Before : |
Advocate Matthew John Thompson, Master of the Royal Court. |
Between |
Zac (A Minor) through his Guardian ad Litem |
Plaintiff |
And |
The Estate of A (Deceased) |
Defendant |
Advocate S. Thomas for the first Plaintiff.
Advocate L. A. Ingram for the Defendant.
CONTENTS
|
|
Paras |
1. |
Introduction |
1 |
2. |
Background |
2-11 |
3. |
The applications |
12-20 |
4. |
The evidence of Mr Rosson/Advocate Blomfield |
21-45 |
5. |
Dr Renée McCarter |
46 |
6. |
Dr Trevor Powell |
47-49 |
7. |
The evidence of Debbie Eaton |
50-52 |
8. |
Mr Chris Daykin |
53 |
9. |
Costs |
54-55 |
judgment
the master:
1. This judgment contains my written reasons in respect of an application by the plaintiff to adduce additional expert and factual evidence on the issue of investment charges and to deal with various objections by the defendant to other factual and expert evidence the plaintiff wished to adduce.
2. The general background to the present proceedings is set out in a previous judgment I issued in this matter reported at Zac (A Minor) v The Estate of A (Deceased) [2018] JRC 088A ("the 2018 judgment") at paragraphs 2 to 15 which I adopt for the purposes of this judgment.
3. In a further judgment dated 28th May 2020 reported at Zac (A Minor) v The Estate of A (Deceased) [2020] JRC 096 ("the 2020 judgment"), I summarised the procedural history since the 2018 judgment.
4. The 2020 judgment related to an application to vary directions as a result of the plaintiff suffering a seizure at the end of 2019 which required investigation and led to a detailed timetable being set by an Act of Court dated 28th May 2020.
5. Paragraphs 8 to 11 of that Act of Court state as follows:-
"8. the Plaintiff shall provide a schedule of loss by 5:00 p.m. Friday, 9th October, 2020 together with any expert evidence from an independent financial adviser and any actuary the Plaintiff wishes to rely on;
9. the Plaintiff's schedule of loss must identify what damages are sought as a lump sum and what amounts are sought by way of a periodical payment order;
10. the Defendant shall provide its counter-schedule of loss by 5:00 p.m. Friday, 30th October, 2020 together with any expert evidence from an actuary the Defendant wishes to rely on should actuarial evidence be adduced by the Plaintiff;
11. the Defendant's counter-schedule of loss must also identify the extent of its agreement or disagreement with any lump sum or periodical payment orders sought by the Plaintiff..."
6. These paragraphs are pertinent to the application now brought before me by the plaintiff.
7. In the 2020 judgment paragraphs 37 to 43 contained the following observations about the schedules of loss that were required by paragraphs 8-11 of the said Act of court as follows: -
"Schedules of loss
37. In relation to schedules of loss, the plaintiff has now indicated that he wishes to seek a periodic payment order. I therefore consider that the schedule of loss to be produced by the plaintiff must identify what payments are sought by way of a lump sum and what payments are sought by way of periodic payment. During the hearing, the question of the plaintiff seeking an order for periodic payments led to argument about how the trial court should determine the suitability of whether or not a periodic payment order was required. Advocate Ingram contended that in England the approach was to address matters in two stages, with the judge determining what sums would be awarded as future loss on an annual basis and what multiplicand was applicable and then leaving it to the parties to determine whether there was any agreement as to which losses were suitable for a periodical payment order and which were to form part of a lump sum. If this could not be resolved, which I was told was unlikely, then the parties would return to court. He cited Tameside & Glossop Acute Services NHS Trust v Thompstone & Ors [2008] 1 WLR 2207 as confirming this approach.
38. In my judgment there are three issues that arise. The first is what damages are payable. The second is whether damages awarded are payable by way of a lump sum or should form part of a periodical payments order. The third is, if a periodical payment order is awarded and provision needs to be made for inflation, an issue may arise as to whether or not the retail prices index or some other index is to be used.
39. In my judgment, these issues should as far as possible be determined at a single trial and should not be leftover (unless the trial judge determines it is appropriate to do so) until certain findings of fact have been made. The trial court should therefore have before it all relevant evidence that can realistically be produced to determine all issues in the case. An approach that leads to more than one hearing should generally be avoided and does not lead to efficiency.
40. In relation to schedules of loss, I have therefore concluded that the plaintiff must set out what damages are sought as a lump sum and what damages should be provided for by periodical payment. This is to occur at the same time as and as part of filing his schedule of loss.
