Kerry Underwood

BANKRUPTCY PETITION REMEDIED WHERE NO PREJUDICE

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Moorgate Industries UK Ltd v Mittal [2020] EWHC 1550 (Ch) (19 June 2020)

the Chancery Division of the High Court remedied a creditor’s defective bankruptcy petition, using rule 12.64 of the Insolvency (England and Wales) Rules 2016, where no prejudice had been caused to the debtor.

Here, the creditor had included accrued interest on the judgment debt stated in the statutory demand and converted it from a foreign currency to sterling, but a creditor’s bankruptcy petition should not include interest which has accrued after the date of the statutory demand – see  Paragraph 12.2.2 of the Insolvency Practice Direction (July 2018).

While rule 10.9(1)(e) of the Insolvency (England and Wales) Rules 2016, arguably allows a petitioner to claim a rate of charge or interest if stated in their statutory demand, this is not how the court has traditionally understood the legislation.

Rule 14.21 of the Insolvency (England and Wales) Rules 2016 sets out the only currency conversion requirement in the insolvency legislation, which provides that a proof for a debt incurred or payable in a foreign currency must state the amount of the debt in that currency, and the trustee in bankruptcy then converts the debt into sterling using the exchange rate prevailing on the date of the bankruptcy order.

As no prejudice had been caused to the debtor by these defects, the court remedied them by using rule 12.64 of the Insolvency (England and Wales) Rules 2016 by reducing the amount claimed in the creditor’s petition to the amount claimed in their demand.

The court also declined to apply its discretion, under section 266(3) of the Insolvency Act 1986, to stay or dismiss proceedings as the creditor owed a costs award to the debtor following the withdrawal of an earlier bankruptcy petition.

There was no authority preventing a creditor from presenting a second petition where a costs order, made on withdrawing an earlier petition, remained unpaid.

Instead, it permitted the creditor to apply equitable set-off of the costs award against the debt owed by the debtor.

The decision reflects the approach taken with defective statutory demands which contain incomplete, misleading or inaccurate details of the debt since –

Agilo Ltd v William Henry [2010] EWHC 2717 (Ch).

Here, the court made the bankruptcy order on the creditor’s remedied petition as there was no evidence of a reasonable prospect of it being paid in full within a reasonable period of time.

 

Underwoods Solicitors are the solicitors for Crowe UK LLP, the Joint Liquidators of the Cambridge Analytica Group of Companies

Written by kerryunderwood

July 3, 2020 at 9:26 am

Posted in Uncategorized

THREE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

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Set out below are three new recipes from my close friend Andy Wakeford who is Head of School for Food Academy, Hospitality & Restaurant Services at West Herts College.

Also see my previous blogs –

 FOUR RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

 THREE NEW RECIPES FROM ANDY WAKEFORD

 MORE NEW RECIPES FROM ANDY WAKEFORD

THREE MAYDAY RECIPES FROM ANDY WAKEFORD

FOUR MAYDAY RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

MORE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

TWO MORE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

THREE MORE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

Written by kerryunderwood

June 30, 2020 at 8:53 am

Posted in Uncategorized

INSOLVENCY: INJUNCTION RESTRAINING ADVERTISEMENT OF WINDING-UP PETITION GRANTED UNDER CORPORATE INSOLVENCY AND GOVERNANCE BILL, NOT YET LAW

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Re A Company [2020] EWHC 1551 (Ch) (16 June 2020)

the Chancery Division of the High Court granted an injunction restraining advertisement of a winding-up petition based on paragraph 5 of Schedule 10 to the Corporate Insolvency and Governance Bill 2019-21 (Schedule 10), which as the name suggests, is not yet law but which will have retrospective effect.

The court found that on the facts paragraph 5(1)(a) and (b) of Schedule 10 were satisfied, that is the petition was presented in the relevant period and the company was deemed unable to pay its debts on a ground specified in section 123(1) of the Insolvency Act 1986.

The court held that the evidential burden of showing that COVID-19 had a financial effect on the company before the presentation of the petition,so as to satisfy paragraph 5(1)(c) of Schedule 10 was on the company, not the petitioner.

This was a low threshold; the requirement was simply that a financial effect must be shown, not that COVID-19 was a cause of the company’s insolvency.

The evidential burden was to establish a prima facie case, rather than to prove the financial effect on a balance of probabilities.

The court held that the fact that the company’s funding drive was stopped by the onset of COVID-19 satisfied the requirement.

As paragraph 5(1) of Schedule 10 was satisfied, the court noted that, at the hearing of the petition, it would only be able to wind-up the company if paragraph 5(3) of Schedule 10 was satisfied.

Thus, the ground on which the petition was based  – section 123(1) of the Insolvency Act 1986 –  would apply even if COVID-19 had not had a financial effect on the company.

The burden of showing this was on the petitioner.

The court was not satisfied with this and found that there was no real chance of a winding-up order being made on the petition.

Allowing the advertisement would also be oppressive and unfair to the company, which was in the process of implementing a scheme of arrangement.

The High Court had previously restrained the presentation of a winding-up petition based on Schedule 10: – see

Re a Company (Injunction to Restrain Presentation of a Petition) [2020] EWHC 1406.

The purpose of the legislation was set out in a government press release on 23 April 2020:

“…the government will temporarily ban the use of statutory demands (made between 1 March 2020 and 30 June 2020) and winding up petitions presented from Monday 27th April, through to 30th June, where a company cannot pay its bills due to coronavirus.”

 

Comment

Without going into the facts of this case in detail, it was clear that at the beginning of 2019 the company was unable to pay its debts.

There is much comment on the expected massive rise in unemployment once furloughing ends, and also on the fact that many companies may be unable to continue trading, genuinely due to coronavirus.

What is less commented on the fact that many companies which were about to go into administration or liquidation, irrespective of coronavirus, have had a stay of execution.

Coronavirus has not caused these companies to get into financial difficulties; that is the point that I am making.

However, it will mean that in addition to companies which have genuinely suffered due to coronavirus, a dam will break in relation to companies which were going under anyway but, as stated above, have had a stay of execution.

 

Underwoods Solicitors are the solicitors for Crowe UK LLP, the Joint Liquidators of the Cambridge Analytica Group of Companies

Written by kerryunderwood

June 30, 2020 at 8:07 am

Posted in Uncategorized

INSURED’S RIGHT TO CHOOSE OWN LAWYER

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This piece, in slightly different form, first appeared on the Practical Law Dispute Resolution Blog.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

 

The issue of whether an individual who has before-the-event insurance is forced to use the solicitors nominated by the insurance company, or whether they have freedom of choice to instruct their own solicitor, is a vexed one which I get a huge number of enquiries about.

The direction of travel of the courts has all been one-way, and that is to give freedom of choice to clients to choose their own solicitor, but to enable the before-the-event insurance company to set limits on the hourly rates and effectively to impose upon those independent solicitors the same terms as would be imposed upon their own panel solicitors.

The latest chapter in this saga is a recent decision of the Court of Justice of the European Union which held that the freedom of choice of an insured person extends to mediation proceedings, as well as substantive proceedings.

That decision was given in the case of

Orde van Vlaamse Balies and Ordre des barreaux francophones et germanophone v Ministerraad (Case C-667/18) EU:C:2020:372 (14 May 2020) .

An insured person’s right to freedom of choice of lawyer under a legal expenses insurance policy stems from the Solvency II Directive (2009/138/EC) and the key wording, which has thrown up so many cases, is contained in Article 201(1)(a) of that Directive which provides:

“(1) Any contract of legal expenses insurance shall expressly provide that:

(a) where recourse is had to a lawyer or other person appropriately qualified according to national law in order to defend, represent or serve the interests of the insured person in any inquiry or proceedings, that insured person shall be free to choose such lawyer or other person”.

Most recent cases have revolved around the meaning of “any inquiry or proceedings”.

Here the request was made in proceedings between the Orde van Vlaamse Balies and the Ordre des barreaux francophones et germanophone  – the bar associations – and the Ministerraad  – Council of Ministers, Belgium – relating to the freedom of an insured person to choose his or her representative in mediation proceedings in the context of a legal expenses insurance contract.

The bar associations sought annulment of a 2017 national law as infringing the constitution, when read with the Solvency II Directive.

The Court of Justice of the European Union concluded that Article 201(1)(a) of the Solvency II Directive must be interpreted as meaning that the term “proceedings” referred to in that provision includes judicial and extrajudicial mediation proceedings in which a court is involved or is capable of being involved, whether when those proceedings are initiated or after they are concluded.

Previously, in a landmark decision, the European Free Trade Association (EFTA) Court held that the right to choose ones own lawyer applied at the stage of notification of the claim, or any effort to settle a matter out of court, or any instruction of the lawyer to assess the legal and factual situation, and thus the right arose as soon as a potential cause of action arose.

The judgment was a wholesale rejection of the longstanding arguments of insurance companies that freedom of choice only applied once proceedings have been issued.

That decision was in

Nobile v DAS Rechtsschutz-Versicherungs AG (Case E-21/16)

where the European Free Trade Association (EFTA) Court considered whether provisions in a legal expenses insurance contract were compatible with the freedom for insured persons to appoint a lawyer set out in the Solvency II Directive (2009/138/EC).

In reliance on its terms and conditions, the insurer had declared that it was not obliged to provide cover, as the insured person in question had instructed a lawyer without the insurer’s consent before the start of proceedings.

The court held that Article 201(1)(a) precludes terms and conditions in a legal expenses insurance contract that release the insurance company from its obligations under the contract if the insured person mandates an attorney to represent his interests, without the consent of the company, at a point in time when the insured person would be entitled to make a claim under the contract.

It rejected the argument that the application of the freedom to choose a lawyer was limited to judicial or administrative proceedings.

Here the court held that the right to choose one’s own lawyer applied at the stage of notification of the claim or any effort to settle a matter out of court, or any instruction of a lawyer to assess the legal and factual situation.

Thus the right arose as soon as a potential cause of action arose.

The court also held that it was not necessary for the insured to notify the BTE insurer in advance.

A BTE insurer has no right to deny coverage for the potential proceedings in issue because it deemed such proceedings to be unnecessary, or disproportionate or premature.

Such a right could motivate the insurance undertaking to reject coverage, which could deprive the insured person of the protection afforded by the legal expenses insurance contract.

If DAS’s contract was to be upheld then the insured person’s right freely to choose a lawyer would consist solely of the possibility of suggesting a lawyer, the acceptance of whom would be, ultimately, at the discretion of the insurance company.

It is incompatible with Solvency II Directive to accept that an insurance undertaking could be released from its obligations under legal expenses insurance contracts because the insured person breached some terms and conditions.

However that freedom to choose a lawyer cannot extend to obliging member states to require insurers to cover in full the costs incurred by the person instructed to represent the insured person.

Limitations of coverage may, for example, relate to a single claim or to the economic value of a claim.

However, terms and conditions to limit the coverage may not be such as to render it impossible for the insured person freely to choose a lawyer.

 

Comment

This is an interpretation of an EU Directive and it is likely that the UK will form part of a non-EU European grouping, including countries like Norway and Switzerland, once we leave the EU.

Any which way, these decisions are likely to remain binding on BTE insurers operating in the UK.

This is a case at the most senior level stating in the clearest possible terms that an insured person under a BTE insurance contract has an absolute right to instruct lawyers of their choice the moment the course of action, or potential course of action, arises.

In

Massar v DAS Nederlandse Rechtsbijstand Verzekeringsmaatschappij NV (Case C-460/14)

and

Buyuktipi v Achmea Schadeverzekeringen NV and Stichting Achmea Rechtsbijstand (Case C-5/15) (7 April 2016)

the European Court of Justice ruled that the term “inquiry” included disciplinary proceedings by an employer in relation to an employee.

Here, at Paragraph 31, the court said:

“Thus, any stage, even a preliminary stage, which is capable of leading to proceedings before a judicial body must be regarded as falling within the term ‘proceedings’ within the meaning of Article 201 of Directive 2009/138.”

At Paragraph 33 the court recognised the importance of an insured person having the same representative at the preparatory stage of a case as well as at the judicial stage.

In spite of the clarity and certainty of these rulings by what is still the highest court governing matters in the United Kingdom, I will no doubt continue to get scores of emails from solicitors telling me that “the insurance company won’t let my client instruct me.”

There is a very short answer:

Sue.

Written by kerryunderwood

June 29, 2020 at 11:18 am

Posted in Uncategorized

COMPANY IN LIQUIDATION CAN COMMENCE ADJUDICATION PROCEEDINGS

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25 (17 June 2020)

the Supreme Court considered the relationship between the adjudication regime for building disputes and a rule of insolvency law known as insolvency set-off and the Supreme Court unanimously held that a company in liquidation can bring adjudication proceedings and that an adjudicator has jurisdiction to deal with the same.

The claims maintained their separate identity for many purposes, and it is not futile to allow an adjudication to proceed.

Bresco has a statutory and contractual right to adjudicate.

It would ordinarily be inappropriate for the court to interfere with the exercise of that statutory and contractual right.

Maintaining cash flow is not adjudication’s only purpose – it was designed to be a method of alternative dispute resolution in its own right.

In reality, most adjudicators’ decisions are not challenged, and they lead to a speedy, cost effective and final resolution of the dispute.

Here, adjudication was a proportionate method for Bresco’s liquidators to determine the net balance due between the parties.

It is possible a court will not enforce an adjudicator’s decision due to the insolvency process, but that is an issue for the court at the time of enforcement.

The operation of the insolvency set-off between claims and cross-claims does not mean there is no longer a dispute under the construction contract, or that the claims “simply melt away so as to render them incapable of adjudication”.

It does not deprive adjudication of its potential usefulness to liquidators and appropriate undertakings could be given, such as the sort discussed in

Meadowside Building Developments Ltd (In Liquidation) v 12-18 Hill Street Management Co Ltd [2019] EWHC 2651 (TCC).

 

The Supreme Court’s Press Summary reads:

 

Background to The Appeal

This case is about the relationship between (a) the adjudication regime for building disputes and (b) a

rule of insolvency law called insolvency set-off.

Adjudication was introduced by Parliament in 1996 to help resolve disputes in the building industry.

Parties to a construction contract have the right to refer their disputes to an independent adjudicator for a quick decision. The adjudicator’s decision is binding unless and until it is successfully challenged in court. In the meantime, the losing party must comply with the adjudicator’s decision – a principle known as “pay now, argue later” which is designed to stop financial disputes from holding up the project’s cash flow.

Insolvency set-off means that, when a company enters liquidation and there are mutual debts between the company and one of its creditors, the debts in each direction automatically cancel each other out.

This leaves a single net balance owed in one direction. The liquidator of the company will calculate the balance and decide how much the company owes or is owed overall.

The facts of the case

Bresco and Lonsdale are electrical contractors. In 2014 Bresco carried out installation work for Lonsdale on a construction site at 6 St James’s Square, London SW1. In 2016 Bresco entered insolvent liquidation.

Both parties claimed they were owed money by the other. Lonsdale said Bresco had abandoned the project prematurely, forcing them to pay £325,000 for replacement contractors.

Bresco said Lonsdale had never paid for some work Bresco had done, so Lonsdale owed £219,000 in unpaid fees plus damages for lost profits.

In 2018 Bresco’s liquidators took steps to refer their £219,000 claim to an adjudicator.

Lonsdale objected to the adjudication. They said Bresco’s claim (if any) and Lonsdale’s cross-claim had cancelled each other out by the process of insolvency set-off. This meant there was no longer any claim, or therefore any dispute under the contract, so adjudication was unavailable (“the jurisdiction point”).

In any case the adjudicator’s decision would not be enforced until the liquidator calculated the net balance. So an adjudication was pointless (“the futility point”).

Mr Justice Fraser accepted both Lonsdale’s points and granted an injunction to stop the adjudication.

Following an appeal by Bresco, the Court of Appeal rejected the jurisdiction point but upheld the injunction on the basis of the futility point. Bresco appealed again to the Supreme Court. Lonsdale cross appealed on the jurisdiction point.

Judgment

The Supreme Court unanimously allows the appeal and dismisses Lonsdale’s cross-appeal, with the result that the adjudication can go ahead. Lord Briggs gives the only judgment.

Reasons for The Judgment

(1) The jurisdiction point

The Supreme Court concludes that the adjudicator does have jurisdiction.

The insolvency set-off between Bresco’s claim and Lonsdale’s cross-claim does not mean that there is no longer a dispute under the construction contract, or that the claims have simply melted away [47].

The claims maintained their separate identity for many purposes [29]. Despite insolvency set-off, Bresco could have brought court proceedings to determine the value of its claim, or exercised a contractual right to go to arbitration [50-51]. It follows that Bresco could also refer its claim to adjudication [52].

(2) The futility point

The Court of Appeal thought there was a basic incompatibility between adjudication and insolvency setoff. If the adjudicator found in favour of Bresco, the courts would refuse to enforce the award because it would interfere with the insolvency process. The adjudication would not promote the goal of “pay now, argue later”: it was futile and a waste of resources [54-56].

The Supreme Court rejects that view [58]. Bresco has a statutory and contractual right to adjudication.

It would ordinarily be inappropriate for the court to interfere with the exercise of that statutory and contractual right [59].

Maintaining cash flow is not the only purpose of adjudication under the 1996 Act. Adjudication was designed to be a method of alternative dispute resolution (ADR) in its own right. In reality most decisions of an adjudicator are never challenged in court and they lead to a speedy, cost effective and final resolution of the dispute [13-15]. Here an adjudication will be a simple, proportionate method for Bresco’s liquidators to determine the net balance [60-62]. It is possible that the courts will not grant summary enforcement of the adjudicator’s decision due to the insolvency process, but that does not deprive the adjudication of its potential usefulness to the liquidators [64-67].

References in square brackets are to paragraphs in the judgment.

 

See my blogs –

INSOLVENCY: MEADOWSIDE EXCEPTIONS TO BRESCO RULE APPLIED: ADJUDICATIONS TO PROCEED

INSOLVENCY PROHIBITION IN BRESCO IS NOT ABSOLUTE

COMPANY IN LIQUIDATION CANNOT COMMENCE ADJUDICATION

 

Underwoods Solicitors are the solicitors for Crowe UK LLP, the Joint Liquidators of the Cambridge Analytica Group of Companies

Written by kerryunderwood

June 24, 2020 at 4:47 pm

Posted in Uncategorized

COSTS OF APPLICATIONS FOR INTERIM INJUNCTIONS

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

Immediate Costs Award In Failed Application For Interim Injunction

In

Neurim Pharmaceuticals (1991) Ltd and another v Generics UK Ltd and another [2020] EWHC 1468 (Pat)

the Patents Court held that the costs of an application for an interim injunction, refused because damages were an adequate remedy, should be decided immediately and not reserved to the trial judge.

The court thus distinguished the approach in such cases as compared with the approach to costs where the application for an interim injunction is granted, based on the balance of convenience as per the very recent case of –

Koza Ltd and another v Koza Altin Isletmeleri AS [2020] EWHC 1092 (Ch) (12 May 2020)

– see below.

The general situation in such cases is that, absent any special factor, the court normally reserves costs until after trial, although this is not an absolute rule, and indeed in that case did make an immediate costs order.

Broadly, where an interim injunction is granted, it is not correct to say that the defendant is the unsuccessful party, or that the claimant is the successful party as the idea of an interlocutory injunction is simply to “hold the ring” until trial when the dispute between the parties can properly be decided.

The position is different when an interim injunction is refused, as that does effectively mean a defeat for the claimant on that point.

