Healy v Corporation of Lloyds
COURT OF APPEAL (CIVIL DIVISION)
 EWCA Civ 262, (Transcript: Smith Bernal)
HEARING-DATES: 24 FEBRUARY 2004
24 FEBRUARY 2004
Contracts - Damages - Breach of contract - Defendant admitting liability - Trial on quantum - Claimant alleging procedural irregularities in trial.
The Applicant in person; P Blakesley for the Respondent; Sophie Hoffman
PANEL: THE MASTER OF THE ROLLS (Lord Phillips of Worth Matravers), KENNEDY, NEUBERGER LJJ
JUDGMENTBY-1: LORD PHILLIPS, MR:
LORD PHILLIPS, MR:
 This is an appeal by the claimant, Miss Healy, against decisions made in the summer 2002 by His Honour Judge McGonigal sitting as a judge of the High Court in the Mercantile Court in Newcastle upon Tyne. The judge was assessing quantum in proceedings in which the respondents, Lloyd's, had admitted liability for failure to provide Miss Healy with the benefits of health insurance to which she was entitled as their employee. The judge awarded £ 148,418 on the basis that, until she was 55, she would have been able to continue earning 50% of her earnings when she was working for Lloyd's. It is Miss Healy's case that by the time damages came to be assessed her condition had deteriorated to such an extent that she was unable to continue to work at all. She contends that she should have been awarded damages and interest amounting to a total of approximately £ 220,000. Her attack on the judgment when she obtained permission to appeal was, however, procedural. It is important to identify the precise nature of the procedural shortcomings alleged by Miss Healy and to consider the extent to which she has obtained permission to appeal in respect of these.
THE PROCEDURAL HISTORY
 In the middle of 1986 Miss Healy started to work for Lloyd's of London as a secretary. In or about June 1994 she fell ill and was in receipt of sick pay up until January 1995. Thereafter she received no pay or benefits but remained in employment until 19 February 1996 when Lloyd's terminated her employment on the ground of her incapacity to work. On 27 February 1996 Lloyd's paid her the sum of £ 5,108, presumably by way of compensation for losing her job.
 Lloyd's maintain a Permanent Health Insurance Scheme ("PHI scheme") for the benefit of their employees. They did not provide the benefit of this scheme to Miss Healy. On 22 April 1999 she sued Lloyd's claiming that this constituted a breach of contract. On 10 April 2002 Lloyd's submitted to judgment on liability. This left damages to be assessed. The issue was the amount of benefits to which Miss Healy would have been entitled under the PHI scheme. This depended on the extent to which her illness had prevented, and would have continued to prevent, her from profitable employment.
 Miss Healy had the benefit of a Legal Expenses Insurance Policy. This funded legal representation in respect of her action against Lloyd's. When liability was still in issue Miss Healy was examined by two consultant rheumatologists. Dr Walker, instructed by Miss Healy, examined her in January 2001 and reported on 28 March 2001. Dr Fordham, instructed by Lloyd's, carried out an examination in July and reported on 30 July 2001. The two consultants subsequently produced an agreed statement dated 19 December 2001. They found that Miss Healy was suffering from cervical spondylosis. This, combined with work related upper limb disorder and stress caused by a poor work relationship, meant that she was unable to carry out her secretarial duties. However, they found that she was capable of carrying out certain non-repetitive work, as was demonstrated by the fact that she had been working as a carer for her mother and her aunt.
 On 2 May 2002 Lloyd's sent to each of the consultants a questionnaire which sought their opinions on the types of non-repetitive work that Mrs Healy could perform and whether she would be capable of working full-time or only part-time. Dr Walker replied on 7 May 2002 as follows:
"You ask which of the list of jobs Ms Healy is fit to carry out. I believe that she is fit to work as a matron or houseparent, receptionist, care assistant, caretaker and sales assistant. I believe that she could also be a telesales operator provided attention was paid to her seating position and as a store, despatch of production control clerk provided this did not involve any heavy lifting.
I think she might struggle with the accounts and wage clerk because of the repeated writing and hand movements and similarly with the retail cash desk operator. With all of these jobs there may be some heavier aspects that she would struggle to do.
I think that she could probably work approximately two-thirds normal time. I think more than that would probably cause increasing pains in her neck. I think she has been capable of doing these occupations since about 1997 when she became a carer.
In terms of whether she would be able to continue this to normal retirement age, it is likely that her cervical spondylosis will get gradually worse over the years and she is only in her early forties now. I think it would be reasonable for her to do this to about the age of fifty-five."
