THE ESTATE OF A DECEASED PERSON CAN BE SUBSTITUTED AS A PARTY WHEN THERE IS A PROVISIONAL DAMAGES ORDER: HIGH COURT DECISION TODAY

In  Power v Bernard Hastie & Company Ltd & Ors [2022] EWHC 1927 (QB) Mr Justice Johnson held that the estate of a claimant who had obtained an provisional damages order can take advantage of that order.  The order was not confined to the claimant personally and further damages could be sought.  It is not clear, however, whether this would allow the estate to amend the claim to plead a case under the Fatal Accidents Act 1976.

“… section 3(4) of the 1996 Act demonstrates that the statutory scheme does not preclude the payment of further damages to the injured person’s estate. Accordingly, I do not consider that there is anything in the statutory scheme that prevents an application for further damages being made by someone other than the injured person, so long as the applicant has acquired the right to make the application.”

THE CASE

In October 1993 the claimant obtained a court judgment which included an order for provisional damages.

THE ORDER

The order referred to a number of asbestos related diseases and symptoms and went on the state.

“3. The Plaintiff do have leave to apply (without time limit) for further damages pursuant to Order 37 Rule 10 if he does develop the aforesaid conditions or diseases or any of them.

4. The documents referred to in the schedule to this Judgment shall be produced to the Court by the Plaintiff’s solicitors so that those documents maybe preserved as material for any further assessment and the said documents will comprise the case file.”

THE APPLICATION

The claimant died in October 2017, it is said the death was from asbestos related symptoms.  Probate was obtained by the claimant’s nephew who sought an order that he be substituted as claimant in his capacity as executor of the estate.

THE ISSUES

1. 1. In order to resolve the ultimate question as to whether an order for substitution should be made, and in light of the submissions advanced, the following issues arise:

(1) Does the statutory framework limit the right to claim further damages under a PDO to the claimant?

(2) If not, did the order in this case limit that right to the claimant?

(3) If not, has the right to claim further damages expired by effluxion of time?

(4) If so, does the scheme permit a retrospective extension of time?

(5) If a claim for further damages could in principle now be made by someone other than Mr Hammacott, has a relevant cause of action now passed to the applicant?

(6) If so, should an order for substitution be made?

(7) If so, can the applicant (who will then be the claimant) seek to amend the proceedings to include (as well as the application for further damages under the PDO) a claim under the 1976 Act.

THE JUDGMENT ON THESE ISSUES

The judge construed all of these issues in the claimant’s favour.

(1) Does the statutory framework limit the right to claim further damages to the injured person?

1. 1. Section 32A(4) of the 1981 Act says that rules of court may provide that further damages may be awarded to “the injured person”. CPR 41.1(2)(c)(ii) provides, consistently with the governing statute, that where a provisional damages award is made, “the injured person” is entitled to apply for further damages.

1. 1. Nothing in the statute permits an award of damages to anyone other than the injured person. Nothing in the rules permits an application for further damages to be made by anyone other than the injured person. Equally, however, nothing in the statutory framework prevents the injured person’s right to apply for further damages under a PDO from being transferred to a third party (where that is otherwise permissible). The definition of an “award of provisional damages” in CPR 41.1(2)(c)(ii) contemplates that the “injured person” may make an application for further damages, but that does not prevent the application being made by the executor of the injured person’s estate if the right to make the application has passed to the executor.

1. 1. Mr Williams accepted that if Mr Hammacott had died after Kay J made the PDO, and before the provisional damages had been paid, then his estate would have been entitled to enforce the order. He also accepted that if Mr Hammacott had made an application for further damages, but had then died before the application had been heard, then his estate could have taken over that application. That shows that the stipulation in section 32A(4) of the 1981 Act that provision may be made for the awarding of further damages to “the injured person” does not prevent the damages being awarded to the injured person’s estate. Mr Williams’ concession is plainly correct: section 3(4) of the 1996 Act demonstrates that the statutory scheme does not preclude the payment of further damages to the injured person’s estate. Accordingly, I do not consider that there is anything in the statutory scheme that prevents an application for further damages being made by someone other than the injured person, so long as the applicant has acquired the right to make the application.

1. 1. The statutory framework therefore permits an application for further damages under a PDO to be made by the injured person, and does not prevent the application being made by anybody else who has validly acquired that right.

(2) Did the order in this case limit that right to Mr Hammacott?

1. 1. For the reasons given above, the statutory framework does not prevent the right to claim further damages being transferred to the injured person’s estate. That framework does not explicitly permit a court to limit the right to claim further damages in that way. I do not consider that there is any indication that the order of Kay J was intended to introduce such a limit.

