Kerry Underwood

Archive for June 2017

IPEC, FIXED COSTS AND REFUSAL TO TRANSFER CASE TO HIGH COURT

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In 77M Ltd v Ordnance Survey Ltd and others [2017] EWHC 1501 (IPEC)

the Intellectual Property and Enterprise Court (IPEC) refused to transfer proceedings to the High Court on the ground that to do so would remove the smaller party’s access to the courts.

Applying the principles set out in

Comic Enterprises Ltd v Twentieth Century Fox Film Corp [2012] EWPCC 13

the judge said that it was clear from the accounts of 77M Ltd that it would be unable to fund litigation if it risked the high costs payable in the High Court.

Ordnance Survey Ltd had not offered any formal undertaking to limit 77M’s costs liability.

The value of the claim carried little weight as 77M had agreed to waive the limit on the maximum amount of damages that could be awarded in the IPEC.

There is a time limit of three days for a trial in the IPEC and the judge thought the matter could be concluded within three days but did not rule out the possibility that the case might still be transferred at the Case Management Conference if it transpired that this would not be possible, even after the issues had been narrowed down.

Comment

This is a potentially important decision given the Fixed Recoverable Cost Pilot now taking place in the Commercial Court in relation to claims up to £250,000.00 and in advance of Lord Justice Jackson’s report on extending Fixed Recoverable Costs, which report which to be published in July 2017.

That pilot, like the IPEC, is voluntary, but it suggests that the courts will be reluctant to transfer matters to the old open costs system.

This makes perfect sense. The whole point of Fixed Recoverable Costs is that it introduces certainty for the parties, who can then make an informed decision as to whether or not to proceed with litigation.

If a party was to start a case on the basis that there would be Fixed Recoverable Costs, but it is then transferred to the open costs regime, then it defeats the point of Fixed Recoverable Costs and effectively amounts to retrospective procedural legislation in relation to that party.

The IPEC has capped, rather than fixed, costs but those costs generally reach the cap and therefore it is akin to a Fixed Costs Scheme.

It is widely regarded as a great success and reinforces the view that although there is great resistance to fixed costs, once lawyers become involved in fixed costs systems they like them.

There is overwhelming evidence that clients want fixed costs.

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Written by kerryunderwood

June 30, 2017 at 9:57 am

Posted in Uncategorized

WITHDRAWING ADMISSIONS

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In Blake v Croasdale [2017] EWHC 1336 (QB)

the Queen’s Bench Division of the High Court held that an admission by insurers was binding, but on the facts gave permission to them to resile from that admission.

Here the Claimant was seriously injured in a road traffic accident and the claim was submitted on the RTA Portal.

The Defendant stated that it might be alleging contributory negligence in relation to matters other than failure to wear a seatbelt and that the case was unsuitable for the portal because of its value, but they admitted primary liability.

When proceedings were issued the Defendant filed a Defence denying liability and including an allegation that the Claimant’s injury was caused by his own criminal act, asserting that at the time of the accident he was acting in the course of a joint criminal enterprise with the First Defendant, namely dealing in drugs.

There was sufficient evidence in support of that allegation that it would not be struck out on the usual principles.

The court also took into account the fact that a claim initially issued on the portal, and therefore valued at no more than £25,000.00, was now a multimillion pound claim.

That could be interpreted as meaning that a Defendant will be entitled to resile from an admission on that ground alone.

However in Wood v Days Health UK Limited and Others [2016] EWHC 1079 (QB) the court said:

“It is true that the potential value of C’s claim has increased since 2010; and that is the real ground for the application. But that is a risk which is inherent in any personal injuries claim, and is a reason why it can sometimes be commercially advantageous to try and settle a claim at an early stage. …  I do not consider that the fact that the potential value of the claim has increased since the admission is a good reason for allowing D1 to withdraw the admission.”

Comment

There is still considerable uncertainty in the law relating to admissions and withdrawing admissions.

In the absence of fraud or fundamental dishonesty or whatever it is hard to see why a party should be allowed to withdraw an admission, especially if that admission was made having received professional advice.

Written by kerryunderwood

June 30, 2017 at 8:35 am

Posted in Uncategorized

SOLICITOR LLP CAN CLAIM SOLICITOR’S COSTS AND IS NOT A LITIGANT IN PERSON

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In Halborg v Emw Law LLP [2017] EWCA Civ 793, 23 June 2017

the Court of Appeal upheld the lower court’s decision that a firm of solicitors operating through the medium of a Limited Liability Partnership is not to be treated as a litigant in person when seeking to recover costs in an action where it is a party.