41. When filing his schedule of loss the plaintiff must also file any expert evidence the plaintiff wishes to rely on to justify the schedule of loss. Whether the plaintiff does so is a matter for the plaintiff and his advisers. That may be from an independent financial adviser or an accountant. To the extent that the plaintiff wishes to argue for a different inflation index than RPI, this should also be made clear. If the plaintiff does wish to pursue such an argument, then appropriate actuarial expert evidence should be filed. Permission for such evidence is given accordingly.
42. In response, the defendant should file a counter-schedule, but it is not necessary for the reasons set out in Tameside at paragraphs 111 and 112 for evidence to be filed in from an expert IFA. Rather the defendant should simply make observations in its own counter-schedule of loss if it wishes to do so on any split between a lump sum and a periodic payment. The position is however different in respect of arguments about applying a different interest rate where I consider the defendant, if such a point is raised by the plaintiff, is entitled to file actuarial evidence in response if it wishes to do so.
43. In this case therefore there is a complexity to what is required because the plaintiff needs to be clear in his schedule of loss about what damages are sought as a lump sum and what is asked for by way of a periodical payment with the expert evidence I have permitted. The defendant is required to file a schedule of loss in response and permitted to adduce expert actuarial evidence should an indexation argument arise. This is a development of the approach taken last September because a periodic payment is now asked for. It therefore affects the overall timetable required to prepare this case for a trial."
8. On 22nd July 2020 the timetable for directions was varied by consent including the time limit for provision of a schedule of loss and evidence from an independent financial adviser to 5:00 p.m. Friday, 30th October 2020, with the defendant providing its counter-schedule of loss and any expert evidence by 5:00 p.m. Friday, 20th November 2020.
9. On 21st September 2020 directions were further varied again by consent because the plaintiff wished to adduce evidence from an economist instead of an actuary. The plaintiff was also required to identify the names of its independent financial adviser and economist by 5:00 p.m. Wednesday, 21st September 2020.
10. Following the 2020 judgment, new trial dates were also fixed to commence on 15th February 2021. These dates were a re-fixing of trial dates following my decision to adjourn the previous dates. The trial is listed for four weeks.
11. The plaintiff's application was initially to adduce evidence from Mr Paul Rosson, his named independent financial adviser, on the question of whether the plaintiff could claim investment charges for investing any lump sum ordered to be paid to the plaintiff as a head of loss and his estimate of those charges if permitted in principle.
12. Mr Rosson's report was served with the plaintiff's schedule of loss on 2nd November 2020. The claim for investment charges had not been referred to previously. The amount of such charges as set out in Mr Rosson's report as provided to the defendant were significant seven figure sums. The precise amount claimed was linked to the amount of any lump sum awarded; the higher the lump sum, rather than a periodical payment, the higher the figure claimed for management charges for such a lump sum.
13. In support of the claim for the cost of investing a lump sum as a head of loss, on 30th November 2020, Baker & Partners provided to Advocate Ingram the supplemental affidavit of Advocate Blomfield, the Court appointed delegate to the plaintiff, which affidavit was sworn on 26th November 2020. The defendant objected to this affidavit being admitted in evidence.
14. On 18th December 2020 the plaintiff's summons was amended seeking permission to adduce the affidavit of Advocate Blomfield in evidence. The amended summons also sought to rely on an updated report from Dr Renée McCarter the plaintiff's neuropsychologist. Her updated report was dated 11th December 2020.
15. The defendant also objected to the plaintiff relying on reports from a Dr Trevor Powell dated 1st September 2019 and an updated report dated 2nd June 2020.
16. In respect of expert evidence from Ms Debbie Eaton, the plaintiff's expert occupational therapist and brain injury case manager, the plaintiff, when filing what was intended to be Ms Eaton's final report in June 2020, in error did not file the final corrected version of reports approved by Ms Eaton. The question for the court was whether this updated corrected evidence should be admitted, and if so, whether any consequential orders should follow.
17. Finally, by the time of the hearing before me, the only other issue of concern was a reference in the plaintiff's schedule of loss to an expert report from an actuary. The issue between the parties was whether there was such a report in existence or not, and, if so, whether it should be produced.
18. I refer to each of these issues in turn. However, how it is convenient to deal with the applications in respect of Mr Rosson and Advocate Blomfield together because they both relate to the question of investment charges.
