Success for Andrew Roy in High Court stress at work appeal
XY v (1) Ingenious Media Holdings Limited (2) Ingenious Media Limited  EWHC 350 (QB)
HHJ Walden-Smith, sitting as a Judge of the High Court, dismissed this appeal by a litigant in person against an order striking out his stress at work claim.
The appeal raised a novel point as to whether, to what extent and in what circumstances impecuniosity can satisfy the first limb of the Ladd v Marshall test for admitting new evidence on appeal, that the evidence could not have been obtained with reasonable diligence for the hearing below.
It also illustrates an often overlooked means by which QOCS can be displaced.
Andrew Roy, instructed by Tracy Head at Kennedys, appeared for the Defendant.
The Claimant alleged that he suffered psychiatric injury due to occupational stress whilst employed by the Second Defendants as a chartered accountant and chartered tax adviser between July 2000 and June 2009. (The First Defendant is the Second Defendant’s parent company: they were treated indistinguishably for these purposes).
The Second Defendant and the Claimant had previously been involved in litigation against each other arising out of the Claimant’s employment. This prior litigation did not include any injury claim although, on the Claimant’s evidence he knew at the time that he had a psychiatric injury (depression) which he attributed to the Second Defendant. The litigation was settled in January 2011 by way of a compromise agreement. The crucial provision of the agreement read:
This Settlement Agreement is in full and final settlement of all claims of any kind, known and unknown, which the Parties have or may have against each other, and whether referred to in the litigation hereby compromised or otherwise.
The Claimant pleaded that he was not bound by this because he lacked capacity at the relevant time due to hypomania caused by anti-depressant medication. He also argued that the claim was not within the scope of the agreement as he was not aware at the time that he had hypomania. He later added an allegation of sharp practice as a third basis of impugning the agreement, alleging that the Second Defendant had planted an impostor witness in his camp to give him bad advice to accept the compromise agreement.
Strike out at first instance
The Defendants applied under CPR 3.4(2)(a) to strike out the claim on the basis the statement of case disclosed no reasonable grounds for bringing the claim. The application relied upon the fact that the Claimant had not produced any evidence to show that he lacked capacity at the relevant time. Although he had report from a consultant psychiatrist, this did not so state. The expert instead indicated the need for a specialist retrospective capacity assessment.
It might be noted that the more natural vehicle for this application would have been summary judgment under CPR 24.2 rather than CPR 3.4(2)(a). The basis for the application was that lack of merit in claim itself rather than in the statement of case per se. The pleading would have been a coherent and arguable one if properly supported by evidence. However, it is permissible to proceed under CPR 3.4(2)(a) by reference to the underlying merits rather than merely the pleading. Higgins v Swanlea Ltd  EWHC 1147 (Ch) at [16-22] permits what is effectively a summary judgment application to be brought as a strike out. Whilst this distinction will be academic in many contexts, it is highly relevant in personal injury litigation because of QOCS.
CPR 44.15 provides that a Defendant may enforce a costs order “where the proceedings have been struck out on the grounds that – (a) the claimant has disclosed no reasonable grounds for bringing the proceedings”. There is no such exception when a claim is defeated by way of summary judgment. This is surprising. The purposes of the exception are presumably to (i) deter claimants from pursuing hopeless claims, thereby wasting the courts’ and other parties’ time and costs; and (ii) compensate Defendants for the costs of defending claims which should never have been brought. One might have thought these rationales applied equally to claims subject to summary judgment as to those struck out under CPR 3.4(2)(a). However, the wording of the rules is clear. Thus the Defendants in this case were advised to bring the application under CPR 3.4(2)(a) with explicit reference to Higgins.
Master Cook granted the Defendants’ application. The claim was struck out. The Claimant was ordered to pay the Defendant’s costs.
The Claimant obtained permission to appeal. He relied upon a retrospective capacity assessment obtained a month after the strike out. He claimed that the reason he had not obtained this report before was that he was impecunious and had to borrow the money.
Issues on appeal
The two main issues were whether Master Cook was wrong in finding that the Claimant did not have a realistic prospect of succeeding in establishing either:
- That the compromise entered into by the parties for the purpose of bringing the earlier proceedings to an end meant that he could not bring his current claim, or
- That he did not have capacity at the time so the compromise is not binding on him.
These however were supplemented by allegations of sharp practice in relation to the compromise agreement and of procedural unfairness in relation to the instant proceedings.
The judge gave short shrift to both of these complaints. She found the first to be inherently unlikely and not established. In relation to the second, she held that the Claimant had been given every proper opportunity to present his case. Indeed, he been given greater latitude than would have been granted to a represented litigant. The Supreme Court in Barton v Wright Hassall LLP  UKSC 12 had re-affirmed that a litigant in person is not to be put in a different, or more favourable, position when complying with the rules. Applying a lower standard of compliance to litigants in person was inconsistent with the need under the overriding objective at CPR 1.1(1)(f) to enforce compliance. Any advantage granted to a litigant in person imposed a corresponding disadvantage on the other side.
