Healy v
Corporation of Lloyds
COURT OF APPEAL
(CIVIL DIVISION)
[2004] EWCA Civ
262, (Transcript: Smith Bernal)
HEARING-DATES:
24 FEBRUARY 2004
24 FEBRUARY 2004
Contracts - Damages
- Breach of contract - Defendant admitting liability - Trial on quantum -
Claimant alleging procedural irregularities in trial.
The Applicant in
person; P Blakesley for the Respondent; Sophie Hoffman
PANEL:
THE MASTER OF THE ROLLS (Lord Phillips of Worth Matravers), KENNEDY, NEUBERGER
LJJ
JUDGMENTBY-1:
LORD PHILLIPS, MR:
LORD PHILLIPS, MR:
[1] This is an
appeal by the claimant, Miss Healy, against decisions made in the summer 2002
by His Honour Judge McGonigal sitting as a judge of the High Court in the
Mercantile Court in Newcastle upon Tyne. The judge was assessing quantum in proceedings
in which the respondents, Lloyd's, had admitted liability for failure to
provide Miss Healy with the benefits of health insurance to which she was
entitled as their employee. The judge awarded £ 148,418 on the basis that,
until she was 55, she would have been able to continue earning 50% of her
earnings when she was working for Lloyd's. It is Miss Healy's case that by the
time damages came to be assessed her condition had deteriorated to such an
extent that she was unable to continue to work at all. She contends that she
should have been awarded damages and interest amounting to a total of
approximately £ 220,000. Her attack on the judgment when she obtained
permission to appeal was, however, procedural. It is important to identify the
precise nature of the procedural shortcomings alleged by Miss Healy and to
consider the extent to which she has obtained permission to appeal in respect
of these.
THE PROCEDURAL
HISTORY
[2] In the middle
of 1986 Miss Healy started to work for Lloyd's of London as a secretary. In or
about June 1994 she fell ill and was in receipt of sick pay up until January
1995. Thereafter she received no pay or benefits but remained in employment
until 19 February 1996 when Lloyd's terminated her employment on the ground of
her incapacity to work. On 27 February 1996 Lloyd's paid her the sum of £
5,108, presumably by way of compensation for losing her job.
[3] Lloyd's
maintain a Permanent Health Insurance Scheme ("PHI scheme") for the
benefit of their employees. They did not provide the benefit of this scheme to
Miss Healy. On 22 April 1999 she sued Lloyd's claiming that this constituted a
breach of contract. On 10 April 2002 Lloyd's submitted to judgment on
liability. This left damages to be assessed. The issue was the amount of benefits
to which Miss Healy would have been entitled under the PHI scheme. This
depended on the extent to which her illness had prevented, and would have
continued to prevent, her from profitable employment.
[4] Miss Healy had
the benefit of a Legal Expenses Insurance Policy. This funded legal
representation in respect of her action against Lloyd's. When liability was
still in issue Miss Healy was examined by two consultant rheumatologists. Dr
Walker, instructed by Miss Healy, examined her in January 2001 and reported on
28 March 2001. Dr Fordham, instructed by Lloyd's, carried out an examination in
July and reported on 30 July 2001. The two consultants subsequently produced an
agreed statement dated 19 December 2001. They found that Miss Healy was suffering
from cervical spondylosis. This, combined with work related upper limb disorder
and stress caused by a poor work relationship, meant that she was unable to
carry out her secretarial duties. However, they found that she was capable of
carrying out certain non-repetitive work, as was demonstrated by the fact that
she had been working as a carer for her mother and her aunt.
[5] On 2 May 2002
Lloyd's sent to each of the consultants a questionnaire which sought their
opinions on the types of non-repetitive work that Mrs Healy could perform and
whether she would be capable of working full-time or only part-time. Dr Walker
replied on 7 May 2002 as follows:
"You ask which
of the list of jobs Ms Healy is fit to carry out. I believe that she is fit to
work as a matron or houseparent, receptionist, care assistant, caretaker and
sales assistant. I believe that she could also be a telesales operator provided
attention was paid to her seating position and as a store, despatch of
production control clerk provided this did not involve any heavy lifting.
