Kerry Underwood

Archive for August 2018

FIXED COSTS IN SPLIT TRIAL CASES

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In September and October I am delivering my new course – Getting the Retainer Right – in 10 cities – details and booking form here.

It should go without saying that a fast track matter should never be listed for a split trial, and the superior courts are now strongly against split trials in any matter, but nevertheless it does still happen.

In those circumstances what is the correct level of fixed recoverable costs, and when is the claimant entitled to them?

At present the fixed recoverable costs scheme only applies to personal injury cases, and not all of those, and with a maximum value of £25,000, unless the matter has wrongly been placed on the portal.

This issue will become a far more significance as and when fixed recoverable costs spread to all civil litigation valued at £100,000 or less.

Although the rules do not deal with the matter, my view is that a successful claimant cannot be entitled to receive the fixed recoverable costs once he or she has won the liability trial, essentially for two separate reasons.

Firstly, both the preparation fee and the trial advocacy fee are in part calculated by reference to damages, and so it would be impossible to quantify the fixed recoverable costs.

Clearly if the matter is going to trial it has reached the final stage of the Table in CPR 45.29 Table 6B, that is issued – Post Listing and Pre-Trial.

The fixed recoverable costs in the different type of ex-portal claims which have reached that stage are:

                                               £

  • road traffic accident    2,655 plus 20% of damages

  • employers liability      4,280 plus 30% of damages

  • public liability             3,790 plus 27.5% of damages

In all types of work the trial advocacy fee is fixed by reference to the amount awarded by the court as follows:

                                                 £

  • up to £3,000                     500

  • £3,000 to £10,000            710

  • £10,000 to £15,000       1,070

  • £15,000 and over           1,705

The second reason is that the defendant may have made a Part 36 offer, which the claimant has failed to beat.

Let us assume that the defendant had offered £10,000 very early on in the case, and the claimant then wins on liability, but obviously without quantum being determined, as it is a split trial.

At that stage no one will know whether or not the defendant’s Part 36 offer will be beaten or not, as obviously that will be determined at the quantum trial.

The principle applies even if no Part 36 offer has been made, and in any event a defendant who has lost a liability trial is then very likely to make a Part 36 offer on quantum.

That raises an interesting, and as yet unanswered, question as to what happens in those circumstances.

The claimant has had to do all of the work in readiness for a liability trial, and has thus reached the final stage.

After the liability trial the defendant, for the first time, makes a Part 36 offer, which the claimant then fails to beat at the quantum trial.

What happens to costs?

My view is that the claimant still gets the full preparation costs, that is in accordance with the formula set out above, together with the trial advocacy costs of the liability trial, and does not have to pay the defendant any costs in relation to preparation.

The claimant would not get the costs of the second trial, and would have to pay the defendant’s costs of that trial.

I am unaware of any case on this point.

In relation to the fees for the quantum trial, neither party should get any extra preparation costs as the fixed fee, calculated in relation to the formula above, is intended to cover all liability and quantum issues and the fixed recoverable costs scheme does not differentiate between cases where liability is admitted, and those where it is not admitted.

Thus if a case is settled just before trial for, say, £10,000, then the claimant recovers exactly the same level of fixed costs whether liability was admitted only just before trial, or where it had been admitted at the very beginning of the case, meaning that almost no work on liability was done.

The idea is that it is a swings and roundabout system.

The advocacy fee is a freestanding view and generally a successful claimant should get a second advocacy fee if there is a liability trial and a quantum trial, although again, there is no authority on this point.

Presumably the amounts of damages awarded at the quantum trial would also determine the level of fixed advocacy costs for the liability trial, in accordance with the above formula.

Outside the field of personal injury there is no system of Qualified One-Way Costs Shifting, and therefore where there is a liability trial at which the defendant succeeds, then that is the end of the matter and the defendant will get its costs in accordance with the fixed recoverable costs formula.

Written by kerryunderwood

August 31, 2018 at 8:10 am

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CONSIDERATION OF WHETHER ACCEPTABLE FOR EXPERT TO WORK UNDER CONDITIONAL FEE ARRANGEMENT

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In September and October I am delivering my new course – Getting the Retainer Right – in 10 cities – details and booking form here.

In Gardiner & Theobald LLP v Jackson (Valuation Officer) [2018] UKUT 253 (LC) (3 August 2018)

the Upper Tribunal Lands Chamber looked at the extent to which principles established in

R (Factortame Ltd) v Secretary of State for Transport, Local Government and the Regions [2002] EWCA Civ 932

concerning an expert witness being paid under a Conditional Fee Agreement or other success fee arrangement, apply to tribunal proceedings.

Factortame established, in  civil proceedings, that it would generally be “highly undesirable” to instruct an expert on a contingency fee basis as that might threaten the objectivity of the evidence and, only in “a very rare case indeed”, would the court consent to it.

The CJC Guidance for the instruction of experts in civil claims strongly discourages payment of experts’ fees contingent on the nature of the expert evidence or the outcome of the case.

The President of the Lands Chamber noted that sometimes a slightly different approach is appropriate under tribunals’ procedures.

In Keen v Worcestershire County Council (LCA/44/2001),

which pre-dated Factortame, it emerged during a hearing that a surveyor was acting on a no win no fee basis.

The tribunal decided that no weight should be given to his evidence due to his financial interest in the outcome.

The President of the Lands Chamber observed that applying factors established in Factortame to assess the weight to be attached to an expert’s report, rather than the admissibility, might allow “a more nuanced approach”.

However, he emphasised that, whatever approach the tribunal decided to adopt regarding Factortame, it was “wholly unacceptable” for an expert witness to enter into a Conditional Fee Agreement without declaring it in sufficient detail to the tribunal and other parties from the very outset of their involvement in the case.

Failure to do so would be treated as a “serious matter”.

Specific factors considered included the terms of the Conditional Fee Agreement, access to justice, the need for compliance with obligations owed by expert witnesses to the tribunal, and the Code of Conduct and Practice Statement of the Royal Institute of Chartered Surveyors with the Royal Institute of Chartered Surveyors to be asked to consider if any action is required following this case.

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August 30, 2018 at 8:30 am

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LITIGANTS IN PERSON: TWO CASES: TWO APPROACHES

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In September and October I am delivering my new course – Getting the Retainer Right – in 10 cities – details and booking form here.

Lenient Approach by Court

In Country Cars of Bristol Ltd v County Cars (SW) Ltd and another [2018] EWHC 839 (IPEC)

the Intellectual Property and Enterprise Court, part of the High Court, considered a case where the defendants were acting in person and the claimant had entered judgment in default following the defendants’ failure to file an acknowledgment of service, even though they had served the acknowledgment on the claimant, albeit a few days later.

The High Court set aside the judgment, and is a rare recent example of the court adopting a lenient approach towards the mistakes of litigants in person, although there was a twist in the tale here in that there were problems with the court’s electronic filing systems.

The acknowledgment of service was due to be filed on 27 November 2017, and on the same date the defendants’ solicitors stopped acting for them and on 7 December 2017 the defendants, now litigants in person, served the acknowledgment and defence on the claimant, but failed to file either document at court and judgment in default was served on them on 18 January 2018.

On 31 January 2018 the defendants instructed new solicitors, who attempted to file an application to set judgment aside under CPR 13.3 on the very same day, and their evidence was that there was difficulty with the court’s electronic filing system causing them to be unable successfully to file that application until 20th February 2018.

Under CPR 13.3 the High Court considered that the delay between 17 January, when the defendants became aware of the default judgment, and 31 January when the attempt was made to file the application, was short and of little consequence, and the court found that the defendants were not culpable for the further delay between 31 January and the eventual filing of the application on 20 February as the judge accepted that this might have been due to the court’s electronical filing system.

Applying the test in CPR 3.9 the judge found that the breach was serious or significant, but he held that the reasons for this were that the defendants were not represented and that they believed that they had done what was required in serving the acknowledgment, but not filing it.

Taking into account the lack of prejudice, and the fact that there was a real prospect of the defendants successfully defending their claim, the judge was satisfied that there were grounds of setting aside the default judgment under CPR 13.3 and that the requirements under CPR 3.9 did not lead to the opposite view.

Hardline in Employment Tribunals

In Green v Mears Ltd [2018] EWCA Civ 751

the Court of Appeal rejected an appeal against an order of the Registrar at the Employment Appeal Tribunal refusing an extension of time to a litigant in person who was more than two months late in lodging the appeal, and who argued that he was computer-illiterate and did not access the judgment booklet online, or asked anyone for help.

Any perceived relaxation of the rules in the ordinary courts, following the decisions in the Mitchell and Denton cases did not supersede the decision in

United Arab Emirates v Abdelghafar & Anor [1995] ICR 65 EAT .

In so far as there was any difference of approach between Abdelghafar and Denton, Abdelghafar still governed Employment Tribunal proceedings.

Even if the Denton guidance should have been applied in this case, the appeal would have failed in any event and a divergence of approaches between the Civil Courts and the Employment Tribunal system was legitimate.

The Court of Appeal held that Mr Green, representing himself, received the Employment Judge’s decision and reasons in October 2013 and had until 12 November 2013 to lodge an appeal to the Employment Appeal Tribunal.

He twice made an application for a reconsideration by the Employment Tribunal and was refused both times, the second time being in December 2013.

It is settled law that an application for a reconsideration or review by the Employment Tribunal of its own decision does not stop time running in relation to the lodging of an appeal with the Employment Appeal Tribunal.

Mr Green lodged an appeal with the correct documentation on 24 January 2014, that is 73 days out of time.

Mr Green argued that he was wrongly advised by staff that the original tribunal to await the outcome of his reconsideration application before lodging any appeal and he said that he found the appeal process to be “a daunting prospect”.

The Employment Appeal Tribunal found that neither of those reasons constituted exceptional grounds on which to grant an extension.

In Abdelghafar the Employment Appeal Tribunal had refused an extension of time, even though the default had not caused any prejudice to the successful party in the original proceedings and that approach had been upheld on at least three occasions by the Court of Appeal.

The Court of Appeal has frequently been unhappy with the strict approach adopted in the Employment Appeal Tribunal, but has always declined to interfere.

In Woods v Suffolk Mental Health Partnership NHS Trust [2007] EWCA Civ 1180

the Court of Appeal observed that “ the denizens of the Employment Appeal Tribunal seem to be a hard-hearted lot” in whose blood “mercy flows thinly”, and here the Court of Appeal used those quotes in this decision.

The Court of Appeal here also quoted from Jurkowska v HLMAD Limited [2008] EWCA Civ 231:

“65. This court has more than once approved the policy adopted by the EAT for the administration of the statutory rule requiring any appeal to be instituted within 42 days of the sending out of the tribunal’s reasons. It is a policy which is unforgiving, but it has never been suggested that its effect is to stifle the discretion given by the rule to enlarge time. Its purpose and effect can nevertheless fairly be said to be an equality of misery: anyone who is caught out by the 42-day time limit has, barring something quite exceptional, only himself or herself to blame for leaving it so late to institute their appeal. But one has only to consider the alternatives to see why the policy is justifiable: either any honest excuse would be capable of securing an enlargement of time, shifting the focus to how long a consequential delay might be pardoned in one case or another; or a checklist of acceptable and unacceptable excuses would develop, distinguishing between such things as transport delays, postal delays, administrative oversights, lack of funds, staff sickness, late advice and so forth. This is why judges of this court from time to time find themselves denying permission to appeal from a refusal of the EAT to waive a delay of a few minutes or hours in the delivery of appeal papers to its registry, where they would not have hesitated to enlarge time had there been a similar lapse in filing the papers in the Civil Appeals Office.”

Meanwhile in Vosland

The Chancellor of the High Court Sir Geoffrey Vos in a bizarre speech, which I will report elsewhere, and delivered to the Law Society on 8 May 2018 said:

“35. This online world has allowed the litigant in person to flourish. Indeed, many of the online dispute resolution processes are designed to allow individuals to deal by themselves with their small legal cases.”