19. In respect of Mr Rosson the primary focus of his report was to assist the Court on how far damages should be awarded by way of a lump sum and how far a periodical payment award might be appropriate. In doing so the report at paragraphs 3.6 and 4.16 touched upon the relevance of investment charges and to the legal approaches taken in England and Jersey to recovery of such charges.
20. Section 12 of Mr Rosson's report then dealt with the claim for investment charges directly. At paragraphs 12.1 to 12.5 he summarised what he was asked to advise on in respect of this part of his report. Paragraph 12.5 states as follows: -
"12.5. This suggests that the investment charges could range from 0.25% - 1.80% dependent on the type of underlying investment. I am unable to provide advice in relation to a suitable portfolio as I am not authorised to provide advice to citizens in Jersey. In addition, I would need to discuss with the Plaintiff's representatives their objectives and attitude to risk before preparing a suitable recommendation."
21. His report then went on to set out the likely charges and therefore to calculate the amount of investment charges Mr Rosson thought were appropriate.
22. In relation to the supplemental affidavit of Advocate Blomfield, she firstly described the anticipated investment process she intended to follow and then set out her intended approach to investment management fees. This was based on her experience as a delegate based on her holding funds for several different delegation clients (see paragraph 3 of her affidavit).
23. At paragraph 18 of her affidavit she stated: -
"18 From my experience an average investment management fee of 1% would be reasonable to be offered on a proposal. However, also in my experience, there can be some negotiation on the management fee. I am often able to negotiate a reduction, particularly in a case like [Zac]'s where a large sum is involved. I would expect that I could negotiate with both managers to charge a flat fee of 0.75% per annum and if not, I could find a different experienced manager to provide a service for this fee."
24. Advocate Blomfield also explained that she was seeking the costs of independent advice on the choice of investment advisers and the monitoring of investment performance.
25. She also stated she would seek tax advice in order to invest the funds efficiently for UK tax purposes and attached an email from the Managing Director of Graham Thornton Limited, Channel Islands recommending that a Jersey investment holding company be set up as an investment vehicle. The total annual cost of this was £6,025. Applying the appropriate multipliers, the amount claimed to administer such a company was a lump sum in the region of £215,000.
26. The rationale for claiming the costs of investing a lump sum was that without provision for such costs the plaintiff would be under compensated as his delegate would have to meet these costs out of the damages awarded to the plaintiff.
27. In respect of this argument the first aspect to it was a legal issue concerning the effect of the Damages (Jersey) Law 2019 and whether or not that law allowed prevented a claim for investment charges. All parties agreed this question was a matter for submission at trial.
28. In relation to Section 12 of Mr Rosson's report, while the plaintiff's claim was not going beyond the figures of the fee of 0.75% from investment charges contained in Advocate Blomfield's affidavit, Advocate Thomas for the plaintiff argued that Mr Rosson's report was helpful to understand whether the level of fees generally charged in Jersey for investing a lump sum were reasonable or not. Mr Rosson's report was therefore background evidence to what was an appropriate fee for investment charges.
29. As to why the issue had not been raised earlier, Advocate Thomas accepted that the current legal team, including leading counsel in the UK had only considered the issue in September 2020 and not before. He accepted, by reference to previous submissions made to Scrutiny and the States in response to consultation on the Damages Law, that the issue could have been identified earlier but the reality was that it was not.
30. He argued that the issue could still fairly be dealt with at trial as Mr Rosson's report had been served at the beginning of November 2020 and so the defendant had nearly 3½ months to prepare its response which was sufficient time to deal with the issue.
31. What was at the heart of the plaintiff's claim was the affidavit of Advocate Blomfield which set out her practice. This evidence was not difficult to respond to because the issue was ultimately what was the appropriate level of investment charge if the investment charges were in principle recoverable as a head of loss.
32. Advocate Ingram stated that the defendant should have been put on notice much earlier, months if not years ago, in relation to this head of claim. The matter could have been raised at the hearing leading to the 2020 judgment. That judgment did not contemplate any claim for investment charges but was solely focused on a split between a lump sum and a periodical payment order. He emphasised that the issue was very much known about in the written materials supplied in relation to the Damages Law including by the plaintiff's former legal advisers and by the plaintiff's current English Solicitors albeit not by those with responsibility for the plaintiff's claim. He also asked, if the plaintiff's legal team knew about the issue in September 2020, why the defendant's team was not put on notice of the issue at that time.
33. In relation to the affidavit of Advocate Blomfield, this was usurping the functions of an expert and was also hearsay evidence. As a consequence, it meant that the defendant needed an IFA to file evidence in response.
