Kerry Underwood

Archive for July 2017

FIXED COSTS REPORT OVERVIEW : POST 1

leave a comment »


This blog first appeared in Practical Law on 31 July.

On 31 July 2017 Lord Justice Jackson’s Supplemental Report on Recoverable Fixed Costs was published and is available here.

You can book for my 10 city Autumn Fixed Costs Tour here.

This will now be subject to consultation by the government, and so these are proposals at this stage.

Whatever comes in is likely to be on 1 October 2018.

Fast Track

The Fast Track limit remains £25,000.00 and all Fast Track claims will be covered by Fixed Recoverable Costs.

The new grid has the same stages as the current Fast Track personal injury grid set out in CPR 45.29, but has four bands of complexity, a new concept.

In Band 4 alone, covering the most complex cases, there will be ring-fenced fees for counsel/specialist lawyers as follows:

Post-issue advice or conference –                             £1,000.00

Settling Defence/Defence and counterclaim –           £500.00

Throughout the Fast Track, both pre and post-issue, all figures are fixed, not capped.

There is a special table for noise induced hearing loss (NIHL) claims as follows:

Stage NIHL claims with value less than £25,000
Pre-Issue £4,000 + £500 per extra defendant (reduced by £1,000 if there is an early admission of liability or by £500 if settled before proceedings drafted)
Post-issue, pre-allocation £5,650

+ £830 uplift per extra defendant

Post-allocation, pre-listing £7,306

+ £1,161 uplift per extra defendant

Post-listing, pre-trial £9,187

+ £1,537 uplift per extra defendant

Trial advocacy fee Not agreed

The costs figures are to be reviewed every three years.

Non-monetary awards

Non-monetary awards, such as declarations or injunctions are to be valued at £10,000.00, with courts having a discretion to vary that valuation.

The fixed recoverable fee for an interim injunction application will be £750.00.

Interim applications in NIHL and Band 4 fast track claims will be paid at two-thirds of type A and type B costs, rather than one-half.

Portals

There will be no extension to the portal system.

Complexity

The Pre-action Protocols are to be amended to require parties, pre-issue, to agree the band of complexity, and that will depend upon the individual case, rather than the type of case.

Ultimately the Judge on Allocation will decide both the track and the band.

The party will be able to challenge the band and track allocation, but if unsuccessful, will incur fixed costs of £150.00.

Clinical negligence

The only clinical negligence cases to be covered by fixed costs will be where breach and causation are admitted in the Pre-action Protocol Letter of Response and the claim is valued at less than £25,000.00.

Given the absence of any other fixed costs regime for clinical negligence cases, this is a very powerful incentive on Resolution (formerly the NHSLA) to admit liability and causation, where appropriate, immediately.

IPEC

Intellectual Property and Enterprise Court claims will remain subject to their own existing capped costs scheme and are not affected by this report.

Intermediate Track

This new streamlined track will apply to most civil claims, including personal injury, but not clinical negligence, matters valued at between £25,000.00 and £100,000.00.

This is subject to those claims being ones where the trial will take three days or less, with no more than two expert witnesses giving oral evidence on each side.

The Intermediate Track has nine pre-trial stages and four complexity bands.

As with the existing fast track grid, the fixed costs are a combination of a core fee and a percentage of damages.

The figures are cumulative, that is you get the figure in the box at the stage you have reached; you do not add all of the stages up.

In relation to non-personal injury cases, the Stage 1 costs, that is for settlement pre-issue, or pre-defence investigations, is capped and not fixed.

The reason for this is that in personal injury cases, there is a minimum amount of work which must be done to achieve a settlement pre-issue and therefore the Stage 1 figures are calculated on a “swings and roundabouts” basis.

In non-personal injury cases, the amount of work to be done to achieve a pre-issue settlement may vary substantially. In some cases, a simple Letter of Claim may bring about a settlement, whereas in other cases a large amount of investigation may be required.

The figures

In the Intermediate Track, these are the figures:

Stage (S) Band 1 Band 2 Band 3 Band 4
S1 Pre-issue or pre-defence investigations £1,400 + 3% of damages £4,350 + 6% of damages £5,550 + 6% of damages £8,000 + 8% of damages
S2 Counsel/ specialist lawyer drafting statements of case and/or advising (if instructed) £1,750.00 £1,750.00 £2,00012 £2,00013
S3 Up to and including CMC £3,500 + 10% of damages £6,650 + 12% of damages £7,850 + 12% of damages £11,000 + 14% of damages
S4 Up to the end of disclosure and inspection £4,000 + 12% of damages £8,100 + 14% of damages £9,300 + 14% of damages £14,200 + 16% of damages
S5 Up to service of witness statements and expert reports £4,500 + 12% of damages £9,500 + 16% of damages £10,700 + 16% of damages £17,400 + 18% of damages
S6 Up to PTR, alternatively 14 days before trial £5,100 + 15% of damages £12,750 + 16% of damages £13,950 + 16% of damages £21,050 + 18% of damages
S7 Counsel/ specialist lawyer advising in writing or in conference (if instructed) £1,250 £1,500 £2,000 £2,500
S8 Up to trial14 £5,700 + 15% of damages £15,000 + 20% of damages £16,200 + 20% of damages £24,700 + 22% of damages
S9 Attendance of solicitor15 at trial per day16 £500 £750 £1,000 £1,250

______________________________________

12 £3,000 if there is a counterclaim and defence to counterclaim.  The rules may need to specify how costs are split between claim and counterclaim.

13 £3,000 if there is a counterclaim and defence to counterclaim.  The rules may need to specify how costs are split between claim and counterclaim.

14 If the receiving party did not prepare the bundle, subtract: (a) £500 for a Band 1 case, (b) £750 for a Band 2 case, (c) £1,000 for a Band 3 case, and (d) £1,250 for a Band 4 case.

15 In this table “solicitor” includes a representative of the solicitor’s firm.

16 To be halved if attendance is for half a day or less.

Stage (S) Band 1 Band 2 Band 3 Band 4
S10 Advocacy fee: day 1 £2,750 £3,000 £3,500 £5,000
s11 Advocacy fee: subsequent days17 £1,250 £1,500 £1,750 £2,500
S12 Hand down of judgment and consequential matters £500 £500 £500 £500
S13 ADR: counsel/specialist lawyer at mediation or JSM (if instructed) £1,200 £1,500 £1,750 £2,000
S14 ADR: solicitor at JSM or mediation £1,000 £1,000 £1,000 £1,000
S15 Approval of settlement for child or protected party £1,000 £1,250 £1,500 £1,750
Total: (a) £30,000 (b) £50,000, (c) £100,000 damages18

 

(a)   £19,150

(b)   £22,150

(c)   £29,650

(a)    £33,250

(b)    £37,250

(c)    £47,250

 

(a)    £39,450

(b)    £43,450

(c)    £53,450

(a)    £53,050

(b)    £57,450

(c)    £68,450

 

____________________________________________

17 To be halved if attendance is for half a day or less.

 18 Assuming a one day trial in Band 1, a two day trial in Band 2, and a three day trial in Bands 3 and 4. For all bands, it is assumed that there was no counterclaim, that the receiving party prepared the trial bundles, that there was unsuccessful ADR and that there was no approval of settlement for a child or protected party.

19 Solicitors and costs lawyers.

Advocacy Fees

There are six variations of Advocacy Fees and the same four bands of complexity and these are set out at stages 10 to 15 of the table above.

The total maximum fixed costs ranges from £19,150.00 for a Band 1 matter of £30,000.00 or less to £68,450.00 for a Band 4 claim of between £50,000.00 and £100,000.00.

Judicial Review

Judicial Review applications are to be subject to capped costs along the lines of environmental cases as in the Aarhus Convention.

“Citizens must be able to challenge the executive without facing crushing costs liabilities if they lose.” (Paragraph 11 of Executive Summary)

Part 36

If the Defendant fails to beat a Claimant’s Part 36 offer, then there should be a 30%, or 40% uplift on Fixed Costs, rather than an award of indemnity costs.

This introduces certainty for the litigants and avoids the need for a detailed assessment of costs in such cases.

This will apply in both the Fast Track and the new Intermediate Track, although on my initial reading of the report I can see no proposal as to whether a late accepting Defendant, as compared with a Defendant who has had judgment against it, should be so penalised in costs.

Modifications to the existing Fast Track Regime

Lord Justice Jackson states:

“I have come to the conclusion that it is not appropriate for me in this review to start “tinkering” with the existing Fast Track FRC [Fixed Recoverable Costs] Regime, which overall works well. The focus of this report is upon whether and how to introduce FRC for cases where costs are currently at large. I therefore leave it to the Civil Procedure Rule Committee (“The Rule Committee”) to consider the points of detail which have been raised concerning the current regime.”

Commercial pilot for claims between £100,000.00 and £250,000.00

This is part of Lord Justice Jackson’s recommendations, and I dealt with this in my last blog, and do not deal with it again in detail here.

Part 8 Claims

Part 8 claims, generally dealing costs, will not be subject to the Fixed Recoverable Cost Scheme.

Summary

This is very much an initial overview of a 135 page report, excluding appendices.

I will look at specific proposals in much more detail in future posts, as well as dealing with them in my series of lectures in the Autumn, and more information about those courses can be found here. 

 

Written by kerryunderwood

July 31, 2017 at 4:57 pm

Posted in Uncategorized

FIXED COSTS PILOT

with one comment


This blog first appeared in Practical Law on 27 July.

I deal with this matter in detail in my Fixed Costs Autumn Tour – you can book here.

All of these matters are dealt with in my new book – Personal Injury Small Claims, Portals and Fixed Costs, running to three volumes and 1,300 pages and costing £80.00 and available from me here or Amazon here.

A voluntary two year capped costs pilot scheme for High Court cases valued between £100,000.00 and £250,000.00 is now running in the London Mercantile Court and the Mercantile, Technology and Construction and Chancery Courts in Manchester and Leeds District Registries.

Although voluntary, once a party has agreed to enter the scheme it will not have an automatic right to leave it. This principle has already been established in relation to IPEC – see 77M Ltd v Ordnance Survey Ltd and Others [2017] EWHC 1501 (IPEC).

The Claimant can always issue in the scheme but the case will only continue within it if the Defendant consents.

There is a streamlined procedure based on the Shorter Trials Scheme. The trial will be fixed within eight months of the Case Management Conference (CMC) and is limited to two days.

Each phase of work is capped and the overall total is capped and costs will be subject to summary assessment and the indemnity principle will apply, in contrast to the existing fixed costs scheme (see Nizami v Butt [2006] EWHC 159 (QB)).

There will be no Costs Budgeting.

When the minimum jurisdiction of the High Court is raised from £100,000.00 to £250,000.00, it is proposed that claims subject to the pilot remain in the High Court.

Cases which involve an allegation of fraud or dishonesty, or involve multiple issues and parties, or are likely to require expert evidence or extensive disclosure or extensive evidence are excluded.

Pre-Issue    

The Claimant sends a “succinct” Letter of Claim notifying the Defendant of intention to issue in the Capped Costs List.

The Defendant responds within 14 days stating whether it agrees to the matter being in the pilot.

Statements of Case

Particulars of Claim and Defences with counterclaim are limited to 20 pages.

All other Statements of Case are limited to 15 pages.

A bundle of core documents must be appended to the Particulars of Claim and additional core documents must be appended to subsequent Statements of Case.

The Particulars of Claim and any counterclaim must contain a brief summary of the dispute, a list of anticipated issues and a concise statement of the facts and arguments relied upon, as well as a full statement of all relief and remedies claimed and detailed calculations of any money claimed.

Detailed provision is made concerning the Acknowledgement of Service, and Defence and arranging the CMC.

The trial advocate, or a senior legal representative – undefined – must attend the CMC.

Disclosure

The general rule is no disclosure and the parties will be able to rely only on the core bundle.

Experts

The general rule is that expert evidence will not be allowed.

Witnesses

 Limited to two witnesses per party with each Witness Statement limited to 15 pages.

Applications

Except for the CMC, the court will generally deal with applications without a hearing.

Trial

The CMC Judge will hear the trial.

Cross-examination will be strictly controlled and timetabled.

Judgment will be given within six weeks.

Appeals

The Court of Appeal will expedite appeals in Capped Costs Cases.

Part 36

Indemnity costs will be awarded, but capped at a sum equal to 125% of normal capped costs.

The Figures

 

Work done in respect of Maximum amount of costs
Pre-action £10,000.00
Particulars of Claim £7,000.00
Defence and counterclaim £7,000.00
Reply and defence to counterclaim £6,000.00
Case Management Conference £6,000.00
Disclosure £6,000.00
Witness Statements £8,000.00
Experts’ reports £10,000.00
Trial and judgment £3,000.00
Settlement/negotiations/mediation £10,000.00
Making or responding to an application £3,000.00
Work done post-issue which is not otherwise covered by any of the stages above £5,000.00

The total costs are capped at £80,000.00 plus VAT and court fees and costs relating to the enforcement of any Court Order.

The total costs on an indemnity basis are capped at £100,000 plus VAT etc.

Wasted costs can be ordered in addition.

See here for full Civil Procedure Rule Committee minutes, including draft rules.

Written by kerryunderwood

July 28, 2017 at 10:22 am

Posted in Uncategorized

SUPREME COURT: FRIENDS OF THE PEOPLE: UNISON CONSIDERED

with 4 comments


In the case of R (on the application of UNISON) v Lord Chancellor [2017] UKSC 51

a seven member Supreme Court unanimously allowed UNISON’s appeal and quashed the Employment Tribunals and the Employment Appeal Tribunals Fees Order 2013.