Dr Fordham replied on 8 May as follows:
"Thank you for your letter to myself posing some questions relating to the joint report Dr Walker and I produced dated the 19 December 2001.
(a) The occupations I believe that Ms Healy would be able to carry out in my opinion include Matron or houseparent, receptionist, stores despatch or production control clerk, telephone or telesales operator, care assistant or attendant, caretaker, sales assistant. I think that she would have difficulties in carrying out work as a wage clerk, book-keeper or retail cash desk or checkout operator because of the associated arm and wrist movements particularly associated with these activities.
(b) As regards her ability to carry them out full-time, I believe that she could carry out all of the occupations indicated on a part-time basis.
(c) Turning to the question as to when she would have been able to carry them out, I note that from paragraph 19 that she was made unemployed in December 1994 and that she started her work as a carer for her disabled mother in 1997. I would presume therefore that she would have been able for the kind of work indicated above some time between 1995 and 1997 eg 1996.
(d) As regards her ability to continue in such employment until ordinary retirement, I think that this is unlikely and anticipate that she could work to the age of 55."
It is plain that the two consultants must have agreed the appropriate response to the questionnaire on the basis of their observations of Miss Healy in the previous year.
 On 25 June 2002 Miss Healy's solicitor, Miss Hucknall of The John Brennan Partnership, wrote to the two consultants enclosing additional medical reports from Mr Kramer, Mr Mahdi and a witness statement from Miss Healy herself. She asked them to consider Miss Healy's full medical profile and to state to what extent that impinged on their opinion of her ability to work on a part-time basis in the positions that they had listed. Dr Walker replied on 1 July 2002 as follows:
"You send me the reply that Dr Fordham sent to Lloyds about her ability to work and this is very similar to my own response to the same questions, that essentially she was fit to do the lighter occupation on a part-time basis probably to the age of fifty-five. I would agree that we have both made this assessment in relation to the problem Ms Healy had that were directly related to this claim. I note from her more recent statements that the only care she is able to give to her mother is in terms of shopping, cooking and keeping her company and I note that the report from Mr Kramer from June 2001 suggests that she had some deterioration in her symptoms and signs subsequent to my examination of her. I would accept that this indicates that her overall condition may be deteriorating more quickly than expected and the estimate that she could work to the age of fifty-five may be somewhat optimistic. It is now eighteen months since I have seen Ms Healy and it is, therefore, difficult to be more specific about her ability to work."
Dr Fordham replied in a letter dated 3 July 2002 stating that the material in question did not cause him to alter his previous assessment. He added:
"It is of course a fact that a year has elapsed since the medical assessment was made and it is conceivable that her condition may have altered in that time."
 The date for the trial of the issue of quantum was fixed for 16 July 2002. On 11 July Miss Hucknall ceased to act for Miss Healy and her solicitors obtained permission to come off the record. As a consequence her Legal Expenses Insurance ceased to provide cover. On 12 July 2002 Miss Healy wrote to the court confirming that she would be proceeding as a litigant in person. Between 12 and 15 July 2002 Miss Healy typed, or arranged for her niece to type, a number of statements. She sent these and other documents, to the Court. The statements covered, among other matters, the circumstances in which her solicitors had come off the record.
 Miss Hucknall had sworn an affidavit explaining that she wished to come off the record because Miss Healy refused to follow the advice of her counsel, Mr Peter Morton. On 15 July 2002 Miss Healy wrote to the court enclosing a confidential statement which she said she did not wish the other side to see because it concerned private issues which would normally remain privileged.
 In her confidential statement Miss Healy explained that she had always contended that she could earn no more by way of part-time work than the £ 42 per week that she received by way of carer's allowance. She had, however, reluctantly been prepared to accept the financial expert's advice that her earning ability should be calculated at the minimum wage rate. This increased her earning capacity to £ 84 per week. At this point the letter dated 1 July 2002 was received from Dr Walker. Miss Healy stated that, on receipt of this letter, she urged her counsel, Mr Morton, to seek a fresh medical examination by the two consultants. They would then see that her condition had seriously deteriorated and might advise that she was no longer fit to work.
 Mr Morton refused to adopt this course, whereupon Miss Healy asked Miss Hucknall to replace him with a barrister specialising in disabled rights. Miss Hucknall declined to do so and, when Miss Healy persisted in disregarding the advice of her counsel, Miss Hucknall resigned.