I am unaware of any other member of the judiciary who shares this view. Indeed there is overwhelming evidence, both from the criminal and civil judiciary, that litigants in person are struggling to get justice, while at the same time slowing down the whole court process.

The two decisions here demonstrate that fact.

 

Written by kerryunderwood

August 29, 2018 at 10:23 am

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PHOTOGRAPHS AND COPYRIGHT

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Kerry is undertaking a 10 city Autumn Tour with his new course – Getting the Retainer Right.

For full details and to book click here

PHOTOGRAPHS AND COPYRIGHT

In Land Nordrhein-Westfalen v Dirk Renckhoff

the European Court of Justice held that it was a breach of a photographer’s copyright to republish a photograph without permission, even though it had appeared online.

The fact that a photographer had given permission for the photograph to appear elsewhere did not entitle anyone else to use it.

Here a German secondary school re-published the photograph without permission of the photographer.

The European Court of Justice, currently still the highest court in England and Wales, held that even where a work was freely accessible to all internet users with the consent of the copyright holder, publication on a new publicly accessible website constituted making that work available to the public within the meaning EU Directive 2001/29, also known as the InfoSoc Directive.

Linking to the original work is acceptable, but making a new copy available is not.

This decision follows the law in relation to published articles and copyright, where a link to a website is permissible but reproducing the work without permission is not.

Written by kerryunderwood

August 24, 2018 at 12:25 pm

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QUEEN’S BENCH DIVISION GUIDE: NEW EDITION

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Kerry is undertaking a 10 city Autumn Tour with his new course – Getting the Retainer Right.

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QUEEN’S BENCH DIVISION GUIDE: NEW EDITION

On 21 August 2018 a new edition – the sixth – of the Queen’s Bench Guidance published and this is known as the Queen’s Bench Guide 2018 and is here.

This replaces the previous guide and is effective immediately and the following changes should be noted:

  • On issue of a claim, the claimant is required to complete the Queen’s Bench Allocation of Claims form (in Annex 3) so that the claim can be allocated to a specialist list or master (paragraph 4.1.6).

  • A directions order for trial will be sent to the Queen’s Bench Listing Office, who will notify all parties of a listing appointment for a trial date or period within the trial window, which will usually be six weeks from the date the order is sealed (or three weeks in the case of mesothelioma liability trials) (paragraphs 10.4.1, 20.1.2 and 20.4.5).

  • For trials, skeleton arguments should be filed and served not later than 10am two days before the trial, and for substantial applications, no later than 10am one day before the application.

Where one party is a litigant in person (LIP) and the other is represented, the represented party should try and provide their skeleton argument to the LIP two days before the hearing (paragraphs 12.3.7 and 20.8).

  • The trial window will be no longer than three months, unless the court considers there is a good reason for requiring a longer trial window, in which case directions will be given for a trial window no longer than four months (paragraph 20.1.1).

  • While efforts to accommodate the convenience of counsel will be made when listing a trial, this is not a determinative factor (paragraph 20.1.5)

Media & Communications List

A list of claims that should be allocated to the List: defamation, malicious falsehood, misuse of private information, breach of confidence, breach of data protection rights and misuse of personal data, harassment, and injunctions to restrain publication (paragraph 19.3).

  • Clarification that rulings on meaning in defamation cases can take place at any time, since the question is no longer one for a jury (paragraph 19.7).
  • Clarification that, in defamation cases, questions of meaning and serious harm should ordinarily be dealt with together at an interlocutory stage. The court will be slow to direct a preliminary issue as to serious harm involving substantial evidence (paragraph 19.8).

Written by kerryunderwood

August 24, 2018 at 11:15 am

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PROPORTIONALITY AND NON-FINANCIAL MATTERS (2)

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Kerry is undertaking a 10 city Autumn Tour with his new course – Getting the Retainer Right.

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In Various Claimants in Wave 2 of the Mirror Newspapers Hacking Litigation v MGN Ltd (unreported), 3 August 2018, (Senior Courts Costs Office)

following judgment in “Wave 1” of the phone-hacking litigation the Senior Costs Judge has ruled on the proportionality of ten claimants’ costs in “Wave 2” of the litigation, applying the post-April 2013 test.

The costs were agreed as reasonable and the issue was proportionality, and as the master observed, that is unusual.

The same factors were involved as in the wave 1 cases.

He held:

  • Sums in issue: “Sums in issue” reflects the value of the claim as viewed by the parties during the currency of the claim and, intentionally, is not as narrow as the sum awarded or agreed.

Although, by Wave 2, the court’s approach regarding damages was known, uncertainty remained regarding the number of articles individual claimants could prove to have been the result of phone-hacking.

  • Value of non-monetary relief in issue: Again, “in issue” refers to what is claimed. 

Injunctions, undertakings, statements in open court and apologies were of substantial value: the claim was not just about damages.

  • Complexity: Although Wave 1 resolved the methodology for calculating damages, these claims were not “straightforward”.

The need to establish which articles derived from phone-hacking, the number of interlocutory hearings and the estimated trial length meant that these were not “run of the mill” cases.

  • Additional work generated by the conduct of the paying party: This was “hard-fought litigation with fairly major interlocutory skirmishes” but no significant additional work was caused by the defendant’s conduct.

  • Wider factors: The wider factors in the Wave 1 claims also applied here.

The cases were of significant public importance: the number of people whose privacy was invaded, and the “deplorable conduct” of the defendant made the claims of continuing public interest and importance.

The claimants’ reputations were involved, and there was a degree of vindication (although less than in Wave 1).

Even in two cases where the agreed reasonable costs exceeded the agreed damages, the Master held that the reasonable costs were not disproportionate.

The fact that two claimants’ costs were higher, as they had instructed solicitors not acting for other claimants in this litigation, might have gone to reasonableness but was not relevant to proportionality.

The appropriate Civil Procedure Rule is set out in my recent blog Proportionality and Non-Financial Matters.

The Original blog first appeared on the Practical Law Dispute Resolution Blog on 30 July and I am grateful to Practical Law for this further information.

Written by kerryunderwood

August 23, 2018 at 8:10 am

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RECOVERABLE HOURLY RATES

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Kerry is undertaking a 10 city Autumn Tour with his new course – Getting the Retainer Right.

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In JXA v Kettering General Hospital NHS Foundation Trust [2018] EWHC 1747 (QB) (09 July 2018)

a High Court Judge was considering an appeal from a Costs Master in relation to hourly rates allowed in a high value clinical negligence – potentially as much as £20 million – arising from the Trust’s negligent treatment of the claimant during his birth.

The Master had allowed the following rates:

  £
Grade A partner   350 an hour;
Grade C assistant solicitor 200 an hour;
Grade D trainee/paralegal 150 an hour.

 

The claimant’s solicitors had sought the following:

  £
Grade A partner   380 an hour to 31 March 2013, rising by £10 each to 31 March up to £420 by the end of the case;
Grade C assistant solicitor 270 an hour from 1 January 2017;
Grade D trainee/paralegal 150 an hour to 31 March 2013 rising by £10 each to 31 March to £190 by the end of the case.

 

While finding that the Master had not properly addressed the issue of whether choosing the Central London firm was reasonable, as required by:

Wraith v Sheffield Forgemasters Ltd & Truscott v Truscott [1998] 1 WLR 132(CA)

the Costs Master had in fact arrived at appropriate hourly rates and thus the appeal was dismissed.

 

Written by kerryunderwood

August 22, 2018 at 8:10 am

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INDEMNITY COSTS ORDERED ON LATE ACCEPTANCE OF PART 36 OFFER, OR WERE THEY?

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In Holmes v West London Mental Health NHS Trust – Case No:  HQ15C00683 29 June 2018

the Queen’s Bench Division of the High Court ordered a defendant to pay indemnity costs from the date of expiry of the claimant’s Part 36 offer on liability on a 95/5 basis.

The offer was made in February 2017 and accepted in May 2018.

The judge was very critical indeed of the defendant’s conduct in relation to almost every aspect of the case and the NHS Trust had repeatedly failed to respond to the claimant’s invitations to engaged in ADR, and at all times the defendant knew that the claimant was mentally fragile.

A Master had described the defendant’s cases “worse than hopeless” and the judge here described the defendant’s conduct in defending the case as unreasonable, as it had eventually capitulated, and criticized its “drip feeding” of liability offers at a lower percentage than 95.

Comment

Not too much should be read into this decision, which cannot be seen as in any way disagreeing with, or undermining, the decision of the Court of Appeal in

Hislop v Perde [2018] EWCA Civ 1726.

It appears, from a not very clear judgment, that in fact the indemnity costs order was made on the basis of conduct, and not late acceptance of a Part 36 offer.

The expiry of the date for accepting the claimant’s Part 36 offer seems simply to have been used as a convenient date from which to order indemnity costs.

In some areas, the judgment is plain wrong.

For example the judge says:

“I remind myself that the indemnity basis does not mean what that word implies.  It does not entitle the receiving party to recover any more than reasonably incurred costs and in reasonable amounts and proportionate to the claim.” (Paragraph 38).

That is not correct.

CPR 44.3(2) reads:

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

  • 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
  • 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.”

(Factors which the court may take into account are set out in rule 44.4.)

CPR 44.3(5) then sets out the test for proportionality, but that only applies where the basis of assessment is the standard one.

CPR 44.3(3) deals with assessment on the indemnity basis and states:

“(3) Where the amount of costs is to be assessed on the indemnity basis, the court will resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party.”

That is often referred to as the reversal of the burden of proof in relation to reasonableness, and it is.

However, it is clear, and widely accepted, that proportionality has no part to play when costs are assessed on the indemnity basis.

Written by kerryunderwood

August 21, 2018 at 8:10 am

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CLAIM AGAINST FORMER PARTNER FOR LOST CHANCE TO SETTLE COSTS CLAIM NOTWITHSTANDING UNENFORCEABILITY OF CONDITIONAL FEE AGREEMENT

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In FPH Law (A firm) v Brown (t/a Integrum Law) [2018] EWCA Civ 1629 (16 July 2018)

the Court of Appeal upheld a decision permitting a claim by solicitors against a former partner who had taken cases to a new firm and had undertaken to keep the original firm informed about matters raised in costs negotiations, including a specific claimant personal injury case.

The substantive claim was settled and there were then negotiations in relation to costs, during which the defendant challenged the validity of the claimant’s Conditional Fee Agreement and, ultimately, at the detailed assessment the District Judge upheld that challenge and ruled that the Conditional Fee Agreement was unenforceable and allowed the claimant no profit costs at all and indeed ordered the claimant to pay the losing defendant’s costs of £5,000 in relation to the defendant’s successful conduct of the detailed assessment proceedings.

Consequently neither the original firm of solicitors, nor the new firm, got any costs.

Before the detailed assessment took place, there had been negotiations in relation to costs, the vast majority of which were due to the original firm.

By 5 May 2011 the defendant had offered £64,000 in relation to costs, but had repeated their concerns about the validity of the Conditional Fee Agreement.

On 6 May 2011 the defendant here, that is the solicitor who had moved firms, suggested to the claimant here – the original firm of solicitors that he worked for – that they counteroffer £77,000, with a view to settling at £73,000.

In fact he counteroffered in the sum of £78,000 and on 16 May 2011 the defendants increased their offer to £70,000.

Thus, in a case where the validity of the Conditional Fee Agreement was being challenged, ultimately successfully, the defendants were in the substantive action were prepared to pay £70,000 and the claimants in the substantial action were prepared to accept £73,000.

The Court of Appeal said:

“13. There, for reasons which are wholly unexplained, the matter rested. Even though Jarvis’ solicitors were prepared to offer £70,000, and the claimant was prepared to accept £73,000 (even without knowing about the challenge to the validity of the CFA), the defendant failed to effect a settlement of the costs dispute. Instead the defendant allowed the dispute with Jarvis’ solicitors to continue to formal pleadings and a final determination. The claimant had no involvement in any of this.