Thus Employment Tribunal and Employment Appeal Tribunal fees are scrapped and, in accordance with its previous undertaking, the government must return all fees paid, estimated to be around £30 million.

That will be a windfall for losing employers, who generally will have been ordered to pay the winning Claimant’s fee, as well as a refund for unsuccessful Claimants.

An unresolved issue is whether Employment Tribunals will now allow original Employment Tribunal applications years out of time on the basis that the unlawful fee prevented the employee from making a claim.

Here the Supreme Court had three main options:

  1. to do nothing and allow the fees to stand;

 

  1. to quash the order on fairly narrow grounds, such as discrimination or failure of equivalency under European Union law; or

 

  1. to re-state and re-affirm that access to the courst to enforce the laws passed by Parliament is an inherent constitutional right not capable of being prevented, even by Parliament itself.

The Supreme Court clearly and bravely went for option 3.

This decision relies on domestic law primarily, as well as European law, and thus its effect and importance will continue after the exit of the United Kingdom from the European Union.

The Senior Judiciary have been less than impressed by the idea that the European Union is the fount of rights in this country and that outside the European Union the courts would be unable to enforce individual rights.

The rights of access to the courts existed before entry into the Common Market and will exist afterwards, just as human rights existed before the Human Rights Act.

“Before this court, it has been recognised that the right of access to justice is not an idea recently imported from the continent of Europe, but has long been deeply embedded in our constitutional law. The case has therefore been argued primarily on the basis of the common law right of access to justice…”

This decision is also of potential relevance to fees in the ordinary courts.

If those fees are so high, or so structured, that they severely limit access to justice, then they will be quashed.

However the most significant aspect of this historic judgment of great constitutional importance is its tone and its restatement of some of the basic rights of citizens of the United Kingdom, put more eloquently and powerfully than in all of the Acts and treaties etc.

At paragraph 29 the Supreme Court makes the point that going to court is not just for winners, and that losing claims are not necessarily unmeritorious:

“29. More fundamentally, the right of access to justice, both under domestic law and under EU law, is not restricted to the ability to bring claims which are successful. Many people, even if their claims ultimately fail, nevertheless have arguable claims which they have a right to present for adjudication.”

We used to call that  “Having your day in court.”

Enforcement

The Supreme Court also pointed out that successful Claimants often lose out as only 53% of successful Claimants received any part of the award before taking enforcement action, which action itself is subject to a further court fee of £44.00.

Even after enforcement 35% received no money at all, 16% received payment in part and only 49% received payment in full.

Although the Supreme Court made no further comment, that demonstrates the woeful inadequacy of the County Court Enforcement Procedure, something known to every litigation lawyer in the land.

Impact assessment

The impact assessment had estimated that 77% of applicants would receive full or partial fee remission.

In fact the figure is 29% and as the Supreme Court pointed out, the true figure is “even lower, compared with what had been anticipated, given the difference between the number of Claimants before and after the introduction of fees.” (Paragraph 43)

The point here is that obviously people who do not qualify for fee remission are more likely to be deterred from bringing claims, so those who do bring claims have a much higher percentage of fee remission qualifiers, making the statistics largely meaningless.

Thus, for example, if the fee was £1 million and only one person qualified for fee remission and only one person brought a claim, then 100% of all applicants qualified for fee remission and therefore the fee of £1 million has not deterred anyone from bringing a claim.

Virtually every assumption made in the impact assessment, including those about the drop in the number of claims, the percentage settlement through ACAS, and the weeding out of meritorious claims was hopelessly wrong.

Impact assessments are a pointless and misleading waste of money and should be scrapped (My comment, not the Supreme Court’s comment).

Children without clothes

The Lord Chancellor of the United Kingdom, in 2017, submitted to the Supreme Court that people could afford Employment Tribunal fees by, for example, not buying clothes for their children.

The Supreme Court said:

“One problem with the Lord Chancellor’s approach to these calculations is that some of the expenditure which he excludes, such as spending on clothing, may not in fact be saved, but is simply postponed. For example, if the children need new clothes because they have outgrown their old ones, replacements have to be purchased sooner or later. The impact of the fees on the family’s ability to enjoy acceptable living standards is not avoided merely by postponing necessary expenditure.”

The constitutional right of access to the courts

This is the most important part of the judgment and defines it as a major constitutional document.

At the end of this blog I set out in full paragraphs 66 to 75 of this judgment.

This passage has already been described as poetic and beautifully written and I endorse those sentiments.

Key phrases and quotes

The constitutional right of access to the courts is inherent in the rule of law.

The importance of the rule of law is not always understood. Indications of a lack of understanding include the assumption that the administration of justice is merely a public service like any other.

… the idea that bringing a claim before a court or a tribunal is a purely private activity, and the related idea that such claims provide no broader social benefit, are demonstrably untenable.

At the heart of the concept of the rule of law is the idea that society is governed by law.

Parliament exists primarily in order to make laws for society in this country.

Courts exist in order to ensure that the laws made by Parliament, and the common law created by the courts themselves, are applied and enforced.

In order for the courts to perform that role, people must in principle have unimpeded access to them. Without such access laws are liable to become a dead letter, the work done by Parliament may be rendered nugatory, and the democratic election of members of Parliament may become a meaningless charade. That is why the courts do not merely provide a public service like any other.

… it is not always desirable that claims should be settled: [Because authoritative rulings are sometimes required on matters of general importance].

… although it is often desirable that claims… should be resolved by negotiation or mediation, those procedures can only work fairly and properly if they are backed up by the knowledge on both sides that a fair and just system of adjudication will be available if they fail. Otherwise, the party in the stronger bargaining position will always prevail.

In English law, the right of access to the courts has long been recognised. The central idea is expressed in chapter 40 of the Magna Carta of 1215 (“Nulli vendemus, nulli negabimus aut differemus rectum aut justiciam”), which remains on the statute book in the closing words of chapter 29 of the version issued by Edward I in 1297:

“We will sell to no man, we will not deny or defer to any man either Justice or Right.”

Those words are not a prohibition on the charging of court fees, but they are a guarantee of access to courts which administer justice promptly and fairly.

Significantly the Supreme Court held here that even an act of Parliament, as compared with the secondary legislation bringing in Employment Tribunal fees, can effectively be struck down by the court    “… even where primary legislation authorises the imposition of an intrusion on the right of access to justice, it is presumed to be subject to an implied limitation. As it was put by Lord Bingham in Daly, the decree of intrusion must not be greater than is justified by the objectives for which the measure is intended to serve” (Paragraph 88).

The Supreme Court rejected the Divisional Courts view that specific evidence from specific people was required:

“In order for the fees to be lawful, they have to be set at a level that everyone can afford, taking into account the availability of full or partial remission. The evidence now before the court, considered realistically and as a whole, leads to the conclusion that that requirement is not met. In the first place, as the Review Report concludes, “it is clear that there has been a sharp, substantial and sustained fall in the volume of case receipts as a result of the introduction of fees”. While the Review Report fairly states that there is no conclusive evidence that the fees have prevented people from bringing claims, the court does not require conclusive evidence: as the Hillingdon case indicates, it is sufficient in this context if a real risk is demonstrated. The fall in the number of claims has in any event been so sharp, so substantial, and so sustained as to warrant the conclusion that a significant number of people who would otherwise have brought claims have found the fees to be unaffordable.”

In a damning indictment of the reasoning of the Divisional Court the Supreme Court had this to say:

“The question whether fees effectively prevent access to justice must be decided according to the likely impact of the fees on behaviour in the real world. Fees must therefore be affordable not in a theoretical sense, but in the sense that they can reasonably be afforded. Where households on low to middle incomes can only afford fees by sacrificing the ordinary and reasonable expenditure required to maintain what would generally be regarded as an acceptable standard of living, the fees cannot be regarded as affordable.”

The Supreme Court rejected the idea that individuals could, and should, sacrifice acceptable living standards in order to pay court fees and had this to say:

“The Lord Chancellor argues that, if the households sacrifice all spending on clothing, personal goods and services, social and cultural participation, and alcohol, the necessary savings can be made to enable the fees to be paid. As was explained earlier, the time required to make the necessary savings varies, in the examples, between about one month and three and a half months. Leaving aside the other difficulties with the Lord Chancellor’s argument discussed earlier, the fundamental problem is the assumption that the right of access to courts and tribunals can lawfully be made subject to impositions which low to middle income households can only meet by sacrificing ordinary and reasonable expenditure for substantial periods of time.”

The Supreme Court also held that the effect of the fees imposed limitations on the exercise of EU rights which are disproportionate, and therefore the Fees Order is also unlawful under European Union law.

The Supreme Court also made it clear that this case was not about an administrative decision challenged on the basis that relevant considerations were not taken into account, or on the basis that the decision to introduce fees was unreasonable. Rather it said:

“The Fees Order is unlawful under both domestic and EU law because it has the effect of preventing access to justice.” (Paragraph 119).

The Supreme Court also held that the Fees Order is indirectly discriminatory under the Equality Act 2010 because the higher fees for type B claims put women at a particular disadvantage, because a higher proportion of women bring type B than bring type A claims.

Summary

A momentous, dramatic, powerful and brave decision by the Supreme Court.

In contrast to virtually all other commentators, I expected nothing less – see my previous writings on this subject.

The Supreme Court is one of our greatest institutions and its first two presidents, Lord Phillips and Lord Neuberger amongst our greatest citizens.

The Judges of the Supreme Court are indeed the Friends of the People.

 

 

Here are the key paragraphs relating to the constitutional rights of citizens of the United Kingdom.

“66. The constitutional right of access to the courts is inherent in the rule of law. The importance of the rule of law is not always understood. Indications of a lack of understanding include the assumption that the administration of justice is merely a public service like any other, that courts and tribunals are providers of services to the “users” who appear before them, and that the provision of those services is of value only to the users themselves and to those who are remunerated for their participation in the proceedings. The extent to which that viewpoint has gained currency in recent times is apparent from the consultation papers and reports discussed earlier. It is epitomised in the assumption that the consumption of ET and EAT services without full cost recovery results in a loss to society, since “ET and EAT use does not lead to gains to society that exceed the sum of the gains to consumers and producers of these services”.

  1. It may be helpful to begin by explaining briefly the importance of the rule of law, and the role of access to the courts in maintaining the rule of law. It may also be helpful to explain why the idea that bringing a claim before a court or a tribunal is a purely private activity, and the related idea that such claims provide no broader social benefit, are demonstrably untenable.

 

  1. At the heart of the concept of the rule of law is the idea that society is governed by law. Parliament exists primarily in order to make laws for society in this country. Democratic procedures exist primarily in order to ensure that the Parliament which makes those laws includes Members of Parliament who are chosen by the people of this country and are accountable to them. Courts exist in order to ensure that the laws made by Parliament, and the common law created by the courts themselves, are applied and enforced. That role includes ensuring that the executive branch of government carries out its functions in accordance with the law. In order for the courts to perform that role, people must in principle have unimpeded access to them. Without such access, laws are liable to become a dead letter, the work done by Parliament may be rendered nugatory, and the democratic election of Members of Parliament may become a meaningless charade. That is why the courts do not merely provide a public service like any other.

 

  1. Access to the courts is not, therefore, of value only to the particular individuals involved. That is most obviously true of cases which establish principles of general importance. When, for example, Mrs Donoghue won her appeal to the House of Lords (Donoghue v Stevenson [1932] AC 562), the decision established that producers of consumer goods are under a duty to take care for the health and safety of the consumers of those goods: one of the most important developments in the law of this country in the 20th century. To say that it was of no value to anyone other than Mrs Donoghue and the lawyers and judges involved in the case would be absurd. The same is true of cases before ETs. For example, the case of Dumfries and Galloway Council v North [2013] UKSC 45[2013] ICR 993, concerned with the comparability for equal pay purposes of classroom assistants and nursery nurses with male manual workers such as road workers and refuse collectors, had implications well beyond the particular claimants and the respondent local authority. The case also illustrates the fact that it is not always desirable that claims should be settled: it resolved a point of genuine uncertainty as to the interpretation of the legislation governing equal pay, which was of general importance, and on which an authoritative ruling was required.

 

  1. Every day in the courts and tribunals of this country, the names of people who brought cases in the past live on as shorthand for the legal rules and principles which their cases established. Their cases form the basis of the advice given to those whose cases are now before the courts, or who need to be advised as to the basis on which their claim might fairly be settled, or who need to be advised that their case is hopeless. The written case lodged on behalf of the Lord Chancellor in this appeal itself cites over 60 cases, each of which bears the name of the individual involved, and each of which is relied on as establishing a legal proposition. The Lord Chancellor’s own use of these materials refutes the idea that taxpayers derive no benefit from the cases brought by other people.

 

  1. But the value to society of the right of access to the courts is not confined to cases in which the courts decide questions of general importance. People and businesses need to know, on the one hand, that they will be able to enforce their rights if they have to do so, and, on the other hand, that if they fail to meet their obligations, there is likely to be a remedy against them. It is that knowledge which underpins everyday economic and social relations. That is so, notwithstanding that judicial enforcement of the law is not usually necessary, and notwithstanding that the resolution of disputes by other methods is often desirable.

