Kerry Underwood

Archive for August 2017

FIXED COSTS AND INTERIM APPLICATIONS: A WRONG DECISION

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I deal with this matter at length in my book Personal Injury Small Claims, Portals and Fixed Costs running to 1,300 pages and three volumes, available for £80.00 including P&P from Amazon here or me here.

You can now book onto my Fixed Costs Autumn Tour – here

In Skowron V Rollers Roller Disco Limited, Truro County Court, 8 June 2017, Claim Number C00EX746

a District Judge considered the level of fixed costs on an application for pre-action disclosures in a personal injury claim.

Such applications are covered by the fixed costs regime as interim hearings – see Sharp v Leeds City Council [2017] EWCA Civ 33.

Thus the issue here was the level of such costs. The original application for pre-action disclosure was dealt with on the papers, that is with no advocate attending.

 

The relevant law is CPR 45.29H which reads:

“(1) Where the court makes an order for costs of an interim application to be paid by one party in a case to which this Section applies, the order shall be for a sum equivalent to one half of the applicable Type A and Type B costs in Table 6 or 6A.”

 

Table 6 and Table 6A form part of CPR 45.18 and by virtue of CPR 45.18(2) Type A fixed costs means the legal representative’s costs and Type B fixed costs means the advocates costs.

CPR 45.18(4) provides that subject to CPR 45.24(2) the court will not award more or less than the amounts shown in Table 6 or 6A, that is the costs are fixed.

CPR 45.24 deals with failure to comply with the relevant protocol and the costs consequences and is not relevant here.

Type A fixed costs are – £250.00.

Type B fixed costs are – £250.00.

Half of £250.00 is –       £125.00.

As there was no advocate’s costs in this case, then it is obvious that the correct fee was £125.00.

Bizarrely, the judge held that even where there was no advocacy the Type A and Type B costs had to be added together to form £500.00 and then halved, meaning that the fee payable was £250.00.

Comment

I report this decision as it has been reported elsewhere as important.

It is as wrong and illogical a decision as I have ever seen.

Very obviously had it been the intention that a fee of £250.00 should be awarded then the rule would simply refer to Type A costs, which are £250.00, or Type B costs, which are also £250.00.

This judge apparently believed that the rules intended you to add two things together and then halve them to arrive at the original figure.

Why not do that for all fixed costs?

Thus instead of having a road traffic portal fee of £500.00 let’s have a rule which says:

“The portal fee in a road traffic accident case shall be one tenth of the fixed fee multiplied by 10.”

A flavour of the quality of this decision can be gained by this sentence from the judgment:

“In so doing, I think he overlooked, and his attention was not drawn to, the decision of Sharp v Leeds, the judgment given, I believe, by Lord Justice Jackson in the Court of Appeal….”

Given that this is a Court of Appeal judgment directly on point, one would have thought that the judge would have looked at it, read it, given the correct citation, and applied the law.

This decision should be ignored. It will not be followed.

Written by kerryunderwood

August 31, 2017 at 11:54 am

Posted in Uncategorized

WHEN CAN COSTS JUDGE DEPART FROM COSTS BUDGET? HARRISON CONSIDERED

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By Robert Males, Managing Partner, Underwoods Solicitors

In Harrison v University Hospitals Coventry and Warwickshire NHS Trust (2017) EWCA Civ 792 (21 June 2017)

the Court of Appeal dealt with the important issue of when a party’s costs claimed in an action can vary from the costs budget in a situation where the costs were in fact less than the cost set out in a particular phase in the budget.

The first issue concerned a situation where a costs management order approving a cost budget has been made and whether on a subsequent detailed assessment the costs judge is precluded from going below the budgeted amount unless satisfied there is a good reason to do so. Alternatively, can the costs judge go below the budgeted amount without any prior requirement for a good reason?

The second issue is whether regarding the incurred costs there is a similar requirement of a Mr Justice good reason if a costs judge on assessment wishes to depart from the amount put forward in that section of the costs budget.

The court was aware of the decision of Carr in the case of Merrix v Heart of England NHS Foundation Trust (2017) EWHC 346 (QB) where on the first of these issues the judge reached the decision that a good reason is required to go below the budgeted amount on assessment.

The case involved a clinical negligence matter following a caesarean section operation undertaken at the defendant’s hospital where proceedings were issued on 9th April 2013.

In the claim form the damages were limited to £50,000.00 and liability was disputed. A Costs Management Conference took place on 18th August 2014 and the parties were given permission to rely upon their updated costs budget as modified at that hearing. The total of the claimant’s costs, including both incurred and estimated future costs, amounted to approximately £197,000.00. The success fee and ATE insurance premium were not included in that sum. There was no comment recorded by the judge in relation to incurred costs which amounted to approximately £108,000.00 of the total figure.

In July 2015 the case was settled shortly before trial on the basis that the defendant agreed to pay £20,000.00 plus costs on the standard basis. The claimants subsequently put forward a bill of costs in excess of £467,000.00 including the success fee and ATE premium.

The court set out the relevant rules including CPR 44.3 which provided, among other things, as follows:

“(2) Where the amount of costs is to be assessed on the standard basis, the court will –

(a) only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and

(b) resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party.

The court went on to set out the factors to be taken into account when deciding the amount of costs under CPR 44.4 including all of the factors to be taken into account by the court set out at CPR 44.4(3) which include under CPR 44.(3)(h) “the receiving party’s last approved or agreed budget.”

Rules relating to costs management and costs budgeting are contained in CPR 3.12 to CPR 3.18 which include the important requirement to file costs budgets which provide that the court may make a costs management order where costs budgets have been filed and exchanged unless it is satisfied that the litigation can be conducted justly and at proportionate cost in accordance with the overriding objective without such an order being made.

Such a costs management order will:

(a) record the extent to which the budgeted costs are agreed between the parties;

(b) in respect of budgets or parts of budgets which are not agreed, record the court’s approval after making appropriate revisions;

(3) if a costs management order has been made, the court will thereafter control the parties’ budgets in respect of recoverable costs.

The key aspect for the purposes of this case was CPR 3.18 which provided as follows:

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

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

(b) not depart from such approved or agreed budget unless satisfied that there is a good reason to do so.

(attention is drawn to rules 44.3(20)(a) and 44.3(5), which concern proportionally of costs.)”

The court was also directed to the relevant sections of the Practice Directions relating to costs management and costs budgeting, in particular paragraph 7.3 and 7.4 of Practice Direction 3E which provided as follows:

“7.3 If the budgets or parts of the budgets are agreed between all parties, the court will record the extent of such agreement. In so far as the budgets are not agreed, the court will review them and, after making any appropriate revisions, record its approval of those budgets. The court’s approval will relate only to the total figures for each phase of the proceedings, although in the course of its review, the court may have regard to the constituent elements of each total figure. When reviewing budgets, the court will not undertake a detailed assessment in advance, but rather will consider whether the budgeted costs fall within the range of reasonable and proportionate costs.

7.4 As part of the costs management process the court may not approve costs incurred before the date of any budget. The court may, however, record its comments on those costs and will take those costs into account when considering the reasonableness and proportionality of all subsequent costs.”

Counsel for the appellant argued that the word budget as set out in the CPR 3.18(b) connoted a fund and if the figure for costs claimed fell within that amount then there was no departure from it. This meant that CPR 3.18(b) effectively set a cap on the amount upon which the paying party could expect to pay unless of course the court was satisfied there was a good reason to depart from that budget. Counsel submitted that there was no good reason required if the costs claimed fell below the budgeted amount because there was no departure from the budget.

Counsel went on to submit that it was appropriate for the court to consider the costs on a detailed assessment with the benefit of hindsight and conduct a thorough reappraisal of the costs which had actually been incurred rather than considering an estimate of what might in the future be incurred which occurs during the cost budgeting process. Counsel also noted that cost budgeting did not concern itself with issues such as hourly rates and furthermore, that a proper assessment of proportionally could only be made at the conclusion of the proceedings and that was better suited to a detailed assessment.

Counsel for the respondent submitted that the original costs judge’s interpretation of CPR 3.18(b) was correct.

The court considered the construction of wording CPR 3.12 and concluded that the Master had reached the correct conclusion that a good reason was required to depart from the costs budget and endorsed the reasoning of Carr J in Merrix v Heart of England NHS Foundation Trust (2017) EWHC 346 (QB).

The court was critical of the complaints raised by counsel for the appellant about the current cost budgeting process. The court referred to the latest edition of Cook on Costs which commented that to sanction a departure from the budget at detailed assessment, without good reason, would overlook that budgeted costs are already required to have regard to both reasonableness and proportionality. The aims of cost budgeting include a reduction in detailed assessment and of the issues raised in points of dispute and that the element of certainty to clients would be removed.

Furthermore, the court noted the requirement that a cost budget has to be signed and certified as being a fair and accurate estimate of the costs which it would be reasonable and proportionate for the client to receive. Any revision of those budgets has to be filed and approved where the estimates change. The judge who is being asked to approve a budget at a Costs Management Hearing must take into account considerations of both reasonableness and of proportionality.

The court did not consider there was any ambiguity in the words of CPR 3.18(b). It did not mean that a receiving party may only seek to recover more than the approved or agreed budget if good reason is shown whereas a paying party would seek to pay less than the approved or agreed budget without a good reason being required. There is no sense of fairness in that. Both the prospective paying party and the prospective receiving party need to know where they stand in relation to costs at an early stage of the litigation.

Had the intention of the rule been that a good reason is only required in the instances where the sum claimed exceeds the approved budgets then no doubt the rule could have easily and explicitly had said so. In any event, the rules provide elsewhere for costs capping cases.

The natural and ordinary meaning of CPR 3.18 is wholly consistent with the purposes behind and importance attributed to costs budgeting and costs management orders.

The court went on to identify further weaknesses in counsel for the claimant’s argument. Counsel submitted that unless the rules were interpreted as he had argued, a Case Management Order approving a budget would operate in effect to replace detailed assessment. That clearly cannot be correct. The effect of a CMO effects how the detailed assessment is conducted. Where there is a proposed departure from a cost budget, be it upwards or downwards, the court on a detailed assessment has the power to sanction a departure from the budget if it is satisfied that there is a good reason for doing so. That qualification is a significant fetter on the court’s discretion. Costs judges should not be expected to adopt a lax or overindulgent approach to the need to find a good reason. To do so would subvert one of the principle purposes of costs budgeting and the overriding objective.

The existence of the “good reason” provision provides a valuable and important safeguard in order to prevent a real risk of injustice. What will constitute a “good reason” in any given case will depend upon the circumstances and if the court decides that it was not sensible to give guidance or examples. The matter can safely be left to the individual assessment by costs judges.

CPR 3.18(b) relates to a departure from “the approved or agreed budget” however, the costs incurred before the date of the budget were never agreed nor were they ever approved by the CMO. The focus of a judge making a CMO is on estimating costs reasonably and proportionately to be incurred in the future. In carrying out this task, the court may have regard to costs already incurred and that may, in turn, impact on the assessment of what may be reasonable and proportionate for the future. However, paragraph 7.4 of Practice Direction 3E is quite specific. As part of the Cost Management process, the court may not approve costs incurred before the date of a Costs Management Conference. It can record in the CMO its comments on incurred costs (if any) and those can then be taken into account when considering reasonableness and proportionally. (See CPR 3.15(4) and CPR 3.18(c))

The court confirmed that incurred costs are not within the ambit of CPR 3.18 at all and that such incurred costs are subject to detailed assessment in the usual way without any added requirement of a “good reason” for departure from the approved budget.

Despite counsel for the claimant submitting a somewhat subtle argument saying that the incurred costs will have acquired a special status because they are considered when the court looks at each phase of the budget and takes into account incurred costs when assessing reasonableness and proportionality of future costs. This did not seek favour with the court. Incurred costs are either within the ambit of CPR 3.18(b) or they are not and the court concluded that as they are not approved budgeted costs then they are not within that sub-rule.

Furthermore, the judge conducting the Costs Management hearing is entitled, but not obliged, to record comments on incurred costs which, if made, will be taken into account when considering reasonableness and proportionality.

A costs judge on detailed assessment will be assessing incurred costs in the usual way and will also be considering budgeted costs, and not departing from those costs in the absence of a good reason, so the costs judge will be looking at matters in the round and consider whether the resulting total figure is proportionate, having regard to CPR 44.3(2)(a) and (5).

The rules and Practice Direction clearly distinguish between incurred costs and estimated budgeted costs and it is important to keep that distinction. It is only the budgeted costs which are subject to variation for good reason.

Comment

This case along with Merrix will hopefully put to bed the argument about when a Costs Budget can be varied whether up or down and help practitioners understand what is “a good reason”.

We have seen cases since this decision involving hourly rates but this decision is very important in understanding when and how a Costs Budget can be varied on assessment.

Lord Justice Jackson’s recent report on the Extension of Fixed Costs makes numerous references to the costs budgeting process and the general view that after a difficult start it is now working well and that decisions such as this will assist in the development of the costs budgeting process until such time as fixed costs enter the picture.

 

See Also:

HOURLY RATES IN BUDGET CAN BE CUT ON ASSESSMENT

HOURLY RATES IN BUDGET CAN BE CUT ON ASSESSMENT, OR CAN THEY?

Written by kerryunderwood

August 30, 2017 at 8:40 am

Posted in Uncategorized

EXCURSIONS UNDER CONSUMER CONTRACTS REGULATIONS

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I deal with this matter at length in my book Personal Injury Small Claims, Portals and Fixed Costs running to 1,300 pages and three volumes, available for £80.00 including P&P from Amazon here or me here.

You can now book onto my Fixed Costs Autumn Tour – here

In Kupeli and others v Atlasjet Havacilik Anonim Sirketi [2017] EWCA Civ 1037

the Court of Appeal upheld a High Court ruling that consumers who had entered into conditional fee agreements with solicitors in a community centre had not done so “during or after an excursion organised by the trader away from business premises”.

Here the Court of Appeal considered that the committee that had initiated and organised the meeting were representing the consumers/clients and were not acting as agents for the solicitors.

Consequently the solicitors had not organised an excursion away from business premises.

This decision was under the 2008 Regulations, which have since been replaced by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

Those new regulations apply in relation to any contract made on or after 13 June 2014.

I reported the High Court decision in my post CANCELLATION OF CONTRACTS AND ADR REGULATIONS – UNIFIED.

It is important to note that the new regulations give clients/consumers protection whenever a contract is not signed on business premises.

Under the 2013 regulations the definition of an “off-premises contract” is a contract “concluded in the simultaneous physical presence of the trader and the consumer in a place which is not the business premises of the trader.

The 2013 Regulations do preserve the concept of a contract concluded during an excursion organised by the trader with the aim or effect of promoting and selling goods or services to the consumer.

Thus this decision on the actual point of excursions is only of relevance in relation to contracts still governed by the 2008 Regulations.

However the Court of Appeal confirmed that had Atlasjet been right, in what the Court of Appeal refer to as “their technical point” they would not have had to pay any costs whatsoever.

However, as an Off-Premises Contract now includes any contract included in the simultaneous physical presence of the trader and the consumer in a place which is not the business premises of the trader, I am not sure what the concept of an excursion adds.

Thus the decision reinforces the crucial importance of complying with what are now the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

Written by kerryunderwood

August 29, 2017 at 8:17 am

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BUDGET: HIGH COURT AGREES INCREASE

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In JSC Mezhdunarodniy Promyshlenniy Bank and Another v Pugachev and Others [2017] EWHC 1853 (Ch)

the Chancery Division of the High Court dealt with an application to increase the costs budget of the defendant children who were beneficiaries of a trust.

The judge had to consider that the estimate for the length of the original trial was 8.5 days but in fact it would take a total of ten days.

In addition, the estimate of additional costs on behalf of the children’s representative included preparation time along with closing arguments and additional work by the solicitors.

The total of these additional costs came to £84,000.00.

That figure caused somewhat of a surprise to the judge but bearing in mind that the cost budget for the children in defending this action was £1.8 million, then although the £84,000.00 was still a lot of money, it was not as much, in proportionate terms, as might have seemed at first glance.

The claimant submitted that the work which needed to be done should be covered by the existing budget but the judge did not agree.

He said it was clear that more work will need to be done than had been originally budgeted for and that the extra work, in particular the closing submissions, would assist the court in dealing with the proceedings.

As a result, the judge approved the increase in the children’s budget.

The judge was satisfied that the hourly rates charged by solicitors and the rates charged by counsel were reasonable and proportionate in the circumstances.

This is a relatively rare decision of an increase on a costs budget being allowed and therefore is of interest.

Also see:

LATE BUDGET AND RELIEF: NEW CASE

HOURLY RATES IN BUDGET CAN BE CUT ON ASSESSMENT, OR CAN THEY?

COSTS BUDGETING AND ASSESSMENT: RECENT CASES

Written by kerryunderwood

August 25, 2017 at 10:17 am

Posted in Uncategorized

APOCALYPTIC WARNING BY SUPREME COURT PRESIDENT

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Lord Neuberger, President of the Supreme Court, addressed the Australia Bar Association Conference in London last month.

Referring to the United Kingdom’s exit from the European Union he said:

“… left, once again to our common law devices, we will in some respects be able to react more quickly and freely to developments in our fast changing world.”

Lord Neuberger continued

“… we have a serious problem with access to justice for ordinary citizens and small and medium sized businesses,” and that in England and Wales legal assistance services are increasingly under-resourced leaving millions without adequate access to quality legal advice and assistance and that whilst there is universal agreement that more funding is needed, there is little appetite by government to make this a priority.

Lord Neuberger said that lawyers and judges could not “get away with standing on the side lines and criticising; they have a heavy duty to do all they can to support and improve access to justice for ordinary citizens and small businesses.”

He also criticised the UK government’s “somewhat parsimonious funding of BAILII, which provides extraordinary value for money.” While praising the legislation.gov.uk website for ensuring that new statutes are available reasonably quickly he said that “the updating service to deal with amendments and repeals is little short of lamentable with amendments and repeals sometimes not being recorded more than six years after the event. It should not cost much for the UK government to ensure that its legislation website is kept up to date, so that current legislation is freely available to everyone.”

Lord Neuberger said that access to legal advice and representation is “of course a fundamental ingredient of the rule of law, and the rule of law together with democracy is one of the two principal columns on which a civilised modern society is based.