Following the detailed assessment proceedings the original law firm brought these proceedings and the former partner argued that the ultimate finding of invalidity in relation to the Conditional Fee Agreement was a complete defence to the claim that had the original solicitors known about the challenge to the validity of the Conditional Fee Agreement, it would have instructed the former partner to accept the offer of £70,000.

At first instance the High Court held that a compromise of claims made under contracts said to be illegal was an enforceable comprise, applying

Binder v Alachouzos [1972] 2 Q.B. 151

Here the Court of Appeal rejected the argument that Binder could be distinguished and rejected the idea that a higher standard should be applied to the Conditional Fee Agreement drawn up by solicitors as officers of the court.

In Binder the agreement had been put into place on the basis of legal advice. The knowledge and experience of those involved in the drafting of an agreement could not affect the application of the principle in that case.

The Court of Appeal went on to say:

43. More widely, it seems to me that the argument that the CFA must be treated as if it was always illegal or unenforceable (thus striking down any agreement subsequently based upon it), is commercially unrealistic. It would discourage the compromise of costs issues, and instead encourage lawyers for the losing party to work through existing CFAs with a fine-tooth comb to try and find a reason why the entire CFA was illegal or unenforceable, so as to provide the losing party with some sort of windfall on costs. Solicitors enter into CFAs in good faith, as a way of providing legal services to a claimant who needs them and who would otherwise be unable to pay for them. Sometimes things go wrong, and the CFA which has been entered into will be found to be unenforceable. But it would go much too far to say that such a result must always strike down an earlier bona fide compromise of costs based on that Conditional Fee Agreement.”

Comment

A sensible and correct decision.

It beggars belief how some solicitors deal with costs issues.

This is one of them.

Written by kerryunderwood

August 20, 2018 at 8:10 am

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COURT OF APPEAL STRIKES DOWN PART OF CICA SCHEME RE SEXUAL ABUSE

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In JT v First-Tier Tribunal & CICA & Equality and Human Rights Commission [2018] EWCA Civ 1735

the Court of Appeal held that the “same-roof” rule in the Criminal Injuries Compensation Authority Scheme, which provides that an award will not be made in respect of a criminal injury sustained before 1 October 1979 “if at the time of the incident giving rise to that injury, the appellant and the assailant were living together as members of the same family” was manifestly without reasonable foundation and thus struck it down.

This is an important and significant decision which may open up the heavily curtailed CICA Scheme to other challenges.

Here, the applicant’s stepfather was convicted of repeatedly raping and sexually assaulting her while they were living together as members of the same family, but the same-roof rule meant that no compensation was payable.

By contrast, a relative of the applicant, not living under the same roof, did receive compensation in relation to two incidents of indecent assault by the stepfather.

The rule was modified in 1979, but only in relation to post-1979 incidents, not claims, and thus a pre-1979 incident always remained outside the scheme.

On appeal the applicant argued that the same-roof rule was incompatible with article 14 of the European Convention on Human Rights which provides:

“Prohibition of discrimination

The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”

The Court of Appeal then set out its task in determining this issue:

“40. To determine whether applying para 19 of the 2012 scheme is incompatible with article 14, three questions need to be answered. The first is whether the difference in treatment of which JT complains concerns the enjoyment of a right set forth in the Convention – the test for this purpose being whether the facts of the case fall “within the ambit” of a Convention right. The second question is whether the difference in treatment is on the ground of a “status” which falls within article 14. The third question is whether the difference in treatment amounts to “discrimination” prohibited by article 14. Where the claimant has been treated differently from a class of persons whose situation is relevantly similar, this depends on whether there is an objective and reasonable justification for the difference in treatment.”

The judgment contains detailed examination of the principles, issues in case law in relation to all matters, and its first task was to decide whether the facts of this case fell “within the ambit “of  article 14 and concluded that they did.

The applicant here relied upon article 1 of Protocol 1 (1P1) which provides:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law…”

It concluded:

“69. The necessary conclusion, in my view, is that the current criminal injuries compensation legislation in the UK is to be regarded as establishing a proprietary interest falling within the ambit of article 1P1 for persons satisfying its requirements. It follows that article 14 applies to JT’s claim that she would be eligible for an award under the 2012 scheme but for discrimination on a ground prohibited by article 14.

70. In reaching this conclusion, I am fortified by the fact that it accords with the recent decision of the Court of Session (Inner House) in MA vCriminal Injuries Compensation Board[2017] CSIH 462017 SLT 984, which has been followed by the High Court of Northern Ireland in In re F [2018] NIQB 7.”

The Court of Appeal then considered whether the difference in treatment was on the ground of “a status” which falls within article 14:

“71. Article 14 contains a list of grounds on which discrimination is prohibited. But the wording of article 14 also makes it plain that the list is illustrative and not exhaustive. Thus, the list is preceded by the words “on any ground such as” and ends with the words “or other status”. It is not suggested that JT has been discriminated against on the ground of a status which is specifically mentioned in article 14. What is said is that the case falls within the words “or other status”. The approach of the European Court of Human Rights has been to interpret that phrase (“toute autre situation” in the French text) broadly. As interpreted, article 14 is not restricted to grounds such as sex or race which are particularly suspect because they are commonly or historically associated with prejudice and discriminatory treatment. (Such an interpretation would in any event be inconsistent with the inclusion of “property” in the list of grounds.) In addition, while the court has repeatedly referred to the need for a distinction based on a “personal” characteristic in order to engage article 14, this has not been taken to limit the scope of “other status” to characteristics which are innate or inherent: see Clift v United Kingdom (Application No 7205/07) 13 July 2010, paras 58-59.”

Again, the Court of Appeal reviewed the relevant case law and principles and concluded that once the relevant comparator group is correctly identified, it is clear that the difference in treatment complained of is based on a ground which constitutes a status for the purposes of article 14:

“77. The main and much more focused way in which the case has been advanced in this court identifies the relevant status by reference to the terms of para 19 of the 2012 scheme as that of someone who, when a victim of a violent crime, was living together as a member of the same family as her assailant. That, in my view, is undoubtedly a personal status of a kind which falls within article 14. Although not a core feature of a person’s identity such as gender or sexual orientation, living with another person as a member of the same family seems to me to come within the middle of Lord Walker’s concentric circles, being a status that – certainly in the case of a parental or quasi-parental relationship – is central to the development of an individual’s personality and is not a matter which he or she can be expected to change. This is reflected in the fact that respect for a person’s family life and home is protected in the Convention by article 8 because of its “central importance to the individual’s identity, self-determination, physical and moral integrity, maintenance of relationships with others and a settled and secure place in the community”: see Connors v United Kingdom(2005) 40 EHRR 9, para 82.”

The Court of Appeal then considered the issue of discrimination and said that the settled case law showed that this depended upon whether the state can show an “objective and reasonable” justification for the difference in treatment, judged by whether it has a legitimate aim and there is a “reasonable relationship of proportionality” between the aim and the means employed to realise it.

The Court of Appeal saw this as equivalent to the irrationality test and said that “it is also firmly established and is common ground in the present case that the test for justification remains one of proportionality.” It then added:

“83. … The canonical formulation of that test is now that of Lord Reed in Bank Mellat v HM Treasury (No 2) [2013] UKSC 39[2014] AC 700, para 74, where he identified the assessment of proportionality as involving four questions:

“(1) whether the objective of the measure is sufficiently important to justify the limitation of a protected right, (2) whether the measure is rationally connected to the objective, (3) whether a less intrusive measure could have been used without unacceptably compromising the achievement of the objective, and (4) whether, balancing the severity of the measure’s effects on the rights of the persons to whom it applies against the importance of the objective, to the extent that the measure will contribute to its achievement, the former outweighs the latter.”

Put more shortly, the question at step four is whether the impact of the rights’ infringement is disproportionate to the likely benefit of the impugned measure: ibid. Another way of framing the same question is to ask whether a fair balance has been struck between the rights of the individual and the interests of the community: see Bank Mellat v HM Treasury (No 2) [2013] UKSC 39[2014] AC 700, para 20 (Lord Sumption).

  1. In In re Medical Costs for Asbestos Diseases (Wales) Bill[2015] UKSC 3[2015] AC 1016, paras 46-52, Lord Mance (giving the lead judgment in the Supreme Court) discussed at some length the question of how the “manifestly without reasonable foundation” test relates to this four-stage assessment of proportionality. Lord Mance concluded that the test is applicable at the first stage, when asking whether the measure has a legitimate aim, and possibly at the second and third stages. However, at the fourth stage where the court is required to weigh the benefits of the measure against its impact on individual rights, it may be appropriate to give significant weight to the choice made by the legislature but “the hurdle to intervention will not be expressed at the high level of ‘manifest unreasonableness'” (paras 46 and 52). Lord Thomas, who gave the other judgment, agreed with Lord Mance on this point (para 114). This view has since been endorsed by Lord Wilson in giving the majority judgment in R (A) v Secretary of State for Health (Alliance for Choice and others intervening) [2017] UKSC 41[2017] 1 WLR 2492, para 33.
  2. On this authority counsel for JTand for the Equality and Human Rights Commission submitted that the criterion of whether the policy choice made is “manifestly without reasonable foundation” is not relevant at the final stage of assessing proportionality in asking whether a fair balance has been struck between the rights of the individual and the interests of the community. Counsel for CICA disputed this, relying on other decisions of the Supreme Court in which no distinction has been drawn between different stages of the proportionality assessment in applying the “manifestly without reasonable foundation” test. They relied above all on R (MA) v Secretary of State for Work and Pensions [2016] UKSC 58[2016] 1 WLR 4550, where a Supreme Court of seven justices unanimously rejected an argument that the courts below had been wrong to apply the “manifestly without reasonable foundation” test and the Supreme Court itself applied the test without referring to proportionality. Counsel for CICA also emphasised that the Medical Costs case and the Alliance for Choice case were not concerned with the provision of state benefits: the former involved the retrospective deprivation of property and the latter was concerned with the provision of abortion services, a quite different field.
  3. I do not accept that the Medical Costsand Alliance for Choice cases can be distinguished on the ground that they did not involve the provision of state benefits. Both involved matters of economic or social policy which fell squarely within the area where the court will be very slow to substitute its view for that of the executive or legislature. Moreover, there is nothing in the Stec case (or other jurisprudence of the European Court of Human Rights) from which the “manifestly without reasonable foundation” test derives, and no reason in principle or logic, to adopt a different and special rule in benefit cases. However, the approach endorsed in the Medical Costs and Alliance for Choice cases has not been explicitly discussed or applied in other decisions. It may be that at some point the Supreme Court will re-visit and clarify the correct analysis. That said, whether, at the stage of assessing whether a policy choice strikes a fair balance, the “hurdle for intervention” is pitched at the level of “manifest unreasonableness” or something slightly less is a point of some nicety which seems unlikely to make a practical difference in many cases. Certainly it would make no difference to my conclusions in the present case. In these circumstances I propose to apply both versions of the test.” 

Thus the Court of Appeal has asked the Supreme Court to consider ditching the “manifestly without reasonable foundation” test.

The Court of Appeal considered in detail the history of the CICA Scheme and the amendments to it and its key findings are at paragraphs 113 to 115:

“113. Put in terms of proportionality, saving a potentially significant and uncertain cost is undoubtedly a legitimate aim and the ‘same roof’ rule is at least causally connected to that aim. However, there are plainly other ways of saving money which do not involve excluding a group of applicants from the scheme on an arbitrary and irrational basis. Such an approach in any event manifestly fails to strike a fair balance between the objective of saving cost and the rights of individuals in the position of JT.

114. The arbitrary and unfair nature of the rule which prevents JT from receiving an award of compensation is starkly illustrated by the award which has actually been made to her relative (see para 3 of this judgment). I do not belittle the injuries which that person suffered as a result of two incidents of sexual assault which occurred before 1 October 1979. But it is clear that in terms of severity those incidents cannot stand comparison with the repeated sexual abuse and rape to which JT was subjected during most of her childhood, as established at a criminal trial. A scheme under which compensation is awarded to the relative but denied to JT is obviously unfair. It is all the more unfair when the reason for the difference in treatment – that JT was living as a member of the same family as her abuser, whereas her relative was not – is something over which JT had no control and is a feature of her situation which most people would surely regard as making her predicament and suffering even worse.

