CLAIMANT’S CASE STRUCK OUT BECAUSE IT SAID TWO CONTRADICTORY THINGS: “JANUS-FACED” PLEADINGS NOT ALLOWED

The judgment of Mr Justice Marcus Smith in Betesh Partnership -v- Evans [2020] EWHC 1589 (QB) contains interesting observations on the need for a claimant to plead a case that is not inconsistent.  I am working and citing  from the transcript here . There is also a useful Case Note on this case in PI Focus  (Vol 30 issue 9) which contains some details that are not in the judgment.

“I conclude, therefore, that the Particulars of Claim contain mutually inconsistent averments as to the status of the Settlement. At one and the same time, it is averred that the Settlement was void and was not void. The Particulars of Claim (taking opportunity of the fact that Ms Evans’ capacity to conclude the settlement agreement is an open question, as yet undetermined by a court) assert at one and the same time an entitlement to damages presuming Ms Evans’ incapacity and a loss of opportunity predicated upon her capacity.”

THE CLAIM

The claimant instructed the defendant solicitors and barristers to bring a personal injury case against the defendants following a road traffic accident.  That case resolved when the claimant accepted at Part 36 offer made by the defendants in the original action [the  report in PI Focus states that the offer was accepted against the advice of the solicitors]. The Part 36 offer was accepted in 2009. In 2017 new claims were made against these defendants alleging that there was negligence and the claim was under-settled because the defendants failed to take into account that the claimant did not have capacity.

THE DEFENDANTS’ APPLICATIONS

The defendants applied to strike out the action on the grounds that, if the claimant did not have capacity, then the original claim had not been validly resolved since it required approval by the court. It was therefore open to the claimant to continue the original proceedings against the driver of the vehicle.  That application was rejected by the District Judge but allowed, on appeal, by Mr Justice Marcus Smith.

THE CLAIMANT’S PLEADINGS

There was, it was held, an inherent contradiction in the way in which the case was pleaded.  Mr Justice Marcus Smith held that it was not open to the claimant to plead that she was under a disability and the defendants were, thereby, negligent whilst simultaneously arguing that she was not under a disability so, therefore, could not re-open the original action.

THE JUDGMENT ON THIS ISSUE

Mr Justice Smith considered the way in which the claim was pleaded made it unsustainable.

The pleadings
21. As I have noted, it is an open question whether, at the time the Settlement of the Personal Injury Proceedings, Ms Evans was or was not a protected person within the meaning of the Mental Capacity Act 2005 and CPR Part 21. Nothing in this Judgment says anything about Ms Evans’ mental capacity at the time of the Settlement (or, indeed, at any other time).
22. Rather, the question before me is whether the pleadings contain an averment, which for present purposes I must accept to be true, that Ms Evans lacked capacity at the time of the Settlement of the Personal Injury Proceedings, so as to render her a protected party.

23. On behalf of Ms Evans, Mr Weir, QC, contended that Ms Evans’ claim was no more and  no less than a professional negligence claim where Ms Evans’ professional advisors had,in breach of duty, failed to give her proper advice, such that she had settled her claim at an undervalue. The fact that Ms Evans might – or might not – have needed a litigation friend in order to conduct the Personal Injury Proceedings was irrelevant; as was the failure (if it was a failure) to obtain approval of the Settlement under CPR Part 21.10.

24. Ms Evans’ case was that she had settled for a net amount of £100,000, when the value of her claim was significantly higher than this. Her damage was the additional amount, over and-above £100,000 paid to her, that she would have recovered had she properly been advised. It was entirely irrelevant whether the Settlement of the Personal Injury Proceedings was or was not void under CPR Part 21.10.

25. I do not accept this contention. In my judgment, Ms Evans’ claim contains within it unequivocal but inconsistent averments regarding the status of the Settlement of the Personal Injury Proceedings. More specifically:

(1) The nature of the breaches of duty alleged by Ms Evans and the damage said to be caused by such breaches involves an averment that the Settlement was void. As to this:

(a) The breaches of duty alleged by Ms Evans aver that there was a negligent failure on the part of the defendants to investigate whether Ms Evans had
capacity to settle the Personal Injury Proceedings. Thus:

(i) Paragraph 31 of the Particulars of Claim sets out the particulars of negligence and/or breach of contract of the Firm. Paragraph 31.2 states that the Firm acted negligently and in breach of contract in that it:
“Failed to investigate whether the claimant had the capacity to conduct the litigation and, in particular, to compromise her claim in the sum offered and
failed to investigate whether the claimant had capacity to manage her property and affairs.”