1. 1. The order itself simply provides that the claimant (“The Plaintiff” to use the language of the time) may make an application for further damages. It does not say that the application may only be made by Mr Hammacott personally, and does not prevent an application being made by his executor (if his executor is otherwise substituted as the claimant).

1. 1. Mr Williams relies on the statement of facts which states that the application must be made during the claimant’s lifetime, indicating, says Mr Williams, that the right was personal to the claimant. No such stipulation appears in the order itself. Even if it did, it deals with the time within which the application must be made. It does not have the effect that the application may only be made by the claimant personally. It would not, for example, prevent a trustee in bankruptcy from being able to make the application. Of course, the time limit has the practical effect that if the application is made within time, then there is no question of the application being made by the estate. That raises a separate question as to whether an out of time application can be advanced. It is not a sufficient basis for concluding that the order prevents the application being made by someone other than Mr Hammacott.

1. 1. If the intention had been to limit the right to make the application to the claimant personally, then different words would have been used in both the order and the statement of facts.

1. 1. Accordingly, the order did not limit the right to make a further application to Mr Hammacott alone.

(3) Has the right to claim damages expired by reason of effluxion of time?

1. 1. CPR 41.2(2)(b) requires that a PDO must specify the period within which an application may be made. Here, the order states that an application may be made “without time limit”. The defendants do not suggest that this is incompatible with the obligation to specify the period within which an application may be made, far less that it invalidates the order (and see Kemp & Kemp: Personal Injury Law Practice and Procedure at 8-024). There are many other cases in which the court has deliberately not imposed a time limit: Thurman v Wiltshire and Bath Health Authority [1997] PIQR Q115 per HHJ Hedley at Q118 is an example of a reasoned decision for not doing so (there was no evidential basis upon which an appropriate time limit could be set, and the prejudice to the claimant of setting a time limit was greater than the prejudice to the defendant of not doing so).

1. 1. The defendants rely on the statement of facts which states (consistently with what now appears at paragraph 2.3 of PD41A) that the parties had agreed that the claimant could apply for further damages at any time during his life. The defendants say that the statement of agreed facts is an interpretative aid to the order, and should result in the order being interpreted as imposing a time limit – namely that any application must be made during the claimant’s lifetime. I do not agree. The order expressly states that there is no limit of time for the making of an application. I do not consider that the statement of facts, which was appended to the order, enables the order to be read as providing a time limit when the order says in terms that there is no limitation of time. It is the order, rather than the statement of facts, that controls the right to claim damages. Correctly construed, it does not impose a time limit.

1. 1. That means it is not strictly necessary to seek to construe the statement of facts. But if it were necessary to do so, the statement of facts can be read as an indication (consistent with the order) that the parties had agreed that the claimant should not be limited as to the time period within which he made an application. Stating that the claimant could make the application at any time during his life is effectively the same as stating that he could make the application at any time.

(4) If the time limit has expired, can it be extended?

1. 1. For the reasons given in paragraphs 39 – 41 above, the order permitted an application for further damages to be made without time limit. There is therefore no need to apply to extend the time period within which an application may be made. If I am wrong about that, it is then necessary to address whether the time limit set in a PDO for seeking further damages can be (retrospectively) extended after its expiry. If not, there would be no purpose in substituting the applicant as the claimant.

1. 1. If this case continued to be governed by the RSC, then an application for an extension of time had to be made before the expiry of the time limit (ie, on the assumption – contrary to my finding – that this is what the order specified, the application had to be made before Mr Hammacott died). That was the effect of RSC Order 37 rule 10. However, for the reasons given at paragraph 16 above, the CPR, not the RSC, now apply to this claim. That, at least, is common ground between the parties.

1. 1. There is nothing in the statutory framework, the applicable rules of court, or the order itself, which prevents a time limit that is set in a PDO from being extended by the court. CPR 3.1(2)(a) provides that (except where the rules otherwise provide), the court may extend the time for compliance with any court order, even if an application for extension is made after the time for compliance has expired.

1. 1. In Blythe v Ministry of Defence [2013] All ER (D) 326, a PDO was made in 1990. It provided that the period for seeking further damages was 20 years. The claimant applied 2 years after the expiry of that time period to extend the time during which he could apply for further damages. The Master granted the claimant’s application to extend time. An appeal to the High Court was dismissed. HHJ Gore QC held that CPR 3.1(2)(a) permitted an out of time application to extend the period to apply for further damages under a PDO that was made pursuant to RSC Ord 37. The Court of Appeal dismissed a further appeal.