 

  1. When Parliament passes laws creating employment rights, for example, it does so not merely in order to confer benefits on individual employees, but because it has decided that it is in the public interest that those rights should be given effect. It does not envisage that every case of a breach of those rights will result in a claim before an ET. But the possibility of claims being brought by employees whose rights are infringed must exist, if employment relationships are to be based on respect for those rights. Equally, although it is often desirable that claims arising out of alleged breaches of employment rights should be resolved by negotiation or mediation, those procedures can only work fairly and properly if they are backed up by the knowledge on both sides that a fair and just system of adjudication will be available if they fail. Otherwise, the party in the stronger bargaining position will always prevail. It is thus the claims which are brought before an ET which enable legislation to have the deterrent and other effects which Parliament intended, provide authoritative guidance as to its meaning and application, and underpin alternative methods of dispute resolution.

 

  1. A Lord Chancellor of a previous generation put the point in a nutshell, in a letter to the Treasury:

“(i)      Justice in this country is something in which all the Queen’s subjects have an interest, whether it be criminal or civil.

 

(ii)       The courts are for the benefit of all, whether the individual resorts to them or not.

 

(iii)     In the case of the civil courts the citizen benefits from the interpretation of the law by the Judges and from the resolution of disputes, whether between the state and the individual or between individuals.”

(Genn, Judging Civil Justice (2010), p 46, quoting a letter written by Lord Gardiner in 1965)

  1. In English law, the right of access to the courts has long been recognised. The central idea is expressed in chapter 40 of the Magna Carta of 1215 (“Nulli vendemus, nulli negabimus aut differemus rectum aut justiciam”), which remains on the statute book in the closing words of chapter 29 of the version issued by Edward I in 1297:

“We will sell to no man, we will not deny or defer to any man either Justice or Right.”

Those words are not a prohibition on the charging of court fees, but they are a guarantee of access to courts which administer justice promptly and fairly.

  1. The significance of that guarantee was emphasised by Sir Edward Coke in Part 2 of his Institutes of the Laws of England(written in the 1620s, but published posthumously in 1642). Citing chapter 29 of the 1297 charter, he commented:

“And therefore, every Subject of this Realme, for injury done to him in bonis, terris, vel persona [in goods, in lands, or in person], by any other Subject … may take his remedy by the course of the Law, and have justice, and right for the injury done to him, freely without sale, fully without any deniall, and speedily without delay. Hereby it appeareth, that Justice must have three qualities, it must be Libera, quia nihil iniquius venali Justitia; Plena, quia Justitia non debet claudicare; & Celeris, quia dilatio est quaedam negatio [Free, because nothing is more iniquitous than saleable justice; full, because justice ought not to limp; and speedy, because delay is in effect a denial]; and then it is both Justice and Right.” (1809 ed, pp 55-56)

More than a century later, Blackstone cited Coke in his Commentaries on the Laws of England (1765-1769), and stated:

“A … right of every [man] is that of applying to the courts of justice for redress of injuries. Since the law is in England the supreme arbiter of every man’s life, liberty, and property, courts of justice must at all times be open to the subject, and the law be duly administered therein.” (Book I, Chapter 1, “Absolute Rights of Individuals”).

 

Also see:

A Christmas Carol by the High Court

Written by kerryunderwood

July 27, 2017 at 9:54 am

Posted in Uncategorized

A CHRISTMAS CAROL BY THE HIGH COURT

with 4 comments


Given the Supreme Court decision this morning unanimously to allow the appeal against the Administrative Court’s refusal to judicially review Employment Tribunal fees, this post I wrote at the time needs another airing.

Scene: 

Any solicitor’s office in the country (except the Strand).

Solicitor:

So, Ms Peasant you have been sacked because you are pregnant and you have come in for a free interview.  Typical of your sort if I may say so.

Client: 

It’s so unfair.  I want to bring a claim.  You do no win no fee don’t you?

Solicitor: 

WE do. The State doesn’t.  Tribunal fees are £1,200.00 win or lose.

Client: 

I haven’t got that sort of money!  I am unemployed.  I’ve been sacked.

Solicitor: 

Come, come now.  I am an employment lawyer.  I know the minimum wage is £6.50 an hour.  Easy to remember; it is one hundredth of what I charge – 200 hours work and you have the fee, unless we need to appeal.  Cut out the foreign holidays. Sack the nanny – she won’t be able to afford the fee to sue you.  My little joke!

Client:  

My Mum looks after the children.  We only just got by when I was working.

Solicitor: 

There I can help you.  You need to prioritise your spending.  The High Court has said so.  Eat your existing children – Swift said that and he was a clever man, but you peasants don’t read you just watch Sky.

Client: 

We don’t have Sky.  Murdoch is nearly as right wing as the High Court.

Solicitor: 

Go down the library and read Swift.

Client: 

They’ve closed the library.

Solicitor:  

Have an abortion.  Save you money and I might be able to get your job back.

Client: 

I don’t want an abortion.  Anyway they’ve closed the clinic.

Solicitor:

Find a rich man.

Client: 

I am married.  My husband was sacked for complaining about my treatment at work.

Solicitor: 

Oh then he has a claim as well then.  Another £1,200.00 mind.

Client:  

I’ve had enough!

Solicitor: 

I advise on the law; I don’t make it.  I want to read to you what the High Court said:

“The question many potential claimants have to ask themselves is how to prioritise their spending; what priority should they give to paying fees in a possible legal claim as against many competing and pressing demands on their finances?”

It goes on a bit but basically do you want to bring a claim or eat and feed and clothe your children?

Client: 

But no-one should have to make that choice in Britain in 2014.

Solicitor:  

That’s where you are wrong.  The court said:

“The question is not whether it is difficult for someone to be able to pay – there must be many claimants in that position – it is whether it is virtually impossible and excessively difficult for them to do so”.

Client:  

That’s wicked.

Solicitor: 

That’s the High Court. Lord Justice Elias is paid £198,674.00 and Mr Justice Foskett £174,481.00 so they know all about having to count the pennies.

Client:

Surely Labour will change all this.

Solicitor: 

Nope.

Client:  

I think I will vote for the Fascists then.

Solicitor:

They tried that in Germany.    Didn’t do them much good. Nice rallies mind.

Client leaves.  Solicitor hums the Horst Wessel.  There is a muffled explosion.  The local court is in ruins.

Written by kerryunderwood

July 26, 2017 at 10:31 am

Posted in Uncategorized

ADVOCACY FEES AND FIXED COSTS: A PUZZLE

with 2 comments


All of these matters are dealt with in my new book – Personal Injury Small Claims, Portals and Fixed Costs, running to three volumes and 1,300 pages and costing £80.00 and available from me here or Amazon here.

You can now book onto my Fixed Costs Autumn Tour and there is an early bird discount if booked and paid for by 31 July 2017 – here

Here I look at the position where a Defendant is successful at trial on a counter- claim, where the original claim is a personal injury case within the Fixed Recoverable Costs Scheme.

CPR 45.29G governs the position in relation to Defendants bringing a counterclaim.

If the Defendant succeeds as counterclaimant, then the fee is based on that successful claim.

If the counterclaim is for something other than personal injuries, but is in response to a claim for personal injury, then the order for costs on the counterclaim shall be for a sum equivalent to one half of the applicable type A and type B costs in table 6.

What is the advocacy fee where the counterclaim is successful, but does not include a claim for personal injuries?

By CPR 45.29G(c) if the court makes an order for the costs of the counter-claim then rules 45.29B, 45.29C, 45.29I, 45.29J, 45.29K and 45.29L shall apply.

CPR 45.29C fixes costs.

What is not clear is whether CPR 45.29G(2)(a) limits the total costs payable to the successful counter-claimant to half of the applicable type A and type B costs in table 6, meaning that there will be no advocacy fee at all, or whether it restricts those aspects of the costs to half of the type A and type B costs, but allows full advocacy costs.

A third interpretation is that as the counter-claim is not for personal injury then the advocacy fee is determined by CPR 45.37 which has its own fixed Fast Track trial costs for all Fast Track cases not covered by CPR 45.29.

Thus, if the defendant counterclaims for personal injury and succeeds, then that Defendant is treated as a successful claimant for the purposes of fixed costs and the advocacy fee is based on the amount awarded to the counterclaimant.

The area of uncertainty is if the counterclaim does not include a claim for personal injury.

Any case allocated to the Multi-Track ceases to be subject to fixed costs, following the decision in Qader & Others v Esure Services Ltd [2016] EWCA Civ 1109 and now enshrined in rule 8(1) of the Civil Procedure (Amendment) Rules 2017.

Written by kerryunderwood

July 26, 2017 at 10:01 am

Posted in Uncategorized

QOCS AND SET-OFF: CONFLICTING CASES

with 16 comments


These issues are dealt with in my book Qualified One-Way Costs Shifting, Section 57 Set-off available from Amazon here

In Darini and Olsoy v Markerstudy Group, Central London County Court, 24 April 2017, Claim A49YP380

the court considered the difficult issue of set-off and its relationship with Qualified One-Way Costs Shifting (QOCS).

Here the Claimants brought a personal injury claim and discontinued it, thus creating a deemed Costs Order in favour of the Defendant, pursuant to CPR 38.6(1), but one which could not be enforced without leave of the court, due to QOCS.

The defendant unsuccessfully sought to set aside the Notice of Discontinuance and was ordered to pay the costs of that application to the Claimants.

The District Judge allowed those costs to be set off against the notional, unenforceable, sum due from the QOCS protected Claimants on discontinuance, which negated the Costs Order on the failed application.

The Claimants appealed and the Circuit Judge allowed that appeal, holding that there was no right of set-off.

Consequently the judge did not need to consider the proper exercise of judicial discretion on these facts, as there was no discretion, in his judgment.

However, had there been such discretion, the Circuit Judge would have overturned the District Judge’s decision on the basis that it was unjust, as it would put the Claimants in a worse position than they otherwise would have been as a result of the Defendant’s failed application.

The worse position was that the Claimants would effectively have to pay their own costs for successfully defending the Defendant’s application as they would not physically recover those costs from the Defendant due to set-off.

The judge held that set-off applied in only three circumstances in the context of QOCS:

  • against damages and interest only – CPR 44.14(1) – and not costs;
  • where the claim had been struck out on the ground that it is an abuse, in which circumstances enforcement, including by way of set-off is allowed in full, without the permission of the court – CPR 44.15;
  • where there has been fundamental dishonesty, in which case the extent of set-off is in the court’s discretion – CPR 44.16.

Thus the court here held that the restriction on enforcement in various places in CPR 44.13 to CPR 44.17, dealing with QOCS, prevented “enforcement” by set-off and thus set-off is only allowed where and when enforcement is allowed.

The court accepted that there was no authority directly on the point.

It was accepted that there can always be a set-off of damages and/or costs against damages and that that is not a matter of discretion.

Here the court quoted from

Burkett v London Borough of Hammersmith & Fulham [2004] EWCA Civ 1342:

“It is possible to regard all questions regarding costs as being subject to the statutory discretion conferred on the court by section 51 of the Supreme Court Act 1981 [now Senior Courts Act 1981]. But I would not have thought a set-off of damages against damages could properly be described as a discretionary matter, nor that a set-off of costs against damages could be so described.”

Thus the issue here was whether there could be a set-off of costs against costs or whether that amounted to “enforcement” and thus had to be dealt with in the same way as any other method of enforcement.

The judge took the view that set-off of costs against costs is a form of enforcement and thus subject to CPR 44.13 to 44.17, and can only be exercised in the same circumstances as any other method of enforcement.

Comment

This is a difficult issue.

Why the Civil Procedure Rules Committee refuses to clarify the obviously defective QOCS rules is beyond me, and beyond the constant stream of judges at every level who have commented on them.

On balance, I believe the judge to be wrong and the District Judge who made the first decision to be right.

CPR 44.12 which appears immediately before the QOCS rules at CPR 44.13 to CPR 44.17, says:

“(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.”

I see nothing anywhere that prevents CPR 44.12(1)(a) apply to QOCS cases.

It would have been helpful if the Civil Procedure Rules said:

“This rule applies to cases under CPR 44.13 to 17”; or

“this rule does not apply to cases under CPR 44.13 to 17.”

You have to be Kremlinologist to understand the working of the Civil Procedure Rules Committee.

Presumably they could not make up their minds, as is evident from so many other rules, and so stuck the set-off rule immediately before the QOCS rule, without bothering to tell anyone whether or not it applied to QOCS cases.

They have adopted the same policy in relation to Part 36 and its relationship with virtually any other rule.

The Practice Direction is silent.

Forthcoming Court of Appeal decision

Although the written judgment is not yet available, the Court of Appeal in dealing with the cost consequences of its decision in Howe v Motor Insurers’ Bureau [2017] EWCA Civ 932, held that the losing Defendant – the Motor Insurers’ Bureau, could set-off against the costs it had to pay Mr Howe the “unenforceable” Costs Orders it had obtained against him in the main personal injury litigation, where Mr Howe’s claim failed due to limitation issues.

This is on all fours with the facts of the Darini case, where the losing Claimant in the substantive action was successful in resisting the Defendant’s application to set Notice of Discontinuance aside and was awarded costs of that application.

Thus Darini must now be considered to be wrongly decided, in the sense that the court said that there was no jurisdiction to allow set-off. Clearly there is, although the court could exercise its discretion so as not to allow set-off in any given case.

I stress that I have not yet seen the Court of Appeal judgment, which was given orally, but I understand that it will hold that a successful defendant in a QOCS case can set-off “unenforceable” Costs Orders against any costs that it has to pay to the Claimant.

