Phillips v Whatley
| Jurisdiction | UK Non-devolved |
| Judge | Lord Mance |
| Judgment Date | 02 May 2007 |
| Neutral Citation | [2007] UKPC 28 |
| Court | Privy Council |
| Docket Number | Appeal No 26 of 2006 |
| Date | 02 May 2007 |
[2007] UKPC 28
Present at the hearing:-
Lord Hope of Craighead
Lord Scott of Foscote
Lord Rodger of Earlsferry
Lord Walker of Gestingthorpe
Lord Mance
Privy Council
[Delivered by Lord Mance]
This appeal arises from an accident suffered by the respondent, Mr Stephen Whatley, as long ago as 2 nd August 1994. Mr Whatley and Sharon Fosdike (who later became Mrs Whatley) were each directors and 50% owners of Whatley & Fosdike Building Contractors Limited ("W&F"). The accident occurred on a small site on which they were working. Mr Whatley maintains that the accident resulted in serious injury to his health, giving him a large potential claim against W&F, which he puts (the Board was told) at around £2 million. But it is common ground that he lost any such claim due to the negligence of the first appellants, a firm of barristers and solicitors, of which the second appellant, a barrister, is owner. The negligence in question – the only negligence that could on the face of it have been alleged, since the present claim was issued on 21 st July 2003 - is failure to issue a writ against W&F between 21 st July 1997 and 2 nd August 1997.
The conventional approach to a claim such as the present is not to seek to try the original claim, but to measure its prospects of success and assess damages on a broad percentage basis: see e.g. Kitchen v. Royal Air Force Association [1958] 1 WLR 563; Hanif v. Middleweeks [2000] Lloyd's Rep. PN 920; Dixon v. Clement Jones [2004] EWCA Civ 1005; [2005] PNLR 6; Browning v. Brachers [2005] EWCA Civ 753. Before the Board, Mr John Leighton Williams QC representing the appellants sought leave to submit, for the first time, that this was no longer a correct approach, and that the Board should assess damages on an "all or nothing" approach by applying a balance of probabilities test, having regard to the House of Lords' decision on 27 th January 2005 in Gregg v. Scott [2005] UKHL 2; [2005] 2 AC 176. Such a submission could have been raised below, before Dudley J who heard the matter in mid-March 2005 and gave judgment on 27 th April 2005 and before the Court of Appeal for Gibraltar which gave judgment on 22 nd December 2005. There are also obvious differences between the medical context of Gregg v Scott and the present. In these circumstances, the Board ruled that it was not appropriate to take the exceptional course of permitting a new point of this nature to be raised for the first time on appeal to the Board. The appeal therefore falls for determination on the basis on which it was approached below.
The assessment which Dudley J had to undertake was complicated. He had to assess not merely the prospects in law of a successful claim against W&F, but also the prospects of W&F satisfying any such claim. W&F itself plainly never could do so. Its financial statements for periods to 30 th June 1998 show very limited assets, and it was in November 1999 wound up on a creditor's petition with an evidently substantial deficit. The only hope lay in its employers' liability policy with Assicurazioni Generali SpA ("Generali"). But, in clear breach of a condition precedent to liability under that policy, no notice of any claim was given by W&F to Generali until 23 rd May 1995 – and this is not a breach which can be laid at the appellants' door. Generali, through local barristers and solicitors, Marrache & Co., reserved all its rights in respect of the breach and, without prejudice thereto, sought further information which was never supplied. An added difficulty, even if W&F had recovered monies from Generali, appeared in the courts below to be that there was in Gibraltar no Third Party (Rights against Insurers) or Employers' Liability legislation to give Mr Whatley a direct or preferential right to such recoveries. It was thought (incorrectly as now appears – see paragraphs 39-43 below) that they would have gone into the general liquidation pot.
Dudley J concluded that (i) Mr Whatley's chances of success in establishing liability against W&F were more than negligible, and would be assessed at 25%, while (ii) the percentage prospect of "recovering from Generali" would be assessed at 25%. In arriving at the latter percentage, he bore in mind the policy issues, the difficulty that Mr Whatley would have had in funding any claim by W&F against Generali and the fact that any recovery by W&F would on its face have had to be distributed amongst all W&F's creditors. However, it appears that he may not have been taken in any detail to the figures in W&F's financial or liquidation statements. In the upshot Dudley J assessed Mr Whatley's overall chance of success at 7% (a rounding up of 25% × 25%, which would give 6.25%).
