DEFENDANT IN CASE WITH PROTECTED PARTY ENTITLED TO RESILE FROM “COMPROMISE”: REQUIREMENT FOR COURT APPROVAL NOT A BREACH OF ECHR RIGHTS

October 30, 2017 · by · in Applications, Case Management, Damages

In Revill v Damiani [2017] EWHC 2630 (QB) Mr Justice Dingemans  held that the rule that required a protected party to obtain a court order to approve a proposed settlement remained good law. It did not breach the claimant’s human rights.

 

THE CASE

The claimant was badly injured in a road traffic accident in 2015. His injuries left him without capacity. Liability was admitted.  A joint settlement meeting took place in February 2017 where a memorandum was prepared which set out the terms of future sums. The discount rate for future losses was agreed at the (then) rate of 2.5% but with the proviso that if the discount rate changed before the date of court approval then the claim for future losses would be re-calculated in accordance with the new rate.

Three days after the meeting the discount rate was changed to 0.75%. This considerably increased the sum that the defendant was due to pay under the memorandum. The defendant’s solicitors then withdrew from the memorandum of agreement.   The defendant’s solicitors contested the right to withdraw from the agreement and issued an application for an approval hearing.  There was an order for a preliminary issue to be heard as to whether the defendant was entitled to withdraw.

THE CLAIMANT’S ARGUMENTS

The claimant accepted that the rules requiring settlement to be approved by the court were intra vires.

CPR Part 21.10 provides: “(1) Where a claim is made- (a) by or on behalf of a … protected party; … no settlement, compromise or payment (including any voluntary interim payment) … shall be valid, so far as it relates to the claim by, on behalf of … the protected party, without the approval of the Court.”

    1. There was much common ground between Mr Weitzman QC and Mr Grime QC, and I am very grateful to them and their legal teams for their helpful written and oral submissions.
    2. First it is agreed that Mr Revill’s status as a protected party for the Civil Procedure Rules is an “other status” for the purposes of article 14 of the ECHR.
    3. Secondly the claim made by Mr Revill as a protected party against Mr Damiani falls within the ambit or field of article 6 of the ECHR, because it involves the determination of Mr Revill’s civil rights.
    4. Thirdly there is a difference of treatment between Mr Revill as a protected party and another litigant who is not a protected party bringing a claim for damages. This is because the other litigant who is not a protected party can compromise their claim for damages without obtaining the approval of the Court.
    5. This means that the issue is whether the difference in treatment has an objective and reasonable justification, in the sense that: (1) the difference of treatment pursues a legitimate aim; and (2) there is a reasonable relationship of proportionality between the means employed and the aim sought to be realised.
    6. It was also common ground that the difference in treatment between protected parties and other litigants pursued a legitimate aim, namely the objects set out in paragraph 21 above.
    7. This meant that the real issue between the parties was whether there was a reasonable relationship of proportionality between the means employed requiring the compromise to be approved by the Court pursuant to CPR 21.10 and the aims sought to be realised summarised in paragraph 21 above.
    8. Mr Weitzman referred to the approach which had been taken in family proceedings to compromises in Smallman v Smallman [1972] Fam 25. In that case the words “subject to the approval of the Court” did not prevent a binding agreement being made or entitle one party to resile from its terms before the court had been asked to approve it. The clause simply suspended carrying out the terms of the agreement until it had been approved. In Sharland v Sharland [2015] UKSC 60; [2016] AC 871 at paragraphs 27 and 28, Baroness Hale commented on differences between compromises in family proceedings and civil proceedings. Mr Weitzman’s essential point was that the CPR could have adopted the approach to “the approval of the Court” in family proceedings. Mr Weitzman submitted that such an approach would have been consistent with the United Nations Convention on the Rights of Persons with Disabilities, would have involved less interference with Mr Revill’s ECHR rights, and would have been a proportionate approach to the issue of protected parties. Such an approach would have meant that Mr Damiani could not have withdrawn from the compromise unless the Court did not approve the compromise. Mr Grime submitted that the approach taken by the rule making committee to this provision of the CPR was a proper approach, well within the discretionary area of judgment for the rule-making body.

THE JUDGE’S FINDINGS

The judge did not accept the claimant’s arguments.

