Kerry Underwood


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I deal with this in my Personal Injury Reforms Course which can be booked here.

Earlier this month I completed an 8 day trek in the Sahara Desert to raise money for the Lord’s Taverners cricket charity for disadvantaged children. Please go here if you would like to make a donation.

In OMV Petrom SA v Glencore International AG [2017] EWCA Civ 195

the Court of Appeal considered what it described as “a straightforward but important point concerning the interest that the court may award when a claimant’s CPR Part 36 offer is rejected, but the claimant achieves a greater award at trial.”

Here the claimant made a Part 36 offer on 9 April 2014 offering to settle the litigation for US $35 million but the defendant did not respond to that offer and nor did it make any counteroffer but rather defended the claim “uphill and down dale” and the court awarded over US $40 million meaning that the claimant had beaten its Part 36 offer.

The claimant appealed against the rate of interest on damages and indemnity costs awarded to it, under CPR 36.14(3)(a) and (c) respectively, contending that the judge had been wrong to proceed on the basis that he could not penalise the defendant for its unreasonable conduct by awarding more than a compensatory level of interest.

The Court of Appeal unanimously allowed the appeal, holding that the enhanced interest rates under these provisions can include a non-compensatory element to encourage the parties to engage in reasonable settlement negotiations.

The court replaced the rate of interest on both

(a) the award of damages for the period from the expiry of the claimant’s Part 36 offer until judgment and

(b) costs, with a rate of 10 percent above base, being the maximum uplift available under CPR 36.14(3).

The court said that it did not regard the specified rate of 10% as a starting point as the words of the rule provided for enhanced interest to be awarded “at a rate not exceeding 10% above base rate”.

“That does not make the figure of 10% a starting point. It makes it the maximum possible enhancement.” (Paragraph 31 of the judgment).

The court emphasised that the provisions in CPR 36.14(3) are aimed at encouraging good practice.

In some cases, a proportionate rate would have to be greater than purely compensatory, in order to provide the appropriate incentive to defendants to engage in reasonable settlement discussions and mediation, and to mark the court’s disapproval of any unreasonable or improper conduct.

“36. If it were right to say that the provision for additional interest were entirely compensatory, the 10% cap would only rarely be engaged (as the judge’s order demonstrates), and then probably only in unusual cases where, for example, the period of the enhanced interest award was very short. First instance courts would be required to engage in a complex and unnecessary exercise aimed at identifying what the prolongation of the litigation has cost the successful party in terms of wasted management time and other on-costs. This would be the kind of undesirable satellite litigation, perhaps involving detailed evidence, of which the court spoke in Denton supra. Moreover, the range of possible additional costs that might be caused by the litigation would be boundless. It would all depend on the particular type of litigation and the particular situation of the claimant concerned. Such additional costs might include the loss of profitable commercial contracts, additional loan costs and many other types of damage.

37. Moreover, the argument that the Jackson reforms demonstrate that the existing provision was not intended to be penal, in my judgment, proves too much. The Jackson reforms undoubtedly introduced a penal award of up to £75,000 as an additional sum calculated on the basis of the amount of the court’s award or, in the absence of such an award, the amount of the claimant’s costs. But whatever the consultation papers show as to what consultees thought about the nature of the existing provisions, Jackson LJ’s final report had said expressly at paragraph 1.1 of Chapter 41 that the existing Part 36 was “backed up by a scheme of penalties and rewards in order to encourage the making of reasonable settlement offers and the acceptance of such offers”.

38. In my judgment, the use of the word ‘penal’ to describe the award of enhanced interest under CPR Part 36.14(3)(a) is probably unhelpful. The court undoubtedly has a discretion to include a non-compensatory element to the award as I have already explained, but the level of interest awarded must be proportionate to the circumstances of the case. I accept that those circumstances may include, for example, (a) the length of time that elapsed between the deadline for accepting the offer and judgment, (b) whether the defendant took entirely bad points or whether it had behaved reasonably in continuing the litigation, despite the offer, to pursue its defence, and (c) what general level of disruption can be seen, without a detailed inquiry, to have been caused to the claimant as a result of the refusal to negotiate or to accept the Part 36 offer. But there will be many factors that may be relevant. All cases will be different. Just as the court is required to have regard to “all the circumstances of the case” in deciding whether it would be unjust to make all or any of the four possible orders in the first place, it must have regard to all the circumstances of the case in deciding what rate of interest to award under Part 36.14(3)(a). As Lord Woolf said in the Petrotrade case, and Chadwick LJ repeated in the McPhilemy case, this power is one intended to achieve a fairer result for the claimant. That does not, however, imply that the rate of interest can only be compensatory. In some cases, a proportionate rate will have to be greater than purely compensatory to provide the appropriate incentive to defendants to engage in reasonable settlement discussions and mediation aimed at achieving a compromise, to settle litigation at a reasonable level and at a reasonable time, and to mark the court’s disapproval of any unreasonable or improper conduct, as Briggs LJ put the matter, pour encourager les autres.

39.The culture of litigation has changed even since the Woolf reforms. Parties are no longer entitled to litigate forever simply because they can afford to do so. The rights of other court users must be taken into account. The parties are obliged to make reasonable efforts to settle, and to respond properly to Part 36 offers made by the other side. The regime of sanctions and rewards has been introduced to incentivise parties to behave reasonably, and if they do not, the court’s powers can be expected to be used to their disadvantage. The parties are obliged to conduct litigation collaboratively and to engage constructively in a settlement process.”