As the costs of the substantive action lost by the Claimant will normally be higher than any costs awarded to the Claimant on an application or appeal, the effect is that the Claimant has to pay its own costs in relation to those ancillary proceedings, where it has won.

Policy issues

One of the points in the Darini case was that it was the policy of the rules, following implementation of Lord Justice Jackson’s report, although in relation to QOCS, not in the way that Lord Justice Jackson advised, that QOCS would replace the need for After the Event insurance.

Such insurance would not protect the Claimant in relation to applications successfully resisted.

Take the Darini case. Let us say that the costs against Mr Darini were £20,000.00 and he successfully resisted the application and was awarded £5,000.00.

Prior to QOCS the balance due from Mr Darini to the MIB would be £15,000.00 and that is the only amount that the ATE insurers would pay out, as they do not insure a client’s own costs.

Thus prior to QOCS Mr Darini would indeed have had to fund his own application, which would not have been insured.

I realise that the application here was in relation to QOCS and therefore would not have arisen prior to QOCS, but the principle is the same, that is that a Claimant successfully resisting an application and being awarded costs would simply result in the Claimant owing less costs overall and it is only that lower sum that insurers would cover.

Thus the policy considerations in Darini are based on a false premise.

I am grateful to Ben Williams QC for his assistance in relation to this piece.

These issues are dealt with in my book Qualified One-Way Costs Shifting, Section 57 Set-off available from Amazon here.

 

Also see:

KERRY ON QOCS: BOOK UPDATE AND LINKS: UNIFIED

QOCS, APPEALS, SET-OFF & KAFKA

QOCS, PART 36, TWO DEFENDANTS: SOME PROBLEMS

CREDIT HIRE, QOCS AND NON-PARTY COSTS ORDERS

QOCS, DISCONTINUANCE AND STRIKE-OUT AND OTHER THINGS

Written by kerryunderwood

July 25, 2017 at 9:40 am

Posted in Uncategorized

ACCEPTING PART 36 OFFER DURING TRIAL

with 2 comments


In Houghton v PB Donoghue (Haulage & Plant Hire Ltd) and others [2017] EWHC 1738 (Ch) (13 June 2017)

the High Court refused the Claimant permission to accept a Defendant’s offer two days after the trial began, in circumstances where the Part 36 offer had been made nearly six months earlier.

The judge recognised that allowing acceptance of the offer would settle the matter and save the court’s time but against that was the fact that the attempt to accept had been left very late and that the Defendant now wished to take its chances at trial, meaning that for all intents and purposes the settlement would be court imposed rather than voluntary.

The court said that where a claimant decided to take its chances at trial, and then changed its mind because the trial was going less well than predicted, then the court would often conclude that it was not right to allow acceptance.

The court considered two Technology and Construction Court authorities relating to earlier version of Part 36

Sampla and others v Rushmoor Borough Council and another [2008] EWHC 2616 (TCC); and

Nulty v Milton Keynes BC [2012] EWHC 730 (QB).

Comment

I have no problem with this decision, but the Defendant who wishes to take its chances at trial could withdraw the offer and thus remove any risk of the court allowing acceptance of the Part 36 offer, as there will be nothing to accept.

True it is that the Defendant would not automatically get the benefits of Part 36 if the Claimant failed to beat its offer.

This throws up one of the many problems with Part 36.

Supposing in this case the claimant says   “Okay – we are part way through the trial – we wish to accept the offer of £100,000.00.”

The judge refuses. He will not know the value of the offer. He then goes on to award more than £100,000.00. Arguably, there is no problem as the Defendant will then have to pay all of the costs of trial.

But supposing the judge awards £98,000.00 and there had been a further £75,000.00 of costs occasioned by the judge’s refusal to allow the Claimant to accept the Defendant’s Part 36 offer of £100,000.00, which has never been withdrawn.

Why should the claimant be forced to pay all of those costs?

Why is it not reasonable of a claimant, realising the way the matter is going, to seek to end further costs by accepting the offer?

How is this different, in principle, from the court’s general refusal to punish discontinuing QOCS Claimants on the basis that it is better to discontinue than to go to trial and lose?

The policy of the judiciary needs to be thought through in relation to these matters, which I accept involve conflicting public policy principles.

As in most things in life and law, certainty either way has a great deal to be said for it.

Written by kerryunderwood

July 21, 2017 at 11:14 am

Posted in Uncategorized

ALTERATION OF BUDGET AFTER CIRCUMSTANCES CHANGE  

leave a comment »


 

By Robert Males, Managing Partner, Underwoods Solicitors

In Asghar v Bhatti (2017) EWHC 1702 (QB)

the court considered an issue relating to the variation of a Costs Budget where it had been previously confined to court fees only. The issue related to the change of circumstances and in particular an early Part 36 offer.

Earlier in the case the Claimant had failed to file a Costs Budget and therefore in accordance with the rules the budget had been confined to the court fees only. The Claimant made an application for relief from sanctions but that was refused.

The matter was originally listed for a six day trial but it became apparent that that was not enough and so the trial was adjourned. The parties were given an opportunity to make an application to revise their Costs Budget on the basis of the change in circumstances in that the trial would now last longer than originally anticipated. The application to amend the Costs Budgets came before the Master. As mentioned the Claimant’s Costs Budget was already limited to court fees only so the question for the Master was whether it was possible to revise a Costs Budget in relation to additional work which had not been anticipated at the time of filing the original Costs Budget.

There is a relevant paragraph in the White Book which says as follows:

“If a Costs Management Order is made, it is arguable that a party treated as having a budget limited to court fees may, indeed must, seek revisions of it so as to include any additional expenditure made reasonable by developments which could not have been anticipated at the time of their breach of rule 3.14. Practice Direction 3E, paragraph 2.6 requires parties to revise their budgets in respect of future costs if significant developments in the litigation warrant such revisions. If a Costs Management Order is not made, Practice Direction 44, paragraph 3.7 applies. Under this provision the court may accept that the occurrence of significant developments in the litigation amounts to a satisfactory explanation for a claim for extra costs in respect of those developments.”

The Master decided to allow the Claimant’s budget to be revised because of the additional time of the trial.

The trial commenced but settled on the second day when the Defendant was given permission to accept the Claimant’s offer and as a result the Defendant was to pay the Claimant’s costs. The Defendant appealed the order which had revised the Claimant’s Costs Budget.

The court considered the two grounds of appeal. The first is that the practical effect of the Master’s order was to overturn the costs sanction previously imposed by the court which limited the Costs Budget to court fees only. The judge was clear that the Master fully appreciated the position in relation to the earlier Costs Order and that an application for relief from sanctions had been refused.

However the application before the Master to revise the Costs Budget was different. There had been significant developments since the failure to file the original Costs Budget. The notes in the White Book envisage a situation where revised budgets can be dealt with where additional costs which were not foreseen and were not anticipated the time of the original failure to file the Costs Budget. The judge held that if there was a significant development and if the Costs Budget was revised to permit those additional costs that will not undermine the policy underlying CPR rule 14.

The judge was referred to the decision of Mr Justice Coulson in Murray and Another v Neil Dowlman Architecture Limited (2013) EWHC 872

which dealt with a position if the Costs Budget could later be revised because of mistakes or inadequacies in the budget and expressed the view that that would undermine the whole purpose of the Costs Budget regime. However this case is different because we are dealing a revision to the budget arising out of a significant development which is the additional time needed for the trial and that information has arisen well after the original failure to file the budget.

Counsel for the Defendant submitted that the Master did not take into account the fact that revising the budget would subvert the original sanction ordered by the previous Master in relation to the failure to file the Costs Budget. It was clear that the Master had in her mind the events which amounted to the significant development and was well aware that she was allowing a revision to the budgets because of that development. Indeed she drew attention herself to the notes in the White Book as mentioned above.

The judge indicated it was a matter for the Master’s discretion as to whether she should allow a revision of the budget based upon the fact that the original trial was listed for six days and was now listed for 12. She was aware of the circumstances and decided it was appropriate to revise the Costs Budget since the original failure to file the budgets.

The Part 36 offer

The Claimant had made an early Part 36 offer in this case which was accepted by the Defendant on the second day of the trial. This brings into focus the provisions of CPR 36.23 and may allow the Claimant to recover part of its costs. This deals with cases where the Costs Budget is confined to the court fees alone.

“(1) this rule applies in any case where the offeror is treated as having filed a Costs Budget limited to applicable court fees, or is otherwise is limited to their recovery of costs to such fees.”

“(2) costs in rules 36.13 (5) (b), 36.17 (3) (a) and 36.17 (4) (b) shall mean – (a) in respect of those costs subject to any such limitation, 50% of the costs assessed without reference to the limitation; together with (b) any other recoverable costs.”

In order to follow this, you need to cross reference the various rules.

(1) 36.13 (5) (b) is a reference to where the parties cannot agree liability for costs and where the court, unless it is unjust to do so, orders “the offeree do pay the offeror’s costs for the period from the date of expiry of the relevant period to the date of acceptance”.

(2) 36.17 (3) (a) is a reference to the costs being ordered to be paid by a Claimant to a Defendant where a Claimant fails to beat a Defendant’s offer.

(3) 36.17 (4) (b) is a reference to the costs order to be paid by the Defendant to a Claimant when the Defendant fails to beat the Claimant’s offer.

What this means in practice is that a party which has their Costs Budget limited to court fees only can still recover 50% of their fees for the period after a Part 36 offer is made if the offer is not beaten.

This means that a well-judged Part 36 offer can still be of assistance to a party even though they have had their Costs Budget limited to court fees only and so the opponent still needs to be sure that they can beat that offer and it still gives the parties an incentive to settle.

A paying party could in fact be at some disadvantage even at half the costs because this would be a situation where they are not aware of the likely costs of the party because a Costs Budget has not been filed.

Written by kerryunderwood

July 20, 2017 at 9:08 am

Posted in Uncategorized

MIB, SET-OFF AND QOCS

leave a comment »


These issues are dealt with in my book Qualified One-Way Costs Shifting, Section 57 Set-off available from Amazon here.

In Howe v Motor Insurers’ Bureau [2017] EWCA Civ 932, 6 July 2017

the Court of Appeal held that a Claimant who had lost his claim against the Motor Insurers’ Bureau, following an accident in France, enjoyed the protection of Qualified One-Way Costs Shifting and thus did not have to pay the costs of the MIB.

The Court of Appeal overturned the decision of the High Court which had held that the Claimant was not entitled to QOCS protection as the claim was not a claim for damages for personal injury, but rather for compensation under Regulation 13 of the Motor Vehicle (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003 (SI 2003/37).

Here the Court of Appeal held that the reference in CPR 44.13 to  “damages for personal injuries” could be interpreted easily to include a claim for compensation under Regulation 13 by applying the principles set out in Marleasing SA v La Comercial Internacional de Alimentacion SA (Case -106/89 [1990]) ECR 1-4135.

The Marleasing principle requires national legislation to be interpreted in accordance with European Union Law in so far as possible.

The purpose of QOCS is to ensure that those who have, or may have, valid claims for damages for personal injury are not deterred from pursuing them by fear of having to pay the Defendant’s costs, except in certain circumstances as set out in the QOCS rules.

The Court of Appeal also held, although by the stage it reached the hearing the parties had agreed the same, that QOCS applies to appeals in cases that are covered by QOCS at first instance.

Regulation 13 of the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003 reads:

Entitlement to compensation where a vehicle or insurer is not identified

(1) This regulation applies where— (a) an accident, caused by or arising out of the use of a vehicle which is normally based in an EEA state, occurs on the territory of— (i) an EEA state other than the United Kingdom, or (ii) a subscribing state, and an injured party resides in the United Kingdom, (b) that injured party has made a request for information under regulation 9(2), and (c) it has proved impossible— (i) to identify the vehicle the use of which is alleged to have been responsible for the accident, or (ii) within a period of two months after the date of the request, to identify an insurance undertaking which insures the use of the vehicle.

(2) Where this regulation applies— (a) the injured party may make a claim for compensation from the compensation body, and (b) the compensation body shall compensate the injured party in accordance with the provisions of article 1 of the second motor insurance Directive as if it were the body authorised under paragraph 4 of that article and the accident had occurred in Great Britain.”

Regulation 16 provides:

“Any sum due and owing pursuant to these Regulations shall be recoverable as a civil debt.”

In Moreno v MIB [2016] UKSC 52

the Supreme Court said:

“In construing the 2003 Regulations, the starting point is that they should, so far as possible, be interpreted in a sense which is not in any way inconsistent with the Directives: Marleasing SA v La Comercial Internacional de Alimentación SA (Case C-106/89) [1990] ECR I-4135.”

Here the Court of Appeal held that the rationale underlying QOCS is a domestic version of the principle of effectiveness, that is that those who have, or may have, valid personal injury claims should be able to bring them without fear of the Defendant’s costs, save as set out in the QOCS exceptions themselves.

By the Claimant’s Regulation 13 claim being covered by QOCS he would be in an equivalent position to an injured person who sues an insured driver.

Comment:

A correct and welcome decision and, out of pure vanity, I set out my comment on the original High Court decision which has been overturned:

““This decision must be wrong in principle. It is over technical and fails to give effect to the clear intention of Parliament in implementing the Jackson Report, that is, as the judge himself here recognized, to protect “those who had suffered injuries from the risk of facing adverse costs orders obtained by insured or self-insured parties or well-funded Defendants.”

QOCS was of course brought in as part of a deal whereby those insured or self-insured parties would no longer have to pay the claimant’s After-the-Event insurance premium.