Thus the longstanding rule that a firm of solicitors, when acting for itself, can recover costs as solicitors and not as litigants in person, applies also to LLPs.

The paying party relied on CPR 46.5(6)(b), which declares a solicitor to be a litigant in person, except where he or she is represented by a firm in which that person is a partner.

Thus the paying party relied on the fact that a solicitor in such circumstances is not represented by a firm in which that person is a partner.

The court held that the principles set out in

the London Scottish Benefit Society v Chorley Crawford and Chester [1884] 12 QBD 872 (CA) applied to LLPs as much as to firms of solicitors.
In Malkinson v Trim [2002] EWCA Civ 1273

the Court of Appeal confirmed that that principle also applied where the work was done by others within the solicitors’ firm and not by the solicitor herself or himself and that it also applied where the action could not have involved the firm because it related to matters that took place when the solicitor was a partner in a different firm.

If the wording was applied literately, then it would mean that a sole practitioner, not being a partner could only recover costs as a litigant in person.
The Court of Appeal had this to say about that concept:

“34. That is a slavishly literal interpretation which would produce an absurd and plainly unintended result. Mr Marven offered no policy rationale for such a distinction between, on the one hand, a solicitor litigant in sole practice who represents himself and, on the other hand, a solicitor litigant who is represented by the firm of which he is one of a number of partners. It is perfectly plain that Chadwick LJ in the Malkinson case did not consider that the CPR and Costs Practice Direction provisions under consideration in that case made such a distinction and attenuated the Chorley principle in that way. Indeed, he said (at [14]) that he regarded such a distinction as “absurd”. Paragraph 52.6 of the then Costs Practice Direction expressly treated the solicitor litigant in sole practice and the solicitor litigant in a multi partner firm identically. Further, so far as concerned the application of the indemnity principle, Chadwick LJ’s analysis was to acknowledge that the Chorley principle applied to the case of a solicitor litigant in a multi partner firm because there was no material distinction between such a solicitor and a solicitor in sole practice. Nothing has been shown to us to indicate that a conscious decision was taken by the Civil Procedure Rule Committee or the Government, in bringing into effect CPR 46.5, to create what, on the face of it, would be an irrational and indeed absurd distinction.

  1. I consider, therefore, giving the words in parenthesis at the beginning of CPR 46.5(6)(b) a purposive interpretation in the light of Malkinson case and the history of the Chorley principle, that the word “firm” includes a solicitor in sole practice and “partner” includes a case where there is only one principal in the firm.

 

  1. That then leaves the issue whether a solicitors LLP within the Limited Liability Partnerships Act 2000, and the members of it, are to be treated differently, for the purposes of CPR 46.5(6), to an ordinary partnership firm of solicitors within the Partnership Act 1890 and the partners of such a firm. No sensible policy reason has been given on behalf of Mr Halborg for such a distinction. There is no discernible reason why the Chorley principle, and the rationale underlying it, should be applicable to a traditional partnership but inapplicable to an LLP.

 

  1. The fact that former has no separate legal personality and the partners have unlimited liability whereas the latter is a body corporate (pursuant to section 1(2) of the 2000 Act) and its members enjoy limited liability (pursuant to section 1(4)) does not bear on the rationale for the Chorley principle.”

The court also endorsed the observations of the High Court in R(Sword Services Limited) v HMRC [2016] EWHC 1473 (Admin)

that “in ordinary parlance the terms “partnership” and “partners” cover both general and Limited Liability Partnerships and their members.

Written by kerryunderwood

June 29, 2017 at 8:56 am

Posted in Uncategorized

UNPAID COSTS AND LIENS

with 2 comments


In Spencer-White v Harding Evans LLP [2017] EWCA Civ 434, 14 June 2017

the Court of Appeal unanimously dismissed an appeal against an order awarding judgment to a firm of solicitors on its claim for unpaid fees.

The Court of Appeal also held that the firm was entitled to a lien over all of the files that it held in connection with that client, and that the lien was not limited to the files that related to matters on which there were outstanding fees.

The Terms of Business and the Client Care letter provided that the solicitors were entitled to retain all of the client’s papers and documents until any outstanding sums had been paid.

Furthermore, the fees were to be charged on a time spent basis and therefore on termination, causing the transaction to be abortive, the client still had to pay all of the solicitor’s charges and expenses up to the date of termination.

The transaction in question was the sale of a property.

Written by kerryunderwood

June 28, 2017 at 9:21 am

Posted in Uncategorized

PART 36 AND RESERVING COSTS TO END OF CASE

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In Interactive Technology Corporation Ltd v Ferster [2017] EWHC 1510 (Ch)

the Chancery Division of the High Court held that the existence of Part 36 offers by the Defendants meant that the issue of costs after a preliminary hearing had to be reserved until the end of the case.