While the court was prepared to exercise the discretion afresh and order the maximum possible uplift in view of the defendant’s “deplorable” conduct of the litigation, it emphasised that appeals on issues of the kind should be rare, noting that the court has a wide discretion as to the appropriate rate of enhancement under Part 36.14(3), and the Court of Appeal will not often to be persuaded to interfere with it.

CPR 36.17 (in force from 6 April 2015) is in materially the same terms and therefore this decision is likely to be relevant when considering the award of interest under CPR 36.17.

Written by kerryunderwood

April 25, 2017 at 8:01 am

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I include a roundup of recent cases in relation to costs and funding in my Personal Injury Reforms Course which can be booked here.


Earlier this month I completed an 8 day trek in the Sahara Desert to raise money for the Lord’s Taverners cricket charity for disadvantaged children. Please go here if you would like to make a donation.


In Newmarket Holdings (Guernsey) Ltd v Confiance Ltd and others (unreported), 7 March 2017, (High Court)


the court considered whether the claimant’s failure to pay security for costs was equivalent to serving a notice of discontinuance which justified an order for indemnity costs.


The court drew a distinction between a forced and a voluntary withdrawal from proceedings.


The judge acknowledged that when fraud was pleaded and a claim discontinued, those factors alone could justify an indemnity costs order (Clutterbuck v HSBC plc [2015] EWHC 3233 (Ch)).


The judge distinguished those cases where the claimant realised that a claim was bad and voluntarily withdrew (voluntary withdrawal), and cases where the claimant was faced with a change in circumstances that put significant pressure on them to withdraw a claim which they still considered had merit (forced withdrawal).


The case here was one of forced withdrawal.


The judge did not accept that the claimant’s failure to meet the order for security for costs equated to serving a notice of discontinuance.


There might be circumstances where a claimant chose to discontinue rather than incur costs in complying with directions already made by the court.


Discontinuing on that basis would not be a recognition that the case was bad, but a recognition that it would be a waste of costs to proceed.


The judge held that the claimant had taken steps to try and raise the money to meet the costs order but had fallen short of the required sums and, as the claim was neither “speculative” nor “opportunistic”, it was not appropriate to award costs on the indemnity basis but on the standard basis.

Written by kerryunderwood

April 24, 2017 at 8:52 am

Posted in Uncategorized


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This is dealt with in my new book – Personal Injury Small Claims, Portals and Fixed Costs. This is three volumes and over 1,300 pages. For more information and to order a copy please click here.


Earlier this month I completed an eight day trek in the Sahara Desert to raise money for the Lord’s Taverners cricket charity for disadvantaged children. Please go here if you would like to make a donation.


In Harrath v (1) Stand For Peace Ltd (2) Samuel Westrop [2017] EWHC 653 (QB)


the High Court of Justice held that the fact that the claimant had limited the amount claimed in his Claim Form to £10,000.00 did not limit the power of the court to give judgment for the amount which it finds the claimant is entitled to recover – see CPR 16.3(7).


It does not matter that the claimant has only paid the court fee relevant to a claim not exceeding £10,000.00.


Here the claimant made it clear that he was willing to pay any additional fee.


The court awarded £140,000.00.

Written by kerryunderwood

April 21, 2017 at 7:33 am

Posted in Uncategorized


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I deal with success fee and ATE recoverability on my Spring 2017 Personal Injury Reforms Course – click here for more information and to book.


Earlier this month I  completed an 8 day trek in the Sahara Desert to raise money for the Lord’s Taverners cricket charity for disadvantaged children. Please go here if you would like to make a donation.


Recoverability and transitional provisions 


In Plevin v Paragon Personal Finance Ltd [2017] UKSC 23


the Supreme Court considered the effect of the transitional arrangements in relation to the abolition of the recoverability of additional liabilities effected by the Legal Aid, Sentencing and Punishment of Offenders Act 2012. (LASPO).


Assignment of the Conditional Fee Agreement


Mrs Plevin entered into a CFA with her solicitors, Miller Gardner, on 19 June 2008 and thus the success fee was recoverable.


However there were two technical changes of solicitor arising out of organisational changes within the same firm.


In July 2009, the partners reconstituted themselves as an LLP and this was done by appointing administrators of the old partnership, who entered into an agreement with the new firm, Miller Gardner LLP, transferring specified assets to it.


In April 2012 Miller Gardner LLP transferred its business to a limited company, Miller Gardner Limited, under a similar agreement.


The paying party maintained that on neither occasion was the CFA validly assigned, and therefore there was no effective retainer at the time when the costs were incurred in the Supreme Court.


Here, somewhat unusually, it was common ground that the CFA was in principle capable of assignment, and therefore the argument was about the construction of the actual documents.


Given the concession that CFAs are in principle capable of assignment the Supreme Court simply considered the actual wording of the agreements and held that the Conditional Fee Agreement was, on each occasion, assigned.


Recoverability of the success fee


It having been established that there was a valid Conditional Fee Agreement in place all of the time, through the three different legal entities, the next question for the Supreme Court to consider was whether the success fee was recoverable.


The original CFA covered all proceedings up to and including the trial and all steps taken to seek leave to appeal from an adverse result at the trial.


On 8 August 2013, the Court of Appeal having given leave to appeal from the dismissal of Mrs Plevin’s case by the trial judge, she and Miller Gardner entered into a Deed of Variation extending the CFA to cover the conduct of the appeal.


On 3 January 2014 the Court of Appeal, having allowed the appeal and given leave to appeal to the Supreme Court, there was a further Deed of Variation extending the CFA to cover the appeal to the Supreme Court.


Paragon’s case was that in relation to the proceedings in the Court of Appeal and the Supreme Court, the variations of August 2013 and January 2014 were new agreements entered into after 1 April 2013 for the provision of litigation services after that date.