“The claim made by Mr Revill is not within the ambit of article 1 protocol 1 of the ECHR
    1. The fact that it is common ground that the civil claim made by Mr Revill is within the ambit of article 6 of the ECHR means that it is not necessary to determine whether the claim is also within the ambit of article 1 protocol 1 of the ECHR. However as there has been argument on the point I will express briefly my conclusion on this point.
    2. In my judgment, the claim made by Mr Revill does not engage the provisions of article 14 with article 1 protocol 1 of the ECHR. This is because the question of whether Mr Revill has made a binding compromise does not affect Mr Revill’s enjoyment of his rights set out in article 1 protocol 1 of the ECHR. His claim for damages is a chose in action which will either have been converted into an entitlement to sums due under the compromise, or remain an existing chose in action. The law has not affected the peaceful enjoyment of his possessions or discriminated in the enjoyment of those possessions which continue to exist. In my judgment Mr Revill’s complaint falls to be addressed under articles 6 and 14 of the ECHR alone. This is because it is a complaint about discrimination in the treatment of protected parties compromising legal claims by the rules of Court, when compared with unprotected parties. I should record that even if I had found the claim to be within the ambit of article 1 protocol 1 with article 14 of the ECHR, my conclusion on justification and proportionality set out below would have been the same.
CPR 21.10 is a proportionate means of achieving legitimate aims
    1. In my judgment the approach taken by CPR 21.10 to compromises and court approval was a proportionate means of achieving the legitimate aim of ensuring the protection of protected parties from: other parties; from themselves; and from legal representatives. This is because, as was common ground, the objects set out in paragraph 21 above required the implementation of a scheme which required court approval of a compromise made by a protected party before that compromise would bind the protected party. This was because the protected party required protection from inadequate compromises, other parties required a means of obtaining a valid compromise, and consequential matters of distribution of the damages and costs needed to be resolved. This means that, as was common ground, CPR 21.10 pursued a legitimate aim.
    2. Although it is right that the CPR could have been rewritten so that the approach in family proceedings was adopted, in my judgment the approach taken by the CPR was proportionate. This was for two main reasons. First the decision whether to continue with the “civil proceedings approach” set out in CPR21.10 or the “family proceedings approach” was within the discretionary area of judgment for the rule-making body for the Civil Procedure Rules. There are factors in favour of the family proceedings approach. In this case it would have meant that Mr Damiani would have been held to the compromise, assuming that the court approved the compromise. However there are factors in favour of the approach taken by CPR 21.10. These include the facts that: (1) the compromise rule now set out in CPR 21.10 is long established so that all practitioners know where they stand, meaning that everyone can enter into negotiations to attempt to compromise the action knowing the legal position about when the compromise will become binding; and (2) permitting all parties, including the protected party, to withdraw from a compromise before it had been approved, maintained a fair balance between protected parties and the other party who might want to withdraw. The “family proceedings approach” requires permission from the court to withdraw from a compromise, and such permission might not be provided. This could create uncertainty with attendant worry and cost. It might also be undesirable, for example legal representatives acting in a case where a protected party had developed groundless fears about the effect of a compromise (which compromise would affect the rest of that protected party’s life) and which groundless fears would never have been sufficient to justify a court refusing to approve the compromise, might withdraw from the compromise. This would enable the protected party to be reassured, providing as much autonomy as possible to the protected party consistent with the UN Convention, before a further compromise was made. That further compromise would either meet the protected party’s concern or at least provide as much comfort as possible to the protected party. It was for the rule making body to decide which approach between the “civil proceedings approach” and “family proceedings approach” to pursue. The approach taken by CPR 21.10 was well within the discretionary area of judgment accorded to the rule making body to make the relevant procedural arrangements to secure the good administration of justice and to protect the relevant rights engaged.
    3. Secondly CPR 21.10 formed part of a series of rules which, among other matters, included the duty on the court to provide active case management. In this case, as appears below, it enabled the Court to set a trial date for a 4 day hearing commencing on Monday 11th December 2017. The powers of active case management permit the court to ensure that cases involving protected and unprotected parties are managed in a proportionate and efficient manner, thereby securing the good administration of justice and protecting relevant rights.
Other developments
    1. At the conclusion of legal argument on 12th October 2017 I announced my decision that Mr Damiani was entitled to withdraw from the compromise set out in the memorandum. I had notified the parties during argument that if I was able to announce my decision on the day of hearing (with reasons to follow), and if my decision was that Mr Damiani was entitled to withdraw from the compromise, I would exercise my case management powers to manage the case to set a trial date for the trial of the quantum of Mr Revill’s damages. I noted that both parties had had sufficient information to agree a (non-binding) compromise of the action on 24th February 2017, and that it should be possible to arrange a trial of quantum within a short period of time. I noted that Mr Revill would be disappointed by the fact that Mr Damiani was entitled to withdraw from the compromise and that although the rules might permit that, the rules also encouraged me to manage actively the case to arrange a trial. I should record that I am grateful that both parties managed to get sufficient information to be able to make informed submissions on the directions necessary for trial. I therefore gave directions on the day of the haring providing for a trial to commence in the week of 11th December 2017. The directions made provision for lay and expert evidence at the trial.
    2. After I had given those directions and before delivery of this draft judgment, I was informed on Thursday 19th October 2017 that the parties had been able to reach a further compromise of the action. I have therefore produced this judgment so that the judge approving the compromise will know why I permitted Mr Damiani to withdraw from the compromise set out in the memorandum dated 24th February 2017.
Conclusion
  1. For the detailed reasons given above: (1) I dismissed the application for a declaration that the Defendant was bound by the compromise of 24th February 2017; (2) I did not make a declaration that the provisions of CPR 21.10 were incompatible with the provisions of the Human Rights Act 1998; and (3) I directed that the trial of the action be listed to be heard on Monday 11th December 2017 with a time estimate of 4 days.”
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