34. Advocate Ingram also criticised the claim for tax advice. Advocate Blomfield was not an expert in tax nor was the two-page email from Grant Thornton exhibited to her affidavit expert evidence; this email went nowhere near setting out an explanation whether the cost of a company was justified to mitigate UK tax.
35. The conclusion I have reached in respect of this issue was that in respect of claims for investment charges, the affidavit of Advocate Blomfield should be admitted but not the relevant part of the affidavit of Mr Rosson. This was for the following reasons.
36. Firstly, the question of investment charges is a significant loss and it would be prejudicial to the plaintiff to exclude the same as long as the issue could be fairly determined at trial. In respect of the principle of whether such charges are recoverable there is already significant analysis as attached to the affidavit of Graham Dickinson, Partner of DWF Law filed on behalf of the defendant in opposition to the plaintiff's application. I therefore consider there is sufficient material readily available to enable both sides to present arguments to the Royal Court about whether or not investment charges may be recovered as a head of loss having regard to the Damages (Jersey) Law 2019.
37. In relation to the amount of investment charges claimed, however I excluded the report of Mr Rosson because as he notes at paragraph 12.5, he is not able to provide advice in Jersey and therefore cannot advise on suitable fees to invest a portfolio. In other words, he does not have the relevant experience to set out what is an appropriate fee for a Jersey delegate to be charged by investment managers that Advocate Blomfield would use. This part of his affidavit does not therefore meet the threshold to be admitted as expert evidence.
38. By contrast, while Advocate Blomfield is not giving evidence as an expert, she is used to acting as a delegate applying her professional skill and judgment; as an advocate she is also an officer of the Royal Court and so her duties as a delegate, which is a court appointment, are ultimately owed to the Court as well as to the plaintiff. As she deposes in her affidavit, she has acted as a professional delegate in a number of cases and therefore is able to give her own opinion on what is an appropriate fee. While generally factual witnesses should give evidence as to facts rather than opinion, this rule is not a hard and fast one and does not apply to professionals such as Advocate Blomfield giving evidence of a relevant opinion. In my judgment her evidence of appropriate investment fees charged to a delegate is within the category of relevant opinion evidence that may be adduced at trial.
39. I also concluded that it would not be difficult for the defendant to obtain evidence from investment managers operating in Jersey as to an appropriate fee given the range of lump sums suggested by the plaintiff. In my judgment there is also still sufficient time for the defendant's legal team to obtain evidence as to an appropriate fee if they disagreed with Advocate Blomfield's evidence. This is assuming that the Royal Court in principle accepts that such a fee is recoverable as a head of loss.
40. However, I reached a different conclusion in respect of the claim for tax advice. In relation to this head of loss what was required was evidence from a tax adviser. The email provided nowhere near the detailed advice required. Any such evidence would require an analysis of the likely charges to tax that might arise, the likely amount of such charges based on estimated returns for any lump sum, the sort of savings that might be achieved by using a company compared to the annual cost of such a company, also taking into account that over the lifetime of the plaintiff the intention is that ultimately the lump sum should all be spent. This is not a case of preserving a lump sum for the entire life of the plaintiff. For this issue an analysis might therefore be required of possible savings as any lump sum provided gradually reduced in size. Whether there are any double taxation treaty provisions in place that might apply would also have to be considered. None of this analysis, from the material before me, had been carried out.
41. I therefore concluded in respect of this issue it was simply too late to bring in this head of claim at this stage. For the issue to be determined it would require detailed evidence to be provided by the plaintiff to address the points I have referred to above; then the defendant would have to be permitted to file evidence in response. There is simply not enough time in this case for that to occur unless I postponed the trial dates again which I was not willing to do. I had already had to adjourn the trial dates in 2020 but that was due to an unforeseen event affecting the plaintiff referred to above where additional evidence was obviously required from both sides. By contrast this an issue that has been raised late in the day in a manner that is far from complete and which is not in its present form in a state to assist the court or to be subject to detailed scrutiny. There is also no explanation as to why this issue could not have been raised earlier. This evidence was therefore excluded.
42. I should also add for the sake of completeness that while I have allowed the claim for investment charges and monitoring charges other than in respect of setting up a company for tax reasons, the plaintiff's advisers should have notified the defendant's team in September 2020 that they intended to raise these claims. It is only because there is significant analysis already on the principle of recovering such charges and that, in my view, it is not complex to ascertain from Jersey based investment managers, the likely fees they would charge, that I allowed this head of claim to be brought.
