Alan Dudley & Others -v- Dartford and Gravesham NHS Trust (2006)
This case revolved around a failure by the Trust to diagnose a heat condition which resulted in death.  A claim was put forward on behalf of the deceased’s wife, children and Estate.  The case was eventually successful but it was extremely difficult in terms of valuing the case due to evidential difficulties on how to prove the deceased’s losses.  The case was eventually settled for a significant sum. 

DUDLEY & OTHERS -v- DARTFORD AND GRAVESHAM NHS TRUST
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CASE NOTE
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On 22nd December 2001 Mr Dudley was driving his car when he suffered chest pain and pulled over.  He suffered a myocardial infarction and died before he reached Hospital.  He had presented to the Defendant’s Hospital previously complaining of chest and other pain entirely consistent with a cardiac cause but no investigations had ever been planned or undertaken.   Proceedings were brought both by the executors of his estate and by and on behalf of his dependants.  Breach of duty and liability were admitted early in proceedings leaving only the issue of quantum for trial.   That issue remained hotly contested and there were no offers from the Defendant prior to the settlement.  Trial was listed for 10 days beginning on 9th October 2006.  An extended fixture was required because the deceased’s finances were extremely complicated and on the Claimant’s case included a very significant amount of undeclared income.  Both parties were reliant upon the evidence of forensic accounting experts whose reports and appendices filled a lever arch file.  The documents and witness evidence upon which those reports and conclusions were based stretched to a further twelve lever arch files and covered the business and financial dealings of a string of companies in which the deceased was involved. 
At trial the Claimant was to rely upon evidence from a range of witnesses including former employees, business partners, colleagues, company accountants and earnings comparators from within the industry as well as family members.  All of that evidence was to be directed to the very complex issues of:
-           how much the deceased was earning at the time of death;
-           how much he would have continued to earn in the future.
           
The parties met at a Round Table Meeting on 12th September 2006 and negotiated a settlement in the sum of £800,000 in respect of all four claims. 
Medical  Background
The deceased was born on 10th December 1952.  He was a keen footballer playing weekly before his death and enjoyed generally good health.  He had been a heavy smoker but gave up the habit some fourteen years prior to death.   In December 2001 he attended Gravesham NHS Accident and Emergency Department (“the Hospital”) on three occasions with complaints of chest pain (13th, 16th and 20th December 2001).  On his final visit (at 0142 hrs on 20th December) a history was taken which included the previous episodes of pain and attendance and an ECG was ordered.  It showed clear abnormality in the T-wave inversion from V1-V4.  The doctor reviewing the deceased made no note that he had acknowledged the abnormality and the ECG itself was appended with the comment “nil acute, no pain”.  The deceased was discharged home.  On 22nd December 2001 at about 1430 hrs he suffered a cardiac arrest whilst on the M25 motorway.  He was conveyed to the Hospital where all attempts to resuscitate him failed.
The Defendant admitted that failures in clinical assessment on the second and third attendance resulted in “missed opportunities” to provide treatment which would have avoided the myocardial infarct and death.  There was a minor dispute as to life expectancy.  The Claimant maintained a lifexpectancy to age 75 whilst the Defendant suggested a reduction of seven years to age 68.  There was no discussion between the cardiology experts since the Defendant’s expert himself sadly passed away shortly before trial.  No significant issue turned on this small area of disagreement.

Financial Background
The deceased’s training and career background was summarised in the Schedule of Special Damage and are set out below:
The Deceased was born on 10th December 1952 and died on 22nd December 2001 aged 49 years and 12 days.   He trained as an apprentice (aged 16/17) as an engineering technician and between 1980 and 1987 worked with British Telecommunications as an engineer and technician eventually becoming the lead person within the central London area.
In 1987 the Deceased left BT and commenced an unsuccessful venture.
Between 1988 and 1992 the Deceased worked with Stentofon (now Zenitel) as a Field Maintenance Engineer.  Concurrently he set up and ran Assured Services an industrial painting and decorating business.
From 1992 onwards the Deceased operated Esstech Services Ltd which carried out all maintenance and servicing business for Zenitel.
Furthermore, from about 1998 onwards the Deceased operated (having bought) Communications Needs 1989 Ltd;
 The Deceased also earned cash from selling on the second hand market telecoms systems that he had removed from customers who were upgrading.
The Deceased was a successful businessman.  At the time of his death he had an income from a number of different sources.  Expert forensic accounting evidence had been adduced demonstrating the nature and extent of that income
           