115. In these circumstances I have no hesitation in concluding that the difference in treatment of which JTcomplains is manifestly without reasonable foundation and violates article 14 of the Convention.”

The Court of Appeal, article 14, concluded:

118. I would therefore hold that treating JT as ineligible for an award of compensation on the ground that she was living as a member of the same family as her assailant at the time when he assaulted her is incompatible with article 14 of the Convention.

119. Under section 6 of the Human Rights Act 1998, it is unlawful for a “public authority” – which includes a court or tribunal – to act in a way which is incompatible with a Convention right unless (broadly speaking) it is required to do so by primary legislation. The precise test is set out in section 6(2) but it is unnecessary to consider the test in detail as it has not been suggested that section 6(2) is applicable in this case. The 2012 scheme is contained in subordinate legislation and there is nothing in any primary legislation which requires the 2012 scheme to contain the ‘same roof’ rule or which prevents its removal. In particular, there is nothing in the 1995 Act under which the scheme was made which has that effect. Accordingly, section 6(1) of the Human Rights Act makes it unlawful for CICA (or any other public authority including the First-tier Tribunal) to apply para 19 of the 2012 scheme in JT’s”

Written by kerryunderwood

August 17, 2018 at 8:10 am

Posted in Uncategorized

FIXED COSTS, TRIBUNALS AND APPEALS: A PROBLEM

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In Office Equipment Systems Ltd v Hughes [2018] EWCA Civ 1842 (01 August 2018)

the Court of Appeal considered the question of costs when an appeal from a non-costs jurisdiction – the Employment Appeal Tribunal here – reaches the Court of Appeal, which is costs bearing.

This problem has been partly dealt with by the relatively new provision in CPR 52.19 which provides:

“(1) Subject to rule 52.19A [Aarhus Convention claims], in any proceedings in which costs recovery is normally limited or excluded at first instance, an appeal court may make an order that the recoverable costs of an appeal will be limited to the extent which the court specifies.

(2) In making such an order the court will have regard to—

(a) the means of both parties;

(b) all the circumstances of the case; and

(c) the need to facilitate access to justice.

(3) If the appeal raises an issue of principle or practice upon which substantial sums may turn, it may not be appropriate to make an order under paragraph (1).

(4) An application for such an order must be made as soon as practicable and will be determined without a hearing unless the court orders otherwise.”

The problem with this rule is that it gives the Court of Appeal a discretion to limit costs, rather than the starting point being that there are no costs in an appeal to the Court of Appeal from a non-costs jurisdiction.

The facts of this case demonstrate the absurdity and gross unfairness of the current rule, which clearly defeats the will of Parliament.

Here the applicant won an Employment Tribunal claim on liability when the respondent failed to file a response within time and was debarred from taking part in any hearing without the permission of the Employment Judge hearing the case.

An Employment Tribunal has this power under rule 21 of the Employment Tribunals Rules of Procedure 2013.

The issue here which went to the Court of Appeal was whether the respondent should be allowed to take part in the quantum trial, known as a remedies hearing in Employment Tribunals.

Both the Employment Tribunal and the Employment Appeal Tribunal decided that the respondent could not take part.

Both of these jurisdictions are costs free.

The respondent succeeded in the appeal to the Court of Appeal and the applicant was ordered to pay costs to the respondent totalling £14,227.

Thus an entirely innocent applicant – indeed an applicant who was the victim of sex discrimination, unfair dismissal, breach of contract, unpaid wages and unpaid holiday pay- has been ordered to pay the guilty party £14,227.

True it is that the applicant failed to comply with CPR 52.19(4) which requires an application for a limited or non-costs order to “be made as soon as practicable” and here the Court of Appeal said that had such an application been made in time it was “highly probable that an order under CPR 52.19 would have been made which might have limited the recoverable costs to the court fees, or even directed that no costs were to be recoverable at all.”

However, as the word “might” shows, there is no certainty in such cases and the victim here may still have faced a bill of costs, and the court fee alone was £1,727.

Given that there is no right to appeal to the Court of Appeal unless and until permission is given, a no costs rule would not lead to unmeritorious cases reaching that court.

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

the Supreme Court outlawed the Employment Tribunal fee system as preventing access to the courts, and so we have returned to a no tribunal fee system in the Employment Tribunal and Employment Appeal Tribunal, which also remain costs free, that is, unless exceptional circumstances apply, a winning party does not recover costs from the losing party.

To impose costs in the Court of Appeal, and to charge a court fee to proceed to the Court of Appeal, in cases where Parliament and the Supreme Court have said that there should be no costs, and no court fees, is defying the will of Parliament and the Supreme Court.

The rule should read:

“Unless there is unreasonable conduct, there shall be no order for costs in any court dealing with any appeal in relation to proceedings where costs recovery is excluded at first instance.”

Fixed Costs Cases

There is a similar problem in relation to fixed costs cases, that is that first instance costs are fixed, but appeal costs are not.

I propose the following wording:

“Unless there is unreasonable conduct, any costs order in any court dealing with any appeal in relation to proceedings where recoverable costs are fixed in the first instance, shall not exceed 20% of those fixed costs.”

You can argue about the figure of 20%, but it is the principle that I am driving at.

This will become of far greater significance once fixed costs are extended to all claims of all kinds worth £100,000 or less.

Indeed, now that the Civil Justice System is seen as a profit silo, rather than one of the corner stones of a democratic society, like defence and the police, it should be the Ministry of Justice which pays all of the costs of all appeals caused by an error by a judge.

Why should private citizens and companies pay for that judge’s error twice over, once through taxation and again in the actual proceedings?

Presidential Guidance Note No. 2 of 2018

The President of Tribunals has issued  Guidance Note No.2 of 2018, providing further guidance on wasted costs and unreasonable costs, and on the correct approach to applications for costs made in proceedings before the First-tier Tribunal.

The detailed guidance is for the judiciary, but is obviously very useful for lawyers operating in the tribunal system, and the guidance is here.

 

 

Written by kerryunderwood

August 16, 2018 at 8:10 am

Posted in Uncategorized

COSTS BUDGETING AND DISPROPORTIONALITY: A TRESPASS CLAIM

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In Red and White Services Ltd v Phil Anslow Limited and another [2018] EWHC 1699 (Ch) (23 May 2018)

a High Court Judge held some of the budgets to be disproportionate and emphasised that parties should approach budgeting realistically.

High budgets may not be approved and setting low budgets as a tactic may backfire.

The claimant and defendant are bus companies in dispute about access to slots in a bus station and the claimant sued the defendant for trespass.

The defendant counterclaimed with a competition law claim against the claimant and against a third party.

The defendant’s budget to trial was £288,000, reduced from £400,000, originally.

The other two parties’ budgets were each £1.5 million to trial.

The defendant submitted that the other parties’ budgets were seriously disproportionate, given that damages were likely to be £80,000 to £120,000.

The claimant and the third party submitted that their budgets were realistic estimates and that the defendant’s budget was unrealistically low.

This was not simply a modest claim for damages but had serious implications for the claimant and the third party.

Taking into account the financial value of the claim and its overall significance, the judge decided that a costs budget of £1.5 million was disproportionate.

It should be possible for a competition law claim about a bus station to be tried at a more modest costs level.

The seriousness of competition law infringements, could not be used “as a form of trump card justification for a very high budget”.

The significance of an approved budget was that costs were more likely to be recoverable from the losing party.

Accordingly, a very significant aspect of budgeting was concerned with the other party’s cost risk.

That was obviously of concern to the defendant in this case as the defendant was the claimant in the competition claim.

As to the options available after declaring the budgets disproportionate, the judge:

  • was not attracted by the defendant’s Precedent R, which sought to set the other parties’ budgets by reference to the same level as the defendant’s budget.

He considered that D’s budget was too low and not a good guide.

  • thought that simply to send the case away helped nobody.

Simply to decline to make a costs management order also was unhelpful and prolonged uncertainty.

  • concluded that the court should come up with an overall appropriate figure for the claimant and the third party’s budgets of £800,000.

They should file revised budgets in line with that.

Written by kerryunderwood

August 15, 2018 at 8:10 am

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INTEREST ON COSTS PRE-JUDGMENT. INCREASED HOURLY RATE AND SUCCESS FEE WHERE SOLICITORS FUNDING DISBURSEMENTS.

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In Jones and Ors v Secretary Of State for Energy and Climate Change (2013) EWHC 1023 (QB)

the Queen’s Bench Division of the High Court allowed pre-judgment interest on disbursements where the disbursements had been paid by the claimants’ solicitors as the matter progressed, and where there was a credit agreement between the solicitors and the client.

The interest rate was 4% above base, payable only in the event of success, with the After-the-Event insurer paying the credit charge if unsuccessful.

The paying party conceded that in principle the claimants were entitled to pre-judgment interest on disbursements and here it was the rate of interest that was in dispute.

CPR 44.3(6)(g) allows a court to award interest on costs from or until a certain date, including a date before judgment, and the rate is in the discretion of the court.

This power was introduced by the Civil Procedure Rules and first exercised in

Bim Kemi AB v Blackburn Chemicals Limited [2003] EWCA Civ 889,

where the Court of Appeal said:

“…in principle there seems no reason why the court should not [award interest on costs] where a party has to put up money paying its solicitors and has been out of the use of that money in the meanwhile.”

The judgment here then considers various cases where the rate of interest had been considered, including

Jaura v Ahmed [2002] EWCA Civ 210

which deals with the issue in detail.

In Tate and Lyle Food and Distribution Limited v Greater London Council [1982] 1 WLR 149

the High Court said that it would always be right to look at the rate “at which plaintiffs [claimants] with the general attributes of the actual plaintiff in the case… could borrow money as a guide to the appropriate interest rate.”

Examples of rates allowed include:

Jaura v Ahmed:                                                             3% above base rate

Bim Kemi:                                                                     1% above base rate

Brown v KMR Services:                                                  2% above base rate

Denney v Gooda Walker:                                               2% above base rate

Here, given that the claimants were individuals of modest means, the Court of Appeal found that in the open market the interest rate on an unsecured loan “would have been significantly in excess of the 4% above base rate” agreed with the solicitors, and thus allowed that sum.

The case is also of interest in that it takes as a given that the solicitors could have charged a higher hourly rate, and/or a higher success fee to reflect the fact that they were funding disbursements:

In some cases, the claimant’s solicitors might fund the disbursements, either by absorbing the cost as part of their overheads or by providing the funding in return for the payment on increased hourly rates of remuneration or an additional uplift in the success fee under a CFA.” (Paragraph 5)

The Court of Appeal regarded this as a separate and additional risk, beyond that of postponement of receipt of costs, warranting a higher hourly rate and/or success fee.

Given the fact that it is much harder for a client to challenge the hourly rate as compared with the success fee, claimants’ solicitors are advised to reflect funding in the hourly rate.

Also, a success fee is now never recoverable from a losing party, whereas the solicitor and client full rate potentially is, where an indemnity cost order is made, for example because a claimant has matched or beaten its own Part 36 offer at trial, or on judgment being entered.

RECOVERING INTEREST ON THIRD PARTY FUNDER LOANS

In Angela Jade Powell v Shrewsbury and Telford Hospital NHS Trust, 1 April 2016, Case Number O5Y02236

the claimant, a person of limited means, used disbursement funding and sought to recover the interest payments from the losing party.

Here, the paying party conceded that in principle the claimant could recover interest, but disputed the right to claim pre-judgment interest on three grounds:

  • the credit agreement was unenforceable as the claimant had not been properly advised;

  • the court did not have jurisdiction to re-open the Consent Order and thus changed what had been agreed;

  • 3% was an excessive rate of interest.

In the end, the defendant conceded on all points and paid £1,600 in interest.

