PROPORTIONALITY AND SURVIVAL FOR LITIGATORS 4: CLAIM ONLY WHAT YOU CAN PROVE

November 6, 2015 · by · in Civil Procedure, Conduct, Costs, Damages, Uncategorized

Proportionality is, mostly, about money.  The problems that proportionality causes increase  in those cases  where the sums recovered are much less than those originally sought.    The over-claiming of damages is a dangerous tactic for many reasons. Not least it puts into question any decisions made at the costs budgeting stage in relation to proportionality.

“… there must be a sound and honest evidential basis for an initial schedule. It is not appropriate, as a tactic, to quantify, for example, a case with a true worth of £200,000 at £1,000,000, five times as much.”

DUNCUM -v- CHURM: THE BEST GUIDANCE YOU ARE GOING TO GET

I am grateful to barrister Jamie Clarke for pointing out the case of Duncum -v- Churm (HH Judge Harris QC, Oxford County Court 12th September 2014, transcript available on Lawtel).  That case is about costs and Part 36.  Matters did not turn out well for the claimant who turned down a Part 36 offer and was penalised with costs when it was accepted late.  I will look at the Part 36 implications in a later post.  However the judge’s observations on the role of those putting forward claims for damages are essential reading.

“ It is appropriate to observe that, when composing schedules of damages in personal injury cases, the authors of such schedules will of course put the case towards the top end of the bracket which it may legitimately inhabit. It is tactically unsound to cast a case too low at an early stage and all professional litigators clearly understand that reductions are likely to be necessary from theoretically arguable calculations in order to quantify a realistic view of the value of the claim, in order to negotiate productively, and in order to appear reasonable and thus persuasive should the case come to trial. But there must be a sound and honest evidential basis for an initial schedule. It is not appropriate, as a tactic, to quantify, for example, a case with a true worth of £200,000 at £1,000,000, five times as much. This is because questions of honesty apart, which are of course important, such a discrepancy will be unsupported by evidence and will go far beyond putting a valuation at the top end of a legitimate bracket, and because such an approach is likely to produce an unfruitful negotiation and an unnecessary trial. A Defendant might quite understandably say, well if that is what you are after, there is no point in our talking. Another consequence, though not an inter-parties matter, is that an honest Claimant is likely to be acutely disappointed.”

BREAKING THAT GUIDANCE DOWN

  1. It may be appropriate to put the case towards “the top end of the bracket which it may legitimately inhabit”.
  2. There must be a “sound and evidential” basis for an initial schedule.
  3. An “overblown” schedule may, potentially, be dishonest.
  4. An overblown schedule will not be supported by evidence.
  5. An overblown schedule is likely to lead to unfruitful negotiation and and unnecessary trial.
  6. An overblown schedule means that an honest claimant is likely to be acutely disappointed.

THE RELEVANCE FOR PROPORTIONALITY AND COSTS

The other major impact of an overblown claim for damages is that it is likely to have a major impact on the issue of “proportional” costs.  A judge may approve a budget as proportional for a million pound claim, however the situation could be wholly different if the case settles for a lower amount. Further, as we shall see, it could lead to issues as to which party should, in fact, be paying costs.

TAKING A REALISTIC VIEW OF DAMAGES

It is important, therefore, that a wholly realistic view of the claim for damages is taken at the outset.  It is appropriate to put the case at the upper end of the bracket. It is dangerous to argue for sums, or heads of damages, which will never be recoverable.

IF YOU CAN’T PROVE IT YOU DON’T GET IT

One problem with witness statements being prepared so late in the day is that the question of proving damages is left late. Indeed the cases indicate it is sometimes never addressed at all.

SOME EXAMPLES OF CASES WHERE THERE WAS NO, OR NO ADEQUATE, EVIDENCE BEFORE THE COURT

There are a surprising number of examples, in some major cases, of there simply being no evidence at all before the court to prove the damages being claimed.

  • The recent case of One Money Mail Ltd -v- RIA Financial Services [2015] EWCA Civ 1084                                                “The judge said that the evidence before her did not enable her to perform any kind of calculation of the loss which may have been suffered by OMM… there was no evidence which would have enabled the judge to calculate that gain any more than there was evidence of the loss suffered by OMM.”
  • McRae -v- Chase International Express Ltd [2003] EWCA Civ 505

” there was simply no evidence before the judge to substantiate that finding. There was no assertion in the pleadings. There was no assertion in the pleadings; there was nothing in the statement filed on behalf of the claimant. When the claimant came to give oral evidence he was not asked about that matter at all”

“Hillmead adduced no evidence to show how such an overhead cost had been calculated. Surmise is one thing; proof – on the balance of probabilities – is another thing; and Hillmead has failed to establish the latter”

SUGAR HUT AS A WORKING EXAMPLE OF A FAILURE TO PROVE DAMAGES

The judgment of Mr Justice Eder in Sugar Hut Group -v- AJ Insurance [2014] EWHC  3352  (Comm) is another case where there is a constant recitation of the numerous heads of damage that the claimant had claimed but had simply brought no evidence at all to court to prove. For instance:

“Here, there is absolutely no evidence whatsoever to that effect; and for that reason alone, it follows that this claim must be rejected.”

THE CONSEQUENCES FOR COSTS AND PROPORTIONALITY

In the Sugar Hut case the issue of the claimant’s conduct in its ability to prove major heads of claim had major consequences in costs. The claimant:

  • Had its own costs reduced by 30%.
  • Was ordered to pay the defendant’s costs from the date of an offer which the claimant had beaten,

“It is against that background and for the reasons stated above that I concluded that although the claimants were the successful parties and subject to the qualification in respect of interest which I refer to below, the claimants be denied any costs from 14 June 2014 and that the defendant be entitled to its costs on a standard basis from that date.”

Further, on any assessment of costs, the question of the proportionality of the claimant’s costs could well come under close scrutiny.

HOW WOULD THE COST BUDGET FARE ON ASSESSMENT IF THE DAMAGES CLAIMED HAD BEEN SUBSTANTIALLY REDUCED?

Similar principles would apply to any case that had been costs budgeted. When setting the budget the judge is making decisions in relation to reasonableness of costs based on an assessment of proportionality. If the damages are (for instance) a fifth of the sum claimed then there could be good grounds for re-visiting the costs budget.

KNOWING HOW TO PROVE DAMAGES

This problem is not a new one. In Bonham Carter v Hyde Park Hotel Ltd [1948] WN 89, 92 Sol Jo 154, KBD it was stated:-

‘Plaintiffs must understand that if they bring actions for damages it is for them to prove their damage, it is not enough to write down the particulars, and, so to speak, throw themselves at the head of the court saying “This is what I have lost. I ask you to give me these damages”. They have to prove it.’

WHAT HAS TO BE ESTABLISHED

  • Merely putting figures in a Schedule supported by a statement of loss does not prove damages.
  • Putting a section in the witness statement stating “I agree the figures in the schedule” does not prove damages.
  • The evidence (witness or documentary) has to set out the factual foundation for the loss.
  • This includes a factual foundation to show that there was a loss and the amount of that loss. (Sugar Hut is a good example of  where the judge found that this had not been done).

BACK TO PROPORTIONALITY AND SURVIVAL

The key element here is:

  • Know what the case is on damages.
  • Know what you can prove.
  • Draft a claim and/or a Schedule of Damages using great care and judgment. (A surprising amount of schedules end up being harmful to a claimant’s case.)
  • Only claim what you can prove.
  • Know how to prove things.

RELATED POSTS IN THIS SERIES

RELATED POSTS ON PROVING DAMAGES

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