I think she might
struggle with the accounts and wage clerk because of the repeated writing and
hand movements and similarly with the retail cash desk operator. With all of
these jobs there may be some heavier aspects that she would struggle to do.
I think that she
could probably work approximately two-thirds normal time. I think more than
that would probably cause increasing pains in her neck. I think she has been
capable of doing these occupations since about 1997 when she became a carer.
In terms of whether
she would be able to continue this to normal retirement age, it is likely that
her cervical spondylosis will get gradually worse over the years and she is
only in her early forties now. I think it would be reasonable for her to do
this to about the age of fifty-five."
Dr Fordham replied
on 8 May as follows:
"Thank you for
your letter to myself posing some questions relating to the joint report Dr
Walker and I produced dated the 19 December 2001.
(a) The occupations
I believe that Ms Healy would be able to carry out in my opinion include Matron
or houseparent, receptionist, stores despatch or production control clerk,
telephone or telesales operator, care assistant or attendant, caretaker, sales
assistant. I think that she would have difficulties in carrying out work as a
wage clerk, book-keeper or retail cash desk or checkout operator because of the
associated arm and wrist movements particularly associated with these
activities.
(b) As regards her
ability to carry them out full-time, I believe that she could carry out all of
the occupations indicated on a part-time basis.
(c) Turning to the
question as to when she would have been able to carry them out, I note that
from paragraph 19 that she was made unemployed in December 1994 and that she
started her work as a carer for her disabled mother in 1997. I would presume
therefore that she would have been able for the kind of work indicated above
some time between 1995 and 1997 eg 1996.
(d) As regards her
ability to continue in such employment until ordinary retirement, I think that
this is unlikely and anticipate that she could work to the age of 55."
It is plain that
the two consultants must have agreed the appropriate response to the
questionnaire on the basis of their observations of Miss Healy in the previous
year.
[6] On 25 June 2002
Miss Healy's solicitor, Miss Hucknall of The John Brennan Partnership, wrote to
the two consultants enclosing additional medical reports from Mr Kramer, Mr
Mahdi and a witness statement from Miss Healy herself. She asked them to
consider Miss Healy's full medical profile and to state to what extent that
impinged on their opinion of her ability to work on a part-time basis in the
positions that they had listed. Dr Walker replied on 1 July 2002 as follows:
"You send me
the reply that Dr Fordham sent to Lloyds about her ability to work and this is
very similar to my own response to the same questions, that essentially she was
fit to do the lighter occupation on a part-time basis probably to the age of
fifty-five. I would agree that we have both made this assessment in relation to
the problem Ms Healy had that were directly related to this claim. I note from
her more recent statements that the only care she is able to give to her mother
is in terms of shopping, cooking and keeping her company and I note that the
report from Mr Kramer from June 2001 suggests that she had some deterioration
in her symptoms and signs subsequent to my examination of her. I would accept
that this indicates that her overall condition may be deteriorating more
quickly than expected and the estimate that she could work to the age of
fifty-five may be somewhat optimistic. It is now eighteen months since I have
seen Ms Healy and it is, therefore, difficult to be more specific about her
ability to work."
Dr Fordham replied
in a letter dated 3 July 2002 stating that the material in question did not
cause him to alter his previous assessment. He added:
"It is of
course a fact that a year has elapsed since the medical assessment was made and
it is conceivable that her condition may have altered in that time."
[7] The date for
the trial of the issue of quantum was fixed for 16 July 2002. On 11 July Miss
Hucknall ceased to act for Miss Healy and her solicitors obtained permission to
come off the record. As a consequence her Legal Expenses Insurance ceased to
provide cover. On 12 July 2002 Miss Healy wrote to the court confirming that
she would be proceeding as a litigant in person. Between 12 and 15 July 2002
Miss Healy typed, or arranged for her niece to type, a number of statements.
