Case No: B3/2005/0698-0699-0488
Neutral Citation Number: [2006] EWCA Civ 31
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEENS BENCH DIVISION 
THE HON MR JUSTICE HODGE 
[2005] EWHC 204 (QB)
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Wednesday, 1st February 2006

Before :

LORD JUSTICE WALLER
LORD JUSTICE LATHAM
and
LORD JUSTICE DYSON
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Between :

	LITTLEFAIR, WILLIAMSON, & BEARDALL	Appellant	
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	VINAMUL	Respondent	

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(Transcript of the Handed Down Judgment of
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William Stevenson QC (instructed by Messrs Beachcroft Wansboroughs) for the Appellant
Gerard Martin QC & Guy Vickers for the 1st & 2nd Respondents (instructed by Messrs Rowley Dickinson) & Richard Hermer for the 3rd Respondent instructed by Messrs Leigh Day & Co)

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Judgment

Lord Justice Latham : 
1.	The three respondents are amongst a group of former employees of the appellants who have claimed damages from the appellants for personal injuries and consequential loss arising out of their alleged exposure to chemical agents, and hand-transmitted industrial vibration from machines used in their employment, known as Daleks.  Their claims were at the relevant time being handled by a senior legal executive with the firm of Rowley Dickinson, Mr Snowden, who had 35 years experience of personal injury work.  The appellants’ defence was being handled at the relevant time by an associate solicitor with Beachcroft Wansbroughs, Miss Wood.  The issue which we have to determine on this appeal is whether or not the respondents’ claims for damages arising from the alleged exposure to chemicals were compromised in the summer of 2004.  This issue was tried as a preliminary issue before Hodge J who, on the 18th February 2005 concluded that there had been no compromise, so that the claims in this respect could proceed.
2.	The evidence before the judge consisted of the pleadings, statements from both Mr Snowden and Miss Wood, some of the contemporaneous documents and a joint statement prepared for the hearing by Mr Snowden and Miss Wood setting out in tabular form their comments on those documents and on the history of the events at the relevant time.  I say some of the contemporaneous documents because privilege was not waived by the respondents in relation to all of those documents.  The heading to the joint statement was in the following terms:
“All of the comments and observations below must be read in the context of an unusually agreeable and sensible working relationship between the solicitors for the parties considered necessary due to the complexity of the Shaw case and those others subject to this application.  It is conceded that it would have been preferable for there to have been detailed telephone attendance of all conversations, but this was not always possible or realistic.”
3.	In an introductory paragraph to his judgment, the judge said:
“This hearing has only become necessary because of the lack of precision and exactness in the dealings between the parties’ solicitors.  Miss Wood at no point after the alleged agreement had been reached confirmed in terms the existence of a compromise.  It is good practice for a solicitor to do so.  Mr Snowden never made it clear he was not compromising his clients claims and the written records clearly raise an arguable case that he had.  That lack of clarity over so important an issue was also not good practice.”
4.	Whatever may or may not be good practice it is undoubtedly the case that the material before this court has to be considered in the light of the fact that Mr Snowden and Miss Wood clearly had the good relationship which they asserted in the joint statement.  It is unfortunate that the result has been a dispute about the legal effect of their dealings at the relevant time which has prolonged and rendered more expensive what were in any event difficult claims about matters which occurred a long time ago.  The respondent Beardall was employed by the appellant from 1980 until 1992; the respondent Littlefair was employed by the appellants until June 1996; and the respondent Williamson was employed by the appellants between 1980 and 1995.  As far as this appeal is concerned, we are in the same position as the judge, who heard no oral evidence.  He was in no better position than us to evaluate the evidence.  And he was not exercising any discretion.  In these circumstances our task is to determine whether or not on the material before both him and us, the judge was, to use the word inCPR Part 52.11.3(a) “wrong”.