The case that established this principle is

Jones and Ors v The Secretary of State for Energy and Climate Change and Anor [2013] EWHC 1023 (QB).

Written by kerryunderwood

August 14, 2018 at 8:10 am

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MIXED DATA CASES AND DISCLOSURE

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MIXED DATA CASES AND DISCLOSURE

Mixed data is data which relates to someone else, as well as the person making the request for data.

In the case dealt with below it was an independent expert’s report obtained by the General Medical Council, which dealt not only with the medical treatment of the person making the request, but with the conduct of the GP who had treated him.

The principles relating to this case were contained in section 7(4) of the Data Protection Act 1988, which has now been repealed, but similar provisions are now contained in section 94(6) to (10) of the Data Protection Act 2018:

“(6) Where a controller cannot comply with the request without disclosing information relating to another individual who can be identified from that information, the controller is not obliged to comply with the request unless—

(a) the other individual has consented to the disclosure of the information to the individual making the  request, or

(b) it is reasonable in all the circumstances to comply with the request without the consent of the other individual.

(7) In subsection (6), the reference to information relating to another individual includes a reference to information identifying that individual as the source of the information sought by the request.

(8) Subsection (6) is not to be construed as excusing a controller from communicating so much of the information sought by the request as can be communicated without disclosing the identity of the other individual concerned, whether by the omission of names or other identifying particulars or otherwise.

(9) In determining for the purposes of subsection (6)(b) whether it is reasonable in all the    circumstances to comply with the request without the consent of the other individual concerned, regard must be had, in particular, to—

(a)  any duty of confidentiality owed to the other individual,

(b) any steps taken by the controller with a view to seeking the consent of the other     individual,

(c)  whether the other individual is capable of giving consent, and

(d)  any express refusal of consent by the other individual.

(10) Subject to subsection (6), a controller must comply with a request under subsection (1)—

(a) promptly, and

(b) in any event before the end of the applicable time period.

Section 7(4) of the Data Protection Act 1988 read:

“(4) Where a data controller cannot comply with the request without disclosing information relating to another individual who can be identified from that information, he is not obliged to comply with the request unless—

(a)  the other individual has consented to the disclosure of the information to the person making the request, or

(b) it is reasonable in all the circumstances to comply with the request without the consent of the other individual.”

In B v General Medical Council [2018] EWCA Civ 1497, 28 June 2018

the Court of Appeal allowed an appeal by the General Medical Council against a High Court decision preventing the disclosure of an independent expert’s report concerning a GP’s fitness to practice.

The patient who was the subject of the report had sought disclosure of the full expert report following his complaint that his doctor had examined him and failed to make a bladder cancer diagnosis resulting in a delay in treatment.

The Court of Appeal held that:

  • the High Court had wrongly relied on

Durant v Financial Services Authority (Disclosure) [2003] EWCA Civ 1746,

which identified a basic presumption or starting point in favour of the objector and therefore against disclosure in a “mixed data” case, but here the Court of Appeal, which is not bound by its own previous decisions, held that that case was wrong on this point, and in any event was obiter, that is it did not form part of the basis of its finding.

“70. Contrary to the view of Auld LJ and the judge below, I do not think that the balancing regime in section 7(4)-(6) of the DPA includes any presumptive starting point or hurdle which either the requestor or the objector has to overcome. The circumstances in which the balancing exercise has to be carried out from case to case will be many and varied, and where no consent has been given for disclosure (or where objection has been raised, as in this case) the outcome of the exercise will inevitably depend on the particular facts and context. The question is simply whether “it is reasonable in all the circumstances to comply with the [SAR] without the consent of the other individual” (section 7(4)(b)). Although section 7(6) specifies that regard should be had to certain listed matters “in particular”, it does not limit the other matters which may be relevant circumstances; nor does it specify the weight to be given to the listed matters either as between the items in the list or as against other, non-listed relevant circumstances. There is no sound basis for saying that one should load the exercise at the outset in favour of either the objector or the requester. The rights and interests engaged on each side are both rooted in Article 8 of the ECHR and in specific protective provisions in the Directive. Both sets of rights and interests are important and there is no simple or obvious priority as between them which emerges from consideration of their nature or their place in the legislative regime. In that regard I note that the Information Commissioner, in her guidance, does not recognise or endorse any presumption of the kind referred to by the judge: see her Subject Access Code of Practice (version 1.1, February 2014, at pp. 30-34; version 1.2, June 2017, at pp. 36-40).

71. It is conceivable, but in practice I think unlikely, that a data controller who carries out the balancing exercise in section 7(4)-(6) in a mixed data case might be left with factors for and against disclosure which are found to be in perfect equilibrium with nothing to choose between them. In that situation there would be a need to apply a presumption at the end of the exercise, in order to arrive at a decision one way or the other. In my view, the presumption to be applied at this stage would be in favour of withholding disclosure. I emphasise that this would be a presumption of the weak, tie-breaker type referred to above. It is not a significant or substantive presumption to be applied at the outset.

72. My reason for saying that the tie-breaker assumption operates in favour of the third party data subject, rather than the requestor in this situation is that, although section 7(1) of the DPA creates a right for the data subject as against the data controller to have his personal data disclosed to him upon making a SAR, by virtue of section 7(4) the data controller is relieved of that obligation where information comprising those personal data cannot be disclosed “without disclosing information relating to another individual who can be identified from that information”, unless either of sub-paragraphs (a) or (b) is satisfied. As regards sub-paragraph (b), it must appear that it is “reasonable in all the circumstances to comply with the request without the consent of the other individual”; that is to say, having regard to the strength of the interest of the requester (as reflected in the legislative regime set out in the Directive and the DPA) in obtaining disclosure, to the strength of the interest of the objector in maintaining his privacy in relation to the information in question and to any further public interest factors which may be relevant. If the considerations for and against disclosure really are precisely balanced, the data controller (or anyone else applying the test in section 7(4)) cannot positively say that it is reasonable to comply without the consent of the other individual. This indicates that the tie-break presumption should operate in this residual sense against disclosure.”

  • There was no general principle that the patient’s interests, when balanced against the doctor’s, should be devalued because he was seeking information which might assist him in litigation.

Even if the patient intended to obtain material which might help him in litigation, that in no way diminished the legitimacy or force of his interest to have communicated to him, under section 7 of the Data Protection Act 1998 (DPA 1998), information about his personal data as processed by the GMC and the independent expert.

  • The High Court had erred in its criticisms of the General Medical Council’s consideration of the doctor’s privacy rights, his express refusal of consent and in its assessment of the incremental impact of disclosure on the doctor.

It had also substituted its own views regarding relevant factors and the weight that should be accorded to them for those of General Medical Council as controller.

The Court of Appeal also said that it would be reasonable in appropriate cases for a data controller to make disclosure conditional upon there being no wider dissemination of the information.

“83.Thirdly, in view of the wide-ranging submissions we heard on this appeal, I should mention a possible half-way house which may be open to data controllers which conduct a balancing exercise under section 7(4). In some cases, the balance between the legitimate protected interests of a requester and those of an objector may be more finely balanced than in this. For example, it might appear that the requester has good reasons for wishing to check on the accuracy of his personal data used in processing by the data controller whilst at the same time there are objective grounds to think that he wishes to use the information obtained for an illegitimate purpose, e,g, to post the information on the internet to try to traduce the objector. In such a case it might be reasonable (within the meaning of section 7(4)(b)) to make disclosure of the information to the requester if there can be appropriate assurance that no wider inappropriate dissemination of the information will occur, whilst it might not be reasonable to make disclosure in the absence of such assurance. In my view, it would be open to the data controller in such a case to invite the requester to consider giving a binding contractual undertaking to the data controller or the objector or both, to restrict the use to which the information might be put. In conducting the balancing exercise under section 7(4), the data controller would then be entitled to take into account whether such an undertaking had been proffered, or not, when deciding whether it was reasonable to make disclosure. To be clear, I do not think that this would usually be an appropriate course to try to restrict a requester from using information sought by means of a SAR in litigation thereafter. Later use in litigation is not something which is illegitimate in itself, so far as the subject access regime is concerned.”

It appears that neither of the parties, nor the court, considered Section 35 of the Data Protection Act 1998, which reads:

“35. Disclosures required by law or made in connection with legal proceedings etc.

(1) Personal data are exempt from the non-disclosure provisions where the disclosure is required by or under any enactment, by any rule of law or by the order of a court.

(2) Personal data are exempt from the non-disclosure provisions where the disclosure is necessary –

(a) for the purpose of, or in connection with, any legal proceedings (including prospective legal proceedings), or

(b) for the purpose of obtaining legal advice,

or is otherwise necessary for the purposes of establishing, exercising or defending legal rights.”

That would appear to have made the whole case unnecessary, but perhaps I am missing something.

The Data Protection Act 2018 has repealed the Data Protection Act 2018. It is virtually unintelligible. The Act has to be cross read with the Schedules and the General Data Protection Regulations, but essentially Schedule 1 Paragraph 33 maintains this exemption:

“33. This condition is met if the processing-

(a) Is necessary for the purpose of, or in connection with, any legal proceedings (including prospective legal proceedings),

(b)  Is necessary for the purpose of obtaining legal advice, or

(c)  Is otherwise necessary for the purposes of establishing, exercising or defending legal rights. “

Underwoods Solicitors are the solicitors for the Joint Administrators in The Cambridge Analytica case.

Written by kerryunderwood

August 13, 2018 at 1:40 pm

Posted in Uncategorized

INDEMNITY PRINCIPLE

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In Commissioners for HM Revenue and Customs v Gardiner & Others [2018] EWHC 1716 (QB)

the Queen’s Bench Division of the High Court was considering the indemnity principle in relation to a non-conditional fee case.

Although the judgment contains no new legal principles, it does contain a thorough analysis of the relevant case law and sets out the principles relevant to the making of a costs order in favour of a successful party in circumstances in which another body or individual has undertaken to meet those costs.

Here the High Court said that the indemnity principle will not be infringed if:

  1. the putative receiving party establishes a contract with solicitors or representatives to act on their behalf;

  1. the contract derives from a retainer or agreement, which may be express or implied;

  1. the receiving party may have sole liability for costs or dual liability with a solicitor or other representative acting as their agent;

  1. absent an express term to that effect it is likely to be an implied term of such a contract that the client will be liable for costs incurred on his behalf;

  1. if the receiving party establishes a contractual liability to pay the costs, it does not matter that it is “highly or vanishingly unlikely” that the receiving party will in fact be called upon to pay those costs. It is the liability to pay, rather than who makes the payment, which is material;

  1. the presumption that a client instructing a solicitor or representative to represent them will be liable for costs incurred for such representation may be rebutted by the paying party proving that there was a bargain between the client and the representative that under no circumstances was the client to be liable for costs.

The High Court added:

Frequently, as in this case, litigation is funded by the third party to further their own interests as well as those of the funded party. However that does not negate the liability of the funded successful claimant to pay for legal fees incurred albeit met by a third party acting as his agent in giving instructions.” (Paragraph 39)

Written by kerryunderwood

August 13, 2018 at 8:10 am

Posted in Uncategorized

PAYMENT BY CARD

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AMEX

AMEX automatically deducts the commission from the supplier once payment is made by the client.

Thus if money is paid on account of costs, rather than to discharge an invoice, then the automatic deduction of commission creates a client account shortfall.

Thus £2,000 on account of costs is taken. The money goes into client account. Let us assume 2% commission is taken. That means £40 is removed by AMEX.

If the solicitor tops up that sum from office account, then the client is not losing out, as there is still £2,000 on account being held.

Indeed the client is benefitting in that the solicitor is taking payment by credit card with no charge to the client for that facility, whereas many suppliers make a charge to the customer.

The Solicitors Regulation Authority has been very helpful and its view is that this is not a problem, but that the clients should be told that the commission will be taken straight away, but that it will involve no extra cost to them.

There is a problem if the client does not proceed, as the solicitor would then need to refund the whole sum, which would result in a net loss of £40 to the solicitor.