The effect of this decision is that a claimant in the circumstances does not get QOCS protection and to protect him or herself would need to take out ATE insurance, which is no longer recoverable from the paying party and therefore has to be paid by the claimant.

That is entirely contrary to the whole point of the Jackson Report on this point and entirely contrary to the clear will and intention of Parliament.
This decision should be overturned on appeal.

I am grateful to Ben Williams QC for advising me concerning this decision and for background information and material.”

 

Also see:

KERRY ON QOCS: BOOK UPDATE AND LINKS: UNIFIED

QOCS, APPEALS, SET-OFF & KAFKA

QOCS, PART 36, TWO DEFENDANTS: SOME PROBLEMS

QOCS, DISCONTINUANCE AND STRIKE-OUT AND OTHER THINGS

CREDIT HIRE, QOCS AND NON-PARTY COSTS ORDERS

Written by kerryunderwood

July 18, 2017 at 7:49 am

Posted in Uncategorized

QOCS, DISCONTINUANCE AND STRIKE-OUT AND OTHER THINGS

with one comment


These issues are dealt with in my book Qualified One-Way Costs Shifting, Section 57 Set-off available from Amazon here.

In Shaw v Medtronic Corevalve LLC & Others [2017] EWHC 1397 (QB)

the Queen’s Bench Division of the High Court refused to set aside a Notice of Discontinuance and refused to give permission to Defendants to enforce a Costs Order in a Qualified One-Way Costs Shifting case.

The discontinuance did not amount to an abuse of process and although there were elements of the claim outside the ambit of QOCS protection, they were either not pleaded, or were de minimis and would not have added to the costs of the action.

Previously the court had set aside permission to the Claimant to serve the First and Third Defendants out of the jurisdiction and the claim against the Fourth Defendant was struck out and the Claimant then discontinued against the Fifth Defendant.

Now, the Claimant sought permission to amend the Particulars of Claim against the Second Defendant, who was the one remaining Defendant.

The First, Third and Fifth Defendants applied for leave to enforce the Costs Orders made against the Claimant.

The judge refused permission to the Claimant to amend against the Second Defendant and then struck out the claim against that Defendant.

Thus the position in relation to claim was:

First Defendant:              Service set aside

Second Defendant:         Struck out

Third Defendant:            Service set aside

Fourth Defendant:          Struck out

Fifth Defendant:              Discontinued.

CPR 44.15 reads:

Exceptions to Qualified One-Way Costs Shifting where permission not required

44.15 Orders for costs made against the claimant may be enforced to the full extent of such orders without the permission of the court where the proceedings have been struck out on the grounds that –

(a) the claimant has disclosed no reasonable grounds for bringing the proceedings;

(b) the proceedings are an abuse of the court’s process; or

(c) the conduct of –

(i) the claimant; or

(ii) a person acting on the claimant’s behalf and with the claimant’s knowledge of such conduct,

is likely to obstruct the just disposal of the proceedings.”

In relation to the First and Third Defendants, the claim had not been struck out, even though the judge held that the Claimant had disclosed no reasonable grounds for bringing the proceedings and had said that had the Claim Form been served within the jurisdiction, he would have struck the claims out as having no reasonable grounds.

However, as the claim was served outside the jurisdiction the appropriate remedy was to set aside service.

Neither had the claim been struck out against the Fifth Defendant – it had been discontinued.

Thus CPR 44.15(1)(a), relating to strike-out, could not apply in relation to any of these three Defendants.

Setting aside discontinuance   

The Fifth Defendant sought an order setting aside the Notice of Discontinuance, so as to allow the court to consider striking out the claim on the basis that the Claimant had no reasonable grounds for bringing the proceedings.

That would have the effect of bringing the matter back within the CPR 44.15(1)(a) exception to QOCS.

The judge refused, saying that:

“… the Claimant had a right to discontinue under CPR rule 38.2. It was a proper use of that power, and to be encouraged, for the Claimant to recognise … that her claim against the Fifth Defendant was not sustainable and to discontinue that claim (Paragraph 53).”

The court recognised that it had power under CPR 38.4 to set aside a Notice of Discontinuance and the authorities suggested that that should only be done if there had been an abuse of process in serving the Notice of Discontinuance.

The rule itself is silent as to when the power should be exercised.

The judge held that the facts here were not an abuse of process “or anything sufficient to justify setting aside the Notice of Discontinuance (Paragraph 58).”

The court left open the possibility that servicing Notice of Discontinuance to avoid the claim being struck out on the no reasonable grounds basis, and thus triggering disqualification from QOCS protection, could be an abuse of process justifying the setting aside of the Notice of Discontinuance, but that was not the position here.

A claim made for the benefit of the Claimant other than a claim to which this section applies

This exception is interpreted to mean a non-personal injury claim.

There is an inherent problem with this exception, which is to be found in CPR 44.16(2)(b), and where the court’s permission to enforce a Costs Order is required.

The problem is that CPR 44.13(1) provides:

“(1) This Section applies to proceedings which include a claim for damages –

(a) for personal injuries;

Thus the whole of the claim does not need to be for personal injuries and the protection is not limited to the personal injury element.

If it were otherwise, the wording would have been something like:

“… which includes claim for damages for personal injuries, but only to those parts of the claim that are for personal injury.”

Even the judge got confused, referring to CPR 44.12.1. That deals with set-off.

Nevertheless the judge’s rulings at paragraphs 60 and 61 are useful guidance as to how such hybrid claims may be treated.

“60. This sub-rule applies if the Claim Form and Particulars of Claim include a claim which falls outside the scope of CPR 44.12.1. There were only two candidates for such a claim. The first is the claim for misrepresentation and deceit. This is referred to in the Claim Form, but not pleaded in the Particulars of Claim, as I noted in paragraph 12.2(d) of the First Judgment. I therefore ignore it. The second is the free-standing claim in unjust enrichment, but, as I said in paragraphs 32 to 35 of the First Judgment, it was unclear whether the Particulars of Claim did include a free-standing claim in unjust enrichment. Moreover, the Claimant did not obtain permission to serve the Claim Form out of the jurisdiction insofar as it contained a free-standing claim in unjust enrichment. Consequently, there was no such claim against the First and Third Defendants and CPR 44.16.1(b) does not apply to them.

 

  1. Assuming that there is a pleaded free-standing claim in unjust enrichment against the Fifth Defendant, it overlaps entirely with the claim for restitutionary damages. The additional costs incurred in dealing with the free-standing claim are minimal and it would not be just to make an order under section 44.16.1(b) on that account. I would have reached the same conclusion in relation to the First and Third Defendants if I had found that CPR 44.16.1(b) applied to them.”

The judge also suggested that the Civil Procedure Rules Committee may care to reconsider the scope of CPR 44.15(1)(a).

Comment

A number of cases on QOCS are now being decided.

This is an exceptionally complicated subject and the Civil Procedure Rules plumb new depths of incomprehension.

Fortunately it is all explained in my book – Qualified One-Way Costs Shifting, Section 57 Set-off – available from Amazon here.

 

See also:

KERRY ON QOCS: BOOK UPDATE AND LINKS: UNIFIED

QOCS, APPEALS, SET-OFF & KAFKA

QOCS, PART 36, TWO DEFENDANTS: SOME PROBLEMS

Written by kerryunderwood

July 17, 2017 at 8:54 am

Posted in Uncategorized

CREDIT HIRE, QOCS AND NON-PARTY COSTS ORDERS

with 3 comments


See my book on Qualified One-Way Costs Shifting, Section 57 and Set-off available for £25.00 on Amazon here.

In Select Car Rentals (North West) Ltd v Esure Services Ltd [2017] EWHC 1434 (QB)

the High Court upheld the decision of the first instance judge to award costs against the Credit Hire Company in a lost personal injury claim, where the claimant was protected by Qualified One-Way Costs Shifting and where there was no finding of fundamental dishonesty or anything else which would displace the normal QOCS rule.

Here the personal injury claim brought by three claimants included a claim for £23,456.85 for money due under Car Hire Agreements in relation to a car with a pre-accident vale of £1,710.00.

In fact the First Claimant had purchased a replacement car nine weeks after the accident but allowed her boyfriend to continue using the cars provided under credit hire until the boyfriend himself was involved in an accident.

The claims were lost, but no finding of fundamental dishonesty was made and the claimants therefore had the protection of Qualified One-Way Costs Shifting.

The successful Defendant sought and obtained an order for costs against the Credit Hire Company, Select Car Rentals, who were not a party to the case.

Thus the order was made under Section 51 of the Senior Courts Act 1981.

Even if a Non-Party Costs Order, or Wasted Costs Order is made, the starting point in a personal injury claim is that order cannot be enforced against the claimant unless one of the exceptions to Qualified One-Way Costs Shifting apply.

The relevant exception here is that the proceedings included a claim which is made for the financial benefit of a person other than the Claimant, that is the Credit Hire Company.

The Practice Direction in relation to Qualified One-Way Costs Shifting specifically lists claims for credit hire examples of claims made for the financial benefit of a person other than the claimant.

In an important statement the High Court Judge said:

“The fact that any given credit hire organisation’s connection with a claim is no greater than is commonly the case does not, without more, provide it with an automatic immunity from a Non-Party Costs Order. There is no room for the argument that it is a prerequisite to the making of such an order that such involvement be exceptional.”

Thus the starting point now is that in any unsuccessful personal injury claim involving credit hire a Costs Order can be made against the Credit Hire Company and enforced.

In fact the judge here appears to have confused the jurisdiction under Section 51 of the Senior Courts Act 1981 and Qualified One-Way Costs Shifting.

What CPR 44.16(2) in fact says is:

“Orders for costs made against the claimant may be enforced to the full extent of such orders with the permission of the court, and to the extent that it considers just, where –

(a) The proceedings include a claim which is made for the financial benefit of a person other than the claimant or a dependant within the meaning of Section 1(3) of the Fatal Accidents Act 1976 (other than a claim in respect of the gratuitous provision of care, earnings paid by an employer or medical expenses)…”

Thus if the proceedings include a claim which is made for the financial benefit of a person other than the Claimant, then the position is that the court may allow the successful Defendant to enforce the full order for costs made against the Claimant.

It needs to be remembered that in a Qualified One-Way Costs Shifting case that the order against an unsuccessful Claimant is made in the usual way.

What is different is that unless certain exception apply that order cannot be enforced against the Claimant.

Because the claim is for the financial benefit of a person other than the Claimant, that alone should not and cannot justify a Non-Party Costs Order.

What it does is to allow the order made against the Claimant, but generally unenforceable, to in fact be enforced with the permission of the court and to the extent that the court considers it just.

CPR 44.16(3) does allow the court, subject to CPR 46.2, to make an order for costs against a person other than the Claimant, for whose financial benefit the whole or part of the claim is made.

The judge here did correctly state that CPR 44.16(3) is not an exception to the QOCS regime as QOCS only protects Claimants and not non-parties.

CPR 46.2 is the CPR dealing with Non-Party Costs Orders and reads:

“46.2 – (1) Where the court is considering whether to exercise its discretion under section 51 of the Senior Courts Act 1981 (costs are in the discretion of the court) to make a costs order in favour of or against a person who is not a party to the proceedings –

a) That person must be added as a party to the proceedings for the purposes of costs only; and

b) He must be given a reasonable opportunity to attend a hearing at which the court will consider the matter further.”

Thus CPR 44.16(3) allows a Non-Party Costs Order to be made in a QOCS case but subject to the CPR 46.2 procedure being followed.

As I have previously observed the logic of CPR 44.16(3) is that anyone whose expenses form part of the special damages claim in a personal injury action is exposed to a potential Costs Order.

That is reinforced by the fact that CPR 44.16(2)(a) specifically protects those for whom a claim is made in respect of the gratuitous provision of care or earnings paid by an employer or medical expenses, which obviously means that all other special damage recipients are not so protected.

The bombs in the minefield of Qualified One-Way Costs Shifting are beginning to go off.

PS

 I particularly enjoyed paragraph 27 of Mr Justice Turner’s decision:

“I note that the authors of “Costs Funding following the Civil Justice Reforms: Questions and Answers” 3rd Edition conclude:

“Whether the working of CPR 44.16(3) (and CPR 44 PD 12.5) is intended to and does in any way relax the established common law as to the circumstances in which a third party costs order is available is a moot point and will no doubt be argued in due course.”

Having thus raised the question, however, the authors, perhaps counter-intuitively given the name of their publication, declined thereafter to venture an answer.”

 

Also see:

KERRY ON QOCS: BOOK UPDATE AND LINKS: UNIFIED

QOCS, APPEALS, SET-OFF & KAFKA

QOCS, PART 36, TWO DEFENDANTS: SOME PROBLEMS

Written by kerryunderwood

July 14, 2017 at 8:21 am

Posted in Uncategorized

FIXED COSTS FOR HOLIDAY SICKNESS CLAIMS

leave a comment »


You can now book onto my Fixed Costs Autumn Tour and there is an early bird discount if booked and paid by 31 July 2017 – here.

On 9 July 2017 the government announced that it had asked the Civil Procedure Rules Committee to include foreign holiday sickness claims within the Fixed Recoverable Costs Scheme, to bring them in line with domestic claims.

Currently both the portals are restricted to personal injury cases where the accident or injury occurred in England and Wales.

Paragraph 4.3 of the Employers’ Liability and Public Liability portal does not apply to a claim:

“(7) For personal injury arising from an accident or alleged breach of duty occurring outside England and Wales.”

Only claims which have been, or should have been, in one of the portals can currently be the subject of Fixed Recoverable Costs.