 In the week before the trial Miss Healy prepared a statement of issues. She summarised these as follows:
"Now that they have had sight of these important documents Lloyd's can hopefully agree with me that the only issues for the Court to address are firstly whether the medical evidence proves that I can work for more money at a different job without suffering various degrees of pain for which I need varying amounts of painkillers and without causing further acceleration of my disease. It will then be possible for the Court to decide which Schedule of Loss correctly reflects my true financial position with regard to both past and future losses."
 When the trial began on 16 July 2002 Miss Healy sought an adjournment. Her application was refused and the formal order was drawn up refusing it. In the reserved judgment that he subsequently delivered, the judge gave the following reasons for rejecting Miss Healy's application:
"Until 22 July 2002 Ms Healy had solicitors acting for her under a legal expenses insurance policy. They ceased to act for her on that date and she appeared at the quantum trial on 15 [sic] July 2002 in person. She sought an adjournment of the trial on the basis that she felt that her symptoms had become worse since she was seen by the medical experts in 2001. She wanted the opportunity to be re-examined by them. In particular she felt that they had reached the wrong conclusion in relation to her ability to work, partly because of her subsequent deterioration and partly because they had examined her in 2001 in the context of liability (namely whether her condition in 1995 was such that she should have been put onto the PHI scheme) rather than in the context of what she was able to do after leaving Lloyd's. On considering the various medical reports I was satisfied that the doctors had taken account of the worsening of her systems [sic] up to the time when they saw her in 2001 in reaching their conclusions as to whether she could work. Obviously they could not take into account any deterioration in those symptoms after they saw her but after listening to Ms Healy I was satisfied that whatever deterioration there was not of such significance to justify an adjournment of the trial with the consequent increase in stress and expense for both parties. In reaching that decision I took account of the fact that in making her application Ms Healy showed herself competent in conducting her own case and as an articulate person. She had clearly mastered the material. I formed the view that she is obviously an intelligent woman. She continued to conduct her case competently and to demonstrate her mastery of the documents. Despite her medical problems she was able to sit down and stand up and deal with files of paper for the whole day but she said in evidence that she had had to take pain killers to enable her to do this."
 On 28 August 2002 the judge provided to the parties, in draft, the judgment that he proposed to hand down. His purpose in doing so was explained by the final paragraph of his judgment:
"As I have taken account of matters that were not the subject of submissions at the trial and I have made my own calculations I will hear submissions as to this judgment before it is finalised. Those submissions should be submitted in writing 7 days before the judgment is due to be handed down when they can be amplified in the light of the other party's submissions."
The handing down of the judgment was fixed for 27 September 2002.
 Miss Healy prepared very detailed submissions in relation to the draft judgment. In effect these re-argued her case. Unfortunately, she did not succeed in completing these until 23 September 2002. More significantly, Miss Healy succeeded in persuading Dr Walker to re-examine her. She was, through no fault of her own, unable to achieve this before 24 September 2002. His report, produced on the same day, gave the following opinion:
"Miss Healy is clearly suffering from cervical spondylosis which has indeed deteriorated over the last twenty months according to my examination. She also probably has some degenerative change in her knee and foot. Her use-related forearm pains have continued when she uses them and her history clearly relates her activities to an increase in the pain in a progressive fashion, which would mean that since 1997, had she been asked to work, that her symptoms would have been likely to deteriorate to an extent that she wouldn't have been a reliable employee. The activities she has done for her mother, which haven't aggravated her problems, have largely been the same as self-caring activities that she does for herself and doesn't really amount to a proper job. I do not think that she is fit for work or likely to be fit for work in the future."
 Miss Healy appears to have done her best to get her submissions and Dr Walker's latest report before the judge in advance of the hearing of 27 September 2002. She did not succeed and the judge did not look at this new material. Miss Healy then applied for permission to appeal. In refusing permission, the judge said this:
"Before I handed down judgment I refused the claimant permission to adduce additional medical evidence as to her ability to work. This is an issue dealt with in paragraph 4 of the judgment in the context of an application to adjourn the trial. The claimant admitted that the additional medical evidence could have been addressed at the trial and blamed the former solicitors for failing to obtain it. I refused permission on the basis that the first condition in Ladd v Marshall had not been met. I considered then in the light of the overriding objective, but decided in my discretion that it was not a case in which practice required prolongation of this litigation to enable the claimant to produce evidence late. Matter of discretion. No real prospect of success."
 The judge treated Miss Healy's application as an application for permission to appeal against the substantive judgment. It is implicit that her grounds of appeal were procedural: failure to adjourn the hearing to enable her to obtain a fresh medical report and failure to have regard to the report that she did obtain when he handed down his judgment. The formal order drawn up on 12 February 2003 recorded that permission to appeal was refused.
