Kerry Underwood

Archive for August 2017

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 12 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

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