The judge was unaware of terms of the offers but the very fact that they had been made meant that the preliminary trial costs must be reserved, even though there had been a lengthy trial on the preliminary issue.

CPR 36.16 provides:

“36.16.— Restriction on disclosure of a Part 36 offer

(1) A Part 36 offer will be treated as “without prejudice except as to costs”.

(2) The fact that a Part 36 offer has been made and the terms of such offer must not be communicated to the trial judge until the case has been decided.

(3) Paragraph (2) does not apply—

(a) where the defence of tender before claim has been raised;

(b) where the proceedings have been stayed under rule 36.14 following acceptance of a Part 36 offer;

(c) where the offeror and the offeree agree in writing that it should not apply; or

(d) where, although the case has not been decided—

(i) any part of, or issue in, the case has been decided; and

(ii) the Part 36 offer relates only to parts or issues that have been decided.

(4) In a case to which paragraph (3)(d)(i) applies, the trial judge—

(a) may be told whether or not there are Part 36 offers other than those referred to in paragraph (3)(d)(ii); but

(b) must not be told the terms of any such other offers unless any of paragraphs (3)(a) to (c) applies.”

The judge then applied CPR 36.16 to the facts of this case and said:

“Applying CPR 36.16 to this case, the position is as follows:

(1) The case has not “been decided”, for the purposes of rule 36.16(2), because there are issues in the case which remain to be decided; see Beasley v Alexander [2013] 1 WLR 762, a decision on an earlier version of Part 36 but which remains relevant in relation to the current version of Part 36;

(2) Although ITC is content for the court to be told the terms of the three Part 36 offers, the Defendants and, in particular, Jonathan Ferster, do not agree to that and so the case is not within rule 36.16(3)(c);

(3) A part of the case has been decided within rule 36.16(3)(d)(i);

(4) The Part 36 offers do not relate only to parts or issues that have been decided and so the case is not within rule 36.16(3)(d)(ii);

(5) I have been told of the existence of the Part 36 offers, in accordance with rule 36.16(4)(a);

(6) I have not been told the terms of the Part 36 offers, in accordance with rule 36.16(4)(b)”

The judge then explained that he knew that there were Part 36 offers that related not only to the decided issues and he was unaware, and was not entitled to know, whether those offers related only to issues which had not been decided or whether they related both to issues which had been decided and issues which had not been decided.

This follows the decision of the Court of Appeal in

HSS Group plc v BMB Ltd [2005] 1 WLR 3158

which concerned an earlier version of Part 36 but the judge took the view that the relevant reasoning in that case still applied.

I deal extensively with Part 36 in my book Personal Injury Small Claims, Portals and Fixed Costs, which runs to 3 volumes and 1,300 pages and is available for £80.00 from Amazon here or from me here.

Written by kerryunderwood

June 27, 2017 at 8:27 am

Posted in Uncategorized

MCKENZIE ONLINE JUDGES COMING SOON

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Giving the Lord Slynn Memorial Lecture earlier this month the Master of the Rolls spoke about the proposed online court and admitted that the failed Rechtwijzer Dutch Scheme had been inspiration behind the proposals for an online court in England and Wales.

 

That system was set up in 2014 but is to be abandoned next month and is very widely regarded as an absolute disaster with only around one in 100 qualifying disputes actually being dealt with.

 

The concept is logically flawed.

 

The Master of the Rolls referred to three stages:

 

1. The Online Solutions Court will assist individuals to find the right sources of legal advice and help in order to enable them to consider whether they have a viable legal dispute. By helping individuals before who have not yet reached the stage of beginning legal action it will “secure access to preventive justice”.

 

I have not got a clue what “preventive justice” means.

 

If we had a properly funded system of law centres, Citizens Advice Bureaux and legal aid would that not “assist individuals to find the right sources of legal advice and help in order to enable them to consider whether they have a viable legal dispute.“

 

What on earth does an Online Solutions Court bring to the party in terms of advising people as to their legal rights?

 

Furthermore, as any lawyer who has been practicing for more than about two days knows, the law itself is only a small part of our work and the advice that we give to clients.

 

The law is really the background to the potential solutions.

 

Does the client wish to engage in litigation?

 

Does the client wish to maintain a relationship with the proposed opponent?

 

Should the matter be dealt with by negotiation, a settlement and ADR? How obvious is it that it is not the role of the court?