1. 1. It follows that if the time limit under this PDO has expired, it is open to the court to grant an application for an extension of time. Such an application has not been made. It is not necessary to express any view on the merit of such an application.

(5) Did a relevant cause of action pass to the applicant?

1. 1. This question arises because it is common ground that the only way in which the applicant might have acquired the right to pursue an application for further damages is by operation of section 1 of the 1934 Act. That provision provides (subject to specified exceptions) that causes of action vested in Mr Hammacott survived his death for the benefit of his estate (see paragraph 19 above).

1. 1. Mr Hammacott had a cause of action against the defendants as a result of the facts which resulted in his original claim. He exercised that cause of action by bringing a claim. Ordinarily, where judgment is given on a claim, the cause of action “merges” with the judgment. This means that the original cause of action is extinguished, and the claimant’s continuing rights (if any) are those prescribed by the judgment: King v Hoare 153 ER 206 (1844) 13 M&W 494. I was not shown any authority as to the application of the doctrine of merger where judgment is given on a claim for provisional damages.

1. 1. In principle, I accept Mr Williams’ submission that once judgment had been given Mr Hammacott’s original cause of action had no continuing vitality beyond that prescribed by the order of Kay J and rules of court. Mr Hammacott did not have a general continuing right to litigate his original cause of action, and no such right passed to his estate.

1. 1. Once judgment was given for provisional damages, Mr Hammacott had a continuing residual right to seek further damages in accordance with the PDO and rules of court. That right existed where the conditions set out in the order of Kay J were satisfied. This, itself, amounts to a continuing cause of action. In Ord v Upton [2000] WLR 352 Aldous LJ said at 368C that a cause of action can be defined “as every fact which is material to be provided to entitle a party to success and every fact which the defendant would have a right to traverse.” Here, the relevant cause of action is the right to claim further damages under the order of Kay J. That is a right that vested in Mr Hammacott. It was therefore transferred to the applicant by operation of section 1 of the 1934 Act.

1. 1. This shows why, when section 3 of the 1996 Act was enacted, Parliament made no equivalent provision so as to permit a 1934 Act claim to be advanced by the estate of a beneficiary of a PDO. It was not necessary to make such provision because the 1934 Act itself enables the estate to bring a claim. If Parliament had intended to exclude the right of an estate to bring a claim for further damages then the 1934 Act would have been amended accordingly, just as it excludes claims in defamation, or claims for bereavement damages or exemplary damages.

1. 1. In Guilfoyle HHJ Roberts held that an administrator of a deceased’s estate was entitled to seek further damages under a PDO that was made in the deceased’s favour. Mr Williams is right that no argument appears to have been advanced in Guilfoyle as to the effect of the doctrine of merger, but that doctrine does not prevent rights under the PDO passing to an estate. I respectfully consider that Guilfoyle was correctly decided. I note that the same result appears to have been reached in Grice v Montracon Tasker Ltd (Sheffield County Court, 23 August 2005) – see “Provisional damages awards: exceptions to the principle of ‘full and final settlement'” (2012) JPIL 112.

1. 1. It follows that a relevant cause of action (the right to claim further damages under the PDO) passed to the applicant.

(6) Should an order for substitution be made?

1. 1. For the reasons given above, the relevant cause of action is the right to claim further damages under the PDO. That right is not subject to a period of limitation under the Limitation Act 1980 or any other enactment. In particular, I do not consider that the limitation period in section 11(5) of the 1980 Act applies. That is the limitation period for a claim for personal injuries. What the applicant seeks to advance is an application for further damages under the PDO. That is not a claim for personal injuries within the meaning of section 11 of the 1980 Act. Where the claim is for further damages under the PDO there is no limitation period under the 1980 Act. The time period within which the application must be brought is prescribed by the PDO (or, as here, the PDO may provide that there is no time limit).

1. 1. It follows that CPR 19.5 does not apply, and the application must be considered by reference to the general rules on substitution of parties under CPR 19.2.

1. 1. Mr Williams says that there are no remaining matters in dispute in respect of the PDO. That, however, depends on his antecedent submissions that no rights under the PDO and associated rules of court survived Mr Hammacott’s death. For the reasons I have given, I do not accept those submissions. It follows there are remaining matters of dispute in respect of the PDO. Mr Hammacott’s interest in the PDO has passed to the applicant. It is desirable to substitute Mr Power as the claimant so that the court can resolve the matters in dispute in the proceedings. It follows that the test for substitution in CPR 19.2(4) is satisfied.