She sent these and other documents, to the Court. The statements covered, among
other matters, the circumstances in which her solicitors had come off the
record.
[8] Miss Hucknall
had sworn an affidavit explaining that she wished to come off the record
because Miss Healy refused to follow the advice of her counsel, Mr Peter
Morton. On 15 July 2002 Miss Healy wrote to the court enclosing a confidential
statement which she said she did not wish the other side to see because it
concerned private issues which would normally remain privileged.
[9] In her
confidential statement Miss Healy explained that she had always contended that
she could earn no more by way of part-time work than the £ 42 per week that she
received by way of carer's allowance. She had, however, reluctantly been
prepared to accept the financial expert's advice that her earning ability
should be calculated at the minimum wage rate. This increased her earning
capacity to £ 84 per week. At this point the letter dated 1 July 2002 was
received from Dr Walker. Miss Healy stated that, on receipt of this letter, she
urged her counsel, Mr Morton, to seek a fresh medical examination by the two
consultants. They would then see that her condition had seriously deteriorated
and might advise that she was no longer fit to work.
[10] Mr Morton
refused to adopt this course, whereupon Miss Healy asked Miss Hucknall to
replace him with a barrister specialising in disabled rights. Miss Hucknall
declined to do so and, when Miss Healy persisted in disregarding the advice of
her counsel, Miss Hucknall resigned.
[11] In the week
before the trial Miss Healy prepared a statement of issues. She summarised
these as follows:
"Now that they
have had sight of these important documents Lloyd's can hopefully agree with me
that the only issues for the Court to address are firstly whether the medical
evidence proves that I can work for more money at a different job without
suffering various degrees of pain for which I need varying amounts of
painkillers and without causing further acceleration of my disease. It will
then be possible for the Court to decide which Schedule of Loss correctly
reflects my true financial position with regard to both past and future losses."
[12] When the trial
began on 16 July 2002 Miss Healy sought an adjournment. Her application was
refused and the formal order was drawn up refusing it. In the reserved judgment
that he subsequently delivered, the judge gave the following reasons for rejecting
Miss Healy's application:
"Until 22 July
2002 Ms Healy had solicitors acting for her under a legal expenses insurance
policy. They ceased to act for her on that date and she appeared at the quantum
trial on 15 [sic] July 2002 in person. She sought an adjournment of the trial
on the basis that she felt that her symptoms had become worse since she was
seen by the medical experts in 2001. She wanted the opportunity to be
re-examined by them. In particular she felt that they had reached the wrong
conclusion in relation to her ability to work, partly because of her subsequent
deterioration and partly because they had examined her in 2001 in the context
of liability (namely whether her condition in 1995 was such that she should
have been put onto the PHI scheme) rather than in the context of what she was
able to do after leaving Lloyd's. On considering the various medical reports I
was satisfied that the doctors had taken account of the worsening of her
systems [sic] up to the time when they saw her in 2001 in reaching their
conclusions as to whether she could work. Obviously they could not take into
account any deterioration in those symptoms after they saw her but after
listening to Ms Healy I was satisfied that whatever deterioration there was not
of such significance to justify an adjournment of the trial with the consequent
increase in stress and expense for both parties. In reaching that decision I
took account of the fact that in making her application Ms Healy showed herself
competent in conducting her own case and as an articulate person. She had
clearly mastered the material. I formed the view that she is obviously an
intelligent woman. She continued to conduct her case competently and to
demonstrate her mastery of the documents. Despite her medical problems she was
able to sit down and stand up and deal with files of paper for the whole day
but she said in evidence that she had had to take pain killers to enable her to
do this."
[13] On 28 August
2002 the judge provided to the parties, in draft, the judgment that he proposed
to hand down. His purpose in doing so was explained by the final paragraph of
his judgment:
"As I have
taken account of matters that were not the subject of submissions at the trial
and I have made my own calculations I will hear submissions as to this judgment
before it is finalised. Those submissions should be submitted in writing 7 days
before the judgment is due to be handed down when they can be amplified in the
light of the other party's submissions."