Thus, generally, a claimant who loses an application for an interlocutory injunction can expect to have an immediate award of costs against it, but a claimant who succeeds on an interlocutory injunction is generally likely to find costs reserved until after the trial.

 

Interim Injunctions Decided On Balance Of Convenience

In

Koza Ltd and another v Koza Altin Isletmeleri AS [2020] EWHC 1092 (Ch) (12 May 2020)

the Chancery Division of the High Court considered the question of costs on successful applications for interim injunctions where the balance of convenience was a decisive factor.

In

Picnic at Ascot Inc v Derigs [2001] FSR 2,

the court stated that, in a case without any other special factors, where an applicant obtains an interlocutory injunction on the basis of the balance of convenience, the court normally reserves costs until after trial but in the Picnic case, the court was not laying down a hard and fast rule on how costs should be dealt with on applications for interlocutory injunctions where the balance of convenience was a decisive factor.

The logic of this practice is that, at this stage, there is no winner or loser.

There was no rule against awarding costs on such applications.

The present case was so significantly against the claimants on the balance of convenience that it was not within the general approach described by the court and it would be wrong to treat it as such and it would also be wrong to put off dealing with the matter of costs and, having heard the injunction application, the judge was best placed to ascertain whether the claimants really were justified in resisting the application.

The court here also ruled that there was no invariable rule that, when parties make common cause, running the same arguments, a costs order should be on a joint and several basis.

The costs order here was made against only one of two claimants as he was the “the real master of the litigation” on the claimants’ side.

An order against the other claimant might also have interfered with the purpose of the injunction.

The court held that it may not be possible to set off costs when different parties are involved and clear distinctions can be drawn.

The party facing the costs order here was not entitled to take advantage of a previous costs award that only his fellow claimant had obtained.

Written by kerryunderwood

June 15, 2020 at 7:41 am

Posted in Uncategorized

IMMEDIATE COSTS AWARD IN FAILED APPLICATION FOR INTERIM INJUNCTION

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Neurim Pharmaceuticals (1991) Ltd and another v Generics UK Ltd and another [2020] EWHC 1468 (Pat)

the Patents Court held that the costs of an application for an interim injunction, refused because damages were an adequate remedy, should be decided immediately and not reserved to the trial judge.

The court thus distinguished the approach in such cases as compared with the approach to costs where the application for an interim injunction is granted, based on the balance of convenience as per the very recent case of –

Koza Ltd and another v Koza Altin Isletmeleri AS [2020] EWHC 1092 (Ch) (12 May 2020)

all written up in my blog of 18 May 2020 –

COSTS OF APPLICATIONS FOR INTERIM INJUNCTION DECIDED ON BALANCE OF CONVENIENCE.

The general situation in such cases is that, absent any special factor, the court normally reserves costs until after trial, although this is not an absolute rule, and indeed in that case did make an immediate costs order.

Broadly, where an interim injunction is granted, it is not correct to say that the defendant is the unsuccessful party, or that the claimant is the successful party as the idea of an interlocutory injunction is simply to “hold the ring” until trial when the dispute between the parties can properly be decided.

The position is different when an interim injunction is refused, as that does effectively mean a defeat for the claimant on that point.

Thus, generally, a claimant who loses an application for an interlocutory injunction can expect to have an immediate award of costs against it, but a claimant who succeeds on an interlocutory injunction is generally likely to find costs reserved until after the trial.

Written by kerryunderwood

June 12, 2020 at 10:26 am

Posted in Uncategorized

PLAYING BEHIND CLOSED DOORS WOULD KILL SEMI-PRO FOOTBALL

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By Kerry Underwood

Underwoods Solicitors deal with all aspects of football law and Kerry is of course vice-chair of Hemel Hempstead Town Football Club and can be contacted at Kerry.underwood@lawabroad.co.uk or 01442 430 900.

At 2pm this afternoon Thursday 11 June 2020, the National League South, that is the level that is two divisions off of the Football League meets by Zoom to discuss whether to have play-offs, following the decisions of Leagues 1 and 2 to end their seasons now, but to have play-offs and promotion and relegation.  

Also to be decided is whether the new National League South season should start behind closed doors.

Here are my thoughts as in the article by Jon Dunham in this week’s Hemel Hempstead Gazette.

TEXT OF ARTICLE

The vice-chairman of Hemel Hempstead Town believes any idea of playing National League South matches behind closed doors is “an absolute non-starter”.

In their latest update to their 68 clubs, the National League confirmed that August 8 remains the official start date for the 2020-21 season but that it will ‘inevitably need to be reviewed and updated’.

They also said  ‘it is assumed that it is not practical and sustainable to commence the new season if matches are to be played behind closed doors’.

And that assumption seems to fit in exactly with Tudors vice-chairman Kerry Underwood, who also feels some sort of clarification on a potential start date when fans will be allowed into grounds is needed.

“Playing games at our level behind closed doors is an absolute non-starter and would kill the semi-professional game, there’s no doubt about that,” Underwood said.

“We get no TV money obviously, our money is dependent on gate takings and people spending money in the bar and buying food and so on.”

“We know that Premier League clubs, as they soon will be, can survive without anyone walking into the ground.”

“But what on earth is the point of having non-televised football being played behind closed doors? It’s like painting a picture and then not displaying it.”

“It would mean football in the National League would have no more relevance than me having a kickabout in the local park.”

“And my guess is that is the view of all 68 clubs.”

“I am also vice-chairman of my local cricket club and the ECB have given clear guidance all along and they said some time ago that the professional season would not start before August 1.”

“Personally, I think there is zero chance of football in front of live crowds before August.”

“And I think the National League could say now that there will be no football before the first Saturday in September because I know clubs are worried as they are currently having to have their pitches and everything ready in line with August 8.”

“And a lot of contracts involve players getting paid a month before the season starts so they can train and everything like that.

“So, contractually, that is putting clubs in a position where they would need to pay out from the beginning of July.

“If it was said now that there will be no football until the first Saturday in September at the earliest, that would at least clarify it for the 68 National League clubs.”

Hemel are currently without a manager following the departure of Sammy Moore last month.

At the time, the club insisted there was ‘no hurry’ when it comes to appointing his successor.

And Underwood added: “That remains the position but, as you would expect, we have had a lot of interest from good candidates.

“And whenever the season starts, we are confident we will be ready with a good team in place.”

With thanks to Jon Dunham and the Hemel Hempstead Gazette

Written by kerryunderwood

June 11, 2020 at 10:06 am

Posted in Uncategorized

INSOLVENCY: EXTRA-TERRITORIAL JURISDICTIONS

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Wolloff and Short (as Joint Liquidators of Akkurate Limited) v Calzaturificio Rodolfo Zengarini SRL and another [2020] EWHC 1433 (Ch)

the Chancery Division of the High Court held that it did not have power under Section 236(3) of the Insolvency Act 1986 to require persons resident in the European Union to produce documents relating to their dealings with a company being compulsorily wound up in England and Wales.

Section 236(3) does not have extra-territorial jurisdiction.

However, the court held that it did have such power under Council Regulation (EC) No 1346/2000 on insolvency proceedings.

The court here exercised its discretion to make such an order.

The 79-paragraph judgment is an exhaustive examination of the law in this field.

 

Underwoods Solicitors are the solicitors for Crowe UK LLP, the Joint Liquidators of the Cambridge Analytica Group of Companies

Written by kerryunderwood

June 9, 2020 at 10:24 am

Posted in Uncategorized

THREE MORE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

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Set out below are three new recipes from my close friend Andy Wakeford who is Head of School for Food Academy, Hospitality & Restaurant Services at West Herts College.

Also see my previous blogs –

 FOUR RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

 THREE NEW RECIPES FROM ANDY WAKEFORD

 MORE NEW RECIPES FROM ANDY WAKEFORD

THREE MAYDAY RECIPES FROM ANDY WAKEFORD

FOUR MAYDAY RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

MORE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

TWO MORE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

Written by kerryunderwood

June 9, 2020 at 8:39 am

Posted in Uncategorized

COSTS FOLLOWING DISCHARGE OF WORLDWIDE FREEZING ORDER

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Les Ambassadeurs Club Ltd v Albluewi [2020] EWHC 1368 (QB)

the Queen’s Bench Division of the High Court ruled on costs after discharging a casino’s Worldwide Freezing Order against a customer, who sought his costs of the Worldwide Freezing Order and the continuation and discharge applications, given findings of lack of risk of dissipation and material non-disclosure.

The casino said that as the court had criticised the customer, costs should be the customer’s costs in the case, but the court rejected this submission as the outcome of the applications had not hinged on his criticisms of the customer, and the casino’s non-disclosures were an independent matter.

The customer sought indemnity costs, arguing that non-disclosure breached an important duty, taking the matter “out of the norm”, and that there had been no basis for alleging risk of dissipation.

The court distinguished cases where a freezing order application had no basis from those, as here, where it was arguable, but the evidence failed to establish risk of dissipation.

Standard basis costs were ordered.

Relevant factors included the non-disclosure, its inter-relationship with whether risk of dissipation was established and the importance of upholding the duty of disclosure in without notice applications.

However, none of this was decisive and the non-disclosure was not in bad faith; the casino had failed to appreciate the potential relevance of certain matters to the risk of dissipation.

There is no general practice that material non-disclosure leads to indemnity costs, but it is relevant, and deliberate or culpable non-disclosure usually will.

Considering whether to order an interim payment, the court described the starting point for interim applications as “pay as you go” and referred to CPR 44.2(8) – payment on account, absent “good reason” otherwise.

Since enforcing any judgment the casino obtained might be difficult, due to absence of assets within the jurisdiction, it was just to allow the casino to set off the customer’s costs judgment against any judgment the casino obtained, by not ordering an immediate interim payment.

This was “not a point of general application” but reflected the customer’s concession that the casino had a good arguable case, and the “unsatisfactory features” of the customer’s indebtedness.

Written by kerryunderwood

June 8, 2020 at 9:45 am

Posted in Uncategorized

PORTAL MISTAKE BINDING: OUTRAGEOUS AND SHAMEFUL DECISION

with 10 comments


Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

 

In

Mahoney v Royal Mail, Truro County Court, 26 May 2020

a Deputy District Judge ruled that a personal injury claimant who had mistakenly settled a claim on the portal for £550, rather than £5,550, was bound by that error, even though in any case outside the portal system the common law doctrine of mistake would have allowed the claimant to avoid the consequences of the mistake.

The defendant was very well aware of the mistake as it had offered £4,000 and so knew that the claimant responding with an offer of just £550, rather than £5,550, was an error.

Nevertheless the Royal Mail, itself subject in other proceedings to stinging criticism, exploited the position and promptly accepted the offer.

The solicitors for the claimant realized the mistake and contacted the solicitors for the Royal Mail to attempt to withdraw the offer and return the money, including sending a cheque back, but the solicitors for Royal Mail refused to accept the cheque and maintained that the matter had been compromised when it accepted the claimant’s offer on the portal.

The claimant issued Part 7 proceedings to re-start the claim and the Royal Mail sought to have the claim struck-out, relying on similar cases such as Fitton v Ageas, where the court found that the doctrine of mistake did not apply to portal claims.

The Circuit Judge there said that although this might lead to “rough justice” on occasion, the overall benefits of the system far outweighed the negative.

By the way “rough justice” means no justice and injustice, and is a weasel phrase unworthy of any members of the judiciary.

The District Judge here, in a bizarre decision for someone charged with administering something approaching justice if possible, held that it did not matter that the defendant knew that the claimant had made a mistake, and nor did the magnitude of the mistake matter – it was “neither here nor there”.

Well, for the claimant of course it was “here or there”.

The claim was struck-out.

The judge gave an example of where an offer of £25,000 was made instead of £25 and said that the cost of rectifying the error, that is issuing proceedings, would exceed the costs of the mistake.

The difference there is £24,975. I was unaware that the portal and fixed costs scheme in Cornwall had costs exceeding that sum.

From now on we should all make a stampede down to Cornwall, lockdown restrictions permitting, to recover fixed costs of over £25,000 and to test our eyesight at the same time.

On its website Crown Office Chambers report this case as “A v B”.

No restricted reporting order was made, and nor could it be in a case such as this, and everyone else is reporting the defendant as the Royal Mail, well known to be heavily involved in highly controversial legal proceedings elsewhere.

Is it the case that the lawyers who represented the Royal Mail did not want it to know that it was the Royal Mail who behaved in this way?

 

Comment

An outrageous decision which shames our judicial system.

Do courts want the sort of scenes we are seeing on the streets of the United States to occur in the United Kingdom? If you say that what happened to George Floyd is vastly more serious than this, then you are right, but the significance is in the loss of trust in the judiciary, Parliament and the establishment to treat all equally.

The Court of Appeal should strike these judgments down with ferocity and with the severest criticism.

To seek to justify the decision by the fact that the cost of rectifying the error might exceed the cost of the mistake is ludicrous; let’s all save a few bob by scrapping the courts and having summary execution.

Firstly – surely it is more important that justice is done than a few pounds saved.

Secondly – if the message went out to parties that an obvious error would be rectified, then parties would not act in the way that the Royal Mail did here, and the cost of putting it right would be one email – that is around £15 for a junior fee earner.

In any event, how does it save money? The claimant will presumably sue the solicitors in negligence, with all of the costs that that involves.

This decision was made during a nationwide lockdown.

The relevance of that is that the Prime Minister’s most senior adviser can break the law with impunity with no consequences but one of the plebs loses £5,000 because of a typing error that any of us could make.

In any event, if the cost of rectification argument is a legitimate one, then why does it not apply to any other form of legal proceedings outside the portal system?

One law for the plebs, one for the rest.

What is the moral difference between accepting an offer that you know has been made by mistake, thus avoiding paying the proper sum, and the fundamental dishonesty of a claimant exaggerating a claim to try and get more?

 

Remedies

  1. Extend the Civil Procedure Rules to Cornwall, especially CPR 1.3;

        “The parties are required to help the court further the overriding objective.”

  1. Make it compulsory to spell out the amount, that is “five hundred and fifty pounds” and that any offer has to be typed in twice, just like a password, to avoid such a mistake, with Portal software be written to pick up an obvious error, e.g. a claimant offering to accept, as here, less than the defendant had offered, or a defendant offering to pay more than a claimant had offered to accept.

          It is common when filling out a form online for the software to say something like “Did you really mean           that?

  1. A short Act of Parliament stating that any court must take into account an obvious error and apply the common law doctrine of mistake in all cases.
  2. Mass legal tourism to Cornwall, where apparently fixed recoverable costs in the portal are over £25,000.
  3. Compare and contrast the behaviour here with leaving a briefcase on a train and lying to your employer about it, resulting in you being struck off.
  4. Consider whether the legal establishment, responsible in this case and Denton, for causing enormous worry to legal workers should stop bleating about its concerns for the mental health of young lawyers.
  5. Consider what will happen next year when many on the portal will be Litigants in Person.
  6. Consider whether the portal injustices outweigh its usefulness and whether it should now be scrapped.

Written by kerryunderwood

June 5, 2020 at 12:04 pm

Posted in Uncategorized

WHO REGULATES THE REGULATORS?

with 4 comments


This piece, in slightly different form, first appeared on the Practical Law Dispute Resolution Blog.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

Below I report the decision of the Court of Appeal in

Competition and Markets Authority v Flynn Pharma Ltd and others [2020] EWCA Civ 617

concerning the circumstances in which a regulator who brings regulatory proceedings and loses should pay the successful party’s costs.

This raises the wider question of whether regulators should enjoy virtual immunity from costs, and indeed regulation and accountability.

The traditional idea that a regulator is a quasi-judicial body enjoying the respect and confidence of those who it regulates is, in the modern age, laughable.

The Law Society Gazette, on 18 May 2020, reported that the Junior Lawyers Division has lost confidence in the Solicitors Regulation Authority fairly to prosecute young solicitors whose judgment is clouded by pressures of work. The chair of that organization has written to the chief executive of the SRA calling for an immediate review of its approach to handling junior lawyers who report mental health issues or a toxic working environment.

This follows the striking off of recently qualified solicitor Claire Matthews who lied to her employer to cover her mistake of leaving sensitive documents on a train.

Ms Matthews is appealing, but the significance is in the flood of lawyers rushing to her support, both with money and pro bono representation.

Hers is not the first such case.

One of the features of that case was that Ms Matthews was ordered to pay costs of £10,000 and that the costs risk if she loses her appeal is around £40,000, and all of these costs are those of the regulator as her own lawyers are acting free of charge.

It is fair to say that the Legal Ombudsman system is regarded as nothing short of a Star Chamber by many lawyers. It serves no purpose and should be scrapped immediately.

My personal workload involves a considerable amount of football law, including appearing before the Football Association to represent managers and players etc.

Now the Football Association’s Judicial Services Team– and that is what it is called – is efficient, well run, well resourced and the FA’s courtroom facilities far exceed anything you will find in any Magistrates’ Court, Crown Court or County Court. The Legal Ombudsman and Solicitors Regulation Authority it most certainly is not.

Nevertheless, this entirely unregulated and unaccountable body has the power of economic life or death over those who appear before it and often hands out what football lawyers consider to be harsh, and inconsistent, sentences.

Put simply the suspicion is that if you are a Premier League Player or a manager whose participation in the sport brings in billions of pounds from Sky, you will get a less serious penalty than if you are a Non-League Player.

The point about all of these bodies is their lack of accountability, although it is fair to say that there is an appeal to the High Court from the Solicitors Disciplinary Tribunal.

My proposal is that there be a regulatory Court of Appeal, presided over by a High Court Judge with an automatic right of appeal to that court from any decision of any regulator.

This would be a far wider right than Judicial Review or the equivalent.

I would also abolish forthwith any legal assumption that a losing regulator should be immune from costs.

 

Competition and Markets Authority Case

In

Competition and Markets Authority v Flynn Pharma Ltd and others [2020] EWCA Civ 617

it was common ground that Rule 104 of the Competition Appeal Tribunal Rules 2015 conferred a discretion on the Tribunal to award costs.

The Court of Appeal said that the question is whether there is a starting point for the exercise of that discretion, and if so what it is.

Here the Competition Appeal Tribunal overturned a finding against Flynn Pharma Limited and Pfizer of abusing a dominant market position, and this decision was due to errors made by the Competition and Marketing Authority (CMA), whose appeal to the Court of Appeal against the decision of the Competition Appeal Tribunal largely failed.

The matter was remitted to the Competition Appeal Tribunal which held that its established practice was that the starting point for the exercise of discretion was that the unsuccessful party should pay the successful party’s costs, that is that costs follow the event.

It ruled that the Competition and Markets Authority should pay a proportion of the defendants’ costs.

The Competition and Markets Authority appealed to the Court of Appeal and that appeal is the subject of this judgment.

It argued that the starting point is that no order for costs should be made against a public body performing its functions in the public interest, unless it has acted unreasonably.

It was not disputed that the CMA had swingeing powers. Section 46 of the Competition Act 1998 gives a party a right to appeal to the Competition Appeal Tribunal. That Tribunal is able to hear detailed evidence as the appeal is on the merits and is not in the nature of judicial review.

Here the Court of Appeal referred to other bodies that had similar powers as the CMA, such as the regulators of communication and postal services, electricity, gas, water and sewerage, railways, air traffic and air operation services, payment systems, healthcare services in England and financial services.

Although the costs rules of the Competition Appeal Tribunal are similar to those in the Civil Procedure Rules there is no equivalent to the general Civil Procedure Rule that “unsuccessful party will be ordered to pay the costs of the successful party”.