Issue one – scope of the compromise
In seeking to avoid being caught by the compromise agreement, the Claimant relied upon the decision of the House of Lords in Bank of Credit and Commerce International SA (In Liquidation) v Ali (No 1)  UKHL 8 and the speech of Lord Bingham where he stated that there was “…a long and in my view salutary line of authority shows that, in the absence of clear language, the court will be slow to infer that a party intended to surrender rights and claims of which he was unaware and could not have been aware”.
The Claimant contended that he was unaware of the potential to bring a claim against his employer for personal injuries at the time of the agreement, complaining of bad faith on behalf of the Second Defendant and alleging that the compromise was “slipped in”.
The Defendants countered this by arguing (a) the language was clear; and (b) in any event the personal injury claim was one which the Claimant was, or at least could have been, aware. The Claimant knew at the time of the conduct which now formed the subject matter of his claim and the fact this conduct had (on his case) been injurious to his health. That he might not have appreciated the full extent of his injury was beside the point.
The judge accepted the Defendants’ arguments. She found that:
- The compromise was clear and comprehensively worded and covered the later claim.
- The elements necessary for the Claimant to bring a claim were all present when he entered into the compromise. He knew about his psychiatric condition in 2010. Although the he may not have recognised the extent or nature of the alleged personal injury, he did recognise that he had a personal injury claim. He could not now properly contend that a personal injury claim was not within the contemplation of either himself or the Second Defendant at the time of the compromise agreement.
- The authorities did not assist the Claimant. The relevant clause here was wider than in Royal National Orthopaedic Hospital Trust v Howard  IRLR 849, which in any event concerned a claim which did not exist at the time of the agreement. Whilst the clause was narrower than in Khanty-Mansiysk Recoveries Ltd v Forsters LLP  EWCA Civ 89, it remained wide enough to catch the Claimant’s claim.
- Further, the compromise was part of the settlement of the litigation between the Claimant and the Second Defendant, which was to the Claimant’s benefit. In order to obtain the benefit of settling the litigation which would have been extremely expensive, if not ruinous, the Claimant gave up the ability to bring further claims against the Second Defendant.
- There was no bad faith on the Second Defendant’s part.
Issue two – capacity
Under the s1(2) of the Mental Capacity Act 2005 “A person must be assumed to have capacity unless it is established that he lacks capacity”. It was for the Claimant to prove that he had a realistic prospect of rebutting this presumption.
This ground of appeal was also dismissed. The judge held that:
- The “general rule is that impecuniosity does not excuse procedural noncompliance. There may be rare cases “at the margins” where impecuniosity could potentially give a justification for the failure to obtain evidence at an earlier stage, but those circumstances does not apply in this case.” Impecuniosity would therefore not normally only satisfy the Ladd v Marshall Had the Claimant been impecunious his proper course, with reference to the need for finality in litigation, was to seek an adjournment of the hearing below.
- There was in any event no evidential basis to support C’s contention that he was impecunious at the time.
- Moreover, even if the Claimant were permitted to rely upon the later report, it did not support a finding that he probably lacked capacity at the relevant time. It would therefore not have resulted in a different outcome.
- Master Cook was not wrong in his conclusion that, if there was credible evidence of incapacity, it would have been produced by the time of the hearing. It would not have been appropriate for him to have allowed the case to proceed on the speculative basis that Mr XY might produce evidence that he lacked capacity.
The overall conclusion was that Master Cook’s decision was unimpeachable. The appeal was therefore dismissed.
There are three points of general interest here.
Firstly, impecuniosity will rarely satisfy Ladd v Marshall. An impecunious litigant’s remedy should normally to be ask at first instance for more time to seek the necessary funds and evidence.
Secondly, general release clauses in compromise agreements should be drafted as widely as possible to provide maximum protection. Whilst the clause here was widely drafted, it could have been improved upon, as the judge made clear when comparing it to the clause in Khanty-Mansiysk. It might not have been sufficient if the injury which formed the subject matter of the later claim had come into existence after the agreement. The additions of the words “past and future” to describe the claims thereby caught would have been advisable.
Thirdly, Defendants facing hopeless claims should adopt strike out rather than summary judgment as their primary means of bringing such a claim to an end. The Defendants in this case incurred considerable costs on the application (which was adjourned several times) and the subsequent appeal. Those costs would have been irrecoverable had the application been brought under CPR 24.
The availability of this means of displacing QOCS is potentially important in deterring hopeless claims. Whilst the QOCS regime has obvious benefits, one of its disadvantages is that it can encourage some claimants to see litigation as a “free hit” to be pursued without financial risk. Highlighting that this will not necessarily be the case might bring legitimate pressure to bear on such claimants to consider the merits of pursuing weak or speculative claims.