43. As a consequence of permitting a claim for investment charges, I issued consequential directions setting a timetable for the defendant to provide evidence in response as well as directions in relation to amending the plaintiff's schedule of loss and the defendant's counter-schedule of loss.
44. In respect of this part of the application, this report was an up-date based additional disclosure from those supporting the plaintiff on a day to day basis. The discovery orders made previously required the plaintiff's advisers to keep the defendant's advisers updated of the ongoing progress of the plaintiff in relation to living independently and the support he required. As Dr McCarter concluded that the up-dated evidence did not "add any significant information to her previous reports" and her views remained the same in terms of the future needs of the plaintiff, I concluded on balance to have an up-dated report would assist the Jurats at trial. I did, however, give the defendant permission, if required, to file a supplemental report in response from Dr Connelly, the defendant's neuropsychologist, as well as allowing both experts an opportunity to provide a further joint statement before the commencement of trial, if necessary.
45. In respect of Dr Powell, what led to his report was paragraph 3 of the Act of Court of 19th September 2019 which granted the plaintiff permission to replace existing experts in the fields of neurology and clinical psychology as they were longer able to continue in their roles. Paragraph 3 required any reports from the replacement experts to be by way of up-date rather than replacement reports. The same order also permitted both parties to adduce evidence from both a neuropsychologist and a clinical psychologist.
46. The fundamental problem with Dr Powell's reports is that Dr Powell, as described on the face of his own reports, is a "consultant clinical neuropsychologist". His reports are also headed Neuropsychological Report for the court. In his curriculum vitae Dr Powell describes himself as a consultant clinical psychologist "who has worked for the NHS for the last 25 years in the filed of Neuropsychology and Adult Mental Health".
47. The conclusion I reached was that Dr Powell's report was not therefore a report from a clinical psychologist but was a further report from a neuropsychologist. As I had already issued directions for the plaintiff to call one neuropsychologist and those neuropsychologists had met and produced a joint statement, I was not prepared to allow the plaintiff to adduce evidence from a second neuropsychologist. A second report was not justified and would not assist the court. The court had before it the neuropsychology evidence from the two experts who had met and produced joint statements which was sufficient for a trial to take place.
48. In relation to this issue, I was satisfied that it arose out of an innocent error when the final versions of Ms Eaton's report was not sent to the defendant. However, in the report following the joint meeting between Ms Eaton and the defendant's expert, Fiona Johnson, the issue of the earlier draft versions having been served was identified with the report noting that final reports had now been shared between both experts.
49. The area of the difference raised by the final version of the report was what support the plaintiff might need if he had a family of his own. The joint statement of the experts noted the following "FJ has been provided with the correct reports and notes but does not agree with the commercial help considering that if this was to occur the help would be for a family".
50. In other words, Ms Eaton thought that if the plaintiff had a family, he would need additional professional help whereas the defendant's expert disagreed. I was satisfied that this was a matter that could be resolved at trial, albeit I gave permission to the defendant's expert to file a supplemental report on this discrete point alone and allowed both experts to decide if any further supplemental joint statement was required.
51. In respect of this issue, Advocate Thomas was clear that there was no actuarial report in existence. He therefore agreed that the plaintiff's schedule of loss should be amended to remove any reference to such a report. No such evidence could therefore be adduced at trial.
52. Finally, in respect of costs, although primarily the hearing was about giving directions to preserve the current trial dates, the plaintiff's application in respect of the main issue I had to decide relating to investment charges had been brought late in the day and the plaintiff had not been completely successful. The issue should have been raised earlier in the proceedings. Nor had the plaintiff prevailed in respect of the attempt to rely on the evidence of Dr Powell. Accordingly, in relation to the plaintiff I allowed the plaintiff to recover only 50% of its costs should it prevail at trial with the plaintiff otherwise bearing its own costs. This order best reflected the outcome of this application as far as the plaintiff was concerned.
53. In relation to the defendant, I ordered costs in the cause as the defendant had prevailed on some points but not on others and its concerns had otherwise been addressed by directions allowing for the filing of the supplemental reports, updated schedules of loss and further meetings of experts, if required.
Authorities
Zac (A Minor) v The Estate of A (Deceased) [2018] JRC 088A
Zac (A Minor) v The Estate of A (Deceased) [2020] JRC 096
Damages (Jersey) Law 2019.