The handing down of
the judgment was fixed for 27 September 2002.
[14] Miss Healy
prepared very detailed submissions in relation to the draft judgment. In effect
these re-argued her case. Unfortunately, she did not succeed in completing
these until 23 September 2002. More significantly, Miss Healy succeeded in
persuading Dr Walker to re-examine her. She was, through no fault of her own,
unable to achieve this before 24 September 2002. His report, produced on the
same day, gave the following opinion:
"Miss Healy is
clearly suffering from cervical spondylosis which has indeed deteriorated over
the last twenty months according to my examination. She also probably has some
degenerative change in her knee and foot. Her use-related forearm pains have
continued when she uses them and her history clearly relates her activities to
an increase in the pain in a progressive fashion, which would mean that since
1997, had she been asked to work, that her symptoms would have been likely to
deteriorate to an extent that she wouldn't have been a reliable employee. The
activities she has done for her mother, which haven't aggravated her problems,
have largely been the same as self-caring activities that she does for herself
and doesn't really amount to a proper job. I do not think that she is fit for
work or likely to be fit for work in the future."
[15] Miss Healy
appears to have done her best to get her submissions and Dr Walker's latest
report before the judge in advance of the hearing of 27 September 2002. She did
not succeed and the judge did not look at this new material. Miss Healy then
applied for permission to appeal. In refusing permission, the judge said this:
"Before I
handed down judgment I refused the claimant permission to adduce additional
medical evidence as to her ability to work. This is an issue dealt with in
paragraph 4 of the judgment in the context of an application to adjourn the
trial. The claimant admitted that the additional medical evidence could have
been addressed at the trial and blamed the former solicitors for failing to
obtain it. I refused permission on the basis that the first condition in Ladd v
Marshall had not been met. I considered then in the light of the overriding
objective, but decided in my discretion that it was not a case in which
practice required prolongation of this litigation to enable the claimant to
produce evidence late. Matter of discretion. No real prospect of success."
[16] The judge
treated Miss Healy's application as an application for permission to appeal
against the substantive judgment. It is implicit that her grounds of appeal
were procedural: failure to adjourn the hearing to enable her to obtain a fresh
medical report and failure to have regard to the report that she did obtain
when he handed down his judgment. The formal order drawn up on 12 February 2003
recorded that permission to appeal was refused.
[17] Miss Healy
applied to this court out of time for permission to appeal. In Pt 5 of her
Appellant's Notice, which was on the proper form N161, she stated the orders
against which she appealed as those of 17 July 2002 and 12 February 2003, and
identified the parts of the orders against which she wished to appeal as
"'Permission to appeal refused' + Permission to adduce submissions and
updated medical opinion."
[18] Her
application for permission to appeal came on paper before Clarke LJ. On 7 July
2003 he refused to grant an extension of time because he considered that she
had no reasonable prospect of success on the appeal. Miss Healy sought to renew
her application at an oral hearing. In the event she did not come to London for
this because she said she felt too infirm to do so. Accordingly Chadwick LJ
dealt with the renewed application on paper. He gave Miss Healy permission to
appeal for the following reasons:
"I am
satisfied that Ms Healy's further submissions that there is a real prospect
that she might persuade a Court of Appeal that Judge McGonigal exercised his
discretion on 16 July and again on 27 September on a wrong basis. There seems
to me to be force in the submission that he did not give sufficient weight to
the difficulty in which Ms Healy was placed in the circumstances that her
solicitors, after refusing to obtain the evidence which she was asking to be
obtained, then withdrew from the case in circumstances where the evidence when
obtained was evidence which was, at least prima facie, highly relevant to the
submissions which she wanted to make. In those circumstances I propose to give
permission to appeal."