Here the Court of Appeal set out the relevant legal principles to be derived from its extensive review of the case law, and set them out as follows:

i) Where a power to make an order about costs does not include an express general rule or default position, an important factor in the exercise of discretion is the fact that one of the parties is a regulator exercising functions in the public interest.

ii) That leads to the conclusion that in such cases the starting point or default position is that no order for costs should be made against a regulator who has brought or defended proceedings in the CAT acting purely in its regulatory capacity.

iii) The default position may be departed from for good reason.

iv) The mere fact that the regulator has been unsuccessful is not, without more, a good reason. I do not consider that it is necessary to find “exceptional circumstances” as opposed to a good reason.

v) A good reason will include unreasonable conduct on the part of the regulator, or substantial financial hardship likely to be suffered by the successful party if a costs order is not made.

vi) There may be additional factors, specific to a particular case, which might also permit a departure from the starting point.

Here, the Court of Appeal held that those principles applied to proceedings before the Competition Appeal Tribunal and consequently allowed the appeal of the Competition and Markets Authority and substituted a finding that there be no order for the costs of the proceedings before the Competition Appeal Tribunal.

The Court of Appeal stated here that the starting point or default position is that no order for costs should be made against a regulator who has brought or defended proceedings in the Competition Appeal Tribunal acting purely in its regulatory capacity.

It said that that starting point may be departed from for good reason, but the mere fact that the regulator has been unsuccessful is not enough.

That statement is one of general application to regulators.

It said, “there is a public interest in encouraging public bodies to exercise their public function of making reasonable and sounded decisions without fear of exposure to undue financial prejudice, if the decision is successfully challenged.”

However, the Court of Appeal said that the courts have been unable to take into account wider considerations of policy and consequently “there may be merit in the issue being considered by the Law Commission.”

 

Comment

Why should it be that a publicly funded body which has the power to destroy individuals and businesses should enjoy costs protection, but those individuals and businesses whose lives are destroyed enjoy no such protection?

The reality is that regulators, as recognised here, have power, without trial, to impose criminal sanctions on individuals and businesses.

The power of, and the protection given to, regulators is enormous and threatens the whole basis of democracy and accountability in the United Kingdom.

Written by kerryunderwood

June 3, 2020 at 7:48 am

Posted in Uncategorized

NON-PART 36 OFFER CAN BE ACCEPTED AFTER TRIAL STARTS

with 2 comments


The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

MEF v St George’s Healthcare NHS Trust [2020] EWHC 1300 (QB)

a High Court Judge, sitting with an Assessor held that a Calderbank offer, as compared with a Part 36 offer, did not lapse once the hearing started, and consequently could be accepted without the court’s permission part way through the hearing when it was clear that things were not going well for the recipient of the offer, who had become unlikely to recover as much at court as was on offer.

The court pointed out that the party making the offer could have withdrawn it, or time limited it – a so-called time-bomb offer, or made the offer under Part 36 of the Civil Procedure Rules, whereby the court’s permission is requested to accept an offer once the hearing has started.

Here, straightforward contractual principles applied and an unwithdrawn, non-time limited offer remains capable of acceptance.

In this case, the paying party made a non-Part 36 offer to settle costs for £440,000 “subject to the agreement of the Defendant’s costs of Detailed Assessment incurred since that date.”

The court held that that wording did not require a specific figure of costs to be agreed, but rather that it established the defendant’s entitlement to costs, to be assessed if not agreed, in the usual way.

By the end of the second day of a three day hearing the bill of costs had already been reduced to below £440,000, and just before the end of the second day the receiving party emailed the paying party and accepted the offer, but the paying party argued that it was too late.

The Master held that the detailed assessment proceedings had been compromised and that the matter was subject to common law principles of offer and acceptance.

As there was no time limit placed on acceptance of the offer, it had been properly accepted, and it could not be assumed that the common law principles stopped at the door of the court.

Indeed that is not the position under Part 36; rather Part 36 requires the court’s permission to accept a Part 36 offer once the trial has started.

On appeal here, the High Court held that the Master had not expressly applied the contractual principle of an offer lapsing after a reasonable time, but nevertheless on the facts of this case the offer had not lapsed and was thus capable of acceptance.

A non-time limited Calderbank offer is likely always to be held to be capable of acceptance before the conclusion of a detailed assessment.

There remains open the issue as to what extent, if any, withdrawing the offer, or time limiting it, would reduce the limited costs protection afforded in respect of a non-Part  36 offer, under CPR 44.2(4)(c) which requires a court to have regard to all the circumstances, including any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.

 

Comment

A correct and sensible decision.

It is beyond me as to why parties so frequently avoid Part 36.

Any party which fails to use Part 36 will suffer the consequences.

Written by kerryunderwood

June 2, 2020 at 3:51 pm

Posted in Uncategorized

COURT FUNDS OFFICE INTEREST RATES REDUCED FROM TODAY 1 JUNE 2020

with 4 comments


Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

The Lord Chancellor has today announced an immediate reduction in the Court Funds Office rates of interest payable to clients, with effect from today Monday 1 June 2020.

The Special Account reduces from 0.5% to 0.1%.

The Basic Account reduces from 0.1% to 0.05%.

See –

Interest Rate Reductions On The Court Funds Office Special And Basic Accounts.

In practice, solicitors should be very careful about allowing money to be paid into court on behalf of a protected party, as it will decline in value in real terms.

Solicitors should look for investing the money in a secure way, having taken proper advice, and that investment will of course still need the approval of the court.

Written by kerryunderwood

June 1, 2020 at 12:22 pm

Posted in Uncategorized

CLAIMANT’S JUDICIAL REVIEW COSTS INCLUDE COSTS OF INTERVENING IN UNCONNECTED PROCEEDINGS

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Hunt v Director of Public Prosecutions [2020] EWHC 1292 (Admin)

the High Court held that a claimant could recover her costs of intervening in entirely unconnected proceedings in the Court of Appeal, Criminal Division, as part of her costs in the judicial review proceedings.

Section 51(1) of the Senior Courts Act 1981 provides so far as relevant:

“(1) Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in… the High Court… shall be in the discretion of the court.”

The claimant’s judicial review claim concerned the defendant Director of Public Prosecutions’ decision not to prosecute an individual for voyeurism.

On the same day that the claimant’s skeleton argument had to be filed, the Crown Prosecution Service applied to adjourn the judicial review proceedings because the unconnected Court of Appeal proceedings raised the same point of law; the claimant had been unaware of the Court of Appeal proceedings.

The claimant was granted permission to intervene in the Court of Appeal proceedings and made written and oral submissions through counsel, and the Court of Appeal’s judgment meant that the defendant could no longer defend the judicial review claim.

It agreed to quash the decision not to prosecute and to make a fresh decision, resulting in the claimant withdrawing her claim.

The High Court held that the claimant’s judicial review costs should include her costs of intervening in the Court of Appeal proceedings, and that the latter were “of or incidental to” the judicial review proceedings pursuant to section 51(1) of the Senior Courts Act 1981.

The Court of Appeal’s judgment would bind the High Court and would determine the claimant’s judicial review claim, and so it was “understandable and appropriate” that she made submissions in the Court of Appeal.

The granting of permission for the claimant to intervene in the Court of Appeal proceedings was exceptionally rare and was a measure of how directly relevant and important her intervention was to her judicial review claim, and her submissions appeared “focused and valuable” in the judgment.

The High Court was critical that the Crown Prosecution Service made “diametrically opposed” arguments in each set of proceedings and added that it was regrettable that the claimant had not been informed of the Court of Appeal proceedings, which raised an identical point of law, much earlier.

 

“56. The intervention was “attributable to the defendant’s conduct” because there was a most unusual and unsatisfactory contradiction between the stance taken by the defendant in resisting the judicial review on the one hand and resisting the criminal appeal on the other. The Crown was, in effect, arguing opposite cases on the same point of law in parallel proceedings. More generally, the intervention was attributable to the defendant’s conduct because the reason underlying the necessity for the claimant to intervene and argue the same legal point arose from the decision not to prosecute XY, which was the conduct challenged in the judicial review.

 

Here, the court considered in detail the decision in

Roach & Ors v Home Office [2009] EWHC 312 (QB).

The court here had this to say about that judgment:

“57….The case involved two separate costs appeals in civil proceedings for negligence arising from deaths by suicide in prison. The issue in each case was whether the costs of the subsequent personal injury claim could include the costs of counsel and solicitors attending and taking part in the inquest into the prisoner’s death Were those costs recoverable as costs “of or incidental to” the subsequent civil proceedings? Like Gibson, the case therefore related to costs incurred before the personal injury claim was commenced. But that was not the issue in the appeals. The value of the case is that the costs in dispute were the costs of taking part in other court proceedings.

58. Davis J held that there was no rule that the costs of one set of proceedings were never recoverable as costs “of or incidental to” another set of proceedings, within the meaning of s.51(1) of the Act. The costs of attendance at an inquest were therefore capable of being recoverable as costs “incidental to” subsequent civil proceedings. In other words, there was jurisdiction to award such costs.

59. Davis J also held that although the purpose of a party’s attendance at an inquest will be a relevant consideration when determining whether, or the extent to which, the costs of such attendance were “of or incidental to” subsequent proceedings, it could not be decisive. It was essential also to have regard to the relevance of such attendance to the subsequent proceedings and to the reasonableness and proportionality of the costs so incurred.

60. At the conclusion of his judgment, Davis J declined to lay down guidelines for the assistance of costs judges and those who practise in this field. He said, at [62]:

“Each case should properly be decided by reference to its own circumstances. I am fortified in this view by the suggestion, as to which I express no opinion, that what is decided in these cases (which relate solely to inquests preceding a subsequent resolution of civil proceedings) may also be relevant in other contexts: for example, attendance prior to civil proceedings at a criminal trial involving death by dangerous driving or a criminal trial involving health and safety issues. Better, I think, to leave it to costs judges to decide each case on its own facts by reference to section 51 and the subordinate statutory rules and having regard to the principles indicated in In re Gibson’s Settlement Trusts [1981] Ch 179.””

 

In finding for the claimant here the court said:

 

“65. Because that point of law was likely to be determinative of the judicial review, and because she should not have been disadvantaged by the fact that the criminal appeal was to be argued before the judicial review, it was necessary, reasonable and proportionate that she should intervene and participate actively in the criminal appeal, through counsel, to argue that which she sought to argue in the judicial review and (in effect) seek to persuade the Court of Appeal to declare the law to be in her favour. Had she not intervened she would have been deprived of the opportunity to argue her case in the forum which was to decide the very point of law on which her judicial review claim would stand or fall.

 

Written by kerryunderwood

May 29, 2020 at 11:45 am

Posted in Uncategorized

COSTS BUDGETING: UNDERSPEND IS NOT A GOOD REASON TO DEPART

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Utting v City College Norwich [2020] EWHC B20 (Costs)

a Master of the Senior Courts Costs Office held that an underspend on one or more of the phases of a budget did not amount to a good reason to depart from a budget pursuant to CPR 3.18.

The relevant part of CPR 3.18 provides:

In any case where a costs management order has been made, when assessing costs on the standard basis, the court will –

(a) have regard to the receiving party’s last approved or agreed budgeted costs for each phase of the proceedings;

(b) not depart from such approved or agreed budgeted costs unless satisfied that there is good reason to do so;……

The Master held that there was a clear and obvious distinction between an underspend and substantial non-completion of a phase, for example the Trial and Trial Preparation phases where a matter settled.

The court thus disagreed with the decision of the County Court in

Salmon v Bart Health NHS Trust [2019] unreported,

and followed the decision of the District Judge in

Chapman v Norfolk and Norwich University Hospital NHS Foundation Trust, March 2020

who relied on the Court of Appeal decision in

Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] EWCA Civ 792.

It should be noted that the indemnity principle still applies in full, so if the budget for a particular phase is £10,000, but only £7,000 worth of work has been done, then the party gets only £7,000, and not £10,000.

This is confirmed at Paragraph 18 of the judgment here:

“As the learned District Judge suggested, the observation that the indemnity principle applies to cost budgeting does not say much beyond affirming that the amount that the receiving party receives in respect of a budgeted phase is limited to the amount the receiving party has incurred: the client has to be liable for the sums sought and there is no “automatic entitlement” to the budgeted sum”.

Given that, one might wonder what all the fuss is about as an underspend saves the paying party money, so why would that paying party want to depart from the budget?

The answer is that departing from the budget triggers a detailed assessment where everything is open to attack.

As the court here said, it that were the case:

“…solicitors who had acted efficiently and kept costs within budget would find their costs subject to detailed assessment, whereas less efficient solicitors who exceeded the budget would, absent any other “good reason”, receive the budgeted sum and avoid detailed assessment.” (Paragraph 19).

 

Comment

A correct decision.

Having said that, is it not high time to get rid of all this nonsense and introduce fixed recoverable costs for everything?

Written by kerryunderwood

May 26, 2020 at 1:12 pm

Posted in Uncategorized

TWO MORE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

with 3 comments


Set out below are two new recipes from my close friend Andy Wakeford who is Head of School for Food Academy, Hospitality & Restaurant Services at West Herts College.

Also see my previous blogs –

 FOUR RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

 THREE NEW RECIPES FROM ANDY WAKEFORD

 MORE NEW RECIPES FROM ANDY WAKEFORD

THREE MAYDAY RECIPES FROM ANDY WAKEFORD

FOUR MAYDAY RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

MORE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

Written by kerryunderwood

May 22, 2020 at 10:03 am

Posted in Uncategorized

FIXED COSTS AND COUNSEL’S FEES: SUPREME COURT REFUSES LEAVE TO APPEAL

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

The Supreme Court has refused permission to the claimant to appeal against the decision of the Court of Appeal which held that counsel’s fees are not recoverable in infant approval cases in the fixed costs system.

The Supreme Court said that “the application does not raise a point of law of general public importance which ought to be considered at this time”.

However, the Supreme Court did suggest that it was appropriate for the Civil Procedure Rule Committee to reconsider the rule preventing the recoverability of counsel’s fees in such cases.

 

In

Aldred v Cham [2019] EWCA Civ 1780

the Court of Appeal held that counsel’s fees, necessary for an approval hearing, fell within the fixed recoverable costs scheme and could not be separately recovered as a disbursement “reasonably incurred due to a particular feature of the dispute”.

At paragraph 3 of the judgment, the Court of Appeal set out the issue:

“3. The issue that arises in the present case concerns the recoverability of the cost of counsel’s advice as to the quantum of the proposed settlement of the RTA claim, in a case where the claimant is a child. The question for this court is whether that is a claim for a disbursement which should be allowed (in addition to the fixed recoverable costs) because, in the words of the relevant rule, it was “reasonably incurred due to a particular feature of the dispute”. That simple question is then said to raise other issues, some arising out of the use of similar wording in other parts of the fixed recoverable costs regime”.

The Court of Appeal, correctly in my view as the Civil Procedure Rules stand, held that the particular characteristics of a claimant did not amount to a “particular feature of the dispute”.

The relevant rule is CPR 45.12 which reads:

“45.12

(1) The court –

(a) may allow a claim for a disbursement of a type mentioned in paragraph (2); but

(b) will not allow a claim for any other type of disbursement.

 

(2) The disbursements referred to in paragraph (1) are –

(a) the cost of obtaining –

(i) medical records;

(ii) a medical report;

(iii) a police report;

(iv) an engineer’s report; or

(v) a search of the records of the Driver Vehicle Licensing Authority;

(b) where they are necessarily incurred by reason of one or more of the claimants being a child or protected party as defined in Part 21 –

(i) fees payable for instructing counsel; or

(ii) court fees payable on an application to the court; or

(c) any other disbursement that has arisen due to a particular feature of the dispute.”

 

The Court of Appeal then said:

 

“21. In this way, r.44.12(2)(b) provides a particular route for the recovery of counsel’s fees, over and above the fixed recoverable costs, “where they are necessarily incurred by reason of one or more of the claimants being a child or protected party”. There is then what has been called a catch-all[2] at r.45.12(2)(c), in respect of “any other disbursement that has arisen due to a particular feature of the dispute.”

Where the claimant is a child, Table 6 of the fixed recoverable costs scheme, applicable when the claim remains within the portal process, expressly provides that the cost of the advice on the amount of damages is included within Type C fixed recoverable costs in the sum of £150. (Paragraph 24).

Disbursements are governed by CPR 45.19 which does not contain a provision in the list of allowable disbursements for the cost of instructing counsel to advise on settlement where the claimant is a child.

 

Here the Court of Appeal said:

 

“That is probably because, as we have seen, the cost of that advice is already included in the fixed costs at Table 6”. (Paragraph 25).

CPR 45.19(2)(e) nevertheless retains the “any other disbursement that has risen due to a particular feature of the dispute” provision.

CPR 45.29 governs ex-portal claims and CPR 45.29I(2)(h) contains a slightly differently worded exception:

“..any other disbursement reasonably incurred due to a particular feature of the dispute”.

The District Judge and, on appeal, the Circuit Judge, both allowed counsel’s fee for the advice on settlement under CPR 45.29I(2)(h).

The Court of Appeal set out in full the relevant provisions of the Civil Procedure Rules but said the issues could be narrowed down to:

  1. Was counsel’s advice “due to a particular feature of the dispute”?
  2. If so, was the cost of the disbursement reasonably incurred so that the court should allow recovery of it in addition to the fixed recoverable costs?

The Court of Appeal said that there was no reported decision on the point but considered two first instance decisions relating to the cost of translators where the issue was whether the fact that a claimant was not an English speaker meant that the fee was as result of “a particular feature of the dispute”.

The two judges at first instance had reached different conclusions.

In

Olesiej v Maple Industries, Liverpool County Court, 4 January 2012

the judge refused to allow recovery, holding that the disbursement arose from a characteristic of the claimant and not out of a particular feature of the dispute.

In

Madej v Maciszyn [2013] Lexis Citation 143

the Senior Courts Costs Office allowed recovery, stating that a claimant’s personal characteristics can amount to a particular feature of the dispute.

The Court of Appeal here held that counsel’s fee was not recoverable:

 

“35. Having considered these careful judgments, I prefer the approach of HHJ Wood QC. The fact that, in a particular case, a claimant is a child, or someone who cannot speak English, or who requires an intermediary, is nothing whatever to do with the dispute itself. Age, linguistic ability and mental wellbeing are all characteristics of the claimant regardless of the dispute. They are not generated by or linked in any way to the dispute itself and cannot therefore be said to be a particular feature of that dispute.

36. The particular features of the dispute in an RTA claim will commonly be matters such as: how the accident happened, whether the defendant was to blame for the accident, the nature, scope and extent of the injuries and their consequences, and other matters of that kind. For example, the particular circumstances of the accident may be sufficiently unusual to require an accident reconstruction expert, or the injuries may be so complex that they require a number of different experts’ reports. Such additional involvement of experts may also require specific advice from counsel. Depending always on the facts, such costs may be said to be a disbursement properly incurred as a result of a particular feature of the dispute.

37. In contrast, the cost of counsel’s advice in the present case was not necessitated by any particular feature of the dispute, and was instead required because it is an almost mandatory requirement in all RTA cases where the claimant is a child. It was therefore caused by a characteristic of the claimant himself and does not fall within the exception.

38. I reach that conclusion based on the plain words of r.45.29I(2)(h). I do not derive any particular assistance in that interpretation from the similar words used in r.45.12(3)(b) and r.45.19(2)(e), in Sections II and III of Part 45 respectively. However, I do consider that my reading of these words, which would limit recoverability of sums over and above the fixed costs to disbursements due to specific features of the dispute which has arisen between the parties, is consistent with the overall purpose of the fixed recoverable costs regime, and in particular its aim of ensuring that, save for express exceptions, the amount recoverable is limited to the sums set out in the tables by way of fixed recoverable costs. I come back to that topic again, in a slightly different context, in the next section of this judgment.

