England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ON APPEAL FROM THE SENIOR COURTS COSTS OFFICE

		Royal Courts of Justice Strand, London, WC2A 2LL
		20 January 2015

Mr Justice Supperstone :

Introduction

1. There are three appeals before the court which raise the same point of law, namely whether the fixed success fee regime in (pre- 1 April 2013) CPR Part 45 Section IV applies to claims brought by members of the armed forces in respect of injuries suffered at work. I understand that this is a novel point that despite many similar claims in the past has not previously been considered.
2. On 2 June 2014, in the case of Woof, Master O'Hare decided that the regime does apply because the Claimant was an employee within the meaning of Rule 45.20(1)(a). Master O'Hare reached the same conclusion on 30 July 2014 in the case of Broni; so did Deputy Master James on 28 July 2014 in the case of Barbour.
3. Master O'Hare granted permission to appeal in Woof and Broni; and Deputy Master James granted permission to appeal in Barbour.
4. Mr Robert Marven appears for all three Appellants; and Mr Mark James appears for the Respondent in all three cases. I am grateful to counsel for their admirably concise and helpful submissions.
5. The material facts in each case can be stated shortly. Mr Woof was a serving military policeman in the Royal Marines stationed at a military base in Norway. His underlying claim was in respect of an injury to his left ankle whilst using sports equipment at the base. Mr Broni was a Private in the Army. He developed a Non-Freezing Cold Injury ("NFCI") when on training in Kent. Mr Barbour also sustained a NFCI that arose out of military exercises during basic training undertaken in Cambridgeshire.
6. In each case the Appellant contends that the fixed success fee regime does not apply because he was not an "employee"; and that the costs judge was wrong to conclude to the contrary.

The Fixed Success Fee Regime

7. The pre- 1 April 2013 CPR Part 45 Section IV stipulates fixed success fees in certain employers' liability claims. This would include the injuries sustained in these three cases if the other criteria for the application of this regime were satisfied.
8. CPR Rule 45.20(1)(a) stipulates that: "this Section applies where… the dispute is between an employee and his employer…".
9. "Employee" is defined in Rule 45.20(3)(b):

"'Employee' has the meaning given to it by section 2(1) of the Employers Liability (Compulsory Insurance) Act 1969."

10. Section 2(1) of the Employers Liability (Compulsory Insurance) Act 1969 ("the 1969 Act") states:

"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."

11. The wording of CPR r.45.20(1)(a) is broadly mirrored in the wording of CPR r.45.23(1)(a) and r.45.23(1)(b), save that CPR r.45.23(1)(a) expressly applies to claims arising out of death and CPR r.45.23(1)(b) is concerned with disease claims rather than injury claims.
12. With the exception of mesothelioma claims, success fees in personal injury (and Fatal Accidents Act 1976) claims against an employer cannot be recovered between the parties where the conditional fee agreement ("CFA") was entered into after 31 March 2013. Mr James informed me that notwithstanding this, the point remains of importance to the Respondent as there are still a significant number of employers' liability claims where the CFA was entered into before 1 April 2013.

The Decisions of Master O'Hare and Deputy Judge James

13. In Woof, Master O'Hare said:

"I have to decide whether the fixed success fee regime applies to claims brought by members of the armed forces and I think it plainly does. I think there is a 'contract of service' although I am using those words in a way which is wider than the way in which they [are] used in the 1969 Act."

He continued:

"I think the common sense of the fixed success fee regime is that it should apply to armed forces as it applies to others."

14. In Broni Master O'Hare applied the same reasoning as he did in Woof. He said:

"In this case it is easy to describe the Claimant as an employee and the Defendant as the agents of his employer, Her Majesty, even though there is no contract of service in the strict sense but, nevertheless, there is a contract of service."

He added:

"I think this is an employers' liability case and employers' liability cases should apply. The presence or absence of contractual rights are not determinative in this or other employers' liability cases and claims can be made against the employer by way of tort as well as by contract."

15. In Barbour, Deputy Judge James decided that "Armed Forces personnel should be dealt with as employees", noting that Master O'Hare in Woof had reached the same conclusion.

