Kerry Underwood

Archive for March 2019

NO PROTECTIVE COSTS ORDER IN PRIVATE CLAIM

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

In

Maugham v Uber London Ltd [2019] EWHC 391 (Ch)

the High Court refused the claimant’s application for a protective costs order limiting his costs to £20,000.

Here the claimant was seeking a declaration that the defendant provide a VAT invoice in relation to its alleged supply of transport services in the form of private hire vehicles and the defendant said that it was an intermediary and did not provide transport services, and therefore it was not liable to invoice for VAT.

The claimant believed that HMRC was failing to take action in respect of Uber’s alleged liability for output tax, and that therefore there was a public interest in the case in ensuring that any liability was collected and generally in the fair administration of the VAT scheme.

Protective costs orders are generally only made in public law claims, particularly in judicial review proceedings.

Here, the High Court held that this was private litigation in which a protective costs order could not be made and that the wider public interest in the tax issues did not justify changing that position.

The High Court said it was bound by the decision in

Eweida v British Airways PLC [2009] EWCA Civ 1025

which held that a protective costs order could not be made in private litigation.

The High Court said that if it was wrong about its interpretation of Eweida it would not be just or fair to make a protective costs order in this case in any event as a properly formulated public law challenge by judicial review was the proper way of reviewing HMRC’s conduct in not exercising its VAT powers and that would then engage the possibility of a costs capping order.

The general principles governing protective costs orders were set out by the Court of Appeal in

R (on the application of Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192.

Written by kerryunderwood

March 25, 2019 at 6:40 am

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COURT OF APPEAL IN STRONG ATTACK ON MINISTRY OF JUSTICE

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In

Dunn v The Secretary of State for Justice & Anor [2018] EWCA Civ 1998

the Court of Appeal was considering whether the Employment Appeal Tribunal should have remitted a disability discrimination case to the Employment Tribunal, rather than substituting its own decision, having overturned the original decision of the Employment Tribunal.

It dismissed the appeal and held that the EAT was right not to remit.

Of greater interest is the Court of Appeal’s attack on the Ministry of Justice:

“… its ill-health retirement processes, which by definition are applied to people who are to a greater or lesser extent vulnerable, are so… arcane and unwieldy…”

It quoted from the Employment Tribunal:

“…There is a lack of proper management of individual cases, no one person oversees the case from beginning to end and there is a requirement to deal with three different contracted out services, all of which rely on different information held on computers in different parts of the organisations.”

The Employment Tribunal found that the ill-health retirement process was operated unreasonably “and perhaps even to some extent unfairly.”

It also found that this was “a difficult ill-health retirement process that demands a high hurdle before an individual is accepted as fulfilling the criteria for ill-health retirement, in part because the benefits provided are expensive to provide.”

In a damning statement quoted by the Court of Appeal, the Employment Appeal Tribunal said:

“We cannot leave this case without this further comment. The lay members in particular, who have experience of managing absence and ill-health retirement processes of the kind in focus in this case, are concerned by the manner in which it was applied and operated by MoJ as found by the Tribunal. The Tribunal found that the system operated in a manner that caused stress and anxiety to the Claimant, who was already unwell with depression and who suffered a worsening of his heart condition as a consequence. It undoubtedly led to inordinate delay. The systemic failures and the inordinate delay that occurred here may have impacted more harshly on the Claimant as a disabled person and in future might operate more harshly on others with disabilities. However, that was not the case advanced by the Claimant to the Tribunal and not a case, accordingly, that we have been able to address. The lay members in particular feel that these systemic failures and the delays that they cause should be addressed for the future by those with responsibility at MoJ so that others are not subjected to what may be both unfair and disadvantageous treatment.”

The Court of Appeal itself referred to “the reprehensible delay in dealing with the appellant’s ill-health retirement application.” It took the relevant person at the MoJ three months to even bother to read the claimant’s grievance.

The claimant lost because everyone at the MoJ, disabled or not, is treated like this, and therefore the conduct was not due to the claimant’s disability.

This is known among employment lawyers as “the bastard defence”, that is that the employer behaves terribly to everyone, and not just those with protected characteristics.

Comment

What a state of affairs this country has reached when the government department responsible for administrating the justice system of this country is in this state.

However, let us be clear where the blame lies – it is with the utterly destructive “austerity” policies of government whereby the Ministry of Justice’s budget is being cut by 51% between 2010 and 2024 – see Law Society Gazette – 18 March 2019.

As certain very significant expenses, such as judicial pensions, council tax etc. are ring-fenced and cannot be cut, the true day to day running cut is reckoned to be around 75%.

No organisation can function with that sort of cut.

Written by kerryunderwood

March 22, 2019 at 10:33 am

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CONDITIONAL FEE AGREEMENTS: SOLICITOR’S RIGHT TO END WHEN ADVICE RE SETTLEMENT NOT TAKEN

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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

Butler v Bankside Commercial Limited [2019] EWHC 510 (QB) (07 March 2019)

the High Court considered the meaning of a Conditional Fee Agreement incorporating the following term:

What happens when this agreement ends before your claim for damages ends?

(b) Paying as if we end this agreement

…(iii) We can end this agreement if you reject our opinion about making a settlement with your opponent. You must then:

• Pay the basic charges and our disbursements, including barrister’s fees;

• Pay the success fee if you go on to win your claim for damages.”

Here, the claimant was a firm of solicitors and the defendant was a commercial agent, and a former client of the claimant firm, which acted for it against Nikon under a Conditional Fee Agreement with the above wording.

Nikon offered €90,000 to settle the claim, which offer was not accepted.

The solicitors subsequently wrote to the client “in strong and very detailed terms, that a counter-offer of €90,000 plus 50% of costs should be made”.

The client rejected that advice, resulting in the solicitors terminating the retainer on the ground, among others, that the client’s refusal to follow the firm’s advice amounted to a rejection of its opinion about making a settlement under 7(b)(iii) above.

The client went continued on its own, but was awarded only £40,636.80 with a costs order not entirely in its favour.

The solicitors agreed to limit their costs to the sum of costs awarded to the client, namely £238,527.29, resulting in the client having to pay nothing out of its own pocket.

The defendant argued that the clause only covered where the offers of settlement from the other side should be accepted, and not its failure to take the solicitor’s advice concerning making an offer of settlement.

The Master, and the High Court on appeal, rejected that submission.

The solicitor’s opinion was about making a settlement with the client’s opponent and the client had rejected that opinion.

The court said that it was satisfied that the suggestion that any opinion about “making a settlement” being construed as limited to the consideration of the acceptance of any offers made by the opponent was inconsistent with the language of the clause and would, in any event, lead to procedural distinctions devoid of either logical justification or practical coherence.

The judgment is also significant in that it recognises the risk that solicitors are taking when acting under a Conditional Fee Agreement, and recognises that those solicitors are entitled to a degree of protection against unreasonable clients.

“ 21. Where there is no CFA, the client’s privilege of ignoring her solicitors’ advice, so long as they can continue to act within the boundaries of their professional duties, is preserved intact.

22. Where, however, there is a CFA under which the solicitors, themselves, face significant economic risks in the event of an adverse result at trial, one would not expect the level of protection which they are afforded against the whims of the unreasonably optimistic client to turn upon the random happenstance of whether or not the other side has made an approach which can be categorised as a contractual offer capable of acceptance. For such solicitors to be required to wait, like Vladimir and Estragon, for an offer from the other side which might never come rather than, where appropriate, to take the initiative in negotiations would impose artificial and unjustifiable limits on their ability to protect their own legitimate interests.”

Written by kerryunderwood

March 12, 2019 at 10:57 am

Posted in Uncategorized

VIDEO COURTS: JUDICIARY PRESSES PAUSE

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This piece, in slightly different form, first appeared on the Practical Law Dispute Resolution Blog.

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.

Opposition is growing to the government juggernaut of scrapping live courts, even for trials, with the judiciary in particular expressing its clear and certain view that austerity and cost-cutting, not access to justice, are behind the move.

On 25 January 2019 Lord Burnett, the Lord Chief Justice and Sir Ernest Ryder, Senior President of Tribunals, issued a joint message reporting on the response of the judiciary to proposed changes –

Jurisdictional responses to the ‘Judicial Ways of Working’ exercise.

Responses were received from or on behalf of over 10,000 judges and office holders, with nearly 800 attending local meetings.

The Heads of Jurisdictions summarise the responses in four documents, relating respectively to Crime, Civil, Family and Tribunals, and here I look at the Civil Jurisdiction, with this section being prepared by the Master of the Rolls and the Deputy Head of Civil Justice.

Video Hearings

The judiciary was highly critical of the move to video hearings for contested trials:

“One common theme was that they were being proposed in the name of cost reduction, but at the risk of justice.”

Most judges expressed the firm view that final hearings, that is trials involving oral evidence, are not suitable for video hearings, as judges needed to watch as well as to listen, and that meant being able to watch not just the witness, but also the parties, representatives and supporters in court.

Judges are concerned that evidence could be manipulated or tampered with, as it would not be clear who else was in the room or behind the camera.

Another concern related to security and confidentiality of the court process, including the ease with which they could be recorded and posted publicly on social media.

Concern was also expressed about the lack of gravitas of hearings conducted by video.

In a small pilot in the First-tier Tax Tribunal running from March to July 2018, over one third of cases could not proceed due to technical issues.

There was wide spread acceptance that matters such as Directions Hearings, and some specified interlocutory applications were suitable for video hearings.

Information Technology

Few query the need, and potential benefit of IT, but the “… trenchant view, shared by many, was that IT of sufficient quality, and the provision of proper training was vital to the success of reforms.”

Dame Elizabeth Gloster, former Court of Appeal Judge and now an arbitrator, in a recent article in the Harbour Litigation Funding journal –

Technology In Commercial Arbitration – Time To Throw Away The Comfort Blanket?

while accepting the benefits of IT in the context of arbitration raised key questions:

  • Does the arbitrator, on the side – print out hard copies of all the documents that he or she thinks relevant to the case?
  • Can counsel as effectively cross-examine a witness by video-link?
  • Is an arbitral tribunal able adequately to judge credibility of a witness by seeing that witness “perform” on screen?
  • Should a losing party feel resentful that he has not had a fair hearing where all or part of the arbitral process has been conducted in a remote virtual environment as opposed to in person?

“While some, perhaps minor, witnesses can usefully be cross-examined in a virtual environment, where a substantive challenge is mounted to a witness’ evidence, both the tribunal and cross-examining counsel may need to have the witness there in person. That is not only so that the tribunal can more adequately assess credibility and reliability, but also so that counsel can maintain the impact and momentum of cross-examination. Both can be lost where cross-examination is conducted remotely.”

No one is suggesting a return to the days of a two hour round trip to court for a 10 minute agreed Directions Hearing, but trials are something different.

The reason appeal courts so rarely interfere with the findings of fact of trial judges is that the trial judge has seen and heard the witnesses.

The same is true of juries.

Video trials risk throwing all of that away.

Justice done on the cheap is not justice, and the old phrase about justice needing to be seen to be done, as well as being done, was not a reference to trial by YouTube.

Written by kerryunderwood

March 11, 2019 at 6:57 am

Posted in Uncategorized

UNASSESSED INTERVENTION COSTS ARE LIQUIDATED SUM FOR INSOLVENCY PURPOSES

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

In

The Law Society (Acting Through the Solicitors Regulation Authority) v Blavo [2018] EWCA Civ 2250

the Court of Appeal held that unassessed costs of an SRA intervention constitute a debt for a liquidated sum under section 267(2)(b) of the Insolvency Act 1986.

Applying the approach adopted in

McGuinness v Norwich and Peterborough Building Society [2011] EWCA Civ 1286 (09 November 2011)

the Court Appeal held that Paragraph 13, Part II, Schedule 1 to the Solicitors Act 1974, which permits recovery of intervention costs as a statutory debt, creates a pre-ascertained liability.

The fact that the liability is in relation to solicitors’ fees does not bring into play the general principle that a solicitor’s claim for remuneration is an unliquidated sum, being a reasonable and fair amount for the work done.

An SRA intervention agent’s costs required no further act under the Solicitors Act 1974.

Paragraph 13 provided the mechanism for determining the amount.

Consequently the costs were a debt for a liquidated sum and the High Court should not have set aside the statutory demands under rule 6.5(4)(b) of the Insolvency Rules 1986.

Postscript

In a separate High Court judgment on 21 December 2018 John Blavo was ordered to pay the government £22.1 million after the court found it more likely than not that systemic fraud had taken place in legal aid claims, and that there was an endemic culture of dishonesty.

An audit by the Legal Aid Agency in 2015 showed claims for representation in mental health hearings in 24,658 cases, but only 1,485 actual hearings.

See –

 The Lord Chancellor v Blavo & Co Solictors Ltd & Anor [2018] EWHC 3556 (QB) (21 December 2018)

Written by kerryunderwood

March 8, 2019 at 6:54 am

Posted in Uncategorized

CONTINGENCY FEES, EXPERTS AND TRIBUNALS

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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

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

March 7, 2019 at 6:42 am

Posted in Uncategorized

COSTS PERMITTED TO BE CLAIMED AS DAMAGES

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

In

Playboy Club London Ltd v Banca Nazionale Del Lavora SPA [2019] EWHC 303 (Comm) (21 February 2019)

the Commercial Court allowed an amendment to Particulars of Claim in deceit proceedings to include as a head of damages adverse costs incurred in respect of the defendant in these proceedings, that is the other party in the original proceedings.

Both the original proceedings, and the current ones, related to a credit reference relied upon by the claimant, the owner of a casino, and the original negligence claim succeeded in the High Court, but the Court of Appeal overturned that decision, and that finding of the Court of Appeal was upheld by the Supreme Court and thus the defendant won the claim and the claimant was ordered to pay the costs of the defendant.

The claimant then brought the current deceit proceedings and the defendant’s attempt to strike them out failed.

The proposed amendments in these proceedings pleaded that, although the claimant’s negligence claim had ultimately failed, it had at all relevant times at least a reasonable prospect of success, and that the claimant had acted reasonably in bringing and pursuing the claim and that the costs incurred formed part of the total costs exposure recoverable in the deceit claim.

The court recognised that damages are recoverable to a greater extent in a case of fraud, as compared with a claim in negligence, and found that the claimant had a more than merely fanciful prospect of success, and therefore it would be wrong to decide the question without a trial.

The defendant argued that, as a matter of principle, costs could not be recoverable as damages.

There was no authority involving costs of a previous legal action between the same parties, and where the claimant had been unsuccessful and had had costs awarded against it, being awarded damages in a subsequent legal action, to include those costs.

The defendant pointed out that the effect of this is to reverse the costs award previously made.

The court considered that although this was a novel and unprecedented claim which might be difficult to establish, the principle should not be determined without findings on all of the disputes of fact.

The matter should be decided at trial, and not by refusing permission to amend the pleadings, which would mean that the matter could not be argued at all.

Written by kerryunderwood

March 6, 2019 at 7:12 am

Posted in Uncategorized

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