Kerry Underwood

FUNDING NOTIFICATION: STRICT APPROACH BY COURT OF APPEAL

with 3 comments


In Springer (Personal Representative of The Estate of Wayne Anthony Springer (Deceased)) v University Hospitals of Leicester NHS Trust [2018] EWCA Civ 436

the Court of Appeal, in considering a second appeal against an order of a Deputy District Judge, dismissed the appeal against an order refusing the claimant relief from sanction following a failure to serve notice of funding in accordance with paragraph 9.3 of the old Practice Direction on Pre-Action Conduct.

This meant that the claimant could not recover the success fee under the conditional fee agreement for the period before notice was given and was also deprived of recovery of part of the After the Event insurance premium.

With limited exceptions, recovery of additional liabilities was abolished in relation to conditional fee agreements and After the Event insurance policies entered into on or after 1 April 2013, and thus this decision applies only to cases with pre–April 2013 funding arrangements, but this still covers a fair number of personal injury claims.

The decision will also be of relevance, albeit in relation to a different Practice Direction, where recoverability of additional liabilities remains, principally in mesothelioma cases, defamation and breach of privacy cases, and, in relation to clinical negligence cases, the After the Event insurance premium in relation to reports on causation and liability.

 

Paragraph 9.3 of the Practice Direction provided:

 

“Where a party enters into a funding arrangement within the meaning of rule 43.2(1)(k), that party should inform the other parties about this arrangement as soon as possible.”

 

This was effective from 1 April 2009 and prior to that there had been no requirement to inform the other parties “as soon as possible”.

Thus the decision is effective in relation to additional liabilities arrangements between 1 April 2009 and 31 March 2013 in relation to personal injury matters.

Just six months later, on 1 October 2009 the Practice Direction was changed yet again, and I set out the new paragraph 9.3 below, and it should be noted that the word “should” was replaced by the word “must”, which is mandatory and not just aspirational – see

 

Metcalfe v Clipson [2004] EWHC 9005 (Costs);

 

and

 

 Cullen v Chopra [2007] EWHC 90093 (Costs)

The new rule read:

 

“Where a party enters into a funding arrangement within the meaning of rule 43.2(1)(k), that party must inform the other parties about this arrangement as soon as possible and in any event either within 7 days of entering into the funding arrangement concerned or, where a claimant enters into a funding arrangement before sending a letter before claim, in the letter before claim.

(CPR rule 44.3B(1)(c) provides that a party may not recover certain additional costs where information about a funding arrangement was not provided.)”

 

 

CPR 44.3B(1) imposed a sanction on those who failed to provide funding information as required and for conditional fee agreements entered into on or after 1 October 2009, it provided, so far as is relevant:

 

“Unless the court orders otherwise, a party may not recover as an additional liability –

(c) any additional liability for any period during which that party failed to provide information about a funding arrangement in accordance with a rule, practice direction or court order…”.

 

 

All three courts which considered this matter, ending in the Court of Appeal, held that “as soon as possible” meant just that, although the courts accepted that the wording of the Practice Direction was poor and did not sit well with the original Civil Procedure (Amendment No 3) Rules 2000 as far as the sanction for failure to give notification was concerned.

Here there was a long delay in giving notice on Form N251 of the additional liabilities.

The facts are long and complicated and set out in full in the judgment, but the key point is that “as soon as possible” means just that.

The Court of Appeal pointed out that such a formula is not unusual, for example judicial review proceedings must be brought promptly, and in any event within three months.

At paragraph 61 of the judgment the Court of Appeal pointed out that the White Book is wrong in its analysis of paragraph 9.3 of the Practice Direction.

The White Book does not have a good record of getting the law in relation to funding arrangements and conditional fee agreements etc. correct.

At paragraph 63 of the judgment the Court of Appeal said that if it was not possible to identify all, or possibly any, of the proposed defendants then it would not be possible to notify those unknown defendants and thus the obligation to notify them under paragraph 9.3 will not arise until they are identified.

The second issue was whether the claimant should be granted relief from sanctions in relation to the now well-known principles in

 

Denton v TH White Limited [2014] EWCA Civ 906

 

For reasons set out in the judgment the Court of Appeal held that the three stage test in Denton meant that the claimant should not be granted relief from sanctions.

The key finding was that the NHS Trust had suffered significant prejudice as a result of the breach because it lost the opportunity of taking proactive steps towards investigating and resolving the potential claim over the two and a half year period during which additional liabilities were being incurred without their knowledge.

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Written by kerryunderwood

April 10, 2018 at 9:12 am

Posted in Uncategorized

3 Responses

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  1. I’m glad the CA found against the solicitors. Trying to charge the NHS £116,000 in costs for a claim that settled for just £20k immediately after the Defence had been filed is outrageous.

    It’s cases like this where such naked greed is displayed by the solicitors that have both destroyed the public image of PI practitioners and killed the goose that laid the golden egg.

    Pro Bono

    April 10, 2018 at 11:43 am

  2. Thanks for your comment. Any different views on this?

    Kerry

    kerryunderwood

    April 10, 2018 at 12:59 pm


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