The Parties' Submissions

16. The submission made by Mr Marven can be simply stated. A serving member of the armed forces does not work under a "contract of service". Accordingly such a person is not an employee for the purposes of the 1969 Act or consequently for the purposes CPR Part 45 Section IV.
17. Mr Marven submits that the law is clear that a serving member of the armed forces is not an employee under a "contract of service". In support of this submission he relies on the leading authority of Quinn v Ministry of Defence [1998] PIQR 387 at 396 where Lord Justice Swinton Thomas stated:

"For my part, I would have no doubt at all that when Mr Quinn enlisted in the Royal Navy pursuant to the King's Regulations neither he nor the Crown had any intention to create legal relations. Further, as a matter of public policy, following the decisions to which I have referred there is binding authority that there is no such contract. In relation to members of the Armed Forces, as with Police Officers, I can see no reason to find that those long-standing public policy considerations should be changed."

18. Mr Marven submits that in circumstances where CPR Part 45 Section IV defines "employee" by reference to the 1969 Act, there is no proper basis for construing the term "employee" for the purposes of Section IV any more broadly. None of the Appellants worked under a contract of service.
19. Mr James accepts serving members of the armed forces do not work under a contract of service (at least on the present state of the law, see O'Brien v Ministry of Justice [2013] 2 All ER 1, per Lord Hope and Lady Hale at para 31). However in response to the Appellants' argument he makes four submissions. First, he submits that acceptance of the Appellants' argument would create serious practical difficulties at detailed assessment. In every employers' liability case (other than where the parties were agreed) the court would have to investigate whether at the time the cause of action arose the Claimant had entered into, or was working under, a contract of service. By reference to the authorities Mr James observed that this is not a straight-forward enquiry. In Carmichael v National Power plc [1999] 1 WLR 2042 the House of Lords emphasised that in addition to considering the terms of the relevant documents it was necessary to look at the surrounding circumstances and the parties' true intentions, including how the contract actually worked in practice. Further Mr James observes that where the question of whether there was a contract of service or a contract for services would not have been an issue in the main proceedings, the detailed assessment before the Costs Judge is likely to involve the presentation of written, maybe oral, evidence, and the costs to the parties will be greatly increased.
20. Second, the Appellants' arguments are inconsistent with the purposes of CPR 45 Parts IV and V, which is to create certainty (see Patterson v Ministry of Defence [2013] 2 Costs LR 197 at para 20(1), per Males J). On the contrary they would, Mr James submits, create great uncertainty. This point follows from the first submission as to the practical difficulty that would be created if the Appellants' argument is accepted.
21. Third, the Appellants' argument would, Mr James submits, create a bewildering number of cases that are outside the fixed recoverable success fee regime for no evident purpose and on no principled basis. He lists eleven classes of employers' liability claims which would typically be outside the fixed success fee regime which, in addition to all servicemen in all the Armed Services, and police officers, would include, for example civil servants, doctors in private practice, and members of the judiciary. Mr James submits that carving out such exceptions to the fixed success fee regime in employers' liability type cases brought by these categories of workers would be wholly anomalous and unprincipled.
22. Fourth, Mr James submits that the decision in Quinn v MOD is not in point. While section 2 of the Crown Proceedings Act 1947 was engaged, he points to the fact that the Ministry of Defence was able to rely on the immunity given by section 10 of that Act. He accepts that the Appellants submitted in the alternative that there was a contract of employment between him and the Crown and that he was entitled to sue for breach of the contract between an employer and employee for, inter alia, failure to provide a safe system of work. However Mr James contends that the context in which that argument failed was wholly different to the present case; and that the plaintiff did not argue that he was an "employee" within section 2 of the 1969 Act.
23. Mr James submits that the court should adopt a purposive approach to the construction of the words "contract of service" in s.2(1) of the 1969 Act so that the relationship between a serving member of the armed forces and the Respondent is treated as one of employer and employee and a contract of service exists for the purposes of Rule 45.20(1). In support of this submission Mr James relies on the decision in Kilby v Gawith that Rule 45.11 had to be construed purposively by reference to its ordinary meaning in the context of section II of Part 45 and of the CPR as a whole (see Sir Anthony Clarke MR at para 17). In order to create certainty Mr James suggests that one should look at the way the claimant puts his or her case. If the claimant alleges that the defendant owes the claimant common law or statutory duties of an employer then the claimant is an "employee" and the defendant is the "employer" for the purpose of CPR Rule 45.20(1). He says that this is the way that personal injury claims by servicemen injured on duty due to the alleged fault of the Respondent are invariably put, and responded to by the Respondent. In this regard Mr James relies on the decision of the Court of Appeal in Smith v MOD [2013] 1 All ER 778 (see also Munkman on Employer's Liability (2013), 16 ed at para 10.81).
24. The facts of Smith are well known. Four claims were brought against the Ministry of Defence following the deaths and injury of members of the armed forces on active service in Iraq. The claims were brought in negligence and under the right to life guaranteed by ECHR Article 2. In the action for negligence the Claimants alleged that the Ministry of Defence was in breach of its duty of care as an employer to provide safe equipment and technology. (The exemption from liability of the Crown in tort under section 2 of the Crown Proceedings Act 1947 by virtue of section 10 was abolished by section 1 of the Crown Proceedings (Armed Forces) Act 1987). Moses LJ (with whom Lord Neuberger MR and Rimer LJ agreed) stated at paragraph 38:

"It is beyond dispute, and the MOD did not purport to dispute, that it owed a duty of care at common law to members of the armed forces as their employer."

Moses LJ continued at paragraph 46:

"The duty of care owed by the MOD, as employer, to the members of the armed forces, as employees, does exist and has been recognised, without demur, by the courts. It includes a duty to provide safe systems of work and safe equipment, as I have demonstrated."

(See also para 55).

25. Mr James submits that in the present case section 2(1) of the 1947 Act was engaged. There is nothing unjust, he submits, about saying that where a claimant seeking damages for personal injury alleges that the defendant owes him the duties of an employer then, when this claim succeeds, the claimant is an "employee" and the defendant an "employer" for the purposes of costs under CPR Rule 45.20(1). Context, Mr James suggests, is all important. A person may, for example, be self-employed for tax purposes, but an employee to whom a duty of care is owed when safety at work is at issue (see Lane v Shire Roofing Company (Oxford) Ltd [1995] IRLR 493 at para 12).

Discussion

26. I see some force in Mr James' submission as to the practical difficulties at detailed assessment if the Appellants' argument is accepted (see para 19 above). However I do not consider that there is a proper basis for adopting the purposive approach for which he contends. There is in my view no good reason for giving the words "contract of service" in section 2(1) of the 1969 Act a construction broader than their usual meaning. In Smith v MOD the court was not concerned with whether servicemen were employees in the true sense, that is persons operating under a contract of service. The Ministry of Defence owe a duty of care to servicemen whether they work under a contract of service or not, both at common law and under the Health & Safety at Work Act 1974 (see Moses LJ at para 38: "… Nor was it disputed that health and safety provisions contained in ss.2-4 and 6-7 of the Health & Safety Act 1974 and in regulations made under s.15 imposed statutory duties on the MOD". Persons "in the service of the Crown" are deemed to be employees for the purposes of Part 1 of the Act and its regulations, see Munkman at para 10.80).
27. I do not accept Mr James' submission that the decision in Quinn is not in point. The submission in that case on the Appellant's behalf that there was a contract of employment or a contract of service between the plaintiff and the Crown was rejected on the express basis that there is no contract between the Crown and members of the armed forces (see para 17 above).
28. In my view there is no ambiguity in CPR Rule 45.20(1)(a) and (3)(b). The Rule addresses itself to the question of what the term "employee" means. It is a person who falls within s.2(1) of the 1969 Act. There is in these circumstances no scope for giving a broad or purposive interpretation to Rule 45.20(1)(a) 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.

Conclusion

29. In my judgment for the reasons I have given the fixed success fee regime does not apply to these claims, and accordingly these appeals are allowed.
30. I direct that the issue of the assessment of the success fee be referred to Master Haworth for determination.