Castanho v Brown & Root (U.K.) Ltd
|England & Wales
|22 April 1980
|Judgment citation (vLex)
| EWCA Civ J0422-1
|Court of Appeal (Civil Division)
|22 April 1980
 EWCA Civ J0422-1
The Master of the Rolls (Lord Denning)
Lord Justice Shaw and
Lord Justice Brandon
In The Supreme Court of Judicature
Court of Appeal
On Appeal from the High Court of Justice
Queen's Bench Division
(Mr. Justice Parker)
MR. J. MELVILLE WILLIAMS, Q. C. and MR. G. NEWMAN and MR. J. HENDY (instructed by Messrs. B. M. Birnberg & Co.) appeared on behalf of the Plaintiff (Appellant).
MR. C. BATHURST, Q. C. and MR. M. LEREGO (instructed by Messrs. Clyde & Co.) appeared on behalf of the Defendants (Respondents)
"A Texas-style claim is big business". That is how the newspapers put it. The managers of the business are two attorneys of Houston, Texas. They keep a look-out for men injured on the North Sea oil rigs. The worse a man is injured, the better for business. Especially when he has been rendered a quadriplegic and his employers have no answer to his claim. Their look-out man tells the Texan attorneys. They come across to England. They see the injured man and say to him: "Do not bring your action in England or Scotland. You will only get £150,000 there. Let us bring it in Texas. We can get you £2,500,000 in Texas". If he agrees, they get him to sign a Power of Attorney which provides for their reward. Under it the attorneys are to get 40 per cent of any damages recovered. That is £1,200,000 for themselves. Big business indeed:
In our present case, however, the Texan attorneys struck a snag. Their look-out man was too late. The injured man had already gone to solicitors in England before the Texan attorneys got to know of it. His English solicitors had already started an action for him against his employers. They had succeeded so well that they had already obtained from the English court orders for interim payments amounting to £27,250. He had spent that sum on buying land and putting a house on it. How were the Texan lawyers to overcome that snag? Could they legitimately start an action in Texas when the English proceedings had got so far?
They devised a plan. They said to the English solicitors: "Let us arrange things together. You drop the action in England and let us help one another in an action in Texas. We will ourselves pay back the £27,250 out of our own pocket. We will pay him his salary and everything. We will pay you all yourproper costs for the actual work you do. We will recoup it out of the £2,500,000 we get in Texas". So they would get their 40 per cent. The English solicitors would get their proper costs. A clever plan indeed. But will it work? That is the question in this case.
A motor vessel called the "American Moon" was engaged in carrying supplies to oil rigs in the North Sea. On the 11th February, 1977 she was lying at Great Yarmouth in Norfolk. One of her crew was Inocencio Castanho, a Portuguese. He was transferring oil from a drum to a tank - by a pipe with compressed air. A valve flew off and went into his neck. It penetrated his spinal cord. He was completely paralysed in his arms and legs - a quadriplegic. He is completely dependent on others for everything. Both by day and night.
He was in Stoke Mandeville hospital for nine months from February 1977 to November 1977. He was well looked after there. The employers treated him very well. They continued to pay him his full salary of £690 a month. They arranged for members of his family to visit him from Portugal. They paid all their expenses. Their representative visited him regularly once a month to see to his welfare. After nine months, the doctors thought it would be better for him to be with his wife and family in Portugal. So his employers arranged for a specially fitted 'plane to take him back to Portugal. They also provided special equipment at his home in Portugal - so as to enable him to get about. Their representative in Lisbon visited him at his home - so as to do all they could for him and his family. His wife has been very good. She is doing everything for him. The only thing outstanding is the amount of compensation tobe paid to him.
The legal history in England up to June 1978
Soon after the accident, his wife and brother came to see him at Stoke Mandeville. They asked the Portuguese Consulate to find a solicitor for him to claim compensation. The Portuguese Consulate suggested B. M. Birnberg & Co., Solicitors, of London. They were instructed on the 4th May, 1977. They got into touch with the employers' solicitors, Clyde & Co. of London. No doubt Clyde & Co. were aware of the Texas-style claims made by some injured men. So they were glad the proceedings were started in England rather than America. They did everything they could to keep them in England. They said they would willingly make an interim payment on account. This was arranged and everything done properly. A writ was issued in September 1977. An order by consent was made on the 22nd March, 1978 for £7,250 to be paid as an interim payment. A statement claim was delivered on - the 28th March, 1978. But no defence was delivered at that time. It was deferred by consent till later.