1. 1. If, contrary to the findings I have made above, a relevant period of limitation has expired, then the substitution of the applicant is necessary within the meaning of CPR 19.5(2)(b) and 19.5(3)(c) because Mr Hammacott has died and his interest has passed to the applicant. It is not suggested that the limitation period had expired at the time Mr Hammacott issued proceedings in 1991. It follows that there is power under CPR 19.5(2) to substitute the applicant as the claimant.

1. 1. Having found that there are remaining matters in dispute in these proceedings, and that it is necessary for the applicant to be substituted as the claimant to enable those matters to be resolved, there is no residual reason not to substitute the applicant as the claimant.

1. 1. I therefore accede to the application that the applicant, in his capacity as executor, be substituted as the claimant in these proceedings.

(7) Can the applicant seek to amend the proceedings to include a claim under the 1976 Act?

1. 1. Once Kay J gave judgment, the existing proceedings had run their course, save for the right to make an application for further damages pursuant to the PDO.

1. 1. It is not necessary to rule on the question of whether it would be appropriate to permit an amendment to the existing proceedings so as to enable a claim to be advanced under the 1976 Act. No such application has yet been made. The matter was, however, subject to extensive argument by the parties and I set out my provisional views, whilst stressing that these are not intended to be binding on any future court.

1. 1. It is common ground that the dependents of Mr Hammacott have a right of action under section 1 of the 1976 Act, and that such an action could be brought by way of a claim in the name of the applicant. Express provision is made for that by section 3 of the 1996 Act.

1. 1. There would be good sense in the application for further damages under the PDO and the 1934 Act proceeding at the same time as the claim under the 1976 Act. If fresh proceedings are issued for a claim under the 1976 Act, then it is possible that the application of the overriding objective under CPR Part 1 would result in the court directing that it proceed together with the application for further damages.

1. 1. An alternative way of achieving that aim, if it were possible and just to do so, would be to amend the existing proceedings so as to add a new cause of action under the 1976 Act. Ordinarily, it is possible to add a new claim to existing proceedings: see CPR Part 17. Mr Bowley argued that where a claimant in extant personal injury proceedings dies from their injury, it is routine for a claim under the 1976 Act to be added to the proceedings. This is for obvious reasons of convenience. So too here, he said, requiring a fresh claim to be brought would simply cause delay and increase costs.

1. 1. In the type of case where Mr Bowley said the addition of a 1976 Act claim is “routine”, the limitation period for the 1976 Act claim will not have expired. Mr Williams was, understandably, concerned that such a course should not be taken if that would result in unfair prejudice to the defendants. In particular, he was concerned that it might have the effect of depriving the defendants of an accrued limitation defence.

1. 1. Section 12 of the Limitation Act 1980 provides that no action under the 1976 Act may be brought after 3 years from the date of death, or the date of knowledge (within the meaning of section 14 of the 1980 Act) of the person for whose benefit the action is brought, whichever is the later. Mr Hammacott died more than 3 years ago. Subject to the question of date of knowledge, the limitation period has expired.

1. 1. CPR 17.4(2) permits the addition of a new claim after the expiry of a period of limitation, but only where it arises out of the substantially the same facts as the existing claim. In order for a claim under the 1976 Act to succeed, it would have to be shown that Mr Hammacott’s death arose out of the defendants’ wrongful conduct. Those facts are no part of the proceedings that were brought by Mr Hammacott. The proposed 1976 Act claim does not therefore arise out of substantially the same facts as the existing claim.

1. 1. Accordingly, unless the applicant can show that the limitation period has not expired, it may be that he will need to issue fresh proceedings if he wishes to advance a claim under the 1976 Act. Any limitation defence can then be determined in those proceedings (which could still be case managed with these proceedings).

Next steps

1. 1. The parties have indicated that they are likely to be able to agree directions for the further progression of the claim. The applicant (now claimant) will need to decide whether he wishes to apply to amend the Particulars of Claim. If his proposed amendment is agreed, then the amendment can be made under CPR 17.1(2)(b). Otherwise, an application for permission to amend will need to be made. There may then need to be directions for an amended defence, and for the matter then to be listed for a case management hearing. Subject to any further representations from the parties, I will make directions accordingly.

Outcome

1. A beneficiary’s right to apply for further damages under a PDO passes, on death, to their estate, and may be advanced by their executor. I will therefore order that the applicant be substituted as the claimant in these proceedings so as to enable him to pursue an application for further damages under the PDO.