 

The Court of Appeal said:

 

“If an item of work is deemed (or can be said implicitly) to be within the fixed recoverable costs in Table 6B, then it will not be separately recoverable as a disbursement. The brief fee is the most obvious example of that analysis”. (Paragraph 51)

The Court of Appeal also held that it was irrelevant that some parts of the Civil Procedure Rules did provide for an additional fee for counsel in these circumstances.

It said that the figure in Table 6B is higher than in Table 6 and “the comparison cannot prevent the conclusion that, for Table 6B, the cost of a child settlement advice is included in the stated fixed costs.”

Note that the decision to the contrary in

Dover v Finsbury Food Group Plc [2019] EWHC B11 (Costs)

by Master Brown in the Senior Courts Costs Office, given just 15 days earlier than this decision and coming to a contrary conclusion is clearly wrong.

Written by kerryunderwood

May 22, 2020 at 7:55 am

Posted in Uncategorized

COSTS OF APPLICATIONS FOR INTERIM INJUNCTION DECIDED ON BALANCE OF CONVENIENCE

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These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Koza Ltd and another v Koza Altin Isletmeleri AS [2020] EWHC 1092 (Ch) (12 May 2020)

the Chancery Division of the High Court considered the question of costs on successful applications for interim injunctions where the balance of convenience was a decisive factor.

In

Picnic at Ascot Inc v Derigs [2001] FSR 2,

the court stated that, in a case without any other special factors, where an applicant obtains an interlocutory injunction on the basis of the balance of convenience, the court normally reserves costs until after trial but in the Picnic case, the court was not laying down a hard and fast rule on how costs should be dealt with on applications for interlocutory injunctions where the balance of convenience was a decisive factor.

The logic of this practice is that, at this stage, there is no winner or loser.

There was no rule against awarding costs on such applications.

The present case was so significantly against the claimants on the balance of convenience that it was not within the general approach described by the court and it would be wrong to treat it as such and it would also be wrong to put off dealing with the matter of costs and, having heard the injunction application, the judge was best placed to ascertain whether the claimants really were justified in resisting the application.

The court here also ruled that there was no invariable rule that, when parties make common cause, running the same arguments, a costs order should be on a joint and several basis.

The costs order here was made against only one of two claimants as he was the “the real master of the litigation” on the claimants’ side.

An order against the other claimant might also have interfered with the purpose of the injunction.

The court held that it may not be possible to set off costs when different parties are involved and clear distinctions can be drawn.

The party facing the costs order here was not entitled to take advantage of a previous costs award that only his fellow claimant had obtained.

Written by kerryunderwood

May 18, 2020 at 7:41 am

Posted in Uncategorized

MORE RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

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Set out below are three new recipes from my close friend Andy Wakeford who is Head of School for Food Academy, Hospitality & Restaurant Services at West Herts College.

Also see my previous blogs –

 FOUR RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

 THREE NEW RECIPES FROM ANDY WAKEFORD

 MORE NEW RECIPES FROM ANDY WAKEFORD

THREE MAYDAY RECIPES FROM ANDY WAKEFORD

FOUR MAYDAY RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

Written by kerryunderwood

May 15, 2020 at 10:45 am

Posted in Uncategorized

COURT REFUSES PRE-JUDGMENT INTEREST IN PERSONAL INJURY – BUT OK IN COMMERCIAL CASES

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Nosworthy v Royal Bournemouth & Christchurch NHS Foundation Trust [2020] EWHC B19 (Costs)

in detailed assessment proceedings, the Master rejected the successful claimant’s claim for pre-judgment interest in relation to the funding of an expert by way of a loan at an interest rate of 15%.

The power stems from CPR 44.2(6)(g):

“(6) The orders which the court may make under this rule include an order that a party must pay –

(g) interest on costs from or until a certain date, including a date before judgment.”

The Master rejected the claimant’s contention that there was a general rule,  or normal practice of awarding pre-judgment interest costs are referred to by the Court of Appeal in

Jones and others v Secretary of State for Energy and Climate Change and others [2014] EWCA Civ 363.

The Master also rejected the views of a full High Court Judge set out in the case of

Involnert Management Inc v Aprilgrange Limited & Ors [2015] EWHC 2834 (Comm) .

The Master also cast doubt on the validity of CPR 44.2(6)(g), as specifically approved by both the Court of Appeal and the High Court.

But apart from that, he cited authorities, including

Schumann and another v Veale Wasbrough [2013] EWHC 4070 (QB),

where the judge concluded such an award was not the general rule in “ordinary litigation”, and that such a rule would be “undesirable”.

Such an inquiry over interest was likely to be much more proportionate in large commercial, or multi-party, actions but, “self-evidently”, not here.

Nothing took this case “out of the ordinary”, and making an order for pre-judgment interest would add an “unnecessary level of sophistication” into costs assessment, and if it was necessary to consider the interest rate for experts funding, that might be necessary for other costs and disbursements, and to take account of payments on account, for example.

Paying parties might legitimately question whether they should pay interest if the receiving party paid disbursements upfront, without a loan.

Funding costs are generally not recoverable –

Hunt v RM Douglas (Roofing) Ltd [1987] 11 WLUK 221.

Payment of judgment rate interest from the date of the costs order rather than from when costs are ascertained or agreed provides substantial mitigation, and the Master was not aware of any legal principle preventing him having regard to judgment rate interest received when exercising his discretion under CPR 44.2(6)(g) or providing that such sum could not be expected to be used to defray costs of funding.

The claimant argued that he should not be expected to defray costs of funding disbursements out of judgment rate interest.

It was not unreasonable to take account of the wide availability of legal expenses insurance, which might have avoided the need for funding with the premium possibly recoverable in such a claim.

Costs recovery is not intended to provide a complete indemnity and if Parliament had intended that costs of funding should be recoverable, there would be an appropriate mechanism, which CPR 47.15 was not.

 

Comment

This decision is wrong, but difficult to challenge as it involves the exercise of a Costs Judge’s discretion:

See my write-up –

SOLICITORS ACT ASSESSMENTS: HIGH COURT CONSIDERS “PAYMENT”, PARTIAL PAYMENT AND SPECIAL CIRCUMSTANCES

 

In

Involnert Management Inc v Aprilgrange Limited & Ors [2015] EWHC 2834 (Comm) 

the High Court Judge said:

“”Since Hunt’s case was decided, the CPR have given the court power to order interest to be paid on costs from a date before judgment: see CPR 44.2(6)(g). This power is now routinely exercised when an order for costs is made following a trial to award interest at a commercial rate from the dates when the costs were incurred until the date when interest becomes payable under the Judgments Act . In the usual way, I have made such orders in this case.””

The Master here said:

“At the risk of stating the obvious, in large commercial claims or multi party actions it is much more likely to be proportionate for the Court to undertake the sort of enquiry into interest which is anticipated by this claim. In a case such as this one, self- evidently, it is not.”

That is wrong on at least two levels.

Firstly, proportionality relates to the actual case. It is not some general principle of law. If it was, then the end game is that the courts should not hear anything other than substantial commercial claims. Unfortunately, many judges seem to take that view.

Thus, although the interest claimed here was low, this was in a context of a relatively low-value claim.

Secondly, a commercial client will get tax relief on loans, as well as generally paying a lower interest rate than a private individual.

So, in fact the effect on an individual in a modest claim is, in real terms, greater than on party in a substantial commercial case.

Widow’s mite and all that.

Here, at Paragraph 20, the Master even questioned whether he had power to order such interest, in spite of the clear wording of CPR 44.2(6)(g) and the comment in

Involnert Management Inc v Aprilgrange Limited & Ors [2015] EWHC 2834 (Comm) ,

and the Court of Appeal decision in

Jones and others v Secretary of State for Energy and Climate Change and others [2014] EWCA Civ 363.

Paragraph 22 says it all:

“As Dingemans J observed, the making of an order of the sort which is requested by the Claimant would introduce an unnecessary level of sophistication into the process for assessing costs. If it were right that the court were required in general to specifically consider the interest rate applicable to experts funding, presumably also the same would apply to counsel’s fees, solicitors fees. and other disbursements (such as court fees). Further, the parties would have to take into account such matters as the payments on account and the allocation of such payments to different expenditure. The schedule of the Claimant’s costs relied on for the oral hearing put his costs at close to £4,000. Even ignoring the extent to which the Claimant’s representatives have been dealing with what, to my mind, might be regarded as a novel point the costs incurred in dealing with claims such as this are still liable to be disproportionate. The complications which would arise would, to my mind, be substantial even in a modest case; and they would exist even assuming that the rates and the principle of payment were agreed. Further, paying parties might legitimately question whether they should be paying any interest if the receiving party had, for instance, the means, by way of insurance or otherwise, to pay up front for disbursements without taking out a loan. The potential for yet further legitimate disagreement would be substantial in the context of ordinary litigation (which may involve litigants in person). In respectful agreement with the comments of Dingemans J such complications and costs would, to my mind, set significant barriers for parties litigating in the courts.”

Translation:  I can’t be bothered dealing with this sort of thing.

Note the reference to “ordinary litigation”.

The argument that post-judgment interest could be used to defray the costs of funding is illogical.

Supposing a party incurs significant interest costs during a life of a hard-fought case, but the judgment debtor pays up as soon as judgment is given.

Then there is no post-judgment interest.

Generally, this decision is all over the place and should be overturned on appeal.

See my blog –

INTEREST ON COSTS PRE-JUDGMENT. INCREASED HOURLY RATE AND SUCCESS FEE WHERE SOLICITORS FUNDING DISBURSEMENTS.

Written by kerryunderwood

May 12, 2020 at 8:18 am

Posted in Uncategorized

SOLICITORS ACT ASSESSMENTS: HIGH COURT CONSIDERS “PAYMENT”, PARTIAL PAYMENT AND SPECIAL CIRCUMSTANCES

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Rippon Patel And French LLP v Mowlam [2020] EWHC 1079 (QB)

a High Court Judge considered the question of when and whether a bill had been paid for the purposes of the time limits in the Solicitors Act 1974.

The court also considered the question of special circumstances in Section 70(3) of that Act.

Put simply, the client has an absolute right to detailed assessment without any conditions if the application is made within one month of the delivery of a bill (Section 70(1)).

After one month the court has a discretion as to whether or not to order detailed assessment and can impose any conditions that it thinks fit, for example that the client pay security for costs (Section 70(2)).

After one year the court can only order detailed assessment if there are special circumstances, and again can impose any conditions that it thinks fit (Section 70(3)).

Once a year has passed since payment of the bill, no assessment may be ordered (Section 70(4)).

Here, there had been a dispute about the bill on various grounds, but the main one was whether or not the costs sum included VAT.

It was common ground that a partial payment of a bill is not payment for the purposes of Section 70(4).

This is for the very good policy reason that if it were otherwise a client would always have to refuse to pay any part of the bill or lose the right to have a detailed assessment after a year had passed.

Here the total sum of the bill was £78,000, being £65,000 plus VAT of £13,000.

This sum was deducted from the total sum, including damages, received from the other side on settlement.

Due to the dispute over VAT, the solicitors transferred £65,000 to Office Account, but retained £13,000, being the VAT element, in Client Account.

The High Court upheld the Master’s decision that that sum of £13,000 had not been paid, as it had not been transferred from Client Account to Office Account.

Consequently, there was no statutory bar on the court ordering detailed assessment, as it was not the case that a year had passed since payment of the bill.

If only part of a bill has been paid, as here, the client is still entitled to challenge the whole bill, and not just the unpaid element.

Thus the court here had the power to order detailed assessment of the whole sum.

There remained the issue of whether there were special circumstances as required by Section 70(3), as the bill, although held to be unpaid, was nevertheless more than a year old.

Thus although there was no absolute bar on ordering detailed assessment, this could only occur if the court found that there were special circumstances.

The Master found that there were and ordered detailed assessment, and here, on appeal, the High Court examined the case law in relation to special circumstances, which is fact-based, or as described by the High Court in

Falmouth House Freehold Company Ltd & Anor v Morgan Walker LLP [2010] EWHC 3092 (Ch)

“a value judgment.”

It depends on comparing the particular case with the run of the mill case.

In

Re Cheeseman [1891] 2 Ch 289

the Court of Appeal held that it would not interfere with the decision of the first instance judge on whether special circumstances existed, except in a strong case.

The Master found that the wording of the agreement concerning costs between the solicitor and client on the issue of VAT was ambiguous, although on the facts of the case it looks as though it did include VAT, that is it was an inclusive figure.

The parties agreed that the solicitor should retain:

“£65,000 plus £13,000 VAT in your clients account until such time as we have resolved the question of your actual costs in this matter and how we can deal with the question of VAT”.

The Master held that that uncertainty constituted special circumstances as it made this other than a run of the mill case.

The High Court rejected the solicitor’s appeal against the finding of special circumstances.

Even if special circumstances are established, it is still in the court’s discretion as to whether or not to order detailed assessment.

One of the factors in relation to that discretion concerns delay and here there had been a delay of over three years in presenting the application under the Solicitors Act 1974.

This issue have been considered in

Kundrath v Harry Kwatia & Gooding [2005] 2 Costs LR 279:

which the court here considered.

It found that there was no significant prejudice caused to the solicitors by the delay and the Master had not exercised his discretion wrongly.

Neither had the Master wrongly exercised his discretion by not imposing terms on the detailed assessment, specifically by not ordering security for costs and not restricting the assessment to the disputed VAT element.

 

Comment

A detailed and helpful analysis of the law in this difficult area.

I am not sure that a dispute over whether or not the bill was VAT inclusive takes this out of the “run of the mill” category.

Such disputes are common.

Run of the mill must refer to the facts in the context of the Solicitors Act proceedings, not relations between the solicitor and client.

By definition, the very fact that a matter is subject to a Solicitors Act 1974 application by the client takes it out of being run of the mill as far as ordinary, undisputed, bills between solicitor and client are concerned.

I think that the court lost sight of this here, possibly due to the specific facts.

It also reinforces the point that solicitors should always make it crystal clear whether a bill includes or excludes VAT and should always set out clearly the total figure including VAT.

 

Underwoods Solicitors are specialists in resisting Solicitors Act 1974 applications.

Written by kerryunderwood

May 11, 2020 at 7:46 am

Posted in Uncategorized

FOUR MAYDAY RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

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Set out below are four new recipes from my close friend Andy Wakeford who is Head of School for Food Academy, Hospitality & Restaurant Services at West Herts College.

Also see my previous blogs –

 FOUR RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

 THREE NEW RECIPES FROM ANDY WAKEFORD

 MORE NEW RECIPES FROM ANDY WAKEFORD

THREE MAYDAY RECIPES FROM ANDY WAKEFORD

Written by kerryunderwood

May 8, 2020 at 9:37 am

Posted in Uncategorized

INSOLVENCY: DIRECTORS AND SHAREHOLDERS CANNOT APPLY FOR INJUNCTION AGAINST PRESENTING A WINDING-UP PETITION

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Shorts Gardens LLB v London Borough of Camden Council [2020] EWHC 1001 (Ch)

the High Court held that simply being a director or shareholder of a company does not give an individual sufficient personal interest to apply for an injunction to prevent winding-up proceedings against the company.

The right to dispute a winding-up petition is the right of a company and not the right of a director or shareholder.

Directors are not personally entitled to any benefit because of holding office, and the making of a winding-up order does not deprive shareholders of their shares.

Accordingly, the court refused the director/shareholder’s applications in this case, which had sought to restrain presentation of winding-up petitions against two entities owned by her.

The court also held that, on the facts the applications were an abuse of process.

In particular, one application had been made by the director/shareholder precisely because the company itself was subject to a general civil restraint order barring it from making any application to the High Court without first obtaining the permission of a nominated judge.

The court noted that disobedience of a civil restraint order is capable of being a contempt of court by the person who is the subject of the order.

Depending on the circumstances, a director/shareholder who seeks to assist their company to evade a civil restraint order by making an application in place of the company may also be committing a contempt of court although the judge did not pursue the contempt issue further.

 

Underwoods Solicitors are the solicitors for Crowe UK LLP, the Joint Liquidators of the Cambridge Analytica Group of Companies

Written by kerryunderwood

May 8, 2020 at 8:49 am

Posted in Uncategorized

INSOLVENCY: FURLOUGHING IS AN ADOPTION OF EMPLOYMENT CONTRACTS SAYS COURT OF APPEAL

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Debenhams Retail Ltd, Re [2020] EWCA Civ 600

the Court of Appeal upheld the decision of the High Court – reported in my blog

FURLOUGHING, INSOLVENCY AND ADOPTION OF EMPLOYMENT CONTRACTS

that the furloughing of employees under the government’s Job Retention Scheme in relation to coronavirus amounts to an adoption of contracts of those employees.

The significance of an employment contract being adopted in an administration is that it gives employees what is known as “super-priority” in that salaries, sick pay and holiday pay for the period from adoption until termination of the employment or, if earlier, the end of the administration, are payable as expenses of the administration ahead of not only pre-administration unsecured liabilities, but also ahead of many of the costs and expenses of the administration itself.

Hence the term “super-priority”.

The judgment examines in detail the current Job Retention Scheme.

The judgment also contains a helpful and detailed analysis of the general law in relation to the adoption of employment contracts by Administrators.

“30. The effect of the relevant provisions of paragraph 99 was helpfully summarised by Mr Smith as involving the following points:

(1) A liability arising under a contract of employment which is adopted by an administrator is charged on and payable out of the property of which the administrator has custody or control immediately before the cessation of his appointment (paragraph 99(3)).

(2) The liability ranks ahead of the administrator’s remuneration and expenses and any amounts secured by a floating charge, which themselves rank ahead of ordinary unsecured liabilities, and is therefore commonly described as enjoying “super-priority” (paragraph 99(4)).

(3) The liability is restricted to “wages or salary” and excludes any liability which arises by reference to anything which is done, or which occurs, before the adoption of the contract (paragraph 99(5)). Wages or salary includes holiday pay and sick pay (paragraph 99(6)), but has been held not to include redundancy payments and payments for unfair dismissal (Re Allders Department Stores Ltd [2005] EWHC 172 (Ch)[2005] ICR 867[2006] 2 BCLC 1) or protective awards or payments in lieu of notice (Re Huddersfield Fine Worsteds Ltd [2005] EWCA Civ 1072[2005] 4 All ER 886).

(4) The administrator is given an initial 14-day period following appointment to decide on the action, if any, to be taken. Any action taken within that period does not amount or contribute to the adoption of a contract (paragraph 99(5)(a)).”

For the facts of the case please see my previous blog

FURLOUGHING, INSOLVENCY AND ADOPTION OF EMPLOYMENT CONTRACTS.

The court rejected the submission that in reality the Administrators were not adopting the contracts as the government was making all of the payments and thus there was no financial impact on the administration estate and consequently the Administrators did not need to make any election to treat the liabilities as having super-priority.

Debenhams argued that this was consistent with the object of an administration.

The Court of Appeal held that the Job Retention Scheme required employees to continue to be employed; indeed that was the whole point of the scheme and therefore to be furloughed employees had to remain in employment and therefore the act of furloughing by the Administrators amounted to adoption of those employment contracts.