The Texans come on the scene
The Texans came on the scene in June 1978. Someone told them of the accident to I. Castanho. They did not know his address in Portugal. So they wrote to Stoke Mandeville and got them to forward it to him. Then things moved rapidly. No expense was spared. The Texan lawyers were ready to pay out large sums themselves out of their own pocket - without security - because of the 40 per cent contingency fee opening up before them. They were ready to cast their bread upon the waters in the expectancy of the £1,200,000 fee which would be theirs.
One of their top men, Bob Chaffin (he had been named inthe newspapers), went to Portugal to see I. Castanho. Bob Chaffin was closely associated with the firm of Benton Musslewhite of Houston, Texas. Bob Chaffin pressed I. Castanho to let their firm take over the claim. He succeeded so far that on the 3rd July, 1978 their firm, Benton Mustlewhite, sent I. Castanho a Power of Attorney to sign authorising them to institute proceedings in Texas. They told him to sign it where marked "X" and to return it to them.
I. Castanho seems to have been a little uncertain. He did not sign the Power of Attorney at that time. Instead, in August 1978, he got in touch with the employers' representative in Lisbon. He told him "he would like the case to rest with the people (in London) who are handling it".
This made the Texan lawyers very concerned. They had not got the Power of Attorney back signed by I. Castanho. So they took quick action. Early in September 1978 Mr. Benton Musslewhite himself went over to Portugal. He saw I. Castanho and told him the advantage of proceeding in the United States. He then went from Portugal over to London and saw Mrs. Margaret Bowden, the managing clerk from Birhberg & Co. He told her how American law operated. He told her that, if they were permitted to sue in the United States, they would make advance payments to I. Castanho so as to cover all his needs: and that they were confident of success: and that they would expect the damages to come up to £5,000,000. Mrs. Bowden was impressed and asked him to send her his credentials. He did so. He went back and sent her a batch of papers showing the successes which Benton Musslewhite and Bob Chaffin had achieved in the cases they had handled: and in addition a draft claim which they proposed to file on behalf of I. Castanho in the American court.
This was followed up by another visit to England by Mr. Benton Musslewhite in December 1978. He had meetings again with Mrs. Margaret Bowden: and also with counsel, Mr. Melville Williams, Q. C. It was then decided that the American lawyers should be instructed to pursue a claim in the United States of America where the potential damages were very much greater. Counsel advised that "the English action should proceed, though not to judgment, as this would be a bar to the American action", that Birnberg & Co. should co-operate with the American lawyers in the interests of I. Castanho: but should only get their proper costs. Benton Musslewhite were to pay the English lawyers their proper costs for work done, charged in the ordinary way, win or lose.
That decision was duly implemented. So much so that on the 31st January, 1979 Mrs. Bowden herself visited I. Castanho at his home in Portugal, taking with her various papers including a Power of Attorney in Portuguese for him to sign in favour of Benton Musslewhite - prepared by Benton Musslewhite.
The Power of Attorney
The Power of Attorney in Portuguese was executed in I. Castanho's hamlet of Varzim. By it I. Castanho conferred on Benton Musslewhite exclusive powers to represent him judicially in the United States: and promised to pay them, if settled out of court, one-third part of the moneys received; and 40 per cent if the petition were filed in the court. Any expenses that were incurred on behalf of I. Castanho were to come out of the sums he received. If he got nothing, he had to pay nothing. There was an express clause that:
"It is understood that the process initiated in England will not be concluded prior to the decision in the United States".The object of that provision was, no doubt, to keep the English proceedings alive in case the American proceedings were unsuccessful.
The Power of Attorney also contained a provision by which Benton Musslewhite agreed to pay I. Castanho his salary - if the employers stopped paying it: and also agreed to repay any amounts received by I. Castanho by way of interim payments in the English proceedings: also any extra cost necessary to complete the house, etc. in Portugal. All these payments...
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