The claim is advanced on the following basis:
(a)        the Court will have to assess the likely course of the Deceased’s various business interests in the future assuming proper treatment had been provided;
 (b)       there will be arguments as to the length of any dependency claim having regard to the Defendant’s allegation that life expectancy would have been affected (the Claimant conceded that normal life expectancy would have been reduced by seven years and multipliers applied in this schedule are computed on that basis);
(c)        it is admitted that the Deceased failed to declare all of his income to the Inland Revenue.  That has a number of ramifications.
(i)         firstly the Claimants will have to give credit for tax that would have been lawfully due had his income been declared.  Given that the nature of the businesses with which he was involved was itself inherently lawful the Defendant cannot argue that the income is to be ignored in total (see Newman v Folkes);
(ii)        secondly, there is an incomplete paper trail and there were clearly cash payments/income received.  An assessment of the size of those cash payments has been achieved in part by a detailed examination of the expenses and outgoings that the Deceased’s income allowed him to meet and to some extent therefore his income has been assessed by a “back calculation”.

As that introduction made clear, the deceased had a number of income streams.  Those are dealt with in more detail below.

The Companies
At the time of his death the deceased was involved in the following business ventures:

Company Benefits
In addition to the monies received as above the deceased also received unofficial “fringe benefits” by reason of his involvement in these companies.  By way of example:

Those write offs gave rise to a total of £40,000 odd over three years or approximately £13,300 per annum.

The Second Hand Equipment Claim
Whilst engaged in Esstech business the deceased would occasionally be required to replace entire telephone systems for clients.  He was in the habit of storing those systems in his and his sister’s garages where they would either be cannibalised for parts or occasionally refurbished and installed by the deceased in other clients’ offices.  That “second hand installation” business was conducted almost exclusively by the deceased alone.  Save for the witness statement of one Mr Barnshaw there is not a single piece of documentary evidence supporting the income generated from that venture.  On one occasion only an installation engineer employed by Esstech was asked to assist the deceased in carrying out a second hand installation which took place at a commercial institution.  There was no evidence of the sums paid for that contract nor was there any indication of where the money (however much might have been realised) went.  No tax was paid on it.  The engineer’s evidence was exceedingly vague as to the detail of the installation and as to the frequency with which the deceased carried out such installations, not least because the deceased’s practice appears to have been to disclose little of his business affairs to others.

The Devon Cottage
In mid 2000 the deceased purchased a holiday cottage in Devon for the sum of £150,000 with the aid of a mortgage from Direct Line.  He paid a deposit of £15,000.  On 1st March 2001 he paid £35,000 off the mortgage.  Despite exhaustive investigation by McMillan Williams and the Claimants’ forensic accountant there was no evidence or information as to the provenance of the £50,000 raised in that eight/nine month period.

Cash Payments to the Deceased’s Wife
The deceased’s wife’s evidence was that every week she was given £400 in cash by her husband to cover general household running expenses, meals and some credit card bills.  To the best of her recollection that practice had begun in 1998 or 1999.   Some eleven weeks before the deceased died there had been a “family discussion” between the two of them in which he had queried how she was managing to spend so much money.  Days later she found herself in a stationers and bought a small cash tin and note book with which she then recorded both the cash that her husband had given her and where it had been spent.  Although covering a period of only eleven weeks that documentation showed clearly that she was receiving £400 per week in cash and was spending it on items such as credit card bills, restaurant bills etc.  There was no evidence indicating where this £400/week was sourced.

Basis of the Dependency Claim
It is clear from the summary set out above that the deceased’s financial matters were somewhat opaque.   There was only one fixed and easily ascertained source of income (the Esstech salaries) together with the payments he was said to receive from Assured Services.  Other than that the claim was based substantially on the claim by his wife that she had a significant cash income weekly and the deceased appeared to have reasonably large sums washing around (vide the payments on the holiday home).