Lord Justice Jackson’s report on fixed costs, due out later this month, is expected to recommend the widespread extension of fixed costs to most civil claims valued between £25,000.00 and £100,000.00.

Such claims would not have been in the portals, which currently have an upper limit of £25,000.00.

The fact that the government has taken this action now suggests that a change will be made sooner than the extensive changes expected to come in together on 1 October 2018.

It is possible that foreign holiday sickness claims will be subject to fixed costs as early as this October, that is 2017.

Written by kerryunderwood

July 13, 2017 at 10:52 am

Posted in Uncategorized

MEDICAL PROTECTION SOCIETY: MAD AS EVER

with 5 comments


The Medical Protection Society (MPS) represents healthcare professionals sued for negligence.

Rather than trying to cut the number of negligent incidents, the MPS suggests saving money by restricting loss of earnings awards to average national earnings, rather than the actual loss suffered by the victim of the surgeon’s, or whoever’s, negligence.

Thus a surgeon earning £150,000.00 a year is guilty of negligence, causing someone to lose their entire earnings of say £70,000.00 a year.

The negligently treated patient would only get £27,600.00 a year, being the average wage.

The surgeon would carry on earning £150,000.00 a year.

Maybe the principle should be applied in other fields, but only to healthcare professionals.

“You’re business class flight to Australia was cancelled Dr Strangelove. Here is £49.00 being the average budget airline fare to France.”

“£1.5 million house loss due to a solicitor’s negligence? Here’s £232,500.00 being the average house price.”

“New Mercedes stolen? Here’s £7,000.00 being the average price of a second hand car.”

Society will collapse if the Medical Protection Society has any say in anything.

Written by kerryunderwood

July 12, 2017 at 9:14 am

Posted in Uncategorized

NO SEE NO FEE? IS CFA VOIDABLE IF CLIENT NOT SEEN?

leave a comment »


In Vilvarajah v West London Law Ltd [2017] EWHC B23 (Costs)

the Senior Courts Costs Office held a Conditional Fee Agreement to be unenforceable as between solicitor and client as it was unfair and unreasonable within the meaning of Section 61 of the Solicitors Act 1974.

This was for a number of reasons and my blog – Hourly Rates in Retainers – deals with the issue of the hourly rates.

It has been established since

In re Stuart, ex parte Cathcart [1893] 2 QB 201

that the issue of fairness is confined to looking at how the agreement was entered into, whereas the issue of reasonableness is confined to the contents of the agreement.

Section 61(2)(b) of the Solicitors Act 1974 allows the court to set aside a Contentious Business Agreement and order the costs covered by it to be assessed as if it had never been made if the agreement is in any respect unfair or unreasonable.

In In re Stuart, applying a similar provisional in the Attorneys’ and Solicitors’ Act 1870 the Queen’s Bench Division of the High Court said:

“… if a solicitor makes an agreement with a client who fully understands and appreciates that agreement that satisfies the request as to fairness…”

and that that the solicitor must satisfy the court that “the agreement was absolutely fair with regard to the way in which it was obtained…”
Here the solicitor’s attendance note in relation to the Conditional Fee Agreement read:

“Attending client in our offices. Went through the CFA with him before he signed the same. He is acceptable to the same in that he is liable for barrister’s fees. I will find out how much the barrister’s fee will be for the forthcoming hearing on Friday. Time: 5 units.”

The judge pointed out that five units is 30 minutes and continued:

“18. At paragraph 8 of her statement Miss Yarranton recorded that she explained to the Claimant what a conditional fee agreement was, that the Defendant would be paid win or lose, “but that the rate payable would be considerably less if the claim failed”, what the different rates were, that a success fee would be payable “if the claim was successful” and that the Claimant would be liable for counsel’s fees. At paragraph 11 she stated that she could not recall whether she gave the Claimant a copy of the agreement at the meeting but “would usually do so”.

19. In relation to the Claimant’s understanding of English Miss Yarranton stated, at paragraph 23, that “it is relatively obvious that English is not his first language” and accordingly she took particular care to explain things thoroughly. At paragraph 30 Miss Yarranton explained that the Claimant had been unable to continue to fund the matter under a conventional retainer and that:

The Defendant was only prepared to act on the Claimant’s behalf under a CFA on the terms offered and the Claimant was fully aware of this.”

The judge held that the client did not fully understand and appreciate the agreement and said this about what should have happened:

“25. …There is no correspondence between the Defendant and the Claimant about the conditional fee agreement. I would expect to see a letter from the Defendant to the Claimant in advance of the meeting on 7th January 2013 explaining the options clearly. I would expect that letter or a subsequent letter, still in advance of the meeting, to enclose a draft of the proposed conditional fee agreement and to explain its terms so that the Claimant would have an opportunity to consider it before the meeting and think about whether there was anything which required explanation. I would expect the solicitor to be able to produce an attendance note of the meeting at which the agreement was signed recording precisely what explanation she gave of it to the Claimant. I would then expect to see a letter sent to the Claimant after the agreement was signed enclosing a copy of the agreement and explaining the key points.”

The judge said that no Risk Assessment was carried out and there was nothing to suggest that the client had been given any advice as to the prospects of success in the case and therefore the likelihood that he would have to pay a substantial success fee in addition to the primary rate.

On the point the judge concluded:

“28. I cannot conclude that an explanation given in a 30 minute appointment, with no attempt at communication before or after, enabled the Claimant fully to understand and appreciate the terms of the agreement and in particular the liabilities that he was assuming.

29. Accordingly in my opinion the agreement is unfair and should be set aside.”

Thus here the court set aside a Conditional Fee Agreement, even though the solicitor had in fact seen the client and spent 30 minutes explaining the agreement. It is clear from the paragraphs quoted above that the judge felt that a 30 minute appointment, with no communication before or after, was insufficient to explain the Conditional Fee Agreement.

In personal injury matters, very many solicitors never see the clients and virtually all such claims are conducted under a Conditional Fee Agreement.

You can assume that if a client challenges such an agreement under Section 61 of the Solicitors Act 1974, then in the absence of a personal meeting between solicitor and client the Conditional Fee Agreement will be voided by the court.

Written by kerryunderwood

July 11, 2017 at 8:55 am

Posted in Uncategorized

SECURITY FOR COSTS: THREE RECENT CASES

leave a comment »


In Physiotherapy Network v Health & Case Management Ltd [2017] EWHC 1238 (QB)

the High Court has overturned a Master’s order requiring the Defendant to pay security for costs, failing which judgment in default would be entered for the Claimant on both the claim and counterclaim without further order.

The High Court Judge found that the effect of the order was not only that the counterclaim would not proceed, but that there would be no trial of the merits of the claim.

In his view, that, of itself, justified granting permission to appeal.

The High Court Judge referred to

BJ Crabtree (Insulations) Ltd v GPT Communications Systems Ltd [1990] 59 BLR 45,

which discusses the situation where a claim and counterclaim exist and, if security were ordered and not provided, one claim would be stayed and one would be advanced.

He observed that here, the Master had tried to address this potential difficulty by issuing an order which meant that neither claim nor counterclaim would be advanced, “but only because he gave judgment on the claim in default of providing the security on the counterclaim”.

This was unjust when the counterclaim raised the same issues as the claim.

He noted that the parties had not focused on whether the Defendant’s counterclaim was freestanding or covered the same issues as the claimant’s claim (Autoweld Systems Ltd v Kito Enterprises LLC [2010] EWCA Civ 1469 considered).

This meant that an important factor had not been considered at all by the Master, so the exercise of his discretion was flawed.

The claim and counterclaim here covered identical ground, such that it was unjust and wrong to order the Defendant to pay security for costs in respect of the counterclaim.

The judge described this as “a curious case and a curious order”, but his judgment includes lengthy consideration of several authorities on security for costs applications where there is a claim and counterclaim, and serves as a helpful reminder of the importance of considering whether the counterclaim simply gives rise to the same issues as the claim.

 

ATE AND SECURITY FOR COSTS

In Catalyst Managerial Services v Libya Africa Investment Portfolio [2017] EWHC 1236 (Comm)

the High Court held that the claimant’s After the Event (ATE) insurance policy was not satisfactory security for the Defendant’s costs in circumstances where the proceeds might not be available if the Claimant became insolvent and also where there was a risk that the insurer would avoid the policy.

The court held that there was a real and not fanciful risk of the Claimant becoming insolvent and if that happened the policy proceeds would go to unsecured creditors and not to pay the Defendant’s costs.

The policy also excluded reliance on the Contracts (Rights of Third Parties) Act 1999 and the Defendant could not rely on the Third Parties (Rights Against Insurers) Act 2010 if the Claimant was wound up in foreign jurisdiction, here the United Arab Emirates.

The judge held that the ATE policy could not be described as reasonably satisfactory security as the Defendant risked becoming an unsecured creditor in a foreign insolvency.

The court also held that there was a significant risk that the policy would be avoided by the insurers as part of the defence was an allegation for forgery against the claimant.

There was also a suggestion of misrepresentation by the Claimant.

 

FOREIGN CLAIMANTS ORDERED TO PAY SECURITY FOR COSTS

In Newwatch Ltd and another v Bennett and others [2016] EWHC 3506 (Comm)

the High Court ordered the Claimant companies, based in Denmark and Jersey, to pay security for costs under CPR 25.13(2)(a),(c) and (f).

On the evidence, the judge accepted that there was reason to believe that the claimants would be unable to pay the Defendants’ costs if ordered to do so and noted that the threshold in CPR 25.13(2)(c)and (f) was low.

The judge considered that the ATE insurance policies, which the claimants had taken out with a benefit of £1.8 million, provided insufficient protection for the Defendants because:

  • the Defendants were not named as direct beneficiaries and both policies expressly excluded the rights of third parties;

 

  • if a substantial costs order was made against them, the claimants would be insolvent and any payment from the insurers would be to the insolvency practitioner and the Defendants would be unsecured creditors in a foreign insolvency.

The case could be distinguished from Premier Motorauctions v Price Waterhouse Coopers LLP [2016] EWHC 2610 (Ch), which involved an English company;

  • there was a risk that insurers would refuse payment on the basis of exclusion clauses because of issues of illegality and fraud regarding deeds of assignment on which the claimants relied;

 

  • the Defendants’ costs were likely to be in excess of £1.8 million.

The application for security for costs was made very close to trial but the court said that the delay was not a bar to the making of an order, but it was material to the exercise of discretion.

The judge ordered the claimants to pay security for costs in the sum of £1.2 million.

Courts have reached differing views on whether ATE insurance provides sufficient protection for Defendants but most, like this one, rule that it will not, and particularly where there are issues of fraud and a foreign element.

Written by kerryunderwood

July 10, 2017 at 9:22 am

Posted in Uncategorized

NON-PARTY COSTS ORDERS: TWO NEW CASES

leave a comment »


In two recent cases involving directors of limited companies the courts have refused to make non-party Costs Orders against those directors.

In JAS Financial Products LLP v ICAP PLC [2017] EWHC 1172 (Comm)

the Commercial Division of the High Court refused to make a Non-Party Costs Order against a former director of the Claimant Company where the company had entered into liquidation after its claim against the Defendants failed and where the company could not meet the order for costs.

The court referred to it as being a difficult case which came very close to the line.

The court considered and applied the principles set out in Deutsche Bank A.G. v Sabastian Holdings Inc [2016] EWCA Civ 23 and discusses and distinguishes the decision in Creative Foundation v Dreamland Leisure Limited [2016] EWCA 859 (Ch).

In the Dreamland case it was accepted that pursuing litigation with the view to obtaining money for a charity in which an individual had a strong interest could be regarded as a relevant financial benefit in the context of Non-Party Costs Orders.

However in that case most of the potential benefit was to be derived by the relevant non-party personally, whereas here there was no direct financial benefit to the director and the fact that any recoveries would have benefitted a charitable cause which he believed in, did not give rise to the very close connection necessary between a Non-Party and the litigation to justify a Non-Party Costs Order.

The court also accepted the director’s evidence that in pursuing the litigation he had been acting in what he saw as the company’s best interest.

The court also took into account the fact that the Defendant had not warned the director that he might be pursued personally for costs by way of Non-Party Costs Order.

Neither had the Defendants sought security for costs against the Claimant.

Overall these factors led the judge in a case that he referred to as being “very close to the line” not to make a Non-Party Costs Order.

In Spartafield Ltd v Penten Group Ltd and another [2017] EWHC 1121 (TCC).

the Technology and Construction Court, part of the High Court, refused to make a non-party costs order under section 51 of the Senior Courts Act 1981 (SCA 1981) against the sole director of a Defendant company Penten Group Limited.

The sole director was in no sense the real Defendant to the proceedings, nor could it sensibly be said that he was funding them solely or substantially for his own benefit.

This case demonstrates how, given the principle of corporate limited liability, the court will look closely and critically at the factors alleged to justify a non-party costs order against a company director.

The deputy judge had regard to the principles in Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] UKPC 39, focusing on who was the real party to the litigation, and on whether the case fell into the category where non-parties fund financially insecure companies in litigation designed to advance their own financial interests.

However, he held that there was really only one question to consider, namely whether it was just to make a non-party costs order (Systemcare (UK) Ltd v Services Design Technology and Sharif [2011] EWCA Civ 546).

The sole director had made substantial loans to Penten Group Limited and had personally funded around 25% of Penten Group Limited’s litigation costs.