It is simply wrong, and fundamentally wrong at that, if ordinary citizens and businesses are unable to obtain competent legal advice as to their legal rights and obligations, and competent legal representation to enforce those rights and test those obligations in court. Obtaining advice and representation does not merely mean that competent lawyers exist; it also must mean that their advice and representation are sensibly affordable to ordinary people and businesses: access to justice is a practical, not a hypothetical, requirement. And if it does not exist, society will eventually start to fragment. That is not merely a fragmentation in the sense of the gulf between rich and poor, which leads to real frictions and difficulties if it gets too wide. It is a fragmentation which arises when people lose faith in the legal system; they then lose faith in the rule of law, and that really does undermine society. The sad truth is that in countries with a long peaceful and democratic history such as the UK (and, I suspect, Australia), we face the serious risk that the rule of law is first taken for granted, is next consequently ignored, and is then lost, and only then does everyone realise how absolutely fundamental it was to society.”

He continued:

“It verges on the hypocritical for governments to bestow rights on citizens while doing very little to ensure that those rights are enforceable. It has faint echoes of the familiar and depressing sight of repressive totalitarian regimes producing wonderful constitutions and then ignoring them.”

The President of the Supreme Court went on to say that the complexity of legislation and the growth in regulation made it harder than ever for non-lawyers to establish their rights and duties and the need for access to legal advice is thus greater than it ever was.

He said that the “flag-wavingly” named Access to Justice Act 1999, by which the then Labour Government severely restricted civil legal aid, was “frankly very hard to defend.”

He went on severely to criticise the regime of recoverability of additional liabilities introduced by the same Act.

While welcoming the repeal of those provisions in the Legal Aid, Sentencing and Punishment of Offenders Act 2012, Lord Neuberger said that “it also confirmed a severe shrinking in the type of civil law cases for which legal aid could be available and severe shrinking of legal aid in most private family law cases.”

Lord Neuberger then considered in detail the problems occasioned by litigants in person and looked at the possibility of a contingency legal aid fund.

He criticised the closing of local courts stating that while that may improve efficiency it risks removing justice from the people “or maybe it would risk removing the people from justice.”

Written by kerryunderwood

August 25, 2017 at 7:22 am

Posted in Uncategorized

LATE BUDGET AND RELIEF: NEW CASE

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By Robert Males, Managing Partner, Underwoods Solicitors

In Mott v Long (2017) EWHC 2130 (TCC) 2 August 2017

the Technology and Construction Court, part of the High Court, considered an application for relief from sanctions from a defendant who had served a cost budget 10 days late.

The Case Management Conference was listed for 2 August 2017 and pursuant to CPR 3.13 costs budgets were due to be filed no later than 21 days before the CMC.

The claimant’s solicitors served their client’s cost budget on 11 July 2017 and the covering letter confirmed that the claimant’s solicitor awaited receipt of the defendant’s budget which was due that day.

A week later on 18 July 2017, no cost budget had been filed by the defendant and the claimant’s solicitor wrote to the defendant’s solicitor explaining that they believed an application for relief from sanctions would be required if the defendants were to provide a cost budget late.

The defendant’s solicitors said that the budget had been sent on 11 July and that a copy would be sent the following day. However, no such cost budget had been received by the claimant’s solicitors nor by the court.

It then transpired that a cost budget had been drafted by the defendant on 6 July but it was not clear as to when, if at all, that budget had been served on the claimant’s solicitors or filed at court.

The defendant’s solicitor confirmed that she had started to draft the cost budget on 6 July but stated that she had experienced IT difficulties around this time which included problems with saving word documents and printing those documents.

She believed that the cost budget had been saved and printed correctly.

However, upon review, she realized that the claimant’s solicitors had not received the cost budget.

On receipt of the claimant’s email of 20 July, the defendant’s solicitor appreciated that there was likely to have been an error and therefore on 21 July she filed a correct version of the cost budget.

The court considered Denton v TH White Ltd [2014] EWCA Civ 906, and whether the breach was a trivial or minor breach.

The defendant submitted that this was a minor delay which had no material effect on the proceedings, and nor had it prejudiced the claimant in any material way.

The judge considered that the court should consider both the seriousness and significance of the breach of which relief from sanctions is sought, as per Denton.

The claimant’s position was that there was a prejudice suffered as a result of the delay of 10 days in filing the cost budget.

The purpose of exchanging 21 days in advance of the CMC is to allow parties sufficient time to consider those budgets and discuss them in time to file budget discussion reports which are due 7 days before the CMC.

The failure by the defendant to serve a cost budget in time meant there was very little time for consideration of the budgets and to produce a budget discussion report.

This, in turn, would have a significant impact on the preparation for the CMC and for discussion and potential agreement of budgets.

It would be more acute in this case because of the different approaches to the parties in relation to the issue of expert evidence which then impacted upon the length of trial.

The claimant’s submitted that the breach was both serious and significant and referred to the case of Lakhani v Mahmud and Others (2017) EWHC 1713 CH where the court refused an application for relief from sanctions in circumstances where a cost budget had been served one day late on 20 December 2016.

However, the defendant’s solicitor who had served the budget late knew that their office would be shut between 23 December 2016 and 3 January 2017, therefore limiting the time available for the agreement of costs to just a couple of days before Christmas and a few days in the new year. The court rejected an argument that it did not matter that the budgets were not agreed anyway.

In Lakhani, the court referred to a decision of the Court of Appeal in Clearway Drainage Systems Ltd v Miles Smith Ltd (2016) EWCA Civ 1258 including the following passage:-

“Denton made clear that the focus of the enquiry at the first stage should be on whether the breach was serious or significant. The court expressly rejected the notion that the sole test was whether a future hearing date was imperiled. It emphasized that, although there are many circumstances in which materiality in that sense would be the most useful measure of whether a breach has been serious or significant, it is deficient in leaving out of account those breaches which are incapable of affecting the efficient progress of the litigation, although they are serious.”

Thus there may be a breach which, on the face of it does not imperil the litigation, but may none the less affect the progress of that litigation.

The court in Lakhani had to evaluate the seriousness of a breach where a deadline is missed and held as follows:

“In considering the amount of time lost by failure to meet a deadline, it is legitimate for a court to take into account of the effective amount of time available and how much of that was lost as a result. Moreover, the amount of time lost can be more significant where a task involves a degree of cooperation, such as attempting to agree a matter, rather than the unilateral performance of an act, such as the service of witness statements, which does not involve coordination with an opposing party of availability to discuss matters or exchange correspondence.”

The judge went on as follows:

“While the impact on the ability to perform the task required by the order is very important and may be decisive in many cases, the authorities do not suggest that it is the overriding factor in every case. In my judgment, in evaluating the seriousness of breach, a court is entitled to consider the risk of difficulty that the failure to meet a deadline has created even if, in the event, it has been possible to perform the task required, notwithstanding the breach. That is particularly legitimate in the case orders whose performance requires a degree of cooperation because, in such cases, even though it may be possible for the non-defaulting party still to do what is required as well, it may make it more inconvenient and costly, since extra time may need to be made available…”

Here the court held that the filing of a cost budget 10 days late is not a modest order of time such as a few hours or even one or two days late.

The degree of lateness in every case is to be construed in the context of the particular circumstances of the case. Serving a cost budget late has the capacity to prejudice the process of cooperation cost budgeting, which the rules are designed to achieve.

In these circumstances, the delay in this case is serious or significant with a particular emphasis on the latter word.

As far as a good reason is concerned, the court concluded that the draft cost budget prepared by the defendant’s solicitor on 6 July was not saved to their IT system although it was not clear on the evidence exactly whose fault that was, whether it was an IT system error or a human error but it was noted on behalf of the claimant that should there have been IT problems, one would have expected a witness statement from someone in the IT department to explain this and no such evidence was provided.

As a result, the court determined that it was not satisfied that the defendant’s had established there was good reason for the default.

The court then turned to the third stage of the Denton criteria in considering all the circumstances of the case.

There was an important practical aspect to consider in that the first cost budget of the defendant prepared on 6 July amounted to just under £40,000.00 and the claimant’s solicitor believed that that was wholly unrealistic and artificially low and simply designed to make the claimant’s budget seem too high.

The second cost budget of the defendant was slightly higher at a figure of just over £47,000.00 and that is in contrast with the claimant’s budget in the sum of £281,000.00 in respect of which the defendant had offered a sum of £170,000.00.

The difference in these cost budgets was explained by the parties taking very different approaches to the case.

The claimant believed that the parties should be allowed to adduce expert evidence from two categories of expert whereas the defendant took the view that only one type of expert was necessary and, furthermore, a single joint expert could be instructed.

As a result of this, the claimant was estimating a four-day trial whereas the defendant a two-day trial.

It seemed to the court that in these circumstances, it is unlikely that during the discussion of cost budget an agreement would have been reached and that it is likely that a decision would have to have been made at the CMC and the court would have to decide on the cost budgets.

This would have led to revised costs budgets having been ordered to be provided at the CMC and in these circumstances, the cost budgeting process would not have been completed at the CMC.

The inability of the parties to discuss the defendant’s cost budget had to be viewed in that context.

So the court came to the overall conclusion that having regard to all the circumstances in the case, it was a case where the court should grant relief from sanctions.

A factor of considerable importance was that the parties were now in precisely the same procedural position as far as cost budgeting is concerned, had the defendant served its budget in time.

However, the court did order that the defendant was to pay the claimant’s costs of the application as a result of having to make the application for relief from sanctions.

Written by kerryunderwood

August 24, 2017 at 8:04 am

Posted in Uncategorized

HOURLY RATES IN BUDGET CAN BE CUT ON ASSESSMENT, OR CAN THEY?

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You can now book onto my Fixed Costs Autumn Tour – here

In my recent blog – HOURLY RATES IN BUDGET CAN BE CUT ON ASSESSMENT

I reported

RNB v London Borough of Newham [2017] EWHC B15 (Costs)

and concluded by saying that it was a poorly argued and illogical decision which should be treated with considerable caution as the logic of it was that an assessing court could simply avoid the Harrison and Merrix decisions altogether by cutting incurred costs and using that as a “good reason” to cut budgeted costs.

Michael Fletcher has now posted an article saying that at a detailed assessment in Birmingham on Friday 18 August 2017, District Judge Lumb, sitting as a Regional Costs Judge, expressly disagreed with the decision in RNB v London Borough of Newham.

District Judge Lumb held that to reduce hourly charging rates for budgeted costs to the same levels as those allowed for the incurred costs, thereby causing a potential departure from the budgeted phase totals, would be to second guess the Costs Managing Judge and would impute a risk of double jeopardy into the detailed assessment.

The Costs Managing Judge was not fixing hourly rates, but have had regard to them when setting a reasonable and proportionate allowance for each phase of the budget.

Without clear evidence the costs judge simply could not know what the position was.

District Judge Lumb held that the clear philosophy in guidance from the Court of Appeal in

Harrison v University Hospitals Coventry and Warwickshire Hospital NHS Trust (2017) 3 Costs LR424

and

Merrix v Heart of England Foundation NHS Trust [2017] 1 Costs LR91

was to simplify and reduce the scope of detailed assessments and the “good reason” bar was high.

Thus we now have two distinct lines of authority in relation to this issue, just as we do with the other vital costs issue of whether a Claimant gets indemnity costs on late acceptance by a Defendant of a Part 36 offer.

May we have all of these matters cleared up before next year’s October Revolution?

Written by kerryunderwood

August 23, 2017 at 10:35 am

Posted in Uncategorized

QOCS AND MIXED CLAIMS

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These issues are dealt with in my book Qualified One-Way Costs Shifting, Section 57 Set-off available for £25.00 from Amazon here or me here.

In Robert Jeffreys v The Commissioner of the Police from Metropolis

the claimant failed in a claim for compensation for false imprisonment, assault and battery, malicious prosecution and misfeasance in public office.

He also claimed that these events had exacerbated his pre-existing condition of paranoid schizophrenia and caused swelling and bruising to his wrists and he also lost this part of the claim.

A Circuit Judge at first instance disapplied Qualified One-Way Costs Shifting in relation to 70% of the costs to reflect the fact that part of the claim was a personal injury claim protected by QOCS.

The Claimant appealed to the High Court which dismissed the appeal.

The High Court held that the personal injury and non-personal injury elements were divisible and that the malfeasance claims were claims in their own right and damages could have been awarded separately on that basis had the claim succeeded.

The judge said that where there was a single non-personal injury element of a claim that was inextricably linked to the personal injury claim, then QOCS would not be disapplied.

The first instance court, and the High Court, apparently relied on CPR 44.16(2) (b) and the whole of CPR 44.16(2) reads:

“(2) Orders for costs made against the claimant may be enforced up 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); or

(b) a claim is made for the benefit of the claimant other than a claim to which this Section applies.”

The High Court Judge here said that there was no authority, and nothing in the Civil Procedure Rules or White Book guidance or Civil Justice Council reports on Qualified One-Way Costs Shifting on this point.

Comment

The court appears not to have considered CPR 44.13 which states:

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

(a) for personal injuries;”

(My bold).

Clearly this claim did include a claim for damages for personal injuries and, in my view, should therefore have attracted the protection of Qualified One-Way Costs Shifting.

Having said that it is hard to see what CPR 44.16(2)(b) means if any claim including a claim for personal injuries is protected by QOCS.

Clearly the better wording in CPR 44.13(1) would have been:

(1) This Section applied to proceedings for damages –

(a) for personal injuries; …

 

Written by kerryunderwood

August 23, 2017 at 8:31 am

Posted in Uncategorized

QUALIFIED ONE-WAY COSTS SHIFTING: CAN YOU SWITCH CFA’S TO GET PROTECTION?

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In Catalano v Espley-Tyas Development Group Ltd [2017] EWCA Civ 1132

the vexed issue of the transitional provisions in relation to Qualified One-Way Costs Shifting, and specifically the issues raised at page 132 of my book, were considered for the first time at Court of Appeal level.

All of this is dealt with in great detail in chapter 6 – Pre-Jackson Funding Arrangements – in my book Qualified Costs Shifting, Section 57 and Set-Off, £25.00 on Amazon here or me here.

The Court of Appeal has followed my reasoning.

Put simply, if prior to 1 April 2013, there was in place a Claimant Conditional Fee Agreement or collective Conditional Fee Agreement or After the Event insurance, or membership organisation indemnity, then the Claimant can never get QOCS protection.

CPR 44.17 reads:

“This section does not apply to proceedings where the claimant has entered into a pre-commencement funding arrangement (as defined in rule 48.2).”

On page 132  I say:

“By ending any relevant agreement can you disapply the disapplication and achieve retrospective QOCS protection?”

“This depends upon the meaning of “has entered into”. Clearly the better wording would have been “had entered into” or “has ever entered into”, which would have put it beyond doubt. “Has” is not tense specific. “Has my client got a CFA ?” is present tense.”

I then said that “my view is that anyone who has ever had recoverable liability does not get QOCS protection.”

The Court of Appeal has now agreed and has effectively reworded CPR 44.17 as suggested by me.

Here Ms Catalano had a pre-Jackson Conditional Fee Agreement, but After the Event insurance was declined by the insurer. She did not enjoy QOCS protection.

The inability of the Claimant to obtain After the Event insurance in this case explains a great deal.

As she did not have ATE insurance, then under a pre-Jackson funding arrangement, where QOCS does not apply, Ms Catalano would personally have had to pay the costs, and thus had a strong incentive to try and get QOCS protection, even at the price of losing recoverability of the success fee.

Had she had a recoverable ATE premium, covering her costs risk, she would have had no incentive whatsoever to cancel the pre-Jackson Conditional Fee Agreement and enter into a new one.

However these somewhat unusual facts do not affect the legal principles that are applicable.

Proceedings were issued on 26 July 2013, but on 15 July 2013, that is post-Jackson but prior to the issue of proceedings, the Claimant and her solicitors entered into a new CFA, which was said to have replaced the earlier one.

Form N251, Notice of Funding, was served on the Defendant on 20 January 2014 and explained that the case was now being funded by way of a Conditional Fee Agreement dated 15 July 2013.

It referred to the existence of the earlier Conditional Fee Agreement of 13 June 2012, but the box available for saying that that agreement had been terminated was not ticked.

This, in itself, is curious. There was no ATE insurance in place, and therefore no information to be given about that non-existent insurance.

Post-31 March 2013, in cases where there is no recoverability of a success fee, that is a post-Jackson funding arrangement, there is no requirement to serve Notice of Funding upon the Defendant as it makes no difference whatsoever to their liability for costs.

There remained an obligation to serve notice on the Defendant if the original Conditional Fee Agreement was terminated, as this would lead to the Defendant having a lower liability for costs, in that they would not be liable for the success fee, and that may affect their attitude to settling, or not settling a case.

I do not know whether the solicitors were trying to have it both ways and keep the old agreement alive while laying the ground to obtain QOCS protection, or whether they did not understand the rules.

In any event the trial was due to start on 14 January 2015, but the day before the Claimant served a Notice of Discontinuance, and under CPR 38.6, that triggers a costs liability against the discontinuing party.

Thus a Costs Order had to be made against the Claimant.

The issue was whether or not it was enforceable, or in other words whether the Claimant enjoyed QOCS protection as there was now no pre-Jackson funding arrangement in place, or whether the costs protection had been lost forever because of the one-time existence of the old, pre-Jackson Conditional Fee Agreement.

The District Judge held that Ms Catalano did not enjoy QOCS protection in the circumstances.

He considered the case of

Landau v The Big Bus Company, 31 October 2014, Senior Courts Costs Office

where Master Haworth in the Senior Courts Costs Office held that QOCS protection did not apply to appeal proceedings where a Claimant had had a pre-Jackson CFA for the original trial and a post-Jackson Conditional Fee Agreement for the appeal.

In that case there had been no attempt to manipulate the rules. The original CFA did not cover appeal proceedings and so a fresh one had to be entered into post-Jackson.

Nevertheless, the court held that there was no protection in relation to the appeal as the reference to “proceedings” in CPR 44.17 means “claim” and that the proceedings, both at first instance and on appeal, plainly concerned the same claim.

However in

Casseldine v The Diocese of Llandaff, 3 July 2015, Cardiff County Court, Claim 3YU56348

Cardiff County Court held that a Claimant enjoyed Qualified One-Way Costs Shifting, and thus protection from paying the successful Defendant’s costs in a personal injury case, even though the Claimant had entered into a pre-1 April 2013 Conditional Fee Agreement with recoverable additional liabilities.