5.	The reference to “the Shaw case” in the preamble to the joint statement is to the fact that the claims by employees of the appellants included a claim by Christopher Shaw which commenced with the issue of a writ in February 1998.  He, like the respondents, claimed damages for exposure to chemicals and to damage caused by the vibration.  His claim was also handled by Mr Snowden; and the appellants’ defence against the claimants was handled by Miss Wood.  Very substantial sums of money had been expended in obtaining expert evidence, and on legal fees.  The judge recorded that over £250,000 had been incurred by each side.  It was treated by the two solicitors’ firms as the lead case.  All the respondents’ claims had been stayed in 2002 and 2003 to await its outcome.  Mr Shaw’s case was settled in May 2004.  The judge set out in his judgment the circumstances of the settlement in the following terms:
“11.	On the 6th May 2004 both Mr Snowden and Miss Wood had attended a round table meeting in Manchester to plan the future progress of the Shaw case and to attempt a negotiated settlement.  Gerard Martin QC for the Claimants and William Stevenson QC for the Defendant with their junior counsel were also there and took the lead in the settlement negotiations.  Mr Stevenson on behalf of the Defendant made it clear that the Defendant was not prepared to pay anything for the chemical exposure claim.  That stance has been continued at all time in relation to these actions.  Mr Martin was clearly not accepting that the Shaw negotiations were so limited.  All the claimants in these actions wish to pursue the chemical claims.  I do not need to make any decision on the basis for the settlement with Mr Shaw.
12.	   The 6th May meeting concluded with an offer for £100,000 in full and final settlement of all Mr Shaw’s claims including costs.  The offer was made on the basis that it would expire at 10 a.m. on the following morning of the 7th May.  Mr Shaw was present in the building where these discussions took place and was kept informed of the negotiations as they progressed.
The following morning Mr Snowden rang Misss Wood and the offer was accepted.  Her attendance note reads:
“9.07 a.m. he has the Claimant with him, he has decided to accept the offer subject to the confidentiality agreement being agreed.  A cheque made payable to him.  Promised to walk it over today.”   
6.	She added at the end of the attendance note “maybe discuss the other cases over a lunch in due course.  I gave no impression that these will be compromised.”
7.	On the 12th May 2004 Miss Wood wrote a letter to Mr Snowden in relation of each of the respondents in the following terms:
“Our clients have instructed us to offer that they bear their own costs incurred to date if your client discontinues his action against Vinamul.  This offer will only remain open for 21 days.
We reserve the right to draw this letter to the attention of the Court as to costs.”
8.	As to this letter, it is said that even although a copy of the one sent to Mr Snowden in the name of the respondent Williamson is on Miss Woods’ file, the original was not received by Mr Snowden.  In view of the fact that Mr Snowden undoubtedly, as will become apparent, took instructions from Mr Williamson based upon the correspondence started by this letter, that issue is of no relevance.  It is, however, to be noted that no mention is made in the letter of any distinction between the claim for damages in relation to exposure to chemicals and damage caused by vibration.  However in the joint statement Mr Snowden concedes that such discussions as were taking place at the time essentially related to the disposal of the “chemical issue”.
9.	The next recorded event is on the 18th May 2004 when there was a telephone call between Mr Snowden and Miss Wood which was in part to do with the settlement of Mr Shaw’s claim.  Mr Snowden’s attendance note reads as follows:
“Engaged today on the telephone speaking to Liz Wood.  She has been looking at our proposed Tomlin order and is not happy that the precise terms of the settlement be embodied in the Order as this would then be a public document and she would not want it to get out as to how the case was settled.  As it stands it appears as if Mr Shaw has been partly compensated for his exposure to chemicals.  This is not the basis on which the settlement was reached.  She would much prefer the precise terms of the settlement to be included in a letter attached to the Order.  She will write to me with the wording of the proposed letter and I will consider the matter further.”
10.	Miss Wood’s note is in slightly different form:
“Proposed revised Consent Order as per manuscript draft.  I will send over.
Very worried that in the public domain as a document that can used (sic) against both of us.  Both agreed that Counsel could have done better on the day than this.
Re others.  He wants to meet.  Yes fine but I have no evidence of injury.  Invited him to discontinue parts of the claim i.e. chemicals.  Said that I would need to throw our Silk plus a load of effort at them if not.  Said that our concession of risk was costs i.e. Williamson was loads.” 
11.	In the joint statement, Mr Snowden conceded that “there may well have been discussion regarding other cases as per EMW’s note.”
