – should be proven to a high standard of proof.

About the Author

Called to the Bar in 1997, Sarah Prager has been listed in the legal directories as a Band 1 practitioner in travel law for many years. Together with her colleagues at 1 Chancery Lane, Matthew Chapman QC and Jack Harding, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. She was recently named Best Lawyers’ Travel Lawyer of the Year 2020/2021 and the Lawyer Monthly Women in Law Awards 2020: Personal Injury.

…And Finally…

Imagine our horror when we read of the man awarded an interim payment of £130,000 after slipping on a puddle of Baileys close by a British Airways check-in desk at Heathrow Airport. History does not relate how or why the Baileys came to be there, but we were reminded that there is no sadder sight than a splodge of ice cream on a pavement, speaking as it does of excited anticipation, then momentary pleasure, followed by existential despair and loss. Altogether, a tale of such pathos that we were in dire need of cheering up. Happily 1CL’s Richard Cherry and Ian Stebbings are at hand, bringing their unique compering skills to what is likely to be the last of our Lockdown Quizzes, this one in aid of the London Legal Support Trust. The quiz will take place on 31st March, and, if last time is anything to go by, will be beset by celebrity stories from Richard and cheesy puns from Paul. Anyone wishing to participate in the chaos should email [email protected] to reserve a place.