 Miss Healy applied to this court out of time for permission to appeal. In Pt 5 of her Appellant's Notice, which was on the proper form N161, she stated the orders against which she appealed as those of 17 July 2002 and 12 February 2003, and identified the parts of the orders against which she wished to appeal as "'Permission to appeal refused' + Permission to adduce submissions and updated medical opinion."
 Her application for permission to appeal came on paper before Clarke LJ. On 7 July 2003 he refused to grant an extension of time because he considered that she had no reasonable prospect of success on the appeal. Miss Healy sought to renew her application at an oral hearing. In the event she did not come to London for this because she said she felt too infirm to do so. Accordingly Chadwick LJ dealt with the renewed application on paper. He gave Miss Healy permission to appeal for the following reasons:
"I am satisfied that Ms Healy's further submissions that there is a real prospect that she might persuade a Court of Appeal that Judge McGonigal exercised his discretion on 16 July and again on 27 September on a wrong basis. There seems to me to be force in the submission that he did not give sufficient weight to the difficulty in which Ms Healy was placed in the circumstances that her solicitors, after refusing to obtain the evidence which she was asking to be obtained, then withdrew from the case in circumstances where the evidence when obtained was evidence which was, at least prima facie, highly relevant to the submissions which she wanted to make. In those circumstances I propose to give permission to appeal."
 Chadwick LJ added:
"I give permission to appeal against the order of 16 July 2002. Formally permission from the order of 27 September which refuses her permission to appeal-cannot be given. But the court will no doubt take account in considering the appeal for which permission is given that she was refused the opportunity to present the evidence which she had on 27 September, albeit that there is no formal order to that effect."
 It seems to me that Chadwick LJ, understandably, may have been a little confused by the form of Miss Healy's Appellant's Notice. The correct analysis must be, I think, that she was seeking leave to appeal against the judge's substantive order assessing her damages in the sum of £ 148,418, and that the grounds that she was given permission to advance were (i) that the judge had wrongly refused her an adjournment in order to obtain up-to-date medical evidence at the commencement of the hearing; and (ii) that the judge had wrongly refused to have regard to the material which she had submitted late when he handed down his judgment on 27 September 2002. I would propose to entertain her appeal on this basis.
DEVELOPMENTS SUBSEQUENT TO JUDGMENT
 Lloyd's contended that they should not be required to deal with an appeal based on the judge's failure to adjourn for additional medical evidence unless there was an investigation of the circumstances in which Miss Healy failed to obtain the medical evidence in question prior to the date of the hearing. They issued an application seeking discovery of Miss Healy's correspondence with her lawyers. They alleged that she had waived privilege in relation to this. That application was adjourned to this hearing on the basis that it might prove unnecessary to pursue it because Miss Healy appeared to have shifted her ground for attacking the judge's conduct of the proceedings.
 Miss Healy filed a lengthy skeleton argument for our assistance together with a supplementary statement on Lloyd's application for disclosure. A significant part of her skeleton argument consisted of challenges to some of the judge's substantive conclusions. Those criticisms are not appropriate so far as the permission to appeal was concerned because that permission was given simply on the grounds of procedural shortcomings. Nonetheless, one of the points made in those submissions appeared to us to have obvious merit. It would appear that, in calculating the deduction to be made from the damages to reflect the amount that Miss Healy could earn by way of employment or, alternatively, benefits for being unable to work, the judge had taken into account both notional earnings and the benefits, although Miss Healy would only have been entitled to one or the other. I shall revert to that point at the end of this judgment. Meanwhile, I am concerned with the appeal that Miss Healy was given permission to bring, founded as it was on the contention that the conduct of her case by the judge was procedurally unfair.
 Miss Healy's skeleton argument and the supplementary statement throw more, and a different, light on the circumstances in which her solicitors withdrew from the record. She had engaged a forensic accountant, Mr Barraclough. It was proposed that he should act as a joint expert and his draft report was disclosed to Lloyd's. Lloyd's then decided that they were not prepared to accept him as a joint expert and appointed their own. Mr Barraclough had originally based his calculations on Miss Healy's own appreciation of her limited ability to work. After the responses of the consultant rheumatologists dated 7 and 8 May 2002 to the questionnaire that they had received, Mr Barraclough revised his calculations to reflect those responses. He based his calculations on the assumption that Miss Healy had an earning potential of 50% of what she would have earned had she continued to be employed by Lloyd's.