Consequently they were not covered by the transitional provisions in section 44(6) of LASPO.


The Supreme Court rejected that argument and said that the “matter that is the subject of the proceedings, as set out in section 44(6)(a) of LASBO meant the underlying dispute.”


The two Deeds of Variation provided for litigation services in relation to the same underlying dispute as the original CFA, albeit at the appellate stages.


Consequently unless the effect of the deeds was to discharge the original CFA and replace it with new agreements made at the dates of the deeds, the success fee was recoverable.


Whether a variation amends the Principal Agreement or discharges and replaces it, depends on the intention of the party.


Paragraph 13 the Supreme Court said:


“….To establish a discharge and replacement, “there should have been made manifest the intention in any event of a complete extinction of the first and formal contract, and not merely the desire of an alteration, however sweeping, in terms which are still subsisting”: Morris v Baron & Co [1918] AC 1, 19 (Viscount Haldane). At the time when the two deeds of variation were executed, the CFA still subsisted (there were outstanding proceedings relating to the costs, for example). Both deeds are expressly agreed to be a variation of the CFA, leaving all of its terms unchanged except for the addition to the coverage of a further stage of the litigation and a change in the amount of the success fee. While the description given to the transactions by the parties would not necessarily be conclusive if the alleged variation substituted a different subject-matter, that cannot be said of either of the deeds of variation.


  1. There was a faint suggestion that the deeds of variation were an “artificial device” designed to avoid the operation of section 44(4) of LASPO. There is nothing in this point. The deeds of variation were not a sham. An amendment of the existing CFA is a natural way of dealing with further proceedings in the same action. They therefore take effect according to their terms.”




That is a very helpful decision for those with Conditional Fee Agreements in that it upholds the right to vary an agreement after 13 March 2013 whilst preserving recoverability.


However on the issue of assignment it takes matters no further as it was conceded that a Conditional Fee Agreement is capable of assignment, something which generally remains very much in dispute.


Recoverability of the ATE premium


Curiously, the paying party, Paragon, had conceded at the hearing in front of the costs judges that the ATE premium was recoverable, just as they had conceded that the Conditional Fee Agreement was in principle capable of assignment.


In relation to the ATE premium point the Supreme Court gave Paragon leave to resile from the concession on condition that they pay the costs of the issue in any event.


The Supreme Court set out the facts concerning the ATE policy at paragraph 16:-


“16.       The ATE policy was originally concluded on 29 October 2008. It covered legal expenses and liability for the other side’s costs up to and including the “trial period”, which meant the period fixed by the court for the trial. It was “topped up” for the appeal to the Court of Appeal and again for the appeal to the Supreme Court. The top-ups did not give rise to fresh contracts. They were true amendments to the policy which continued in effect subject to the same terms as amended. But on both occasions the amendment was made after LASPO came into force. By mistake, the wrong standard terms were incorporated into the policy, but the insurers have agreed to be bound by Clause 4 of the insuring clause in the form which ought to have been incorporated. This provided:


“4. We will indemnify you against your liability, if any, to pay your insurance premium for your policy if you win and cannot recover the premium in full or in part.”


We were told that this is a common, although not invariable provision in ATE policies issued to non-business litigants. Its effect is that if the premium is not included in the assessed costs awarded to the insured, the loss falls on the insurers and not on the insured. The significance of the point as far as the insured is concerned is that whichever of them is bound to meets the cost of the ATE premium, if it is not recoverable from the losing party ATE will not be a viable method of funding.“


The Supreme Court then went on to point out that the wording in LASPO of the transitional provisions relating to ATE premiums was different from the wording in relation to success fees.


The wording in relation to ATE premiums is contained at section 46(3) and reads:
“The amendments made by this section do not apply in relation to a costs order made in favour of a party to proceedings who took out a costs insurance policy in relation to the proceedings before the day on which this section comes into force.”


Section 44(6) of LASPO, dealing with success fees refers to an “agreement… in connection with the matter that is the subject of the proceedings”.


Thus in relation to an insurance policy it has to be “in relation to the proceedings”, whereas in relation to the success fees it is “the subject matter of the proceedings.”


Here there was an ATE policy in place before 1 April 2013 but it was not a policy in relation to the appeal to the Court of Appeal or to the Supreme Court.


Thus the issue here for the Supreme Court was whether the two appeals constitute part of the same “proceedings” as the trial or not.


If the appeals constituted distinct proceedings, then there was no policy in place at the commencement date as required by the Act in relation to the appeal.


The Supreme Court then pointed out that “proceedings” is not a defined term in the legislation and nor is it a term of art under the general law.


Its meaning must depend on its statutory context and on the underlying purpose of the provision in which it appears, in so far as that can be discerned.


At paragraph 18 of the judgment the Supreme Court reviewed a number of decisions that had held that a trial and successive appeals do constitute distinct proceedings.


Essentially for policy reasons, the Supreme Court distinguished those cases and held that provided that there was ATE cover in place in respect of liability for the costs of the trial, then the insured is entitled after the commencement date – 1 April 2013 – to take out further ATE cover for appeals and to recover the cost of those additional premiums.


