The High Court has recently had cause to consider the scope of fixed success fees in employer’s liability claims – and it is much narrower than previously thought.
The decision
In Broni & Ors v Ministry of Defence [2015] EWHC 66 (QB) three appeals were heard together in a single point of law: namely, whether the (pre-1 April 2013) fixed success fee regime under CPR Part 45 Section IV applies to members of the armed forces. In all three cases, it had been held at first instance that the fixed success fee regime applies.
Fixed success fees apply in claims where ‘the dispute is between an employee and his employer…’ ‘Employee’ is defined as having the same meaning as section 2(1) of the Employers Liability (Compulsory Insurance) Act 1969, which reads:
"For the purposes of this Act the term 'employee' means an individual who has entered into or works under a contract of service or apprenticeship with an employer whether by way of manual labour, clerical work or otherwise, whether such contract is expressed or implied, oral or in writing."
The key words are ‘contract of service’. It was common ground that it is a long-standing principle of law that members of the armed forces are not employees serving under a contract of service.
However the Defendant sought to apply the fixed success fee regime on a broad reading of Section IV. The Defendant pointed to the significant practical difficulties that would arise at detailed assessment in determining the precise nature of the relationship between Claimant and Defendant, especially where this was not an issue which had been decided or agreed in the underlying claim, and to the uncertainty this would generate in costs proceedings where the success fee would be at large in significant numbers of cases.
The court expressed sympathy with these practical arguments, but in a very short discussion held that “there was no ambiguity” in the rules and therefore “no scope for giving a broad or purposive interpretation … different from the specific meaning given to the term "employee" by s.2(1) of the 1969 Act. The words "contract of service" in s.2(1) of the 1969 Act have a single meaning which does not vary.”
The can of worms
The decision is potentially of wide application, with some perhaps surprising results. It applies in the run off of cases where success fees are recoverable, not only to members of the Armed Forces but potentially to all office holders whose appointment is subject to the will of the Crown, such as police officers and civil servants; and others whose work relationship is not one of a contract of service, such as doctors in private practice and certain members of the judiciary. The nature of the relationship between Claimant and Defendant will need to be explored in every case, even where it is not relevant to the underlying claim. Where there is a dispute as to the status of the Claimant, it is hard to see how this could be resolved via the provisional assessment process, so costs of assessment in such cases are likely to be substantially higher.
The definition of employee in the (pre-1 April 2013) CPR Part 45 Section V is identical, and so the decision potentially applies to disease claims, including mesothelioma claims where recoverability has not yet been abolished.
The definition of employee in the Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims is also identical. This theoretically means that such persons whose work relationship is not a contract of service fall under the scope of Public Liability claims rather than Employer’s Liability claims. This means that for those cases that exit the portal, solicitors in like cases to Broni would be restricted to the lower fixed recoverable costs for Public Liability Claims rather than Employer’s Liability claims. On the other hand, as the Protocol definition of Public Liability claims excludes “a claim for damages arising from a disease that the claimant is alleged to have contracted as a consequence of breach of statutory or common law duties of care, other than a physical or psychological injury caused by an accident or other single event” it would mean that such cases would never enter the portal in the first place, therefore denying Defendants the opportunity to limit costs to portal costs via an early admission of liability.