That could be dealt with in the retainer, that is that there is no credit card charge to the client if the matter proceeds, but they will have to pay it if they do not proceed.

My view, from a marketing and not a regulatory position, is that that may put clients off and also causes unnecessary work in each case, given that it rarely happens.

A firm with a work profile where it does happen frequently could take a different view.

There is a problem in delivering an invoice and then taking payment for it by AMEX, as the money then goes into client account, which is a breach of the Solicitors Accounts Rules, as once a bill has been delivered, payment should go into office account.

I know that solicitors often take the view that putting money into client account is the safe option, but it is in fact a breach in these circumstances.

If a solicitor is dealing with a matter, or a stage, on a fixed fee, or is delivering an interim bill, then there is a practical way around it.

That is to telephone or email the client and explain that the bill is about to be delivered, take payment into client account, immediately deliver a bill and then transfer the money from client account to office account.

At the beginning of a case, this presents few problems as the solicitor can explain the situation to the client and send an email in advance of the bill, guaranteeing that that is the price for the work to be done and there will be no further charges.

This can be set out at the end of the Client Care Letter under a “Next Steps” section, together with costs information.

This could read:

Next Steps

To attend you and take a detailed statement from you and advise you at that meeting and in writing concerning your employment matter.

The fee for this work is £300 plus VAT giving a total of £360.”

The potential problem arises when a solicitor sends out a bill as the matter goes along and the client then wishes to pay by credit card.

If it is a trusted client, then the solicitor could issue an immediate credit note, take the payment and then deliver a fresh bill and transfer the money.

Where a solicitor has less confidence in the client, it would be possible to raise a credit note for internal purposes and if the client pays, then a fresh invoice can be delivered.

If for any reason the client does not pay, then the credit note need never be sent out.

Other Credit Cards

Generally other credit card companies do not deduct commission at source, but send the supplier a monthly invoice, and so that point does not arise, but all of the other points dealt with above in relation to AMEX do apply.

Debit Cards

Generally these are not a problem as money can be paid into client account or office account, depending on whether the payment is to discharge a bill, or is a payment on account of costs.

 

Written by kerryunderwood

August 10, 2018 at 8:10 am

Posted in Uncategorized

QOCS AND SET-OFF BY SUCCESSFUL DEFENDANT IN MULTI-DEFENDANT CASES

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I am grateful to Jeremy Rea, Solicitor of BC Legal Leeds, for information and assistance concerning this piece.

Kerry is undertaking a 10 city Autumn Tour with his new course – Getting the Retainer Right.

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In Cartwright v Venduct Engineering Limited [2018] EWCA Civ 1654

the Court of Appeal held that under CPR 44.14(1), which provides that in a QOCS case orders against a claimant may be enforced without the court’s permission up to the value of damages and interest, a defendant can enforce against damages payable to the claimant by another defendant.

Any other result would allow a claimant to bring proceedings against as many defendants as it wanted, knowing it was safe from costs and causing successful defendants to run up costs.

That is not an entirely logical finding in the sense that that is exactly what the QOCS regime allows a claimant to do, and was so designed, in relation to a single defendant, and it is hard to see why the principle should be different in relation to multiple defendants.

By running a claim against several defendants a claimant would in any event be incurring its own, extra, irrecoverable costs, if any of those defendants was not held to be liable.

The Court of Appeal went on to hold that acceptance of a Part 36 offer was outside the provisions of CPR 44.14(1), so a claimant can accept a Part 36 offer from one defendant, safe in the knowledge that any other defendants will not be able to take costs out of those damages.

It also held that Tomlin orders were not covered by CPR 44.14(1) as the schedule to a Tomlin order, setting out the damages and interest payable to the claimant, was not part of the court’s order, but merely reflected the agreement between the parties.

In any event it will be impossible to bring Tomlin orders within the scope of QOCS as such orders were often confidential and/or provided for a global settlement where damages were not separately identified, or where terms included a benefit which could not be quantified.

The Court of Appeal held that it was not dealing with a technical point, but one which would require a wholesale rewriting of the rule, and that was a matter for the Ministry of Justice and the Civil Procedure Rules Committee.

The Court of Appeal endorsed the principle in

Howe v Motor Insurers’ Bureau (No 2) [2017] EWCA Civ 2523,

allowing the successful defendant to offset the costs it would normally receive on discontinuance against it against the costs it had been ordered to pay in respect of the appeal.

Here it lost on appeal as the Court of Appeal found that, as this was a Tomlin order case, the successful defendant, on the facts, could not get its costs.

Although it does not feature in the judgment, except by being mentioned, the rationale of the decision in Howe v Motor Insurers’ Bureau (No 2) [2017] EWCA Civ 2523 was accepted by the Court of Appeal here in its order which provided, in part:

“(4) The appellant may set-off the costs payable to the respondent under paragraph (3) above against the costs payable by the respondent by virtue of his discontinuance of the claim against the appellant.”

CPR 44.14(1) reads:

“(1) Subject to rules 44.15 and 44.16, orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the claimant.”

It was common ground that whilst a Tomlin order is itself enforceable, the schedule to a Tomlin order is not a court order – see

Community Care North East v Durham County Council [2012] 1 WLR 338; and

Watson v Sadiq [2013] EWCA Civ 822 .

The decision will cause significant problems for claimants as recognised here by the Court of Appeal:

“34. I understand of course that in NIHL[Noise Induced Hearing Loss] claims, it is often necessary for a claimant to consider carefully which of his or her former employers may be liable and why. I understand too that, because it is a divisible injury, there may be times when a claimant may have to issue proceedings against a number of such employers, even if it is known that the claim against employer A is likely to be stronger than the claim against employer B. But none of that can override the need to ensure that defendants such as Venduct are not faced with a hopeless claim, in respect of which they have to incur costs, only for that claim to be discontinued shortly before trial.”

The Court of Appeal also said that a claimant should make appropriate Part 36 offers to all of the defendants as soon as reasonably practical.

Well, yes, except that in Hislop v Perde, the Court of Appeal itself, just six days later on 23 July 2018, held that a claimant was only entitled to ordinary costs, and so gains nothing, where a defendant accepts a Part 36 offer out of time, so there is now little incentive for a claimant to make a Part 36 offer.

Jeremy Rea of BC Legal of Leeds, solicitors for Venduct Engineering Limited, the appellant in relation to the set-off point, has published a very useful and interesting commentary on how this decision may affect the personal injury litigation landscape, which I set out at the end of this piece.

QUALIFIED ONE-WAY COSTS SHIFTING AND COSTS – SET-OFF

In Howe v Motor Insurers’ Bureau No. A2/2016/1904

the Court of Appeal considered the question of set-off in the context of Qualified One-Way Costs Shifting (“QOCS”).

Mr Howe lost his claim against the MIB and, as is usual, a costs order was made against him and in favour of the MIB and his appeal on the issue of substantive liability was struck out by the Court of Appeal, following the decision of the Supreme Court in

Moreno v The Motor Insurers’ Bureau [2016] UKSC 52.

The trial judge held that QOCS did not apply and thus the order for costs against Mr Howe was enforceable.

Mr Howe succeeded in his appeal to the Court of Appeal on that point and thus was entitled to his costs on that issue in the Court of Appeal and below before Mr Justice Stewart.

Thus the issue before the court here was whether there could be set-off of the costs awarded to Mr Howe against the costs orders in favour of MIB in relation to the substantive case.

The Court of Appeal said that the court’s power to award costs arises under Section 51 of the Senior Courts Act 1981 and that subject to rules of court, the court has a wide discretion, and that the power to allow one set of costs to be set off against another set of costs is a discretionary power recognised by CPR 44.12, which appears immediately above the Civil Procedure Rules dealing with QOCS, which are contained in CPR 44.13 to CPR 44.17.

The circumstances in which a set-off of costs may be ordered owes nothing to the detailed rules about legal or equitable set-off as substantive defences, although those rules may give guidance as to how the discretion should be exercised – see

Burkett, R (on the application of) v London Borough of Hammersmith & Fulham [2004] EWCA Civ 1342.

That decision also held that there was no objection to a set-off of costs awarded to a non-legally aided party against a legally aided party and emphasises that set-off does not require the person against whom the set-off is ordered to pay anything.

The Court of Appeal rejected the submission that that rule precludes set-off, and that a set-off is enforcement and that set-off is only permitted against orders for damages and costs.

The Court of Appeal held that under the general law, set-off is not a species of enforcement and that the decision in

Vava and others v Anglo American South Africa Ltd [2013] EWHC 2326 (QB)

did not hold otherwise.

That case involved the construction of a contract rather than a rule and the reference in CPR 44.14 concerns enforcement against a claimant and limits enforcement by reference to damages and interest.

The Court of Appeal held that “enforcement” in that context means enforcement in accordance with all the rules of the court, which includes the various powers that the court has to compel compliance with its orders.

CPR 44.14 enables enforcement without the permission of the court, whereas CPR 44.12 requires the permission of the court, or at least a court order to allow for one set of costs to be set off against another.

Consequently it held that the court does have jurisdiction under CPR 44.12 to order a set-off of costs.

Nothing in the Civil Procedure Rules setting up the QOCS regime disapplies the court’s power to order set-off.

The Court of Appeal held that it would be just for the costs awarded to Mr Howe to be set-off against the costs awarded to the MIB.

The MIB went further and sought to enforce the costs order on the ground that Mr Howe’s appeal was struck out, relying on CPR 44.15(1) which provides:

Orders for costs made against the claimant may be enforced to the full extent of such orders, without the permission of the court where the proceedings have been struck out on the grounds that (a) the claimant has no reasonable grounds for bringing the proceedings.”

The Court of Appeal held that the appeal on liability was part of the same proceedings as the original claim, and quoted from the Supreme Court decision in

Plevin v Paragon Personal Finance Ltd. No.2 [2017] UKSC 23 :

“The starting point is that as a matter of ordinary language one would say that the proceedings were brought in support of the claim and were not over until the court had disposed of that claim one way or the other at whatever level of the judicial hierarchy. The word is synonymous with action.”

Here the Court of Appeal said that in some contexts “proceedings” can have a narrower meaning, but this was not one of them, and even if one were to chop up the various stages in the overall action, Mr Howe had reasonable grounds for bringing the appeal in the first place as it was not until after the appeal was brought that the law was changed.

Consequently the MIB was not entitled to rely on CPR 44.15(1) and Mr Howe should have his costs of the costs issue, here and below, but that order in his favour should be set off against the costs orders existing in favour of the MIB in relation to the substantive issue.

Commentary – Jeremy Rea

How is Cartwright likely to change the landscape?

A claimant should now be nervous if he goes to trial with more than one defendant. If he wins against one but loses against another his damages could be wiped out.

In circumstances where there is a final settlement that involves a court order, for example a provisional damages award or a periodical payments order, enforcement will be possible by a successful co-defendant, as will be the case if a claimant receives an interim payment.

The show cause (why judgment should not be entered) procedure in asbestos litigation is now applied in cases of divisible asbestos disease. One defendant may show cause and the other not. An interim payment is routinely ordered when judgment is entered. If the defendant who is given leave to defend is ultimately successful, enforcement of the successful defendant’s costs is possible up to the amount of the interim payment, whether or not the claimant settles by a provisional award.

Pre-trial, until any change is implemented by the CPRC (see below) we will no doubt see the claimant world falling in love with Tomlin orders.

The reason for using a Tomlin order in a personal injury action is not usually because of any confidentiality; in most cases the parties do not give a moment’s thought to that and the Courts routinely send out copies (complete with “confidential schedule”) to all other parties in an action.

However, Tomlin orders historically are how the majority of settlements are concluded. A benefit of this (for the defendant) is that there is no judgment, as that can only follow if the damages are not paid.

Where there is a vertical relationship with a paying defendant who has some costs orders against the claimant in his bag he should make it clear in the schedule to any Tomlin order that he can net off those liabilities. Even then all is not lost. He can simply not pay and he will get his order eventually.