No specific evidence of adoption was needed; it is a matter of law and the Court of Appeal had this to say at Paragraph 54 of its judgment:

“54. We agree with the way in which Laddie J summarised the effect of Paramount on the meaning of adoption in Re Antal International Ltd [2003] EWHC 1339 (Ch), [2003] 2 BCLC 406 at [7]:

“What Lord Browne-Wilkinson was pointing out was that it was important to find some conduct on behalf of the administrator or receiver which could be treated as an election or could be regarded as him exercising a choice as to whether or not the contracts of employment were to be adopted.”

And again at [12] where he said:

“It is necessary to look at the facts and to decide whether there has been some conduct by the administrator or receiver which can legitimately be treated as an election to continue the contract of employment.”

 

Adoption of Employment Contracts in the Present Case

The Court of Appeal recognised the fact that furloughed employees are not carrying out any work for the company, and indeed are not permitted to do so under the Job Retention Scheme. While regarding that as a significant factor, and one that distinguishes the current case from the facts of previous decisions, the Court of Appeal did not consider that it was sufficient to justify a finding that the contracts had not been adopted.

The Court of Appeal did say that “there may be good reasons of policy for excluding action restricted to implementation of the Scheme from the scope of “adoption” under paragraph 99 [that is paragraph 99 of Schedule B1 to the Insolvency Act 1986], but such exclusion cannot be accommodated under the law as it stands.”

On the day that the reasons were published the Administrators announced that they would be permanently closing five further stores, with 1,000 jobs at risk at a result.

Written by kerryunderwood

May 7, 2020 at 12:15 pm

Posted in Uncategorized

CAPPED COSTS AND VAT: AN ANOMALY

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Response Clothing Ltd v The Edinburgh Woollen Mill Ltd [2020] EWHC 721 (IPEC)

the Business and Property Courts of England and Wales held that the £50,000 cap on recoverable costs in IPEC cases (CPR 45.31(1)(a)) is inclusive of VAT.

Where a receiving party is registered for VAT, VAT is not included in the claim, as it can be recovered as input tax – Practice Direction 44.2.3.

Here, the successful claimant, who was not registered for VAT and whose costs exceeded £50,000, submitted that it should recover costs of £50,000 plus VAT.

The defendant argued that claimant’s costs, including VAT, could not exceed £50,000.

The judge considered section IV of CPR 45 Scale Costs for Claims in the Intellectual Property Enterprise Court and the wording in Practice Direction 45 relating to scale costs for IPEC proceedings.

The judge noted that the only exception to the £50,000 cap, in the rules, is in CPR 45.32 where a party has behaved unreasonably, which was not applicable here.

He noted that, in Henderson, HHJ Birss QC – as he then was – had held that the court also had a discretion to depart from the £50,000 cap “in an exceptional case” although he did not do so and, as far as Hacon J was aware, the cap has always been adhered to.

In Henderson, HHJ Birss QC also unequivocally concluded that VAT, if appropriate, was dealt with “on top of the PCC costs cap”, apparently on the basis that “scale costs” in CPR 45.42(5) then in force in identical terms to the current CPR 45.31(5) referred to total and stage costs.

The judge noted that the headings of section IV of CPR 45 and CPR 45.31 suggest that the term “scale costs” applies to both total and stage costs.

However, in his view, CPR 45.30(4) creates a definition of scale costs that is “too strong” to allow for any alternative interpretation.

That, combined with the “unambiguous” wording of CPR 45.31(a), led him to conclude that a party claiming VAT on its costs can only recover £50,000 including VAT, subject only to CPR 45.32 and/or Henderson “exceptional circumstances”.

Therefore, the claimant was only entitled to £50,000 in costs.

This has a curious effect. A party which charges VAT, as it is over the VAT threshold of a turnover of £85,000 does not claim VAT from the other party as it can set off the VAT against VAT received from its customers or clients.

Thus for a VAT registered business where the costs are £50,000 plus VAT, the VAT will not be claimed from the other party and therefore the full £50,000 is recovered and is all costs, with no element being VAT.

For a non-VAT registered company, the calculation will be as follows:

                                                    £

Costs                                          41,667

VAT thereon at 20%                      8,333

Total                                           50,000

Thus, as the court here recognised, smaller enterprises are unfairly disadvantaged because their net recovery of costs will be lower than £50,000, whereas larger businesses can claim the full £50,000 in costs and recover the VAT on top of that.

The court described this as “an unfortunate anomaly.”

The court suggested that the Civil Procedure Rules be amended.

This issue does not arise in fixed costs as the fixed costs sum is always net of VAT, and therefore if, for example, the fixed costs were £50,000 then that is what the other side would pay in relation to a VAT registered company, whereas in relation to a non-VAT registered company they would pay £60,000, being £50,000 plus VAT.

Written by kerryunderwood

May 7, 2020 at 7:46 am

Posted in Uncategorized

PERSONAL INJURY COSTS REDUCED FOR EXAGGERATION WHERE NO DISHONESTY

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These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

Morrow v Shrewsbury Rugby Union Football Club Ltd [2020] EWHC 999 (QB)

the Queen’s Bench Division of the High Court reduced the claimant’s costs by 15% to reflect the fact that he had exaggerated his personal injury claim.

There was no submission of dishonesty, let alone fundamental dishonesty.

The case is a reminder that the general power of the court to punish a claimant in costs for exaggerating a claim still exists alongside the ability to disallow the claim, even where it would otherwise have been successful, for fundamental dishonesty under Section 57 of the Criminal Justice and Courts Act 2015.

The judgment here considers the case law on reducing costs due to exaggeration.

There are those of us who cannot see how knowingly putting forward an exaggerated – and therefore false – claim is other than dishonest.

Written by kerryunderwood

May 6, 2020 at 1:20 pm

Posted in Uncategorized

CAPPED COSTS IN BUSINESS CASES: THREE NEW CASES

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This piece, in slightly different form, first appeared on the Practical Law Dispute Resolution Blog.

The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

 

Here I look at three recent business cases involving capped costs, including the first two cases to be tried in the Capped Costs List Pilot Scheme and one in the Intellectual Property and Enterprise Court.

Both are part of the Business and Property Courts of England and Wales.

Capped costs are different from fixed costs in that the receiving party still has to show what work was done and justify the rates and levels of fee earners utilised.

Thus, in two capped costs cases involving the same issues and the same amount of damages and concluding at the same stage, the actual costs within the cap may be quite different.

That cannot happen in fixed costs cases.

Lord Justice Jackson’s last report recommended the introduction of fixed recoverable costs in all claims valued at £100,000 or less, but the consecutive issues of Brexit and coronavirus have meant that nothing has happened.

In April 2020, the government announced that the Civil Procedure Rule changes and small claims limit changes in personal injury work, and other personal injury reforms, were being put back until April 2021 at the earliest.

It is unlikely that the extension of fixed recoverable costs will come in before October 2021, or even April 2022.

This delay is likely to lead to greater use by the courts of their powers to cap costs.

It may be that one the lasting effects of coronavirus will be more remote hearings, cutting costs and justifying capped costs, especially as many parties in the Business and Property Courts are likely to be short of money for some time.

Consequently, understanding capped costs and considering the early decisions is important. As with Conditional Fee Agreements, it is much more difficult to get a grip of the relevant law if you come to the party late.

Both of the cases in the Capped Costs Scheme were accommodated within the two-day trial period, even though, in both cases, more witnesses than anticipated by the Pilot were allowed.

This may well encourage cases to be listed in this scheme, even though, on the face of it, they are not suitable due to the number of witnesses.

 

IPEC £50,000 Recoverable Costs Cap Inclusive of VAT Subject Only to CPR 45.32 Or Henderson “Exceptional Circumstances”

In

Response Clothing Ltd v The Edinburgh Woollen Mill Ltd [2020] EWHC 721 (IPEC)

the Business and Property Courts of England and Wales held that the £50,000 cap on recoverable costs in IPEC cases (CPR 45.31(1)(a)) is inclusive of VAT, subject only to CPR 45.32 or the “exceptional circumstances” contemplated in

Henderson v All Around the World Recordings Ltd [2013] EWPCC 19.

As far as the court was aware, the point had not arisen before in the IPEC.

Where a receiving party is registered for VAT, VAT is not included in the claim, as it can be recovered as input tax – Practice Direction 44.2.3.

Here, the successful claimant, who was not registered for VAT and whose costs exceeded £50,000, submitted that it should recover costs of £50,000 plus VAT.

The defendant argued that claimant’s costs, including VAT, could not exceed £50,000.

The judge considered section IV of CPR 45 Scale Costs for Claims in the Intellectual Property Enterprise Court and the wording in Practice Direction 45 relating to scale costs for IPEC proceedings.

The judge noted that the only exception to the £50,000 cap, in the rules, is in CPR 45.32 where a party has behaved unreasonably, which was not applicable here.

He noted that, in Henderson, HHJ Birss QC – as he then was – had held that the court also had a discretion to depart from the £50,000 cap “in an exceptional case” although he did not do so and, as far as Hacon J was aware, the cap has always been adhered to.

In Henderson, HHJ Birss QC also unequivocally concluded that VAT, if appropriate, was dealt with “on top of the PCC costs cap”, apparently on the basis that “scale costs” in CPR 45.42(5) then in force in identical terms to the current CPR 45.31(5) referred to total and stage costs.

The judge noted that the headings of section IV of CPR 45 and CPR 45.31 suggest that the term “scale costs” applies to both total and stage costs.

However, in his view, CPR 45.30(4) creates a definition of scale costs that is “too strong” to allow for any alternative interpretation.

That, combined with the “unambiguous” wording of CPR 45.31(a), led him to conclude that a party claiming VAT on its costs can only recover £50,000 including VAT, subject only to CPR 45.32 and/or Henderson “exceptional circumstances”.

Therefore, the claimant was only entitled to £50,000 in costs.

This has a curious effect. A party which charges VAT, as it is over the VAT threshold of a turnover of £85,000 does not claim VAT from the other party as it can set off the VAT against VAT received from its customers or clients.

Thus for a VAT registered business where the costs are £50,000 plus VAT, the VAT will not be claimed from the other party and therefore the full £50,000 is recovered and is all costs, with no element being VAT.

For a non-VAT registered company, the calculation will be as follows:

                                                    £

Costs                                          41,667

VAT thereon at 20%                      8,333

Total                                           50,000

Thus, as the court here recognised, smaller enterprises are unfairly disadvantaged because their net recovery of costs will be lower than £50,000, whereas larger businesses can claim the full £50,000 in costs and recover the VAT on top of that.

The court described this as “an unfortunate anomaly.”

The court suggested that the Civil Procedure Rules be amended.

This issue does not arise in fixed costs as the fixed costs sum is always net of VAT, and therefore if, for example, the fixed costs were £50,000 then that is what the other side would pay in relation to a VAT registered company, whereas in relation to a non-VAT registered company they would pay £60,000, being £50,000 plus VAT.

 

Capped Costs List Pilot Scheme Decisions

In

Silvercloud Finance Solutions Ltd (t/a Broadscope Finance) v High Street Solicitors Ltd [2020] EWHC 878 (Comm)

only the second case to be tried as part of the Capped Costs List Pilot Scheme under Practice Direction 51W , the court noted that the trial had been “comfortably accommodated” within the two-day period allowed by the Capped Costs List and heard within the Capped Costs List time limits.

As in the first case under the Capped Costs List

Faiz v Burnley Borough Council [2020] EWHC 407,

The court relaxed the general rule that each party may call no more than two witnesses, and here allowed five witnesses to give oral evidence, as well as receiving the evidence of another witness under a Civil Evidence Act notice giving no particular reason for allowing this.

The High Court observed:

  • one of the consequences of the Capped Costs List time limits is less opportunity to explore the reliability of witnesses.
  • Despite this, where there are factual disputes, the court must still decide which evidence is to be preferred, and should not “shy away from” finding that people have been dishonest with the court.
  • The Capped Costs List costs caps mean that disclosure may be more limited, and that a party dissatisfied with the other’s disclosure may be more hesitant to apply for specific disclosure.
  • Although Practice Direction 51W.3.10 provides that the costs of an application will be reserved until the end of a trial, when they will be summarily assessed, there was insufficient time here to deal with summary assessment before handing down judgment, and it would be dealt with on paper as soon as practicable.

The court also noted that two of the witnesses gave oral evidence by telephone because they were self-isolating during the COVID-19 pandemic; it had been hoped they would give evidence by Skype, but this did not prove practicable.

They were still able to give their evidence clearly, and the judge did not consider that the method used impaired their evidence.

On the facts, the underlying claim for £100,000 plus interest said to be contractually due as a loan introduction fee, failed.

The case also shows the danger of ever using initials. There was dispute over the meaning of the initials “BQ” with the defendant stating that the B stood for beer whereas the judge found it was more likely that it referred to borrowing as in Borrowing Questionnaire.

Beer Quotient or Borrowing Questionnaire – much the same I suppose.

NGLIMHO initials are not a good idea.

In

Faiz v Burnley Borough Council [2020] EWHC 407,

the first case in which proceedings subject to the Capped Costs List Pilot reached trial, the court made the following helpful observations about procedural matters in such cases:

“28. The Capped Costs List Pilot Scheme is governed by the provisions of CPR Practice Direction 51W. The Pilot is scheduled to last for two years having commenced on 14th January 2019 and it applies to the courts identified in PD51W Para 1.4. These include the London Circuit Commercial Court and courts now subsumed in the Business and Property Courts in Leeds and Manchester. It is a separate list, not a sub-list. Subject to the matters listed in Para 1.6(3), it is available for all cases to a value not exceeding £250,000 where the trial is expected to require no more than two days.

29. In the present case, the Claimants applied promptly for interim injunctive relief following the action taken by the Council to obtain peaceable re-entry. At that stage, it is unlikely the Claimants contemplated issuing proceedings in the Capped Costs List and, in any event, they did not have any realistic opportunity to raise this with the Council before issuing their application. At the hearing, on 22ndNovember 2019, of the Claimants’ initial application, I granted them interim relief and fixed a return date on 3rdDecember 2019.

30. On the return date, the parties agreed to treat the hearing as the Case Management Conference. In view of the urgency of the case, it was listed for trial on 4th-5thFebruary 2020 on the basis that the interim injunctive relief would continue until trial or earlier order. I canvassed with counsel the Capped Costs List Pilot Scheme and, ultimately, the parties together agreed to transfer the case to the Capped Costs List. Consistently with PD 51W Para 2.28, the parties agreed to rely only on the documents contained in their bundles of core documents with no other directions for disclosure. A deadline was provided for the exchange of witness statements but, consistently with Para 2.33, there were no directions for expert evidence. Having been allocated to the Capped Costs List, there was no provision for cost budgeting.

31. Although Para 2.31 provides for the parties to be limited to no more than two witnesses, agreement was reached that the Council should be permitted to call three witnesses. For reasons to which I shall refer later, I was satisfied that this was appropriate and, at the commencement of the trial, I thus made an order providing for the Council to have permission to do so.

32. A trial bundle was filed at Court amounting to 568 pages. Skeleton arguments were delivered in accordance with the Chancery Guide and the parties jointly prepared a Trial Timetable. At all stages, there was a significant degree of collaboration to ensure that the case was ready by the agreed trial date. For this, the parties are to be commended.

33. The trial occupied the Court for no more than two full days.

Written by kerryunderwood

May 6, 2020 at 7:28 am

Posted in Uncategorized

INSOLVENCY: MEADOWSIDE EXCEPTIONS TO BRESCO RULE APPLIED: ADJUDICATIONS TO PROCEED

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Balfour Beatty Civil Engineering Ltd v Astec Projects Ltd (In Liquidation) [2020] EWHC 796 (TCC)

the High Court considered the Meadowside exceptions to the Bresco rule and held that they applied here and consequently the adjudications were allowed to proceed and Balfour Beatty‘s application for an injunction to restrain them failed.

In

Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd [2019] EWCA Civ 27

the Court of Appeal held that, if a company was in insolvent liquidation, it was “an exercise in futility” to allow an adjudication to continue.

The matter has been appealed to the Supreme Court and we are currently awaiting the decision of that court.

In

Meadowside Building Developments Ltd (In Liquidation) v 12-18 Hill Street Management Co Ltd [2019] EWHC 2651 (TCC),

an Appeal Judge, sitting in the High Court, held that exceptional circumstances could arise, which would allow an adjudication to continue even where a company was in insolvent litigation.

The decision here in the Balfour Beatty case is the first judgment dealing with the Meadowside factors, and permitting an insolvent company – Astec – to proceed with three adjudications, but on conditions.

There were three potential adjudications in relation to three separate contracts here and here the High Court Judge held that a final net position could be reached and there was nothing in the judgments in Bresco or Meadowside that prevented this.

Those adjudications would deal with the entirety of the parties’ mutual dealings and would mirror rule 14.25 of the Insolvency (England and Wales) Rules 2016 (SI 2016/1024).

Because Astec has been in liquidation since October 2014 and is legally funded, along with having legal expenses and after the event insurance, the conditions ordered include:

  • A security for costs payment of £750,000.
  • Astec to issue the remaining two adjudication notices within 21 days, with the same adjudicator appointed to deal with all three adjudications, and those adjudications to be dealt with together, but over an 84-day period to allow 28 days for each one.
  • Alternatively, the parties could agree to confer jurisdiction on an adjudicator to deal with all three contracts in one adjudication.
  • Balfour Beatty has six months from the adjudicator’s decision(s) to issue court proceedings to seek a different result.
  • Astec cannot seek to enforce the adjudicator’s decision(s) during that period or while any litigation proceedings are ongoing.

Astec says it is owed £4 million, Balfour Beatty counterclaims and says it is owed £1 million.

 

Underwoods Solicitors are the solicitors for Crowe UK LLP, the Joint Liquidators of the Cambridge Analytica Group of Companies

Written by kerryunderwood

May 5, 2020 at 7:50 am

Posted in Uncategorized

QOCS AND SET-OFF – COURT OF APPEAL DECISION

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

 

In

Ho v Adelekun [2020] EWCA Civ 517

the Court of Appeal considered the interplay between Qualified One-way Costs Shifting (QOCS) and set-off, and held that a QOCS protected claimant in a personal injury matter was liable to have adverse costs set off against the costs order in her favour in the proceedings generally.

Here Miss Adelekun was the successful claimant in a QOCS protected personal injury case, but there was a dispute as to costs, specifically whether the agreement between the parties meant that fixed costs did, or did not, apply.

Miss Adelekun lost that aspect of the case when the Court of Appeal ruled that fixed costs applied, thus reducing her costs from £42,000 to £16,000.

See my blog – STANDARD COSTS MEANS FIXED COSTS: COURT OF APPEAL DECISION

Mrs Ho, the defendant, having won that aspect of the case was awarded costs, as usual as QOCS relates to the enforcement of costs orders, not whether they should be made in the first place.

Thus the issue here was whether a losing defendant in a QOCS protected personal injury case could set off against the costs of that action the costs order made in her favour, but on the face of it unenforceable, in the fixed costs/not fixed costs dispute, in which she was successful.

Yes, said the Court of Appeal, holding that it considered itself bound by its own decision in

Howe v Motor Insurers’ Bureau (No 2) [2017] EWCA Civ 2523,

where the court allowed such set-off.

See my blog – QOCS AND SET-OFF BY SUCCESSFUL DEFENDANT IN MULTI-DEFENDANT CASES

The Court of Appeal said that there was no question of a claimant ever having to make a payment to a defendant under the set-off provisions, but the costs awarded to the claimant could be substantially reduced, or extinguished altogether, by set-off of costs awarded to a defendant in the course of those proceedings, as here.

The potential effect is that a successful claimant in such a situation will have a potential liability to her or his own solicitors for the effectively unrecovered costs, unreceived due to set-off.