(ii) Similarly, paragraph 32 of the Particulars of Claim sets out the particulars of negligence of Mr McGinty. Paragraph 32.1.4 provides
that Mr McGinty acted negligently in that he:

“Failed to investigate whether the claimant had capacity to conduct the litigation and whether she had capacity to manage her property and affairs.”

(b) Obviously, it is a matter of indifference to Ms Evans, in the Professional Negligence Proceedings, whether the Settlement of the Personal Injury
Proceedings is void or not. She has received £100,000 net from Mr Clancy’s insurers and those insurers are most unlikely themselves (whatever the strict
legal position21) to seek to contend that the settlement is void, given that the almost inevitable consequence would be that Ms Evans would accept that
proposition and then seek to recover in a higher amount.

(c) However, the (lack of) capacity of Ms Evans is obviously a breach of duty that Ms Evans contends is causative of loss. One can easily see why: if – as
a result of the accident – Ms Evans has sustained an injury rendering her unable to act on her own behalf, that will augment the damage she will
recover.

On Ms Evans’ behalf, Mr Weir, QC contended that the question of capacity or incapacity had to be considered in context and specifically in relation to the decision of Ms Evans under consideration. Thus, for example, Ms Evans claims as potential damages future care and assistance and case management including (in paragraph 33.5.2 of the Particulars of Claim) as a claim framed in the following terms:

21 It was common ground that Mr Clancy would have a restitutionary claim to recover monies paid pursuant to a
void settlement.

“…it is likely that the claimant does not have capacity to manage her finances and, therefore, damages for Court of Protection costs and the costs of running a
professional deputyship.”

(e) Mr Weir, QC contended that a lack of capacity existed in relation to a specific matter; and that, indeed, is exactly what section 2(1) of the Mental
Capacity Act 2005 says.22 Mr Weir contended that the fact that Ms Evans might lack capacity in relation to the “matter” of managing her finances said
nothing about her capacity in relation to the “matter” of approving the Settlement of the Personal Injury Proceedings.

(f) It seems to me that this is at best a semantic distinction, and that – whilst Ms Evans may not wish to aver that she lacked capacity when concluding
the Settlement of Personal Injury Proceedings – that is an inevitable consequence of the averment she does make, namely that she cannot
manage her own finances.

(g) But, as I have described, the pleadings in fact go further than this. Paragraphs 31.2 and 32.1.4 of the Particulars of Claim – set out in paragraph
24(1)(a) above – plead in terms that there was a failure to investigate Ms Evans’ capacity to compromise the Personal Injury Proceedings. Whilst it
might in theory be right to say that a failure to investigate capacity does not mean that there is in fact a lack of capacity (one might investigate, and find
capacity and not its lack), that is not the meaning of the Particulars of Claim:

(i) Paragraph 33 of the Particulars of Claim pleads:

“By reason of the matters aforesaid, the claimant has suffered loss and damage for which the defendants and each of them are liable.” Plainly, “the matters aforesaid” include the failure to investigate Ms Evans’ capacity to settle.

(ii) The only way in which Ms Evans would suffer loss and damage as a result of the failure to investigate her capacity would be if – upon such investigation – it would have become clear that she lacked capacity. If the conclusion, on investigation, would have been that Ms Evans was capable, then no loss would flow from the breaches of duty alleged.

In short, it is a necessary part of Ms Evans’ claim for loss and damage that she lacked capacity to conclude the settlement of the Personal Injury Proceedings and that – in consequence – she was a “protected party” to whose Settlement of the Personal Injury Proceedings CPR Part 21.10 applied.

(2) Ms Evans’ particulars of loss unequivocally assert that Ms Evans had capacity when the Settlement was concluded. The exact converse point is made in Ms Evans’ particulars of loss and damage. The first paragraph, under the heading “Particulars of loss and damage”, provides:

“The claimant has lost the opportunity of recovering an appropriate sum of damages and thereby damages in addition to those already recovered and in respect of which she had a reasonable prospect of recovering.”