[19] Chadwick LJ
added:
"I give
permission to appeal against the order of 16 July 2002. Formally permission
from the order of 27 September which refuses her permission to appeal-cannot be
given. But the court will no doubt take account in considering the appeal for
which permission is given that she was refused the opportunity to present the
evidence which she had on 27 September, albeit that there is no formal order to
that effect."
[20] It seems to me
that Chadwick LJ, understandably, may have been a little confused by the form
of Miss Healy's Appellant's Notice. The correct analysis must be, I think, that
she was seeking leave to appeal against the judge's substantive order assessing
her damages in the sum of £ 148,418, and that the grounds that she was given
permission to advance were (i) that the judge had wrongly refused her an
adjournment in order to obtain up-to-date medical evidence at the commencement
of the hearing; and (ii) that the judge had wrongly refused to have regard to
the material which she had submitted late when he handed down his judgment on
27 September 2002. I would propose to entertain her appeal on this basis.
DEVELOPMENTS
SUBSEQUENT TO JUDGMENT
[21] Lloyd's
contended that they should not be required to deal with an appeal based on the
judge's failure to adjourn for additional medical evidence unless there was an
investigation of the circumstances in which Miss Healy failed to obtain the
medical evidence in question prior to the date of the hearing. They issued an
application seeking discovery of Miss Healy's correspondence with her lawyers.
They alleged that she had waived privilege in relation to this. That
application was adjourned to this hearing on the basis that it might prove
unnecessary to pursue it because Miss Healy appeared to have shifted her ground
for attacking the judge's conduct of the proceedings.
[22] Miss Healy
filed a lengthy skeleton argument for our assistance together with a
supplementary statement on Lloyd's application for disclosure. A significant
part of her skeleton argument consisted of challenges to some of the judge's
substantive conclusions. Those criticisms are not appropriate so far as the
permission to appeal was concerned because that permission was given simply on
the grounds of procedural shortcomings. Nonetheless, one of the points made in
those submissions appeared to us to have obvious merit. It would appear that,
in calculating the deduction to be made from the damages to reflect the amount
that Miss Healy could earn by way of employment or, alternatively, benefits for
being unable to work, the judge had taken into account both notional earnings
and the benefits, although Miss Healy would only have been entitled to one or
the other. I shall revert to that point at the end of this judgment. Meanwhile,
I am concerned with the appeal that Miss Healy was given permission to bring,
founded as it was on the contention that the conduct of her case by the judge
was procedurally unfair.
[23] Miss Healy's
skeleton argument and the supplementary statement throw more, and a different,
light on the circumstances in which her solicitors withdrew from the record.
She had engaged a forensic accountant, Mr Barraclough. It was proposed that he
should act as a joint expert and his draft report was disclosed to Lloyd's.
Lloyd's then decided that they were not prepared to accept him as a joint
expert and appointed their own. Mr Barraclough had originally based his
calculations on Miss Healy's own appreciation of her limited ability to work.
After the responses of the consultant rheumatologists dated 7 and 8 May 2002 to
the questionnaire that they had received, Mr Barraclough revised his
calculations to reflect those responses. He based his calculations on the
assumption that Miss Healy had an earning potential of 50% of what she would
have earned had she continued to be employed by Lloyd's.
[24] Miss Healy was
dissatisfied with her accountant's assessment. She demanded that he revise his
report to reduce her earning capacity to £ 84 per week. He refused to do so.
Miss Healy complained that he insisted on thinking "like a joint expert".
In these circumstances she found that Mr Barraclough was not acceptable as an
expert and refused to proceed on the basis of his evidence. It was this, it
seems, which led her solicitor and counsel to resign.
JUDGE MCGONIGAL'S
CONDUCT OF THE PROCEEDINGS
[25] Miss Healy
confirms, as indicated in her skeleton argument, that she no longer complains
of the fact that the judge would not grant her an adjournment so she could
procure an up-to-date medical report. Her case has been very clearly stated in
her skeleton argument and in correspondence with Lloyd's in relation to that
matter. Her case is that at the time that such a medical report would have been
obtained her physical condition had not deteriorated to such an extent that the
report would have made any difference.