The Claimants’ forensic accounting expert dealt with the variables in her compendious report by setting up four scenarios each based on differing sources and amounts of income.   As she properly acknowledged:

“… there are several possible elements of income and numerous options within each element.  These are all issues for the Court..” [Pg 63, para 3.10.b]

Those different factual scenarios are not perused in detail here.  In essence the first scenario was the least ambitious but nevertheless included a sum of £24,000 per annum from Esstech over and above the salaries received (gross £80,423) from that company.  That £24,000 was attributed to the entitlement to profits from Esstech and other companies (Comms Needs 1989 Ltd for instance.  In addition it claimed a further £6,500 per annum from various company sources (effectively half of the “Company Benefits” described above) together with the cash income paid to the deceased’s wife of £400 per week.  On any basis that was an adventurous claim and gave rise to an annual gross income claimed of £137,723. 

At the other end of the spectrum, the fourth scenario built substantially on the preceding scenarios and claimed £172,723 gross per annum.  Self evidently that was more than double the declared and traceable income.

There were two significant difficulties in advising on quantum.  Firstly, what would the Judge make of the evidence as to past cash payments and how much credit would he/she give for an income stream which was largely unsupported by the usual (or indeed any) forms of documentation.  Secondly, what would he/she make of the Deceased’s future career and how much credit would be given for any improvement in his position?   In conducting the valuation exercise the following assumptions were made:
-     That the judge would probably accept the past and continuing gross income from Esstech in the sum of £59,000 net (£80,000 gross);
-     Likewise that he would probably accept the likelihood of a continuing income in the region of £6,000 per annum from Assured Services.  It was a business that appeared to run itself and had apparently generated a continuous income;
-     The claim for a continuing £17,000 per annum by way of profit was very much less certain.  Esstech rarely had more than £6,000 odd available in its Bank account  and the deceased and his wife were already being paid significant salaries totalling £80,000 odd gross and £59,003 net.  There was a very good argument that to claim this additional sum would be to argue for a whole new level of expense and recovery simply unsubstantiated in the (few) documents available.  Furthermore since Comms Needs 1989 Ltd had ceased trading, that company was unlikely to be the source of any further income that could be put towards this head of claim;
-     Likewise the £6,500 “fringe benefits”.  These were written off by the companies within which the deceased operated but a Judge may have been troubled by these figures. 
-     The sum of £400 weekly had been paid regularly for some two to three years even though the cashbook maintained by the deceased’s wife covered only some eleven weeks.  It appeared to be the deceased’s intention that he would continue to provide that sum in the future.  Nevertheless, there was always the chance that business would contract and force a reduction in the payment.  The telecoms business was not reliably secure and a discount for the contingencies of the business world was applied;
-     Finally, the £10,000 claimed annually on the basis of the monies paid towards the holiday cottage.  This was a difficult figure to assess.  In the deceased’s lifetime there had been only one “extraordinary” and untraceable cash injection of this nature (£50,000 in eight months for the cottage).  The Claimants’ strongest point was that these sums had apparently been found within an eight month period.  There were two arguments likely to be raised against a claim under that head.  Firstly that the sums might nevertheless have been saved over a period of many years yet been invested elsewhere and unavailable at the time of the original purchase; secondly that there was only one “big” second hand refurbishing job which was known about and it may well have been that which provided some of these funds.  Once again, the Claimants could not point to any other evidence of any other substantial installation at all which might be relied upon as showing that this level of extraordinary income was likely to continue in the future.  

The Round Table Meeting
As should be plain from what goes before, this was a case with a very complex factual scenario.  There was no agreement between the parties as to the accounting evidence.  There were a great many variables within the deceased’s financial empire and preparation for the round table meeting required extensive collaboration between solicitor, Counsel and expert forensic witness.  That resulted in a detailed workup of the figures which in turn made it relatively easy to “persuade” the Defendant trust who at the Round Table Meeting took only sensible points that the claims advanced were reasonable and likely to succeed in large part even absent the hard financial documentation usually sought in cases of this nature.

McMillan Williams are now very familiar with preparing for cases of this nature and have an experienced and expert group of advisors to assist in relation to technical financial matters.  In addition the lawyers themselves are proficient in identifying and obtaining precisely that lay evidence which will be required to support large financial claims where the usual documentation is not available.
                                                                                           
Counsel instructed Michael J Mylonas of 3 Sergeants Inn
Conducting Solicitor Colum J Smith
New Addington Branch