This is an unequivocal averment that Ms Evans has lost the opportunity of recovering an appropriate sum in damages from Mr Clancy. That, without more, implies that the Settlement of the Personal Injury Proceedings cannot be re-opened and that the opportunity of claiming more from Mr Clancy has been lost.
Obviously, if the Settlement is void, the opportunity of re-visiting the claim against Mr Clancy exists. Indeed, that is the very purpose of CPR Part 21.10 as described by the Supreme Court in Dunhill v. Burgin.

26. I conclude, therefore, that the Particulars of Claim contain mutually inconsistent averments as to the status of the Settlement. At one and the same time, it is averred that the Settlement was void and was not void. The Particulars of Claim (taking opportunity of the fact that Ms Evans’ capacity to conclude the settlement agreement is an open question, as yet undetermined by a court) assert at one and the same time an entitlement to damages presuming Ms Evans’ incapacity and a loss of opportunity predicated upon her capacity. 

APPROBATION AND DISAPPROBATION

The judge then went on to consider the application of the pleading of a contradictory case.

27. A party may not, in a pleading approbate and disapprobate on the same issue. That is to say, the pleading cannot, if it is to stand, adopt inconsistent positions in relation to the same point. That is not to say that a party may not plead alternative positions: this is perfectly proper, provided each alternative is – on its own terms – consistent.

28. This is precisely the problem with the Particulars of Claim. Because no consistent position is pleaded in relation to the status of the Settlement, there is an uncertainty at the very heart of the Particulars of Claim that renders it embarrassing in the technical sense
of that term. More specifically:

(1) If it is Ms Evans’ case that the Settlement was properly concluded, i.e. that Ms Evans was not a protected party and the Settlement cannot be impugned as void by virtue of CPR Part 21.10, then:
(a) The averments alleging a negligent failure to investigate her capacity cannot be made in their present form. They are improper because they cannot be
causative of loss or damage.
(b) The averments of loss and damage, insofar as they turn on (a lack of) capacity also cannot survive in their present form. It may be that a distinction can be drawn between Ms Evans’ capacity to enter into the settlement of the Personal Injury Proceedings and her lack of capacity to conduct her other financial affairs, but that distinction would have to be carefully and properly pleaded, if it were to be made.

Ms Evans would, in making clear that the Settlement was concluded with capacity, obviously be entitled to any settlement undervalue arising because of the
negligence of the defendants. But she would not be entitled (as I have said) to damages calcuated by reference to her lack of capacity. She would expose herself
to contentions that she understood exactly what she was doing and that there was no negligence at all on the part of the defendants. How far those contentions would succeed, I cannot say: but the defendants would at least know the true nature of the case being pleaded against them, and be able to meet that case in their own defence.

(2) If, on the other hand, it is Ms Evans’ case that the Settlement was void because Ms Evans was a protected party, then I do not consider that paragraph 33 of the Particulars of Claim can stand. As was stated in paragraph 24(2) above, the entirety of Ms Evans’ particulars of loss and damage are predicated upon a lost opportunity (the opportunity of recovering more money in settlement of the Personal Injury Proceedings than was in fact recovered) that does not, on this case, exist because the settlement of the Personal Injury Proceedings is alleged to be void and (on that premiss) those proceedings can be revived at any time.

It was suggested that Ms Evans’ failure to re-open the Personal Injury Proceedings was properly seen as a failure on her part to mitigate her loss. I do not accept this. Ms Evans’ pleaded case is the loss of an opportunity that has not been lost. Whether Proceedings is neither here nor there. In short, this is not a question of failure to mitigate. I consider that this is an instance where, on the face of the pleading, Ms Evans has failed to plead actionable damage caused by an alleged breach of duty.

THE RESULT

The judge did not strike out the claim in full but gave the claimant an opportunity to replead her case so as to plead that the settlement was valid.  In the event of there being no application then the case would stand struck out.

“The Janus-faced approach that Ms Evans’ claim takes in relation to the Settlement – at one and the same time asserting its voidness and its validity – means that an order simply striking out the claim would be inappropriate.”

The PI Focus report states that the claimant elected not to amend her case and the claim was struck out.