Here, the Court of Appeal suggested that as the challenge on the fixed costs point was for the potential benefit of the solicitors, rather than the claimant, the solicitors may choose not to enforce any bill, and indeed may not be entitled to.

The Court of Appeal suggested that the Civil Procedure Rules Committee should reconsider the rules and consider whether set-off should ever be available in a case subject to QOCS, although two of the three Court of Appeal Judges said that they could see arguments both ways.

The decision is being appealed to the Supreme Court.

The Court of Appeal described the set-off issue as “a point of some general importance”, but did not find the decision in Howe was per incuriam, that is wrongly decided, but saw considerable force in the submission that enforcement should extend in the context of CPR 44.14 to set-off, and that there was a “powerful case” for calling into question the decision in Howe.

Analysis of authorities on judicial precedent, including

Young v Bristol Aeroplane Co Ltd [1944] 1 KB 718

satisfied the Court of Appeal that it was bound by the decision in Howe and had to order set-off.

Absent the decision in Howe, and finding itself bound by that decision, the Court of Appeal here would have held that in a QOCS case the court has no jurisdiction to order costs liabilities to be set off against each other and that Section II of CPR 44 is a self-contained code only allowing a defendant to recover costs it has been awarded by setting off against damages and interest under CPR 44.14,  or by invoking CPR 44.15 or CPR 44.16, in line with

Darini v Markerstudy Group Central London County Court,24 April 2017

a case not considered by the Court of Appeal in Howe.

See my blog – QOCS AND SET-OFF: CONFLICTING CASES

Costs set-off may have been common in a legal aid context, but QOCS does not mirror that regime.

The Court of Appeal found it hard to see how the fact that CPR 44.14 enables enforcement without the court’s permission, while permission is required under CPR 44.12 could justify set-off.

CPR 44.14 seemed to the Court of Appeal to be designed to bar any enforcement of costs orders against claimants in excess of damages and interest, so no set-off of costs against costs, unless CPR 44.15 or CPR 44.16 applies, not merely enforcement without the court’s permission.

The Court of Appeal saw compelling reason for interpreting “enforced” in CPR 44.14 as extending to set-off.

The QOCS rules in Section II of CPR 44 do not refer to CPR 44.12 and the explanatory note to the rules refers to “set-off against any damages received”, not costs set-off.

 

CPR 44.12 reads:

 

“(1) Where a party entitled to costs is also liable to pay costs, the court may assess the costs which that party is liable to pay and either—

(a) set off the amount assessed against the amount the party is entitled to be paid and direct that party to pay any balance; or

(b) delay the issue of a certificate for the costs to which the party is entitled until the party has paid the amount which that party is liable to pay.”

 

To me that is very clear and, as I pointed out when QOCS came in seven years ago, it is of great significance that this statement of the common law principles of set-off appears immediately before the new rules on QOCS in the Civil Procedure Rules.

I cannot see why the Court of Appeal is so upset about set-off against a claimant’s costs, as compared with set-off against damages and interest.

Set-off against damages and interest, which is very clearly allowed by the rules on QOCS, potentially removes the client’s damages.

Set-off against costs generally affects the solicitor, rather than the client, depending upon the terms of the retainer.

It is the ability to set-off against damages that wrecks QOCS protection whenever a Part 36 offer is made by a defendant, a point recognised in Paragraph 14 of the judgment here.

As the law stands this decision, and the decision in Howe are unquestionably correct.

My book on the subject is called Qualified One-Way Costs Shifting, Section 57 and Set-Off, as it was obvious to me when I wrote that book that that was the case.

Here is the opening page of Chapter 13 from that book:

                                                                                  SET OFF

 

The common law concept of legal set-off has existed since at least as early as 1745 – see Hanak v Green, Court of Appeal 1958, 2 QB 9

The Civil Procedure Rules deal with it in the briefest of terms: –

“Set-off

44.12

(1) Where a party entitled to costs is also liable to pay costs, the court may assess the costs which that party is liable to pay and either –

(a) set off the amount assessed against the amount the party is entitled to be paid and direct that party to pay any balance; or

(b) delay the issue of a certificate for the costs to which the party is entitled until the party has paid the amount which that party is liable to pay.”

The Practice Direction is silent as to the effect of this rule.

Significantly this rule appears immediately above the rule dealing with Qualified One Way Costs Shifting – CPR 44.13 to CPR 44.17 – also notable for its brevity.

This raises the question as to whether, in a QOCS case, even the claimant’s pre Part 36 costs are at risk of being eaten in to to satisfy the unsatisfied element of a costs order in favour of a defendant when a defendant’s Part 36 offer has not been beaten.

Thus the claimant is awarded £30,000 at court and an order is made in the defendant’s favour for £40,000, leaving an unsatisfied balance of £10,000.

May the defendant set this off against the claimant’s pre Part 36 costs?

Yes, seems to be the clear answer. That situation appears to fall fairly and squarely with CPR 44.12(1)(a).

 

Parties could have saved themselves a lot of time and money by purchasing it. You can – details above.

Written by kerryunderwood

May 4, 2020 at 10:45 am

Posted in Uncategorized

FURLOUGHING, INSOLVENCY AND ADOPTION OF EMPLOYMENT CONTRACTS

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

The decision of the High Court reported below has been upheld by the Court of Appeal. Reasons were given on 6 May 2020 and are here.

In

Debenhams Retail Ltd, Re [2020] EWHC 921 (Ch)

the Chancery Division of the High Court considered the relationship between the furloughing of employees due to the coronavirus issue and the adoption of the employees by the Administrators within the meaning of Paragraph 99(5) of Schedule B1 of the Insolvency Act 1986.

The Administrators sought a declaration that:

““None of the contracts of employees who have been furloughed will be adopted by the Joint Administrators if the employees remain furloughed and the Joint Administrators take no further action in relation to these employees except for issuing such communications as may be required to confirm the terms of the employees’ ongoing engagement and to seek any required consent in relation to such terms and to pay to the furloughed employees amounts that are to be reimbursed to the Company through its participation in the Coronavirus Job Retention Scheme.””

The court set out the reason for the urgency at paragraphs 3 and 4 of the judgment.

“3. The Administrators were appointed by the directors of the Company on 9 April 2020. The urgency of the application flows from the fact that they need to make a decision in the next few days as to whether or not to dismiss a significant number of the Company’s employees. That decision will be informed in part by the answer to the question raised by the application. The reason for this is that, if the contracts of employment are adopted, the relevant employees will then enjoy super-priority status in the administration in respect of their wages or salary referable to periods post-adoption pursuant to paragraphs 99(5) and 99(6) of Schedule B1. This means that they will rank ahead both of the provable claims of other creditors and of other expenses of the administration, a consequence which may have a significant effect on the future conduct of the administration.

4. As Mr Smith QC and Mr Fisher QC say in their skeleton argument in support of the application, the financial consequences of adopting contracts of employment mean that these types of decision can be difficult in any administration. This is particularly acute in the present case because the Company has more than 15,000 employees, the majority of whom have already been furloughed.

The court also considered the Job Retention Scheme (JRS).

“6. It is also said by the Administrators that it may well be the case that they would have no alternative but to dismiss the furloughed employees (who are not providing any services to the Company, and cannot do so under the terms of the JRS) if there is exposure to a super-priority liability for wages or salary over and above the amounts which will be reimbursed under the JRS. Because of the way that the JRS works (with which I will deal later in this judgment), and subject to the impact of consents which have been received from a large number of the furloughed employees, the extent of the exposure is the 20% shortfall between the JRS proposed reimbursement of 80% of wages subject to a £2,500 cap, and the liabilities under the contract of employment which are referable to the period after the time of its adoption (paragraph 99(5)(b) of Schedule B1). Subject to a substantial reduction for the consents I have mentioned, this exposure is estimated to amount to over £3 million a month.”

Here, the court declined to grant the declaration sought and instead gave directions.

“8.  …Those directions were that the Administrators be at liberty to act on the basis that they will be taken to have adopted any contract of employment between the Company and its employees in circumstances where, in respect of any particular employee or employees, at any time after 14 days from the time of their appointment:

(1) the Joint Administrators cause the Company to make payments to such employee or employees under and in accordance with their employment contracts including in respect of amounts which may be reimbursed to the Company by a grant under the JRS; or

(2) the Administrators make an application in respect of such employee or employees under the JRS.”

It is clear that the Job Retention Scheme applies to companies in administration and is intended to work within the mandatory principles of insolvency law and the Scheme Guidance contains the following:

““Administrators

Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme. However, we would expect an administrator would only access the scheme if there is a reasonable likelihood of rehiring the workers. For instance, this could be as a result of an administration and pursuit of a sale of the business.””

Here the court referred to the very recent judgment of the Chancery Division in relation to the administration of Carluccio’s Limited:

Re Carluccio’s Limited [2020] EWHC 886 (Ch)

which involved similar issues, but where the Administrators were seeking directions before furloughing staff.

Here, the court quoted, with approval from that decision and the issue of the effect of Paragraph 99 of Schedule 1 of the Insolvency Act 1986.

“31. The effect of paragraph 99 of Schedule B1 was described by Snowden J in paragraphs 39 to 41 of his judgment in Carluccio, in a passage with which the Administrators do not take issue (and with which I agree):

“39. The effect of these paragraphs is that liabilities for wages or salary arising out of contracts of employment adopted by an administrator following the onset of administration (subject to the condition that no act taken within the first 14 days of the administrator’s appointment may amount or contribute to such adoption) are payable out of the assets held by the administrator in priority to the administrator’s remuneration and expenses, which in turn have priority over the claims of floating charge creditors and unsecured creditors.

40. This order of priority is confirmed at Rule 3.51(1) of the Insolvency (England and Wales) Rules 2016, which states (before setting out the priority among expenses of the administration) as follows:

“Where there is a former administrator, the items in paragraph 99 of Schedule B1 are payable in priority to the expenses in this rule.”

41. In contrast, employees whose contracts of employment are not adopted in the first 14 days (in other words, whose employment is terminated by Administrators during this time or whose employment contracts are not adopted for some other reason), do not gain the benefit of super-priority under Paragraph 99(5), and their claims are instead merely unsecured provable debts.””

In Carluccio’s, which has partly been overtaken by events and by the decision in the Debenhams case, the court nevertheless gave a detailed and helpful analysis of how the Job Retention Scheme works, including the formalities that employers must enter into.

The Carluccio’s judgment contains a very detailed, exhaustive and helpful analysis of the law in relation to the adoption of contracts by Administrators.

 

Underwoods Solicitors are the solicitors for Crowe UK LLP, the Joint Liquidators of the Cambridge Analytica Group of Companies

Written by kerryunderwood

May 4, 2020 at 8:01 am

Posted in Uncategorized

THREE MAYDAY RECIPES FROM ANDY WAKEFORD

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Set out below are three new recipes from my close friend Andy Wakeford who is Head of School for Food Academy, Hospitality & Restaurant Services at West Herts College.

Also see my previous blogs –  FOUR RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

                                         THREE NEW RECIPES FROM ANDY WAKEFORD

                                       MORE NEW RECIPES FROM ANDY WAKEFORD

Written by kerryunderwood

May 1, 2020 at 8:17 am

Posted in Uncategorized

COURT OF APPEAL GUIDANCE ON SWITCHING FROM LEGAL AID TO CONDITIONAL FEE AGREEMENT

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

XDE v North Middlesex University Hospital NHS Trust [2020] EWCA Civ 543

the Court of Appeal upheld the original decision of the Costs Judge, itself upheld by the High Court, that on the particular facts of this case it was unreasonable to switch from legal aid to a Conditional Fee Agreement.

Consequently, the success fee and the After-the-Event insurance premium were not recoverable in this case, which predated the abolition of recoverability, except in very limited circumstances.

This was a clinical negligence case and I reported the decision of the Queen’s Bench Division of the High Court in my blog –

SWITCH FROM LEGAL AID TO CONDITIONAL FEE AGREEMENT UNREASONABLE EVEN WHERE SIMMONS v CASTLE UPLIFT NOT IN PLAY

which was posted on 28 June 2019.

There is no new law in the Court of Appeal’s decision, but it is a detailed and useful analysis of the law in this area, which is essentially fact sensitive to each case, but lawyers will find this judgment useful in applying the law to the particular facts of any given case.

It also has a very detailed analysis – at paragraphs 62 to 88 of the issue of whether CFA-Lite, whereby the lawyer agrees never to charge the client more than is recovered from the other side, is inherently superior to legal aid.

The court found that that argument “fails at every level.”

As the Court of Appeal pointed out, there is always an inherent problem with this argument in the context of switching from legal aid to CFA-Lite, and that is that if CFA-Lite is inherently superior to legal aid, then why did the law firm advise and obtain legal aid in the first place, rather than going straight to CFA-Lite?

At Paragraph 82 of the judgment, the Court of Appeal referred to the irony of the court system now introducing, through the mechanism of costs budgeting, the sort of control of costs that used to be exercised by the legal aid authorities in legal aid work.

It saw that cost control as a valuable aspect of legal aid for a lay client “without what some see as the additional paraphernalia that goes with costs budgeting.”

It is very clear that the Court of Appeal has not got the slightest clue as to what the legal aid rates are – any idea that they are comparable to costs budgeted costs is laughable.

The statement at Paragraph 83 that:

“Control of the costs being incurred was in everyone’s interests, including those of the appellant.”

also shows a degree of ignorance by the Court of Appeal of legal aid rates.

They are so low that very few law firms indeed now do legal aid.

The logic of the Court of Appeal’s statement is to say that rates of, say, £5 per hour are in everyone’s interests.

Of course they are not, as no lawyer would work for those rates, just as very few good lawyers are now prepared to do legal aid work.

The significance of the Court of Appeal decision is its entirely valid point, that if CFA-Lite is so good, then why did the law firm go for legal aid for their client to start with?

The lesson here is that firms doing legal aid work will be subject to great scrutiny if they change the funding from legal aid to a Conditional Fee Agreement, even a CFA-Lite which involves the client in no expenditure at all.

Firms are perfectly free not to do legal aid, and the vast majority of firms now do not in fact carry out any legal aid work.

That avoids the problem as if the client wishes to instruct that firm, then it will not be on the basis of legal aid. Of course each client must be informed of the availability of legal aid at other firms and given the choice, just as a firm doing legal aid work must explain to a client that they can have it dealt with under a Conditional Fee Agreement.

These cases may become rarer as the driver here was the fact that under the Conditional Fee Agreement regime at the time the success fee and the full After-the-Event insurance premium were recoverable, if the switch was reasonable.

Now that recoverability has been abolished, with the exception of a limited element of the After-the-Event insurance premium in clinical negligence cases, defendants will have no incentive to challenge the switch.

Clients may still do so, but if they are not paying anything, because it is a CFA-Lite, then they will have no incentive to challenge anyway, especially as they have to achieve a 20% costs reduction to win, failing which they pay the solicitor’s costs of the Solicitors Act 1974 assessment. It is rather difficult to achieve a 20% reduction when the original bill is £0.

Although the Court of Appeal rejects the argument the CFA-Lite is inherently superior to legal aid, the effect of this decision is inevitably to drive even more firms away from legal aid.

The Court of Appeal was clearly swayed by the costs of the NHS, as the final sentence of the judgment reads:

It is a feature of cases like these which, if ignored, is likely to result in vastly increased financial liabilities falling on the NHS.”

That may be the case, but that is not actually the law. Any client, properly advised, is entitled to choose whatever funding method that client wants, and this was reflected in the case of

Campbell v. MGN Ltd [2005] UKHL 61

where Naomi Campbell, a very wealthy model, was allowed to recover the additional liabilities under a Conditional Fee Agreement, with the court rejecting the argument that she could have afforded to pay by the hour as having any relevance at all.

That must be the case here as well.

Lawyers need to be very careful of these matters. The reality is that in the current climate, the courts are likely to work very hard to achieve any costs savings for the NHS, even if the funding decision was reached 10 years ago.

This judgment was given on 23 April 2020.

Written by kerryunderwood

April 30, 2020 at 7:50 am

Posted in Uncategorized

FOOTBALL IN CHAOS: THE FOOTBALL ASSOCIATION IS NOT FIT FOR PURPOSE

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I realise that Football is not the most important thing in people’s lives at the moment, but it is generally a very important part of life and culture in the United Kingdom and, unfortunately, the current problems are showing just how badly football is run in this country at virtually all levels.

There is a pyramid system of football in England and Wales and this runs from the Premier League down through the Championship, League 1, League 2 and then steps 1 to 7 outside of the Football League.

Sitting at the top of the Non-League structure is the National League, which is step 1 and under the National League is National League South and North which is step 2 and so on.

From the top to the bottom we now have three different situations:

  1. the Premier League and Football League have not made a decision as to whether or not the season is over, and so it is possible that the remaining matches will be played, but almost certainly behind closed doors if that happens;
  1. the National League, that is steps 1 and 2, has made a decision to end the season, so that the original league fixtures will not be completed, but have made no decision as to whether there will be promotion and/or relegation, and if so, on what basis promotion and relegation will be determined, or whether the season should be null and void;
  1. steps 3 to 7 have been declared null and void.

In Women’s Football the position is much the same, with the 71 clubs in the National League structure having had their seasons declared null and void, but the Super League and Championship still undecided.

We all realize that these are difficult times, but the message I am getting right across the country is that if the Premier League and Football Association had made a decision, whatever that decision, that applied to all clubs in the country then it would be accepted.

The suspicion is of course that the Football Association and Premier League are more interested in the money from the TV companies than in Football itself, and its supporters.

I have been a Queens Park Rangers supporter since I was born and have had a season ticket for decades. If the last few matches cannot be played, then so be it. I certainly do not expect, nor do I want, any form of refund for those missed matches. However, I will be resentful if those matches are played behind closed doors so that no supporters can actually watch them.

The vast majority of people in this country do not have satellite television, and so will be unable to watch these matches.

The Football Association is not fit for purpose and when all of this is over, we should, as a country, look at a different way of running Football. I am more than happy to advise.

Kerry Underwood is Vice Chairman of Hemel Hempstead Town Football Club and an expert in Football Law and his firm Underwoods Solicitors have appeared in a number of football related cases.

In the current Coronavirus pandemic, Underwoods Solicitors are happy to have an initial free telephone consultation with any football club, great or small, and please contact Kerry Underwood on Kerry.underwood@lawabroad.co.uk or 01442 430900.

Written by kerryunderwood

April 24, 2020 at 10:00 am

Posted in Uncategorized

MORE NEW RECIPES FROM ANDY WAKEFORD

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Set out below are three new recipes from my close friend Andy Wakeford who is Head of School for Food Academy, Hospitality & Restaurant Services at West Herts College.

Also see my previous blogs –  FOUR RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

Note for Mushroom Stroganoff  –  THREE NEW RECIPES FROM ANDY WAKEFORD

In the preparation method there is reference in to adding in the tomato juice but that does not appear in the ingredients.

The amount should be between 50ml and 100ml, depending on how wet you would like the dish to be.

Written by kerryunderwood

April 24, 2020 at 9:29 am

Posted in Uncategorized

THREE NEW RECIPES FROM ANDY WAKEFORD

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Set out below are three new recipes from my close friend Andy Wakeford who is Head of School for Food Academy, Hospitality & Restaurant Services at West Herts College.

Also see my previous blog –  FOUR RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE 

Written by kerryunderwood

April 17, 2020 at 8:01 am

Posted in Uncategorized

FOUR RECIPES FROM ANDY WAKEFORD AT WEST HERTS COLLEGE

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I know that you are all stuck at home over the Easter Weekend, so thought this might be a good time for us all to get back to cooking something more adventures than a microwave meal😊

So set out below are four recipes from my close friend Andy Wakeford who is Head of School for Food Academy, Hospitality & Restaurant Services at West Herts College.