That CFA had been terminated by the first solicitors on 30 January 2013 before proceedings were issued. The Claimant entered into another CFA on August 2013 with her new solicitors.

DJ Phillips distinguished the case from Landau v Big Bus Company Ltd [2014] SCCO on the grounds that here no proceedings had been commenced under the first CFA and as the solicitors had terminated it there was never any entitlement to any success fee or costs.

As the Claimant only issued proceedings under the second CFA, entered into post recoverability, the court was never able to order the defendant to pay additional liabilities.

The purpose of the rules was to allow QOCS protection where a defendant no longer faced an additional liability.

The key difference between this case and Landau is that here proceedings had never been issued.

That leaves open the question of what the position is where a CFA is terminated after proceedings have been issued.

There the defendant would also face no additional liability provided that the new CFA was post recoverability. There seems no reason why the issuing of proceedings should affect the central point that QOCS is allowed where a defendant does not face an additional liability.

The judge here did not have to decide that point as he could distinguish Landau. However he did say, correctly:-

“31. In my judgment the case of Landau is distinguishable and in any event even if it were not, and with the greatest of respect to Master Haworth, the decision is not binding upon me.”

That suggests that DJ Phillips would have made the same decision even if proceedings had already been issued under the original CFA.

My view is that DJ Phillips is right.

It may seem that I am contradicting myself, in that I have said that the Court of Appeal have adopted the wording that I thought the Rule Committee intended to adopt, or rather the wording which would have given intention to the will of Parliament, and yet here I say that DJ Phillips is correct.

On the actual wording of the Civil Procedure Rules, my view is that DJ Phillips is indeed arguably correct, but I believe the Court of Appeal in this case has correctly interpreted the will of Parliament.

In any event, in the current case Ms Catalano entered into a new agreement before issuing proceedings, and so the case was on all fours with Casseldine, save that in Casseldine a different firm of solicitors was instructed under the second Conditional Fee Agreement.

That seems to me to make no difference in law, although clearly in Casseldine there was no attempt to manipulate the rules as the first set of solicitors had unilaterally terminated the contract and thus gave up their right to any costs, let alone a success fee.

Here the termination was mutually agreed and Ms Catalano then continued to instruct the same set of solicitors, and presumably this was a deliberate attempt to acquire QOCS protection.

In the Catalano case the District Judge followed Landau and not Casseldine.

The appeal was leapfrogged to the Court of Appeal.

The Claimant relied on Casseldine.

The Defendant submitted that it could not have been the intention of the Rule Committee to allow a Claimant to cherry pick the advantages of both regimes by proceeding first with the benefit of an ATE premium and a success fee which will be recoverable from the Defendant and then, by adopting a new Conditional Fee Agreement, avoiding the costs consequences of losing the case.

The Court of Appeal accepted the Defendant’s submission and upheld the District Judge’s decision, and although distinguishing Casseldine on the basis that their solicitors had unilaterally terminated the retainer, said that they were doubtful as to the correctness of Casseldine, even on its own facts.

In my view that must be correct, that is that if the Court of Appeal here are right, then the Casseldine decision must be considered wrong, whereas if the court was right in Casseldine, then the Court of Appeal decision here must be wrong.

I set out the reasons for that above.

Casseldine was a first instance decision, as was Landau, and this is a Court of Appeal decision and therefore represents the law.

Nevertheless the Court of the Appeal got a little confused here, saying at paragraph 24:

“24. … A claimant could make an agreement providing for a success fee and purchase ATE insurance and wait until shortly before trial to re-assess his or her prospects. If they appeared to be high, such claimant could continue and claim the cost of the ATE premium and the success fee as costs from the defendants; if they appeared to be low, he or she could cancel the original CFA, make a second CFA and then discontinue the claim a day later and escape the costs consequences. The framers of the rules could not have intended that a claimant should be able to blow hot and cold in that way. The right construction of the rule, therefore, is to give the words “funding arrangement” their natural meaning and apply them to any pre-1st April 2013 agreement (whether terminated or not).”

That misses the point. As set out above a Claimant with ATE in place would never have any incentive to scrap an old Conditional Fee Agreement where they have full, free, costs protection under the ATE policy AND recoverability, both of the success fee and the ATE premium.

The Court of Appeal then gets even more confused at paragraphs 28 and 29:

“28. What then of the case where a CFA is made before 1st April 2013 but, before any work is done, a second CFA is made after 1st April 2013, or the case where work is done but the retainer is terminated (whether by the solicitors or the client) before 1st April 2013 and a second CFA is made by new solicitors after 1st April 2013?

  1. We would prefer to express no concluded view since this case is different from those cases. But we think the first case will be comparatively rare since almost inevitably some chargeable work will be done at about the time the first CFA is made. The second case is the Casseldine case in which DJ Phillips held that it was the solicitor who terminated the retainer and therefore had no entitlement to a success fee in any event. If, however, work had been done (which is probable) we are doubtful that Casseldine can be supported on the true construction of CPR 44.17 and CPR 48.2, unless it could be said that the second CFA retrospectively discharged and extinguished the first agreement and replaced it with the second agreement. That was contemplated as a possibility by Lord Sumption (with whom the majority of the Supreme Court agreed) in Plevin v Paragon Personal Finance Ltd [2017] 1 WLR 1249, para 13 where however the second and third CFA were held on the facts to be merely a variation of the first agreement.”

 

I think that what they are getting at is the issue of whether QOCS applies where there is no success fee payable, for whatever reason, apart from the manipulation of the process as here in Catalano.

Supposing it is a pre-Jackson funding arrangement with a nil success fee.

Is that QOCS protected or not?

This is all dealt with at pages 120 to 124 of my book, as is the issue of whether you can acquire QOCS protection by discontinuing the whole claim, and starting again, rather than switching Conditional Fee Agreements.

This decision also leaves open the possibility of the second agreement being retrospective to the date of the first agreement, so as to acquire QOCS protection in that the new agreement would not have a success fee, but to allow recovery of ordinary between the party’s base costs back to the date the original work was done, rather than the date of the new Conditional Fee Agreement.

Clearly, recoverability would be lost as even though retrospective, the new Conditional Fee Agreement would be post-Jackson and that cannot be recoverability, except in very limited circumstances which do not apply here, of a success fee in a Conditional Fee Agreement entered into on or after 1 April 2013.

I do not think that this works to gain QOCS protection.

If CPR 44.17 is read as disqualifying QOCS if there has ever been a pre-Jackson funding arrangement in place, then the retrospective discharge of that agreement does not get away from the fact that it once existed.

Retrospection cannot airbrush a pre-Jackson funding arrangement out of history.

The issue of potential retrospection in these circumstances arises out of the Supreme Court decision in Plevin v Paragon Personal Finance Ltd [2017] UKSC 23, but again this misses the point.

The Plevin case does not assist on the issue of pre-Jackson funding arrangements as, very surprisingly, the paying party had conceded that the pre-Jackson funding arrangement was capable of assignment and therefore the issue of whether there were really new post-Jackson Conditional Fee Agreements in place did not have to be decided by the Supreme Court.

Furthermore there was no issue of manipulation of the process as the solicitors acting throughout had been the same; the issue arose because of organisation changes within the same firm, with the partnership becoming a Limited Liability Partnership and then a Limited Company.

There the Supreme Court held that the second and third Conditional Fee Agreements were variations of the original one, so there was no issue of true retrospection.

The Court of Appeal recites at paragraph 19:

“Mr Jamie Carpenter for the respondents accepted that the first CFA had been terminated once the second CFA was made (because it is impossible to have two CFAs at the same time)…”.

That statement is contrary to all contractual principles, and to the views of the Court of Appeal in many other decisions, most notably the very long and well-reasoned judgment in

Forde v Birmingham City Council [2008] EWHC 90105 (Costs)] – see for example paragraph 207.

I look at the Plevin case in my blog

RECOVERABILITY OF ADDITIONAL LIABILITIES: FOUR NEW CASES: TWO SUPREME COURT CASES.

Comment

Qualified One-Way Costs Shifting is a minefield.

There are huge numbers of unanswered questions about the transitional provisions, and very much else.

What, for example, is the case where pre-Jackson funding arrangement ends post-Jackson due to the death of the Claimant, maybe a death caused by the very injuries being claimed for?

If the executor or executrix enters into a new post-Jackson CFA, then clearly there is no recoverability of the success fee or ATE premium if that new CFA is on or after 1 April 2013.

Is the executor/executrix also denied QOCS protection as there was once a pre-Jackson funding arrangement in place?

If so, the alleged tortfeasor gets a windfall – no recoverability by the Claimant and no QOCS protection for the Claimant either.

Thus the Defendant is at no risk of paying additional liabilities, but will be able to enforce its costs order if it succeeds.

In those circumstances the Defendant would be financially better off if the Claimant dies from the injuries that it inflicted.

That is why, in my book and above, I say that DJ Phillips in the Casseldine case is right.

The Court of Appeal may have to revisit its decision here as cases with similar facts, but with the same principles applying, come before it.

Unfortunately this is a rather short and confused Court of Appeal decision, possibly influenced by a very unusual set of facts.

 

I am grateful to Colin Campbell of Kain Knight for his interesting blog on the subject on Practical Law’s Dispute Resolution blog.

 

 

Written by kerryunderwood

August 22, 2017 at 9:47 am

Posted in Uncategorized

SERVICE ON INSURERS IS GOOD SERVICE ON DEFENDANT

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In Batt v English, Winchester County Court, Claim number C10YJ382

Master Davison, sitting as a Recorder, held that service on solicitors who had said that they were instructed to accept service of proceedings “on behalf of Aviva Insurance Limited” was good service on the insured, that is on Mr English, the Defendant.

This was a road traffic accident and there had been extensive correspondence with the Defendant’s solicitors, who referred throughout to their client as Mr English.

The solicitors’ argument that they were instructed only by the insurance company, and not Mr English, succeeded before the District Judge who struck out the claim.

The Recorder allowed the Claimant’s appeal and leave for a second appeal has been refused by Lord Justice Underhill.

The solicitors were instructed to accept service on behalf of the Defendant because it was exclusively in their capacity as subrogated to the defence of the claim that Aviva were acting.

I am grateful to Gordon Exall for information concerning this case.

Written by kerryunderwood

August 21, 2017 at 12:29 pm

Posted in Uncategorized

BAD NEWS FOR THIRD PARTY LITIGATION FUNDERS

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There have been two pieces of bad news for third party litigation funders recently.

On 23 May 2017 Ireland’s Supreme Court held that litigation funding is both a civil and criminal offence in Ireland.

In Persona Digital Telephony Ltd v Minister for Public Enterprise

the claimant, Persona, sought a declaration that by entering into a Litigation Funding Agreement it was not “engaging in an abuse of process and/or are not contravening rules on maintenance and champerty.”

The Supreme Court of Ireland refused to grant such an order and upheld the decision of the High Court in Ireland that third party funding is unlawful.

Thus the Supreme Court in Ireland refused to relax the rule relating to maintenance and champerty, which prevents non-parties from financing litigation.

In the absence of a change of law by the Irish Parliament, that is the end of litigation funding in Ireland.

Meanwhile, in England and Wales, the High Court considered the issue of security for costs against non-parties, here litigation funders, in the case of

the RBS Rights Issue Litigation [2017] EWHC 1217 (Ch).

The 32 page decision is a detailed explanation of the law in relation to non-party Costs Orders and third party involvement in proceedings and the distinction between commercial litigation funders and pure funders, and the fact that that is not always an easy line to draw.

The judgment also looks at factors influencing the courts’ exercise of what is a wide discretion in relation to non-party Costs Orders and security for costs by non-parties.

These include the third parties’ awareness of the risk of liability for costs, the risk of non-payment by the primary and third parties, the existence and adequacy of After the Event insurance and any delay in making an application and the closeness of the application to trial.

Here the defendants applied for security of costs pursuant to CPR 25.14(2)(b) against two third party litigation funders who were funding claimants in a case subject to a Group Litigation Order (GLO).

The applications were made on the basis that the third party funders although not substantive parties, were persons who, as funders of the claimants’ litigation costs, may be liable pursuant to section 51 of the Senior Courts Act 1981 in respect of any order against the claimants for adverse costs on the conclusion of the proceedings.

This was an action in connection with an allegedly misleading prospectus in relation to a rights issue of RBS shares.

Thus it was a not a personal injury action and was not protected by Qualified One-Way Costs Shifting.

Previously the court had refused an application that the claimants disclose any ATE policy, but had granted an application that the third party funders be identified.

42% of the claims then settled, meaning that the third party funders would receive substantial sums in relation to those settled claims.

Section 51 provides:

“(1) Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in-

(a) the civil division of the Court of Appeal;

(b) the High Court, and

(c) any county court,

shall be in the discretion of the court.

(2) Without prejudice to any general power to make rules of court, such rules may make provision for regulating matters relating to the costs of those proceedings…

(3) The court shall have full power to determine by whom and to what extent the costs are to be paid.”

Case law establishes that non-party Costs Orders are to be regarded as exceptional, but here the court said that a case with multiple claimants seeking to vindicate their rights under a GLO, and who had been accorded by the court the considerable benefit of several and not joint liability for costs, was likely to be exceptional.

CPR 25.14 allows an order for security of costs to be made against a non-party.

The High Court said:

“19.  The potential exposure of litigation funders to orders for costs against them at the end of the day does not, of course, of itself mean that an order for security for costs should be granted. At such an interlocutory stage the court must assess not only whether it is sufficiently clear that the criteria for the potential imposition of liability are fulfilled, but also whether there is a sufficient basis for interlocutory intervention. Of particular relevance in assessing whether an interlocutory order against a non-party under CPR 25.14(2)(b) to secure a contingent liability pursuant to Section 51 is appropriate and just will be

(1) whether it is sufficiently clear that the non-party is to be treated as having in effect become in all but name a real party motivated to participate by its commercial interest in the litigation;

(2) whether there is a real risk of non-payment such that security against the contingent liability should be granted;

(3) whether there is a sufficient link between the funding and the costs for which recovery is sought to make it just for an order to be made;

(4) whether a risk of liability for costs has sufficiently been brought home to the non- party, either by express warning, or by reference to what a person in its position should be taken to appreciate as to the inherent risks;

(5) whether there are factors, including for example, delay in the making of an application for security or likely adverse effects such as to tip the overall balance against making an order.

 

  1. As to (1) in paragraph [19] above, amongst the important considerations in play is as to the reasons and motivation for the funder’s involvement. In particular, the Court will seek to ascertain whether the funder has become engaged by way of business with a view to profiting from an action in which it otherwise has no interest, or whether it is what is sometimes called a “pure funder”, acting altruistically to enable access to justice and what it perceives to be a worthwhile case to be adjudicated.

 

  1. There will of course be variations within that spectrum (as indeed is illustrated by the rather different positions of the two Respondents in this case).”

In relation to Section 51 Orders the court said:

“34. Furthermore, I accept the Defendants’ analysis that (a) Section 51 orders can be made against non-parties whether or not the claimant is able to pay an adverse costs order himself/herself and (b) CPR 25.14 is ancillary to the Court’s jurisdiction to make costs orders against non-parties under Section 51. If the Court is persuaded that a Section 51 costs order is likely to be made against Hunnewell BVI and LNCP, and that there is a real risk that they may be unable or unwilling to pay, it may well be just and appropriate to make an order under CPR 25.14 to ensure that, when the time comes, there will be funds available to meet such an order.”

The court also said that the case law that an applicant for a non-party Costs Order should warn the third party as soon as possible had little relevance in relation to commercial litigation funders:

“39. However, as the exercise of the jurisdiction has become more usual, and especially with the growth of litigation funding as a business in which funders may be assumed to know their business and its inherent risks, the requirement for express warning has gradually been diluted. Thus in Deutsche Bank v Sebastian Holdings [2016] 4 WLR 17 at paragraph 32 Moore-Bick LJ stated that the importance of a warning will vary from case to case and may depend on the extent to which it would have affected the course of the proceedings.

  1. In my view, in the case of commercial litigation funders, the lack of an express warning is unlikely to be a particularly weighty consideration, still less determinative: it is not for the Court to protect a party from inherent business risks of which it should be well aware.”

Delay in making the application would be a factor, but not a determining one. Here the court quoted with approval LJ Moore-Bick in

Deutsche Bank A.G v Sebastian Holdings [2016] 4 WLR 17  that the “… only immutable principle is that the discretion must be exercised justly.”

The court rejected the third party’s submission that its income from the settled cases would enable it to meet any Costs Order in the ongoing matter.

“65. In my judgment, that evidence is insufficient for that purpose. The absence of any real evidence as to Hunnewell BVI’s financial position leaves the court with no way of knowing whether even quite substantial receipts will result in an available fund for payment of costs, or whether such proceeds will, as it were, go down the plughole for other creditors or unsuccessful ventures in an uncertain line of business. The resort to assertions of confidentiality and secrecy are too general and commonplace to carry conviction and persuade me that they are the true and predominant reasons for reticence.

  1. The impression given of deliberate reticence has not been dispelled; the inference that the real reason for such reticence is that in truth Hunnewell BVI cannot demonstrate sufficient resources to meet an order for costs, has not been displaced by the presently available evidence; and see paragraph [31] above as to the practice of ordering the provision of security for costs in such circumstances.”

The court took into account the inadequacy of the claimant’s After the Event insurance policy.

The court made an order against the professional litigation funder for security for costs.

The court said that it appreciated that this order required the professional funder to provide something similar to ATE cover without receiving a premium, but said that that was a consequence of the risks inherent in undertaking commercial funding for a substantial potential profit without ATE cover being provided.

The court declined to make an order against another third party funder, who it described as a “philanthropist”, who it likened to a pure funder who was not in the business of litigation funding generally, although apparently standing to make a profit in this case.

“120. Put another way, I do not think the evidence presently suggests that LNCP has identified and supported the litigation as a business opportunity; it has extracted a price, but it has sought to assist the parties it has funded to vindicate their rights for their own benefit in the apparent belief that without such assistance a deserving cause would founder. Its support is not, as it were, a self-interested and separate commercial adventure in which the litigation is a vehicle not so much for vindication as speculative profit. It seems to me that its primary motive and interest has been to assist the Related Claimants to obtain damages for their own benefit as compensation for wrong done to them and there is no sufficient evidence that its involvement in this case was primarily or even materially motivated by a wish to gain access to justice to profit from the process.”