 Miss Healy was dissatisfied with her accountant's assessment. She demanded that he revise his report to reduce her earning capacity to £ 84 per week. He refused to do so. Miss Healy complained that he insisted on thinking "like a joint expert". In these circumstances she found that Mr Barraclough was not acceptable as an expert and refused to proceed on the basis of his evidence. It was this, it seems, which led her solicitor and counsel to resign.
JUDGE MCGONIGAL'S CONDUCT OF THE PROCEEDINGS
 Miss Healy confirms, as indicated in her skeleton argument, that she no longer complains of the fact that the judge would not grant her an adjournment so she could procure an up-to-date medical report. Her case has been very clearly stated in her skeleton argument and in correspondence with Lloyd's in relation to that matter. Her case is that at the time that such a medical report would have been obtained her physical condition had not deteriorated to such an extent that the report would have made any difference.
 Miss Healy's case is that the stress of preparing for the trial without assistance, of conducting the trial without assistance and of preparing the submissions she made in relation to the judge's draft judgment, had a drastic and deleterious effect on her condition. It was these matters that reduced her to the condition found by Dr Walker when he carried out the examination on 24 September 2002.
 Miss Healy has expressly withdrawn any suggestion that the judge should have adjourned for the purpose of allowing her to obtain an updated medical report from Dr Walker. She submits that the process was not fair because, on her own without legal assistance, she was unable to advance her case as it should have been put. She submits that she was no match for the skills of Mr Blakesley who was opposing her. It was because of her inadequacies that she was unable to persuade the judge that, notwithstanding the medical reports, she would not be able to work in the manner or to the extent that was being suggested by Lloyd's. She was also unable to deal with other issues that arose in the case, including the double accounting to which I have referred.
 The problem with the case now advanced by Miss Healy, as the court explained to her in the course of her argument, is that it does not demonstrate any shortcoming on the part of the judge, quite apart from the fact that the grounds now relied upon are quite different from those which led to her being granted permission to appeal. Miss Healy did not ask the judge to grant her an adjournment so that she could obtain alternative legal representation. On the contrary, she had written to the court on 12 July 2002 confirming that she would be appearing as a litigant in person, although she did express apprehension as to conducting that task, and she stated that the withdrawal of her legal insurance cover had made it impossible for her to appoint another solicitor. In my view that was a realistic appraisal of the situation. She is not in a position to demonstrate that the fact that she was bereft of legal representation was other than the result of a misunderstanding on her part of the duty of an expert witness.
 Miss Healy appears, mistakenly, to believe that Mr Barraclough was not acting as he should when he declined to alter his report in accordance with her instructions but continued to act as though he was a joint expert. As has been explained to her, Mr Barraclough's primary duty was to the court and he could not alter his expert opinion at the dictate of his client. Nor does it appear that Miss Healy gave any indication at the trial that she was unable to conduct her own case. She has said in some of her written submissions that she was anxious not to show any weakness to Lloyd's when conducting her case. It is quite plain from the judgment that she similarly gave the judge the impression that she was perfectly able to conduct her own case.
 For these reasons, it seems to me that Miss Healy is simply unable to make out a case that there was any procedural defect in the conduct of the trial by the judge. Nor, in my judgment, can the judge be criticised for declining to take into consideration the material that did not reach him until the morning when he was to hand down his judgment. So far as the fresh medical report was concerned, it was entirely appropriate for him, having ruled out the introduction of further medical evidence on Ladd v Marshall  3 All ER 745,  1 WLR 1489 grounds, to decline to have regard to that.
 In the course of her submissions and dialogue with the court, Miss Healy said, "If I knew then what I know now, I would have said to the judge that the evidence had to be clarified. I should have said, 'I do not need new evidence but I need clarification'." Unfortunately she told the judge that she did need new evidence; she did not say to the judge that she needed clarification. In those circumstances no valid grounds of appeal are made out. For those reasons I would dismiss this appeal.
 I would add that Mr Blakesley, on behalf of Lloyd's, has accepted that there was an error in the judge's calculations, which he carried out of his own initiative and which were not advanced by Lloyd's (the double accounting to which I have referred). He has calculated the difference that this would have made to the award of damages in the sum of £ 7,727, and has told the court that Lloyd's is prepared to increase the amount paid to Miss Healy by way of damages by that sum.
JUDGMENTBY-2: KENNEDY LJ:
 I agree.
JUDGMENTBY-3: NEUBERGER LJ:
 I also agree.