The Claimant contended that these factors, together with the sole director’s role as sole shareholder and director and his conduct during and after trial, made the case “exceptional” for the purposes of the court exercising its discretion under section 51 of the SCA 1981.

The deputy judge accepted the sole director’s evidence that the proceedings were defended to recover monies to pay Penten Group Limited’s other creditors, not to procure repayment of the loans.

The sole director genuinely believed that the litigation had good prospects of success, and the fact that not all of his evidence was accepted at trial was “standard fare in litigation”.

In the circumstances, it was not just to make the order sought.

Written by kerryunderwood

July 7, 2017 at 9:02 am

Posted in Uncategorized

HOURLY RATES IN RETAINERS

leave a comment »


I consider this subject in great detail in my book Personal Injury Small Claims, Portals and Fixed Costs which runs to three volumes and over 1,300 pages and costs £80.00, including P&P, and is available from me here or from Amazon here.

In spite of the title of the book it deals with hourly retainers in all civil litigation, and not just personal injury work.

In Vilvarajah v West London Law Limited [2017] EWHC 23 (Costs)(19 May 2017)

the Master said:

“£420.00 is an unreasonable rate for any of the fee earners involved in this case, whether as between solicitor and client or as between parties.”

A Master in the SCCO has the status of a District Judge and therefore this decision is not binding on any other court, but in reality a decision of a Costs Master carries more weight than that of a District Judge.

Here, on a Solicitors Act 1974 Solicitor and Client Assessment the Senior Courts Costs Office set aside the retainer under the provisions of Section 61(1) of the Solicitors Act 1974.

That section reads:

Enforcement of contentious business agreements.

(1) No action shall be brought on any contentious business agreement, but on the application of any person who –

(a) is a party to the agreement or the representative of such a party; or

(b) is or is alleged to be liable to pay, or is or claims to be entitled to be paid, the costs due or alleged to be due in respect of the business to which the agreement relates, the court may enforce or set aside the agreement and determine every question as to its validity or effect.

(2) On any application under subsection (1), the court –

(a) if it is of the opinion that the agreement is in all respects fair and reasonable, may enforce it;

(b) if it is of the opinion that the agreement is in any respect unfair or unreasonable, may set it aside and order the costs covered by it to be assessed as if it had never been made;

(c) in any case, may make such order as to the costs of the application as it thinks fit.

It should be noted that this section does not apply specifically to Conditional Fee Agreements but covers retainers between solicitors and their clients generally in contentious work.

In this case the solicitor was acting for the Defendant and success was defined as any reduction in the first solicitors’ bill and thus even a few pounds saving, effectively a heavy defeat, would, under the terms of the Conditional Fee Agreement, be treated as a success.

There was no damages-based cap and no cap on fees by reference to the amount saved, or indeed anything else.

Thus for all interests and purposes this was a full bill at full rates, win or lose.

To put this in context the original solicitors’ bill which was in dispute was £20,000.00 and in this case the solicitors charged their client £31,945.48.

Thus even if the whole bill had been disallowed, that is the first bill, the costs of obtaining the disallowance of that bill were over 50% higher than the bill itself.

Furthermore the Conditional Fee Agreement was a No Win Lower Fee Agreement and not a No Win No Fee Agreement.

The rate of £420.00 per hour could not be justified by the fact that there was a discounted rate in the agreement as, on the facts, a failure to achieve success within the definition contained in the CFA was highly unlikely and in any event the discount from the full rate was modest.

The judge considered that the calculation of the success fee was peculiar, as it was not based on any risk assessment, but on the proportion of the discounted rate to the primary rate, and those figures were themselves arbitrary.

That partly makes sense, and partly does not make sense.

True it is that the very existence of a success fee reflects the fact that the solicitor will not get paid in the event of defeat, and therefore risk is relevant in that sense, in that if there is no real prospect of defeat, due to the way the Conditional Fee Agreement is worded, as was the case here, then the solicitor should indeed only get a very modest success fee to reflect matters such as Part 36 risk etc.

However once it is established that there is a risk, then the discounted rate is highly relevant.

In any case where there is a significant risk, then if the solicitor is acting on a No Win No Fee Basis, then she or he risks getting nothing and the success fee should reflect that fact.

If, however, the agreement is a No Win Lower Fee Agreement then the solicitor is only at risk of part of his or her costs as they will receive something, even in the event of defeat.

Let us take an example of a case that is very high risk and on the face of it warrants a 100% success fee.

If the agreement provides for £300.00 an hour in the event of a win and £250.00 an hour in the event of defeat, then the solicitor is only at risk of one-sixth of costs and the success fee should be correspondingly lower to reflect that fact.

The judge was also critical of the lack of explanation given in relation to the Conditional Fee Agreement to the client and was critical of the fact that the Conditional Fee Agreement was only discussed with the Claimant in a 30 minute appointment without a detailed attendance note of what was said and without correspondence, before or after.

The judge said he would have expected a letter to be sent to the Claimant in advance of the meeting, with a draft copy of the Conditional Fee Agreement explaining its terms and a follow-up letter after the agreement was signed, enclosing a copy of the signed Conditional Fee Agreement and explaining the key points.

The Master also said that there was no suggestion that the Claimant was given any advice on the prospects of success in the case and the likelihood that the client would have to pay the success fee.

As we have seen above the client was virtually certain always to have to pay the success fee.

The judge also said:

“Crucially there is nothing to suggest that the Defendant gave the Claimant any advice that the primary rate was unusual or that there was no prospect at all that he would recover these rates from his opponent…”

It is true that the judge also said:

“£420.00 is an unreasonable rate for any of the fee earners involved in this case, whether as between solicitor and client or as between the parties.”

However in the previous paragraph, referring to the hourly rates charged by the first set of solicitors, the judge said that the hourly rates agreed in September 2012 of £350.00, £200.00 and £135.00 were not unreasonable.

Allowing for around 8% inflation in the intervening five years that takes that rate to £392.00 an hour, albeit that that was for a Grade A rate, and the judge referred to that as “high” but not unreasonable.

That leaves open the question of having a standard rate for all fee earners.

It should be noted that that is the way the fixed costs system works and the fixed County Court advocacy fees in non-fixed cost cases works.

It is also the way the current pilot scheme in Commercial Court cases up to £250,000 works.

Here, although not mentioned specifically by the judge, it appears that no Section 74(3) Solicitors Act 1974 warning was given.

The judge refers to the primary rate as being “unusual” which is a word drawn from Section 74(3) and CPR 46.9 and the Underwoods Model Conditional Fee Agreement includes the following:

“In so far as any costs or disbursements are of an unusual nature or amount these costs might not be recovered from the other party.”

That is clearly what the judge is referring to in Paragraph 35 of the judgment, although he does not set out the relevant provisions.

Thus there are many factors which distinguish this case from my proposed method of working, which is to charge a high hourly rate – I suggest £400.00 per hour – but always, without exception, to protect the client by capping all costs of all kinds, whether they be basic costs or the success fee or a combination of both, by reference to damages.

However, I accept that the reference to a rate of £420.00 per hour as being unreasonable is potentially problematic.

One thing to note is that generally that rate will not in fact be the true rate charged, due to the exercise of the damages-based cap and that is the point of my conditional fee analysis forms, which are in my book – Personal Injury Small Claims, Portals and Fixed Costs, available from Amazon here, or from me here.

Here the solicitors were always going to charge the full £420.00 per hour provided they got a penny off of the original solicitors’ bill and that is a very different situation.

I do not share the general view that courts are unable to touch the hourly rate as my view is that the court does have a residual jurisdiction over solicitors in our capacity as officers of the court.

It is however true that courts will rarely interfere with hourly rates as between solicitor and client, but they are free to challenge the amount of work done and who it should have been done by.

I am afraid that this is a classic case of hard cases and bad law or whatever the expression is, in that the solicitors should never have sought to uphold their bill when there was no effective protection to the client at all and when in reality it was not a Conditional Fee Agreement.

That begs the question of whether the court would have interfered had this been a straightforward hourly rate, payable win or lose, and not a Conditional Fee Agreement.

I suspect not.

My advice remains the same, that is to put at a rate of £400.00 per hour but to protect the client by limiting all costs, that is base costs as well as the success fee, by reference to damages.

If a client challenges that, then calculate carefully what in fact the hourly rate worked out as.

That is done by dividing the total fee by the number of hours worked and thus the hourly rate will often be relatively low due to the limitation of the charge to the client by reference to a percentage of damages.

If the client pursues the matter, then re-consider the position.

Remember also that this only applies to cases where proceedings have been issued as, if you follow my model, you will have a Section 57 Solicitors Act Contingency Fee Agreement in place prior to issue and that is a straightforward percentage with no reference to the hourly rate and that was recently upheld by a full High Court Judge in Bolt Burdon Solicitors v Tariq [2016] EWHC 811 (QB).

Comment

It should be noted that the Solicitors Act 1974, and its predecessors, look at what was referred to

in re Stuart, ex parte Cathcart [1893] 2 QB 201

as “the mode of obtaining the agreement” and in that case the court said that if a solicitor makes an agreement with a client who fully understands and appreciates that agreement that satisfies the requirement as to fairness.

Thus the issue of fairness is confined to looking at how the agreement was entered into.

In that case the court continued “but the agreement must also be reasonable, and in determining whether it is so the matters covered by the expression “fair” cannot be reintroduced.

As to this part of the requirements of the statute:

“148. The outcome of the case provides no particular assistance, but in the course of his judgment Lord Esher M.R. gave the following guidance on the proper approach under those statutory provisions:

“By s.9 the Court may enforce an agreement if it appears that it is in all respects fair and reasonable. With regard to the fairness of such an agreement, it appears to me that this refers to the mode of obtaining the agreement, and that if a solicitor makes an agreement with a client who fully understands and appreciates that agreement that satisfies the requirement as to fairness. But the agreement must also be reasonable, and in determining whether it is so the matters covered by the expression “fair” cannot be re-introduced. As to this part of the requirements of the statute, I am of opinion that the meaning is that when an agreement is challenged the solicitor must not only satisfy the Court that the agreement was absolutely fair with regard to the way in which it was obtained, but must also satisfy the Court that the terms of that agreement are reasonable. If in the opinion of the Court they are not reasonable having regard to the kind of work the solicitor has to do under the agreement, the Court are bound to say that the solicitor, and an officer of the Court, has no right to an unreasonable payment for the work he has done and ought not to have made an agreement for remuneration in such a manner. On this question it is quite clear to me that we cannot arrive at any other conclusion than that arrived at by the Divisional Court. It is impossible to say that work which according to information given by the taxing master to the Divisional Court would be properly remunerated by a sum of £20 can be reasonably charged at £100. The decision of the Court below must be affirmed, and the appeal dismissed.””

In the case of Bolt Burdon Solicitors v Tariq [2016] EWHC 811 (QB), the High Court said that it found the analyses in that case helpful to the extent of identifying that the issues of fairness and reasonableness must be considered separately:

“Fairness relates principally to the manner in which the agreement came to be made. Reasonableness relates principally to the terms of the agreement.”

Two major points arise.

Firstly, the limitation of the charge to the client by reference to damages and not just to the hourly rates is generally likely to render the agreement reasonable, particularly if, as is now common in personal injury matters, the solicitors effectively self-insure and take upon themselves the risk of the costs consequences of failing to beat a Defendant’s Part 36 offer.

Secondly, and something which should ring very loud alarm bells to those that do not see their clients, the court here states that even a 30 minute face to face appointment with the client was inadequate to explain the Conditional Fee Agreement.

Solicitors who do not see their clients are at great risk of the court finding that the agreement was unfair by that fact alone.

It should be remembered that in the Bolt Burdon Solicitors v Tariq case a full High Court Judge upheld a 50% contingency fee in circumstances where the solicitors would only have earned a fraction of the amount of the contingency fee had they charged the client on the usual hourly rate.

It should also be noted that the Master found as a fact that the client had not fully understood and appreciated the agreement and that, even by comparison with other Conditional Fee Agreements, this was a complicated agreement.

The judge also pointed out that the Claimant was liable to pay a substantial success fee on top of the primary rate.

In a Conditional Fee Agreement where the charge to the client is limited by damages, this is unlikely to happen.

Thus the judge found that the agreement was unfair and should be set aside.

In those circumstances it is arguable that his comments in relation to unreasonableness were obiter as they were not necessary, given that he had already set the agreement aside.

The judge’s comments that the primary rate could not be justified by reference to the discounted rate, due to the fact that the agreement was structured in such a way that any result was bound to be regarded as a win, leaves open the possibility of the primary rate being justified by reference to a limitation on the total charge to the client by reference to damages.

While not seeking to minimise the potential problems caused by the statement:

“£420.00 is an unreasonable rate for any of the fee earners involved in this case, whether as between solicitor and client or as between parties,”

this case is clearly distinguishable on many bases from the method that I advise.

The purpose of the Solicitors Act 1974 is to protect clients in relation to solicitor and own client bills and costs.

An absolute cap on the charges to be made to the client, by reference to damages, gives that protection and very obviously gives much greater protection to a client than a very much lower hourly rate where the client has to pay win or lose.

Written by kerryunderwood

July 6, 2017 at 8:11 am

Posted in Uncategorized

PART 36: LATE ACCEPTANCE, FIXED COSTS CAPPED COSTS – WHERE ARE WE?

leave a comment »


I deal with all of these matters at great length in my new book Personal Injury Small Claims, Portals and Fixed Costs, and in spite of the title it deals with Part 36 in the context of civil claims generally.

Available for £80.00 from me here or from Amazon here.