 

2. “Case Officers and Court Administrators exercising judicial functions under the supervision of the judiciary” will assist parties to manage the claim and reach a settlement.

 

“This is a significant departure from the court’s existing role as it will require a Court Officer actively to engage the parties in mediation and conciliation processes.

 

Unqualified and judicially untrained very junior civil servants will be “exercising judicial functions”.

 

That is a paid McKenzie Friend, except that they cannot be a friend to both parties.

 

How obvious is it that it is not the role of the court to assist parties to manage the claim and reach a settlement, rather it is to hear and try the claims.

 

It is the job of lawyers, insurers, ACAS, mediators and a whole host of others to try and reach a settlement.

 

It is not the job of the court!

 

This also ignores the fact, as to all of the “litigation as a last resort” evangelists that the vast majority of claims, well over 90% and in some areas over 99%, are settled without a hearing.

 

In other words the system, as far as resolution and settlement is concerned, works extremely well.

 

3. The claim will be adjudicated by a judge. However “the process will not necessarily take place in a traditional courtroom. It may be carried out online by video link, by telephone or on a paper”.

 

The idea of cross-examination being carried over the telephone is so ludicrous that it beggars belief that anyone with experience of courts should seriously suggest that that is an acceptable or appropriate way for any dispute which has reach a trial to be dealt with.

 

Funny enough this scheme will only be for low value claims and will not be used in the High Court or Commercial Court or whatever.

 

This is yet another attack on ordinary people with ordinary claims.

 

I trust that on the Friday morning when Jeremy Corbyn becomes our Prime Minister this nonsensical idea will be ended forever.

Written by kerryunderwood

June 23, 2017 at 11:18 am

Posted in Uncategorized

FIXED COSTS AND OFFSHORING

with 5 comments


This article first appeared on the Practical Law Dispute Resolution Blog on 22 June 2017.

 

The Master of the Rolls, giving the Lord Slynn Memorial Lecture on 14 June 2017, had this to say about the effect of electronic filing and online courts:

 

“It also means that law firms can offshore work or otherwise structure their businesses to reduce cost while maintaining quality; an offshore office can file a claim online as easily as an office in the same city as the court. Again cost savings are possible. And where international, commercial and business disputes are concerned, ease of filing over the internet enhances global as well as local accessibility of our courts.”(Paragraph 31).

 

Compulsory online filing now exists in all cases in the Rolls Building, that is heavyweight commercial disputes, and with a small number of exceptions all personal injury claims valued at up to £25,000 damages.

 

It is proposed that from October 2018 all civil claims of £10,000 or less be subject to online filing and video or telephone trials. The day when paper filing is impossible in a court or tribunal is but a few years away.

 

As far as I am aware, this is the first time that a senior judge has referred to offshore legal offices enabling firms to operate in England and Wales at lower costs.

 

Underwoods Solicitors have been doing this through our South African office for over 10 years (and in fact, Underwoods Solicitors is a trading name of Law Abroad Limited, whose name reflects this fact). Two other firms have used our facility. Virtually none of the 10,000 plus law firms in England and Wales have given it a thought. It is particularly notable, and surprising, that even the many personal injury firms who do not see clients, and which are subject to fixed recoverable costs, employ paralegals in this country rather than cheaper and better qualified staff abroad.

 

Expect that to change once fixed costs and online filing extend to other areas of work and to claims of higher value. Apart from seeing the client and trial advocacy (and few matters go to trial), everything else can be done abroad.

 

Take experts – ridiculously expensive by any standards. For anything other than a basic medical report, it is cheaper to fly the client to South Africa for an examination and report. Turn that round and pay for a South African expert to travel to England and Wales to examine and report on 30 or 40 clients and the savings are enormous.

 

With non-medical expert reports (where there is no need physically to meet anyone) huge savings can be made by instructing an offshore expert. Why does a forensic accountant need to be based in the jurisdiction? The same is true in relation to costs lawyers: why is it necessary to prepare a bill of costs here when it could be prepared for a fraction of that cost abroad?

 

All of you reading this will have physical goods made abroad and physically imported into the UK, be it a car, television, phone, camera, sound systems, computer, clothes and so on. If it makes economic sense even where the goods have to be physically transported, how much more sense does it make when there is nothing to be transported and thus no cost attached?

 

You may have a view on the rights and wrongs of offshoring, or importing services to give it another description, but it should be on the next partners’ and staff meeting agendas. Decisions about this year’s Christmas party, the fridge not working properly and running out of toilet paper can be delegated.

 

Written by kerryunderwood

June 23, 2017 at 7:59 am

Posted in Uncategorized

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