Alternatively, defendants could refuse to settle their actions by Tomlin orders and simply consent to judgment against them. That would preserve their position in relation to any costs liabilities and assist other successful defendants seeking to recover costs when a claimant has discontinued against them, in accordance with the main principle established by Cartwright. A paying insurer in one action may be a successful insurer in the next action and looking to take advantage of Cartwright.

In relation to Part 36, defendants who have a costs entitlement should be astute to ensure that any Part 36 Offers they make (or accept) make provision for any costs liabilities in their favour to be enforced but again, if overlooked all is not lost, as Cartwright tells us that a defendant can default on payment and have a judgment entered against him which remedies the ill.

On the same principle that a paying insurer in one action may be a successful insurer in the next action and looking to take advantage of Cartwright, an alternative approach may be for a defendant to make a Part 36 offer to submit to judgment in a specific sum, or when faced with a claimant’s Part 36 offer which they would otherwise simply accept, to immediately make a Part 36 offer to submit to judgment in the same terms as the offer.

These may be theoretical solutions since, aside from an innate aversion by defendant lawyers to judgments, there are obvious commercial reasons why submitting to an immediate judgment may not be attractive for a defendant.

The case for reform and the urgent need for the CPRC to revisit

If the principle and rationale (both of which were accepted by the Court of Appeal) are that:-

a) If a claimant recovers damages in the proceedings, a defendant (whether the defendant who has paid him those damages or a different, successful defendant) who has a costs order in his favour can enforce that liability to the extent of those damages; and

b) The reason for that principle is that the risk of an adverse costs order as a deterrent against bringing frivolous claims or applications and as an incentive to accept reasonable offers is at the heart of QOCS; then,

to an objective bystander (it is suggested) there can be no logical difference whatsoever, whether that sum of damages be received by an order or a pre-trial settlement, achieved by a Tomlin order, Part 36 offer, or otherwise.

Moreover, it would appear to be the case, whether or not within an order, that a claimant can make damages he has manifestly recovered disappear by throwing a blanket of costs over them so there is no readily distinguishable sum of damages.

We now have a situation where the principle is championed but then a signpost shown for a route that a claimant can take to hide those damages from view and put them beyond the reach of defendants so as to thwart the principle. Not unlike tax avoidance, it might be argued this is QOCS avoidance and an anomalous loophole that surely needs to be closed.

Not only do we have the oddity of damages payable under a plain Consent order being caught by 44.14 but damages payable under a Tomlin order not so, but also a settlement achieved by a Part 36 mechanism is not covered.

That is startling not only for the reason that it is opposite to the approach advocated by Sir Rupert Jackson (and also contrary to the Court’s implicit acceptance that a purpose of the QOCS regime was to provide incentives for claimants to accept reasonable offers) but it is clear that the contrary position was that envisaged by both the MOJ in its Commissioning Note and the response of the Civil Justice Council, as the Jackson reforms went through their genesis.

Moreover, the applicability of QOCS to Part 36 was heralded in the Explanatory Memorandum to the Civil Procedure (Amendment) Rules 20135 that gave rise to the changes, where the following passage appears.

“Introducing rules for a new system of qualified one way costs shifting (QOCS) in personal injury cases, devised as an alternative to after the event (ATE) insurance. The effect of QOCS is that a losing claimant will not pay any costs to the defendant, and a successful claimant against who a costs order has been made (for example, where the claimant does not accept and then fails to beat the defendant’s “part 36 offer” to settle) will not have to pay those costs except to the extent that they can be set off against any damages received”

In consequence, damages recovered by a claimant under a Part 36 settlement are out of sight from a different, entirely successful defendant. Not only that, a defendant who makes a Part 36 offer who has accrued some interlocutory costs along the way or, more importantly, where there is late acceptance of a defendant’s Part 36 offer by a claimant (perhaps years after it was made) which gives rise to a costs liability in the defendant’s favour in respect of the post offer period, is unable to enforce that liability to the extent of the claimant’s damages. This is an impediment unforeseen and unimagined.

We then have a yet further anomaly in that if a defendant does not comply with a Part 36 offer as to payment then the claimant can apply to enter judgment and then of course CPR 44.14 is engaged as we have an order. Thus the default of a defendant can enhance his and a co-defendant’s position! The same applies to a Tomlin; if the defendant does not pay the damages then the claimant can apply to enforce that order and judgment will be entered, such that 44.14 is engaged.

Although this appeal was pursued by insurers in an attempt to change irresponsible claimant litigation behaviour in the context of relatively low value divisible disease claims, it may be thought incongruous that such claimants have the ability to insulate themselves from the effect of QOCS by a Tomlin order but not so those claimants who have sustained far more serious injuries and have no choice but to submit to an order to compromise their claim, such as where a provisional damages order is sought or where a periodical payments order best serves a claimant’s needs.

What also of a case where a claimant settles his action by means of a Tomlin order or by the Part 36 mechanism but has received one or more interim payments along the way? The interim payments are caught by 44.14 but the final damages receivable by Tomlin or Part 36 are not. The quality of those damages are no different and there can surely be no sensible reason for the application of QOCS to be different.

It is suggested that the question should be simply whether a claimant has recovered damages in the action whether by an agreed settlement (enforceable by order) or under an order itself and that to treat damages received as having a different quality for the purposes of QOCS depending upon the mechanism by which they are received is wholly incoherent and leads to absurd consequences. It is to be hoped that this issue will be considered by the CPRC at the earliest opportunity and appropriate amendments made to the rules.

Concluding remarks

In multiple defendant disease cases, particularly NIHL, there is dismay at the irresponsible attitude of some claimant firms to litigation, adopting a scattergun approach, suing very many employers with what very often appears to be little heed for the merits, in the Micawberish hope that “something will turn up”. Only too often, that manifests itself in an unmeritorious claim being pursued up until the very last before a notice of discontinuance is served.

Cartwright is an important victory as it establishes the principle that a claimant who has recovered damages by order is vulnerable to enforcement of a costs order by a different successful defendant. QOCS is not a free lunch.

Whilst it is disappointing that the impact has been diluted and it will not necessarily modify claimant behaviour as much as hoped, the insurance industry now needs to build on this victory by agitating for change through the CPRC in a cause that is built on solid and sensible foundations so that QOCS applies to all forms of settlement where a claimant receives damages.

The decision in Cartwright takes a major step in the right direction towards re-establishing a fair balance between the competing interests of claimants on the one hand to be held harmless from costs, in the sense of not exiting the proceedings a net debtor, and defendants, on the other hand, not to be faced with unmeritorious claims.

Cartwright has brought us half-way across the finishing line in terms of addressing the imbalance.

We now need the CPRC to ensure that the undercarriage follows along!

Written by kerryunderwood

August 9, 2018 at 8:10 am

Posted in Uncategorized

SUCCESS FEE AND RISK

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In Herbert v HH Law Limited [2018] EWHC 580 (QB)

the Queen’s Bench Division of the High Court upheld the decision of DJ Bellamy whereby he reduced the success fee in a road traffic accident case from 100% to 15% on a solicitor and own client assessment.

The court also upheld a finding that an After-the-Event insurance premium was a solicitor’s disbursement.

The Court of Appeal has now given leave to appeal against the High Court’s findings.

The District Judge accepted the defendant’s submission that CPR 46.9 “places the burden on the client to prove the charges are unreasonable. It also significantly restricts the scope of the court’s discretion to interfere with contractually agreed amounts through the mechanism of the presumptions.”

The District Judge took into account that the solicitors never met the client and “had little or no direct contact with the client.”

Paragraph 20 of the judgment quoting paragraph 12 of the District Judge’s judgment:

“The Claimant appears to have been referred to the solicitors (details unclear from the file) and the solicitors take instructions on the telephone. There is no face-to-face meeting subsequent to that discussion but there followed significant correspondence, terms and conditions, and documentation in relation to the CFA. There is no evidence on the file of any formal risk assessment, nor note of any discussion in relation to the success fee. Whilst accepting the retainer between solicitor and client is contractual in nature, the reality is that litigation funding of itself is complex, risk assessments and success fees add a further level of complication, as does the charging arrangement of the solicitors. This is an unsophisticated client dealing, by referral, with a claim for damages arising out of a road traffic incident, the circumstances of which appear from the file note relatively straightforward, it being a rear end collision with the claimant’s stationary car. It seems to me not a difficult hurdle in those circumstances for a Claimant to overcome to rebut the presumption of reasonableness in CPR 46.9(3). There is no clear evidence the Claimant approved either expressly or impliedly, with full knowledge, the cost to be incurred, and more particularly, a success fee of 100% 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. Further, there is no risk assessment on the file that would in any event justify as being reasonable, a success fee of 100%’.”

The High Court held that approval required informed consent by the client and that “the simple refrain of freedom of contract establishes neither the presumptions nor the reasonableness of the success fee in the particular case.”

The High Court also held that risk was likely to be the primary factor in fixing the success fee (Paragraph 44).

The key paragraphs are 46 and 47:

46. Like the Judge, I accept that 46.9(4) is not free-standing and that CPR 46.9 must be read as a whole. Thus if a client applies for a reduction in the success fee, he may be met by evidence that he gave his informed approval to the percentage identified in the CFA. If so, the presumption in 46.9(3)(a) and/or (b) is likely to be satisfied and will be difficult to dislodge. Alternatively, if the presumption is not established, the costs judge will proceed to the assessment and hence the reasonableness of the success fee percentage.

47. Putting the point another way, if and insofar as HH took no account of the risk in the individual case and provided for a 100% uplift (subject to the 25% cap) in all cases by reason of its particular post-LASPO business model, I consider that informed approval would require this to be clearly explained to the client before she entered the agreement.”

This leaves open the question of whether a solicitor who has met the client and explained everything in the manner recommended in

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

is safe from attack on the success fee. 

Comment

This decision is all over the place, but it is not clear here what the basis of the charge to the client was.

The actual costs charged to the client was £691 plus VAT, being 25% of the damages.

The claim was an ex-portal RTA claim which settled for £3,400 after proceedings had been issued and, although it is not clear from the judgment, I am assuming that post-issue pre-listing fixed costs applied and if that is the case the recoverable costs are £1,840 being 20% of the damages plus £1,160 as per CPR 45.29 Table 6 B.

Here the solicitor and own client basis of charging was £118 an hour with 22 hours work done giving a total £2,596.

Thus the unrecovered solicitor and own client costs are as follows:

                                                            £

  • solicitor and own client costs    2,596

  • less recovered costs                   1,840

        Total                                            756

These are costs net of VAT, and as we have seen the actual charge to the client was £691 plus VAT.

Consequently, unless I am missing something, there was in fact no success fee at all in this case as all of the charge to the client fell within the unrecovered element of solicitor and own client costs.

Clearly £118 per hour is a very modest rate and appears not to have been challenged.

In those circumstances, the decision appears to be obiter, in the sense that the court did not need to rule on the success fee as in law no actual success fee was charged.

It is well established law that academic claims cannot be brought; in other words the client cannot bring a Solicitors Act 1974 challenge in relation to a bill never delivered, even if the retainer contained challengeable provisions.

If I am correct, and this decision is obiter, then of course it is not binding.

Written by kerryunderwood

August 8, 2018 at 8:10 am

Posted in Uncategorized

UNDERPAYMENT OF COURT FEES: AN ABUSE BUT NO STRIKE OUT

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In Atha & Co Solicitors v Liddle [2018] EWHC 1751 (QB) (09 July 2018)

the High Court was considering an appeal in a case where there had been an underpayment of the issue fee and whether failure to pay the correct fee before limitation expired resulted in the claim being statute barred.

The High Court held that negligently issuing a case without due regard to the correct court fee is an abuse of process, but nevertheless the High Court declined to strike out the case and the High Court Judge said that he realised that he was only able to reach that conclusion by declining to follow previous decisions of the High Court in the cases of

Lewis v Ward Hadaway [2016] 4 WLR 6; and

Bhatti v Asghar [2016] EWHC 1049 (QB).