Part 36 is undoubtedly the most important of the Civil Procedure Rules, but unfortunately it is also the most complicated and difficult rule and, to put it mildly, is not well written.

I have written extensively on these subjects and a list of related blogs appears at the bottom of this piece, but this is a short piece summarising where we are in relation to Part 36 issues concerning fixed costs, capped costs and late acceptance.

These subjects are already important, but their significance will increase dramatically as fixed costs are spread to other areas of civil litigation and to claims with a higher value and we will know more once Lord Justice Jackson’s report is published later this month.

  1. Claim resolved by the end of Stage 2 of the portal process.

There are no Part 36 consequences of any kind if a matter is resolved by the end of Stage 2 of the portal process. A Part 36 offer is effectively suspended until a claim reaches Stage 3.

  1. Claim goes to Stage 3 and Claimant fails to beat Defendant’s offer.

The Claimant gets Stage 1 and Stage 2 costs but does not get Stage 3 costs and has to pay the Defendant’s Stage 3 costs which will be either £250.00 if there is a paper hearing or £500.00 if there is an oral hearing.

  1. Claim reaches Stage 3: Claimant matches or beats own offer.

There are no costs consequences in these circumstances but the Claimant will get enhanced damages under Section 55 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.

  1. Post-Portal

Any claim which leaves the portal is subject to fixed costs unless and until it is allocated to the multi-track, with the single exception that ex-portal industrial disease cases go to open costs.

  1. Claimant accepts Defendant’s offer late or fails to beat Defendant’s offer at trial.

A Claimant gets fixed costs up to and including the stage where time for accepting the Defendant’s Part 36 offer expired.

The Claimant gets no further costs.

The Defendant gets costs capped, not fixed, for each subsequent stage, but this is subject to the indemnity principle, that is the Defendant needs to show what work they did and at what rate.

Because the costs in the Defendant’s case are capped and not fixed, the principles in Nizami v Butt [2006] EWHC 159 (QB) to the effect that the indemnity principle does not apply in fixed costs cases, has no application.

  1. Claimant matches or beats its offer at trial in a fixed costs case.

The Claimant gets indemnity costs for the whole period from expiry of the time for accepting its offer on the indemnity basis with no cap and subject only to the usual Costs Assessment Rules – see

Broadhurst v Tan & Taylor v Smith [2016] EWCA Civ 94.

  1. The Defendant accepts the Claimant’s Part 36 offer late and judgment is entered.

The Claimant gets costs on the indemnity basis as above – see the Broadhurst v Tan decision referred to above.

  1. Claimant matches or beats its offer at trial in a case involving capped, not fixed, costs.

The Claimant gets indemnity costs from date of expiry of the Part 36 offer and without the cap applying subject only to the usual costs rule.

This applies to provisional assessment cases, where the is a cap of £1,500.00 – see

Lowin v W Portsmouth & Co Limited [2016] EWHC 2301 (QB).

This applies to Intellectual Property Enterprise Court cases, where there are capped, not fixed, costs – see

Phonographic Performance Limited v Raymond Hagan [2016] EWHC 3076.

  1. The Defendant accepts the Claimant’s Part 36 offer late in a capped, not fixed, costs matter and judgment is entered.

The Claimant gets indemnity costs from time of the expiry of the Part 36 offer and these costs are not subject to the cap – see Lowin v W Portsmouth and Phonographic v Raymond Hagan above.

  1. The Defendant accepts Claimant’s Part 36 offer late in a fixed costs or capped costs case, but judgment is not entered.

This is the huge outstanding issue in relation to Part 36, both in relation to fixed and capped costs cases, and in relation to cases where the ordinary, open, costs rules apply.

There are no High Court or Court of Appeal decisions dealing with the current version of the Civil Procedure Rules and no Court of Appeal or High Court decision dealing with fixed or capped costs in this situation.

Different courts are coming to different conclusions and we await a definitive decision of a superior court.

I discuss this issue at length in my book and in my blog PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE?

Thus what has been established so far is that a late accepting Claimant is always liable for a Defendant’s costs from the date of expiry of the Part 36 offer until acceptance or Court Order, whether or not judgment is entered.

A late accepting Defendant where judgment is entered, or where the matter goes to trial, where the defendant fails to beat a Claimant’s Part 36 offer results in indemnity costs for the claimant from the date of expiry of the Part 36 offer until acceptance or Court Order.

The big remaining issue is what happens when a Defendant accepts a Claimant’s offer late, but judgment has not been entered.

Does the Claimant just get ordinary costs on the standard basis or does the Claimant get indemnity costs from the date of expiry of the Part 36 offer?

Time, or rather the Court of Appeal, will tell.

This issue is important in cases not subject to fixed costs, but is far more important in fixed costs.

The reason for this is that an award on the indemnity basis allows the Claimant to escape fixed costs and get paid by the hour.

Thus there is both an escape from Fixed Costs and an award on the indemnity, rather than standard, basis and thus the Claimant moves from fixed costs to indemnity costs without passing Go.

It is of less significance in open costs cases as the Claimant will get costs on the standard, not fixed, costs basis and in any event if the matter is settled by late acceptance, then generally costs will be agreed or will proceed to assessment as there is no default position of fixed costs.

Also see:

CLAIMANT ENTITLED TO INDEMNITY COSTS ON LATE ACCEPTANCE, COURT RULES

CLAIMANT’S PART 36 OFFERS: SIX NEW DECISIONS

PART 36 AND RESERVING COSTS TO END OF CASE

PART 36: WHAT HAPPENS WHEN THE OTHER SIDE’S OFFER IS BETTER THAN YOUR OWN

Written by kerryunderwood

July 5, 2017 at 9:11 am

Posted in Uncategorized

CLAIMANT ENTITLED TO INDEMNITY COSTS ON LATE ACCEPTANCE, COURT RULES

with 4 comments


I deal in detail with this subject in chapter 22 of my book Personal Injury Small Claims, Portals and Fixed Costs which runs to three volumes and over 1,300 pages and is available for £80.00 here or from Amazon here.

Below I report the case of Russell v Noble, 15 May 2017, Oldham County Court, where the judge awarded the Claimant indemnity costs on late acceptance by the Defendant of a Part 36 offer where judgment had not been entered.

Leave to appeal has been granted.

In truth this decision does not take matters any further, but I am reporting it as a counterweight to the equally non-binding and of limited relevance decision in Anderson v Ladler in Newcastle County Court, where the judge came to the opposite conclusion.

Take your pick.

The issue of whether or not a Claimant is entitled to indemnity costs on late acceptance of a Part 36 offer by the Defendant, where judgment has not been entered, is a key and unresolved area.

There are First Instance and Circuit Judge decisions both ways and they continue to be made on a regular basis with courts coming to different conclusions.

I have no idea why the Anderson case has received such publicity but I suspect it relates to the publicity machine of the insurance companies and the fact that the summer break is nearly upon us.

The Russell v Noble case

In Russell v Noble, Oldham, 15 May 2017, case B99YM995

the judge carefully analysed Part 36 and the relevant case law and also considered public policy issues.

The judge accepted that there is no specific provision in the rules in relation to a late acceptance case in the absence of judgment being entered (Paragraph 33 of the decision).

The judgment is of such clarity that I can do no better than quote extensively from it:

“  40.  On the basis that Broadhurst indicates that such a course of action is appropriate in a case where there has been a judgement I am of the view, applying the overriding objective, amongst other things, the same ought to apply to a situation where there has been out of time acceptance, but before trial and judgement. That has to be subject to the decision in Fitzpatrick, but which I would respectfully seek to distinguish on the following basis.

  1. The Court of Appeal has held at the absence of a reference in 36.10.4 (now 36.13) is not fatal. The later Court of Appeal case of Broadhurst proceeded to order indemnity costs notwithstanding the absence of a reference to the same in 36.21, and in doing so sought to resolve tension between part 36 and part 45.

 

  1. Fitzpatrick leaves open the possibility of an indemnity costs order (although with reference to 44.3, which is not applicable in this case)

 

  1. To the extent that it is proper to have regard policy considerations, they were considered, and effect given to them, by reference to Parliamentary papers in the Broadhurst case so as to clarify and reinforce the intention of part 36.

 

  1. The Fitzpatrick decision is a case where the background was far removed from the fixed costs low value RTA regime. The alternatives in Fitzpatrick were either assessed costs on a standard basis or assessed costs on an indemnity basis. The question and effect of a fixed costs regime was not relevant and not considered.

 

  1. In this case the real issue is whether or not the claimant should be restricted to the fixed costs or should have the costs, after the relevant period, assessed. If the only way to bring that about is to order that costs be on an indemnity basis then so be it.

 

  1. The Overriding Objective should not be the last resort of District Judges dealing with cases like this, but should be the first resort. The objective will best be met by part 36 having the teeth that Parliament intended it to have; for there to be fairness between the parties by way of equal treatment under the rules; court resources to be saved by early settlement and there being consequences arising from failure to accept a well-judged part 36 offer within the time laid down by the rules. The Overriding Objective is not served by allowing defendants to defer the acceptance of the claimant’s offer in the knowledge that the only consequences will be the incremental costs arising from the various stages in the fixed costs regime. There will be no incentive to even consider part 36 offers in those circumstances until perhaps, as in this case, the very day before trial.

 

  1. Indemnity costs does not, turn on the tap of liquid gold for the claimant. It means the costs are to be assessed as opposed to fixed, whereby 44.3 (3) will apply but so will 44.3 (1) – costs not to be allowed unless reasonably incurred and reasonable in amount.

 

  1. The above reasons the claimant’s application for costs to be assessed on an indemnity basis is granted.”

 

This is an incomparably better reasoned decision than that in the Anderson case.

There the judge referred to the Defendant having “reverse incentive” to proceed to trial once an offer had expired, as late acceptance would attract the same costs basis as losing at trial.

That is nonsense of course.

If the Defendant lost at trial and failed to beat the Claimant’s Part 36 offer, which is comparing like with like, then the Defendant would unquestionably have to pay indemnity costs, including for the trial, which would be a much greater sum – see Broadhurst v Tan and Taylor v Smith [2016] EWCA Civ 94.

If the Claimant’s offer is too high, then the Defendant does not simply have the choice of accepting it or not accepting it.

The Defendant can make its own, lower, offer and thus put the Claimant under pressure as a Claimant’s failure to beat a Part 36 offer at trial, or on late acceptance, again unquestionably leads to the claimant paying costs from the date of expiry of the Part 36 offer to acceptance or Court Order.

The same argument could apply to claimants, that is they may as well push on to trial rather than accept late and pay all of the costs from expiry of the time for accepting the Part 36 offer, as well as forfeiting post Part 36 costs in a case that they have won.

It makes no sense at all.

Perhaps the fullest and clearest decision on this point so far is that of Regional Costs Judge Besford in

Sutherland v Khan, Kingston-Upon-Hull County Court, case number: A81YM424.

As stated above there are plenty of decisions either way and I deal with these extensively in chapter 22 of my book referred to above and that chapter deals with just Part 36.

I also deal with it extensively in my blog PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE?

I am sure that we can all agree that we need a definitive decision of the Court of Appeal as soon as possible.

This whole issue will become of even greater importance once fixed costs spread to all civil litigation, as Lord Justice Jackson is expected to recommend in his report this month, and with a higher upper value, and again we await Lord Justice Jackson’s report as to the recommended value of claims to be brought within the Fixed Costs Regime.

I am grateful to David Pilling of counsel for information and assistance in relation to this piece.

Also see:

CLAIMANT’S PART 36 OFFERS: SIX NEW DECISIONS

PART 36 AND RESERVING COSTS TO END OF CASE

PART 36: WHAT HAPPENS WHEN THE OTHER SIDE’S OFFER IS BETTER THAN YOUR OWN.

Written by kerryunderwood

July 4, 2017 at 9:19 am

Posted in Uncategorized

PAYING WRONG COURT FEE

with 2 comments


In Wiseman v Marston’s PLC, unreported, Sheffield County Court, 21 December 2016, case number B61YP388

a Circuit Judge allowed an appeal from a District Judge and approved an amendment to a Claim Form to increase the value of the claim and held that incorrectly stating the value on the Claim Form at the time of issue, and thus paying a lower court fee, was not an abuse of process.

Thus such an error is capable of correction and will not cause limitation to be an issue.

Thus this decision followed that in Wells v Wood, unreported, a decision of Judge Godsmark, the Designated Civil Judge for Nottinghamshire delivered on 9 December 2016.

Both of these judgments are those of Circuit Judges and thus are not binding on any other court.

However they are well argued and, in my view, clearly correct decisions.

Here the Defendant had admitted liability pre-action and so the only issue was quantum.

The Claimant’s solicitor issued proceedings to protect the position on limitation and stated the value of the claim to be £50,000.00 and paid the appropriate court fee for that sum.

The judge considered that had he given detailed consideration to the value of the claim, he should have realised that it was worth at least £200,000.00.

However, such conduct was not an abuse of court and as soon as the solicitor had the advice of a barrister on quantum and the Particulars of Claim he served them and applied immediately for permission to amend the Claim Form so that the proper value was shown and the correct fee paid.

The judge took the view that there was a world of difference between this conduct and a solicitor deliberately stating the value of the claim to be low in order to save money, which may well be an abuse, and was what happened in Lewis v Ward Hadaway [2015] EWHC 3503 (Ch).

 

Written by kerryunderwood

July 3, 2017 at 1:29 pm

Posted in Uncategorized

%d bloggers like this: