Kerry Underwood

Archive for January 2019

COSTS ROUND-UP

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

Permanent Stay of Costs

In

Raja v Van Hoogstraten & Ors [2018] EWHC 3261 (Ch) (29 November 2018)

the Chancery Division of the High Court refused an application permanently to stay costs orders pursuant to its power under CPR 40.8A, stating that the effect would be the same as setting aside the orders under CPR 3.1(7).

The court doubted that any court would set the orders aside under that provision on these facts and therefore declined to exercise its discretion permanently to stay the orders.

Here the judge had previously ordered interim stays of the costs orders of its own initiative, because the defendant was trying to enforce orders in its favour while at the same time flouting costs orders against it.

The defendant had failed to comply with orders requiring it to send to Her Majesty’s Revenue and Customs a transcript of a previous hearing together with an explanation of tax treatment of certain trust incomes.

It also applied to set aside adverse costs orders, and after the interim stays of the costs orders in these proceedings, the defendant made an application relating to the adverse costs orders and that application was dismissed as totally without merit and the claimant was awarded indemnity costs.

The claimant submitted that the defendant’s conduct, and non-compliance with the adverse costs orders, amounted to matters occurring since the date of the costs orders, making it just to stay them permanently.

Here the court said that the orders were not conditional on the defendant complying with the adverse orders which had been made in the public interest and not for the benefit of the claimant.

The defendant’s non-compliance did not affect the claimant and therefore the defendant’s conduct since the costs orders should not affect the claimant’s liability to pay costs.

A person in contempt could be denied access to a court where that contempt would prevent justice from being done to the other party, but there was no suggestion of that here and therefore the application should be refused.

CPR 40.8 reads:

“40.8A – Without prejudice to rule 83.7(1), a party against whom a judgment has been given or an order made may apply to the court for—

(a) a stay of execution of the judgment or order; or

(b) other relief,

on the ground of matters which have occurred since the date of the judgment or order, and the court may by order grant such relief, and on such terms, as it thinks just.”

This appears to be the first authority in relation to the court’s discretion under CPR 40.8A.

Quantifying Security for Costs

In

Tugushev v Orlov & Ors [2018] EWHC 3471 (Comm) (14 December 2018)

the Commercial Court made an order for security of costs for £1.5 million, as compared with the sum of £2.7 million sought by the defendant.

The application was on the basis that the defendant’s costs were £3.389 million and the security sought represented 80% of certain incurred and estimated future costs of applications relating to the continuation of a worldwide freezing order.

Here the court held that on an application for security of costs the court should consider the applicant’s estimates of incurred and future costs in the same way as they would deal with a summary assessment of costs, or a costs budgeting exercise.

An applicant for security for costs must provide a sufficiently detailed breakdown to satisfy the court that the security ordered will avoid unnecessary prejudice to the other party, and any uncertainty arising from an inadequate breakdown should be resolved in favour of the party having to give the security.

Here the court set out ten principles to take into account when quantifying security for cost.

These were set out in paragraph 23 of the judgment as follows:

“23. The principles discussed in these authorities provide some assistance. However, at best, they provide guidance in what I believe both parties accepted was a “broad-brush” approach to assessing the quantum of security for costs. Nevertheless, I would venture the following principles which I shall take into account in undertaking this general quantification exercise:

(1) The purpose of an order for security for costs is to provide protection to a defendant who is being sued by a claimant who may well not be in a position to satisfy a costs order made against the claimant at the conclusion of the action or of a particular stage of an action.

(2) That protection must be suited for the purpose and therefore cannot exceed any sum which goes beyond what may reasonably be expected to be recovered by the defendant in the event that the claimant is ordered to pay the defendant’s costs.

(3) In determining what may reasonably be expected to be recovered by way of a costs order, the Court should take into account the nature of the litigation, or the stage of the litigation, to which the proposed security relates, what that litigation entails in terms of the provision of legal services by both counsel and solicitors, the production of factual and expert evidence, and other associated costs and disbursements.

(4) The costs associated with such litigation, or the relevant stage of the litigation, and for which security is sought should be costs which, as an estimate, can be considered by the Court to be both reasonably and proportionately incurred and reasonable and proportionate in amount. Costs which are unreasonably incurred or are unreasonable in amount should not be included in a security for costs order.

(5) By CPR rule 44.3(5), costs incurred are proportionate if they bear a reasonable relationship to (a) the sums in issue in the proceedings, (b) the value of any non-monetary relief in issue in the proceedings, (c) the complexity of the litigation, (d) any additional work generated by the conduct of the paying party, and (e) any wider factors involved in the proceedings, such as reputation or public importance.

(6) In determining a security for costs application, the Court should exclude from any security amount costs which the Court is not satisfied can be justified on any view as reasonable and proportionate. That is, the exercise of assessing the quantum of a security for costs order should not be influenced by any costs which a party chooses to incur over and above what is reasonable and proportionate in the circumstances.

(7) The quantification of security is an objective assessment to be carried out by the Court as best it can based on the available evidence and information.

(8) Although I accept that the quantification of an order for security for costs is necessarily a “broad-brush” exercise of assessment, bearing in mind the possible prejudice to the respondent of too much security being ordered, the Court must interrogate the estimates of incurred and future costs provided by the applicant. This exercise will of course not nearly approximate a detailed assessment of costs, but it will be similar to a summary assessment or a costs budgeting exercise. To this end, it is incumbent on the applicant to provide a sufficiently detailed breakdown of costs in support of its application to satisfy the Court that the amount of security which will be ordered will provide the necessary protection to the applicant and avoid any unnecessary prejudice to the respondent. In the event that a sufficiently detailed breakdown is before the Court, in order to ensure that the security ordered provides the necessary protection to the applicant, the Court should resolve any doubt in favour of the applicant. However, if there is no sufficiently detailed breakdown of costs before the Court, any uncertainty arising from the inadequate breakdown should be resolved in favour of the respondent.

(9) An allowance should be made for any reduction of costs which would be made in an eventual assessment of costs. In the ordinary course, costs will be assessed on the standard basis. However, it is relevant to consider whether or not there is a real possibility, whether probable or not, that an order for indemnity costs might be made against the claimant. That does not mean that the Court must decide whether the assessment of costs on an indemnity basis is likely to be appropriate. It is the realistic possibility of such an assessment being ordered which justifies the Court taking this into account in determining the quantum of any security to be provided.

(10) The applicant for security for costs will bear the burden of satisfying the Court that the amount of the security for costs to be ordered is in accord with these considerations.”

In

Airways Pension Scheme Trustee Ltd v Fielder & Anor [2019] EWHC 29 (Ch) (15 January 2019)

the Chancery Division of the High Court limited the appellant’s costs of an appeal to the Supreme Court in advance of the appeal, restricting its costs to the same as those of the respondent.

This is a useful reminder of the little used powers of the court to cap costs in advance.

Do not get too excited – this is hardly a breakthrough in trying to make litigation costs reasonable, as the courts still allowed over £1 million for each side in relation to a single point of law with a time estimate of 1.5 days.

I would have thought £50,000 about the right figure.

Another Non-Party Costs Order Against an Insurer

In

Various Claimants v Giambrone & Law (a firm) and others (defendants) and AIG (Europe) Limited – Section 51 respondent [2019] EWHC 34 (QB)

the Queen’s Bench Division of the High Court made a non-party costs order against the insurers for the defendants.

The claimants succeeded in a professional negligence action against the defendants over legal advice given in relation to the purchase of properties in Italy.

They made an application under section 51 of the Senior Courts Act 1981 for a non-party costs order against the insurers AIG (Europe) Limited.

The judge held that AIG’s funding of the defence increased the claimants’ costs and ordered AIG to pay half of their total costs.

Although success in a section 51 application requires there to be exceptional circumstances, the threshold is lower than it may seem, as in

Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 WLR 2807

the Judicial Committee of the Privy Council said:

“Although costs orders against non-parties are to be regarded as “exceptional”, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such “exceptional” case is whether in all the circumstances it is just to make the order. It must be recognised that this is inevitably to some extent a fact-specific jurisdiction and that there will often be a number of different considerations in play, some militating in favour of an order, some against.”

(Quoted at Paragraph 11 of this judgment.)

Here the court said:

“78. In my view, where an indemnity insurer substantially relinquishes control of the conduct of the litigation to the insured (or fails to take steps to control it when there are grounds for intervening), and does so in the expectation that it will be immune from a costs liability towards the opposing party if the opposing party is successful, that expectation is open to be falsified by the court in a section 51 application, particularly if the prospects of success for the insured are assessed as poor.”

Comment

Given that actively controlling the litigation is a key factor in making a non-party potentially liable for costs, we are now close to the position that, in reality, the starting point is that an insurer will be liable for costs, either because it does control, or fails to control, the litigation.

Although this lengthy decision usefully examines in detail the relevant case law, it does not establish any new legal principle.

Consent Order Trumps Fixed Costs

In

Adelekun v Lai Ho Case No: A06YQ205 Central London County Court (18 October 2018)

a Circuit Judge held that in a fixed costs case under CPR 45, Section III A, where the parties had entered into a consent order providing for the claimant’s reasonable costs to be paid on the standard basis, the claimant succeeded in escaping the fixed costs regime.

The judge held that the consent order, following acceptance of a Part 36 offer of £30,000, was incompatible with fixed costs and overruled them and that the Deputy District Judge had been wrong to vary what the parties had agreed.

The relevant wording in the order was:

“The defendant do pay the reasonable costs of the claimant on the standard basis to be subject of detailed assessment if not agreed.”

This wording, in the view of the Circuit Judge on appeal, allowed him to distinguish previous cases such as

Bratek v Clark-Drain Limited, Cambridge County Court, 30 April 2018

where it was held that a consent order settling a fast-track employers’ /public liability claim, and which provided for payment of costs on the standard basis, could not overrule the mandatory provisions of CPR 45.29D.

The facts here were slightly unusual in that the claimant had applied to re-allocate the claim to the multi – track the day before the Part 36 offer was made and the defendant agreed to the terms of the consent order after making the Part 36 offer.

The Circuit Judge held that the costs consequences were consistent with that, and would have been in the parties’ minds when signing the order.

The court suggested that it might have been sensible to include the issue of re-allocation to the multi-track as a term of the consent order.

In fact re-allocation never took place.

The hearing of the application to re-allocate would have taken place within the 21 day period for accepting the Part 36 offer, had the parties not settled.

In

Solomon v Cromwell Group Plc [2011] EWCA Civ 1584 (19 December 2011)

the Court of Appeal held that, as a matter of construction, general rules gave way to specific rules in the Civil Procedure Rules, and therefore the general Part 36 rules gave way to the specific rules in CPR 45, Section II.

True it is that in that case the relevant wording was “reasonable costs” without mention of the standard basis.

It is also correct that in Solomon the Court of Appeal recognised the possibility of the parties agreeing costs outside the fixed costs regime, even in a fixed costs case.

Here, the Deputy District Judge held that that principle applied in this case and that the order to the contrary was ultra vires and should not have been approved by the court.

In

Qader v Esure Services Ltd [2016] EWCA Civ 1109

the Court of Appeal held that fixed costs in an ex-portal case, as here, applied unless and until a matter has been allocated to the multi-track, whatever the settlement value.

That principle was subsequently enshrined by Parliament in an amendment to the Civil Procedure Rules.

A potential, but not actual, allocation to the multi-track is clearly capable of being an exceptional circumstance allowing an escape from fixed costs under CPR 45.29 (J)(1), a point accepted in this case, but that was not the issue here.

Indeed the Deputy District Judge, while holding that fixed costs applied here, specifically left it open for the claimant to argue that there were exceptional circumstances in the case, and these exceptional circumstances provisions are within the fixed costs rules themselves.

In

Sharp v Leeds City Council [2017] EWCA Civ 33 (01 February 2017)

the Court of Appeal held that the costs of an application for pre-action disclosure were governed by the fixed costs regime, although there, there was no agreement apparently to the contrary.

In

Hislop v Perde [2018] EWCA Civ 1726 (23 July 2018)

the Court of Appeal held that late acceptance of a Part 36 offer by a defendant did not allow a claimant to escape fixed costs.

Again, unlike here, there was no issue of contracting out of the fixed costs regime, and in any event many commentators believe that the decision in Hislop is wrong as a matter of law – see my blog

PART 36 AND FIXED COSTS:  CLAIMANTS’ OFFERS POINTLESS RULES COURT OF APPEAL

The Circuit Judge here held that the parties had consensually varied the usual rule, as envisaged in Solomon as being possible, and that the consent order was not vitiated by fraud, mistake, misrepresentation or incapacity,  and indeed it was not suggested otherwise.

He also held that the Deputy District Judge had no power to vary that consent order.

Matters were further complicated by the case of

Conlon v Royal Sun Alliance Insurance Plc [2015] EWCA Civ 92 (26 February 2015)

where the Court of Appeal held that the court had power, even after the end of a case, retrospectively to re-allocate it and thus retrospectively to alter the basis of assessment of costs.

Here the Deputy District Judge declined to re-allocate to the multi-track, which, in the absence of the issue of consensual variation would have left the case firmly caught by the Qader decision.

Comment

I have found this an extremely difficult matter to form a view on and have enormous sympathy with the judges having, yet again, to grapple with the mind-numbing contradictions of the Civil Procedure Rules.

It may be that the case, ultimately, is of limited importance moving forwards, as clearly the defendant’s solicitors were ill advised to leave the matter in any doubt by using the wording in the consent order.

The claimant’s solicitors may have been better advised to have delayed accepting the Part 36 offer until after re-allocation, although that would hardly have been consistent with the overriding objective of saving court time and costs.

It also seems pretty obvious as a matter of contract law that the parties were not, to use the old phrase, ad idem which means a meeting of the minds.

If two parties to a contract understand the terms and conditions of a contract in the same manner, then it is said that the parties are “ad idem”.

Such “meeting of minds” is essential to a valid contract.

How can that possibly have been the case here?

The point was seemingly not argued, – certainly it is not referred to in a very impressive and comprehensive judgment-  possibly because everyone involved seemed to be looking at the issue from a costs and personal injury point of view, rather than basic contract law.

Also, it is not clear why an agreement to pay standard costs in a fixed costs case means anything other than fixed costs.

After all they are the “standard” that is usual, or normal, costs for that type of work.

The true differentiation is between standard costs and indemnity costs, not between standard costs and fixed costs.

Conclusion

There are no score draws at court, or in my blogs.

On balance, but we are talking 51-49, my view is that the Deputy District Judge was right, that the Circuit Judge was wrong, and that the Court of Appeal should reinstate the Deputy District Judge’s decision, that is that fixed costs apply.

My unanimous decision, a 100-0, is that the Civil Procedure Rules Committee is not fit for purpose.

£550 An Hour Allowed In Budget

In

Arcadia Group Ltd & Ors v Telegraph Media Group Ltd (Rev 1) [2019] EWHC 96 (QB) (23 January 2019)

the Queen’s Bench Division, in a costs budgeting exercise, allowed a rate of £550 per hour on a between the parties basis for a partner in injunction proceedings concerning restraining the Telegraph Media Group from publishing information about the claimants.

The rate was reduced from £690.

A trainee rate of £190 per hour was allowed.

The decision was by a full High Court Judge.

Leaving aside the actual rates, it is of concern that the Judge referred to the Guideline Hourly Rates, which were never meant to apply to this type of case, and which have not been uprated since 2010.

Counter-Offer Is Not a Rejection of Original Offer In The Portal Process

In

Cox v Pace, Birmingham County Court, 23 October 2018, Claim D82YM554

a Deputy District Judge held that a counter-offer within the portal process did not amount to a rejection of the original offer, thus treating the portal rules as a self-contained code in the same way as Part 36.

As a matter of common contract law, a counter-offer acts as a rejection of the original offer, but that is not the case within the Part 36 regime, nor in the portal process.

I am grateful to Kevin McGough of MJP Solicitors for information about this case.

On Assessment Court Not To Re-visit Conduct of Case

In

Andrews and Smith v Retro Computers Limited and others [2019] EWHC B2 (Costs)

Deputy Master Friston held that generally courts dealing with detailed assessment proceedings should not revisit matters relating to the conduct of the case itself, as compared with the conduct of the assessment proceedings.

Although establishing no new principle of law, the judgment contains a very detailed and helpful analysis of all of the relevant authorities.

Third Party Funders, The Arkin Cap And ATE Insurance

In

Bailey & Others v GlaxoSmithKline UK Limited [2017] EWHC 3195 (QB)

the Queen’s Bench Division of the High Court ordered the claimants’ litigation funder Managed Legal Solutions Limited (MLS) to pay security for costs pursuant to CPR 25.14, and in excess of the Arkin cap.

MLS had been joined as an Additional Party for the purposes of responding to this application.

The application covered costs from the date that MLS started funding the case and was made on the basis that the defendant intend to seek orders against it at the end of the case, if successful, pursuant to section 51 of the Senior Courts Act 1981, which deals with non-party costs orders.

In fact the key issue here was the amount of security, and the relevant factors to be taken into account in fixing that amount.

The claimants had ATE insurance of £750,000 and argued that all of that sum should be taken into account in relation to the security issue, relying on

Premier Motorauctions Limited v. PWC LLP & another [2017] EWCA Civ 1872.

The claimants also argued that any sum ordered should be limited by the approach referred to in

Arkin v Borchard Lines Limited (Nos 2 and 3) [2005] 1 WLR 3055

generally known as the Arkin cap, that is that the third party funder’s liability for adverse costs should be limited to the same sum as its own investment in the case.

CPR 25.14 specifically provides for security for costs orders to be made against third party funders.

“(1) The defendant may seek an order against someone other than the claimant, and the court may make an order for security for costs against that person if –

(a)  it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and

(b)  one or more of the conditions in paragraph (2) applies.

(2)  The conditions are that the person –

(a) has assigned the right to the claim to the claimant with a view to avoiding the possibility of a costs order being made against him; or

(b) has contributed or agreed to contribute to the claimant’s costs in return for a share of any money or property which the claimant may recover in the proceedings; and

is a person against whom a costs order may be made.”

Managed Legal Solutions was balance sheet insolvent.

On the facts the court here held that two thirds of the value of the ATE insurance cover should be utilized to reduce the level of security for costs.

As the ATE cover was £750,000, the level of security that would otherwise have been made was reduced by £500,000.

The court also held that the Arkin cap did not apply.

This was on the basis that at the end of the case the court had a discretion to disapply that cap

“unless I take into account now the possibility that the cap will not be applied, there is a risk that the security ordered will be insufficient and the ultimate intention of the court of trial (and, perhaps, the Court of Appeal on appeal) so far as the costs are concerned will be frustrated.” (Paragraph 60)

Reading the decision as a whole, it comes close to saying that it thinks that Arkin was wrongly decided.

There is another interesting feature of the case.

Managed Legal Solutions was 49% owned by Mr Michael Hunt.

Mr Hunt was the sole shareholder of a company called Corporate Administration Management Limited, a creditor of Managed Legal Solutions to the tune of £3,465,299 – see paragraph 29 of the judgment.

The court had this to say at paragraph 9:

“Although it is some while ago, and the circumstances were different from those obtaining in the present situation, Mr Hunt, who had been managing director of Nissan UK, was sentenced to 8 years’ imprisonment and disqualified from being a company director in June 1993 following his conviction for serious dishonesty involving many millions of pounds. The press reports exhibited to Ms Caswell’s 5th witness statement indicate that at the time of his sentence, Mr Hunt was aged 59. He must now be in his mid-80s. The substantive assertions concerning his conviction and sentence have not been controverted.”

At present there is no statutory regulation of third party funders.

Maybe there should be.

Contingency Fees, Experts And Tribunals

In

Merlin Entertainments Group Limited v Cox (Valuation Officer) [2018] UKUT 406 (LC) 11 December 2018

the Upper Tribunal (Lands Chamber)(UT), in a valuation appeal, held that a party’s attempt to present expert evidence as factual evidence was an abuse of process as the objective was to hide the fact that the expert was acting under a Contingency Fee Agreement, which would normally result in the Upper Tribunal refusing to receive that evidence.

In

Gardiner and Theobald LLP v Jackson (Valuation Officer) [2018] UKUT 253 (LC)  

the Upper Tribunal stated that it was wholly unacceptable for an expert witness in tribunal proceedings to enter into a Contingency Fee Agreement without disclosing it to the tribunal and other parties, and here the Upper Tribunal stated that that applies when experts disclose information and give evidence on factual issues, as well as when they give an expert opinion.

The Upper Tribunal held that there was no distinction between an expert using her or his expertise to assemble information and data to assist a court or tribunal in deciding an issue, and an expert giving evidence for the same purpose.

It could not be right for an expert to present even purely factual evidence without disclosing to the court or tribunal, and to the other parties, that she or he was remunerated under a Contingency Fee Agreement.  

Written by kerryunderwood

January 29, 2019 at 12:02 pm

Posted in Uncategorized

COUNTER-OFFER IS NOT A REJECTION OF ORIGINAL OFFER IN THE PORTAL PROCESS

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Cox v Pace, Birmingham County Court, 23 October 2018, Claim D82YM554

a Deputy District Judge held that a counter-offer within the portal process did not amount to a rejection of the original offer, thus treating the portal rules as a self-contained code in the same way as Part 36.

As a matter of common contract law, a counter-offer acts as a rejection of the original offer, but that is not the case within the Part 36 regime, nor in the portal process.

I am grateful to Kevin McGough of MJP Solicitors for information about this case.

Written by kerryunderwood

January 28, 2019 at 10:39 am

Posted in Uncategorized

£550 AN HOUR ALLOWED IN BUDGET

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Arcadia Group Ltd & Ors v Telegraph Media Group Ltd (Rev 1) [2019] EWHC 96 (QB) (23 January 2019)

the Queen’s Bench Division, in a costs budgeting exercise, allowed a rate of £550 per hour on a between the parties basis for a partner in injunction proceedings concerning restraining the Telegraph Media Group from publishing information about the claimants.

The rate was reduced from £690.

A trainee rate of £190 per hour was allowed.

The decision was by a full High Court Judge.

Leaving aside the actual rates, it is of concern that the Judge referred to the Guideline Hourly Rates, which were never meant to apply to this type of case, and which have not been uprated since 2010.

Written by kerryunderwood

January 28, 2019 at 8:59 am

Posted in Uncategorized

FIXED FEES AND AGREED FEES

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

SRA – Question of ethics – January 2014 – What is the difference between a fixed fee arrangement and agreed fees?

The Solicitors Regulation Authority gives guidance in relation to fixed fees and agreed fees and states that they are two distinct types of arrangement and must be treated differently to comply with the accounts rule.

This is true, but does not tell the whole story in that an agreed fee, which is what most solicitors will want, is also a fixed fee, in the sense that it cannot be varied upwards.

In relation to an agreed fee its terms must be evidenced in writing and the fee must be paid into Office Account and cannot be varied upwards and is payable by the client, whether or not the work is completed.

Clients signing up to an agreed fee must be made aware of the implications of paying it and must consent to it before any payment is made.

The benefit to the client is certainty and the benefit to the solicitor is cash flow.

Agreed fees are particularly useful for such matters as an initial interview and advice, and Wills and Powers of Attorney.

A fixed fee is a fee set at the beginning of a retainer, but only payable on completion of the work, and in those circumstances money received must be paid into Client Account pending completion of the work and the delivery of a final bill.

Examples of where fixed fees, as compared to agreed fees, are used, include conveyancing, and may, for example, include a fixed fee for, say, preparing and issuing an Employment Tribunal application.

I repeat the point that an agreed fee is also fixed, as it cannot be varied upwards.

Written by kerryunderwood

January 25, 2019 at 1:44 pm

Posted in Uncategorized

CAPPED COSTS IN BUSINESS AND PROPERTY COURT – VOLUNTARY SCHEME

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

The two year voluntary pilot scheme came in on 14 January 2019 and is based on the existing one in the Intellectual Property and Enterprise Court, which is widely seen as being very successful.

As with the Intellectual Property and Enterprise Court, clients have certainty of maximum exposure to the other side’s costs, and this is expected to lead to a sharp increase in work for commercial lawyers.

It is running in the London Circuit Commercial Court and in Manchester District Registry and Leeds District Registry in the Circuit Commercial Courts, the Technology and Construction Courts and the Chancery courts.

It is open to cases:

  • with damages of £250,000 or less;
  • requiring a trial of no more than two days;
  • where there is no allegation of fraud.

Any case which is likely to require extensive disclosure or reliance upon extensive witnesses or expert evidence or to involve numerous issues or parties may be excluded.

The procedure is contained in Practice Direction 51W (PD 51W) contained in the Civil Procedure Rules Committee’s 102nd CPR Update – Practice Direction Amendments.

The Ministry of Justice has also issued an information bulletin.

Key features include:

  • Particulars of Claim limited to 20 pages and defence with counter-claim limited to 20 pages and other statements of case limited to 15 pages of case accompanied by a core bundle – PD 51W.2.9;
  • witness statements limited to 15 pages and confined to matters in the list of issues – PD 51W.2.31;
  • no expert evidence unless the court orders under PD 51W.2.33;
  • oral evidence from two witnesses per party;
  • no costs budgeting.

No later than 21 days after the trial, the parties must produce schedules of costs for summary assessment and a costs cap applies to each stage, with an overall cap of £80,000 plus VAT, court fees and enforcement costs.

Wasted costs may be ordered in addition to the capped costs.

Costs are capped, not fixed, and so a summary assessment procedure is still required.

Claims are commenced by issuing in the Capped Costs List and leave if the defendant objects in the defence to the matter remaining in the list.

The parties can agree before the Case Management Conference to the matter exiting the list, even if the defendant did not object in the defence.

The court can, at the Case Management Conference, order the matter out of the List – PD 51W.2.2.

The parties can agree to transfer into the List an action not commenced in the List – PD 51W.2.1.

Costs

The Capped Costs Table appears at the end of Practice Direction 51W and I set the table out in full below.

Although the overall total is £80,000, the sum of the total of each of the caps is £98,000.

Thus it is possible to hit the maximum of £80,000 without completing all of the stages, or without reaching the maximum in any given stage.

For example let us assume that there were no experts’ reports – stage maximum £10,000 – and no reply and defence to counterclaim as there was no counterclaim – stage maximum £6,000, that would reduce the overall total possibly available from £98,000 to £82,000, capped at £80,000.

The absence of two stages with maximum capped costs of £16,000 does not come off of the overall maximum of £80,000.

These capped costs are by reference to phase, and not just the stage that the court process has reached, and therefore great care needs to be taken to see what work properly belongs in what stage/phase.

Clearly the idea is to avoid exceeding the cap in any given stage, as the costs will then be reduced to that cap.

THE TABLE

Work done in respect ofMaximum amount of costs
Pre-action£10,000
Particulars of claim£7,000
Defence and counterclaim£7,000
Reply and defence to counterclaim£6,000
Case management conference£6,000
Disclosure£6,000
Witness statements£8,000
Experts’ reports£10,000
Trial and judgment£20,000
Settlement / negotiations / mediation£10,000
Making or responding to an application£3,000
Work done post-issue which is not otherwise covered by any of the stages above£5,000

Written by kerryunderwood

January 25, 2019 at 6:33 am

Posted in Uncategorized

CONSENT ORDER TRUMPS FIXED COSTS

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

The Court of Appeal has now overturned this decision which I have written up as a new blog here under the title  STANDARD COSTS MEANS FIXED COSTS: COURT OF APPEAL DECISION, but I have left this text here as it contains useful arguments, as parties are still free positively to agree, if it is in the clearest terms, costs other than fixed costs.

 

In

Adelekun v Lai Ho Case No: A06YQ205 Central London County Court (18 October 2018)

a Circuit Judge held that in a fixed costs case under CPR 45, Section III A, where the parties had entered into a consent order providing for the claimant’s reasonable costs to be paid on the standard basis, the claimant succeeded in escaping the fixed costs regime.

The judge held that the consent order, following acceptance of a Part 36 offer of £30,000, was incompatible with fixed costs and overruled them and that the Deputy District Judge had been wrong to vary what the parties had agreed.

The relevant wording in the order was:

“The defendant do pay the reasonable costs of the claimant on the standard basis to be subject of detailed assessment if not agreed.”

This wording, in the view of the Circuit Judge on appeal, allowed him to distinguish previous cases such as

Bratek v Clark-Drain Limited, Cambridge County Court, 30 April 2018

where it was held that a consent order settling a fast-track employers’ /public liability claim, and which provided for payment of costs on the standard basis, could not overrule the mandatory provisions of CPR 45.29D.

The facts here were slightly unusual in that the claimant had applied to re-allocate the claim to the multi – track the day before the Part 36 offer was made and the defendant agreed to the terms of the consent order after making the Part 36 offer.

The Circuit Judge held that the costs consequences were consistent with that, and would have been in the parties’ minds when signing the order.

The court suggested that it might have been sensible to include the issue of re-allocation to the multi-track as a term of the consent order.

In fact re-allocation never took place.

The hearing of the application to re-allocate would have taken place within the 21 day period for accepting the Part 36 offer, had the parties not settled.

In

Solomon v Cromwell Group Plc [2011] EWCA Civ 1584 (19 December 2011)

the Court of Appeal held that, as a matter of construction, general rules gave way to specific rules in the Civil Procedure Rules, and therefore the general Part 36 rules gave way to the specific rules in CPR 45, Section II.

True it is that in that case the relevant wording was “reasonable costs” without mention of the standard basis.

It is also correct that in Solomon the Court of Appeal recognised the possibility of the parties agreeing costs outside the fixed costs regime, even in a fixed costs case.

Here, the Deputy District Judge held that that principle applied in this case and that the order to the contrary was ultra vires and should not have been approved by the court.

In

Qader v Esure Services Ltd [2016] EWCA Civ 1109

the Court of Appeal held that fixed costs in an ex-portal case, as here, applied unless and until a matter has been allocated to the multi-track, whatever the settlement value.

That principle was subsequently enshrined by Parliament in an amendment to the Civil Procedure Rules.

A potential, but not actual, allocation to the multi-track is clearly capable of being an exceptional circumstance allowing an escape from fixed costs under CPR 45.29 (J)(1), a point accepted in this case, but that was not the issue here.

Indeed the Deputy District Judge, while holding that fixed costs applied here, specifically left it open for the claimant to argue that there were exceptional circumstances in the case, and these exceptional circumstances provisions are within the fixed costs rules themselves.

In

Sharp v Leeds City Council [2017] EWCA Civ 33 (01 February 2017)

the Court of Appeal held that the costs of an application for pre-action disclosure were governed by the fixed costs regime, although there, there was no agreement apparently to the contrary.

In

Hislop v Perde [2018] EWCA Civ 1726 (23 July 2018)

the Court of Appeal held that late acceptance of a Part 36 offer by a defendant did not allow a claimant to escape fixed costs.

Again, unlike here, there was no issue of contracting out of the fixed costs regime, and in any event many commentators believe that the decision in Hislop is wrong as a matter of law – see my blog

PART 36 AND FIXED COSTS:  CLAIMANTS’ OFFERS POINTLESS RULES COURT OF APPEAL

The Circuit Judge here held that the parties had consensually varied the usual rule, as envisaged in Solomon as being possible, and that the consent order was not vitiated by fraud, mistake, misrepresentation or incapacity,  and indeed it was not suggested otherwise.

He also held that the Deputy District Judge had no power to vary that consent order.

Matters were further complicated by the case of

Conlon v Royal Sun Alliance Insurance Plc [2015] EWCA Civ 92 (26 February 2015)

where the Court of Appeal held that the court had power, even after the end of a case, retrospectively to re-allocate it and thus retrospectively to alter the basis of assessment of costs.

Here the Deputy District Judge declined to re-allocate to the multi-track, which, in the absence of the issue of consensual variation would have left the case firmly caught by the Qader decision.

 

Comment

I have found this an extremely difficult matter to form a view on and have enormous sympathy with the judges having, yet again, to grapple with the mind-numbing contradictions of the Civil Procedure Rules.

It may be that the case, ultimately, is of limited importance moving forwards, as clearly the defendant’s solicitors were ill advised to leave the matter in any doubt by using the wording in the consent order.

The claimant’s solicitors may have been better advised to have delayed accepting the Part 36 offer until after re-allocation, although that would hardly have been consistent with the overriding objective of saving court time and costs.

It also seems pretty obvious as a matter of contract law that the parties were not, to use the old phrase, ad idem which means a meeting of the minds.

If two parties to a contract understand the terms and conditions of a contract in the same manner, then it is said that the parties are “ad idem”.

Such “meeting of minds” is essential to a valid contract.

How can that possibly have been the case here?

The point was seemingly not argued, – certainly it is not referred to in a very impressive and comprehensive judgment-  possibly because everyone involved seemed to be looking at the issue from a costs and personal injury point of view, rather than basic contract law.

Also, it is not clear why an agreement to pay standard costs in a fixed costs case means anything other than fixed costs.

After all they are the “standard” that is usual, or normal, costs for that type of work.

The true differentiation is between standard costs and indemnity costs, not between standard costs and fixed costs.

 

Conclusion

There are no score draws at court, or in my blogs.

On balance, but we are talking 51-49, my view is that the Deputy District Judge was right, that the Circuit Judge was wrong, and that the Court of Appeal should reinstate the Deputy District Judge’s decision, that is that fixed costs apply.

My unanimous decision, a 100-0, is that the Civil Procedure Rules Committee is not fit for purpose.

Written by kerryunderwood

January 24, 2019 at 7:37 am

Posted in Uncategorized

MCDONALD’S LOSES ‘BIG MAC’ TRADE MARK

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Supermac’s (Holdings) Ltd v McDonald’s International Property Company Ltd, 11 January 2019

the European Union Intellectual Property Office revoked McDonald’s Big Mac trade mark for lack of genuine use over a five year period.

Supermac applied under Article 58(1)(a) of the EU trade mark regulations for revocation on the ground that the mark had not been put to genuine use for five years.

McDonald’s said that the mark was genuinely used in Germany, France and the United Kingdom, all currently members of the European Union.

In revocation proceedings on grounds of non-use, the burden is on the trade mark owner and not the applicant, that is the trade mark holder must prove use.

The applicant is not required to prove the negative of non-use.

McDonald’s submitted evidence by way of brochures and printouts of advertising posters, together with printouts from its own websites, and, bizarrely lawyers may think, from Wikipedia.

The Cancellation Division held that this evidence was  insufficient.

McDonald’s had failed to provide third-party evidence and the brochures did not provide details of how they were circulated and whether they had led to any purchases.

In relation to the Wikipedia entry, the Cancellation Division noted that anyone can amend a Wikipedia entry.

Genuine use requires actual use and does not include token use for the purpose of preserving the trade mark.

As well as the evidence above, McDonald’s filed Affidavit evidence from representatives in Germany, France and the United Kingdom.

The Cancellation Division had this to say:

“The assessment of genuine use entails a degree of interdependence between the factors taken into account. Thus, the fact that commercial volume achieved under the mark was not high may be offset by the fact that use of the mark was extensive or very regular, and vice versa. Likewise, the territorial scope of the use is only one of several factors to be taken into account, so that a limited territorial scope of use can be counteracted by a more significant volume or duration of use.

It is noted that all of the remaining evidence (the Affidavits having been already analysed above) originates from the EUTM proprietor itself, this includes the printouts from the proprietor’s own websites, promotional brochures and packaging. Part of the submitted evidence, that is, the printouts, originate from the internet. The standard applied when assessing evidence in the form of printouts from the internet is no stricter than when evaluating other forms of evidence. Consequently, the presence of the trade mark on websites can show, inter alia, the nature of its use or the fact the products or services bearing the mark have been offered to the public. However, the mere presence of a trade mark on a website is, of itself, insufficient to prove genuine use unless the website also shows the place, time and extent of use or unless this information is otherwise provided.

In particular, the value of the internet extracts in terms of evidence can be strengthened by evidence that the specific website has been visited and, in particular, that orders for the relevant goods and services have been made through the website by a certain number of customers in the relevant period and in the relevant territory. For instance, useful evidence in this regard could be records that are generally kept when operating.”

Comment    

A curious decision.

Written by kerryunderwood

January 23, 2019 at 9:47 am

Posted in Uncategorized

ANOTHER NON-PARTY COSTS ORDER AGAINST AN INSURER

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Various Claimants v Giambrone & Law (a firm) and others (defendants) and AIG (Europe) Limited – Section 51 respondent [2019] EWHC 34 (QB)

the Queen’s Bench Division of the High Court made a non-party costs order against the insurers for the defendants.

The claimants succeeded in a professional negligence action against the defendants over legal advice given in relation to the purchase of properties in Italy.

They made an application under section 51 of the Senior Courts Act 1981 for a non-party costs order against the insurers AIG (Europe) Limited.

The judge held that AIG’s funding of the defence increased the claimants’ costs and ordered AIG to pay half of their total costs.

Although success in a section 51 application requires there to be exceptional circumstances, the threshold is lower than it may seem, as in

Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 WLR 2807

the Judicial Committee of the Privy Council said:

“Although costs orders against non-parties are to be regarded as “exceptional”, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such “exceptional” case is whether in all the circumstances it is just to make the order. It must be recognised that this is inevitably to some extent a fact-specific jurisdiction and that there will often be a number of different considerations in play, some militating in favour of an order, some against.”

(Quoted at Paragraph 11 of this judgment.)

Here the court said:

“78. In my view, where an indemnity insurer substantially relinquishes control of the conduct of the litigation to the insured (or fails to take steps to control it when there are grounds for intervening), and does so in the expectation that it will be immune from a costs liability towards the opposing party if the opposing party is successful, that expectation is open to be falsified by the court in a section 51 application, particularly if the prospects of success for the insured are assessed as poor.”

Comment

Given that actively controlling the litigation is a key factor in making a non-party potentially liable for costs, we are now close to the position that, in reality, the starting point is that an insurer will be liable for costs, either because it does control, or fails to control, the litigation.

Although this lengthy decision usefully examines in detail the relevant case law, it does not establish any new legal principle.

Written by kerryunderwood

January 22, 2019 at 6:31 am

Posted in Uncategorized

GOOGLE: ACTION FOR DAMAGES FOR BREACH OF DATA PROTECTION ACT FAILS

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Underwoods Solicitors are acting for the Joint Administrators for The Cambridge Analytica Group of Companies

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

THIS DECISION HAS BEEN OVERTURNED BY THE COURT OF APPEAL ON 2 OCTOBER 2019 – SEE MY BLOG –

REPRESENTATIVE ACTION AGAINST GOOGLE GIVEN GO-AHEAD BY COURT OF APPEAL

In

Lloyd v Google LLC [2018] EWHC 2599 (QB)

the Queen’s Bench Division of the High Court refused the claimant permission to serve the proceedings on Google, permission being needed as Google is a foreign corporation which had not agreed to accept service of the proceedings.

The claimant alleged breach of duty under the Data Protection Act 1998, the allegation being that in 2011/2012 Google secretly tracked the internet activity of Apple iPhone users and collated that information and sold it.

Mr Lloyd was the only named claimant but was suing in a representative capacity on behalf of other people in England and Wales.

No financial loss or destress was alleged and the claim was for compensation for damage and was made under section 13 of the Data Protection Act 1998.

No other remedy was sought.

The claim was for an equal, standard, tariff award for each member of the class, to reflect the infringement of the right, the commission of the wrong, and loss of control over personal data.

In the alternative each class member sought damages reflecting the value of the use to which the data were wrongfully put by Google.

No specific figure was suggested for the tariff, although a range of figures was put forward, and the letter of claim suggested a figure of £750 per potential claimant.

The claimant’s best estimate is that the class comprises 4.4 million people and Google’s estimate of the potential liability is between £1 billion and £3 billion. In its own summary the High Court said that there was no dispute that it is arguable that Google’s alleged role in the collection, collation, and use of data obtained was wrongful, and a breach of duty.

The main issues raised by the application were:

  • whether the pleaded facts disclosed any basis for claiming compensation under the Data Protection Act;
  • if so, whether the court should or would permit the claim to continue as a representative action.

Here, in a judgment running to a 105 paragraphs, the High Court held that the facts alleged in the Particulars of Claim did not support the contention that Mr Lloyd or any of those represented by him had suffered damage within the meaning of section 13 of the Data Protection Act 1998.

In any event, even if it had reached the opposite conclusion, the court would have refused to allow the claim to continue as a representative action because members of the class do not have the same interest within the meaning of CPR 19.6(1) and/or it is impossible reliably to ascertain the members of the represented class and in any event permission to continue the action in this form would be refused as a matter of the court’s discretion.

Section 13 of the Data Protection Act 1998, in so far as relevant, read:

13. Compensation for failure to comply with certain requirements

(1) An individual who suffers damage by reason of any contravention by a data controller of any of the requirements of this Act is entitled to compensation from the data controller for that damage.”

Written by kerryunderwood

January 21, 2019 at 7:03 am

Posted in Uncategorized

SOLICITORS’ LIENS, RETAINERS, CFA LITE AND UNCONSCIONABLE CONDUCT – THE HAVEN INSURANCE COMPANY CASE

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Gavin Edmondson Solicitors Ltd v Haven Insurance Company Ltd [2018] UKSC21

the Supreme Court upheld the Court of Appeal’s decision that an insurance company was liable to pay the solicitors’ fees where it had settled personal injury claims direct with the clients.

Although the Supreme Court upheld the decision, its reasoning was different from that of the Court of Appeal.

The Supreme Court held that the Client Care Letter had to be read, as far as possible, in accordance with the Conditional Fee Agreement and that both preserved and affirmed the clients’ basic contractual liability to pay the solicitors’ fees.

The solicitor was thus entitled to enforce the traditional equitable lien against the insurance company.

The Court of Appeal had held that the effect of the Client Care Letter was to override the general provisions of the Conditional Fee Agreement, with the result that the clients were not under any personal liability to pay the solicitors’ fees.

The Supreme Court also disagreed with the Court of Appeal’s purported extension of the equitable lien to cases where the paying party has implied notice that fees were outstanding.

The Supreme Court stated that there is no general principle that equity will protect solicitors from any unconscionable interference with their expectations in relation to recovery of their charges, and that in order for the equitable lien to apply, the client must be responsible for the solicitors’ charges.

Thus it is important to notify the other side that there will be fees due to your firm out of any damages and/or costs due to the client and that all damages and costs must be sent to you.

Comment

The case is important for many reasons, apart from its basic conclusion.

As the Supreme Court states in the opening paragraph, the judge-made remedy of the solicitor’s equitable lien is not motivated by any fondness for solicitors as fellow lawyers or officers of the court, but because it promotes access to  justice.

Specifically it enables to offer litigation services on credit to clients who have good cases, but lack the money to pay costs upfront.

This was recognised as early as 1815 in

Exp Bryant [1815] 1 Madd 49:

I do not wish to relax the doctrine as to lien, for it is to the advantage of clients, as well as solicitors; for business is often transacted by solicitors for needy clients, merely on the prospect of having their costs under the doctrine as to lien.”

The Supreme Court said that a lien is “better analysed as a form of equitable charge.”

The Supreme Court also specifically approved “CFA Lite” arrangements “designed to ensure that in no circumstances would the client have to put his hands in his own pocket for payment of the firm’s charges” (Paragraph 7).

The CFA Lite wording here was in the Client Care Letter, rather than the Conditional Fee Agreement, and read:

“For the avoidance of any doubt if you win your case I will be able to recover our disbursements, basic costs and the success fee from your opponent. You are responsible for our fees and expenses only to the extent that these are recovered from the losing side. This means that if you win, you pay nothing.”

The Supreme Court held that this wording did not destroy the basic liability of the client to pay the solicitors’ fees. It merely limited the recourse from which the solicitors could satisfy that liability to the amount of its recovery from the defendant.

It both preserved and affirmed that basic contractual liability, to the full extent necessary to form the basis of a claim to an equitable charge as security.

The Supreme Court said that the insurance company – Haven – knew that the solicitors were looking to the fruits of the claim for recovery of its charges.

The claim of collusion between Haven andthe clients to cheat the solicitor failed “not because Haven backed the requisite intent, but because each of the claimants did.” (Paragraph 49).

“Once a defendant or his insurer is notified that a claimant in an RTA case has retained solicitors under a CFA, and that the solicitors are proceeding under the RTA Protocol, they have the requisite notice and knowledge to make a subsequent payment of settlement monies direct to the claimant unconscionable, as any interference with the solicitor’s interest in the fruits of the litigation. The very essence of a CFA is that the solicitor and client have agreed that the solicitor will be entitled to charges if the case is won. Recovery of those charges from the fruits of the litigation is a central feature of the RTA Protocol.” (Paragraph 50).

The Supreme Court held that before the insurance company could be liable for the solicitor’s costs there must be a retainer between the solicitor and client:

“54. For this purpose I am prepared to assume that an offer of a settlement payment, made direct by the insurer to the claimant, which makes no provision for payment of Stage 2 fixed costs, disbursements and a success fee to the solicitor, at a time when a case has entered and not yet left the scheme, is a breach of paragraph 7.37 of the RTA Protocol. But it creates no legal or equitable rights of any kind, if the client has no responsibility to the solicitor sufficient to support the solicitor’s lien. There is no legal entitlement of the solicitor direct against the insurer which the lien can support by way of security.”

This does not override the decision in

Butt v Nizami [2006] EWHC 159 (QB)

to the effect that the indemnity principle does not apply in fixed costs cases.

For the claimant, or her or his solicitors, to recover costs from the defendant, there must be a valid retainer, which is the point made here by the Supreme Court.

Butt v Nizami held that the terms of that retainer do not restrict the amount of the costs that can be recovered in fixed costs cases, provided that there is a retainer.

The court here appears not to have been referred to the case of Butt v Nizami, and it is notable that none of the most well-known costs lawyers were involved in this case.

Unconscionable is defined  by the Oxford English Dictionary as follows:

  • showing no regard for conscience; not in accordance with what is right or reasonable.
  • Having no conscience; not controlled by conscience; unscrupulous

 

Press Summary   

Here is the Supreme Court’s own Press Summary of the decision, which is the only time that the Supreme Court or House of Lords has considered the issue of a solicitor’s equitable lien.

Background to the Appeal

Six individuals were involved in road traffic accidents involving vehicles whose drivers were insured by the appellant insurance company, Haven Insurance Company Limited (“Haven”).

They all entered into conditional fee agreements (“CFAs”) with the respondent solicitors firm, Gavin Edmondson Solicitors Limited (“Edmondson”).

Edmondson notified the claims via the online Road Traffic Accident Portal (“the Portal”), in accordance with the Pre-action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (“the Protocol”).

Under this scheme, the solicitors lodge the details of the claim on the Portal, the insurers respond by admitting or denying liability, and then, if liability is admitted, the amount of the damages are negotiated, with recourse to a court hearing if the amount cannot be agreed.

Under the Protocol, the insurer is expected to pay the solicitor’s fixed costs and charges direct to the solicitors.

In this case, however, shortly after the claims were logged on the Portal, Haven made settlement offers direct to the claimants, on terms which did not include any amount for the solicitors’ costs.

Haven told the claimants that they could pay the claimants more, and more quickly, by that route, than by going through the Portal.

All the individuals eventually accepted these offers, and cancelled their CFAs with Edmondson. This practice by Haven has been repeated in many other cases, which are not before the court.

Edmondson claimed against Haven for the fixed costs which it should have been paid under the Protocol.

Specifically, Edmondson sought enforcement of the solicitor’s equitable lien.

This is a form of security for the payment of fees owed by the client for the successful conduct of litigation, paid out of the fruits of that litigation.

Edmondson’s claim was dismissed at first instance.

The Court of Appeal allowed their appeal, holding that, even though the claimants did not have a contractual liability for the firm’s charges, which meant that the traditional equitable lien claim failed, the remedy could be modernised to allow the solicitors to recover from the insurers their fixed costs that should have been paid under the Protocol.

Judgment

The Supreme Court unanimously dismisses the appeal.

Lord Briggs gives the lead judgment, with which the rest of the Court agrees.

Edmondson are entitled to the enforcement of the traditional equitable lien against Haven, as the client owed a contractual duty to pay the solicitors’ charges.

However, the equitable lien should not have been modernised in the manner undertaken by the Court of Appeal.

Reasons for the Judgment

The solicitor’s equitable lien: the existing law

As the early cases demonstrate, the solicitor’s equitable lien was developed to promote access to justice.

It enables solicitors to offer litigation services on credit to clients who, although they have a meritorious case, lack the financial resources to pay up front for its pursuit [1], [33-34].

The equitable lien depends upon:

  • the client having a liability to the solicitor for his charges;
  • there being something in the nature of a fund in which equity can recognise that the solicitor has a claim (usually a debt owed by the defendant to the solicitor’s client which owes its existence to the solicitor’s services to the client); and
  • something sufficiently affecting the conscience of the payer at the time of payment, either in the form of collusion with the client to cheat the solicitor or notice or knowledge of the solicitor’s claim against or interest in the fund [35-37].

Construction of the CFA – does the client have any contractual liability to pay the solicitor’s charges?

The client care letter, which explained that the solicitor would be able to recover its costs from the losing side if the claimants won, so that the claimants would not need to put their hands in their own pockets, did not mean that the claimants were not contractually liable for the solicitors’ fees.

It merely limited the recourse from which Edmondson could satisfy that liability to the amount of its recoveries from the defendant, and it both preserved and affirmed the client’s basic contractual liability.

This was a sufficient foundation for the lien to operate as a security for payment, on a limited recourse basis [40-44].

Did Haven have notice of Edmondson’s lien?

In all the cases before the court, the requirement that the settlement debts must owe their creation to Edmondson’s services provided to the claimants under the CFAs was satisfied on the facts.

Edmondson’s actions in logging the claim on the portal contributed to the settlement in two ways.

First, it supplied the details of the claim to the insurer, and second, it demonstrated the claimant’s serious intention to pursue the claim, and ability to do so with the benefit of a CFA [45-46], [59-63].

Once a defendant or his insurer is notified that a claimant in a road traffic accident case has retained solicitors under a CFA, and that the solicitors are proceeding under the Protocol, they have the requisite notice and knowledge to make a subsequent payment of settlement monies direct to the claimant unconscionable, as an interference with the solicitor’s interest in the fruits of the litigation.

In this case, Haven had notice of the lien because they knew that each of the claimants had retained Edmondson under a CFA, and also knew that Edmondson was looking to the fruits of the claim for recovery of its charges [48-50].

As such, the lien could be enforced against Haven by requiring it to pay the fee amounts in the CFAs direct to Edmondson, but only up to the amount of the agreed settlement payments [65].

To that limited extent the order made by the Court of Appeal needed to be varied.

The re-formulation of the equitable lien by the Court of Appeal

It is not strictly necessary to address this issue in view of the decision on the traditional principle above, but the correctness or otherwise of the Court of Appeal’s reformulation of the principle has been extensively argued, and the Law Society has intervened to support it [51-52].

There are insuperable obstacles to extending the principle to cases where, although there is no contractual liability for the charges, the Protocol is breached.

This includes the fact that the Protocol is purely voluntary and created no debt or other relevant legal rights at all.

Whilst equitable remedies are flexible, they still operate according to principle.

One of the principles of the equitable lien is that the client must have a responsibility for the solicitor’s charges.

There is no general principle that equity will protect solicitors from any unconscionable interference with their expectations in relation to recovery of their charges [53-58].

Written by kerryunderwood

January 18, 2019 at 12:49 pm

Posted in Uncategorized

LAW SOCIETY GAZETTE CENSORS ME OVER BREXIT

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On 16 January 2019 the Law Society Gazette published a piece:

Brexit: Deadlock means new vote or no deal, says Society.

Here, I am not concerned with Brexit, but rather the Law Society, which still has official status, anonymously entering the debate in a blatantly partisan way and the Law Society Gazette anonymously reporting it, so no Law Society official or council member named and no journalist named, and then taking down my comment, which was not anonymous.

I commented at 19.06 and the comment attracted a great deal of support, and some opposition, which is the point of comments and debates.

At some stage in the following 24 hours the Law Society Gazette removed, that is censored the comment, which I set out below.

Another disgraceful contribution by a worthless body, publicized in a largely worthless publication, although I accept that this appalling piece of bias by the Law Society is at least worthy of publicity, unlike much of what appears here.

Some of us are prepared to fight to preserve democracy – I sort of thought that that was part of the role of lawyers.

Whatever your views, please RT this and generally publicize it to make it clear that, whatever our views, there should be freedom of comment in what is after all our publication.

What a state we have come to where the Law Society Gazette censors perfectly legal and decent comments by solicitors.

Judge for yourself.

Written by kerryunderwood

January 18, 2019 at 9:15 am

Posted in Uncategorized

DATA PROTECTION ROUND-UP

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Underwoods Solicitors are acting for the Joint Administrators for The Cambridge Analytica Group of Companies

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

Please also see yesterday’s blog – Information Disclosure.

Vicarious Liability of Employer for Breach by Data Controller

In

WM Morrison Supermarkets Plc v Various Claimants [2018] EWCA Civ 2339

the Court of Appeal upheld the High Court’s finding that the supermarket chain Morrisons was vicariously liable for the actions of one its employees in deliberately disclosing confidential data about 100,000 of its staff, evenly though the motive of that employee was to damage Morrisons.

Here, the employee had a grudge against Morrisons after he had been disciplined for unauthorised use of its postal facilities for personal use.

He carefully planned and executed a scheme to post data of 99,998 employees of Morrisons on a file sharing website and sent details to the press.

He was sentenced to eight years in prison.

5,000 employees sued Morrisons and the Court of Appeal upheld the High Court’s decision that there was a sufficient connection between the position in which he was employed and his wrongful conduct, so as to create vicarious liability.

The court also found that vicarious liability of an employer for misuse of private information by an employee and for breach of confidence by an employee is not excluded by the Data Protection Act.

The Act here was the Data Protection Act 1998, but the same principles apply in relation to the current legislation, that is the Data Protection Act 2018.

The Data Protection Act was concerned with the primary liability and obligations of data controllers and not with vicarious liability.

Here it was common ground that the employee, not Morrisons, was the data controller and Morrisons were vicariously liable for the act of the data controller, that is the employee.

Motive is irrelevant and so the fact that Morrisons were vicariously liable for a tort aimed to damage them made no difference. 

Damages for Loss of Access to iTunes, LinkedIn, WhatsApp etc.

In

Richmond v Selecta Systems Ltd [2018] EWHC 1446 (Ch)

the Chancery Division of the High Court awarded the claimant £1,000 damages for loss of access to his iTunes library and the inconvenience of being unable to access his LinkedIn, WhatsApp and AOL accounts.

The claimant was employed by the defendant and during discussions over his departure, the employer accessed his company supplied laptop and phone and changed the passwords causing the loss set out above as the employer managed to lose the claimant’s iTunes library.

The claimant succeeded in an action for negligence.

The employer was entitled to protect its business interests by discovering whether there was any company information on the phone and iCloud and to delete it, but it was not entitled to alter passwords so as to affect the claimant’s use of his personal accounts.

Google: Action for Damages for Breach of Data Protection Act Fails

In

Lloyd v Google LLC [2018] EWHC 2599 (QB)

the Queen’s Bench Division of the High Court refused the claimant permission to serve the proceedings on Google, permission being needed as Google is a foreign corporation which had not agreed to accept service of the proceedings.

The claimant alleged breach of duty under the Data Protection Act 1998, the allegation being that in 2011/2012 Google secretly tracked the internet activity of Apple iPhone users and collated that information and sold it.

Mr Lloyd was the only named claimant but was suing in a representative capacity on behalf of other people in England and Wales.

No financial loss or destress was alleged and the claim was for compensation for damage and was made under section 13 of the Data Protection Act 1998.

No other remedy was sought.

The claim was for an equal, standard, tariff award for each member of the class, to reflect the infringement of the right, the commission of the wrong, and loss of control over personal data.

In the alternative each class member sought damages reflecting the value of the use to which the data were wrongfully put by Google.

No specific figure was suggested for the tariff, although a range of figures was put forward, and the letter of claim suggested a figure of £750 per potential claimant.

The claimant’s best estimate is that the class comprises 4.4 million people and Google’s estimate of the potential liability is between £1 billion and £3 billion. In its own summary the High Court said that there was no dispute that it is arguable that Google’s alleged role in the collection, collation, and use of data obtained was wrongful, and a breach of duty.

The main issues raised by the application were:

  • whether the pleaded facts disclosed any basis for claiming compensation under the Data Protection Act;
  • if so, whether the court should or would permit the claim to continue as a representative action.

Here, in a judgment running to a 105 paragraphs, the High Court held that the facts alleged in the Particulars of Claim did not support the contention that Mr Lloyd or any of those represented by him had suffered damage within the meaning of section 13 of the Data Protection Act 1998.

In any event, even if it had reached the opposite conclusion, the court would have refused to allow the claim to continue as a representative action because members of the class do not have the same interest within the meaning of CPR 19.6(1) and/or it is impossible reliably to ascertain the members of the represented class and in any event permission to continue the action in this form would be refused as a matter of the court’s discretion.

Section 13 of the Data Protection Act 1998, in so far as relevant, read:

13. Compensation for failure to comply with certain requirements

(1) An individual who suffers damage by reason of any contravention by a data controller of any of the requirements of this Act is entitled to compensation from the data controller for that damage.”

 

 

 

 

 

 

 

 

 

 

Written by kerryunderwood

January 17, 2019 at 11:24 am

Posted in Uncategorized

EMPLOYER LIABLE IN NEGLIGENCE FOR ALTERING EMPLOYEE’S PASSWORD

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Damages for Loss of Access to iTunes, LinkedIn, WhatsApp etc.

In

Richmond v Selecta Systems Ltd [2018] EWHC 1446 (Ch) (14 June 2018)

the Chancery Division of the High Court awarded the claimant £1,000 damages for loss of access to his iTunes library and the inconvenience of being unable to access his LinkedIn, WhatsApp and AOL accounts.

The claimant was employed by the defendant and during discussions over his departure, the employer accessed his company supplied laptop and phone and changed the passwords causing the loss set out above as the employer managed to lose the claimant’s iTunes library.

The claimant succeeded in an action for negligence.

The employer was entitled to protect its business interests by discovering whether there was any company information on the phone and iCloud and to delete it, but it was not entitled to alter passwords so as to affect the claimant’s use of his personal accounts.

Written by kerryunderwood

January 16, 2019 at 3:31 pm

Posted in Uncategorized

INFORMATION DISCLOSURE

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

The law relating to data disclosure is in a mess and the courts, as usual, are left to try and sort out poorly drafted and conflicting legislation passed by Parliament often, one suspects, with very few Members of Parliament considering what they are voting on.

A central issue is the conflicting policies set out on the one hand in the Data Protection Act 2018 and its predecessors and on the other hand in the Freedom of Information Act 2000 , with whistleblowing protection and the Public Interest Disclosure Act 1998 adding a further layer of complication.

A first step may be to have a single Act dealing with all of these issues, including legal professional privilege, that is both litigation privilege and legal advice privilege, common interest privilege, Without Prejudice and client confidentiality, and whistleblowing.

Withholding Information, Legal Professional Privilege and Section 42 of the Freedom of Information Act

In Norman Fearn v Information Commissioner (EA/2018/0124) (17 December 2018)

the First-tier Tribunal (General Regulatory Chamber) (Information Rights) held that the public interest favoured the withholding of information concerning a council’s future litigation costs, under section 42 of the Freedom of Information Act 2000, which is  a qualified exemption and applies to information which could be subject to legal professional privilege in legal proceedings.

Section 42(1) provides that:

Information in respect of which a claim to legal professional privilege…could be maintained in legal proceedings is exempt information.

By section 2(2)(b) the Tribunal must balance the public interest in maintenance of the exemption on the one hand and disclosure of the information on the other.

The information requester asked Chalfont St Peter Parish Council for information concerning litigation brought against it that was ongoing at the time of the request and the tribunal’s decision.

Specifically the information requester asked:

[1] What costs have been incurred so far in this lawsuit?

[2] What further anticipated costs are included in the budget as the action proceeds?

[3] What provision has been made for a possible award against the Council if liability for the [respondent’s] costs is imposed on the Council?

The council provided details of the costs that it had incurred so far, but in relation to budgeted future costs it provided only a partial response and it withheld altogether its calculated exposure to the costs of the claimant, and cited section 42(1).

The Information Commissioner upheld the council’s decision to withhold the information.

The requester appealed and the essence of his appeal was in paragraph 5 of his grounds:

I have contended that information about possible future costs should not be secret. It cannot affect the legal argument any more than actual cost to date, some of which has been disclosed. As a parishioner I am entitled to know. For a Parish Council this expenditure is very large, the motive is unclear and the action offers no apparent benefit to the Council or the parishioners. It is noticeable that the chief beneficiary of the secrecy will be the solicitor who recommended it.

The tribunal dismissed the appeal of the information requester.

It held that section 42 was engaged and that the information concerned litigation privilege rather than legal advice privilege, both of which are types of legal professional privilege.

Applying the public interest test the tribunal held that this came down in favour of withholding information as disclosure could:

  • undermine the council’s litigation strategy and give its opponents in the litigation a “practical, or at least psychological, advantage” ( paragraph 17);
  • expose the council’s assessment of its prospects and, in turn, the nature of the legal advice it had received;
  • prejudice the public interest in an effective legal system, and the local community’s financial interests if the council achieved a poorer outcome in proceedings.

The tribunal added that it was not in the public interest for citizens to influence the litigation strategies of public authorities.

The tribunal also said that had the request been retrospective in relation to concluded litigation, then that would have been a “different proposition”.

The powerful public interest argument based on possible prejudice to current litigation would not have applied and the council’s objection to disclosure would have been less compelling.

The Tribunal also went through the relevant case law.

Access to Court Documents by Non-Party 

In R (on the application of British American Tobacco (UK) Ltd) v Secretary of State for Health [2018] EWHC 3586 (Admin) (20 December 2018)

the High Court, in judicial review proceedings brought by the tobacco industry concerning regulation of tobacco packaging, exercised the court’s inherent jurisdiction to allow an intervener under CPR 5.4C(2) access to documents on the court file, even though some of them might not fall within the scope of the Civil Procedure Rules.

The intervener, a non-governmental organisation campaigning for a reduction in tobacco use, had obtained copies of pleadings under CPR 5.4C(1) and now sought expert reports, witness statements and various letters referred to in the pleadings, arguing that they would aid universal understanding of tobacco packaging issues.

The defendant objected to disclosure on the ground that trial witness and expert statements were outside the ambit of CPR 5.4C(2).

The court held that where possible, the court should exercise its power under CPR 5.4C(2)  in favour of disclosure.

Open justice case law does not require that the reasons for seeking access should be determinative.

Where there are no issues of confidentiality or security, or any other claim which might serve to limit disclosure, a non-party should be entitled to disclosure upon request and without further justification.

Documents that judges have been invited to read to themselves during or before the hearing are an integral part of the proceedings even though attendees at court might be unaware of their content and relevance.

Courts can order disclosure to give effect to open and transparent justice, even in cases not covered by formal rules of procedure.

Pre-Action Disclosure

In Lacey v Leonard [2018] EWHC 3528 (QB) (20 December 2018)

the Queen’s Bench Division, on appeal, upheld the Master’s decision to refuse pre-action disclosure under CPR 31.16 to a defendant, effectively an insurance company, in a serious road traffic accident claim where the claimant had indicated that damages of £750,000 would be claimed.

In spite of the claimant providing almost no information,the High Court upheld the Master’s decision to refuse disclosure on the basis that pre-action disclosure of medical records relating to the accident would not assist in resolving the dispute without proceedings, nor lead to a saving of costs. Consequently the preconditions for pre-action disclosure in CPR 31.16 were not satisfied.

Following the decision in

Wells v OCS Group Ltd [2009] 1 WLR 1895

the court said that it is expert medical reports and not raw data which may or may not be relevant and which are likely to form a basis for settlement.

The court said that it had sympathy for the insurers in being faced with an unparticularised claim for such a large sum, but CPR 31.16 was not satisfied.

I am grateful to Nick Hanning, a consultant at Anthony Gold Solicitors for information concerning the Lacey v Leonard case.

Pre-Action Disclosure Refused

In Pharmacy2u Limited v The National Pharmacy Association,

a Chancery Division master dismissed an application for pre-action disclosure under CPR 31.16. The judgment considers the meaning of “proceedings” in CPR 31.16 (3)(d) and sets out factors which may count against such disclosure being “desirable” within that rule, which reads:

“(3) The court may make an order under this rule only where –

(a) the respondent is likely to be a party to subsequent proceedings;

(b) the applicant is also likely to be a party to those proceedings;

(c) if proceedings had started, the respondent’s duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and

(d) disclosure before proceedings have started is desirable in order to –

(i) dispose fairly of the anticipated proceedings;

(ii) assist the dispute to be resolved without proceedings; or

(iii) save costs”. 

Pharmacy2u is the United Kingdom’s largest online pharmaceutical retailer and the National Pharmacy Association is a long established trade association representing 3,202 members.

The association distributed a notice to its members, for display to the public, pointing out that Pharmacy2u was nothing to do with the pharmacist and the fact that Pharmacy2u had been fined £130,000 for selling patients’ details to marketing companies, including an Australian Lottery, had failed to send out prescriptions for three weeks over Christmas 2015 and had been found by the Care Quality Commission to be “not safe, effective or well lead.”

None of these facts is disputed by Pharmacy2u, but it said that the National Pharmacy Association had infringed its trade mark by using it in the notice.

The claimant sought pre-action disclosure of the names and contact details of all members to whom the notice had been sent or by whom it had been downloaded, contending that this information was necessary to enable it to understand the extent of the damage and so that it could contact the members to address ongoing harm.

It was common ground that CPR 31.16 (3)(a) -(c) were satisfied and thus the issue was whether it was desirable under (d).

The court held that the order was not necessary in order for the proposed claimant to understand the extent of the damage, as the claimant had sufficient information to plead its case and the respondent had identified the number of its members involved.

As to the meaning of proceedings, the court held that this meant the proceedings against the respondent to this application and not against anyone else, but that if it was wrong about that, then disclosure was not necessary to dispose fairly of these proceedings. Rather, it was to enable the proceedings to be brought by supplying the contact details of potential defendants.

In any event, the disclosure sought was neither necessary nor desirable. The respondent, as the alleged primary wrongdoer, would be liable for any damages and there was no suggestion that it could not pay, nor that it would fail to instruct its members to stop distributing the notice and to destroy any copies.

It was not necessary for the claimant to join the respondent’s members in order fairly to resolve the claim, and it was neither desirable nor proportionate to order disclosure to enable claims to be made against 3,202 members for alleged minor infringement.

The court also had this to say:

“31. In this context, assuming, again for the sake of argument, that NPA has a good defence to P2U’s claim, then there is a risk that the effect of providing P2U with the members’ names and contact details will be that NPA will not have the opportunity to establish that defence. If P2U writes letters before claim to the members, threatening proceedings, injunctive relief, and orders for significant damages and costs, the practical reality is that most members are likely not to involve themselves in contested litigation for all the usual reasons, even if supported by NPA. They were not responsible for the wording of the Notice; and have no direct knowledge of its truth or falsity. There is a serious risk, therefore, that P2U would therefore be able to “pick off” the individual members, without ever having to submit to a judicial determination of the merits of its claim.

32. These concerns are reinforced to a degree by P2U’s conduct to date. When it first wrote to NPA in December 2017, it alleged that the statements in the Notice were untrue, and threatened claims for defamationand malicious falsehood. Following NPA’s solicitors’ response, these were withdrawn. In addition, Mr Strachan’s evidence is that P2U’s solicitors wrote to him personally, threatening to make a complaint about him to the General Pharmaceutical Council. Finally, Mr Strachan also gives evidence of a GP practice which, having displayed the Notice received correspondence he describes as “very intimidating”, instructing them to remove it and threatening to report them to their regulatory body, the General Medical Council. This evidence was not challenged in P2U’s evidence in reply.”

The court also declined, for the same reasons, to make a Norwich Pharmacal Order, that is an order for the provision of information as per the case of Norwich Pharmacal v Customs and Excise Commissioners.

Non-Party Disclosure: Necessity Test To Be Applied Flexibly

In Sarayiah v Royal and Sun Alliance Plc and others,

a High Court judge allowed an appeal by an applicant litigant in person and granted a non-party disclosure order against the respondent insurance company. It held that the lower court had erred in refusing to make the order on the basis that the applicant should have made a specific disclosure application under CPR 31.12 against another party.

The court rejected the argument that a non-party disclosure application should not succeed if the documents are available from another source, meaning that disclosure is not “necessary” to dispose fairly of the claim or to save costs.

Rather, the flexible Norwich Pharmacal approach to necessity should be applied to CPR 31.17applications.

Here, the applicant had sued his sisters for harassment and alleged that they had removed him as an interested party on an insurance policy, causing him considerable loss.

He sought disclosure from the respondent of a tape recording of a telephone call between the sisters and the insurance company concerning the policy change.

The lower court refused his application, stating that he should have sought specific disclosure from the sisters. The applicant then applied to a different judge for such specific disclosure, but it was refused on the erroneous basis that the sisters lacked control of the tape recording, the sisters having failed to tell the judge that they did in fact have a copy of that recording.

On appeal, the High Court judge said that he could not see what considerations the lower court judge had taken into account, except his view that the applicant had alternative means of obtaining the disclosure, which he apparently, and wrongly, regarded as preventing a non-party disclosure order.

The lower court had failed to consider the relevant factors, such as the applicant’s position as a litigant in person seeking a document which the respondent had in its possession.

The lower court had also failed to consider the sisters’ unwillingness to cooperate and whether an application under CPR 31.12 would have been problematic, which in fact it turned out to be.

Here, the criteria in CPR 31.17 were met and it would be disproportionate to require the applicant to make yet another application, this time under CPR 31.12, to obtain disclosure of the tape recording.

The court held that an order for disclosure against the respondent was necessary to dispose fairly of the claim.

Defendant Succeeds In Pre-Action Disclosure Application

In EUI Limited v Charles and others,

the County Court ordered the claimants to give pre-action disclosure of documents relating to impecuniosity in a credit hire case.

Here the applicant insurer was facing potential actions by seven individuals whose cars had been damaged in accidents. All of them had hired alternative vehicles from credit hire companies and the defendants sought, and obtained, disclosure of bank statements and wage slips for the three months before the hire.

A claimant can normally only claim a basic hire rate, but an impecunious claimant can claim the full credit hire charge, not limited to the basic hire rate, provided that the full charge is not unreasonably high.

Impecuniosity is also relevant to the period of hire, and therefore the issue of the claimants’ finances is generally central to such cases.

Here, the applicant insurance company successfully argued that it should be able to assess if a potential claimant is impecunious in order that it could value and settle the claim without litigation if appropriate.

Successful applications for pre-action disclosure by defendants are rare.

Each case will depend upon the facts, but the decisions here and in Sarayiah may indicate a more liberal approach by the courts to pre-action disclosure applications.

The Pharmacy2u case goes the other way, but that is unsurprising on the facts, and given the general conduct of Pharmacy2u.

The general lesson here is that all litigators should always consider the issue of an application for pre-action disclosure, bearing in mind the current establishment view that litigation should only be engaged in as a last resort.

 

Written by kerryunderwood

January 16, 2019 at 9:48 am

Posted in Uncategorized

SOLICITORS ACT: STATUTE BILL NEED NOT INCLUDE DISBURSEMENTS

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Slade (t/a Richard Slade And Company) v Boodia & Anor [2018] EWCA Civ 2667 (27 November 2018)

the Court of Appeal held that a solicitor’s invoice could be an interim statute bill for the relevant period, even though it did not contain the disbursements incurred during that period.

“Interim” is a confusing term as an interim solicitor’s bill is in fact a final bill for that period.

Overturning a High Court judgment, the Court of Appeal held that the Solicitors Act 1974 did not require a statute bill to include both the costs and the disbursements and there was no case law justifying such a rule, nor any reasons of practicality or public policy.

On the contrary, practicality required that solicitors should be able to raise costs- only bills, as having to include all disbursements incurred during the relevant period would leave solicitors dependent upon third parties, such as experts and counsel, to raise invoices.

“The difficulties would be the greater if work were being undertaken (say by counsel or an expert) at the end of a solicitor’s billing period. The solicitor would, presumably, be unable to render a statute bill until he knew the cost of work done up to midnight on the final day, and, where work continued into the next billing period, an apportionment might be required.

“Separate billing for profit costs and disbursements is common with modern, digital billing, and I do not accept that that need give rise to problems.”

The main reason why the distinction is so important is that the delivery of a statute bill starts the limitation clock ticking in relation to a challenge by the client under the Solicitors Act 1974, whereas an interim bill on account does not.

The fact that the Solicitors Act 1974 defines “costs” as including “fees, charges, disbursements, expenses and remuneration” did not mean that they must all be billed together.

Here, the retainer allowed for interim statute bills covering costs and not disbursements to be delivered.

The lower court had failed to consider the decision of the Court of Appeal in

Aaron v Okoye [1998] 2 Costs LR6

where the Court of Appeal had said:

“If the matter is something which cannot be included in the first bill then the solicitor cannot be criticised for omitting it from the first bill. Indeed, it would be wrong for him to include it. If one is to draw the conclusion that he should therefore be thereafter totally debarred from recovering what otherwise would be a perfectly proper fee for disbursement, that is an unacceptable and unreasonable conclusion which is not necessitated by the premise on which one is proceeding. But, in any event, this is not a case where the paying party, the client, was in any way deceived. The first bill made it clear that counsel’s fees were not being included and a covering letter adequately reminded her of the reason why that was so. So she was not deceived. She was not led astray in any way and there is no general principle which precludes the solicitor from then including the relevant item in a later bill when it is proper for him to do so.”

The Court of Appeal said that that judgment was inconsistent with the general principle that profit costs and disbursements cannot be billed separately.

Consequently a bill can be a statute bill even though it only includes profit costs, or disbursements, and not both, for the period it covers.

Comment

A sensible and correct decision.

What the judgment does not deal with is the issue of No-Win Lower-Fee Conditional Fee Agreements and whether the solicitor can charge the lower-fee element, payable whatever the result of the case, as an interim statute bill as the case progresses.

In

Sprey v Rawlison Butler LLP [2018] EWHC 354 (QB) (26 February 2018)

the court held that monthly bills delivered by a solicitor to her or his client under a discounted Conditional Fee Agreement could not be statute bills within the meaning of the Solicitors Act 1974.

It may be that that decision should be revisited following the decision of the Court of Appeal in this case.

Written by kerryunderwood

January 15, 2019 at 6:49 am

Posted in Uncategorized

EMPLOYMENT: VICARIOUS LIABILITY

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There has been a number of recent cases in relation to the vicarious liability of an employer for actions by an employee.

There is no doubt that the trend is to increase the scope of that liability.

Assault 

The original High Court decision in

Bellman v Northampton Recruitment Ltd [2017] IRLR 124

was an exception to that trend, but the Court of Appeal has now overturned that decision and this has reinforced the trend, and the Court of Appeal’s decision is

Bellman v Northampton Recruitment Ltd [2018] EWCA Civ 2214 (11 October 2018) .

Here the claimant was employed by the company as a sales manager and John Major was the managing director and a shareholder.

The company had a Christmas party at a golf club and paid for food and drink and for taxis too, and accommodation at, a hotel nearby.

As the party at the golf club came to an end at around midnight, Mr Major paid for anyone who wanted to get a taxi to the hotel and to continue drinking.

At around 2.00am the conversation turned to work and at 2.45am a group went outside and an argument developed between the claimant and Mr Major about the merits of a new employee.

Mr Major became annoyed that his judgment was being questioned and summoned the remaining employees present and told them that he was in charge and owned the company and would do what he wanted.

The claimant challenged again the merits of the new employee and Mr Major twice punched him, causing permanent brain damage.

The High Court held that the company was not vicariously liable, but the Court of Appeal overturned that finding, holding that it is necessary to consider the field of activities assigned to the employee in a broad sense and to look at the matter objectively taking account of the position in which the employer has placed the wrongdoer.

Here Mr Major was exercising his very wide remit as the directing mind and will of a small company with responsibility for all management decisions, including maintenance of his managerial authority.

In spite of the time, place and circumstances, Mr Major was doing just that and so there was sufficient connection between Mr Major’s field of activities and the assault to render it just that the company should vicariously liable for his actions.

Data Protection

In WM Morrison Supermarkets Plc v Various Claimants [2018] EWCA Civ 2339 (22 October 2018)

the Court of Appeal upheld the High Court’s finding that the supermarket chain Morrisons was vicariously liable for the actions of one its employees in deliberately disclosing confidential data about 100,000 of its staff, even though the motive of that employee was to damage Morrisons.

Here, the employee had a grudge against Morrisons after he had been disciplined for unauthorised use of its postal facilities for personal use.

He carefully planned and executed a scheme to post data of 99,998 employees of Morrisons on a file sharing website and sent details to the press.

He was sentenced to eight years in prison.

5,000 employees sued Morrisons and the Court of Appeal upheld the High Court’s decision that there was a sufficient connection between the position in which he was employed and his wrongful conduct, so as to create vicarious liability.

The court also found that vicarious liability of an employer for misuse of private information by an employee and for breach of confidence by an employee is not excluded by the Data Protection Act.

The Act here was the Data Protection Act 1998, but the same principles apply in relation to the current legislation, that is the Data Protection Act 2018.

The Data Protection Act was concerned with the primary liability and obligations of data controllers and not with vicarious liability.

Here it was common ground that the employee, not Morrisons, was the data controller and Morrisons was vicariously liable for the act of the data controller, that is the employee.

Motive is irrelevant and so the fact that Morrisons was vicariously liable for a tort aimed to damage it made no difference.

Co-workers and Whistleblowing

In Timis and another v Osipov [2018] EWCA Civ 2321

the Court of Appeal held that co-workers’ liabilities for damages for detriment suffered by a whistleblower, within the meaning of section 47B of the Employment Rights Act 1996, included loss suffered as a result of dismissal within section 103A of the Act.

Generally damages for detriment do not include damages flowing from dismissal as there is a separate cause of action against the employer for dismissal.

However there is no cause of action against a fellow worker for unfair dismissal.

Consequently the Court of Appeal upheld the decision of the Employment Tribunal and the Employment Appeal Tribunal that the liability of a co-worker for detriment did extend to detriment and damages flowing from dismissal.

The liability will generally be joint and several as between the co-worker and the employer, as here, and in any event the employer will generally be vicariously liable for the co-worker’s actions as well.

However, where the employer is insolvent this gives the victim of whistleblowing the ability to enforce the whole damages award against the co-worker, who will of course not enjoy the limited liability that most companies have.

Thus an insolvent employer avoids the debt, which becomes the sole responsibility of the fellow worker, although there is no liability for the basic award in unfair dismissal cases.

The same applies in relation to all forms of discrimination claim under the Equality Act 2010.

I suspect that this is not quite what Parliament had in mind.

 

Written by kerryunderwood

January 14, 2019 at 6:47 am

Posted in Uncategorized

PERSONAL INJURY DAMAGES TARIFF – THE SIXTH CENTURY SCHEME

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As we gear up for the whiplash tariff under the Civil Liability Act 2018, it is worth remembering that this is not the first personal injury tariff in this country, and indeed the concept goes back nearly 1,500 years.

I am grateful to Lord Justice Irwin for the idea for this piece and to Harvard University for much of the information.

King Aethelberht of Kent, who reigned from 560 to 616 created an extremely extensive tariff for damages for personal injuries, and some of the examples below show the prevalence of knife, or sword, crime at the time.

Under Section 37 of the code “if a shoulder becomes lamed, let him pay 30 shillings.”

In 7 th Century Kent a shilling was a measure of 1.3 grams of gold.

Currently gold is valued at around £22 a gram, so a shilling was worth around £29.

Thus 30 shillings is around £870, the equivalent under the proposed Civil Liability Act 2018 whiplash tariff to a 9-12 month injury.

 

Other awards included:

Stabs To The Thighs

  • one to two inches deep 1 shilling;

  • two to three inches deep 2 shillings;

  • three inches deep 3 shillings;

  • loss of little finger 11 shillings;

  • loss of four front teeth 6 shillings;

  • piercing through a generative organ 6 shillings;

  • any injury requiring medical treatment 30 shillings;

  • eye-gouging 50 shillings;

  • broken jaw bone 20 shillings;

  • broken arm 6 shillings

Toes, other than the big toe, attracted an award of half the compensation for the corresponding finger.

Bruises were compensated differently depending on whether they were visible outside ordinary clothing, so vanity clearly paid a part in awards, even in the 6th Century.

Indeed there was a specific award for minor disfigurement of appearance, and that was 3 shillings, with 6 shillings being the appropriate sum for greater disfigurement of appearance.
The amount to be paid for the death of a person was also standardised and depended upon the status or inherited rank of the deceased, and could be as high as 1,200 shillings.

Under King Alfred of Wessex, who reigned from 871 to 899, the law accommodated Britons that is Celts not Saxons, who were all referred to as Welshmen and the tariff for a Welshman who died, with no land, was 60 shillings.
Kind Alfred’s code also provided for staged payments.

Aethelberht’s code is believed to be the first example of law being written down in this country and it is thought that a fixed tariff was promulgated to avoid haggling and bargaining between quarrelling families and the fixed financial compensation was introduced as an alternative to retaliation and feud.

Under Aethelberht’s code there was also compulsory arbitration in certain cases, so under Section 65 1 “if he becomes lame, then friends must arbitrate.”

One Way Cost Shifting was not introduced until 1277, by the Statute of Gloucester, but that subject is for another day.

There really is very little new under the sun.

Written by kerryunderwood

January 11, 2019 at 7:04 am

Posted in Uncategorized

SUCCESS FEE RECOVERABILITY SCRAPPED IN DEFAMATION AND BREACH OF PRIVACY CASES

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15. 

Recoverability of success fees, but significantly not recoverability of After-the-Event insurance premiums, is to be scrapped in relation to new defamation and privacy claims, that is claims from 6 April 2019 onwards.

The statement by the Lord Chancellor states that this “provision will come into force for new cases on 6 April 2019.”

It is not clear whether this date relates to the entering into of the Conditional Fee Agreement, as was the case in both 2013 and 2016, or the date of the cause of action.

I presume that it will relate to any Conditional Fee Agreement entered into on or after 6 April 2019.

The type of claims covered are:

  • defamation;
  • malicious falsehood;
  • breach of confidence involving a publication to the general public;
  • misuse of private information;
  • harassment,

but in each case only where the defendant is a news publisher, that is a person who publishes a newspaper, magazine or website containing news or information about or comment on current affairs.

Generally recoverability of both success fees and ATE premiums was abolished in relation to arrangements entered into on or after 1 April 2013, by virtue of section 44 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.

There were limited exceptions and the only ones that now remain are in relation to mesothelioma proceedings, where both the success fee and the ATE premium remain fully recoverable, and in clinical negligence proceedings where the success fee is not recoverable, but the ATE insurance premium is, but only to a limited extent.

In many ways the significance is not the abolition of recovery of the success fee, which was only ever a matter of time, but rather the decision to maintain the recoverability of the ATE premium.

Outside the field of personal injury, where Qualified One-Way Costs Shifting restricts the need for such insurance, this has been a key issue in relation to access to justice.

The system of Conditional Fee Agreements may mean that claimants can afford to pay their own lawyers, but if a losing client remains liable for the other side’s costs, which it does outside the QOCS protected field of personal injury, then access to justice is an illusion.

True it is that a claimant can seek to take out After-the-Event insurance, but the premium is then deducted from the damages if the claimant wins.

The winning claimant is almost certainly to be paying an unrecoverable success fee to its own solicitors in such cases as well.

As such schemes generally provide for no premium to be paid in a lost case, where the insurer has to pay out, a winning claimant is effectively paying for those premiums as well, which partly explains the high cost of ATE insurance.

Allowing recoverability of the ATE premium, but not the success fee, solves this problem and is a potential model for other types of cases.

Such insurance would generally cover the claimant’s own disbursements as well.

Whether it is just for a losing defendant to have to pay for the claimant to bring a claim against it is another matter.

Recoverability of success fees and After-the-Event insurance premiums was generally seen as involving identical considerations.

I always disagreed with that view, and while I always thought that recoverability of success fees was wrong, I took a different view about the recoverability of ATE premiums.

I refer above to it being potentially unjust for a defendant to finance the action against it, but ATE insurance at least gives a successful defendant a fund out of which it can enforce its costs order and generally defendants may prefer such a scheme, that is recoverable ATE insurance, to Qualified One-Way Costs Shifting.

Summary

General Civil Litigation, including Personal Injury Cases

The success fee remains recoverable only where the Conditional Fee Agreement was entered into on or before 31 March 2013.

Insolvency

The success fee remains recoverable only in relation to any Conditional Fee Agreement entered into on or before 5 April 2016.

Defamation and Privacy  

The success fee remains recoverable, but only in relation to Conditional Fee Agreements entered into on or before 5 April 2019.

Mesothelioma Claims

The success fee remains recoverable in all mesothelioma claims and there is no proposal to alter that position.

Written by kerryunderwood

January 10, 2019 at 6:27 am

Posted in Uncategorized

PART 36, SMALL CLAIMS, PORTALS AND FIXED COSTS

with 2 comments


The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

Here I look at some Part 36 issues insofar as they relate specifically to small claims, portals and fixed costs.

Small Claims

Part 36 has no application in small claims track matters.

CPR 27.2(1) (g) reads:-

“(1) The following Parts of these Rules do not apply to small claims –

(g) Part 36 (offers to settle);

Unreasonable behaviour in the Small Claims Track

CPR 27.14(2) (g) allows the court to order “such further costs as the court may assess by the summary procedure and ordered to be paid by a party who has behaved unreasonably”.

CPR 27.14(3) provides that a party’s rejection of an offer in settlement will not of itself constitute unreasonable behaviour under paragraph (2) (g) but the court may take it into consideration when it is applying the unreasonableness test.

Thus Part 36 has no direct application to small claims track cases (CPR 27.2(1) (g)), but nevertheless the court may take into consideration the rejection, and presumably the non-acceptance, of any offer made in accordance with the terms of Part 36, or otherwise.

Part 36 itself requires a court to take into consideration any offer made in any way although strictly that provision does not apply in the small claims track, as it is contained within Part 36 itself, which has no application in the track. Effectively it does apply.

This is a crucial rule and is likely to become a major battleground between claimant lawyers and insurance companies.

In any given case it may make the difference between fixed costs of under £100.00 and full standard costs which, ironically, could well exceed those costs set out in the Fixed Recoverable Costs regime.

Thus the scenario is that the personal injury small claims limit is put up to £5,000.00 and the matter proceeds through the small claims track and the claimant is awarded, say £3,000.00 by the judge and the claimant successfully submits that the defendant has behaved unreasonably, maybe by not accepting an offer, or delay or whatever.

The court is then free to carry out a summary assessment of the claimant’s costs and award whatever it thinks fit.

Given that by definition there would have been unreasonable behaviour those costs are almost certain to be on the indemnity basis.

I stated above that the costs could be higher than under the Fixed Recoverable Costs Scheme and that is true.

However if the unreasonable behaviour is a failure to accept an offer then the effect is likely to be the same as now, that is an award of indemnity costs, which a claimant now gets in the Fixed Costs Scheme if it matches or beats its own Part 36 offer, if judgment is obtained, but not on late acceptance.

The key issue will be how the court exercises its discretion to take an offer into consideration when it is applying the unreasonableness test.

Portals

Section II of Part 36 deals with matters in the portals and the relevant rules are CPR 36.24 to CPR 36.30 and CPR 36.24(1) dis-applies section I of Part 36 in relation to the portals.

CPR 36.24(2) provides that this section only applies once the stage 3 procedure has been engaged and Part 8 proceedings issued.

Until stage 3 is engaged, section I of Part 36 applies as section I is only excluded by CPR 36.24(2) once stage 3 has been reached.

An offer is compulsory in stage 3 proceedings.

CPR 36 is a freestanding provision and a Part 36 offer can be made at any time in any case. CPR 36.7(1) reads:-

“(1) A Part 36 offer may be made at any time, including before the commencement of proceedings.”

I deal below with the concept of always making a Part 36 liability offer on day one.

Although a Part 36 offer can be made at any time in any non-small claims track matter it has no consequences if a matter is resolved by the end of stage 2 of the portal process.

Stage 3

Part 36 envisages three scenarios in relation to costs consequences following a stage 3 hearing:-

  • where the claimant fails to beat the defendant’s portal offer then the claimant must pay the defendant’s stage 3 costs as well as not recovering its own stage 3 costs; thus the claimant’s costs are Stage 1 and 2 minus Stage 3.
  • where the claimant beats the defendant’s offer but does not match its own offer then the defendant pays damages and stage 3 costs in the usual way;
  • where the claimant beats the defendant’s offer and matches or beats its own offer then the defendant pays:
  • the claimant’s stage 3 costs;
  • interest on those stage 3 costs at a rate not exceeding 10% above base rate;
  • 10% additional damages;
  • interest on all damages at a rate not exceeding 10% above base rate running from the first business day after the court proceedings pack (Part A and Part B) was sent to the defendant.

In each case the claimant’s damages are the damages awarded net of deductible state benefits.

Although Broadhurst v Tan & Taylor v Smith [2016] EWCA Civ 94 established that a claimant matching or beating its own Part 36 offer in a fixed costs case is entitled to indemnity costs, there is no such provision in relation to stage 3 of the portal.

Thus if a matter is concluded within stage 2 of the portal process there are no Part 36 consequences and if the matter is concluded within stage 3 of the portal process then there are limited Part 36 consequences as set out above.

Fixed Recoverable Costs and Part 36

Section 1 of Part 36 remains in force for non-portal cases and also applies to cases which exit either of the portals.

CPR 36.10A provides that where a claimant accepts a Part 36 offer within the relevant period the defendant will pay the claimant’s costs up to the stage reached when the offer is accepted.

This is clearly open to abuse.   A defendant makes an offer which the claimant intends to accept but during the 21 day acceptance period another stage is due to be passed.  The claimant delays acceptance thus triggering an additional fee as the next stage is passed.

Where a defendant’s Part 36 offer is accepted after the relevant period the claimant gets the appropriate fixed costs applicable at the date of expiry of the relevant period, and the claimant pays the defendant’s costs from expiry to acceptance.

Where a claimant accepts the defendant’s protocol offer after the claim has exited the portal the claimant gets Stage 1 and 2 costs but pays the defendant’s costs from expiry to acceptance.

The defendant’s fixed recoverable costs are dealt with by CPR 45.29F which states that if a Part 36 offer is accepted out of time then costs are determined under CPR 36.10A.

CPR 45.29F(2) states:-

If, in any case to which this Section applies, the court makes an order for costs in favour of the defendant—

  • the court will have regard to; and
  • the amount of costs order to be paid shall not exceed,

the amount which would have been payable by the defendant if an order for costs had been made in favour of the claimant at the same stage of the proceedings.

In addition CPR 36.10A (10)(b) states that where a court orders costs to be paid to the defendant those costs must not exceed the level of the relevant fixed recoverable costs.

Thus the defendant’s costs are capped, not fixed, at the level of fixed costs.

Exemptions to the new rule capping defendants’ costs

Where the new Qualified One Way Costs Shifting rule applies, but is then disapplied, for example where a claim is found to have been fundamentally dishonest, then the defendants’ costs are not capped.

CPR 45.29F(10) states that “where, in a case to which this Section applies, any of the exceptions to qualified one way costs shifting in rules 44.15 and 44.16 is established, the court will assess the defendant’s costs without reference to this rule”.

If Qualified One Way Costs Shifting never applied, eg because of the existence of a pre-1 April 2013 recoverable additional liability, then the rule capping costs still applies.

The other exceptions, and the interplay between CPR 36 and new CPR 45.29, are of extreme complexity and are among the worst drafted provisions that I have ever seen – and I have seen a few.

CPR 45.29F (9) reads:-

“Where, in a case to which this Section applies, upon judgment being entered, the claimant fails to obtain a judgment more advantageous than the claimant’s Part 36 offer, rule 36.21 will apply instead of this rule.”

CPR 45.29F (9) reads:-

“Where, in a case to which this Section applies, upon judgment being entered, the claimant fails to obtain a judgment more advantageous than the defendant’s Part 36 offer, rule 36.21 will apply instead of this rule.”

CPR 36.21 (3) reads:

  • Where the claimant fails to obtain a judgment more advantageous than the defendant’s Protocol offer—
  • the claimant will be entitled to the applicable Stage 1 and Stage 2 fixed costs in Table 6 or Table 6A in Section III of Part 45; and
  • the claimant will be liable for the defendant’s costs from the date on which the Protocol offer is deemed to be made to the date of judgment; and
  • in this rule, the amount of the judgment is less than the Protocol offer where the judgment is less than the offer once deductible amounts identified in the judgment are deducted.

(‘Deductible amount’ is defined in rule 36.22(1)(d).)

Judgment

CPR 36.21 deals with the position on judgment, rather than acceptance of an offer, but the principles are exactly the same, save that the claimant who matches his or her own offer at trial gets indemnity costs, not fixed recoverable costs, from the date of expiry of the period for accepting the offer.

Defendants’ costs are capped, not fixed, by reference to the level of the claimants’ fixed recoverable costs.

Does A Claimant Get Indemnity Costs on Late Acceptance?

No.

In Hislop v Perde [2018] EWCA Civ 1726

the Court of Appeal held that in fixed costs cases a late accepting defendant has to pay only fixed costs, unless there are exceptional circumstances, and that of itself late acceptance is not an exceptional circumstance within CPR 45.29J.

A long delay without explanation may be a special circumstance, but a short delay with a reasonable explanation will not.

A claimant at trial, or on judgment being entered, who matches or beats her or his own Part 36 offer, still receives indemnity costs in accordance with the decision in

Broadhurst v Tan [2016] EWCA Civ 94

specifically endorsed here by the Court of Appeal, although unfortunately the Court of Appeal refers on several occasions to a claimant having to beat its offer at trial.

This is wrong on two points; firstly the claimant only has to match, not beat, its own offer, and secondly it is any judgment, and not just judgment after trial, which triggers the entitlement to indemnity costs.

Given that virtually all fixed costs cases settle before trial, this very limited exception is for all intents and purposes meaningless.

The Court of Appeal accepted that there was no authority as to when CPR 45.29J exceptional circumstances come into play, and here it chose to give no guidance, except the very limited, non-specific guidance set out above.

The issue of what happens on late acceptance of a Part 36 offer in non-fixed costs cases was not addressed.

Comment

A poor and chaotic decision which shows that this division of the Court of Appeal simply does not understand the funding mechanisms of civil litigation and fixed costs.

Paragraph 53 says it all:

“53. This is important. These rules demonstrate that, in the mirror image of the situation in which these claimants find themselves (namely, where a claimant has accepted a defendant’s offer late) there is no question of either indemnity or standard basis costs being awarded to the defendant. The defendant’s recovery for the period of delay is limited to fixed costs only. There could be no reason to treat the claimant in a radically different way and to go outside the fixed costs regime, and order standard or even indemnity costs, in circumstances where a defendant in a similar position to these claimants is not permitted to recover costs on that basis. In this way, my interpretation of the rules applies the same fixed costs regime to any party whose offer has not been accepted when it should have been.” 

This shows a complete failure to understand Part 36 consequences. In no way is this a mirror image; a claimant who fails to beat a defendant’s Part 36 offer, or accepts late, pays the defendant’s costs and is deprived of its own costs, even though it has won.

Thus that is a double penalty. In contrast a defendant now suffers no penalty whatsoever on late acceptance.

The decision makes no sense at all. If the policy issue set out by the Court of Appeal are correct – and they are not – then why does a claimant at trial or on judgment get indemnity costs if it matches or beats its own Part 36 offer?

How can the happenstance of judgment or trial reverse entirely the policy objectives of certainty etc. trotted out by the Court of Appeal?

The Court of Appeal also falls into the trap of equating indemnity Part 36 costs with indemnity costs caused by misconduct or bad behaviour and here at paragraphs 35 and 36 the Court of Appeal recites the bad behaviour indemnity costs cases, which of course have nothing whatsoever to do with Part 36.

This totally misses the point. Why should a Part 36 penalty on a defendant require bad behaviour?

If so, then why, in the absence of bad behaviour, does a Part 36 late-accepting claimant have to pay the defendant’s costs and be deprived of its own costs, even though it has won the case?

This is all the more the case – a fortiori -in words the Court of Appeal might understand – as in personal injury cases, Qualified One-Way Costs Shifting applies, so failure to beat Part 36 imposes a costs penalty on a claimant, whereas normally a personal injury claimant is now not liable for costs, even in the event of complete defeat.

In the past that costs liability would have been covered by an After-the-Event insurance policy, with a premium recoverable from the defendant in the event of success.

The quid pro quo of the Jackson Reforms was QOCS protection in return for the abolition of recoverability of After-the-Event insurance premiums.

As I have pointed out previously the Part 36 regime drives a coach and horses through QOCS.

This decision reinforces that point, and more so.

There is now no point in a claimant in a fixed costs case making a Part 36 offer on quantum.

On liability – yes – as if that issue is got out of the way, then there is less work to do and fixed costs are the same whether or not liability is in dispute.

A claimant in a fixed costs case is now best advised to just proceed as far as possible, so as to get through to the latest fixed costs stage possible.

For all intents and purposes, in fixed costs cases, Part 36 is now an issue for defendants, and because of the costs consequences on a claimant who fails to beat a defendant’s Part 36 offer, it is at that stage that a claimant must engage with Part 36.

Having said that, there is now little incentive on a defendant to admit liability; they can, at no penalty, force the fixed costs claimant to do extra work, for no extra costs, which of course leads to pressure to under settle.

This is an insurance company decision.

As far as the Court of Appeal is concerned, some litigants are more equal than others.

Part 36 Liability Offers on Day One

Part 36 is a freestanding provision and a Part 36 offer can be made at any time in any case, provided that it is not a small claim, as Part 36 has no application in the small claims track – see CPR 27.2(1) (g).

Section II of Part 36 specifically deals with matters in the portals and the relevant rules are CPR 36.24 to CPR 36.30.

However CPR 36.24(2) provides that that section only applies once the stage 3 procedure in the portal has been engaged and Part 8 proceedings issued. That Section makes a Part 36 offer compulsory in stage 3.

Until stage 3 is engaged section I of Part 36 applies as section I is only excluded by section II once stage 3 is reached.

Clearly if liability is in issue then stage 3 will not be reached as the matter drops out of the portal.

Consequently a Part 36 offer on liability can be made in every case at the outset and there is no need to wait until the matter reaches stage 3, when a Part 36 offer on quantum is compulsory and nor is there any need to wait until the matter drops out of the portal.

CPR 36.7:-

“(1) A Part 36 offer may be made at any time, including before the commencement of proceedings.”

The court must apply the costs consequences of Part 36 unless it would be unjust to do so and, in considering whether it would be unjust, the court must take into account all of the circumstances of the case, including whether the offer was a genuine attempt to settle the proceedings (CPR 36.17(5) (e)).

That is the reason why I suggest making a 95%/5% offer on liability as some courts have held that by making a 100%/0% offer there is no genuine attempt to settle the proceedings as no concession is being offered.

Obviously the client’s permission to make such an offer must be obtained as if it is accepted then damages will be 5% less than the full value of the claim. However in a personal injury matter, or indeed in any type of claim where there are general damages, these are not capable of precise quantification in any event and few lawyers would advise a client in any circumstances to reject a defendant’s offer that amounted to 95% of the full value of the claim.

If a claimant making such an offer matches or beats that offer then the client gets a 10% uplift on damages and thus those damages rise to 110%.

In a personal injury matter involving insurance it is important to check that there will be no effect on the client’s no claims bonus by the 5% concession.

Such an agreement does not cause the matter to drop out of the portal. That only occurs when the defendant alleges contributory negligence. An agreement to accept 95% of what damages are awarded is not a concession of contributory negligence; it is a sensible commercial arrangement and the whole purpose of the portal process, and Part 36, is to limit the matters that remain in issue.

A claimant successful at trial on a 100% basis clearly beats the Part 36 offer and gets indemnity costs and a 10% uplift on all damages and the position is the same if judgment is entered.

What has not yet been determined is whether a claimant in such a position gets indemnity costs on late acceptance by a defendant of a claimant’s Part 36 offer.

It is clear the courts have a discretion to order indemnity costs and indeed has that general discretion whether or not a Part 36 offer has been made.

Underwoods Method – The Retainer

At paragraph 32 of the judgment in Broadhurst the Master of the Rolls recognises, with neither approval nor criticism, the existence of the Underwoods Method, that is of a solicitor and own client hourly rate with the overall charge to the client capped at a percentage of damages. This is a crucial section and is a wholesale rejection of the obiter comments made by District Judge Lumb in A & M (by their litigation friend) v Royal Mail Group (2) [2015] MISC B30 (CC).

The relevant part of the Court of Appeal Judgment appears at paragraph 32 and reads:-

“He says that the way in which lawyers are typically engaged in this part of the market is heavily reliant on CFAs and legal expenses insurance. Both forms of funding typically provide for lawyers to charge on a conventional hourly basis, but may cap their right to enforce payment with reference to the amount recovered. He adds that it is still very common for costs beyond fixed costs to be deducted from claimants’ damages. There is no evidence before us to support this statement either, although I have no reason to doubt it.”

Clearly lawyers who stand to get costs on the indemnity basis will wish to have an appropriate hourly rate in the client care retainer, but equally clearly the client will want to be assured that they will not lose all or most of their damages by way of the unrecovered solicitor and own client costs, given the relatively low level of fixed costs.

The comments of the Master of the Rolls are eminently sensible and helpful and should go a long way to removing the fears of civil litigators concerning fixed costs.

This decision of the Court of Appeal is of great importance and will become much more significant now that it is proposed to introduce fixed costs in all civil work of all kinds where the damages are valued at £100,000.00 or less.

Indemnity costs are not subject to proportionality.

However they are subject to the indemnity rule and thus careful drafting of the retainer is necessary.

A retainer that provides for the solicitor to charge the client fixed costs as per the matrix will result in the solicitor getting no extra costs at all as the costs on the indemnity basis, that is the basis of the solicitor and client retainer, will be identical in amount to fixed costs as that is the wording of the retainer.

Part 36: Case Update

In Bentley Design Consultants Ltd v Sansom [2018] EWHC 2238 (TCC) (29 August 2018)

the Technology and Construction Court, part of the Queen’s Bench Division of the High Court, held that a Part 36 offer made by a claimant could not be held to cover matters that the claimant added to the action after the Part 36 offer was made.

This was a professional negligence action in relation to a survey carried out on two properties, but when proceedings were issued they only related to one plot.

On 23 April 2015 the claimant made what was accepted to be a valid Part 36 offer in relation to that claim and it referred to the claim number, and it was common ground that at that stage it was an offer to settle the claim in respect of the first plot only as the only claim that had been made was in relation to that plot.

The offer was not accepted and later the Particulars of Claim were amended to plead a case in relation to Plot 2, which then formed part of the same claim, with the same claim number.

In November 2016 the defendant then purported to accept the Part 36 offer that had been made in April 2015 and the dispute was whether that acceptance covered both plots, or only the first plot, which was the only dispute in existence when the Part 36 offer was made.

The Circuit Judge held that the acceptance only covered the first plot, and here, on appeal, the High Court upheld that decision.

Comment

This decision is wrong. If a Part 36 offer is made in relation to the whole of a claim, and is not withdrawn, and is then accepted, the whole of the claim at that stage must be compromised.

Otherwise, for example, where a defendant decided to accept the offer because it looked as though the claimant’s damages might be higher – perhaps because of a longer than expected period of recovery in the personal injury case – then this logic would mean that the acceptance only covered the claim as formulated at the time of the offer.

Here, the claimant’s remedy was simple – it could have withdrawn the Part 36 offer once it added another claim by amending the Particulars of Claim.

On the logic of this decision, any amendment to any pleading at any stage means that any pre-amendment Part 36 offer can only be for part of the case.

In Sir Cliff Richard v BBC and Chief Constable of South Yorkshire Police [2018] EWHC 2504 (Ch) (March 2018)

the Chancery Division of the High Court held that a Part 36 offer can be communicated to the trial judge where the Part 36 offer has been accepted, even if the case has not concluded.

CPR 36.16 provides that the existence and terms of a Part 36 offer must not be communicated to the trial judge until the case has been decided.

In a claim brought by Sir Cliff Richard against the BBC and the South Yorkshire Police, the two defendants had served contribution notices on each other under the Civil Liability (Contribution) Act 1978.

South Yorkshire Police subsequently made a Part 36 offer and settled with Sir Cliff.

The terms of that settlement were disclosed to the BBC.

At the pre-trial review, the BBC maintained that the terms of the settlement, particularly the settlement sum, would be material at trial.

South Yorkshire Police gave several reasons why the information should be withheld from the judge at trial, including the restrictions in CPR 36.16.

Noting that CPR 36.16 exists so that parties can make offers to each other without the risk that those offers will be held against them in the proceedings, the court found that, once there is a binding settlement agreement, those considerations fall away.

There is no longer a Part 36 offer but a binding agreement, and CPR 36.16 does not apply to that situation.

Although South Yorkshire Police was still a party to the contribution proceedings, the Part 36 offer had not been made in those proceedings but rather to settle Sir Cliff’s claim against South Yorkshire Police.

The court therefore rejected the argument that CPR 36.16 provided a basis for not referring to the settlement terms at trial.

The court nevertheless had a discretion to refuse disclosure, depending on the relevance of the information and the prejudice caused by its disclosure.

In that regard the prejudice would have to be very heavy to outweigh a case of relevance, especially a strong one.

Ultimately these matters would have to be dealt with at trial, once South Yorkshire Police had clarified in an amended contribution notice, how it could pursue its contribution claim against the BBC without reference to the settlement sum.

In Devoy-Williams v Hugh Cartwright and Amin [2018] EWHC 2815 (Ch) 5 October 2018

the Chancery Division of the High Court held that once a claim had been struck out the claimant could not accept a Part 36 offer made by the defendant.

The High Court also said that the existence and potential acceptance of a Part 36 offer should not be a factor influencing the decision as to whether the court should grant relief from sanctions:

“I agree with the judge that the Part 36 offer could not be some form of a trump card. As the judge said at paragraph [74], the claim was struck out and it was not for the judge to grant relief so that the Part 36 offer could be accepted, thereby thwarting the purpose and effect of an Unless Order that had been breached.”

This was a professional negligence action against solicitors and an Unless Order was made against the claimants requiring disclosure by 21 October 2016 and in default of that disclosure the claim would be struck out.

The defendant made a Part 36 offer on 10 October 2016 and the claimants sought to accept it on 1 November 2016, that is 11 days after the deadline for failure to comply with the Unless Order.

The court held that the action was no longer extant and therefore it was not possible for the Part 36 offer to be accepted.

This follows the decision in

 Joyce v West Bus Coach Services Limited [2012] EWHC 404

No Power to Order Payment on Account After Part 36 Offer has been accepted

In Finnegan v Frank Spiers (t/a Frank Spiers Licensed Conveyancers) [2018] EWHC 3064 (Ch) (27 June 2018)

the Chancery Division of the High Court held that the court has no power to order a payment on account of costs where a party has accepted a Part 36 offer.

The claimant accepted the defendant’s Part 36 offer and issued an application for an interim payment on account of costs.

The District Judge held that there was no power to make such an order and the Chancery Division upheld that decision.

By CPR 44.9(1) acceptance of a Part 36 offer deems that a standard basis costs order has been made.

CPR 44.2(8) provides that where the court has ordered a party to pay costs, it may order an amount to be paid on account before the costs are assessed.

Here the court held “that the place to find the court’s ability to make a payment on account order after acceptance of a Part 36 offer is in Part 36 itself. It is absent from there. There is no reason in my judgment, to read rule 44.2(8) to make a payment on account applicable when a Part 36 offer is accepted”. (Paragraph 30)

The court distinguished the case of

Barnsley v Noble [2012] EWHC 3822

where the court held that it had power to order a payment on account following discontinuance.

This was because the rule on discontinuance preserved the court’s discretion as CPR 38.6 provides that a claimant who discontinues is liable for costs “unless the court orders otherwise”.

There is no such discretion in Part 36.

CPR 44.9(1) reads:

“(1) Subject to paragraph (2), where a right to costs arises under –

(a) rule 3.7 or 3.7A1 (defendant’s right to costs where claim is struck out for non-payment of fees);

(a1) rule 3.7B (sanctions for dishonouring cheque);

(b) rule 36.13(1) or (2) (claimant’s entitlement to costs where a Part 36 offer is accepted); or

(c) rule 38.6 (defendant’s right to costs where claimant discontinues),

a costs order will be deemed to have been made on the standard basis.”

Withdrawn Part 36 Offer Leads to No Order for Costs

In Britned Development Ltd v ABB AB & Anor [2018] EWHC 3142 (Ch) (14 November 2018)

the Chancery Division of the High Court made no order for costs in a matter where the claimant had been awarded damages but was unsuccessful in much of its claim, which would of itself have led to a 40% reduction in costs.

However, the defendant had made a Part 36 offer which the claimant failed to beat, but the offer had been withdrawn prior to judgment and so the usual automatic Part 36 consequences did not apply, that is the defendant did not get its costs from the date of expiry of the offer.

However, such an offer is a factor to be taken into account in the assessment of costs under CPR 44.

In no circumstances the court found that it would be unjust for the defendant to pay any of the claimant’s costs and so it made no order for costs.

Written by kerryunderwood

January 9, 2019 at 10:10 am

Posted in Uncategorized

IPEC SCALE COSTS DISAPPLIED DUE TO ABUSE OF PROCESS

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In

Link Up Mitaka Limited trading as Thebigword v Language Empire Limited and Anor [2018] EWHC 2728 (IPEC)

the Intellectual Property Enterprise Court, Her Honour Judge Melissa Clarke, disapplied the IPEC’s capped costs scheme stating:

“Litigants in IPEC must understand that conduct which amounts to an abuse of the processes of the court will cause them to lose the benefit of the protection that the Scale Costs Scheme gives them.”

This appears to be only the second occasion in IPEC where scale costs have been disapplied.

The IPEC scale costs scheme is set out at Part 45, Section IV of the Civil Procedure Rules and CPR 45.30 reads:

45.30

(1) Subject to paragraph (2), this Section applies to proceedings in the Intellectual Property Enterprise Court.

(2) This Section does not apply where –

  1. a) the court considers that a party has behaved in a manner which amounts to an abuse of the court’s process;
  2. b) the claim concerns the infringement or revocation of a patent or registered design or registered trade mark the validity of which [has been previously certified]

(3) The court will make a summary assessment of the costs of the party in whose favour any order for costs is made. Rules 44.2(8), 44.7(b) and Part 47 do not apply to this Section.

(4) “Scale costs” means the costs set out in Table A and Table B of the Practice Direction supplementing this Part.”

The mandatory application of the Scale Costs Scheme is subject to the court’s discretion to award additional amounts where a party has behaved unreasonably (CPR 45.32) and where the Scale Costs Scheme does not apply then the general costs rules in CPR 44 apply.

Here IPEC found that the court has a general discretion, and although that discretion should only be exercised in exceptional circumstances, it is not confined to cases where the behaviour amounts to an abuse within CPR 45.30(2)(a).

On the facts here the judge found that the defendants’ conduct was an abuse and thus the mandatory disapplication of scale costs applied.

Comment

A pragmatic and sensible decision, as always by this particular judge.

The issue of what does, or does not, lead to the potential disapplication of capped, scale or fixed costs will become of much greater importance as Lord Justice Jackson’s proposals to extend fixed costs to all civil claims of £100,000 or less are implemented, probably in 2020.

The voluntary capped costs pilot scheme in the Business and Property Courts in Leeds, Manchester and London, covering claims up to £250,000 is due to start this month, that is January 2019.

Written by kerryunderwood

January 8, 2019 at 8:30 am

Posted in Uncategorized

NORWICH PHARMACAL ORDERS IN EXISTING PROCEEDINGS

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A Norwich Pharmacal Order requires certain documents to be disclosed, or information given, to the applicant for the order.

Orders are commonly used to identify the proper defendant to an action or to obtain information to plead a claim.

It is an equitable remedy that will only be granted where necessary in the interests of justice.

It is generally not available against someone who is likely to be a party to the potential proceedings, but the respondent to the application must be involved in the potential cause of action, whether innocently or not.

It takes its name from the case of

Norwich Pharmacal Co and Others v Customs and Excise Commissioners [1974] AC133 House of Lords.

In

Blue Power Group Sarl and others v Eni Norge AS and others [2018] EWHC 3588 (Ch) (20 December 2018)

the Chancery Division of the High Court, on the facts, dismissed an application made by the defendants against the claimants for a Norwich Pharmacal Order in existing proceedings, the purpose of which was to discover how some of the privileged documents belonging to the defendants had come into the hands of the claimants.

In spite of the rejection of the application, the judgment contains points of interest in relation to Norwich Pharmacal Orders.

The judge held that the court had jurisdiction to grant interim Norwich Pharmacal relief in existing proceedings and that there was no need for a separate originating process.

He also rejected the claimants’ submission that there was no need for such an order because all of the relevant issues would be aired at trial; how the documents were leaked was not in issue in the main proceedings and the defendants needed to identify the source of the leak before then.

While it was well established that Norwich Pharmacal relief could not be granted in aid of foreign proceedings, that was not what the defendant was seeking to do in this case.

On the facts the court dismissed the application as the defendant had failed to establish that they were unable to obtain the information from within their own organization and the primary purpose of the order was to prevent further disclosure to the claimants, but there was minimal risk of that happening and the order would place a disproportionate burden on the claimants.

Written by kerryunderwood

January 4, 2019 at 12:23 pm

Posted in Uncategorized

THE FUTURE OF PERSONAL INJURY

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

Civil Liability Act

The Civil Liability Act 2018 has received Royal Assent and is expected to come into force in 2020.

Section 1 defines a whiplash injury as a sprain, strain, tear, rupture or lesser damage of a muscle, tendon or ligament in the neck, back or shoulder, or an injury of soft tissue associated with a muscle, tendon or ligament in the neck, back or shoulder but an injury is taken out of that description if it is a soft tissue injury which is part of or connected to another injury and that other injury is not a soft tissue injury in the neck, back or shoulder.

It only applies when the person suffering a whiplash injury is using a motor vehicle other than a motorcycle on a road or other public place in England or Wales, or is being carried in or on a motor vehicle other than a motorcycle while another uses the vehicle on a road or other public place in England or Wales.

Thus pedestrians, cyclists and motorcyclists are excluded from the provisions of the Act, but a passenger in a motor vehicle is included within the Act.

The provisions cover a person getting into, or getting out of, a motor vehicle other than a motorcycle.

Section 3 provides that the Lord Chancellor may specify in regulations a tariff for whiplash injuries which do not exceed, or are not likely to exceed, two years, or would not have exceeded two years but for the claimant’s failure to take reasonable steps to mitigate its effect.

The tariff shall also deal with minor psychological injuries suffered by the claimant on the same occasion as the whiplash injuries.

Pre-medical report settlements are prohibited, but enforcement and punishment is left to the relevant regulator, and generally for solicitors that will be the Solicitors Regulation Authority.

Breach of the provision does not make a person guilty of a criminal offence and nor does it give rise to a right of action for breach of statutory duty and nor is any agreement made to settle a whiplash claim in the absence of a medical report thereby void or unenforceable.

The whiplash tariff is likely to be introduced in 2020 and the figures will be in the regulations, but I set out below the figures previously proposed by this Government.

 

Injury

Duration

2015 average payment for PSLA – uplifted to take account of JCG uplift

(industry data)

Judicial College Guideline (JCG) amounts (13th edition) Published September 2015 New tariff amounts
0–3 months £1,750 A few hundred pounds to £2,050 £225
4–6 months £2,150 £2,050 to £3,630 £450
7–9 months £2,600 £2,050 to £3,630 £765
10–12 months £3,100 £2,050 to £3,630 £1,190
13–15 months £3,500 £3,630 to £6,600 £1,820
16–18 months £3,950 £3,630 to £6,600 £2,660
19–24 months £4,500 £3,630 to £6,600 £3,725

 

Small Claims Limit Increase

This is not dealt with in the Civil Liability Act, and does not require primary legislation.

The Government proposes to increase the small claims limit in personal injury work to £5,000 for road traffic accident claims and to £2,000 for all other types of claims.

The current limit is £1,000.

It should be noted that in fact the current limit is £1,000 for general damages and £10,000 generally, and therefore either general damages must exceed £1,000, or the total claim must exceed £10,000.

It will be seen from the above proposed whiplash tariff that all whiplash claims of two years or less suffered by those in or on motor vehicles, except motorcycles, fall under the proposed new general damages limit of £5,000, and therefore the total value of a claim will need to exceed £10,000 to take it out of the small claims track.

Let us assume a two year whiplash, where the general damages are fixed by the tariff at £3,725.

Special damages total £5,000.

The total is thus £8,725.

That is still a small claim, as neither the £5,000 general damages small claims limit, nor the £10,000 ordinary small claims limit is exceeded.

Thus, statistically, the vast majority of road traffic accidents will be small claims.

It is expected that the increase in the small claims track will come in at the same as the whiplash tariff, and that is expected to be in 2020.

Fixed Costs in All Claims Up To £100,000

In his July 2017 Review of Civil Litigation Costs: Supplemental Report – Fixed Recoverable Costs – Lord Justice Jackson recommended that Fixed Recoverable Costs be introduced for all claims of all kinds where the damages do not exceed £100,000.

The proposed figures are set out in Table 7.1 of the Report, and I set them out below:-

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

 

Stage (S) Band 1 Band 2 Band 3 Band 4
S10 Advocacy fee: day 1 £2,750 £3,000 £3,500 £5,000
s11 Advocacy fee: £1,250 £1,500 £1,750 £2,500
subsequent days17
S12 Hand down of £500 £500 £500 £500
judgment and consequential
matters
S13 ADR: counsel/specialist £1,200 £1,500 £1,750 £2,000
lawyer at mediation or JSM
(if instructed)
S14 ADR: solicitor at JSM or £1,000 £1,000 £1,000 £1,000
mediation
S15 Approval of settlement £1,000 £1,250 £1,500 £1,750
for child or protected party
Total: (a) £30,000 (b) (a) £19,150 (a) £33,250 (a) £39,450 (a) £53,050
£50,000, (c) £100,000 (b) £22,150 (b) £37,250 (b) £43,450 (b) £57,450
damages18
(c) £29,650 (c) £47,250 (c) £53,450 (c) £68,450

 

These changes are also expected to come in at the same time as the increase in the personal injury small claims limit and the whiplash tariff, that is 2020.

Driverless Cars

As it stands, driverless cars will be legal from 1 January 2021 and most of the major car producers have announced that they will shortly stop making traditional cars and Ford has announced that it is proceeding straight to Level 4 and Level 5 driverless cars, that is it will not bother producing any transitional hybrid cars.

Level 4 cars are for use in city areas and Level 5 cars are for full autonomy in any driving conditions or locations.

Virtually all statistics show that over 90% of road traffic accidents are caused by driver error. Take driving out of the equation and that should mean 90% fewer accidents, 90% fewer road traffic accident claims and 90% fewer road traffic accident fee earners.

In relation to the remaining accidents Volvo has already announced that it will cover all loss involving any of its driverless vehicles and that example is expected to be followed by most, if not all, motor manufacturers.

Expectations are that the early take up of driverless cars will be huge, but then may tail off, but it is expected that road traffic accidents will reduce by 50% by 2030, and by 90% by 2040 when it is expected that traditional cars will be banned.

Written by kerryunderwood

January 4, 2019 at 9:04 am

Posted in Uncategorized

LIMITATION: TWO RECENT CASES

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Claim Allowed Under Section 33 of the Limitation Act After Defendant Told He Would Not Be Sued

In Ellis v Heart of England NHS Foundation Trust and others [2018] EWHC 3505 (Ch) (20 December 2018)

the High Court disapplied Section 33 of the Limitation Act 1980 so as to allow the claimant to proceed against the third defendant even though the claimant had previously told that defendant that he would not be sued.

The High Court also held that the case law in relation to relief from sanctions was irrelevant as far as Section 33 applications were concerned.

The correct guidance was to be found in

The Chief Constable of Greater Manchester Police v Carroll [2017] EWCA Civ 1992.

Here the claimant instructed solicitors in October 2013 and issued a Letter of Claim in May 2015 and the third defendant responded in March 2016 and the primary limitation period was extended by agreement and expired in June 2016.

In September 2016 the claimant’s solicitors told the solicitors for the third defendant that the defendant was “released from this matter and we are satisfied for you to close your file”.

Following advice from new counsel a further expert’s report was obtained and in January 2017 the claimant’s solicitors advised the third defendant that he would be pursuing him after all.

Here the court held that the third defendant was on notice from March 2013 of a possible damages claim and, after formal notification, had had full opportunity to investigate and respond well within the primary limitation period and the claimant’s delay in issuing proceedings was understandable given the first negative report of the first expert.

The third defendant could not identify any prejudice to his defence if the claim proceeded, but if the claimant could not pursue his potentially significant claim against the third defendant then he would be left with an uncertain loss of charge claim against his own lawyers.

Section 14A and Latent Damages

In Munroe K Ltd and another v Bank of Scotland plc [2018] EWHC 3583 (Comm) 20 December 2018)

the Commercial Court, a part of the High Court, granted summary judgment to the defendant bank on an interest rate swaps misselling claim holding that a claimant cannot postpone the date of knowledge under Section 14A of the Limitation Act 1980 by choosing which particulars of breach of duty to rely on.

Before the alleged misselling in 2006 and 2008, the defendant had calculated its worst case potential future exposure to the claimants and the claimants alleged that the defendant had breached its advisory duty, and duty not to misstate, by failing to disclose the existence of that calculation, and thus had misled the claimants as to the risks of entering into the swaps.

The claimants contended that they did not discover the calculation until November 2015 and would not have entered into the swaps had the defendant supplied accurate information.

The issue was when the claimants had the requisite knowledge, for the purposes of Section 14A, for bringing an action.

The key question was when the claimants knew that the damage was due in whole or in part to the act or omission alleged to constitute negligence – see Section 14A(8)(a).

By 2009 the claimants knew of their significant actual liability and the fact that they had not been advised or informed of a significant potential liability, whether or not as high as the worst case calculation.

The claimants’ true cause of action was the defendant’s failure in not advising them or informing them of their potential liability when the swaps were sold.

Section 14A did not extend limitation until the identification of every last particular of breach – see

Haward v Fawcetts [2006] UKHL 9.

This was not a case of a continuing duty with breaches occurring over a period.

The claimants’ choice to omit one particular of breach, material enough to satisfy Section 14A(7), in favour of another particular, perhaps, as here, discovered later does not affect the position under Section 14A.

 

Written by kerryunderwood

January 3, 2019 at 4:00 pm

Posted in Uncategorized

RECOVERABLE SUCCESS FEES AND MYSTIC MEG: 20% WHEN LIABILITY ADMITTED

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In NJL v PTE [2018] EWHC 3570 (QB) (20 December 2018)

a High Court Judge held that in a pre-April 2013 Conditional Fee Agreement,where the success fee remains recoverable, the appropriate success fee where liability has been admitted will generally be 20%.

This decision only applies where the success fee is recoverable, and I set out below where that remains the case, and does not govern solicitor and own client success fees, although clearly there is a risk that courts will wrongly use it as guidance in Solicitors Act 1974 assessments.

In this case the claimant’s solicitor had specified a 100% success fee, but before the District Judge had argued for a 67% success fee and the District Judge had allowed 65%.

Here, the High Court reduced it to 20% as a matter of principle, but then reduced it to 12.5% being the fixed recoverable success fee in a road traffic matter under the old CPR 45.19.

There were complex provisions where claims exceeded £500,000 and it is not necessary to go in to them in detail here, but basically the court had a discretion to award a higher success fee in such cases, but if the court determined the success fee at 20% or less, it dropped to the fixed statutory 12.5% covering all road traffic matters valued at less than £500,000.

The High Court indicated that a 100% success fee can never be justified where liability has already been admitted, and when there is no Part 36 offer.

The court said that as far as Part 36 was concerned a key issue was the timing of an anticipated Part 36 offer as the timing of any such offer determined the proportion of the costs at risk, as only costs incurred from 21 days after the making of a Part 36 offer are at risk and costs incurred before that date are secure, and recoverable if reasonably incurred, and therefore the risk in respect of those costs is zero.

Of course the success fee attaches to all costs, including those not at risk, and the court said that the whole process of setting success fees centres on an informing calculated analysis of risk, which courts expect experienced solicitors to get right.

Having said that, the High Court said that it is not a precise science and if solicitors can demonstrate an attempt to form a judgment then the courts will give them considerable leeway.

Here, the District Judge’s assessment could not stand as the District Judge had made no analysis of the risks which the claimant should have taken into account when fixing the success fee and had given no reason for rejecting what might, since the case of

C v W [2008] EWCA Civ 1459

 

be considered as the standard or usual success fee of around 20% where liability has been admitted.

As well as applying to pre 1 April 2013 Conditional Fee Agreements, these principles also apply to Conditional Fee Agreements entered into after that date and those fields of law where the success fee remained recoverable.

Mesothelioma Claims

The success fee remains recoverable in mesothelioma claims and there is no proposal to alter that position.

Defamation and Privacy

The success fee remains recoverable in defamation and privacy cases but that is about to be scrapped and the statement by the Lord Chancellor states that this “provision will come into force for new cases on 6 April 2019.”

It is not clear whether this date relates to the entering into of the Conditional Fee Agreement, as was the case in 2013, and in 2016, or the date of the cause of action. Presumably it will be the date of the Conditional Fee Agreement.

Insolvency

Recoverability of success fees continued in insolvency proceedings in relation to any Conditional Fee Agreement entered into on or before 5 April 2016.  

 

Comment

So part of a solicitor’s risk assessment is meant to include guessing when the other side will make a Part 36 offer and how much it will be for.

Obviously if we knew that there would not need to be any litigation.

Maybe the senior judiciary should make up its mind what particular combination of Mystic Meg and Artificial Intelligence we are meant to deploy.

The decision also relies on the wholly discredited, entirely non-statutory Ready Reckoner approach to success fees.

I cannot see the error of law that the District Judge is meant to have made.

This is such a poor and irrational decision that it should be considered as per incuriam – wrongly decided – and not binding.

Written by kerryunderwood

January 3, 2019 at 2:40 pm

Posted in Uncategorized

HIGH COURT JUDGE SUGGESTS COMPULSORY CARRYING OF MOBILE PHONES AND OTHER STRANGE THINGS

with 15 comments


In a bizarre speech delivered to The Law Society on 8 May 2018, the Chancellor of the High Court, that is a High Court Judge, suggested that there may be benefits if it were made a criminal offence in this country not to carry a mobile phone at all times. He said:

33. Despite this, I think there will be far fewer contested criminal cases in the future, mainly because of the surveillance of which I have already spoken. We have recently seen the impact that digital disclosure of mobile phone records has had on rape prosecutions. One change in behaviour is already having a big impact on the eradication of contested criminal cases. Most people carry their smartphones on their person at all times with their GPS location switched on. They do this voluntarily, but if the legislators were, for example, to require citizens to carry phones at all time, it would be even more difficult to avoid detection. With or without such a rule, as the location of all persons is continuously uploaded to the cloud, there will anyway be far fewer identity issues in criminal cases. As society seems to accept more and more surveillance, I wonder how radical the change I have mentioned will seem to the population in 10, 15 or 20 years’ time.”

My first thought was that this was an ironic piece highlighting how Orwellian society is becoming; I am well used to my own irony being treated as serious proposals.

However, I am assured that Sir Geoffrey Vos was not being ironic, and indeed the rest of the speech is in similar vein.

His apparent detachment from reality as far as the court system is concerned is shown by these observations on litigants in person:

“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, from both 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 whole speech is here and is worth reading, in the same way that George Orwell’s 1984 is worth reading.

Take this:

“Lawyers at all levels must start to demonstrate that they are thinking ahead and, most of all, embracing innovation across the board.”

That statement assumes that innovation = good, and that tried and trusted = bad.

A moment’s thought shows that this is illogical, and plain wrong.

It echoes Lord Justice Munby’s ­recent suggestion that we should ask litigants whether they want to walk a total of 24 miles to court and back, or want to access the court online.

No suggestion that may be the one thousand year old system of having local County Courts – the giveaway is in the name – is what people want.

No, of course not, as old = bad.

In fairness to Lord Justice Munby he made these comments against his own statement:

Anyone who thinks we currently have a network of courts which enables proper access to justice is deluding themselves. I was told that somebody the previous week had walked for 12 miles to get to court and at the end they had to walk 12 miles back home. That is the reality of our present justice system.”

Lord Justice Munby may well have been being ironic.

Imagine a supermarket chain running a campaign along the lines of:

We are closing loads of our supermarkets, which you paid for in the first place, and we will charge up to £10,000 to shop with us.

What we need to know is whether you wish to walk to our nearest store, which will be 12 miles from you, or just trust your luck online.”

Now, we know that no one ever visits a supermarket personally; that is why they are open 24 hours a day and the car parks are full.

Vos suggests that his views had the backing of the American Bar Association, quoting Rule 1.1 Comment 8 of the Model Rules of Professional Conduct.

I think not.

The statement there that lawyers must “keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology” is hardly the same as “embracing innovation across the board” is it?

In particular the American Bar Association specifically warns that lawyers must be aware of the risks associated with technology.

In discussing Artificial Intelligence Vos says:

“This latter [AI] is where machines can perform the kind of intellectual decision making that we normally associate only with humans: for example, the decision of a judge to choose between allocating the custody of a child to her father or her mother, or the decision as to what happened at a contested business meeting.”

This is a telling quote. Surely the whole point of judges, and for that matter politicians, priests, doctors, teachers, police officers etc., is that we often need something other than “intellectual decision making” – something less tangible but more valuable, including wisdom.

For a senior member of the judiciary to equate a dispute as to what happened at a business meeting with the issue of the custody of a child is unfortunate.

I literally started laughing out loud when I read this at paragraph 20:

20. Moreover, we will need to become increasingly aware of the dangers of contract automation, as algorithmic trading increases. It now accounts for some 50% of trades on the S&P 500 and is already credited with having accelerated recent market collapses across the globe.”

Well that is alright then. A global world market collapse is a small price to pay for closing a few courts and saving a few quid on a legal transaction.

Does it not ever occur to the learned judge that people are better off paying a bit more for services and avoiding the collapse of the banking system, together with the consequent cost of nationalising it and the loss on denationalising it?

What about this:

“It will be very rare to have a face to face interview with a lawyer in relation to a legal problem.”

We will see.

Vos also refers to meeting Richard Susskind in 2006, when Susskind predicted that all conveyancing, family law, wills, probate, personal injury and administrative disputes would be advised upon and dealt with online for no charge.

Really?

Vos also, and I am sure it is through ignorance and not an attempt to mislead, equates the drop in conveyancing fees with automation since 2006.

Well conveyancing fees started dropping in the 1980s, and are now increasing again as people realise that you get what you pay for.

The cheap, automated firms, are those going bust.

Vos’ reference to “small legal work” in paragraph 36 is telling; we do not want the plebs having lawyers; only rich corporation should have lawyers and courts and judges.

“Also, unless human nature changes more radically than I expect, I would therefore predict that some advice will still be required about transactions that have either produced that were expected to produce profits or losses.”

But not, presumably, in relation to family matters, custody disputes, immigration, human rights, freedom of speech or employment etc. – the small law for small people.

It may well come as a surprise – or maybe not if you have read this far – that Russia is a role model here:

“46. … I was surprised to learn a few years ago that there were 11,000 regulated advocates in Moscow, but some 50,000 unregulated so-called “business lawyers”. It may well be that we will need a cadre of business advisers with excellent technological and IT skills and an understanding of the law, but rather less fully trained legal experts.”

I was unaware that Russia was regarded as a model of good legal and business practice with no problems of corruption or deregulation.

In the Transparency International Table of Perceptions of Public Corruption, Russia ranks 135 out of 180.

North Korea and the Soviet Union also appear as role models:

“Once greater surveillance becomes the norm, the law of evidence may become less central, and lawyers less indispensable to dispute resolution in this area.”  

As a New Year treat, I suggest that the Chancellor of the High Court read the Glass Bead Game, written by Hermann Hesse during the Nazi control of Europe, and disposing, one had hoped for ever but obviously not, with these theories.

 

Written by kerryunderwood

January 3, 2019 at 9:06 am

Posted in Uncategorized

PRE-ACTION AND NON-PARTY DISCLOSURE

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This blog first appeared on the Practical Law Dispute Resolution Blog on 2 January 2019.

There has been a number of recent cases in relation to pre-action and non-party disclosures.

In Pharmacy2u Limited v The National Pharmacy Association, a Chancery Division master dismissed an application for pre-action disclosure under CPR 31.16. The judgment considers the meaning of “proceedings” in CPR 31.16 (3)(d) and sets out factors which may count against such disclosure being “desirable” within that rule, which reads:

“(3) The court may make an order under this rule only where –

(a) the respondent is likely to be a party to subsequent proceedings;

(b) the applicant is also likely to be a party to those proceedings;

(c) if proceedings had started, the respondent’s duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and

(d) disclosure before proceedings have started is desirable in order to –

(i) dispose fairly of the anticipated proceedings;

(ii) assist the dispute to be resolved without proceedings; or

(iii) save costs”.

Pharmacy2u is the United Kingdom’s largest online pharmaceutical retailer and the National Pharmacy Association is a long established trade association representing 3,202 members.

The association distributed a notice to its members, for display to the public, pointing out that Pharmacy2u was nothing to do with the pharmacist and the fact that Pharmacy2u had been fined £130,000 for selling patients’ details to marketing companies, including an Australian Lottery, had failed to send out prescriptions for three weeks over Christmas 2015 and had been found by the Care Quality Commission to be “not safe, effective or well lead.”

None of these facts is disputed by Pharmacy2u, but it said that the National Pharmacy Association had infringed its trade mark by using it in the notice.

The claimant sought pre-action disclosure of the names and contact details of all members to whom the notice had been sent or by whom it had been downloaded, contending that this information was necessary to enable it to understand the extent of the damage and so that it could contact the members to address ongoing harm.

It was common ground that CPR 31.16 (3)(a) -(c) were satisfied and thus the issue was whether it was desirable under (d).

The court held that the order was not necessary in order for the proposed claimant to understand the extent of the damage, as the claimant had sufficient information to plead its case and the respondent had identified the number of its members involved.

As to the meaning of proceedings, the court held that this meant the proceedings against the respondent to this application and not against anyone else, but that if it was wrong about that, then disclosure was not necessary to dispose fairly of these proceedings. Rather, it was to enable the proceedings to be brought by supplying the contact details of potential defendants.

In any event, the disclosure sought was neither necessary nor desirable. The respondent, as the alleged primary wrongdoer, would be liable for any damages and there was no suggestion that it could not pay, nor that it would fail to instruct its members to stop distributing the notice and to destroy any copies.

It was not necessary for the claimant to join the respondent’s members in order fairly to resolve the claim, and it was neither desirable nor proportionate to order disclosure to enable claims to be made against 3,202 members for alleged minor infringement.

The court also had this to say:

“31. In this context, assuming, again for the sake of argument, that NPA has a good defence to P2U’s claim, then there is a risk that the effect of providing P2U with the members’ names and contact details will be that NPA will not have the opportunity to establish that defence. If P2U writes letters before claim to the members, threatening proceedings, injunctive relief, and orders for significant damages and costs, the practical reality is that most members are likely not to involve themselves in contested litigation for all the usual reasons, even if supported by NPA. They were not responsible for the wording of the Notice; and have no direct knowledge of its truth or falsity. There is a serious risk, therefore, that P2U would therefore be able to “pick off” the individual members, without ever having to submit to a judicial determination of the merits of its claim.

32. These concerns are reinforced to a degree by P2U’s conduct to date. When it first wrote to NPA in December 2017, it alleged that the statements in the Notice were untrue, and threatened claims for defamation and malicious falsehood. Following NPA’s solicitors’ response, these were withdrawn. In addition, Mr Strachan’s evidence is that P2U’s solicitors wrote to him personally, threatening to make a complaint about him to the General Pharmaceutical Council. Finally, Mr Strachan also gives evidence of a GP practice which, having displayed the Notice received correspondence he describes as “very intimidating”, instructing them to remove it and threatening to report them to their regulatory body, the General Medical Council. This evidence was not challenged in P2U’s evidence in reply.”

The court also declined, for the same reasons, to make a Norwich Pharmacal Order, that is an order for the provision of information as per the case of Norwich Pharmacal v Customs and Excise Commissioners.

Non-party disclosure: necessity test to be applied flexibly

In Sarayiah v Royal and Sun Alliance Plc and others, a High Court judge allowed an appeal by an applicant litigant in person and granted a non-party disclosure order against the respondent insurance company. It held that the lower court had erred in refusing to make the order on the basis that the applicant should have made a specific disclosure application under CPR 31.12 against another party.

The court rejected the argument that a non-party disclosure application should not succeed if the documents are available from another source, meaning that disclosure is not “necessary” to dispose fairly of the claim or to save costs. Rather, the flexible Norwich Pharmacal approach to necessity should be applied to CPR 31.17 applications.

Here, the applicant had sued his sisters for harassment and alleged that they had removed him as an interested party on an insurance policy, causing him considerable loss. He sought disclosure from the respondent of a tape recording of a telephone call between the sisters and the insurance company concerning the policy change.

The lower court refused his application, stating that he should have sought specific disclosure from the sisters. The applicant then applied to a different judge for such specific disclosure, but it was refused on the erroneous basis that the sisters lacked control of the tape recording, the sisters having failed to tell the judge that they did in fact have a copy of that recording.

On appeal, the High Court judge said that he could not see what considerations the lower court judge had taken into account, except his view that the applicant had alternative means of obtaining the disclosure, which he apparently, and wrongly, regarded as preventing a non-party disclosure order.

The lower court had failed to consider the relevant factors, such as the applicant’s position as a litigant in person seeking a document which the respondent had in its possession. The lower court had also failed to consider the sisters’ unwillingness to cooperate and whether an application under CPR 31.12 would have been problematic, which in fact it turned out to be.

Here, the criteria in CPR 31.17 were met and it would be disproportionate to require the applicant to make yet another application, this time under CPR 31.12, to obtain disclosure of the tape recording.

The court held that an order for disclosure against the respondent was necessary to dispose fairly of the claim.

Defendant succeeds in pre-action disclosure application

In EUI Limited v Charles and others, the county court ordered the claimants to give pre-action disclosure of documents relating to impecuniosity in a credit hire case.

Here the applicant insurer was facing potential actions by seven individuals whose cars had been damaged in accidents. All of them had hired alternative vehicles from credit hire companies and the defendants sought, and obtained, disclosure of bank statements and wage slips for the three months before the hire.

A claimant can normally only claim a basic hire rate, but an impecunious claimant can claim the full credit hire charge, not limited to the basic hire rate, provided that the full charge is not unreasonably high.

Impecuniosity is also relevant to the period of hire, and therefore the issue of the claimants’ finances is generally central to such cases.

Here, the applicant insurance company successfully argued that it should be able to assess if a potential claimant is impecunious in order that it could value and settle the claim without litigation if appropriate.

Successful applications for pre-action disclosure by defendants are rare.

Each case will depend upon the facts, but the decisions here and in Sarayiah may indicate a more liberal approach by the courts to pre-action disclosure applications.

The Pharmacy2u case goes the other way, but that is unsurprising on the facts, and given the general conduct of Pharmacy2u.

The general lesson here is that all litigators should always consider the issue of an application for pre-action disclosure, bearing in mind the current establishment view that litigation should only be engaged in as a last resort.

Written by kerryunderwood

January 3, 2019 at 8:30 am

Posted in Uncategorized

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