Written by kerryunderwood

April 9, 2020 at 4:10 pm

Posted in Uncategorized

UNLAWFUL EXECUTION OF FOREIGN JUDGMENT SET ASIDE AND INCURABLE

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In

Islandsbanki Hf and others v Stanford [2020] EWCA Civ 480

the Court of Appeal held that a creditor’s bankruptcy petition had been correctly dismissed following premature and unsatisfied execution of an unlawful writ of control, contrary to the Lugano Convention which governs jurisdiction and the enforcement of judgments in civil and commercial matters between European Union member states and Norway, Iceland and Switzerland.

The appellant creditor, one of three who had separately petitioned for the debtor’s bankruptcy, had obtained judgment in Iceland and a registration order in England, pursuant to the Lugano Convention and then attempted to enforce the order in England by obtaining a writ of control.

A writ of control was subsequently issued prematurely by the High Court, during the appeal period prescribed by the Lugano Convention and the registration order and after several failed enforcement attempts, High Court Enforcement Officers certified the writ of control as unsatisfied in whole.

The appellant used this as evidence of the debtor’s inability to pay its debts, pursuant to section 268(1)(b) of the Insolvency Act 1986, in their bankruptcy petition.

The petition was dismissed by the High Court and the writ of control set aside as unlawful.

The creditor appealed, partly to recover their own significant petition costs, as an expense of the bankruptcy, but also to extend the relevant time for challenging the debtor’s antecedent transactions – a bankruptcy order having already been made on another creditor’s later petition.

The  Court of Appeal, considered that an overarching purpose of the Lugano Convention was to strike a fair and proportionate balance between a creditor who applied for an order and a debtor’s right of appeal and it should not, therefore, be undermined by allowing irreversible measures of enforcement.

On the facts, the debtor had a right to set aside the writ of control as a matter of justice, without having to advance a substantive case on its merits.

As such, its purported execution was incapable of establishing a debtor’s insolvency.

The Court of Appeal held that such a fundamental defect in the enforcement and execution procedure could not be remedied or cured under the Lugano Convention, the Civil Jurisdiction and Judgments Act 1982, the Civil Procedure Rules or the Insolvency (England and Wales) Rules 2016: a procedurally irregular writ of control, issued in derogation of the Lugano Convention, was incapable of validation.

Written by kerryunderwood

April 9, 2020 at 2:44 pm

Posted in Uncategorized

ASSESSMENT OF COSTS UNDER SHORTER TRIALS SCHEME

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Eli Lilly & Co v Genentech Inc [2020] EWHC 564 (Pat)

the costs had to be determined following the decision in the trial of a preliminary issue in a case involving a divisional of a Genentech patent in which there had been a previous action between the same parties relating to the parent patent.

The trial had been held under the shorter trials scheme governed by Civil Procedure Rules Practice Direction 57AB.

The court rejected the defendant’s argument that paragraph 2.59 of Practice Direction 57AB, which provided for a summary assessment of the costs to be made, did not apply because of exceptional circumstances.

The judge held that the mere fact that substantial costs – over £1.5 million – had been incurred was not, of itself, exceptional.

In this case, the preliminary issue had been an attempt to avoid a trial on the same very large scale as the first action., where the costs had exceeded £11 million.

Costs would be summarily assessed.

 

Comment

Surely it is time to cap costs in any case – say a maximum of £250,000. If you can’t get your point across within that budget – then you are in the wrong profession.

Written by kerryunderwood

April 9, 2020 at 1:48 pm

Posted in Uncategorized

INSOLVENCY PROCEEDINGS DURING CORONAVIRUS

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Central London County Court

The specialist Circuit Judges for business and property work in the Central London County Court have published a protocol setting out how insolvency and company work will be dealt with in the Central London County Court.

The protocol applies with immediate effect and until further notice.

The measures are as follows:

  • By arrangement with HMRC, HMRC petitions currently listed for hearing will not be heard but will be ordered to be relisted for hearing at least 12 weeks later.
  • The relisted date will be sent to HMRC and the debtor and any opposing or supporting creditors will then be notified by HMRC of the relisted hearing date.
  • HMRC will continue to ask, on paper, for dismissal or withdrawal of the petition where the debt has been paid.
  • Listed bankruptcy petitions by other petitioners will be relisted in the same way unless a request for a remote hearing is made by email to RCJBankCLCCDJHearings@justice.gov.uk.
  • Applications in bankruptcy proceedings will be dealt with on the first occasion on paper.
  • Any hearing then directed will be a remote hearing.
  • Public examinations will remain listed but should not be attended and will be adjourned unless there is a request for rescission, conclusion or a suspension of discharge from bankruptcy.
  • Such a request should be made by email to RCJBankCLCCDJHearings@justice.gov.uk and will be considered on paper.
  • Claims for an extension of time to register company charges will remain listed but will be considered on paper without attendance.
  • The requirement to produce the original charge is waived in this period and evidence of solvency will be accepted by email to RCJCompGenCLCC@justice.gov.uk.
  • Claims for the restoration of companies to the register will remain listed but will be considered on paper without attendance.

 

HMCTS Publishes Revised Operational Summary on Courts and Tribunals

On 2 April 2020, HM Courts & Tribunals Service published an update to its page providing a daily operational summary on courts and tribunals during the COVID-19 outbreak.

The 2 April summary provides new information in relation to various operational matters, including:

Civil Court listing priorities – “Priority 2” work, which refers to work that “could be done”, has been updated in the Civil court listing priorities document to include: “Applications or hearings pursuant to the Insolvency Act 1986 which concern the survival of a business or the solvency of a business or an individual”.

 

North and North-Eastern Business and Property Courts

Mr Justice Snowden has stated that a new emergency Practice Direction on insolvency matters will be published shortly, dealing with the e-filing of Notices of Intention to appoint administrators and Notices of Appointment of administrators.

Snowden J’s position summary given in his capacity as supervising judge of the Business and Property Courts for the North and North-Eastern Circuits does not give further detail on the pending emergency Practice Direction, which is a matter for all Business and Property Courts and not just the circuits he oversees.

He notes that the emergency Practice Direction will also provide a structure for the hearing of winding-up petitions in the coming weeks.

The position summary otherwise concerns the Leeds, Liverpool, Manchester and Newcastle Business and Property Courts although it does not suggest that there are differences for other circuits.

It states that:

  • The CE-file in the Leeds, Liverpool, Manchester and Newcastle Business and Property Courts will remain operational, although there may be delay in processing filings and judges will not have access to unprocessed filings.
  • Practitioners should assume that insolvency lists for winding-up petitions will be proceeding by a remote hearing unless notified to the contrary.
  • The policy of blanket adjournment of winding-up and bankruptcy petitions across all the Business and Property Courts is no longer being pursued.

There are two guides for urgent applications in the Leeds, Liverpool, Manchester and Newcastle Business and Property Courts: for urgent applications within court hours and for urgent applications outside court hours.

The latter applications outside court hours will continue to follow established procedure for the time being.

Source: Mr Justice Snowden: Covid-19 update number 1: Position Summary and Guides for Urgent Applications

 

Temporary Insolvency Practice Direction – April 2020

On 6 April 2020 a temporary Practice Direction on insolvency proceedings came into force and it expires on 1 October 2020 unless amended or revoked before then.

Most of it concerns emergency measures to deal with  COVID-19, but it also addresses longer running issues relating to the e-filing process for administration appointments.

It covers:

  • New rules on the ability to use electronic working, CE-file, to file Notice of Intention to appoint an administrator and Notice of Appointment of an administrator outside court hours.
  • Adjournment of pending applications, petitions and claim forms and procedures for  re-listing.
  • The process for listing urgent hearings in the High Court.
  • Remote hearings.
  • Temporary listing procedure for winding-up and bankruptcy petitions.
  • Making of statutory declarations before an authorised person but not in their physical presence.

 

Written by kerryunderwood

April 9, 2020 at 1:31 pm

Posted in Uncategorized

JUDICIAL REVIEW APPLICATIONS DURING CORONAVIRUS

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On 24 March 2020, the Administrative Court emailed guidance measures for urgent judicial review applications to the members of the Administrative Court User Group which includes the Administrative Law Bar Association to reflect the government’s guidance on social distancing, due to COVID-19.

Effective from 25 March 2020, and until further notice, the Administrative Court Office will no longer accept judicial review applications for immediate or urgent consideration over the counter, by post or by DX.

The guidance was subsequently updated on 27 March 2020 to include information on the procedures to be followed for non-urgent judicial review applications.

The guidance, which provides details of the email address to be used, includes information on:

 – Payment of fees.

 – The requirements of an electronic bundle, which are the same for both urgent and non- urgent judicial reviews.

 – The conduct of the hearings.

What is apparent from the new guidance is that some processes, particularly concerning non-urgent judicial review claims, initially may take longer such as the consideration of an application for permission to apply for judicial review on the papers and the hearings of non-urgent business which may take longer to come on.

Written by kerryunderwood

April 9, 2020 at 11:05 am

Posted in Uncategorized

REPRESENTATIVE ACTIONS AND GROUP LITIGATION ORDERS

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

Google Granted Permission to Appeal Representative Data Protection Class Action for Compensation

In

Richard Lloyd v Google LLC [2019] EWCA Civ 1599

the Supreme Court has granted Google LLC permission to appeal against the Court of Appeal’s order, which granted Mr Lloyd, a representative claimant, permission to serve proceedings outside of the jurisdiction on Google in the US, in a class action seeking compensation for  breach of section 4(4) of the Data Protection Act 1998.

The breach is said to have occurred between 2011 and 2012 in connection with Google’s use of its “Safari Workaround” technology by which it allegedly used its “DoubleClick cookie” technology to track the online behaviour of millions of Apple iPhone users in the UK without their knowledge or consent and then sold the accumulated data to advertisers, contrary to its privacy policy.

The claim is based solely on a contravention of the Data Protection Act 1998 and Mr Lloyd is alleging no financial loss or distress but instead, infringement of data protection rights, the commission of a wrong and loss of control over personal data.

Mr Lloyd is the only named claimant and is relying on an “opt-out” style of class action involving the meaning of “same interest” under Civil Procedure Rule Part 19.6(1).

Mr Lloyd is seeking a uniform amount of damages on behalf of each member of the class and while each amount will be small, the total bill for damages could amount to millions of pounds.

The examination of the right to compensation under the Data Protection Act 1998 will still be relevant for those seeking to recover compensation under Article 82 of the General Data Protection Regulation ((EU) 2016/679) as the principles are largely unchanged.

Recital 85 of the General Data Protection Regulation specifically cites “loss of control” over personal data as a type of damage.

 

Applicable Principles for Competing Firms of Claimants’ Solicitors in Group Litigation

In

Lungowe and others v Vedanta and another [2020] EWHC 749 (TCC)

the first defendant applied for a Group Litigation Order in respect of three sets of proceedings brought against itself and the second defendant.

The claimants in two of the sets of proceedings were represented by a well-known firm of solicitors and in the other proceedings by another firm of solicitors, but the subject matter and the defendants were the same in all of the proceedings.

The claimant firms submitted that, if a Group Litigation Order was made, it ought to keep the two firms’ “strands” separate.

The court considered that their submissions in this regard were underpinned by the commercial advantage to each firm of keeping the interests of their own claimants separate from the other firm.

However, this was not a good reason, it should not influence sensible case management and was contrary to the ethos of group litigation.

 

38. From the provisions of CPR Part 19, PD19 and these authorities, I derive the following principles:

1. Parties to litigation are generally entitled to be represented by the solicitors of their choice, and to have their case argued by their own representatives. However, in group litigation, that entitlement is qualified. In order properly to achieve efficient conduct and case management of the group litigation, that basic right takes second place to the advancement of the rights of the cohort. This is achieved through the role of the lead solicitor, and the use of counsel chosen and instructed by the lead solicitor.

2. The relationship between the lead solicitor and other firms, whether on a steering committee or otherwise, must be carefully defined in writing. In the absence of agreement, or in the event of deficiency in that agreement, the court will become involved, but this will occur only rarely. It is a reserve power and therefore rarely will it be deployed.

3.In group litigation, all the claimants in that group litigation who will be represented by a lead solicitor (or, as in the British Steel Group Litigation, two firms jointly acting as lead solicitor) are only entitled to instruct one counsel team (although that may have, of course, multiple members). Different groups of claimants are not entitled to instruct different groups of counsel.

39. Some explanation can be provided to each of the above. So far as principle (1) is concerned, the lead solicitor is not being instructed by the court to act against its wishes for all the other claimants, including those for whom it does not wish to act, who are (or because they are) represented by another firm. The lead solicitor is acting as precisely that – the lead solicitor in group litigation. They will be the contact point for the court and for the other parties in terms of service and communication. They will instruct counsel. The degree of consultation and liaison with other firms also instructed will be a matter of agreement between all the firms. It is to be hoped that rarely would there be disagreements, but if there are, the court has the reserve power in principle (2).

40. Principle (2) is self-explanatory. There was no written agreement available at the hearing before me on 27 February 2020, although each of Leigh Day and Hausfeld argued there was. This “agreement” consisted of a paragraph in a draft order that effectively stated Leigh Day would act for the Leigh Day claimants, and Hausfeld would act for the Hausfeld claimants. That is not the type of agreement envisaged by PD19B 3.3 and it is not the type of agreement that would be acceptable. Since the detailed GLO issues were drafted by me and the outstanding controversies on the wording of the GLO itself were resolved between the hearing on 27 February 2020 and the date of this judgment, a more detailed agreement was lodged. I will refrain from passing any comment upon it, positive or negative, as that is a matter for the Managing Judge once appointed.

41. Principle (3) is, in my judgment, so obvious that it does not appear to have been stated anywhere expressly before. However, it now seems necessary to do so, given some of the submissions made before me on 27 February 2020. Given group litigation involves resolving GLO issues, and given by definition GLO issues are all common or related issues of fact and/or law, there should never be any need for separate counsel representing separate groups of claimants. The claimants will have, broadly, co-existence of interest in the same issues. After the GLO Issues are all resolved, it will be a matter for the Managing Judge how (say) individual quantum claims are each to be litigated. Depending upon the subject matter of the group litigation, there will be different ways of achieving this. But certainly so far as resolving the GLO Issues themselves is concerned, no court should be faced with different counsel teams acting for the same cohort, save in the very rarest of circumstances which it is not possible fully to envisage. Certainly, no such rare circumstances exist in this litigation.

42. Finally, the court has broad case management powers under the CPR generally, and if anything a Managing Judge in group litigation has even wider powers under CPR Part 19. Group litigation presents particular challenges not only to the court, but also to the parties. Co-operation is an integral part of CPR Part 1.4(2)(a), and the parties have an express duty under CPR Part 1.3 to assist the court to further the over-riding objective. Co-operation in group litigation is of particular importance. The importance of this cannot be over-stated.

Written by kerryunderwood

April 6, 2020 at 10:55 am

Posted in Uncategorized

PAYMENT ON ACCOUNT OF COSTS CONSIDERED

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

Benyatov v Credit Suisse Securities (Europe) Ltd [2020] EWHC 682 (QB)

the court considered CPR 44.2(8),  which provides that where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs unless there is good reason not to do so; it is rare that good reason is established.

Here, various reasons suggested by a defendant facing costs orders were rejected:

Costs orders in both directions – the claimant had a costs order regarding three applications but had been ordered to pay the defendant costs regarding struck out paragraphs of the particulars of claim.

The defendant had not sought an interim payment for those costs and they could only be properly assessed at the end of proceedings when work thrown away could be considered in the full context.

The judge rejected this as a reason not to order an interim payment as it would allow a party to bring into account contingent and uncertain entitlements as to costs to defeat an otherwise sure entitlement of the other party to an interim payment.

This could not only undermine CPR 44.2(8) but also encourage satellite disputes.

Had the defendant made an application for an inteim payment, the position might be different.

Likelihood of a further costs order in the defendant’s favour – the defendant submitted that a costs order might be made against the claimant regarding a future amendment application.

The judge considered it would be wrong to deny the claimant his entitlement to a payment on account of costs because a future costs order might be made against him.

The appropriate course was to deal with the implications of any future costs order as and when such an order was made.

Defendant had sought permission to appeal – the judge said that this did not prevent him ordering an interim payment.

However, as time for applying for permission had been extended, he ordered that the time for making the payment should not start to run until the application had been determined.

Prospect of subsequently recovering costs – the judge did not accept on the facts that the claimant might not be able to repay. Evidence for a previous security for costs application was noted.

The judge went on to order one third of the sum sought by the claimant.

Written by kerryunderwood

April 3, 2020 at 11:01 am

Posted in Uncategorized

INSOLVENCY ROUND-UP

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This piece, in slightly different form, first appeared on the Practical Law Dispute Resolution Blog.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

Here I deal with a number of decisions concerning procedural issues of filing and service in relation to insolvency proceedings.

In particular the Court’s Electronic Filing System is a source of considerable confusion.

 

Extending Time for Service in Insolvency Litigation and Limitation

In

Bell and another v Ide and others [2020] EWHC 230 (Ch) (12 February 2020)

the High Court considered the requirements of rule 12.9(3) of the Insolvency (England and Wales) Rules 2016 to serve an application in insolvency proceedings at least 14 days before “the date fixed for its hearing”, holding that that referred to the date on which the application was actually heard, rather than any original, vacated, hearing date and declined to follow

Re HS Works Ltd [2018] EWHC 1405 (Ch)

which it held had been wrongly decided.

Here, this meant that the respondents to this claim, which concerned alleged preferences, transactions at an undervalue and transactions defrauding creditors, could not argue that the claim had been served out of time.

However, the court also considered, obiter, the effect if the claim had been served out of time.

It was common ground that claims in insolvency proceedings, unlike claims in general litigation, were not invalidated if served out of time – see rule 12.64 of the Insolvency Rules.

In insolvency proceedings, the court controls the time for service by setting the hearing date and service is a procedural, rather than substantive, step that could be cured, if defective, under rule 12.64 of the Insolvency (England and Wales) Rules 2016.

The court held that, as defective service did not automatically invalidate claims in insolvency proceedings, a court’s decision to extend time for service did not by itself rescue an otherwise defunct claim.

Further, as the claim’s validity did not solely depend on the court’s decision to extend time, a decision to extend time did not by itself deprive the respondents of a limitation defence that would apply if the proceedings had to be started with a new claim, and the decision to the contrary in

Re Kelcrown Homes Ltd (In Liquidation) [2017] EWHC 537 (Ch),

was wrong.

Insolvency legislation deals with service differently from the CPR.

While limitation periods do apply to claims in insolvency proceedings, they are unlikely to defeat a claim issued in time.

 

Defect in Electronic Filing and When Notice of Intention to Appoint Administrators Expires

In

Re Statebourne (Cryogenic) Limited [2020] EWHC 231 (Ch)

the High Court held that the identification in the Court’s Electronic Filing System of which Business and Property Court a Notice of Appointment of Administrators was to be filed in, was not a requirement of Schedule B1 to the Insolvency Act 1986  or of the Insolvency (England and Wales) Rules 2016.

Accordingly, a Notice of Appointment that specified a regional Business and Property Court that was not the same court to which court staff had allocated the preceding Notice of Intention to Appoint Administrators was, if it was defective at all, entitled to a waiver of any defect under CPR 3.10(b).