The Supreme Court said this:


“20.        The starting point is that as a matter of ordinary language one would say that the proceedings were brought in support of a claim, and were not over until the courts had disposed of that claim one way or the other at whatever level of the judicial hierarchy. The word is synonymous with an action. In the cases cited above, relating to the awarding or assessment of costs, the ordinary meaning is displaced because a distinct order for costs must be made in respect of the trial and each subsequent appeal, and a separate assessment made of the costs specifically relating to each stage. They therefore fall to be treated for those purposes as separate proceedings. The present issue, however, turns on a different point. The question Page 8 posed by section 46(3) of LASPO is whether the fact of having had an ATE policy relating to the trial before the commencement date is enough to entitle the insured to continue to use the 1999 costs regime for subsequent stages of the proceedings under top-up amendments made after that date. The fact that costs are separately awarded and assessed in relation to each stage does not assist in answering that question.


  1. The purpose of the transitional provisions of LASPO, in relation to both success fees and ATE premiums, is to preserve vested rights and expectations arising from the previous law. That purpose would be defeated by a rigid distinction between different stages of the same litigation. It may or may not be reasonable to expect an insured party who fails at trial to abandon the fight for want of funding. That will depend mainly on the merits of the appeal. But an insured claimant who succeeds at trial and becomes the respondent to an appeal is locked into the litigation. Unless he is prepared to forego the fruits of his judgment, which by definition represents his rights unless and until it is set aside, he has no option but to defend the appeal. The topping-up of his ATE policy to cover the appeal is in reality part of the cost of defending what he has won by virtue of being funded under the original policy. The effect, if the top-up premium is not recoverable, would be retrospectively to alter the balance of risks on the basis of which the litigation was begun.”




This may be a just solution, essentially for the reasons given in paragraph 21, but it is hard to square this decision with previous decisions and with the different wording in the different sections of LASPO.


In my view the logic of Lord Hodge, dissenting, set out at paragraphs 25 to 38 makes more sense.


However, that is neither here nor there as this is a binding decision by the most senior court in the land.


Supreme Court upholds recoverability of success fees and ATE premiums


In Times Newspapers Limited v Flood [2017] UKSC 33


the Supreme Court unanimously dismissed three appeals by newspaper publishers who were claiming that their right to freedom of expression under Article 10 of the European Convention on Human Rights was breached by them being ordered to pay to the claimants’ success fees and ATE premiums.


Each of the newspaper publishers had been involved in libel trial and MGN had faced allegations of hacking into phone messages.


In each case the publisher lost and was ordered to pay the claimant’s costs including the success fee and After-the-Event insurance premiums, which remain recoverable in defamation and privacy claims.


The publishers relied upon the decision of the European Court of Human Rights in MGN v United Kingdom [2011] ECHR 66 where the court held that the right to freedom of expression was infringed by the order to pay the success fees and ATE premiums.

However here the Supreme Court said that the government of the United Kingdom was not a party to the appeals and therefore it would be inappropriate for the Supreme Court to express a concluded view on whether the rights of the publishers were infringed.


In the case involving Associated Newspapers Limited the Supreme Court accepted that either the publisher or the claimant had to suffer an injustice but ruled that the level of injustice to the claimant would be significantly more substantial.


The President of the Supreme Court, Lord Neuberger said:


“It is a fundamental principle of any civilised system of government that citizens are entitled to act on the assumption that the law is as set out in legislation (especially when its lawfulness has been confirmed by the highest court in the land), secure in the further assumption that the law will not be changed retroactively – i.e. in such a way as to undo retrospectively the law upon which they committed themselves.”


Lord Neuberger said it would be wrong to make it more difficult for claimants in defamation actions to obtain access to justice than claimants in other types of civil claims.




The claimant recovers success fee for work carried after Litigation Friend replaced 


In Mole and another v Parkdean Holiday Parks Ltd and another [2017] EWHC B10 (Costs) (29 March 2017)


the Senior Courts Costs Office held that a claimant could recover a CFA success fee under a costs order against the defendants, in respect of work undertaken by the Claimant’s solicitors after the Official Solicitor replaced his mother as litigation friend.


In 2006, his mother entered into a CFA for the Claimant’s claim, which described her as the client (as the Claimant’s mother and litigation friend).


In April 2013, the Official Solicitor replaced her as litigation friend. In July 2013, the Official Solicitor signed a “deed of ratification and affirmation” describing the Claimant as the client and instructing Claimant’s solicitors to continue with the claim under the terms of the CFA.


Defendant contended that the Official Solicitor could not ratify or affirm the CFA as the Claimant’s agent, as a person lacking capacity could not act as principal and, therefore, the CFA was never with the Claimant himself. The deed took effect as a new CFA into which the Official Solicitor entered after 1 April 2013, meaning no success fee was recoverable (section 44(4), LASPO).


Referring to Blankley v Central Manchester Children’s University Hospitals NHS Trust [2015] EWCA Civ 18, the Master held that the 2006 retainer remained effective throughout the claim, despite the Official Solicitor replacing the mother.


The claim for costs in the period after the Official Solicitor’s appointment did not depend on the Official Solicitor having entered into a new agreement on 1 April 2013.


An agreement rendering the claimant liable to pay the success fee under the original CFA for the period after the Official Solicitor’s appointment already existed. The Claimant’s incapacity did not prevent him being a principal for these purposes, or otherwise incurring the relevant costs liability.


The decision avoids three problematic outcomes:


  • The original CFA being found to have been terminated on the basis of a non-party’s contentions and against the parties’ wishes, when both were able to continue performing their obligations.


  • The Official Solicitors being liable for the success fee and potentially having to pass on liability to Claimant.


  • (Assuming that the success fee is otherwise recoverable) the Defendant thereby receiving a windfall.


Proportionality and ATE insurance premiums


In Demouilpied v Stockport NHS Foundation Trust [2016] EW Misc B40 (CC)


Manchester County Court dismissed two appeals by claimants in clinical negligence cases against assessments of block rated ATE insurance premiums.