 

It may be that these two decisions represent the turning of the tide in relation to third party funding.

Written by kerryunderwood

August 21, 2017 at 9:27 am

Posted in Uncategorized

CASE ROUNDUP

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COSTS ON APPLICATION BY NON-PARTY

In Dring (on behalf of Asbestos Victims Support Groups Forum (UK)) v Cape Distribution Ltd and others [2017] EWHC 2103 (QB)

the High Court ordered that an interested party’s submissions in response to a non-party’s application for access to court documents under CPR 5.4C(2) be conditional on the interested party not seeking an order for costs against the non-party.

Dring applied on behalf of the Asbestos Victims Support Groups Forum (UK)  for the supply of certain court documents in and Cape Distribution Limited sought to make representations.

Dring argued that the Forum, made up of not for profit charities, would be deterred from pursuing the application if there was a risk that it had to pay Cape’s costs.

Dring also argued that the application was not made against Cape, but rather to the court, and therefore Cape should have no entitlement to a costs.

Cape argued that Dring was effectively seeking a Protective Costs Order, which was confined to public law proceedings and therefore not permitted in a case such as this – see Eweida v British Airways plc [2009] EWCA Civ 1025.

Here the Master held that the court had power under CPR 3.1(2)(m), and a broad discretion under Section 51 of the Senior Courts Act 1981, and under the overriding objective, to impose conditions on interested parties – see Baker v Quantum Clothing Group Ltd [2008] EWCA Civ 823.

Thus the issue was not whether or not she need make a Protective Costs Order.

In this case it was appropriate to impose a condition on Cape under CPR 3.1(2)(m) that the application should proceed on the basis that Cape would not seek a Costs Order against Dring and this would prevent injustice and the risk of due process being stifled by the risk of a Costs Order.

 

REDRAFTING COSTS BILLS IN DETAILED ASSESSMENT

In Austin v East Sussex Fire and Rescue Service (unreported), 8 August 2017, (Senior Courts Costs Office)

the Senior Courts Costs Office held that although there was no specific provision in the Civil Procedure Rules, the court had jurisdiction to order an amendment of a Bill of Costs in a detailed assessment, although here the Costs Judge declined to do so.

The court held that it had power to require a party to serve an amended Bill of Costs, either to omit costs which that party could not be entitled to, or to identify the basis on which costs were claimed and this power should be exercised if, otherwise, there could not be a fair detailed assessment hearing.

The court compared the decision with its powers to strike out a statement of case under CPR 3.4 and to require a party to provide further information under CPR 18.1.

Hear the proceedings had been consolidated with other claims against different Defendants and the Defendant sought an order that the claimant redraft the bill to distinguish between specific and non-specific common costs, and to indicate the division of specific common costs.

The court held that this would be disproportionate and that the bill as drafted would not adversely affect the detailed assessment hearing, as these arguments could be raised there.

If the hearing was lengthened due to a misdescription in the Bill of Costs, or a failure to divide specific common costs, then the court could make a Costs Order in the detailed assessment proceedings to reflect that fact.

The court also gave a reminder as to the guidance concerning the two categories of common costs.

Non-specific common costs are costs which would have been incurred anyway, whereas specific costs are those which are, in principle, capable of identification and division.

Detailed guidance is contained in Haynes v Department for Business, Innovation and Skills [2014] EWHC 643 (QB).

This case also looked at the law relating to commencement of detailed assessments and this is dealt with in my post COSTS BUDGETING AND ASSESSMENT: RECENT CASES.

I am grateful to Temple Garden Chambers for making this judgment available.

 

APPEALS FROM DJ CONDUCTING CIRCUIT JUDGE WORK GO TO HIGH COURT

In Topping v Ralph Trustees Ltd [2017] EWHC 1954 (QB) (19 July 2017)

a High Court Judge set aside an order of another High Court Judge in relation to the correct route of appeal from a District Judge conducting Circuit Judge work.

The first judge had held that the appeal was to a Circuit Judge in the County Court, as is normal for an appeal against a District Judge’s decision.

That decision has been overturned with the court holding that when a District Judge is conducting Circuit Judge work, then appeal is direct to the High Court, as it would have been had it been a Circuit Judge hearing the case.

Here, due to the unavailability of a Circuit Judge, the designated civil charge released the case to be heard in Milton Keynes County Court by a District Judge.

The Claimant, successfully arguing that the correct route of appeal was directed to the High Court, relied in part of Practice Direction 2B.16, which provides that the appeal against any decision by a District Judge in proceedings which should have been allocated to a Circuit Judge, will be determined as if that decision had been made by a Circuit Judge.

Table 1 of Practice Direction 52A.3.4 provides that County Court decisions by a Circuit Judge should be appealed to the High Court and the definition of a Circuit Judge includes a District Judge exercising the jurisdiction of a Circuit Judge with the permission of the designated Civil Judge, which was exactly the position here.

The second judge found that that point was “manifestly correct”.

A case heard at Circuit Judge level goes direct to the High Court in the event of an appeal.

Communicating with the Court

In the same case the High Court Judge criticized the Defendant’s solicitor for corresponding with the court without copying in the Claimant’s solicitors.

The judge restated what he described as the “elementary rule” as set out in

Mohamed v Secretary of State for Foreign Commonwealth Affairs (No 2) [2010] EWCA Civ 158

that none of the parties to civil litigation may communicate with the court without simultaneously alerting the other parties to that fact.

The appeal regime changed on 3 October 2016, and from that date appeals from the Circuit Judges in the County Courts ceased to lie to the Court of Appeal and instead now have to be brought in the High Court.

The judge said:

“It is improper to communicate privately with the court, without informing the other side. It is a denial of open justice too often overlooked by courts and tribunals as well as parties. It ignores elementary fairness as well as professional curtesy.”

Here, the Defendant’s solicitors, Kennedys had not only written to the court without copying in the Claimant’s solicitors, but had failed to draw the court’s attention to the provisions of Practice Direction 52A, even though they were under a duty, as officers of the court, to refer the court to all relevant provisions.

Here, the court said that had Kennedys’ letter, which failed to draw the court’s attention to relevant legal provisions, been copied to the Claimant’s solicitors, then it is likely that those solicitors would have drawn the court’s attention to the relevant provision, in the way that Kennedys failed so to do.

FAILURE TO MEDIATE

In Thakkar v Patel [2017] EWCA Civ 117

the Court of Appeal ordered that silence in the face of an invitation to participate in alternative dispute resolution is generally unreasonable:

“In my judgment, the time has now come for this court firmly to endorse the advice given in para 11.56 of the ADR Handbook, that silence in the face of an invitation to participate in ADR is, as a general rule, of itself unreasonable, regardless whether an outright refusal, or a refusal to engage in the type of ADR requested, or to do so at the time requested, might have been justified by the identification of reasonable grounds.”

“The message which this court sent out in PGF II [PGF II SA V OMFSA Company Limited [2014] 1WLR 1386] was that to remain silent in the face of an offer to mediate is, absent exceptional circumstances, unreasonable conduct meriting a costs sanction, even in cases where mediation is unlikely to succeed. The message which the court sends out in this case is that in a case where bilateral negotiations fail but mediation is obviously appropriate, it behoves both parties to get on with it. If one party frustrates the process by delaying and dragging its feet for no good reason, that will merit a costs sanction. In the present case, the costs sanction was severe, but not so severe that this court should intervene.”

Written by kerryunderwood

August 18, 2017 at 10:44 am

Posted in Uncategorized

COSTS BUDGETING AND ASSESSMENT: RECENT CASES

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COSTS BUDGETING – PRECEDENT H AND THE BILL OF COSTS

By Robert Males, Managing Partner, Underwoods Solicitors

In Woodburn v Thomas (Costs Budgeting) (2017) EWHC B16 (Costs)

Master McCloud dealt with the relationship of costs budgeting in Precedent H and the subsequent Bill of Costs.

The Master considered the interplay between the provisions of PD 3E paragraphs D 7.2 to D 7.3 and the provisions of the Guidance Note on Precedent H which is annexed PD 3E and how that impacts upon the management of detailed assessment.

PD 3E states that parties must follow the Precedent H Guidance Note in all respects and is clear in its meaning that the guidance must be followed.

That Guidance Note provides:

“This table identifies where within the budget form the various items of work, in so far as they are required by the circumstances of your case, should be included.”

This could lead to some alternatives within the Precedent H as to where a particular piece of work may be placed in the form or it could be interpreted that it simply means that if an item of work is not required in the case it can be omitted from the Precedent H.

However the Master did not decide that particular issue although he inclined towards the narrower view.

In the Guidance Notes for the CMC phase of the Costs Budget the following items must be included within the budget for that phase:

  • Reviewing opponent’s budget;

 

  • Correspondence with opponent to agree budgets where possible.

 

The following must be excluded from the CMC phase:

  • Preparation of costs budget for the first CMC.

 

Guidance in relation to the PTR phase states the following must be included:

  • Preparation of updated costs budgets and reviewing opponent’s budget;

 

  • Correspondence with opponent to agree … costs budgets, if possible.

 

By following the guidance the budget will include in the CMC (or PTR) phases some of the items which are identified above and which relate to the costs budgeting process and the agreement of costs budgets. Those parts of the budgeting costs will themselves be budgeted as part of that phase.

PD 3E paragraph 7.2 states as follows

“Save in exceptional circumstances – (a) the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000.00 or 1% of the approved or agreed budget; and

(b) All other recoverable costs of the budgeting and costs management process shall not exceed 2% of the approved or agreed budget.”

In the costs budget phase for the CMC the assumptions made were as follows:

  • Work to date – instructing costs draftsman to prepare a costs budget;

 

  • Reviewing budget and liaising with costs draftsman;

 

  • Attempting to agree budget;

 

  • Reviewing Defendant’s budget;

 

  • Preparing for further CMC and updating and revising costs budget.

 

The assumptions for the PTR phase were as follows:

  • Liaising with costs draftsman in order to update budget;

 

  • Reviewing opponent’s budget and corresponding with opponents to agree budgets.

The matter was subsequently settled and came before the Master for detailed assessment.

The Bill of Costs was drafted in the new format which specified the costs on a phase by phase basis matching those on the Precedent H.

The bill set out in the CMC phase of the bill included all the CMC costs which did not relate to costs budgeting.

The bill provided a separate “non-phase” part of the bill which related to costs budgeting and costs management issues and this set out the costs of drafting the Precedent H under PD 3E 7.2 (a) and the costs budgeting which did not fall within the scope of that arguably fell within the 2% cap under PD 3E 7.2 (b).

Therefore in the bill as drafted the CMC phase excluded some items of costs which related to budgeting but which were required by the guidance to be included and were included in the Precedent H and formed part of the budgeted costs for that phase. Instead the costs budgeting and costs management issues were all grouped together in the non-phase part of the bill.

An objection was raised by the paying party that the non-phase costs which were included in the costs budgeting part of the bill were costs which had actually been budgeted in the CMC phase of the Precedent H and therefore should have appeared in that part of the bill rather than moved out of that part.

This was relevant because the costs claimed in the CMC part of the bill had been budgeted and were already in excess of the budgeted sum allowed for the CMC phase.

By including the relevant parts of the budgeting costs in the CMC phase this was consistent with the Precedent H guidance and would mean that the total phase of the bill exceeded the budgeted total for that phase by a greater margin.

The receiving party contended that they were correct to have separated out the costs of costs budgeting and that the costs for every item appeared once and once only in the bill and were not duplicated.

The Master recognized the tension between PD3E to follow the Precedent H guidance and the guidance of the Senior Costs Judge in relation to the need to spell out in the Bill of Costs those costs which are claimed as being within the 1% or 2% caps on budgeting costs.

The Master’s approach was that the assumptions in the Precedent H are the starting point as that is evidence of the costs budgeting decision and included in the CMC phase and the PTR phase are those costs referable to budgeting and costs management, as the guidance require.

The lawyer drafting the Precedent H must follow the guidance and consider that where a budget is approved or agreed then the assumptions on which that budget is approved or agreed are the best guide as to how the budgeting costs should be treated in the bill.

Ensuring that the bill phases include the costs which were budgeted in the Precedent H phases could avoid this confusion as to the costs included in the “non-phase” part of the bill.

The Master therefore directed that those items in the non-phase part of the bill which came within the assumptions for the CMC and PTR should be treated as if they were in that phase of the bill and that all other costs of costs budgeting and costs management remain the non-phase part of the bill and be subject to the appropriate cap.

The Master accepted that that approach was not ideal.

On the one hand it ensures that the CMC budget phase matches exactly the CMC phase in the bill but has the effect of dividing the costs budgeting costs into two parts.

Separating those costs in that way can cause difficulty in the application of the 2% cap on budgeting costs.

The Master commented that it may be helpful for the rules committee to consider amendment to the guidance for Precedent H such that any costs referable to costs budgeting and costs management are not to be included in the Precedent H other than for the purposes of the 1% and 2% caps on budgeting costs.

That would mean that the costs budgeting and costs management costs would be spelled out in one clear part of the bill to which the relevant percentage cap can then be applied.

 

COSTS BUDGETING – RECOVERY OF REASONABLE AND PROPORTIONATE COSTS

In Napp Pharmaceutical Holdings Limited v Dr Reddy’s Laboratories (UK) Ltd and Others (2017) EWHC 1433 (PAT)

Mr Justice Birss considered the issue as to whether reasonable and proportionate costs may be recovered where there is a Costs Budget in place.

This was a very substantial claim of £100 million involving an undertaking given by the Claimant when it had obtained an injunction.

The Claimant was ultimately unsuccessful and had to pay damages in accordance with the undertaking.

Among other things the court had to consider whether costs budgeting should be ordered and whether costs budgeting prevented the recovery of reasonable costs.

The Respondent submitted that although the case fell outside the provision of CPR 3.12, which excludes costs budgeting for cases with a value over £10 million, it should however be ordered in this case.

The Claimant submitted that there was no presumption for or against budgeting either way just because the claim was outside the costs budgeting regime on the ground of its value.

The judge agreed that costs budgeting is generally a good idea and can be a useful management tool.

This was a substantial case with a likelihood that the claiming party was litigating at the expense of the paying party and in a situation where the litigating party may not have to bear those costs themselves there is a good reason for costs budgeting to be applied in order to constrain the party incurring those costs.

The Claimants failed to give any good reason why costs budgeting should not be imposed other than the fact that the value of the claim exceeded £10 million.

Counsel submitted that the detailed assessment process was a sufficient safeguard in respect of the recovery of reasonable and proportionate costs and suggested that costs budgeting can prevent the recovery of reasonable and proportionate costs particularly in cases of complexity.

The judge rejected the Claimant’s submission that costs budgeting creates a problem whereby reasonable and proportionate costs may not be recovered. Budgets are often altered during the course of proceedings in order to accommodate unexpected situations.

Just because the value of the claim was substantial was no bar against Costs Budgets being provided by the parties and managed by the court.

The normal situation would be that costs budgeting would be dealt with after pleadings had closed when the issues in the case would become clear.

The judge was not satisfied that costs budgeting in this case was required at an earlier stage but after pleadings had closed the parties shall exchange statements as to the incurred costs at each stage and estimates of future costs.

At that stage an evaluation can take place of the costs and costs budgeting can be reviewed at a subsequent Case Management Conference.

The court did not order costs budgeting but left open the possibility that it could be ordered at a subsequent CMC but made it clear that having a Costs Budget was no bar to recovery of reasonable and proportionate costs.

NOTICE OF COMMENCEMENT OF COSTS – WHEN TO START

In Austin v East Sussex Fire and Rescue Service (8 August 2017)

Master Gordon-Saker refused to order that a Bill of Costs be redrafted to identify common costs and non- specific common costs on the ground that it would be disproportionate.

The judgment goes on to deal with the issue of when to serve a Notice of Commencement of costs.

The Claimant had obtained a judgment against the First Defendant by default.

He then succeeded against the Second Defendant after a trial on liability at which trial an order was made that the Second Defendant pay an interim amount on account of costs but no order was made for costs to be assessed.

The Second Defendant had previously made a Part 36 offer to settle the claim for £25,000.00. That was on 22 December 2014 and the Claimant did not accept that offer until 3 July 2015.

In the meantime on 19 March 2015 the Claimant had served Notice of Commencement of a Bill of Costs in the sum of approximately £720,000.00.

That was premature because the claim had not at that point been concluded and there was no order for detailed assessment.

After the late acceptance of the Part 36 offer the Claimant served a further Notice of Commencement with a bill totalling approximately £755,000.00 on 15 September 2015.

Once again that was premature as the late acceptance of a Part 36 offer does not trigger an order for costs.

The matter then came before the court on 17 June 2016 where an order was made that the Second Defendant pay the Claimant’s costs of the proceedings up to 12 January 2015 with such costs to be assessed if not agreed on the standard basis.

Those costs were against the Second Defendant only and that after 13 January 2015 the Claimant was ordered to pay the Second Defendant’s costs.

There was a further order that the Second Defendant pay the Claimant a sum of £150,000.00 on account of costs.

Following that order a third Notice of Commencement was served by the Claimant on 9 January 2017 for a sum just short of £800,000.00.

It should always be remembered that before commencement of assessment proceedings by way of a Notice of Commencement there must be an order that the paying party pay costs of the receiving party.

That order may be ordered by the court, whether by consent or otherwise, or otherwise be provided for by the rules such as an acceptance of a Part 36 offer within 21 days.

If there is no such authority then the Notice of Commencement will be invalid.

Written by kerryunderwood

August 17, 2017 at 7:58 am

Posted in Uncategorized

LEGAL SERVICES CONSUMER PANEL: A DISGRACE

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This organisation has form – see my blog LEGAL SERVICES CONSUMER PANEL: A BLOT ON THE LANDSCAPE.

I said there that this useless, parasitic, publicly funded body should be scrapped overnight.

It was not, and it is still undermining British society and the rule of law.

Its own survey, published 18 July 2017, showed four out of five clients were satisfied with the services from their lawyers and 83% were satisfied with the advice received, a key finding that it omitted from its press release, sent when the link to the full report, containing those findings, was broken.

Obviously these matters were not linked, if you pardon the pun.

Those findings match exactly those of YouGov research one year ago.

Trust in lawyers was up, as was the percentage saying that their legal matter was explained clearly.

And so it goes on.