On 22 nd December 2005 the Court of Appeal for Gibraltar (Sir Christopher Staughton P, Sir Murray Stuart-Smith JA and Sir William Aldous JA) allowed the Respondent's appeal and dismissed the Appellants' cross appeal. The court held that Mr Whatley's chances of success against W&F were excellent and assessed them at 100%; the majority assessed the percentage chance of recovering from Generali at 80% (Sir Christopher Staughton P put it at only 50%); and the overall chance of success was accordingly assessed by a majority at 80%. Against that decision this appeal is now brought.
Mr Whatley's prospects as against W&F
The accident on 2 nd August 1994 occurred inside a small area (about 5m long, 3.5m wide and 3.5m high) which W&F was converting from a cistern into a garage. Twelve acrows, each nearly 3m long, were stored at an angle (to the floor) of about 60% against the wall in the back right corner, awaiting removal. On site were a Mr Kenyon (site foreman) and Mr Clinton (labourer), both employees who had only been working for W&F for just over two months. It was common ground on the pleadings in the present proceedings that Mr Whatley "attended [the] site …. to assist in the removal from the said site of various pieces of equipment". He was asked by Mr Kenyon to help to lift out a beam lying on the floor. It is also common ground that, as Mr Whatley crouched down at the entrance end of the site to do this, Mr Kenyon stood on the bottom plate of one of the acrows, which came forward and hit Mr Whatley on the back of the head.
Dudley J regarded the claim which Mr Whatley originally advanced against W&F as alleging an unsafe system of work. The letter dated 23 rd May 1995 sent to Masbro Insurance Brokers, local agents for Generali, enclosed an employers' liability report form. This was completed (with one exception) by Mr Whatley and described the accident as happening when an "Acrow fell from resting place". The one exception was the answer in the second appellant's writing to a question about steps taken to avoid future occurrences: "New instructions on method of storage to supervisor". (Mr Whatley disputed that he told the second appellant any such thing.) In a further letter dated 19 th July 1995, the first appellants described the accident as occurring when an acrow fell "as the result of being stacked in this negligent manner".
From mid-September 1995 no claim was progressed against either W&F or Generali. However, on 16 th September 1997, after the expiry of the limitation period, proceedings were issued in Mr Whatley's name against W&F, and served on Marrache & Co. Marrache & Co. acknowledged service, and were able to defend, and in effect terminate, the proceedings on the ground that they were time-barred. The statement of claim in such proceedings was also on its face, as Dudley J noted, "premised upon the basis of an unsafe system of work", involving unsafe storage of the acrows. It made no reference to Mr Kenyon having trodden on the acrow. Only in the present proceedings did an allegation appear of vicarious responsibility for failure "to take reasonable care for the Claimant's safety when working near the Acrow, such that it was dislodged and fell onto the Claimant". Despite this sequence of events, Dudley J held on balance, in the light of other evidence, that the original instructions to the first appellants "must have been such that the action could have been formulated upon the dual basis" of unsafe storage and/or careless dislodgement.
Dudley J found however that "the vicarious liability argument suffers from significant inherent difficulties". An "essential pre-requisite" would, he thought, have been "that the acrows were stored safely". He considered the evidence of Mr Richard Labrador. At pre-trial hearings when permission was being sought to admit Mr Labrador's evidence, counsel for the appellants said that he would not object provided that the evidence was given without elaboration, and that he would not be calling any evidence of his own, and Mr Labrador was described by the judge as "Clearly an expert witness at the eleventh hour without leave". In the event the judge was not wholly convinced by his evidence. Despite it, he saw "force in the proposition that in a building site acrows should not fall merely because they are stepped upon"; and said that "stepping on the base of an acrow may not necessarily be easy to categorise as a negligent act".
The apparent focus on the safety or otherwise of the system of storage led to an issue before Dudley J about who was responsible for health and safety within W&F. Mr and Mrs Whatley said that it was Mrs Whatley, but Dudley J was sceptical. It was not, he correctly said, for him to "decide", but, he went on, "it seems to me that at the very least there is sufficient material upon which the court [i.e. the court hearing a claim by Mr Whatley against W&F] could have properly concluded that Sharon Whatley was not responsible for health and safety and therefore conclude that it was rather...
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