In each case there had initially been a provisional assessment, and in each case the claimant challenged that provisional assessment, leading to an oral hearing.


The judge held that under the post-April 2013 proportionality regime the court no longer had a discretion to award disproportionate costs under CPR 44.3(2) in relation to additional liabilities.


The court also held that when determining proportionality the court was not allowed to take into account matters beyond the specific cases before it.


In other words the court was not entitled to take into consideration wider issues relating to the ATE market.


The court also held that individual items could be found to be disproportionate, even though the global costs figure was not disproportionate.


ATE insurance premiums remain recoverable from the losing party in clinical negligence cases in relation to the cost of medical reports in relation to causation and liability.


Written by kerryunderwood

April 20, 2017 at 9:44 am

Posted in Uncategorized


with 4 comments

I deal with Part 36 on my Spring 2017 Personal Injury Reforms Course – click here for more information and to book – and in my new 3 volume book – Personal Injury Small Claims, Portals and Fixed Costs which can be purchased from Amazon here, or direct from me.


In Thompson v (1) Reeve (2) The Motor Insurance Bureau (3) Mid Essex Hospital Services NHS Trust, Queen’s Bench Division of the High Court, Claim number HQ14P03864 20 March 2017


Master Yoxall allowed CPR 3.10 to be used to rectify the claimant’s admitted error in withdrawing a Part 36 offer by email where the parties receiving the notice had not indicated in writing that they were willing to accept service by email.


Thus the Claimant’s withdrawal of the Part 36 offer was deemed valid, which meant that it was not capable of acceptance by the defendants.


The situation arose due to the recent change in the discount rate.


The case involved a 14 year old child who was injured in a road traffic accident in August 2008.


She suffered significant injuries and these were made worse by the negligent treatment of those injuries by the NHS.


Judgment had been entered against the Motor Insurers Bureau and the Mid Essex Hospital Services NHS Trust but causation and quantum remained in issue.


The claimant’s Schedule of Loss valued the claim at about £347,000.00 and on 25 August 2016 the claimant made a Part 36 offer to settle the whole of the claim against all defendants in the sum of £340,000.00.


On 27 February 2017 the Lord Chancellor announced that the discount rate under section 1(1) of the Damages Act 1996 would be reduced on 20 March 2017 to minus 0.75%.


This would have the effect of increasing the claimant’s claim to around £602,500.00.


On 28 February 2017 the claimant’s solicitors sent an email to solicitors for the second and third defendants withdrawing the Part 36 offer in the following terms:


“Further to previous correspondence, the claimant withdraws all previous Part 36 offers to settle this claim, and specifically withdraws the previous offer to settle the claim in the sum of £340,000.00 in accordance with CPR 36.9(2).”


On 2 March 2017 the defendants accepted that Part 36 offer by fax and DX. This hearing involved the claimant’s application for permission to withdraw the Part 36 offer and an order that that offer was deemed to have been withdrawn on 28 February 2017.


The relevant Part CPR 36 reads:-


“36.9 (1) A Part 36 offer can only be withdrawn, or its terms changed, if the offeree has not previously served notice of acceptance.


(2) The offeror withdraws the offer or changes its terms by serving written notice of the withdrawal or change of terms on the offeree.


(Rule 36.17(7) deals with the costs consequences following judgment of an offer which is withdrawn.)


(3) Subject to rule 36.10, such notice of withdrawal or change of terms takes effect when it is served on the offeree.


(Rule 36.10 makes provision about when permission is required to withdraw or change the terms of an offer before the expiry of the relevant period.)


(4) Subject to paragraph (1), after expiry of the relevant period—


(a) the offeror may withdraw the offer or change its terms without the permission of the court; or


(b) the offer may be automatically withdrawn in accordance with its terms.


(5) Where the offeror changes the terms of a Part 36 offer to make it more advantageous to the offeree—


(a) such improved offer shall be treated, not as the withdrawal of the original offer; but as the making of a new Part 36 offer on the improved terms; and


(b) subject to rule 36.5(2), the period specified under rule 36.5(1)(c) shall be 21 days or such longer period (if any) identified in the written notice referred to in paragraph (2).”


Section III of CPR Part 6 deals with the service of documents other than the claim form. CPR 6.20(1)(d) permits service by fax or other means of electronic communication in accordance with Practice Direction 6A. The effect of paragraph 4.1(1) of the Practice Direction is that service by email is permitted but only where the receiving party has indicated in writing that they are willing to accept service by email.


The Claimant accepted that service of the notice of withdrawal by email was not in accordance with CPR 6.20. However the Claimant submits that CPR 3.10 may be applied so that service of the notice of withdrawal can be treated as valid.


Rules 3.10 states:


“3.10 Where there has been an error of procedure such as a failure to comply with a rule or practice direction –


(a) the error does not invalidate any step taken in the proceedings unless the court so orders; and


(b) the court may make an order to remedy the error.”


The court here then recited the claimant’s and defendant’s admissions as follows:-


“16. The Claimant submits that Rule 3.10 is of wide application and relies on Integral Petroleum SA v SCU-Finanz AG [2014] EWHC 702 (Comm), Popplewell J. The case may be summarised as follows:


Integral Petroleum SA v SCU-Finanz AG [2014] EWHC 702 (Comm), Popplewell J., on an application to set aside a default judgment, it was held that the claimant’s error of procedure in serving particulars of claim by e-mail was “a failure to comply with a rule or practice direction” under r.3.10(a), service was to be treated as valid. The judge indicated that a narrower approach to r.3.10 would be justified in relation to originating documents. It was said that Phillips v Nussberger (reported sub nom Phillips & Another v Symes & Others (No 3) establishes that r.3.10 is to be construed as of wide effect so as to be available to be used beneficially wherever the defect has had no prejudicial effect on the other party.


  1. The Claimant referred to the commentary in the White Book under Rule 3.10. Two Court of Appeal are of interest.


In Vinos v Marks & Spencer plc [2001] 3 All ER 784: dealing with r.7.6(3) (which stipulates a strict code re service of claim form), it was held that the Claimant could not use r.3.10 as this would have the effect giving an extension of time which was not permitted under r.7.6(3).


Cf. Steele v Mooney [2005] EWCA (Civ) 96, [2005] 1 WLR 2819; there the claim form was not served within 4 months, but before the 4 months expired the claimant’s solicitors issued an application for extension of time. However, the application, by error, sought an extension only as regards the particulars of claim and supporting documentation. It omitted to seek an extension of time for the claim form. Held 3.10 could be used.


  1. Against this, the Defendants make the point that Part 36 is a self-contained code as it asserted in Rule 36.1(1). It is submitted that Rule 3.10 cannot be used in the context of Part 36.


  1. The Defendants rely on Sutton Jigsaw Transport Limited v Croydon London Borough Council [2013] EWHC 874 (QB) HHJ McKenna. This case concerned an application by the claimant pursuant to CPR 36(9)(3) for permission to accept the defendant’s Part 36 offer made shortly before start of the trial. During the course of the trial, the claimant’s counsel gave the defendant’s counsel a written note accepting the defendant’s Part 36 offer. Shortly afterwards, the defendant withdrew its Part 36 offer. The question therefore arose as to the validity of the service. It was held that the notice of acceptance had not been validly served as it was not sent to the defendant’s address for service.


The claimant sought to circumvent the difficulty with service by inviting the court to dispense with service or to permit, retrospectively, submitted service.


The judge said at [9]:


I have given consideration to the issue of whether, given that the parties’ representatives, solicitors and counsel were at court, it would be overly legalistic not to accede to the claimant’s application. But it does seem to me, on analysis, that CPR 36 does provide clear rules and the parties should be on a level playing field; both should be taken to know the rules and should comply with them if they wish to obtain the benefits which CPR 36 provides. To permit the claimant’s application either by means of the dispensation with service or by ordering substituted service retrospectively, would, as it seems to me, be to give the party, who did not comply with the rules provided for service or acceptance of the Part 36 offer, with an unfair advantage compared with the party that did comply with the rules.”


The court here then said that it preferred the claimant’s submissions and held that CPR 3.10 has a wide effect and could be applied to the present case while accepting that it could not be used to extend a statutory time limit or to avoid service of a document required by statute or to extend the time for service of a claim form.


Here the claimant gave notice in writing and the defendant had received it and knew everything that it needed to know.


It was only the method of service which was defective and the court found that CPR 3.10 could be invoked to cure that defect.


As far as the Sutton Jigsaw case was concerned the court did not regard itself as bound by that decision as CPR 3.10 was not referred to in that case.


Thus the court found that it had the discretion to cure the defect in service and then considered whether or not it should exercise that discretion.


The judge then said:


“In my view, it would not be just or consistent with the overriding objective that a technical breach of the rules should impede the proper assessment of damages in this case.”


Comment (1)


So the MIB and the NHS Trust – both state/quasi state bodies sought to use a technicality to avoid a very severely and negligently injured child from getting the correct level of damages.


It would be nice if the NHSLA and the MIB behaved other than in this way.


Comment (2)


Proposed amendment to the Civil Procedure Rules


“Anybody which does not consent to service by email shall recover no costs and should always be liable to pay costs on the indemnity basis.”




Written by kerryunderwood

April 5, 2017 at 7:07 am

Posted in Uncategorized


with 2 comments

I am trekking in the Sahara Desert to raise money for the Lord’s Taverners’ cricket charity for disabled and disadvantaged children. If you find my blogs helpful how about making a donation? All donations go straight to the charity as the trekkers pay all of their own expenses. Please donate here.


This is all dealt with in my new book – Personal Injury Small Claims, Portals and Fixed Costs – which can be ordered here.


This post, with a slightly different house style, first appeared on the Practical Law Dispute Resolution Blog on 24 March 2017.


The horizontal and vertical extension of Fixed Recoverable Costs is being considered by Lord Justice Jackson, whose report is due by 31 July 2017.


The Government will then respond and consult, but is on record as supporting the spread of Fixed Recoverable Costs and thus the key issues will be the extent of the vertical extension, that is what value of claims will be covered, and the detail and amount of fixed costs for any piece of work.


Horizontal extension refers to other types of legal work. At present only personal injury work – and not all of that – is covered.


There is no significant judicial or political opposition to the revolution in the delivery of legal services, of which fixed costs are a part.


The Prisons and Courts Bill, which introduces massive changes, including online courts and severe curtailments of general damages in personal injury cases, received an unopposed Second Reading in the House of Commons on 20 March 2017.


Thus not a single member of Parliament from any party voted against these proposals and the same will almost certainly be true in relation to fixed costs.


Civil litigators need to recognise the reality that the issue is how and to what extent fixed costs come in, not whether they come in.


We can already be fairly sure of the date. In its response to the consultation paper on raising the small claims limit in personal injury matters the Government indicated that it intended to bring in all of the reforms together on 1 October 2018 and it is virtually certain that that will be the date when fixed costs come in for all types of civil litigation without exception.


The maximum damages cap being considered by Lord Justice Jackson is £250,000.00, but it may be that initially, on 1 October 2018, there will be a lower maximum figure, perhaps £100,000.00.


The current personal injury fixed costs scheme has the same upper limit as the fast track, that is £25,000.00.


Lord Justice Jackson has referred to spreading fixed costs to “the lower reaches of the multi-track” but is now considering having an Intermediate Track, possibly covering claims between £25,000.00 and £100,000.00.


It is anticipated that this track will have some of the features of the fast-track and some of the features of the multi-track.


Following the decision in Qader & Others v Esure Ltd & Khan v McGee [2016] EWCA Civ 1109, 16 November 2016 and rule 8(1) of the Civil Procedure (Amendment) Rules 2017 – effective 6 April 2017 – any claim allocated to the multi-track ceases to be subject to fixed costs, both in relation to costs already incurred and future costs.

In these blogs I will look in much greater detail at specific areas, such as advocacy fees, the role of counsel, Part 36, indemnity costs, children’s cases and much more.


The reaction of lawyers to the concept of fixed costs in civil proceedings has been overwhelmingly negative and in particular the Law Society and the Bar Council have essentially refused to engage with the idea. In my view that is a huge mistake.


It should be self-evident that the purpose of the legal system is to serve litigants and potential litigants and not lawyers. Any lawyer who does not realise that legal costs are ludicrously expensive to the extent of excluding virtually the entire population, including small and medium sized businesses, is living in Fantasy Land.


A system whereby the potential adverse consequences for a client are fixed and certain, and where the client knows exactly what they will recover in the event of success allows clients, and indeed lawyers to budget and plan accordingly.


Also, once the tyranny of the hourly rate is escaped then lawyers are rewarded for their skill, expertise, speed and judgment and not for ploughing through hundreds of thousands of pages of meaningless documents.


Good lawyers will benefit; the plodders will lose out. So what?


Fixed Recoverable Costs remove the need for budgets, costs draftsmen and time recording and judgments about which level of fee earner is appropriate for the work.


In employment work and family work there are generally no recoverable costs in any event and in most personal injury cases, over 90% – costs are already fixed.


In the personal injury field Fixed Recoverable Costs work and they have changed the behaviour of lawyers for the better. The same will happen with general civil litigation.


A key issue will be the extent to which the process of litigation is re-engineered to make it more efficient and to allow lawyers to both reduce and quantify costs in advance, and still make a profit. The Prisons and Courts Bill, currently before Parliament, is the key measure in this regard.


A measure of how far we have to go can be shown by the case of Thompson v Reeve (1) The Motor Insurance Bureau (2) Mid Essex Hospital Services NHS Trust (3), 20 March 2017, Claim number HQ14P03864 – Queen’s Bench Division of the High Court.


The claimant had by email withdrawn a Part 36 offer and the defendants argued that that was an invalid withdrawal as they had not consented to service by email and therefore they were free to accept the apparently withdrawn offer.
The court accepted that that was the position but granted the claimant relief from sanctions, thus curing the bad service.
That a court needs to do that in 2017 is madness. Any lawyer, business or organisation not accepting service by email should not be allowed to participate in the litigation process.


There are a whole load of legal dinosaurs and the sooner they are extinct the better.


Written by kerryunderwood

March 30, 2017 at 8:37 am

Posted in Uncategorized


with 3 comments

I am trekking in the Sahara Desert to raise money for the Lord’s Taverners’ cricket charity for disabled and disadvantaged children. If you find my blogs helpful how about making a donation? All donations go straight to the charity as the trekkers pay all of their own expenses. Please donate here.


This is all dealt with in my new book – Personal Injury Small Claims, Portals and Fixed Costs – which can be ordered here.


In McShane v Lincoln, Birkenhead County Court, case number B11B1440 – 28 June 2016


the District Judge held that a stage 3 hearing in the portal process required a qualified solicitor or barrister or CILEX fellow to appear and that no one else had rights of audience.


Section 12(1) of the Legal Services Act 2007 designates certain activities as “reserved legal activities” including the exercise of a right of audience and the conduct of litigation.


Schedule 2, paragraph 3 of the Act, defines a right of audience:


“(1) A “right of audience” means the right to appear before and address a court, including the right to call and examine witnesses.


(2) But a “right of audience” does not include a right to appear before or address a court, or to call or examine witnesses, in relation to any particular court or in relation to particular proceedings, if immediately before the appointed day no restriction was placed on the persons entitled to exercise that right.”


Section 13(2) of the Act provides that a person is entitled to carry on a reserved legal activity where:


  • the person is an authorised person in relation to the relevant authority; or


  • the person is an exempt person in relation to that activity.


The claimant submitted that the agent, who it was accepted did not himself have the necessary qualifications to exercise rights of audience, was an exempt person.


The relevant exemption in relation to a solicitor’s agent is set out in schedule 3 paragraph 1(7):


“The person is exempt if—


  • the person is an individual whose work includes assisting in the conduct of litigation,


  • the person is assisting in the conduct of litigation—


  • under instructions given (either generally or in relation to the proceedings) by an individual to whom sub-paragraph (8) applies, and


  • under the supervision of that individual, and


  • the proceedings are not reserved family proceedings and are being heard in chambers—


  • in the High Court or county court, or


  • in the family court by a judge…”


Schedule 3 paragraph 8 states:


“This sub-paragraph applies to—


  • any authorised person in relation to an activity which constitutes the conduct of litigation;


  • any person who by virtue of section 193 is not required to be entitled to carry on such an activity.”


The court pointed out that the importance in determining this issue is that if the solicitor’s agent is not exempt, then he may be committing a criminal offence under section 14 of the Legal Services Act 2007:


“(1)        It is an offence for a person to carry on an activity (“the relevant activity”) which is a reserved legal activity unless that person is entitled to carry on the relevant activity.