All good news, you would think.

No. Clients still rely too heavily on reputation and just 27% shop around only 2% use comparison websites.

That may be because comparison websites are wholly discredited jokes used by no decent organisations and just 2% of people.

That tells its own story. 98% of the population, virtually all of whom have access to the internet and can hardly fail to know about comparison websites, do not use them, just like you and I never do.

Take that statement about relying too heavily on reputation.

Is not that the very best reason to choose a lawyer, plumber, supplier etc.?

How can anyone with half a brain think that a manipulated comparison website is more valuable than a friend, relative or colleague personally recommending someone?

The press release could have said:

  1. People are very satisfied with lawyers;

 

  1. it is terrible that these people, very satisfied with their lawyers, are not complaining about the lawyers that they are very satisfied with;

 

  1. even though those people are very satisfied with their lawyers, and not complaining about them, they should shop around and use comparison websites, presumably to try and find a bad lawyer;

 

  1. we are shouting and screaming about a non-existent problem because once everyone realise that there is not a problem, they will also realise that we are a waste of space.

Very obviously, inaccurate and false attacks on a profession charged with upholding the rule of law is an attack on society itself.

As the great President of the Supreme Court, Lord Neuberger, said:

“Without lawyers, judges and courts, there is no access to justice and therefore no rule of law, and without the rule of law, society collapses.”

These worthless idiots are entitled to their opinion and entitled to express it in a society kept free by the judges and lawyers that they detest, but they should not be able to do so at the tax payer’s expense.

Written by kerryunderwood

August 16, 2017 at 10:05 am

Posted in Uncategorized

SOLICITOR AND OWN CLIENT ASSESSMENTS: TWO NEW CASES

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You can now book onto my Fixed Costs Autumn Tour – here

This subject is dealt with in great detail in my 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

In Breyer Group Plc and Others v Prospect Law Limited, Unreported, Senior Courts Costs Office, 26 July 2017

Master Rowley considered various matters in relation to solicitor and own client costs, which are governed by the Solicitors Act 1974 and CPR 46.9.

Here the solicitors charged each unit as 10 minutes, and thus charged one sixth of the hourly rate, as compared with the almost universal practice of charging a unit as six minutes, that is one tenth of the hourly rate as per Practice Direction 47, paragraph 5.22.

The court held that this was an unusual charge and therefore not recoverable from the client and all ten minute units were reduced to six minutes.

Incoming communications should be charged at half of that rate, which is one twentieth of an hour each.

Invoicing and credit control are administrative matters to be included within a solicitor’s overheads, are not subject to a separate charge.

Where there is an unusual charge, the solicitor must specifically point to the unusual aspect and give specific advice upon it.

A general warning does not protect the solicitor.

Subject to these points, generally solicitor and client are free to agree whatever they want.

In a Solicitors Act 1974 assessment, a client generally has to achieve a saving of 20% or more on the solicitor’s bill for it to count as a win for costs purposes.

In other words, if the reduction is less than 20%, the client pays both sides’ costs, and if it is 20% or more, then the solicitor pays the costs.

What if a solicitor delivers a bill for “£100,000.00, but say £70,000.00”?

Does the client have to get a 20% reduction off of the £70,000.00, or off of the £100,000.00?

In other words, in that scenario, does a reduction to, say, £60,000.00 amount to a 40% reduction from the £100,000.00 figure, or a 14.29% reduction from the £70,000.00 figure?

Here, the court held that the lower figure is the relevant one as solicitors should not be discouraged from discounting bills in the hope of avoiding a Solicitors Act Assessment.

In Herbert v HH Law Ltd, Sheffield District Registry, 28 April 2017, Claim Number C905E097,

District Judge Bellamy held that a 100% success fee in a road traffic accident portal matter “could easily be said to be unusual both in nature and amount given the circumstances of the claim that were known to the solicitors at the time.”

The decision is all over the place, with the district judge holding that such an arrangement was “unusual” but “almost common practice.”

Well it cannot be both can it?

He also notes, with approval, the comments of District Judge Lumb in

A and Another v Royal Mail Group [2015] EW Misc B24

in spite of the wholesale rejection of those very remarks by the Court of Appeal in

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

It is a curious judgment to put it mildly.

However, a key points was that there had apparently been no face to face meeting with the client and little contact and it was a referred matter, which allowed the judge to find that there was no clear evidence that the claimant had approved either expressly or impliedly, the costs to be incurred, and the fact that those costs would not be recoverable.

This is similar to the line taken by the Senior Courts Costs Office in

Vilvarajah v West London Law Ltd, 19 May 2017, Case Number AGS/1603489, Unreported,

which I deal with in my post – Hourly Rates in Retainers.

In that case the judge was also critical of the lack of explanation given to the client in relation to the Conditional Fee Agreement 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.

There the judge said that 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.

Comment

Clear wording and clear explanation and seeing the client is now essential to avoid a Solicitors Act 1974 challenge in an matter conducted under a Conditional Fee Agreement, and arguably in any matter at all.

The key rule here is CPR 46.9 (2) to (4) which reads:

“(2) Section 74(3) of the Solicitors Act 19746 applies unless the solicitor and client have entered into a written agreement which expressly permits payment to the solicitor of an amount of costs greater than that which the client could have recovered from another party to the proceedings.

(3) Subject to paragraph (2), costs are to be assessed on the indemnity basis but are to be presumed –

(a) to have been reasonably incurred if they were incurred with the express or implied approval of the client;

(b) to be reasonable in amount if their amount was expressly or impliedly approved by the client;

(c) to have been unreasonably incurred if –

  • they are of an unusual nature or amount; and
  • the solicitor did not tell the client that as a result the costs might not be recovered from the other party.

(4) Where the court is considering a percentage increase on the application of the client, the court will have regard to all the relevant factors as they reasonably appeared to the solicitor or counsel when the conditional fee agreement was entered into or varied.”

The Practice Direction – PD46,

6.1 reads:

“6.1 A client and solicitor may agree whatever terms they consider appropriate about the payment of the solicitor’s charges. If however, the costs are of an unusual nature, either in amount or the type of costs incurred, those costs will be presumed to have been unreasonably incurred unless the solicitor satisfies the courts that the client was informed that they were unusual and that they might not be allowed on an assessment of costs between the parties. That information must have been given to the client before the costs were incurred.”

I provide details advice, and model wording for agreements of all client, not just personal injury, in my book Personal Injury Small Claims, Portals and Fixed Costs, running to 1300 pages in three volumes and available from me here or Amazon here for £80.00 including P&P.

Written by kerryunderwood

August 15, 2017 at 10:56 am

Posted in Uncategorized

JUDICIAL REVIEW AND FIXED COSTS: POST 5

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You can now book onto my Fixed Costs Autumn Tour – here

Lord Justice Jackson’s proposals in relation to Fixed Costs and Judicial Review (JR) are contained in chapter 10 of his report, and the full report is here.

He recognises the importance of JR, saying that it is a “crucial means by which citizens can challenge the lawfulness of public authorities’ decisions, actions and omissions.” (Paragraph 1.1)),  and

“An effectively functioning system of JR is, therefore, central to the rule of law.” (Paragraph 1.2).

In his previous report Lord Justice Jackson recommended that Qualified One-Way Costs Shifting be introduced for JR claims, but that proposal has not been adopted by the government, although the government has made it clear that it has neither accepted, nor rejected, that original proposal.

On 1 April 2013, at the same time as the previous Jackson Reforms were introduced, an optional regime was introduced for environmental JR claims.

CPR 45 caps a Claimant’s liability for defence costs at £5,000.00, if the Claimant is an individual, and £10,000.00 if it is a business.

The Defendant’s liability is capped at £35,000.00.

The purpose of this rule was to comply with the Aarhus Convention (The Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters signed in Aarhus, Denmark, on 25 June 1998), and so LJ Jackson refers to these as the Aarhus Rules.

On 28 February 2017, the Aarhus Rules were substantially amended, and now require Claimants to submit a Statement of Means, including any financial support provided by others.

One benefit that the 2017 rule changes did have was to extend the Aarhus rules to two other forms of statutory review, that is appeals under Section 289(1) of the Town and Country Planning Act 1990 and those brought under Section 65(1) of the Planning (Listed Buildings and Conservation Areas) 1990.

The court now has power, on the basis of the information on in the Statement of Means, to vary, up or down, the capped costs figures.

Thus the “caps” are now provisional and subject to variation by the court.

Environmental groups have challenged, in the High Court, ironically by way of Judicial Review, the amended rules and a decision is awaited.

The United Nations Economic Commission for Europe, nothing to do with the European Union, in a draft decision expresses concern at the overall slow progress of the United Kingdom in establishing a Costs Regime fulfilling its treaty obligations.

“Prohibitively expensive”

In R (on the application of Edwards & Pallikaropoulos) v Environment Agency [2008] UKHL 22

The House of Lords referred the question as to what was “prohibitively expensive” to the European Court of Justice.

In its judgment at [2013} 1WLR 294

the European Court of Justice held that the proceedings must neither “exceed the financial resources of the concerned nor appear, in any event, to be objectively unreasonable”.

That decision is virtually useless.

The European Court of Justice did not define what was meant by financial resources or how they had to be depleted before they could be said to be “exceeded” for these purposes.

It requires the UK “to, as a matter of urgency, take the necessary legislative regulatory, administrative and practical measures to ensure that the allocation of costs in all court procedures [which are subject to the Aarhus Convention] is fair and equitable and not prohibitively expensive”.

The United Kingdom’s participation in the Aarhus Convention is nothing to do with its membership of the European Union and therefore these issues will continue once the United Kingdom has left the European Union.

The Aarhus Rules in any event apply to only around 1% of JR cases. (Paragraph 1.8)

On 8 August 2016 a new regime of Judicial Review Costs Capping Orders, applying to all JR cases, not just Aarhus Convention cases, was introduced.

This enables the court to cap each party’s costs liability, having regard to the circumstances set out in Section 88 of the Criminal Justice and Courts Act 2015 and CPR 46.

These circumstances include a Claimant’s means and matters such as whether the Claimant’s representatives are acting free of charge.

Discussion about JR in LJ Jackson’s report is in chapter 3, paragraphs 4.23 to 4.25 and chapter 4, paragraphs 9.1 to 9.4, 12.1 to 12.2, 16.2 to 16.9 and 17.4.

At Appendix 16 to the report is the Westgate Report prepared by a working group chaired by Martin Westgate QC.

The Westgate Report looks at how the Aarhus Rules could be developed and used for all JR cases.

Lord Justice Jackson concluded:

 

“(i)          Even though many JR cases fall into a standard pattern, costs are too variable to permit the introduction of a grid of FRC.

(ii)           CCOs are of little practical value, because the procedure for obtaining such orders is too cumbersome and too expensive. The criteria for granting CCOs are unacceptably wide and the outcome of any application must be uncertain. Also, that outcome will not be known until too late in the day.

(iii)          There would be merit in extending the Aarhus Rules, suitably amended, to all JR claims. The fact that most JR cases fall into a standard pattern makes it possible to set default figures as caps, even though it is not practicable to draw up a grid of FRC.

(iv)         The discipline of costs management should be available in larger JR claims, at the discretion of the court.”

 

“CCO” is a reference to a Costs Capping Order, being the new regime of Judicial Review Costs Capping Orders which came into force on 8 August 2016, which I refer to above.

Lord Justice Jackson then states that if Qualified One-Way Costs Shifting in JR is not acceptable to the government, then the Aarhus Rules should be extended to all Judicial Review claims.

While accepting that it is tiresome and expensive for public authorities to face many unmeritorious claims Lord Justice Jackson states that the ready availability of JR proceedings in which public bodies are held to account for their actions and decisions is a vital part of our democracy and both JR and the free press are, in their different ways, bulwarks against the misuse of power. (Paragraph 3.2 of chapter 10).

 

Lord Justice Jackson’s proposals in detail

Lord Justice Jackson’s detailed proposals are contained in paragraph 3.3 of chapter 10 and paragraphs 129 to 130 of his report and are:

 

“(i)          The regime should be available in any case where the claimant is an individual (or an individual who is a representative of a number of natural persons with a similar interest) without legal aid.

(ii)           The regime should be optional. Any JR claimant should be able to opt in.

(iii)          There must be some form of means testing for those claimants who opt in.8 Any investigation of means should be in private and the claimant’s disclosure should be made only to specified individuals within a defined confidentiality ring.

(iv)         The default figures of £5,000/£10,000 for claimants and £35,000 for defendants should remain, but be subject to three yearly reviews.

(v)          Any application to vary those figures should be made by the claimant in the claim form and by the defendant in the acknowledgement of service. Such applications should be dealt with at the permission stage. Such applications should only be entertained later in exceptional circumstances, for example a fundamental change in the case or the discovery of dishonesty in the claimant’s disclosure.

(vi)         If the claimant’s costs liability is increased above the default figure, they should be permitted to discontinue within 21 days and (if they do) only be liable for adverse costs to the extent of the previous figure.”

These reforms cannot be made by rule changes alone as Sections 88 to 90 of the Criminal Courts and Justice Act 2015 will need to be amended.

Those provisions impose restrictions on the Costs Capping Orders which the court can make in Non-Environmental JR cases.

LJ Jackson says that ideally those sections and the rules made under them should be repealed as they “serve little useful purpose now and they will serve no useful purpose whatsoever if the above proposal is accepted.” (Paragraph 3.5 of Chapter 10)

LJ Jackson suggests that there is no need to pilot this scheme as the Aarhus Rules in environmental cases, in place for over four years now, have effectively been such a pilot, and a successful one.

 

Costs Management in heavy Judicial Review cases

Lord Justice Jackson recommends that in any JR case where the costs of a party are likely to exceed £100,000.00, or the hearing is likely to exceed two days, the court should have discretion to make a Costs Management Order the stage of granting permission.

The court could do this either of its own motion, or upon application by either party.

There should be a new, simpler form of Precedent H and if the court makes an order then:

 

“(i) the parties must (if they have not already done so) serve their budgets in the new Form H within 21 days;

(ii) the parties must discuss and seek to agree each other’s budgets;

(iii) in so far as the budgets are not agreed, the court will resolve any dispute at a Costs Management Hearing.”

 

If JR budgets are agreed by the parties, then the court would have no discretion to interfere.

As to piloting the scheme Lord Justice Jackson says that that is an option for consideration by the Rule Committee but that it may be unnecessary as judges and practitioners in the Administrative Court are already familiar with budgeting in other context and the proposed Costs Management Regime for these heavier cases will be discretionary.

 

Costs limits in Aarhus Convention Claims

The current rules are contained in CPR 45.41 to CPR 45.45 and reads:

VII COSTS LIMITS IN AARHUS CONVENTION CLAIMS

Scope and interpretation

45.41

(1) This section provides for the costs which are to be recoverable between the parties in Aarhus Convention claims.

(2) In this Section—

(a) “Aarhus Convention claim” means a claim brought by one or more members of the public—

(i) by judicial review or review under statute which challenges the legality of any decision, act or omission of a body exercising public functions, and which is within the scope of Article 9(1) or 9(2) of the UNECE Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters done at Aarhus, Denmark on 25 June 1998 (“the Aarhus Convention”); or

(ii) by judicial review which challenges the legality of any such decision, act or omission and which is within the scope of Article 9(3) of the Aarhus Convention;

(b) references to a member or members of the public are to be construed in accordance with the Aarhus Convention.

(3) This Section does not apply to appeals other than appeals brought under section 289(1) of the Town and Country Planning Act 1990 or section 65(1) of the Planning (Listed Buildings and Conservation Areas) Act 1990, which are for the purposes of this Section to be treated as reviews under statute.

(Rule 52.19A makes provision in relation to costs of an appeal.)

Opting out, and other cases where rules 45.43 to 45.45 do not apply to a claimant

45.42

(1) Subject to paragraph (2), rules 45.43 to 45.45 apply where a claimant who is a member of the public has—

(a) stated in the claim form that the claim is an Aarhus Convention claim; and

(b) filed and served with the claim form a schedule of the claimant’s financial resources which takes into account any financial support which any person has provided or is likely to provide to the claimant and which is verified by a statement of truth.

(2) Subject to paragraph (3), rules 45.43 to 45.45 do not apply where the claimant has stated in the claim form that although the claim is an Aarhus Convention claim, the claimant does not wish those rules to apply.

(3) If there is more than one claimant, rules 45.43 to 45.45 do not apply in relation to the costs payable by or to any claimant who has not acted as set out in paragraph (1), or who has acted as set out in paragraph (2), or who is not a member of the public.

Limit on costs recoverable from a party in an Aarhus Convention claim

45.43

(1) Subject to rules 45.42 and 45.45, a claimant or defendant in an Aarhus Convention claim may not be ordered to pay costs exceeding the amounts in paragraph (2) or (3) or as varied in accordance with rule 45.44.

(2) For a claimant the amount is—

(a) £5,000 where the claimant is claiming only as an individual and not as, or on behalf of, a business or other legal person;

(b) £10,000 in all other cases.

(3) For a defendant the amount is £35,000.

(4) In an Aarhus Convention claim with multiple claimants or multiple defendants, the amounts in paragraphs (2) and (3) (subject to any direction of the court under rule 45.44) apply in relation to each such claimant or defendant individually and may not be exceeded, irrespective of the number of receiving parties.

Varying the limit on costs recoverable from a party in an Aarhus Convention claim

45.44

(1) The court may vary the amounts in rule 45.43 or may remove altogether the limits on the maximum costs liability of any party in an Aarhus Convention claim.

(2) The court may vary such an amount or remove such a limit only if satisfied that—

(a) to do so would not make the costs of the proceedings prohibitively expensive for the claimant; and

(b) in the case of a variation which would reduce a claimant’s maximum costs liability or increase that of a defendant, without the variation the costs of the proceedings would be prohibitively expensive for the claimant.

(3) Proceedings are to be considered prohibitively expensive for the purpose of this rule if their likely costs (including any court fees which are payable by the claimant) either—

(a) exceed the financial resources of the claimant; or

(b) are objectively unreasonable having regard to—

(i) the situation of the parties;

(ii) whether the claimant has a reasonable prospect of success;

(iii) the importance of what is at stake for the claimant;

(iv) the importance of what is at stake for the environment;

(v) the complexity of the relevant law and procedure; and

(vi) whether the claim is frivolous.