[26] Miss Healy's
case is that the stress of preparing for the trial without assistance, of
conducting the trial without assistance and of preparing the submissions she
made in relation to the judge's draft judgment, had a drastic and deleterious
effect on her condition. It was these matters that reduced her to the condition
found by Dr Walker when he carried out the examination on 24 September 2002.
[27] Miss Healy has
expressly withdrawn any suggestion that the judge should have adjourned for the
purpose of allowing her to obtain an updated medical report from Dr Walker. She
submits that the process was not fair because, on her own without legal
assistance, she was unable to advance her case as it should have been put. She
submits that she was no match for the skills of Mr Blakesley who was opposing
her. It was because of her inadequacies that she was unable to persuade the
judge that, notwithstanding the medical reports, she would not be able to work
in the manner or to the extent that was being suggested by Lloyd's. She was
also unable to deal with other issues that arose in the case, including the
double accounting to which I have referred.
[28] The problem
with the case now advanced by Miss Healy, as the court explained to her in the
course of her argument, is that it does not demonstrate any shortcoming on the
part of the judge, quite apart from the fact that the grounds now relied upon
are quite different from those which led to her being granted permission to
appeal. Miss Healy did not ask the judge to grant her an adjournment so that
she could obtain alternative legal representation. On the contrary, she had
written to the court on 12 July 2002 confirming that she would be appearing as
a litigant in person, although she did express apprehension as to conducting
that task, and she stated that the withdrawal of her legal insurance cover had
made it impossible for her to appoint another solicitor. In my view that was a
realistic appraisal of the situation. She is not in a position to demonstrate
that the fact that she was bereft of legal representation was other than the
result of a misunderstanding on her part of the duty of an expert witness.
[29] Miss Healy
appears, mistakenly, to believe that Mr Barraclough was not acting as he should
when he declined to alter his report in accordance with her instructions but
continued to act as though he was a joint expert. As has been explained to her,
Mr Barraclough's primary duty was to the court and he could not alter his
expert opinion at the dictate of his client. Nor does it appear that Miss Healy
gave any indication at the trial that she was unable to conduct her own case.
She has said in some of her written submissions that she was anxious not to
show any weakness to Lloyd's when conducting her case. It is quite plain from
the judgment that she similarly gave the judge the impression that she was
perfectly able to conduct her own case.
[30] For these
reasons, it seems to me that Miss Healy is simply unable to make out a case
that there was any procedural defect in the conduct of the trial by the judge.
Nor, in my judgment, can the judge be criticised for declining to take into
consideration the material that did not reach him until the morning when he was
to hand down his judgment. So far as the fresh medical report was concerned, it
was entirely appropriate for him, having ruled out the introduction of further
medical evidence on Ladd v Marshall [1954] 3 All ER 745, [1954] 1 WLR 1489
grounds, to decline to have regard to that.
[31] In the course
of her submissions and dialogue with the court, Miss Healy said, "If I
knew then what I know now, I would have said to the judge that the evidence had
to be clarified. I should have said, 'I do not need new evidence but I need
clarification'." Unfortunately she told the judge that she did need new
evidence; she did not say to the judge that she needed clarification. In those
circumstances no valid grounds of appeal are made out. For those reasons I
would dismiss this appeal.
[32] I would add
that Mr Blakesley, on behalf of Lloyd's, has accepted that there was an error
in the judge's calculations, which he carried out of his own initiative and
which were not advanced by Lloyd's (the double accounting to which I have
referred). He has calculated the difference that this would have made to the
award of damages in the sum of £ 7,727, and has told the court that Lloyd's is
prepared to increase the amount paid to Miss Healy by way of damages by that
sum.
JUDGMENTBY-2:
KENNEDY LJ:
KENNEDY LJ:
[33] I agree.
JUDGMENTBY-3:
NEUBERGER LJ:
NEUBERGER LJ:
[34] I also agree.
Appeal dismissed.