(2)          In proceedings for an offence under subsection (1), it is a defence for the accused to show that the accused did not know, and could not reasonably have been expected to know, that the offence was being committed.


The court here said that the issues it had to decide where:


  • Is the hearing in Chambers?


  • Is the advocate assisting in the conduct of the litigation?


  • Is the advocate assisting under instructions given by and under the supervision of an authorised person as defined in subparagraph (8)?


It was agreed that if the answer to any of those questions is no then the solicitor’s agent did not have a right of audience at a stage 3 hearing.


Here the court held that in accordance with CPR 39.2 stage 3 hearings will be public hearings, and do not take place in “chambers” as the term was understood in the previous rules which it was accepted should determine this aspect of the case.


The pre 1999 equivalent was an Assessment of Damages Hearing, which was held in Open Court with the judge and advocates robed, and oral evidence given on oath.


The matter could now be dealt with by way of a disposal hearing upon the case papers, without the presence of the claimant but that was still a final contested hearing and still a public hearing.


That was enough to dispose of the matter but the judge went on to consider the other point.


The judge held that the work of a solicitor’s agent does not include assisting with the conduct of litigation and under section 12 of the Legal Services Act 2007 “conduct of litigation” and “exercise of a right of audience” are distinct and separate reserved legal activities.


This was demonstrated by the fact that under Schedule 3, paragraph 1(2) the court had power to grant a right of audience on a case by case basis, but there is no such power in relation to the conduct of litigation.


The court considered that the decision in Agassi v Robinson [2006] 1 WLR 2126, in relation to the predecessor to the Legal Services Act 2007, that is section 119 of the Courts and Legal Services Act 1990, was relevant and that the same principles should apply.


The judge then said:


“I am not satisfied therefore that applying this definition, a solicitor’s agent’s work includes assisting in the conduct of litigation (as required under Schedule 3, paragraph 7(a)). This may be distinguished from the work of a solicitor’s clerk or legal executive employed by the solicitor who assists with the preparation of the case before attending a hearing who is clearly assisting in the conduct of litigation.”


Historically solicitors would instruct other solicitors firms to appear on their behalf in other parts of the country. This was described as “agency work” and largely involved attending on housing matters, particularly mortgage possession claims which under the CPR are heard in private. However it also included appearing on interlocutory hearings as they were known, as these were heard in chambers. For open court work solicitors or counsel were instructed.


With the introduction of the CPR the demarcation between what is or is not a public hearing has become blurred and thus who may appear at such hearings are unclear. There is currently some disquiet amongst those who have expended very considerably to achieve the necessary qualifications to exercise the right of audience that this is being exercised regularly in breach of the regulations.
The case of a solicitor’s agent is markedly different to that of the historical instruction of an agent. The concept of a solicitor’s agent is a relatively new development, and many thus employed are persons who have legal qualifications but for some reason or other cannot obtain a professional qualification or employment as a solicitor or barrister. They will normally act as a freelance and self-employed advocate and have no previous involvement in the case until instructed to attend the hearing.


The judge also found that the solicitor’s agent was not supervised by an authorised litigator as per paragraph 1(7)(b) of Schedule 3 of the Legal Services Act 2007.


The judge said:


“There are important reasons for this provision, which provides protection to the public in the event of negligence or misconduct, as solicitors and barristers are required by law to have professional indemnity insurance, and are subject to regulation and possible disciplinary sanction by their professional bodies.”


Although this is a first instance decision, it researches thoroughly the law and is an important, and in my view correct, decision.


McKenzie Friends


How does this decision square with the increasing use of McKenzie Friends?


In Ravenscroft v Canal and River Trust [2016] EWHC 2282 (Ch)


Chief Master Marsh gave guidance.


He said that the starting point was to consider whether the applicant reasonably needed such assistance. If so the scope of that assistance should be determined and that required consideration of the applicant’s personal position, the context in which the application was made, the principles in the overriding objective and the guidance in Practice Notes: McKenzie Friends: Civil and Family Courts [2010] 1 WLR 1881.


Here the Master held that it was appropriate to appoint a McKenzie Friend and for him to have rights of advocacy in a full High Court trial, but that is “an exceptional course of action… only justified by exceptional circumstances”.


The Master said that the permission was not open-ended and could be withdrawn at any time if it was abused or if the McKenzie Friend sought to delay the conduct of the trial.


Here the claimant had difficulty in understanding written material, as well as the technical nature of the case and thus it was reasonable for him to call on assistance. The McKenzie Friend proposed to act free of charge and had already won a similar case when representing himself.


However the McKenzie Friend also had a number of unmet costs orders against him, including ones in favour of the defendant here.




A worrying decision that comes very close to saying that anyone who needs representation can choose anyone and does not need to have a lawyer.


This representative has ignored costs orders against him and thus can represent people in court but treat court orders that he does not like with impunity.


Thus this person is allowed to appear in a High Court trial but a solicitor’s agent is not allowed to appear at a stage 3 hearing.


I remain of the view that it is a criminal offence to appear in court as an unqualified representative, except in certain circumstances, and that was the view of the judge in the case of McShane v Lincoln, considered above. Those circumstances include applications in chambers and matters in the Small Claims Court.


On what basis has any judge the power to overrule the criminal law?


My view is that a judge who does so is potentially guilty of the criminal offence of aiding and abetting an offence under section 14 of the Legal Services Act 2007.

Written by kerryunderwood

March 28, 2017 at 9:19 am

Posted in Uncategorized

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