(4) When the court considers the financial resources of the claimant for the purposes of this rule, it must have regard to any financial support which any person has provided or is likely to provide to the claimant.

(Rule 39.2(3)(c) makes provision for a hearing (or any part of it) to be in private if it involves confidential information (including information relating to personal financial matters) and publicity would damage that confidentiality.)

Challenging whether the claim is an Aarhus Convention claim

45.45

(1) Where a claimant has complied with rule 45.42(1), and subject to rule 45.42(2) and (3), rule 45.43 will apply unless—

(a) the defendant has in the acknowledgment of service—

(i) denied that the claim is an Aarhus Convention claim; and

(ii) set out the defendant’s grounds for such denial; and

(b) the court has determined that the claim is not an Aarhus Convention claim.

(2) Where the defendant denies that the claim is an Aarhus Convention claim, the court must determine that issue at the earliest opportunity.

(3) In any proceedings to determine whether the claim is an Aarhus Convention claim—

(a) if the court holds that the claim is not an Aarhus Convention claim, it will normally make no order for costs in relation to those proceedings;

(b) if the court holds that the claim is an Aarhus Convention claim, it will normally order the defendant to pay the claimant’s costs of those proceedings to be assessed on the standard basis, and that order may be enforced even if this would increase the costs payable by the defendant beyond the amount stated in rule 45.43(3) or any variation of that amount.

Practice Direction 45 dealing with Aarhus Convention claims has now been omitted and contains nothing.

Part V of CPR 46 deals with costs and claims for Judicial Review and reads:

Claims for judicial review: costs against interveners

46.15

(1) In this rule the terms “intervener” and “relevant party” have the same meaning as in section 87 of the Criminal Justice and Courts Act 2015 (“the 2015 Act”).

(2) A relevant party may apply to the court for an order for an intervener to pay costs in accordance with section 87 of the 2015 Act.

(Section 87 of the 2015 Act applies to judicial review proceedings in the High Court and Court of Appeal.)

(Rule 54.17 makes provision for any person to be able to apply for permission to file evidence or make representations at the hearing of a judicial review.)

SECTION VI JUDICIAL REVIEW COSTS CAPPING ORDERS UNDER PART 4 OF THE CRIMINAL JUSTICE AND COURTS ACT 2015

Judicial review costs capping orders – general

46.16

(1) For the purposes of this Section—

(a) “judicial review costs capping order” means a costs capping order made by the High Court or the Court of Appeal in accordance with sections 88, 89 and 90 of the 2015 Act; and

(b) “the 2015 Act” means the Criminal Justice and Courts Act 2015.

(2) This Section does not apply to a costs capping order under rule 3.19.

(Rule 3.19 makes provision for orders limiting the amount of future costs (including disbursements) which a party may recover pursuant to an order for costs subsequently made.)

Applications for judicial review costs capping orders

46.17

(1) An application for a judicial review costs capping order must—

(a) be made on notice and, subject to paragraphs (2) and (3), in accordance with Part 23; and

(b) be supported by evidence setting out—

(i) why a judicial review costs capping order should be made, having regard, in particular, to the matters at sub-sections (6) to (8) of section 88 of the 2015 Act and sub-section (1) of section 89 of that Act;

(ii) a summary of the applicant’s financial resources;

(iii) the costs (and disbursements) which the applicant considers the parties are likely to incur in the future conduct of the proceedings; and

(iv) if the applicant is a body corporate, whether it is able to demonstrate that it is likely to have financial resources available to meet liabilities arising in connection with the proceedings.

(2) Subject to paragraph (3), the applicant must serve a copy of the application notice and copies of the supporting documents on every other party.

(3) On application by the applicant, the court may dispense with the need for the applicant to serve the evidence setting out a summary of the applicant’s financial resources on one or more of the parties.

(4) The court may direct the applicant to provide additional information or evidence to support its application.

Court to consider making directions

46.18 If the applicant is a body corporate, and the evidence supporting its application in accordance with rule 46.17(1)(b)(iv) sets out that it is unable to demonstrate that it is likely to have financial resources available to meet liabilities arising in connection with the proceedings, the court must consider giving directions for the provision of information about the applicant’s members and their ability to provide financial support for the purposes of the proceedings.

Applications to vary judicial review costs capping orders

46.19

(1) An application to vary a judicial review costs capping order must be made on notice and, subject to paragraphs (2) and (3), in accordance with Part 23.

(2) Subject to paragraph (3), the applicant must serve a copy of the application notice and copies of any supporting documents on every other party.

(3) If the application is supported by evidence setting out a summary of the applicant’s financial resources, the court may, on application by the applicant, dispense with the need for the applicant to serve such evidence on one or more of the parties.

 

Practice Direction

Practice Direction 46: Paragraph 10 deals with the above rule and states:

Judicial review costs capping orders under Part 4 of the Criminal Justice and Courts Act 2015: rules 46.16 to 46.19

10.1 Unless the court directs otherwise, a summary of an applicant’s financial resources under rule 46.17(1)(b)(ii) must provide details of—

(a) the applicant’s significant assets, liabilities, income and expenditure; and

(b) in relation to any financial support which any person has provided or is likely to provide to the applicant, the aggregate amount—

(i) which has been provided; and

(ii) which is likely to be provided.

10.2  An application to the High Court for a judicial review costs capping order must normally be contained in, or accompany, the claim form.

 

Criminal Justice and Courts Act 2015

Part 4, that is Sections 84 to 92 deal with Judicial Review proceedings.

These are lengthy sections and can be seen here and the effect is dealt with elsewhere in this piece.

In July 2017 the Judiciary for England and Wales published the Administrative Court Judicial Review Guide 2017 which is available here.

It runs to over 100 pages and deals with the Civil Procedure Rules, Practice Directions, forms, fees, time limits and the whole procedure throughout the life of a Judicial Review.

It is very helpful.

 

Also see:

FIXED COSTS REPORT OVERVIEW: POST 1

FIXED COSTS AND THE BAR: POST 2

FIXED COSTS AND PART 36: POST 3

FIXED COSTS: THE FAST TRACK FIGURES: POST 4

Written by kerryunderwood

August 14, 2017 at 12:04 pm

Posted in Uncategorized

TRIBUNALS: WHAT THE HELL IS GOING ON?

with 2 comments


On 9 August 2017 the President of Employment Tribunals ordered a stay of all claims or applications brought in reliance upon the decision of the Supreme Court in R (on the applicator of UNISON) v Lord Chancellor [2017] UKSC 51, which I reported in my post SUPREME COURT: FRIENDS OF THE PEOPLE: UNISON CONSIDERED

The Employment Tribunal President’s order is here.

The stay is “to await decisions of the Ministry of Justice and Her Majesty’s Courts and Tribunals Service in relation to the implications of that decision.”

The Ministry of Justice, or technically the Lord Chancellor, but he is also the Minister of Justice, was the losing party in the UNISON case.

What “decisions” are awaited?

Since when did the loser in litigation decide how the judgment is to be implemented?

The Supreme Court’s decision is sparklingly clear.

Presumably, but I am far from sure as there is no explanation offered, the issue is whether parties can now bring claims way out of time and reply on the powers of Employment Tribunals to allow such claims in out of time, which powers are set out in the various statutes governing employment claims and thus derive from Acts of Parliament.

That is surely a matter for the individual tribunal in each case, subject to the extensive guidance already given by the superior courts in relation to the tests, which are different in discrimination matters and unfair dismissal matters, and which in relation to unfair dismissal have been in for 45 years.

It will be helpful if the Employment Appeal Tribunal or Court of Appeal could give guidance in a case as quickly as possible.

A stay obviously delays that process and appears to be abdicating responsibility for a judicial decision and passing it to the discredited loser in the litigation.

The whole point of the 7-0 Supreme Court decision, which is in uncompromising terms, is that the courts, and not ministers, or even Parliament, control access to the courts to enforce the laws which Parliament makes and which are the sole responsibility of Parliament.

Now, I appreciate that a million old claims will impose massive burdens on an already underfunded court and tribunal system, but the end game of that argument is to scrap courts and tribunals altogether.

PROPERTY CHAMBER: STAFF CAN NOW STRIKE OUT CLAIMS

On 4 August 2017 the Senior President of Tribunals issued a Practice Statement delegating “functions to staff” in relation to the Property Chamber of the First Tier Tribunal. It is here.

Those “functions” include making “unless” orders, staying proceedings and striking out proceedings.

Striking out a case decides it, obviously.

Should these not always be judicial functions exercised by a judge?

IMMIGRATION TRIBUNAL SLAMMED BY COURT OF APPEAL

In AM (Afghanistan) v Secretary of State for the Home Department

the Senior President of Tribunals found the First-tier Tribunal had failed to take account of an Afghan boy’s age, vulnerability and learning difficulties.

AM claimed asylum in 2012 but his application was rejected by the then Home Secretary Theresa May in 2013.

AM was 15 at the time and was granted leave to remain in the UK until his 17th birthday.

Reasons for refusing his application for asylum included inconsistencies in his evidence and the fact that he had not demonstrated a risk to his life.

AM appealed to the Court of Appeal who said that the First-tier Tribunal’s response to a psychological report was “wholly inadequate.”

The Court of Appeal sent the matter back to the First-tier Tribunal and said that tribunals should “closely consider whether oral evidence is necessary at all” and whether requiring oral evidence might prevent there being a fair hearing.

Even if there were discrepancies in the evidence, tribunals should consider the extent to which the age, vulnerability or sensitivity of the witness was an element in those discrepancies.

It pointed out that tribunals have the power to appoint a Litigation Friend where access to justice requires it.

DEPARTMENT FOR WORK AND PENSIONS ILLEGALLY BLOCKING ACCESS TO THE COURTS

On 4 August 2017 the Upper Tribunal held that the Department for Work and Pensions had been unlawfully preventing people who had been refused social security benefits from going to tribunals to challenge the decision.

The Upper Tribunal criticised the DWP’s policy of denying Claimants an appeal if they failed to act within a month, saying that it was obvious that there would be a risk that people with good claims would miss the deadline as many of them were vulnerable.

Since 2013 any Claimant wishing to challenge a decision to refuse benefits has had to apply for a “mandatory reconsideration” before appealing to an independent tribunal.

Where the mandatory reconsideration application is made out of time, there is no right of appeal to the tribunal.

This case was brought by the Child Poverty Action Group (CPAG) on behalf of two Claimants, both of whom have mental health problems and who were denied benefits and were deemed to have failed to ask for a review in time.

CPAG claimed that the policy excluded large numbers of Claimants from the justice system and the tribunal said that this policy had resulted “in a significant number of Claimants who are entitled to benefits not being paid them”.

The tribunal, presided over by a High Court Judge, said that the DWP was improperly making itself “gatekeeper to the independent tribunal system.”

The Upper Tribunal said that the correct position was that where a Claimant made a mandatory reconsideration request at any time within 13 months of the original decision, they will, if dissatisfied, be entitled to pursue the challenge to a tribunal.

The government had argued that there was no need to have access to the tribunal because its decisions on late mandatory reconsideration requests could be challenged by judicial review.

The Upper Tribunal pointed out that not one of the 1,544,805 mandatory reconsideration decisions by the government since 2013 have been challenged by way of judicial review.

 

These are matters of great concern.

On 3 July 2017 the President of the Supreme Court, in a wide ranging attack on recent governments of all political persuasions in the United Kingdom, said:

“The sad truth is that in countries with a long peaceful and democratic history such as the UK (and I suspect, Australia), we face the serious risk that the rule of law is first taken for granted, is next consequently ignored, and is then lost, and only then does everyone realize how absolutely fundamental it was to society.”

“It verges on the hypocritical for governments to bestow rights on citizens while doing very little to ensure that those rights are enforceable. It has faint echoes of the familiar and depressing sight of repressive totalitarian regimes producing wonderful constitutions and then ignoring them.”

That speech is here.

Tribunals and their Presidents should remind themselves every day that they are part of the court system, not administrators for a discredited government department.

 

Also see:

SUPREME COURT: FRIENDS OF THE PEOPLE: UNISON CONSIDERED

Written by kerryunderwood

August 11, 2017 at 11:14 am

Posted in Uncategorized

PART 36 AND LATE ACCEPTANCE: EVEN MORE CHAOS

with 16 comments


I will be chairing an all-day conference on Tuesday 14 November in London on Part 36 which Ben Williams QC and David Pilling will be speaking. Save the date!

This subject is dealt with in great detail in my 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

In Kaur v Committee for the time being of Ramgarhia Board – Leicester County Court, case number: C03YJ945

the Claimant had made a Part 36 offer of £2,000.00 and the Defendant, concerned about the risk of paying indemnity costs on accepting late, subsequently made a Part 36 offer of £3,000.00, that is above the sum that the Claimant was seeking.

The Claimant’s Part 36 offer of £2,000.00 remained open for acceptance.

This scenario is now common.

The Claimant sought indemnity costs from date of expiry of their own offer, whereas the Defendants argued that the Claimant was simply entitled to fixed costs as they had accepted the Defendant’s Part 36 offer.

In what seems to be a developing Solomon-like trend Leicester County Court took the halfway position of ordering standard costs,  not indemnity, nor fixed, costs.

This case has the twist of the Defendant’s offer being higher than the Claimant’s offer.

It will be interesting to see what the courts do in the mirror position when a potentially late accepting Claimant makes a Part 36 offer lower than the Defendant’s offer to seek to avoid paying costs from the date of expiry of the defendant’s offer.

 

In Hislop v Perde, Central London County Court, Claim number: A27YP399

the court was considering the position on the more straightforward situation of late acceptance by a Defendant of a Part 36 offer in a fixed costs case.

Here, again, the court allowed standard costs rather than fixed costs or indemnity costs.

This was an appeal to a Circuit Judge from the decision of the Deputy District Judge who had awarded fixed costs, on the basis that there was no discretion to award standard costs, and that the case was not suitable for an award of indemnity costs.

HHJ Walden-Smith declined to interfere with the Deputy District Judge’s failure to award indemnity costs but made it clear that the court had discretion to award indemnity costs and that another District Judge may well have come to a different, and justified, conclusion on the same set of facts and could have awarded indemnity costs.

Just two days ago I posted – PART 36 AND INDEMNITY COSTS ON LATE ACCEPTANCE: THE CHAOS CONTINUES which looked at three different cases coming to three different conclusions, one allowing indemnity costs, one allowing standard costs and one allowing fixed costs.

Clarification by a superior court is vital.

The problems are not the fault of the courts; they are the fault of the Civil Procedure Rule Committee.

Firstly, the award of standard costs gives a Claimant no benefit outside the fixed costs system and thus gives a Claimant almost no incentive now to make a Part 36 offer.

True it is that if a Claimant beats its offer at trial, then it will get indemnity costs, but few matters go to trial and it means that a Defendant can unilaterally avoid the consequences of its action by settling just before trial.

This is comparable to Claimant unilaterally discontinuing, but not being liable for costs.

Secondly, the sums involved will become far greater as the Fixed Costs Scheme spreads to claims of £100,000.00 or less.

Lord Justice Jackson proposes a fixed uplift on fixed costs of 30% or 40% if a Claimant matches or beats its own Part 36 offer, but that still leaves unresolved the question of whether a Claimant would in fact be entitled to that uplift on late acceptance by a Defendant – see my post FIXED COSTS AND PART 36: POST 3.

I am grateful to Nicola Kitchener of Affinity Law re the Kaur case and Jonathan Frith of Winn Solicitors re the Hislop case.

 

Also see:

PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE?

PART 36: CLAIMANT ORDERED TO PAY INDEMNITY COSTS ON LATE ACCEPTANCE

PART 36 AND INDEMNITY COSTS ON LATE ACCEPTANCE: THE CHAOS CONTINUES

FIXED COSTS AND PART 36: POST 3.

Written by kerryunderwood

August 10, 2017 at 9:39 am

Posted in Uncategorized

HOURLY RATES IN BUDGET CAN BE CUT ON ASSESSMENT

with 10 comments


You can now book onto my Fixed Costs Autumn Tour – here

In RNB v London Borough of Newham [2017] EWHC B15 (Costs)

The Senior Courts Costs Office Master said that the hourly rates in the Costs Budget could be cut on assessment, irrespective of the totals allowed in the budget.

This was an action arising from abuse suffered by the Claimant as a teenager at the hands of an employee of the Defendant in a residential home.

I set out below the Claimant’s hourly rates in the budget and the amounts allowed on assessment:

Type of Lawyer                                           Claimed                                                               Allowed

 

Partner                                                        £355.00 to £375.00                                             £340.00

 

Senior Solicitor                                            £235.00 to £280.00                                             £275.00

 

Solicitors                                                      £215.00 to £225.00                                            £180.00

 

Legal assistants                                           £145.00 to £150.00                                             £135.00

Here the court first reduced the incurred costs, that is those incurred before the budget and then considered the question of whether that reduction should then be reflected in the costs agreed between the parties or approved by the court for costs incurred after the budget, that is the budgeted costs.

It was irrelevant that this would have the effect of reducing the Claimant’s overall costs to a sum below the sum agreed in the budget.

It was common ground between the parties that the reduction could only be made if there was a “good reason” to depart from the figures in the Costs Budget.

The “good reason” point arises from the decision of the Court of Appeal in

Harrison v University Hospitals Coventry and Warwickshire Hospital NHS Trust (2017) 3 Costs LR424

which in turn approved the decision in

Merrix v Heart of England Foundation NHS Trust [2017] 1 Costs LR91.

 

Here the court pointed out that it neither approves nor disapproves hourly rates when budgeting costs under CPR 3.12 to 18, but rather simply approves an amount which is reasonable, necessary and proportionate for a party to incur for each of the 10 phases of the litigation, with the exception of the incurred costs.

Here the Senior Courts Costs Office pointed out that different practices have been adopted by different courts in relation to approving, disapproving or not considering the hourly rates.