12.	The judge concluded at paragraph 40 of his judgment:
“The letters of the 12th May 2004 from Beachcroft Wansbroughs to Rowley Dickinson as moderated by the attendance note of the 18th May showed that there was an offer on the table from the Defendant to settle the chemical exposure claims on the basis that each side bore its own costs.”
13.	In my view the judge was right to conclude that that was the effect of the letter and the telephone call against the background of the settlement negotiations in the Shaw case.  And it is accepted by both sides that this offer was at the time of the telephone call open for 21 days only as stated in the letter.
14.	There is a note of a further telephone call on the 27th May 2004, on this occasion between Mr Snowden’s assistant, Vicki Hopton and Miss Wood.  Miss Wood’s note reads:
“Please note that I will apply for the stay to be lifted/retract limitation agreement etc, etc,  if not heard with discontinuance.   I will, for once, treat the 21 days as a deadline.”
15.	In the joint statement Miss Wood confirms that she intended to impose a strict deadline at that stage in order to put pressure on the respondents.  But she altered her position slightly in a telephone conversation of the 1st June 2004 with Mr Snowden.  Her note of that conversation with which Mr Snowden agrees, is as follows:
“Instructions yet? No.  Will probably be two weeks.  I said No.  21 days is up tomorrow.  No reason why the Union/Clts have not decided yet.  Will extend by one week.  Without prej he advised that he anticipated proceeding on vibration alone.  I said that I needed specific discontinuance on the chemicals otherwise I would give him notice on the Limitation point and ask him to issue straight away.  Liability evidence becomes harder to obtain as time goes on.
Without prej advise that Jayson’s report would lead me to a nuisance payment for vibration on Speakman.  Nothing to indicate risk on the others – some did not even work with daleks.  He considered that Rae didn’t.  He has done a schedule showing which have/have not been exposed.  Will review.”
16.	At some time, it is not clear when, but before the 7th June 2004, the respondents’ position was fundamentally altered by the fact that their union, which had been funding their claims and the claims of the other employees decided that they would no longer fund the chemical exposure case.  On the 7th June 2004, there was the critical telephone conversation between Mr Snowden and Miss Wood which is the foundation of the appellants’ case that the respondents’ claims were compromised.  Miss Wood’s note of that telephone conversation is as follows:
“Rang with an update.  All the Claimants bar Sanders, Rea and Healy have reluctantly discontinued their chem poisoning claims.  Letters on their way.  Don’t know why others have not got back to him yet.  Maybe on holiday.  Union won’t fund them anyway.
Can we talk about vibration?  Yes when I have reviewed the medical evidence and worked out what we have got.”
17.	Mr Snowden’s note reads as follows:
“Engaged today on the telephone speaking to Liz Wood of Beachcroft Wansbroughs. informing her reluctantly that my client’s Union had advised they were no longer able to fund the chemical exposure aspect of this case.  I had taken instructions from the client who had also advised me that he regrettably had to accept the situation and we would now, therefore, concentrate our efforts upon the vibration exposure aspect of the case.  I will write to Miss Wood shortly confirming our position where after perhaps we can arrange a discussion about this case generally and see whether or not we can persuade the Defendants to put forward and offer.”
18.	This note was included by Mr Snowden in the file of each of the employees on whose behalf claims had been made, including the present respondents.  Mr Snowden, in the joint statement, accepted that instructions had been received from all the claimants bar the three identified in Miss Wood’s note but was not prepared to accept that he had, in this conversation, effectively settled the chemical exposure claims.  As he puts it in the joint statement; “it was an exchange of views with EMW who requested TS to confirm the position in writing when instructions had been received from all claimants”.
19.	Miss Wood, on the other hand, was clear that Mr Snowden had, in that conversation, agreed to the offer to settle the chemical exposure claims on what was described as a “drop hands” basis.    She accepted that she may have asked for written confirmation of the telephone conversation although that does not appear in her note.
20.	Despite the fact that Mr Snowden clearly had instructions from his clients (apart from the three who were named) as he stated in the telephone conversation, and as he confirmed in the joint statement, he wrote a letter to the respondent Beardall on the 8th June 2004 in the following terms:
“I refer to my letter to you of the 4th June and to the subsequent telephone conversation which I had with you to confirm that I have now heard from your Union who have, as I suspected, advised me that they are no longer prepared to continue funding the chemical exposure aspect of your claim.