Here the claimant had brought personal injury proceedings, but following receipt of a joint experts’ report, those proceedings were discontinued and in due course the claimant instructed new solicitors to bring negligence proceedings against her first solicitors.

The six year negligence limitation period expired on 31 March 2016 and the claim form was received by the court on 29 March 2016, but not issued until 7 April 2016, and it was common ground that the relevant date for limitation purposes was the date of receipt by the court, and not the date of issue.

The defendant maintained that as the incorrect issue fee had been paid, that amounted to an abuse of process and the automatic consequence of that was that the claim was not brought until the claim form was issued, that is 7 April 2016, and thus the claim was out of time.

The Circuit Judge held that the statement of value, and consequent underpayment of the court fee, did not amount to an abuse of process, and therefore the matter had been presented to the court in time.

The High Court allowed the appeal in relation to the abuse of process point, finding that there had been an abuse of process, but that this did not automatically lead to a case being struck out or proceedings issued within time being declared to be an abuse and thus issued outside the limitation period.

The judge specifically disagreed with the finding in Lewis v Ward Hadaway that an abuse of process meant that proceedings were issued outside the limitation period.

Here the court referred to the case of

Attorney-General v Barker [2000] 1 FLR 759

where the court characterised an abuse of process as “a use of the court process for a purpose or in a way which is significantly different from the ordinary and proper use of the court process.”

Here the court said:

18. The ordinary and proper use of the court process when providing the statement of value on a claim form involves the recording of the unvarnished truth. Deliberately departing from this ordinary and proper use for tactical reasons, such as removing the risk that the issue fee may subsequently be challenged when costs are being assessed, is significantly different from the ordinary and proper use of the court process.”

The court went on to say that it was entirely satisfied that, but for the implications arising out of the context of the operation of the limitation period in this case, the abuse would not have been serious enough to warrant striking out the claim.

In the court below the parties had agreed that if the court were to find that there had been an abuse of process, then the defendant’s application would automatically succeed and the claim would be struck out, and that was initially how it was presented on appeal to the High Court.

However, the High Court was not satisfied that that was the law and considered the Limitation Act and the Civil Procedure Rules and Practice Direction in relation to the issuing of proceedings.

The court ended its decision by saying:

However, I would add by way of postscript that the proliferation of irreconcilable first instance decisions over the last few years is such that the time is now ripe for authoritative guidance from the Court of Appeal.”

 

Written by kerryunderwood

August 3, 2018 at 8:24 am

Posted in Uncategorized

CORONERS AND COSTS

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In R (Adath Yisroel Burial Society & Mrs Ita Cymerman) v HM Senior Coroner for Inner North London [2018] EWHC 1286 (ADMIN)

the Divisional Court of the Queen’s Bench Division considered the incidence of costs of a claim for judicial review against a coroner.

The Queen’s Bench Division pointed out that there appears to be a drafting error in Regulation 17 of the Coroners’ Allowances, Fees and Expenses Regulations 2013, made pursuant to Section 34 of, and Schedule 72 to, the Coroners and Justice Act 2009 as it does not refer to a coroner’s liability for costs.

Both the claimants in this action and the Chief Coroner had written to the court separately, stating that the regulations are defective.

The court said that the point needs to be considered and resolved and that coroners must have certainty about the scope and extent of the indemnity to which they are entitled under the legislation.

Here, the London Borough of Camden had originally indicated that it would not indemnify the coroner in respect of any adverse costs, but it subsequently changed its mind.

The court started with the proposition that it has a discretion on costs pursuant to CPR 44.2, but the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, but pointed out that in relation to judicial officers such as coroners, that general rule does not necessarily apply.

The court stated that the leading authority on costs against coroners is

R (Davies) v Birmingham Deputy Coroner [2004] EWCA Civ 207; [2004] 1 WLR 2739 

and quoted from the judgment in that case:

“[47] It will be apparent from this judgment that the answers to the questions I posed in para 3 above are: (1) the established practice of the courts was to make no order for costs against an inferior court or tribunal which did not appear before it except when there was a flagrant instance of improper behaviour or when the inferior court or tribunal unreasonably declined or neglected to sign a consent order disposing of the proceedings; (2) the established practice of the courts was to treat an inferior court or tribunal which resisted an application actively by way of argument in such a way that it made itself an active party to the litigation, as if it was such a party, so that in the normal course of things costs would follow the event; (3) if, however, an inferior court or tribunal appeared in the proceedings in order to assist the court neutrally on questions of jurisdiction, procedure, specialist case law and such like, the established practice of the courts was to treat it as a neutral party, so that it would not make an order for costs in its favour or an order for costs against it whatever the outcome of the application; (4) there are, however, a number of important considerations which might tend to make the courts exercise their discretion in a different way today in cases in category (3) above, so that a successful applicant, like Mr Touche, who has to finance his own litigation without external funding, may be fairly compensated out of a source of public funds and not be put to irrecoverable expense in asserting his rights after a coroner, or other inferior tribunal, has gone wrong in law, and [where] there is no other very obvious candidate available to pay his costs.”

The judgment sets out in detail the facts of this matter and the claimants and the Chief Coroner were represented by counsel at the hearing but the defendant coroner appeared as a Litigant in Person.

The claimants argued that they were entitled to their costs of the action on a number of grounds based on Davies as follows:

i) The Defendant has not acted neutrally because she has actively sought to defend her policy.

ii) The Defendant unreasonably declined to withdraw her policy or sign a consent order.

iii) The case is distinguishable from Davies because the Defendant in making her policy was not making a judicial decision.

iv) It is manifestly unjust that the Claimants should have to bear the costs of bringing and pursuing these proceedings.

The judgment deals with all of the arguments for and against, but concluded that the claimant should succeed on two related bases:

i) first, the defendant’s failure to reconsider her policy in the light of the Chief Coroner’s intervention is an important consideration when considering where, in fairness, the claimants’ costs should fall within the fourth limb of the case in Davies.

ii) Secondly, the defendant’s Addendum Detailed Grounds, filed in answer to the Chief Coroner’s detailed grounds, mark the point at which the coroner ceased to be neutral in stance, as examined in the second limb of Davies. From that point on she was advocating the correctness of her policy and no longer simply giving information to the court.

For those reasons the court ordered that the defendant should pay the claimants’ reasonable costs from the date she filed her Addendum, with such costs to be the subject of detailed assessment if not agreed.

The court ordered the defendant to pay £68,000 on account of costs.

The court confirmed the general principle that the coroner who remains neutral should not ordinarily be liable for costs.

The court accepted that that itself may be considered to be unfair to a successful claimant and will have to bear their own costs of a successful action.

Comment

This is part of a wider issue, and that is in an era where court fees are extremely high, and the Justice Minister has cut fees to reflect the fact that the department was making a profit in many areas, should the parties have to bear their own costs incurred due to mistakes by the judiciary?

My view is that when a decision is overturned due to an error of law by the Lower Court, then the state should pay both parties’ costs of that appeal hearing, and any rehearing caused by the case being remitted to the first court again.

Legal costs are too high anyway; they should not be added to by innocent parties having to pay for the faults of the state and its officers.

Written by kerryunderwood

August 2, 2018 at 9:02 am

Posted in Uncategorized

PROPORTIONALITY, HOURLY RATES AND COSTS OF ATTENDING OTHER HEARINGS

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In Powell & Ors v The Chief Constable of West Midlands Police [2018] EWHC B12 (Costs)

the Chief Costs Master was dealing with issues of proportionality, hourly rates and the recoverability of costs claimed for attending the prosecution of the defendant’s police officers in the Crown Court, attending the Inquest into the death of Mr Powell and pursuing a complaint to the Independent Police Complaints Commission.

The police officers were acquitted of all charges and the Independent Police Complaints Commission then decided not to pursue disciplinary charges.

However, the Inquest concluded that, on a balance of probabilities, Mr Powell had been transported in the police van on his side and then on his front, that he died in the police van from positional asphyxia and that he had been rendered more vulnerable to death from that cause by being struck by the police car, being sprayed with CS gas, being struck with a baton, being restrained on the ground while suffering psychosis, and by extreme exertion.

Eventually civil proceedings were settled by the defendant agreeing to pay damages of £300,000, accepting the verdict of the jury at the Inquest and apologising unreservedly.

The defendant published a 96 page document of lessons learned and agreed to pay the claimants’ costs of the claims “notwithstanding any orders of the court to the contrary”.

The costs claimed totalled £1,603,380.

The private, solicitor and own client retainer rates were:

  • partner –                             £350 an hour
  • assistant solicitor –             £270 an hour
  • other assistants –                £140 an hour

As to proportionality, the proceedings where commenced before 1 April 2013 and therefore the old tests under the then CPR 44.4(2) and CPR 44.5 applied, and the leading case on those provisions is

Home Office v Lownds [2002] EWCA Civ 365 (21st March, 2002) .

This was clearly a case where factors other than money were very significant, including the importance of the matter to the parties, which was a specific test under CPR 44.5, and was also of public importance.

Of the costs claimed the costs of attending the criminal trial were around £138,000 and the costs of attending the Inquest were around £300,000.

In addition disbursements of around £350,000, mainly counsel’s fees, were incurred in relation to the Inquest.

Here the Chief Costs Master said:

The pre-2013 test of proportionality like its successor, did not have any formula for deciding what figure would be proportionate built into it.”

The court held that even under the less stringent pre-2013 test the costs were disproportionate.

In relation to the criminal proceedings the court held that it was both reasonable and necessary for the solicitors to attend the criminal trial and that a transcript alone would not suffice as the person attending court could report back on the demeanour of the witnesses, which would not come across in the transcripts.

The Costs Master pointed out that no competent solicitor instructed to bring a civil claim arising out of a death in custody would not attend the criminal trial of the officers involved where the prosecution arose out of their treatment of the deceased in the hours prior to his death.

In relation to the complaint of the Independent Police Complaints Commission, the Costs Master held that these were not recoverable as the complaints and the outcome were not of use and service in the civil claim, nor relevant to it. The work done in relation to these complaints was not necessary within the Lownds sense.

In relation to Inquests there are a number of authorities, which the Chief Costs Master considered and on the facts of this case held that in principle the costs of attending the Inquest were recoverable.

Level of Fee Earner

Two senior junior counsel and a senior and a junior fee earner attended the Inquest and the Costs Master held that it was only necessary for one senior junior counsel and a junior fee earner from the solicitor’s office to be present, although it would be reasonable and necessary for the senior lawyer from the solicitor’s office to be present during important parts of the evidence.

In relation to the Crown Court proceedings only one junior fee earner needed to be present.

The Hourly Rate

The actual rates claimed were:

  • Grade A –                                                            £350 an hour
  • Grade C –                                                            £226 an hour
  • Grade D –                                                            £138 an hour

These rates covered the 11 year period from 2005 until 2016, over which the work was carried out.

Here the Costs Judge, applying the test in

Wraith v Sheffield Forgemasters Ltd [1998] 1 WLR 132

held that it was reasonable and necessary for the claimants to instruct a firm of solicitors in Central London, with the experience of this type of case, despite the higher hourly rates that will be charged.

The Costs Judge split the bill into different parts, reflecting the dates when the work was done, but of interest to lawyers now will be the rates allowed for post-2011 work, which were:

  • Grade A –                                                            £335 an hour
  • Grade C –                                                            £220 an hour
  • Grade D –                                                            £130 an hour

Had this not been the case warranting Central London solicitors, the judge would have allowed, for post-2011 work:

  • Grade A –                                                            £250 an hour
  • Grade C –                                                            £200 an hour
  • Grade D –                                                            £120 an hour

Comment

Most of this decision makes perfect sense, but in a case of this complexity and importance, it is disturbing that guideline hourly rates are utilised at all, and in the words of the Costs Judge are used “both as a starting point and as a cross-check”.

Not only were guideline hourly rates never designed for cases like this, but they have not been increased since 2010, and even with a low level of inflation this means that they are worth a lot less than they were in 2010.

Written by kerryunderwood

August 1, 2018 at 8:33 am

Posted in Uncategorized

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