This was set out in detail in paragraph 21:

“Whether or not hourly rates are to be approved or disapproved at the budgeting hearing has been a point considered at judicial level at costs budgeting hearings. The editors of the White Book referred to by Clark J in Merrix are of the view that CPR Rule 3 PDE 7.3 and 7.10 “do not require the court to set hourly rates – indeed 7.10 makes it perfectly plain that the position is quite the reverse – it is expressly not the role of the Costs Management to fix or set hourly rates”. However that was not was not the practice adopted Warby J in Stocker v Stocker [2015] 4 Costs LR 651 in which the hourly rates were agreed and approved, as was the case in GSK Project management Ltd v QPR [2015] 4 Costs LR 729 , Stuart-Smith J. In Group Seven v Nasir [2016] 2 Costs LO 303 Morgan J also decided the hourly rates which were to apply prospectively, and gave guidance about the locality of the firms of solicitors that it was reasonable for the parties to instruct (see judgment at paragraphs 40 to 45 entitled “Solicitors Hourly Rates”). Whilst the judgment was delivered two weeks before PD 7.10 was implemented, the draft amendment would have been available prior to the date upon which the judgment was handed down in that case. It follows in my judgement, that if the court approves hourly rates in terms as was the case in Stocker and Group Seven, neither a paying nor receiving party on any subsequent detailed assessment can challenge them.”

 

Thus here the SCCO said that if the court specifically approves hourly rates at the budget, then neither party can challenge those agreed approved rates on any subsequent detailed assessment.

That was not the position here, where allowances in the Costs Budget were made by reference to phases, without the court commenting on the hourly rates, either in respect of the incurred costs or the budgeted costs.

At the Assessment hearing the Master reduced the hourly rate for the incurred costs and made the point that if he was not allowed to interfere with the budgeted costs that would mean that the Claimant recovered an hourly rate for the budgeted stage at a significantly higher level than the rate which the Master considered to be reasonable and proportionate for the pre-budget stage, that is incurred costs.

It is only on detailed assessment that a paying party has an opportunity to challenge the hourly rate and here the Master held that that is a “good reason” to depart from the costs allowed in the Claimant’s last approved budget.

It is irrelevant that the total of costs at the hourly rate as previously set still came within budget.

The setting of a budget for each phase did not mean that the Claimant automatically got that sum.

The court held that if it was wrong on this point it could, and would, have achieved the same result on proportionality grounds and would have achieved proportionality by reducing the hourly rate for budgeted costs to the same hourly rate as for incurred costs.

Guideline Hourly Rates

Here, the court relied on the outer London guideline rates and said that the rates claimed were too high as the year on year uplift on the outer London guideline rates was excessive.

This also gives cause for concern – that the court appears to have relied on guideline hourly rates, which have more or less been abandoned and had not been raised for seven years now.

The decision also involves a circular argument.

It was the judge himself who reduced the level of incurred costs, which had obviously not been budgeted, and reduced the hourly rate allowed for those incurred costs.

He then used the fact that if he did not cut budgeted costs as well, then the Claimant would be getting a higher level for budgeted costs than incurred costs.

That is true, but only because the judge had cut incurred costs.

The logic of this is that an assessing court can simply avoid the Harrison and Merrix decisions altogether by cutting incurred costs and using that as a “good reason” to cut budgeted costs.

This is a poorly argued and illogical decision which should be treated with considerable caution.

Written by kerryunderwood

August 9, 2017 at 8:47 am

Posted in Uncategorized

NEWS AND CASE ROUND-UP


As the title suggests this blog is a round-up of recent news and cases.

There is a theme running through many of the recent cases, and that is the courts reclaiming the streets.

I have reported elsewhere and in detail the landmark decision of the Supreme Court in the Employment Tribunal fees case – SUPREME COURT: FRIENDS OF THE PEOPLE.

In this round-up the Supreme Court upholds a debarring order against HMRC with Lord Neuberger, President of the Supreme Court, saying that higher, and not lower, standards are expected of public bodies.

The Court of Appeal severely criticises the First-tier Tribunal in its approach to immigration cases and the Upper Tribunal holds that the Department for Work and Pensions is illegally blocking access to the courts.

I will report elsewhere the President of the Supreme Court’s warning that the United Kingdom faces the serious risk of the rule of law being lost altogether and saying that the conduct of United Kingdom governments “has faint echoes of the familiar and depressing sight of repressive totalitarian regimes producing wonderful constitutions and then ignoring them”.

I see a major constitutional clash between the courts and governments coming.

TRIBUNALS AND DEBARRING ORDERS: A SUPREME COURT DECISION

In BPP Holdings Limited & others v Commissioners for Her Majesty’s Revenue and Customs [2007] UKSC 55

the Supreme Court held that the First-tier Tribunal was entitled to make a debarring order – here preventing HMRC from defending an appeal concerning liability for VAT on the supply of books to students.

The debarring order was allowed for in the tribunal’s own procedural rules.

Although the cases on time limits and sanctions in the Civil Procedure Rules do not apply directly, tribunals should generally follow a similar approach.

Here, HMRC also argued that the court should take into account that the debarring order prevented HMRC from discharging its public duty, leading to the public interest being harmed in that VAT which should be paid may not be recovered.

Lord Neuberger, President of the Supreme Court, dismissed that notion in clear terms:

“30. … I consider that it would set a dangerous precedent if that point were accepted, as it would discourage public bodies from living up to the standards expected of individuals and private bodies in the conduct of litigation. It seems to me that there is at least as strong an argument for saying that the courts should expect higher standards from public bodies than from private bodies or individuals. … there is no good reason to have different rules for public law cases.”

The Supreme Court suggested that the rules in tribunals might be changed to allow additional powers of sanction rather than the tribunal having a choice of making a debarring order or doing nothing.

The Supreme Court pointed out that the judge

“was faced with a binary question, involving two unpalatable choices .Making the debarring order, which she described as draconian, or not making the order, which, to use the vernacular, would have meant that HMRC effectively would have got away with it. There may be force in the notion that the tribunal rules should provide for the possibility of more nuanced sanctions, such as a fine or even the imposition of some procedural advantage. Experience suggests that such ideas, while attractive in theory can often be difficult to formulate or to apply satisfactorily in practice, so I mention the point with some diffidence.” (Paragraph 35).

 

FREEZING ORDERS AND SOURCE OF FUNDING

In JSC Mezhdunarodniy Promyshlenniy Bank and another v Pugachev and others [2017] EWHC 1847 (Ch)

the court has made an order requiring the defendant (P), who was subject to a worldwide freezing order, to disclose the source of his legal funding. It held that it was appropriate to require P to provide the information as a condition of him being allowed to proceed with an application to challenge the court’s jurisdiction.

The issue arose in the context of enforcement proceedings by the claimant (C) in respect of a Russian judgment it had obtained against P for approximately £1 billion. P applied to set aside the default judgment against him, and challenged the jurisdiction of the English court. In response, C submitted that the court should impose certain conditions which must be complied with before P’s jurisdiction challenge could be heard, in particular requiring P to pay £35,000 into court, and to file an affidavit setting out ultimately who was providing the money being used to fund his legal expenses in connection with the application, and where that person obtained the money from.

The decision is an interesting, and apparently novel, example of the court making such an order in these circumstances. The judge noted that this was an unusual case, in view of the fact that the defendant had previously been found to be in serious breach of numerous court orders and had failed to serve a two-year prison sentence for contempt of court. However, the decision illustrates that the court will be prepared, in an appropriate case, to require a defendant who is subject to a worldwide freezing order to disclose the source of his legal funding before proceeding with an application, including an application challenging the court’s jurisdiction

 

EMPLOYMENT IN THE LEGAL SECTOR

370,000 people are employed in private legal practice in the United Kingdom, two thirds of whom are based outside London, which still leaves a staggering 124,000 in London.

Source: The Strength of English law and the UK Jurisdiction: Judicial Office, paragraph 9.

 

JUDICIAL REVIEW: UNITED NATIONS TO CRITICISE UK

The United Nations Economic Commission for Europe, which is nothing to do with the European Union, has prepared a draft decision expressing concern at the slow progress of the United Kingdom in establishing a costs system fulfilling its 1998 Aarhus Convention obligations to provide procedures that are fair, equitable, timely and not prohibitively expensive.

This applies to judicial review procedures in relation to environmental matters.

The draft decision requests the United Kingdom:

“To, as a matter of urgency, take the necessary legislative, regulatory, administrative and practical measures to ensure that the allocation of costs in all court procedures [subject to the convention] is fair and equitable and not prohibitively expensive”.

In his Fixed Costs Report, published on 31 July 2017, Lord Justice Jackson called for the existing capped costs scheme in this country for Aarhus Convention matters to be adopted for all judicial review cases.

 

IMMIGRATION TRIBUNAL SLAMMED BY COURT OF APPEAL

In AM (Afghanistan) v Secretary of State for the Home Department

the Senior President of Tribunals found the First-tier Tribunal had failed to take account of an Afghan boy’s age, vulnerability and learning difficulties.

AM claimed asylum in 2012 but his application was rejected by the then Home Secretary Theresa May in 2013.

AM was 15 at the time and was granted leave to remain in the UK until his 17th birthday.

Reasons for refusing his application for asylum included inconsistencies in his evidence and the fact that he had not demonstrated a risk to his life.

AM appealed to the Court of Appeal who said that the First-tier Tribunal’s response to a psychological report was “wholly inadequate.”

The Court of Appeal sent the matter back to the First-tier Tribunal and said that tribunals should “closely consider whether oral evidence is necessary at all” and whether requiring oral evidence might prevent there being a fair hearing.

Even if there were discrepancies in the evidence, tribunals should consider the extent to which the age, vulnerability or sensitivity of the witness was an element in those discrepancies.

It pointed out that tribunals have the power to appoint a Litigation Friend where access to justice requires it.

 

PERSONAL INJURY CLAIMS MANAGEMENT COMPANY NUMBERS DROPPING

The Claims Management Regulator, in its annual report published in August 2017 said that the turnover for Claims Management Companies in the personal injury field fell by 15% to £182 million in 2016/17, and this is down from a figure of over £300 million in 2014/15.

Applications from businesses seeking to become Claims Management Companies in the personal injury field dropped by 40% in 2016/17.

The number of authorised personal injury Claims Management Companies is now 762, down from 979 in 2015.

 

COMMERCIAL COURT: ONLY 28% OF USERS ARE FROM THE UK 

Just 121 cases were brought by UK litigants in the Commercial Court in England and Wales in 2016/17, amounting to just 28% of the total.

Comment

Is it not time to consider closing this court and diverting its resources, that is its judges and court buildings etc. to delivering justice for ordinary people in England and Wales?

No doubt the accountants and economists and hard-line capitalists will point out the invisible earnings that they bring into England and Wales.

What they will not point out is the increasingly visible damage that providing access to justice only to rich people is doing to this country.

 

DEPARTMENT FOR WORK AND PENSIONS ILLEGALLY BLOCKING ACCESS TO THE COURTS   

On 4 August 2017 the Upper Tribunal held that the Department for Work and Pensions had been unlawfully preventing people who had been refused social security benefits from going to tribunals to challenge the decision.

The Upper Tribunal criticised the DWP’s policy of denying Claimants an appeal if they failed to act within a month, saying that it was obvious that there would be a risk that people with good claims would miss the deadline as many of them were vulnerable.

Since 2013 any Claimant wishing to challenge a decision to refuse benefits has had to apply for a “mandatory reconsideration” before appealing to an independent tribunal.

Where the mandatory reconsideration application is made out of time, there is no right of appeal to the tribunal.

This case was brought by the Child Poverty Action Group (CPAG) on behalf of two Claimants, both of whom have mental health problems and who were denied benefits and were deemed to have failed to ask for a review in time.

CPAG claimed that the policy excluded large numbers of Claimants from the justice system and the tribunal said that this policy had resulted “in a significant number of Claimants who are entitled to benefits not being paid them”.

The tribunal, presided over by a High Court Judge, said that the DWP was improperly making itself “gatekeeper to the independent tribunal system.”

The Upper Tribunal said that the correct position was that where a Claimant made a mandatory reconsideration request at any time within 13 months of the original decision, they will, if dissatisfied, be entitled to pursue the challenge to a tribunal.

The government had argued that there was no need to have access to the tribunal because its decisions on late mandatory reconsideration requests could be challenged by judicial review.

The Upper Tribunal pointed out that not one of the 1,544,805 mandatory reconsideration decisions by the government since 2013 have been challenged by way of judicial review.

Comment

The decisions reported in this round-up are part and parcel of the same, enormously welcome, decision by the Supreme Court in R (on the application of UNISON) v Lord Chancellor [2017] UKSC 51 whereby the courts are taking a view that it is for the courts, and not Parliament, to decide on how access to the courts is to operate.

 

AMENDING CLAIM IN PRE-APRIL 2013 CFA CASE

In Mawer (Trustee in Bankruptcy of James Moore) v Mawer, Unreported, Companies Court, 7 April 2017

the High Court refused to make the Grant of Permission to amend a claim subject to a proviso that a pre-1 April 2013 Conditional Fee Agreement, with a pre-1 April 2013 After the Event insurance premium, would not apply to the amended claim and thus there would be no recoverability.

The judge held that the questions of what costs are recoverable under the Conditional Fee Agreement should be determined at the end of the litigation and the Conditional Fee Agreement should not “disrupt the flow of the litigation.”

 

EXCEEDING COSTS CAP IN COMPETITION APPEAL TRIBUNAL

In Socrates Training Ltd v Law Society of England and Wales [2017] CAT 12

the Competition Appeal Tribunal published its costs ruling.

As the case was conducted under the fast-track procedure, the Competition Appeal Tribunal had imposed a cap on costs and the Law Society had conceded that Socrates Training Limited should have its costs on the standard basis up to the capped maximum of £230,000.00.

However Socrates Training Limited claimed that its costs should be assisted on the indemnity basis and thus should not be subject to the cap.

The Competition Appeal Tribunal accepted that in the circumstances of the case, and with regard to the Law Society’s conduct of the proceedings, there were no grounds for an Indemnity Costs Order.

The Law Society’s conduct had not caused such a serious increase in costs that it materially changed the position so as to justify allowing additional costs over and above the amount of the cap.

However the Competition Appeal Tribunal appear to accept that had the conduct warranted indemnity costs then the cap could have been exceeded.

 

WITHDRAWING ADMISSIONS

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

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

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

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

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

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

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

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

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

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

Comment

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

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

Written by kerryunderwood

August 8, 2017 at 10:47 am

Posted in Uncategorized

PART 36 AND INDEMNITY COSTS ON LATE ACCEPTANCE: THE CHAOS CONTINUES

with 23 comments


I will be chairing an all-day conference on Tuesday 14 November in London on Part 36 which Ben Williams QC and David Pilling will be speaking. Save the date!

In McKeown v Venton, Liverpool County Court, 24 July 2017

His Honour Graham Wood QC, Designated Civil Judge for Cheshire and Merseyside, held that a late accepting Defendant did not have to pay indemnity costs to the Claimant whose Part 36 offer had been accepted late.

Unless it was unjust, the Claimant was entitled to indemnity costs if it obtained a judgment better than, or equal to, its Part 36 offer, but, in the absence of judgment, the court had no discretion to award indemnity costs, absent exceptional circumstances, which were not present here.

Late acceptance of a Part 36 offer did not of itself constitute exceptional circumstances.

In Richardson v Wakefield Council

HH Judge Gosnell held that CPR 36.17 trumped CPR 45 and allowed standard, not indemnity, costs to be awarded to a Claimant on late acceptance by the Defendant.

Thus, in that case, the Claimant escaped fixed costs, but did not get indemnity costs, something aptly described by Judge Wood in McKeown as “something of a halfway house between the position adopted by District Judge Besford in Sutherland and the Deputy District Judge in the present case.”

That is a reference to Sutherland v Khan, Kingston-Upon-Hull County Court, Case number A81YM424

dealt with extensively in my blog PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE? 

Judge Wood said:

“59. … I have come to the conclusion that the decision of the deputy district judge should be upheld. His approach to the interpretation of Part 36 in the context of the Fixed Costs Regime cannot be impugned. If there are to be any additional and beneficial consequences to a Claimant arising from late acceptance in a fixed costs case, in my judgment these will have to be affirmed on a policy basis either by a higher court, or by reconsideration on the part of the rules committee. For now it may well be that precise fairness as to costs in individual cases is sacrificed on the altar of certainty which Part 45 has introduced.”

Comment

Take your pick:

  1. on late acceptance by a Defendant the Claimant gets indemnity costs (Sutherland v Khan);

 

  1. on late acceptance a Claimant gets standard, not fixed, costs (Richardson v Wakefield Council);

 

  1. on late acceptance the Claimant gets fixed costs (McKeown v Venton).

 

No case is currently proceeding to the Court of Appeal on this crucial and central point which will become much more important as the fixed costs scheme extends to most civil claims valued at £100,000.00 or less.

To make matters worse the courts are occasionally ordering a Claimant, who has been successful overall but has failed to beat a Defendant’s Part 36 offer, to pay indemnity costs from the date of expiry of the Defendant’s part 36 offer – See for example

Jordan v MGN Limited [2017] EWHC 1937 (Ch)

reported in my blog PART 36: CLAIMANT ORDERED TO PAY INDEMNITY COSTS ON LATE ACCEPTANCE.

This decision throws up another problem. Here the costs of appealing to a Circuit Judge alone were £12,000.00 on account and will presumably be much higher.

Obviously costs of appealing to the Court of Appeal would be much higher again.

Where a claim starts as a small claim and therefore cost free, it remains cost free throughout its appeal life, even if the matter goes to the Supreme Court.

There should be a similar system in relation to fixed costs cases, that is that there should be tightly controlled and relatively low fixed costs in any appeal arising from a fixed costs case.

Otherwise, and this is the potential problem with small claims, the party with the deeper pockets can simply take the matter to appeal to try and force the other party to settle.

PART 36 AND DISCOUNT RATE

In Marsh v Ministry of Justice, Costs, 31 July 2017,

the court held that where a Claimant beat its Part 36 offer only due to the change in the discount rate, made after the offer, it would be unjust for the Defendant to be ordered to pay Indemnity costs.

 

Also see:

PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE? 

PART 36: CLAIMANT ORDERED TO PAY INDEMNITY COSTS ON LATE ACCEPTANCE.

Written by kerryunderwood

August 7, 2017 at 11:05 am

Posted in Uncategorized

PART 36: CLAIMANT ORDERED TO PAY INDEMNITY COSTS ON LATE ACCEPTANCE

with 4 comments


This subject is dealt with in great detail in my 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. 

In Jordan v MGN Ltd [2017] EWHC 1937 (Ch)

the Chancery Division of the High Court ordered a late accepting Claimant to pay costs on the indemnity basis for the period from expiry of time for accepting the Part 36 offer until acceptance, although due to an undertaking given by the defendant earlier, the actual period covered by indemnity costs was shorter.