The court also held that the ten-business day period within which a Notice of Appointment could be filed following a preceding Notice of Intention should be calculated by including the day on which it was filed.  The decision to the contrary in

Re Keyworker Homes (North West) Limited [2019] EWHC 3499 (Ch)

was wrong.

Accordingly, a Notice of Intention filed on Friday 17 January expired at the end of Thursday 30 January 2020, and not at the end of Friday 31 January 2020, and here the Notice of Appointment had been filed out of time on 31 January 2020.

Nevertheless, no substantial injustice was caused by the appointment out of time, and the court granted orders under paragraph 104 of Schedule B1 and rule 12.64 of the Insolvency (England and Wales) Rules 2016 waiving the defect and declaring the administrators validly appointed from the time of filing of the Notice of Appointment on 31 January 2020.

 

Procedural Error When E-Filing Notice of Appointment of Administrator Curable by Court’s Powers Under CPR

In

Carter Moore Solicitors Ltd, Re [2020] EWHC 186 (Ch)

the High Court validated a directors’ Notice of Appointment of an Administrator that had been initially rejected by the court office when uploaded through the Court’s Electronic Filing System.

The Notice of Appointment had been rejected because the person filing it had erroneously tagged it as a “New Case” rather than “Existing Case” in the Court’s Electronic Filing System.

Following the rejection of the Notice of Appointment, it was filed again, correctly, though outside court hours.

It was then accepted by the court staff, but they subsequently referred it to the High Court Judge.

This referral was not strictly pursuant to the more recent guidance that Notice of Appointments purportedly filed through the Court’s Electronic Filing System outside court hours should be referred to a High Court Judge.

The court ultimately side-stepped the out-of-hours issue by only looking at whether to validate the first, in-hours, Notice of Appointment.

The court treated the first Notice of Appointment as having been validly filed, using its discretion under the Electronic Working Practice Direction to remedy procedural errors in Electronic Working (paragraph 5.3, CPR PD 51O).

This use of discretion was appropriate because there had been no breach of insolvency legislation given that the court was only looking at the first Notice of Appointment filing, made within court hours.

The mistake in the first filing was inadvertent and not an attempt to pay a smaller filing fee, and indeed resulted in a higher fee being due.

It had been clear that the first Notice of Appointment was part of an existing case from the documents filed with it.

The mistake was corrected within minutes of it having been notified to the filing party.

No third party would be prejudiced by the validation of the first Notice of Appointment.

Indeed, the second Notice of Appointment would probably have been out of time due to the expiry of the preceding notice of intention to appoint.

The court raised, but did not explore, the debate over how to calculate when it expired, but that issue has since been dealt with in the case of

Re Statebourne (Cryogenic) Limited [2020] EWHC 231 (Ch) 

– see above

The court also used separate common law powers to declare that the administrators’ appointment was valid as a result of its CPR order.

The court also stated that, pending new legislation, practitioners should avoid e-filing out-of-hours’ Notice of Appointments.

 

Effect of Out-Of-Hours E-Filing of Notices of Appointment

In

Re Symm & Company Ltd [2020] EWHC 317 (Ch) (5 February 2020)

the High Court validated a Notice of Appointment of Administrators that had been electronically filed by the insolvent company’s directors outside court hours at 5.36pm.

The court deemed the Notice of Appointment to take effect at 10am on the next working day.

This was because the out-of-hours filing was a defect that was simply an irregularity and caused no substantial injustice and so could be cured under rule 12.64 of the Insolvency (England and Wales) Rules 2016.

It was appropriate that a Notice of Appointment filed by directors should be deemed only to take effect when the court next opened, rather than at the out-of-hours time at which it was originally filed.

By contrast, if a Notice of Appointment was filed outside court hours by a Qualifying Floating Charge Holder, it could be appropriate that the Notice of Appointment be deemed to be filed at the time it was originally submitted.

This was because the Insolvency (England and Wales) Rules 2016 and Insolvency Rules 1986 had long permitted Qualifying Floating Charge Holders, and only Qualifying Floating Charge Holders, to file outside court hours.

The intended meaning of paragraph 8.1 of the Practice Direction on Insolvency Proceedings is to prevent any Notice of Appointment from being filed electronically outside court hours.

The remaining method of filing outside court hours through the email and fax process in the Insolvency (England and Wales) Rules 2016 had always been intended solely for Qualifying Floating Charge Holders, to compensate them for the loss of the 24-hour ability to appoint administrative receivers.

Although rule 1.46 of the Insolvency (England and Wales) Rules 2016 contemplated electronic delivery of court documents, this only reflected the expectation of a then future pilot scheme on electronic filing of court documents generally and did not reflect a policy change on Notice of Appointments.

This is the first reported decision following the recent High Court guidance on the process for dealing with out-of-hours Notice of Appointments in which the court has directly engaged with the relevant legal questions.

Earlier cases have been decided on other grounds.

Note: For those of you under 60, fax was a sort of very early email system which fell into disuse in about 1995.

 

Recognition of Foreign Insolvency Proceedings Under Cross-Border Insolvency Regulations 2006 Notwithstanding the Dissolution of The Debtor

In

Mendonca v KPMG Corporate Finance Sao Paulo, Brazil [2020] EWHC 351 (Ch)

the High Court ordered that Brazilian bankruptcy proceedings of an English limited liability partnership be recognised as foreign main insolvency proceedings under the Cross-Border Insolvency Regulations 2006 (SI 2006/1030) even though the debtor had been dissolved before the Brazilian bankruptcy order had been made.

The court considered whether the company was a “debtor” for the purposes of the Cross-Border Insolvency Regulations 2006 (SI 2006/1030).

Definitions used in the Cross-Border Insolvency Regulations 2006 (SI 2006/1030) of “foreign proceeding”, “foreign representative”, and “foreign main proceeding” were each predicated upon there being a debtor.

The court held that under sections 221(5) and 225 of the Insolvency Act 1986, it was able to wind up a dissolved unregistered company: this had been the case, for example, in

Re Eurodis Electron plc [2011] EWHC 1025 (Ch)

It also noted that in

Re Consumer Trust and others [2009] EWHC 2129 (Ch)

the High Court had recognised as foreign main proceedings US bankruptcy proceedings in respect of a US trust that had no legal personality for English law purposes.

It was consistent with the aims and purposes for which the Cross-Border Insolvency Regulations 2006 (SI 2006/1030) had been introduced that recognition should be granted, and to order otherwise would, in the light of the operation of sections 22(5) and 225 of the Insolvency Act 1986, be perverse.

The fact that the company’s assets had become bona vacantia under English law, however, led the court to refuse to make an order entrusting the assets of the company to the foreign representatives and it stated that the company should be restored to the register.

It permitted the foreign representatives to apply for such an order.

The court observed that, should similar circumstances arise in the future, notice of the recognition application should be served on the relevant bona vacantia authority which was determined by the debtor’s registered office location, and in this case was the Bona Vacantia Division of the Treasury Solicitor in good time before the hearing.

Written by kerryunderwood

March 26, 2020 at 12:47 pm

Posted in Uncategorized

INDEMNITY COSTS FOR FAILURE TO ENGAGE IN ALTERNATIVE DISPUTE RESOLUTION

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

DSN v Blackpool Football Club Ltd [2020] EWHC 670 (QB)

the Queen’s Bench Division of the High Court awarded the claimant indemnity costs on the basis that the defendant had refused to engage in alternative dispute resolution.

The claimant beat its own Part 36 offer at trial and thus got indemnity costs from the date of expiry of the time for accepting the offer, that is 23 December 2019.

However, the court also ordered indemnity costs from over 1 year earlier for the defendant’s failure to respond to earlier Part 36 offers and its failure “to engage in any discussion whatsoever about the possibility of a settlement”.

 

“27. In summary, the Defendant in this case failed and refused to engage in any discussion whatsoever about the possibility of settlement. It did not respond to any of the three Part 36 offers (except to reject the final one). It was required by paragraph 4 of the Order of Master McCloud “to consider settling this litigation by any means of Alternative Dispute Resolution (including Mediation)”. It was warned by the same Order that if it did not engage in any such means proposed by the Claimant it would have to give reasons, and it was also warned that the reasons it gave might in due course be shown to the trial judge when the question of costs arose.”

Written by kerryunderwood

March 23, 2020 at 12:18 pm

Posted in Uncategorized

CAPPED COSTS AND PERCENTAGE ORDERS IN JUDICIAL REVIEW PROCEEDINGS

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

Elan-Cane, R (on the application of) v The Secretary of State for the Home Department & Anor [2020] EWCA Civ 363

the Court of Appeal held that a percentage reduction to a costs award could be made to a capped costs sum, rather than the actual sum, in a case concerning the engagement, of Article 8 of the European Convention on Human Rights, the right to respect for private life.

The Court of Appeal unanimously dismissed the appellant’s appeal in the substantive case, holding that the Secretary of State for the Home Department could refuse to allow an application for a passport with an “X” marker in the gender field to indicate unspecified gender.

The parties had agreed to cap costs at £3,000 each by consent order.

After refusing permission to the appellant on the Article 8 challenge, the High Court ordered the appellant to pay £2,000 for the respondent’s costs, being a 33% reduction to capped costs as the appellant was partially successful in establishing the engagement of Article 8.

The respondent argued that the reduction should apply to actual costs and not capped costs, so that the court should initially consider costs, including any deductions, as though the cap did not exist and apply the cap afterwards.

 

“128. On the figures in the present case, the amount at stake on this issue is only £1,000. But the question is of potentially wider significance in all cases where a costs capping order has been made in connection with public interest judicial review proceedings by the High Court or the Court of Appeal under sections 88 to 90 of the Criminal Justice and Courts Act 2015 (“the 2015 Act”), or (as here) the parties have agreed to a costs capping order in lieu of an order under those sections. Since the irrecoverable costs of the SSHD in such cases are in effect funded by the taxpayer, the SSHD understandably wishes the question of principle to be tested. Permission to appeal was granted by Bean LJ on 20 December 2018.”

 

The court observed that costs capping under the Criminal Justice and Courts Act 2015 promoted access to justice in public interest proceedings at the expense of parties’ potentially irrecoverable costs, and this policy should inform the entire costs exercise in such proceedings.

No rule or principle was precluding a percentage reduction to a capped costs amount.

It might encourage “lax practice or unreasonable litigation conduct” if the successful party knew that it would receive all its capped costs, even if there were factors that would justify a substantial reduction of its uncapped costs.

 

“131. So far as material, sections 88 and 89 of the 2015 Act provide as follows:

88Capping of costs

(1) A costs capping order may not be made by the High Court or the Court of Appeal in connection with judicial review proceedings except in accordance with this section and sections 89 and 90.

(2) A “costs capping order” is an order limiting or removing the liability of a party to judicial review proceedings to pay another party’s costs in connection with any stage of the proceedings.

(3) The court may make a costs capping order only if leave to apply for judicial review has been granted.

(4) The court may make a costs capping order only on an application for such an order made by the applicant for judicial review in accordance with rules of court.

(5) Rules of court may, in particular, specify information that must be contained in the application, including –

(a) information about the source, nature and extent of financial resources available, or likely to be available, to the applicant to meet liabilities arising in connection with the application,

(6) The court may make a costs capping order only if it is satisfied that –

(a) the proceedings are public interest proceedings,

(b) in the absence of the order, the applicant for judicial review would withdraw the application for judicial review or cease to participate in the proceedings, and

(c) it would be reasonable for the applicant for judicial review to do so.

(7) The proceedings are “public interest proceedings” only if –

(a) an issue that is the subject of the proceedings is of general public importance,

(b) the public interest requires the issue to be resolved, and

(c) the proceedings are likely to provide an appropriate means of resolving it.

89. Capping of costs: orders and their terms

(1) The matters to which the court must have regard when considering whether to make a costs capping order in connection with judicial review proceedings, and what the terms of such an order should be, include –

(a) the financial resources of the parties to the proceedings, including the financial resources of any person who provides, or may provide, financial support to the parties;

(b) the extent to which the applicant for the order is likely to benefit if relief is granted to the applicant for judicial review;

(c) the extent to which any person who has provided, or may provide, the applicant with financial support is likely to benefit if relief is granted to the applicant for judicial review;

(d) whether legal representatives for the applicant for the order are acting free of charge;

(e) whether the applicant for the order is an appropriate person to represent the interests of other persons or the public interest generally.

(2) A costs capping order that limits or removes the liability of the applicant for judicial review to pay the costs of another party to the proceedings if relief is not granted to the applicant for judicial review must also limit or remove the liability of the other party to pay the applicant’s costs if it is.

…””

The relevant rules of court are contained in CPR 46.16 to 46.19 and Practice Direction 46, paragraphs 10.1 and 10.2.

Written by kerryunderwood

March 23, 2020 at 12:10 pm

Posted in Uncategorized

STUNNINGLY HIGH SATISFACTION RATES FOR SOLICITORS

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In February and March 2019 YouGov surveyed the legal need of individuals in England and Wales and interviewed 28,633 people who had experienced a legal issue in the previous four years, and that is the biggest ever such survey.

The summary report is here and the full report is here.

90% of people who had used a solicitor were satisfied with the service they received, rising to 94% for those given price information at the outset.

84% thought the solicitor provided value for money.

66% of those who received professional help felt that they had a fair outcome compared with 53% for those who did not.

76% of those receiving professional help thought the outcome was better or as good as they had hoped.

Unregulated providers received the worst ratings, with high levels of dissatisfaction with will-writers and McKenzie Friends; McKenzie Friends are unqualified people who are allowed by the court to assist litigants.

The original idea was that they were literally friends of the litigants and provided free help, but now it has become a major unregulated business.

53% of the legal issues were contentious.

 

The most common issues were:

 

Professional or defective goods/service              26%

Anti-social behaviour by neighbours                  14%

Employment                                                       11%

Wills                                                                   11%

Buying or selling property                                  11%

 

Solicitors are most likely to be the main advisers, advising in 30% of cases, rising to 40% for contentions matters.

Age is the key determining factor in seeking professional, as compared with informal or unregulated, advice.

 

The figures for those reporting that a solicitor was their main adviser are:

 

Aged 65 or over                                                 40%

50 to 64                                                            33%

30 to 49                                                            26%

18 to 29                                                            18%

 

79% of those who seek a solicitor do not shop around.

Of those who decided to get professional help, just 18% looked for or obtained information on prices or services.

 

Reasons for given for not shopping around were:

 

Happy with the first service they found              33%

Trusted a recommendation                                28%

Found the matter fairly simple                           22%

Found it easy to search for services                   93%

Found it easy to obtain details of services          89%

Found it easy to search for reviews                    89%

Found it was easy to find prices                         84%

 

This was before the new rules on price transparency came into effect.

 

Set out below is the percentage of people obtaining help, or not, by legal issue:

 

1

 

2

 

48% of the people did not understand what a regulated service is.

Proportion of people who describe their contentious legal issue as each of the following:

 

3

 

53% of those with the contentious legal issues suffered stress

33% of those with the contentious legal issues offered financial loss

18% of those with a contentious legal issue suffered ill health or injury

Proportion of people who report each of the following experiences as part of or as the result of their contentious legal issue:

 

4

 

Proportion of people with a contentious legal issue who desired each of the following outcomes:

 

5

 

Desired outcome varies significantly based on the type of legal issue experienced, as might be expected. Those with a contentious family-related issue are much more likely than the others to be seeking a change in the nature of a relationship, while those with an issue related to employment/finance/welfare/benefits or the rights of individuals are more often than others wanting to change a decision.

Many groups, however, are seeking money or property as an outcome, as well as for somebody to recognise their rights or meet responsibilities.

 

Table by Subject of The Percentages Of Those Obtaining Legal Help

 

6

 

Table of Sources of Help

 

7

 

Use of Different Types of Advisers by Type of Legal Issue

 

8

 

How and Whether People Searched for Prices, Reviews etc, By Work Type

 

9

 

Reasons for Not Shopping Around

 

10

 

31% of those using an unregulated provider assumed that the adviser was in fact regulated.

Delivery of Services

 

11

 

How are Services Delivered

How services delivered – by work type

 

12

 

Satisfaction by Work Type

 

13

 

Satisfaction in Relation to Different Ways of Delivering the Service

 

14

 

It will be noted the satisfaction levels are very similar whether the services delivered.

Satisfaction by Type of Adviser

 

15

 

Reasons for Dissatisfaction

 

16

 

How People Paid for Service

 

17

 

How the Matter Was Funded for the People Who Did Not Pay All of the Costs Personally

 

18

 

Contentious Work Percentage of Those Thinking That Professional Help Led to A Better Outcome

 

19

Written by kerryunderwood

March 13, 2020 at 9:47 am

Posted in Uncategorized

FUNDAMENTAL DISHONESTY DESTROYS CLAIM EVEN IF CORRECTED

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

Roberts v Kesson & Anor [2020] EWHC 521 (QB)

the High Court allowed the defendant’s appeal and held that the trial judge should have found that the claimant had been fundamentally dishonest.

The claimant made an untrue witness statement which he subsequently corrected and the trial judge said:

 

“It is right that he has accepted that he was dishonest in part when making his first statement, but I do observe that he did not persist with that dishonesty.”

 

The High Court said:

 

“54. Ultimately, I have reached a different conclusion adverse to the interests of the Claimant on that claim in relation to his first witness statement. The language of Section 57 is important. The Court must be satisfied on the balance of probabilities that the Claimant has been fundamentally dishonest. The real question is whether the Claimant has been fundamentally dishonest and not whether he has persisted in that dishonesty. In my judgment, the only permissible conclusion on all the available evidence is that the Claimant has been fundamentally dishonest in advancing a false claim in the schedule of loss and a false claim in his first witness statement.”

 

The dishonesty is the key issue, not whether the claimant persisted in that dishonesty.

Written by kerryunderwood

March 12, 2020 at 7:28 am

Posted in Uncategorized

SOLICITORS OWE NO DUTY TO FUNDERS TO REPORT COUNSEL’S ADVICE ON PROSPECTS OF SUCCESS

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

Hall v Saunders Law Ltd & Ors [2020] EWHC 404 (Comm)

the Commercial Court allowed the defendant solicitors’ application for summary judgment in relation to a claim against them for breach of a funding agreement and breaches of a duty of care or fiduciary duty.

The court found that, under the terms of the funding agreement, the solicitors did not owe any duty to the funder to report pessimistic views expressed by counsel and it was not appropriate to imply any equivalent duty of care or fiduciary duty.

The claimant in the funded action entered into a tripartite funding agreement with the funder and its solicitors, and that action was lost.

The funder went into liquidation and its claims in relation to the funding agreement were assigned to the claimant.

The claimant alleged that the solicitors failed to communicate pessimistic advice received from counsel as to the prospects of success of the funded action, in breach of either the terms of the funding agreement, a common law duty of care, or a fiduciary duty owed by the solicitors to the funder to cease to act for the claimant, if it knew that the claimant was refusing to pass relevant information to the funder, or failing to instruct the solicitors to do so.

The High Court held that there was no freestanding reporting obligation on the solicitors.

There was no basis for implying such an obligation as the funding agreement did not lack commercial or practical coherence without it; reporting obligations on the claimant already provided protection for the funder.

The court noted that the fact that the parties were in a contractual relationship meant that he did not have to consider what duties may have been owed at common law in the absence of a contract.

Further, there was no basis for imposing any fiduciary duty on the solicitors.

The particular wording of the funding agreement in question was key to this decision.

Following this case, funders may seek to impose express reporting obligations on solicitors where that is not current practice.

Written by kerryunderwood

March 11, 2020 at 9:22 am

Posted in Uncategorized

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