…
In relation to the other outstanding claims, the Solicitors for the Defendant have made it abundantly clear that they are not prepared to make any admission as to liability in relation to chemical exposure nor would they in any circumstances be prepared to put forward any settlement proposals in relation to that issue. 
Your Union reasonably take the view that due to their limited financial resources, they could not afford to take the risk in incurring similar costs to those incurred in Mr Shaw’s case and with reluctance therefore they have taken the aforementioned decision.
In many of the remaining cases, however, it is possible that the claims can still continue on the basis that there has been exposure to excessive vibration which has led to health problems and the Solicitors for Vinamul have indicated that where there is such evidence and where it can be established that medical problems have arisen as a result of such exposure, they may be prepared to consider settlement of the claim.  Any such settlement would of course only be on the basis of compensation for that injury and not any additional injuries caused by exposure to chemical fumes.
I am now, therefore, looking at your case closely with a view to establishing whether a claim for damages can be maintained and will do my utmost to bring the claim to conclusion.  
I would point out that if you do not accept your Union’s decision regarding the further funding of your case you are quite at liberty to instruct alternative Solicitors to pursue the matter on your behalf.”
21.	The letter went on explain to Mr Beardall the difficulties that he would face if he decided to continue to pursue the claim without Union support as to costs.  Mr Snowden then went on:
“Having spoken to you, however, I gather that your initial view is that I should be allowed to continue this matter on your behalf in the hope that I can reach a satisfactory settlement for you.  Unless I hear from you to the contrary, I will assume this to be the position.”
22.	On the 10th June 2004, a number of documents came into existence.  The most important one, was a letter of that date written by Mr Snowden to Miss Wood headed: “Re: Messrs. G. Littlefair. A. Williamson. D. Speakman et al –v- Vinamul Limited”.
23.	It continued:
“We refer to the recent telephone conversation between our Mr Snowden and your Miss Wood and confirm that having recently spoken to our above named clients and their Trade Union we are no longer instructed to pursue the chemical exposure element of these cases against your clients on a “drop hands” basis in relation to the costs of the chemical issue.  
We will however, be pursuing vigorously those cases where we are able to establish exposure to excessive levels of vibration and where we are also able to establish causation.”
24.	There was also a telephone conversation that day between Mr Snowden and Miss Wood in relation to the respondent Beardall.  It is clear that Mr Snowden  was anxious to resolve this respondent’s claim quickly as Mrs Beardall was seriously ill.  His note of the telephone conversation was as follows:
“Engaged today on the telephone speaking to Liz Wood and informing her of my conversation with Mr Beardall yesterday.  She is already aware that Mrs Beardall has previously suffered from this condition and expressed her sympathies.  I told her that of all the remaining cases Mr Beardall’s was probably the one which was most easily resolved.  There were differences of opinion between Professor Jayson and Professor Kestor, but Professor Jayson had said that there was no evidence of connective tissue disease and in this respect Mr Beardall’s claim was perhaps stronger than that of Mr Shaw.  She undertook to look at the case over the weekend and to take instructions.  Hopefully she will be in a position to put forward some proposals early next week.”
25.	The telephone conversation was then followed up by a letter of that same date which was faxed to Miss Wood in the following terms:
“We refer to this morning’s telephone conversation between your Miss Wood and our Mr Snowden and write to confirm that our client yesterday contacted us to advise that his wife is seriously ill and for that reason we would request that you give this matter your early attention with a view to it being disposed of.
We would refer to your letter to us of the 12th May and can confirm that Mr Beardall has instructed us that he is prepared to waive any claim for damages on a drop hands basis so far as costs are concerned against your clients in connection with health problems caused by exposure to chemicals.
In relation to vibration, however, we have firm instructions to proceed particularly having regard to the fact that Mr Beardall appears to have been exposed to significant levels of vibration during his employment with Vinamul.”