Here the Claimant accepted a Part 36 offer of £15,000.00 that had been made three years earlier and the Defendant had made later, higher, offers including an offer at a settlement meeting of £100,000.00.

The Claimant accepted the old offer of £15,000.00 shortly before trial, having rejected a much higher non Part 36 offer, which he then sought to accept, unsuccessfully.

Here the court held that the Claimant’s conduct was such as to warrant an order of indemnity costs as the Claimant had failed to make any sensible offer until shortly before the trial, after considerable costs have been incurred.

The judge said:

“The bottom line is that Mr Jordan did not advance any explanation, let alone a good one, why, having run his case for 2½ years, having failed to respond properly to a number of offers, one of which was close to his own proposed financial settlement, having caused himself and the other side to run up significant amounts of costs, and having exposed the defendant to the prospect of having to pay the CFA uplift and ATE premiums (which I am satisfied is a powerful threat to a defendant), should at the last minute do the equivalent of walking away from the action. I consider that all those factors, and the other matters referred to in this section, are good reasons for ruling that the costs be paid on the indemnity basis, and I so order.”

The facts of the offers in this case are very complicated indeed and the decision should not be taken as establishing a principle that generally a Claimant is liable for indemnity costs on late acceptance of a Part 36 offer.

Nevertheless, it is a warning to Claimants that failure to engage in proper negotiations, and failure to make offers and respond to offers, does put them at risk of an Indemnity Costs Order on late acceptance of a Part 36 offer.

The judge appears to have been influenced by the fact that the Claimant had a Conditional Fee Agreement, and therefore was not running up further costs himself by letting the matter drag on.

“One would have thought that a client who was willing to consider settlement would have started to engage more at that point. I find it hard to believe that a normal paying client, who was not litigating under a CFA and with the protection of ATE insurance, would have adopted the tactic of not responding and not engaging further.” (Paragraph 64)

Comment

As the debate rages on as to whether a Claimant is entitled to indemnity costs on late acceptance by a Defendant, here is another case where a successful Claimant has been ordered to pay indemnity costs to a Defendant following late acceptance by the Claimant of the Defendant’s Part 36 offer.

This makes no sense at all. The penalty on a late accepting Claimant is that they are deprived of costs from the expiry of the date for accepting the Part 36 offer AND have to pay the losing Defendant’s costs from that date.

Thus it is a double penalty.

If a late accepting Defendant does not have to pay indemnity costs, then there is no penalty whatsoever upon that Defendant.

 

Also see:

PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE?

Written by kerryunderwood

August 4, 2017 at 7:39 am

Posted in Uncategorized

FIXED COSTS: THE FAST TRACK FIGURES: POST 4

with 8 comments


You can now book onto my Fixed Costs Autumn Tour – here

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

In other posts I look in detail at various aspects of the proposed changes.

Here I set out the figures for the Fast Track as proposed in the report.

Fast Track

In the Fast Track there is a new single fixed costs grid covering all Fast Track claims of all kinds, except Noise Induced Hearing Loss Claims and clinical negligence claims.

In relation to Noise Induced Hearing Loss Claims there is a separate grid, which I set out below, and no figures have yet been provided for clinical negligence claims.

In relation to such claims Lord Justice Jackson proposes that the Civil Justice Council and the Department of Health should set up a working party to develop a process for clinical negligence claims initially up to £25,000.00, together with a grid of Fixed Recoverable Costs for such cases (Page 118).

Thus the grid set out below covers both personal injury claims and non-personal injury civil claims and is very much based on the existing fixed costs table set out in CPR 45.29.

The figures are cumulative, that is you get the figure in the relevant box, and only that figure, that is you do not add up the totals in the various boxes.

The exception is the trial advocacy which is a free standing add-on fee.

Thus a Band 1 case reaches trial and is worth between £3,001.00 and £10,000.00.

You get a preparation fee of £3,250.00, up to and including all pre-trial matters and then a free standing advocacy fee of £710.00.

VAT is added to all figures.

As before the fee is, in most cases, a combination of a core fee and a percentage of damages.

A new concept is complexity and I will deal with that in more detail in another post.

However, here is a simple list of the matters that Lord Justice Jackson proposes go into each band and these are set out on page 84 as follows:

 

“5           The remainder of the fast track

5.1          Proposed matrix of FRC and paradigm cases.  Drawing on the work of the FTWG, I propose that all fast track cases be placed into four bands of complexity, Band 1 being the least complex and Band 4 being the most complex.  The following are paradigm cases for each band:

Band 1: RTA non-personal injury claims (popularly known as ‘bent metal’ claims).

Band 2: RTA personal injury claims.

Band 3: ELA and PL accident claims.Band 4: ELD claims (

Band 4: ELD claims (non-NIHL) and the most complex fast track claims.

 

5.2         A fuller list of cases suitable for each band. I propose the following:

Band 1:  RTA non-personal injury, defended debt cases.

Band 2:  RTA personal injury (within Protocol), holiday sickness claims.

Band 3:  RTA personal injury (outside Protocol), ELA, PL, tracked possession claims, housing disrepair, other money claims.

Band 4:  ELD claims (other than NIHL), any particularly complex tracked possession claims or housing disrepair claims, property disputes, professional negligence claims and other claims at the top end of the fast track.

 

5.3          At the allocation stage, the court must have discretion to move individual claims between those bands having regard to the nature of the individual case.  Judges should exercise this discretion sparingly and bearing in mind the proportionality factors set out in CPR rule 44.3(5).  Any case of particular complexity does not belong in the fast track at all.”

 

Fast Track Fixed Recoverable Costs table

Complexity Band
Stage: 1 2 3 4
Pre-issue

£1,001 – £5,000

£104 + 20% of damages £988 + 17.5% of damages £2,250 + 15% of damages + £440 per extra defendant
Pre-Issue

£5,001 – £10,000

£1,144 + 15% of damages over £5,000 £1,929 + 12.5% of damages over £5,000
Pre-issue

£10,001 – £25,000

£500 £2,007 + 10% of damages over £10,000 £2,600 + 10% of damages over £10,000
Post-issue, pre-allocation £1,850 £1,206 + 20 of damages £2,735 + 20% of damages £2,575 + 40% of damages + £660 per extra defendant
Post-allocation, pre-listing £2,200 £1,955 + 20% of damage £3,484 + 25% of damages £5,525 + 40% of damages + £660 per extra defendant
Post-listing, pre-trial £3,250 £2,761 + 20% of damages £4,451 + 30% of damages £6,800 + 40% of damages + £660 per extra defendant
Trial advocacy fee a. £500

b. £710

c. £1,070

d. £1,705

a. £500

b. £710

c. £1,070

d. £1,705

a. £500

b. £710

c. £1,070

d. £1,705

a. £1,380

b. £1,380

c. £1,800

d. £2,500

Counsel’s fees 

There is an element of ring fencing counsel’s fees in the Fast Track.

This applies to matters in Complexity Band 4, the details of which are set out above.

These fees are as follows:

Post-issue advice or conference –                                      £1,000.00

Settling defence or defence and counterclaim –                 £500.00.

 

Although I refer to the ring fencing of counsel’s fees, such a fee is also payable to a specialist lawyer instructed by the solicitors. This wording exists in the current rules in relation to the additional fee of £150.00 payable if the advice of counsel or a specialist lawyer is required to advise on quantum in a claim valued at over £10,000.00.

It is still not clear whether a specialist lawyer can be someone else in the same firm of solicitors, or has to be an outside lawyer.

For an additional fee of £150.00 under the current scheme, no one got too concerned about this.

However with potential additional fees throughout the case of £1,500.00, this should be clarified.

If one cannot instruct another lawyer in the same firm, then there is nothing to stop firms of solicitors having mutual arrangements whereby they refer these elements of work to each other on their cases.

There is nothing wrong with that – on of the reasons for instructing someone else is an independent view and a fresh pair of eyes.

In relation to what is a specialist lawyer Lord Justice Jackson says this:

“Does that mean ring fencing for barristers alone? No. Very often barristers will do the ring-fenced work and receive the ring-fenced fee. But on occasions the proper person to do the work and receive the ring-fenced fee may be a solicitor, for example the intended trial advocate. On some occasions the proper person to do the ring-fenced work and receive the ring-fenced fee may be a fellow of the Chartered Institute of Legal Executives with appropriate expertise. I shall use the phrase “counsel or specialist lawyer” to describe all such individuals.”

That is still not clear as to whether it can be a specialist lawyer in the same firm, but it appears that certainly a solicitor trial advocate in the same firm could be instructed.

This is potentially significant for solicitors, especially as the Band 4 advocacy fee is very substantially higher than the advocacy fee for Complexity Bands 1 to 3 as seen in the above table.

This may prove to be something of a doubled edged sword for counsel. The significant extra fees available may encourage firms of solicitors to engage and develop solicitor advocates to do this work and earn these extra fees whilst the routine preparation work is done by more junior staff.

This model fits well as the same fee is paid throughout the Fixed Costs Regime, whoever the work is performed by.

Thus a model of a junior lawyer preparing the case and taking advice from a more senior solicitor advocate within the firm as and when necessary, being paid for that advice, as well as any trial advocacy, may be an attractive one.

 

Noise Induced Hearing Loss Claims

There is a separate proposed matrix for such claims:

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

“Counsel’s fees and trial advocacy fees. The CJC working group did not reach full agreement on these matters. I have considered the relevant material and the rival submissions made within the working group. I recommend that counsel’s fees and trial advocacy fees in NIHL cases should be the same as those which I propose for ‘Band 4’ cases in the next section of this chapter. Almost all NIHL claims are low value.  So, as set out below, the trial advocacy fee will generally be £1,380.”

Trial advocacy fee in NIHL claims

As seen above the trial advocacy fee was not agreed and Lord Justice Jackson says that generally the trial advocacy fee will be £1,380.00.

That is correct, although in claims valued between £15,001.00 and £25,000.00, the trial advocacy fee is £2,500.00

Here is paragraph 5.12 of the report:

“5.12 Trial advocacy fee. The NIHL working group accepted that in NIHL cases the trial advocacy fees should be higher, but they could not agree on a figure.  Having considered the rival arguments, I recommend the trial advocacy fee should be increased as follows for both Band 4 and NIHL cases:

(a)  Claim value up to £3,000                        Trial advocacy fee £1,380

(b)  Claim value £3,001 to £10,000             Trial advocacy fee £1,380

(c)  Claim value £10,001 to £15,000            Trial advocacy fee £1,800

(d)  Claim value £15,001 to £25,000           Trial advocacy fee £2,500

CPR rule 45.39, which provides some flexibility in respect of fast track trial costs will continue to apply.”

 

Advocacy fees generally

The advocacy fees appear in the table set out above and apply whether it is a junior lawyer conducting their first case or a senior QC or 30 year solicitor or whatever.

Reference to a, b, c and d are to the value of the claim as follows:

a – A claim valued at up to £3,000.00

b – A claim valued at between £3,001.00 and £10,000.00

c – A claim valued between £10,001.00 and £15,000.00

d – A claim valued at between £15,001.00 and £25,000.00.

 

Review

The existing figures have been uprated for inflation – around 4% using the Services Producer Price Index.

Lord Justice Jackson proposes that the figures be reviewed every three years.

 

Also see:

FIXED COSTS COURSE

FIXED RECOVERABLE COSTS: LJ JACKSON’ S REPORT HERE

FIXED COSTS REPORT OVERVIEW: POST 1

FIXED COSTS AND THE BAR: POST 2

FIXED COSTS AND PART 36: POST 3

 

Written by kerryunderwood

August 3, 2017 at 11:04 am

Posted in Uncategorized

FIXED COSTS AND PART 36: POST 3

with 4 comments


You can now book onto my Fixed Costs Autumn Tour – here

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

Generally Lord Justice Jackson reports that the existing Fixed Costs Regime works well and that he proposes to make no changes, apart from uprating the figures for inflation.

Any other issues are for the Civil Procedure Rule Committee.

However, LJ Jackson made an exception in relation to Part 36 saying that it was the “one issue which cannot be ducked”.

His comment and proposals apply to all cases covered, or to be covered, by Fixed Recoverable Costs, that is the existing scheme in relation to most personal injury cases, as well as the proposed scheme for all civil cases in the Fast Track and for most civil cases in the new Intermediate Track, covering claims between £25,000.00 and £100,000.00.

In Broadhurst v Tan [2016] EWCA Civ 94

the Court of Appeal held that a Claimant who matches or beats its own Part 36 offer when judgment is entered gets indemnity costs, and not fixed costs.

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

the Queen’s Bench Division of the High Court adopted the same reasoning in relation to provisional assessment proceedings where there is a cap of £1,500.00 plus VAT and court fees.

In Phonographic Performance Limited v Raymond Hagan [2016] EWHC 3076 (IPEC)

the Intellectual Property Enterprise Court, part of the Business and Property Court, adopted the same line of reasoning in relation to the system of capped costs in IPEC cases.

The effect of these decisions is that Part 36 trumps fixed and capped costs, resulting in an award of indemnity costs when a Claimant matches or beats its own Part 36 offer and obtains judgment, and possibly on late acceptance by a defendant where there is no judgment.

Although many people, including the Court of Appeal and the High Court, consider that necessary to give Claimants in fixed costs cases an incentive to make Part 36 offers, it takes away one of the central points of a Fixed Costs scheme, which is that parties know the maximum extent of their liabilities when they embark upon bringing or defending litigation.

Allied to that is the fact that it then triggers detailed assessment of costs, bringing a further layer of expense and delay into what is meant to be a certain situation.

I deal with all of this in great detail in my book – Personal Injury Small Claims, Portals and Fixed Costs which consists of three volumes and over 1,300 pages and costs £80.00 including P&P and can be ordered from me here or Amazon here. 

On page 1,237, and in my submissions to Lord Justice Jackson, I said:

PART 36

“If the current Part 36 system is retained then the parties are still in the position of not knowing what the costs will be and the apparatus of detailed assessment needs to be maintained.

I propose that rather than maintain the existing system, where the Claimant escapes fixed costs if s/he matches or beats its own Part 36 offer, and where a Defendant gets costs from the date of expiry of its Part 36 offer if the Claimant fails to beat it, there be introduced a new system of calculating Part 36 penalties/rewards.

This would consist of a percentage add-on/deduction to Fixed Recoverable Costs depending upon the stages passed between expiry and acceptance etc.”

Lord Justice Jackson proposes replacing indemnity costs in such circumstances with a percentage uplift of either 30% or 40% and states that this proposal is a clear issue of policy to be addressed in the consultation exercise following his report.

Lord Justice Jackson does not suggest 30% for one of case and 40% for another, but rather that the figure for everything should either be 30% or 40%.

At present there are conflicting decisions at Circuit Judge level as to whether or not a late accepting Defendant, as compared with a Defendant who has a judgment entered against it, should be liable for indemnity costs.

Lord Justice Jackson does not express any view in his report as to whether the 30%/40% uplift should apply on late acceptance as well as on judgment.

I deal with all of this in my blog: PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE?

 

Lord Justice Jackson set out the different views on Part 36 generally at paragraph 2.6 of chapter 5 of his report on page 80 as follows:

 

“2.6        Broadhurst v Tan and the effect of an order for indemnity costs. The one issue which cannot be ducked, however, is Broadhurst v Tan [2016] EWCA Civ 94; [2016] 1 WLR 1928.  This decision, unless its effect is modified by rule change, will impact upon fixed costs generally. This issue is equally important in relation to higher value claims, but I deal with it here and will not repeat the discussion in later chapters. Views on this issue are sharply divided:

(i) Nine of my assessors consider that, although CPR Part 36 must continue to bring rewards for claimants who make effective Part 36 offers, in the context of a fixed costs regime it would be better for there to be a percentage uplift on the fixed costs rather than an order for indemnity costs.  This will avoid the need for a detailed assessment of costs.  Also, it will provide certainty for litigants.  Certainty is an essential feature of an FRC regime.  As to the level of percentage uplift, views range between 25% and 50%.

(ii) Five of my assessors take the opposite view.  Nicholas Bacon QC writes:

“I do not agree with the proposal that we do away with the Broadhurst indemnity costs order.   These cases on indemnity costs are not clogging up the courts with detailed assessments.  It is a powerful message for a party to consider rejection/acceptance.  A 30% enhancement is not sufficient to redress the failure to accept an offer.  It ignores the fact that as between solicitor and client more than the fixed costs will have been incurred by the client.  Why should a client not be entitled to be reimbursed for their actual legal spend, rather than fixed costs, where a party has misconducted themselves or caused a party to incur costs unnecessarily because an earlier offer should have been accepted.”

I have set out the competing arguments, because this is the only issue on which my assessors are sharply divided.  After considering the powerful arguments on both sides, on balance, for the reasons set out in sub-paragraph (i) above, I favour replacing indemnity costs with a percentage uplift of 30% or perhaps 40%.  BUT this is a clear issue of policy, which will need to be addressed in the consultation exercise following this report.”

 

Unreasonable conduct

In cases of unreasonable litigation conduct, the report proposes that the court should have the power either to award a percentage uplift on costs of 30% or 40%, depending upon which figure is finally chosen, or to make an order for indemnity costs.

The court will exercise that power, having regard to the seriousness of the conduct in question.

One example of such unreasonable conduct, given in the report, might be substantial non-compliance with the relevant Pre-Action Protocol.

As to what constitutes unreasonable litigation conduct, Lord Justice Jackson refers to the case of

Dammermann v Lanyon Bowdler LLP [2017] EWCA Civ 269,  at paragraphs 30 to 32,

dealt with in detail in my blog – SMALL CLAIMS – UNREASONABLENESS AND COSTS.

 

Comment

Unsurprisingly, I welcome this proposal as it reflects my own views.

I would go for a 40% uplift.

It is in the interest of all litigators, whatever side they are on, to have an authoritative superior court decision as soon as possible as to whether a Claimant gets indemnity costs on late acceptance by a Defendant.

 

Also see:

FIXED COSTS REPORT: POST 1

FIXED COSTS AND THE BAR: POST 2

FIXED RECOVERABLE COSTS: LJ JACKSON’ S REPORT HERE

PART 36 AND FIXED COSTS

SMALL CLAIMS – UNREASONABLENESS AND COSTS

PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE?

Written by kerryunderwood

August 2, 2017 at 7:37 am

Posted in Uncategorized

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