26.	Again on the same day Mr Snowden wrote a letter to Miss Wood in relation to an appointment which one of the claimants, Mr Speakman had with a Doctor instructed by the appellants on the next day.  The letter concluded:
“Given the content of the telephone conversation between our Mr Snowden and your Miss Wood the other day, we assume that the appointment said to have been fixed for the 11th June is now cancelled but perhaps you will be good enough to confirm.”
27.	On the 23rd June 2004, Miss Wood replied to the letter of the 10th June 2004 in relation to the respondent Beardall in the following terms:
“Thank you for your letter dated 10th June 2004.  We are awaiting instructions which we hope to obtain in the next few days.”
28.	She then followed up that letter with a letter of the 13th July 2004 in which, again in relation to the respondent Beardall she said:
“We are instructed by our client to put forward a Part 36 offer of £1,000 in full and final settlement of your clients claim.  The offer relates to the whole of the claim and is inclusive of interest.  
In addition to the sum set out above our client will also pay your client’s reasonable costs to be subject to detailed assessment if not agreed.
This offer remains open for acceptance for 21 days from the date this offer is received i.e. until the 5 August 2004.  If not accepted by that date, this offer can only be accepted if costs are agreed or the court gives permission.”
29.	Mr Snowden informed Miss Wood that he would take instructions.  But before he had done so, events overtook him in the sense that the respondents’ union amalgamated with Amicus; and the merged union informed Mr Snowden that it would be prepared to continue funding the respondents’ claims in respect of chemical exposure.  As a result he wrote a letter of the 15th July 2004 to Miss Wood saying:
“We refer to our previous correspondence with you regarding the outstanding Vinamul claims and to our letter of 10th June 2004 in which we indicated that our Clients would not be proceeding with the chemical exposure element of their claims following the decision of our Union Clients to withdraw funding there from.
We write to advise, however, that following a merger between the Unions Amicus, MSF and AEEU, the funding position has now changed and our Union Clients have informed us that these cases will continue to enjoy Union funding.
We appreciate that the reversal of their previous decision may result in some inconvenience to all concerned but you will appreciate that our primary duty is to our respect(sic) Clients we now, therefore, propose to carry out further detailed investigations of each of the cases before contacting you again.”
30.	Miss Wood replied on the 16th July 2004 asserting that there had been a concluded agreement on the chemical exposure element of the claim for which consideration had been given in the form of a “drop-hands” agreement as to costs.  In her note of a telephone conversation on the 19th July 2004, Miss Wood recorded that Mr Snowden’s justification for his faxed letter of the 15th July 2004 was that he did not believe that his clients could sign away their rights to pursue a claim.  Mr Snowden’s note of that telephone call is revealing.  It concluded:
“My response was that although we had definitely reached some kind of agreement with them over the issue, my preliminary view was that it was not possible for a Claimant to sign away his rights in this way and regrettable as it may be we had no alternative but to take out the application.  She will be instructing Counsel and the Application will be opposed.”
31.	The judge gave eight reasons for coming to the conclusion that no compromise had been reached.  First, he considered that it was particularly significant that neither of the solicitors’ file notes made on the 7th June recorded the fact of an agreement being reached. Second, there was no formal exchange of letters.  Although he accepted that here had been no such exchange in Mr Shaw’s case either, he considered that the file notes, coupled with the handing over of the cheque meant that there could be no question about there having been an agreement in that case.  Third there was a clear time limit which expired shortly after the 7th June.  Fourth, the phrase “rang with an update” coupled with the contents of the letter of the 8th June 2004 to the respondent Beardall in his view made it clear that Mr Snowden had not intended to express any concluded position as far as the respondents were concerned and in any event the conversation on the 7th June 2004 made it plain that he had no instructions from three of the would be claimants.  Fifth, the letter of the 8th June 2004 supported the view Mr Snowden had given his clients time to reflect on the proposed abandonment of the chemical issue and instruct the solicitors.   Sixth, the telephone conversation of the 7th June 2004 clearly envisaged that there would be later letters. Seventh, the general letter of the 10th June 2004 made no reference to an agreement reached on the 7th June.  Lastly, the file notes do not make any reference to the offer of the 12th May 2004.
32.	His conclusion was that the offer of the 12th May 2004 expired on the 9th June 2004.  It could no longer be accepted.  The letters of the 10th June 2004 were accordingly counter-offers made on behalf of the respondents and the other claimants.  Those counter-offers, as he described them, were not accepted by the appellants at any stage.  And the letter of the 13th July 2004 was clearly intended by Mrs Wood to dispose of the whole claim of the respondent Beardall, in other words including the claim for chemical exposure which could only be explained on the basis that Miss Wood could not have understood that there had been a compromise of that part of the claim on the 7th or 10th June 2004.
33.	Leaving aside, for the moment, the niceties of any argument based upon the proposition that the appellants’ offer had expired on the 9th June 2004 and could not be revived, nothing to my mind could be clearer from the terms of the general letter of the 10th June 2004 that Mr Snowden, having obtained express instructions from all his clients was affirming, on their behalf, that they were not proceeding with their claims in relation to chemical exposure on a “drop hands” basis, in other words on the basis that each side should bear its own costs in relation to that issue.  That is amply confirmed by the contents of the telephone call that day, and the faxed letter in relation to the respondent Beardall’s claim.  It is also wholly consistent with the letter in relation to the claimant Speakman.  The subsequent correspondence dealing with the respondent Beardall’s claim is somewhat confused.  But the letter of the 23rd June 2004 in its context can only refer to the vibration element of the claim, by reason of the reference to the two professors who were the experts advising the parties in relation to vibration only.  The offer of the 13th July 2004, again in its context, can therefore only have referred to the vibration claim, although ineptly worded.  Miss Wood’s reaction to the letter from Mr Snowden of the 15th July 2004 confirms that; and in my view so does Mr Snowden’s own note of the telephone call on the 19th July 2004.  
34.	I am, however, quite satisfied that it is unnecessary to resolve the question of whether or not the letters of the 10th June 2004 constituted acceptance of the appellants’ original offer or were counter offers or, more correctly new offers.   The notes of the telephone conversation of the 7th June 2004 clearly record a concluded compromise of the chemical exposure claims apart from the claims of Sanders, Rea and Healy.  And no one ever suggested that compromise of the respondents’ claims was dependent in any way on acceptance by these other claimants. Mr Snowden’s note makes it plain that he had obtained express instructions from each of the clients apart from those three; and the claims on behalf of the respondents would accordingly only be proceeding in relation to the allegations relating to vibration.  Mr Snowden records that he would be writing to confirm the position.  There is no suggestion that receipt of such a letter was necessary to complete acceptance of the appellants’ offer.  And the letter, when sent, did not purport in itself to be of contractual significance.  It confirmed that which had been said in “the recent telephone conversation”.
35.	There is no doubt that Mr Snowden and Miss Wood did not record events with the detail and accuracy which is desirable in negotiations such as these.  That is explained, although not excused, by the relationship which was referred to in the joint statement.  What is clear is that by the 7th June 2004 Mr Snowden had received the appropriate instructions from the respondents to withdraw their claims for chemical exposure.  The letter that he wrote to the respondent Beardall the next day, the 8th June 2004 suggests to me that although he had got those clear instructions and had expressly told Miss Wood that he had such instructions, he was concerned that he had not advised his client of the alternative course which was to continue without union funding.  Hence the terms of the letter which spelt out in no uncertain way the possible consequences of taking that course.  I suspect that he was confident of the answer he might get; and he was right.
36.	For those reasons I do not consider that the matters which the judge relied upon in concluding that there was no agreement on the 7th June 2004 cast doubt on what the two notes of the telephone conversation seem to me to spell out clearly, namely that these respondents, in particular, were not proceeding with their chemical exposure claims, and that could only be in the context of the offer of the 12th May 2004, as moderated by the conversation of the 18th May 2004.  I would accordingly allow the appeal and grant a declaration that the claims made by the respondents against the appellant for damages for personal injury suffered as a consequences of exposure to chemicals in the course of their employment by the appellant had been validly compromised by an agreement that they should discontinue their actions in so far as they relate to such exposure on the basis that they and the defendant should each pay their own costs on that issue.
Lord Justice Dyson:
37.	  I agree.
Lord Justice Waller:
38.	I also agree.