Kerry Underwood

SWITCHING FROM LEGAL AID TO A CONDITIONAL FEE AGREEMENT

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In Hyde v Milton Keynes NHS Foundation Trust [2017] EWCA Civ 399

 

the Court of Appeal upheld the decision of a Costs Master and High Court Judge that it was reasonable for a legally aided client in a clinical negligence matter to switch to a Conditional Fee Agreement.

Here the claimant had brought clinical negligence proceedings against the trust and was legally aided but switched to a Conditional Fee Agreement which meant that a success fee and insurance premium were payable by the defendant, as the matter dated back to the time when such additional liabilities were recoverable.

 

The defendant objected but lost in the Senior Court Costs Office and the High Office.

 

On further appeal to the Court of Appeal the defendant conceded that the claimant was entitled to recover base costs but argued that there was no right to recover the success fee or premium.

 

It was agreed that the Legal Aid Certificate had not been formally discharged, even though legal aid had run out and there was no more public funding available.

 

The defendant argued that as the Legal Aid Certificate had not been discharged the court should assume that the work was still being done under that certificate.

 

It was a highly technical argument which was rejected by the Court of Appeal.

 

There was no period of time when the claimant’s solicitors were being paid both by legal aid and under the Conditional Fee Agreement.

 

In this case liability had been agreed but as the dispute over quantum continued the Legal Services Commission declined to increase the funding.

 

The client therefore signed the Conditional Fee Agreement but did not apply for a Notice of Discharge from the commission.

 

The Court of Appeal held that there was no period of time when the solicitors could, let alone did, take payment both under the private retainer and the undischarged funding certificate.

 

Here the trust had “readily accepted that in the present case there was no intention whatsoever on the part of the solicitors (or claimant) that there would or might be such topping up”, that is using public funding as a base and taking extra money from the client.

 

The Court of Appeal rejected the defendant’s argument that while the Legal Aid Certificate was undischarged, the Conditional Fee Agreement had to be treated as unlawful and unenforceable.

 

Comment: Yet another practical and sensible decision by the Court of Appeal to seek to maintain access to justice and yet another piece of disgraceful conduct by the National Health Service Legal Aid Authority, or whatever it is now called.

 

That body is a blot on the legal landscape.

Written by kerryunderwood

June 5, 2017 at 8:55 am

Posted in Uncategorized

ASPERGER’S SYNDROME AND JOB RECRUITMENT

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I am grateful to Terri Brookes for supplying me with information about this case.

In Government Legal Service v Brookes – UKEAT/0302/16/RN

the Employment Appeal Tribunal upheld the decision of an Employment Tribunal that the Government Legal Service (GLS) had discriminated against the applicant, who had Asperger’s Syndrome, in requiring her to sit a multiple choice test at the first stage of its recruitment process.

The EAT also upheld the finding that, by refusing her request to provide answers to the test in narrative form, rather than in a multiple choice format, the GLS had failed to make reasonable adjustments.

The GLS recruits around 35 trainee solicitors each year and receives several thousand applications.

All applicants are required to sit a multiple choice test online.

Ms Brookes contacted the GLS ahead of the recruitment process and requested adjustments to allow her to submit her answers in a short narrative form.

The GLS refused.

Ms Brookes took the test and received 12 marks out of 22 thus her application did not proceed as the pass mark was 14.

The Employment Tribunal found that the GLS had applied a provision, criterion or practice of requiring all applicants to take this online multiple choice test.

Having heard expert medical evidence the Employment Tribunal concluded that this placed people with Asperger’s Syndrome at a particular disadvantage compared with those who did not have it and that this caused Ms Brookes’ disadvantage.

The GLS argued that, even if Ms Brookes had successfully shown that that was the case, the testing was a proportionate method of filtering candidates.

The Employment Tribunal disagreed and said there was a less discriminatory alternative, as proposed by Ms Brookes.

The Employment Appeal Tribunal upheld that claim:

“The tribunal was presented with what appeared to be a capable young woman who, with the benefit of adjustments, had obtained a law degree and had come close to reaching the required mark of 14 in the SJT (Situational Judgment Test, but had not quite managed it.  The tribunal was right to ask itself why, and was entitled to find that a likely explanation could be found in the fact that she had Asperger’s, and the additional difficulty that would place her under due to the multiple choice format of the SJT”

The Employment Appeal Tribunal held that the decision making powers of the small number of candidates with Asperger’s could properly have been measured by allowing answers in a narrative format.

The decision does not mean that employers need to water down the standards for a role, but must consider, where appropriate, adjusting the means of testing whether an individual meets the standards for the job.

Multiple choice tests are considered to be efficient in that there are considered to be objectively right or wrong answers to each question, meaning that marking can be done by a computer without human intervention or judgment.

The Employment Appeal Tribunal refused the Government Legal Service permission to appeal.

Written by kerryunderwood

June 1, 2017 at 9:29 am

Posted in Uncategorized

NO REPAYMENT OF STAGE 1 COSTS REQUIRED

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In JC and A Solicitors v Iqbal & Another [2017] EWCA Civ 355

 

the Court of Appeal held that in cases under the pre-2013 road traffic accident portal solicitors do not have to return the £400.00 Stage 1 fee where claims dropped out before Stage 2.

 

The post-2013 regime provides that no Stage 1 fee is payable unless Stage 2 is engaged and so the issue can no longer arise.

 

The Court of Appeal pointed out that the Stage 1 entitlement only arose once liability had been admitted “so that something solid will have been achieved for the protocol client by the time when the Stage 1 payment becomes due.”

 

The Court of Appeal noted that the protocol contained provisions for repayment of interim damages, but not for Stage 1 costs which were a final, and not an interim payment.

 

The Court of Appeal was critical of District Judge Phillips, sitting in Cardiff, who had considered the figure fixed by parliament as generous, a fact which appears to have influenced a judge not known for being sympathetic to personal injury claims.

 

On a separate point, dealing with the fact that Stage 1 costs were not payable at the end of Stage 1 in a case involving a child, the Court of Appeal points it out that that related to the separate provision in relation to children’s claims “because of the general principles which require the determination of such claims either to be made by the court, or made the subject of a court approved settlement.”

 

This reinforces the point often made by other courts that a Court Order is compulsory in a child’s claim and such claims must never be settled by way of parental indemnity.

Written by kerryunderwood

May 30, 2017 at 9:01 am

Posted in Uncategorized

FIXED COSTS AND THE BAR

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This article first appeared on the Practical Law Dispute Resolution Blog on 25th May 2017.

 

It is accepted by solicitors and the Bar alike that, as fixed fees are introduced, solicitors will become more reluctant to instruct counsel, on the basis that they feel that they are spending their own money, rather than incurring a disbursement, which is then recoverable from the other side in the event of success.

 

Give solicitors a fixed fee of say £3,000 with counsel’s fee as a recoverable disbursement of, say, £750  and counsel will be instructed, but pay an inclusive fee of £4,000 and the solicitors will do the work themselves, even though they would be £250 better off than under the first scheme.

 

This has for long been the case where costs are not recoverable, for example in employment tribunals, and also in the existing fixed costs regime, covering most personal injury claims up to £25,000.

 

This current fixed costs scheme provides for a legal spend, with no separate fee for counsel, with one minor exception worth only £150. Solicitors are free to instruct counsel, but that is regarded as an office overhead in the same way as employing a solicitor, rather than a disbursement.

 

The advocacy fee is a free standing fixed extra fee in all fast track cases, not just personal injury work, and that is payable whether the advocacy is conducted by a solicitor or barrister or legal executive.

 

It makes sense. If counsel’s fees were an add-on for anything and everything, then some solicitors would pocket the fixed fee but instruct counsel to deal with the whole case.

 

Jackson LJ’s initial view a year ago was that the same principle should apply in all fixed cost civil litigation with a potential value of up to £250,000 damages.

 

While seeing the logic of that, it would seriously threaten the existence of the junior civil Bar. I believe that the maintenance of an independent Bar is of crucial importance, not only to the Bar itself, but to small and medium sized solicitors’ firms that often need recourse to the Bar.

 

Having an independent and sustainable Bar also sustains a nationwide network of solicitors able to carry out litigation work.

 

It looks increasingly likely that there will be a new intermediate track to sit between the fast track and the multi-track and that fixed recoverable costs will not spread to the multi-track at the moment, but will cover all intermediate track work.

 

It is likely that that intermediate track will cover work valued at between £25,000 and £100,000.
Consideration should be given to specific fixed fees for specific activities, generally carried out by counsel, but possibly a specialist solicitor, for work in that intermediate track. Those specific tasks could include:

 

  • Drafting pleadings.

 

  • Conferences.

 

  • Advices.

 

I am anticipating that advocacy fees will remain separate and fixed, whoever carries out the advocacy.

 

Advocacy itself throws up a further issue for counsel in that, at present, no advocacy fee or  preparation for advocacy fee is payable unless the matter goes to trial, or is settled on the day of trial (see Mendes v Hochtief (UK) Construction Limited [2016] EWHC 976 (QB)).

 

Work done by a solicitor is effectively covered in the post-listing pre-trial stage fixed costs, but counsel gets nothing.

 

I suggest that we revert to a scheme similar to that which existed when we had fixed recoverable success fees. I propose:

 

  • 25% of the fixed advocacy fee if the matter settles between 21 days and 42 days before trial.

 

  • 50% of the fee if it settles between seven days and 21 days before trial.

 

  • 75% of the fee if it settles within seven days of trial.

 

That is fair to counsel and encourages relatively early instruction of counsel by solicitors, and if there is to be settlement then it encourages it earlier rather than later.

 

I am sure that in particular areas of civil litigation there are other items to be considered, but the key is to ensure that the fee is fixed and certain in fixed costs cases, so as to eliminate the cost and delay of budgets, bills and assessments, which insofar as possible should be consigned to history as unnecessary parasitic costs which make the litigation process more expensive than it needs to be.

Written by kerryunderwood

May 26, 2017 at 8:59 am

Posted in Uncategorized

SMALL CLAIMS – UNREASONABLENESS AND COSTS

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I am currently on my Personal Injury Reforms lecture tour, to check available dates and book a place on a course please click here.

 

In Dammermann v Lanyon Bowdler LLP [2017] EWCA Civ 269

 

the Court of Appeal had a rare opportunity to consider CPR 27.14(2)(g) which allows the court to order “such further costs as the court may assess by the summary procedure and order to be paid by a party who has behaved unreasonably”.

 

Once the personal injury small claims limit is increased to £5,000.00 for road traffic matters, this is likely to be the single most important civil procedure rule as far as costs in personal injury work are concerned.

 

I deal with this extensively in my new book Personal Injury Small Claims, Portals and Fixed Costs, which runs to 1,300 pages over three volumes and costs £80.00 and can be ordered from Amazon here.

 

Here Mr Dammermann had defaulted on a mortgage and the bank appointment receivers to sell the property and those receivers instructed solicitors who sold the property and delivered a bill to the receivers and that became part of Mr Dammermann’s overall liability under the terms of the mortgage.

 

Mr Dammermann brought proceedings against Lanyon Bowdler LLP, the solicitors, challenging the amount of their fees.

 

His claim was dismissed at first instance on the basis that there was no contractual or agency relationship between Mr Dammermann and the firm of solicitors.

 

No order for costs was made at that first instance hearing.

 

Mr Dammermann appealed and that appeal was dismissed but the judge on appeal ordered Mr Dammermann to pay costs.

 

Generally, there can be no order for costs on an appeal from a small claims track matter, wherever it ends up, be it the Court of Appeal of Supreme Court or whatever.

 

Thus the application for costs could only succeed if CPR 27.14(2)(g) was satisfied.

 

The appeal judge said this:

 

“I am satisfied he has acted unreasonably. I was not aware until just a moment ago, that an offer had been paid of £1,000.00 to seek to mollify his concerns in any way in respect of this bill. I would have thought that was a very generous offer that should have been accepted, but leaving that to one side, he has persisted in an argument, notwithstanding – and I agree with the submission made by Ms Tildesley – that it is entirely clear on the basis of this skeleton argument, very clearly argued and presented by Mr Millington, an argument which I noted is dated 16th October 2015 and probably would have been in the hands of Mr Dammerman six or seven weeks ago, that he could have backed off this appeal, not proceed with it, and matters probably would have rested there. He has not done so. It is obvious from that skeleton argument that he was barking up the wrong tree, he had confused himself, he was applying principles of general agency law which could not apply and did not apply, if he had even read those authorities, which are referred to in the skeleton argument and the extracts therein. In those circumstances, I do take the view he has behaved unreasonably, and in those circumstances, I do continue therefore with the assessment of these costs. I am not going to repeat myself in respect of what I have hitherto said in the course of this summary assessment.”

 

CPR 27.14(3) states:

 

“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”.

 

Mr Dammermann was granted leave to appeal to the Court of Appeal and made three substantive points:

 

  1. the unreasonableness of his behaviour must be seen in the light of the fact that the very same judge had granted him permission to appeal on the basis of the case that he went on to argue at the full appeal hearing;

 

  1. the point of law was somewhat obscure, as the mortgage deed indicates that the receivers were his agents but, as the judge found, the solicitors were not;

 

  1. the judge was wrong to take his rejection of the £1,000.00 offer into account and that, had he been allowed to by the judge, he would have told the judge of his counter-offer to settle at a higher figure, which Lanyon Bowdler had in turn refused.

 

The Court of Appeal agreed with Mr Dammermann that it was not an entirely straightforward point of law as case law demonstrated.

 

The Court of Appeal said that the point on which Mr Dammermann lost was the somewhat intricate point rising from a legal document which was artificial or contrived and apt to give a false impression and also pointed out that the judge himself took 12 paragraphs of his judgment to explain the legal position.

 

The Court of Appeal also considered Mr Dammermann’s point that the very same judge who ordered him to pay costs for behaving unreasonably was the judge who had given him leave to appeal in the first place.

 

In relation to the offer of £1,000.00, or rather its rejection, the Court of Appeal did not accept that the judge was in error as he did not base his decision on unreasonable behaviour on this point, but he was entitled by CPR 27.14(3) to take it into account and in the view of the Court of Appeal he was justified in so doing.

 

The fact that Mr Dammerman was prepared to settle for a substantially higher figure was irrelevant. The court had decided that the offer made to him was “a very generous offer that should have been accepted.”

 

Here the Court of Appeal redetermined the matter itself and held that it was not possible to hold that Mr Dammermann had behaved unreasonably in pursuing his appeal.

 

The court then had this to say about the offer:

 

“the rejection of the £1,000.00 settlement offer is the only remaining factor that might be supportive of a finding of unreasonableness, but that, on its own, is incapable of satisfying the test in Part 27.14(2)(g).”

 

That appears to be a correct statement of the law given the wording of CPR 27.14(3):

 

“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.”

 

That leaves open the question of what on earth that rule means. It is not well worded. I had assumed that it meant that a rejection of an offer may be unreasonable so as to satisfy the test, but does not of itself constitute unreasonable behaviour.

 

Thus a party who is offered say £9,000.00 and goes to court and gets £1,000.00 is more likely to be found to have behaved unreasonably than a party who rejected on offer of £1,100.00 and went to court and got £1,000.00.

 

What the Court of Appeal appear to be saying is that the rejection of an offer, however unreasonable, cannot without other unrelated factors, be capable of constituting unreasonable behaviour.

 

It should be noted that Part 36 has no application in the small claims track and therefore the issue of whether the rejection of an offer can ever constitute unreasonable behaviour is a very important one.

 

If the answer is no, then it appears that any party in a small claims track matter is free to carry on without costs consequences, however objectively unreasonable their behaviour is in rejecting an offer.

 

Indeed it appears that a party could reject an offer to settle the whole claim and still not be at risk on cost.

 

That cannot be right.

 

This needs urgent clarification prior to the influx of 750, 000 road traffic small claims a year from 1 October 2018.

Written by kerryunderwood

May 23, 2017 at 8:54 am

Posted in Uncategorized

COST BUDGETING: USING PRECEDENT R TO PLAY A PROCEDURAL GAME

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In Findcharm Ltd v Churchill Group Ltd (2017) EWHC1109 (TCC) Mr Justice Coulson sent out a clear warning against the use of Precedent R as tactics in a cost budgeting exercise.

 

Mr Justice Coulson made his remarks at the end of a Case Management Conference. He accepted that in recent times, judges were spending more time than they used to on dealing with costs budgeting disputes but that recently steps had been taken to try and make that process more efficient for the court. He referred in particular to the introduction of Precedent R which required each party to comment on the costs budget of the other. This has the effect of saving time because the parties are obliged to adopt a realistic attitude towards the budget of the other side and has assisted in identifying the areas of dispute between the parties on costs.

 

However, the judge went on criticise some parties who seem to treat cost budgeting as a form of a game where they are seeking to obtain a tactical advantage over the other side. One example was where one party offered very low figures in the Precedent R in the hope that the court may look at the two different sets of figures put forward by the parties and calculate a figure somewhere in between the two. In this particular case, the judge found that that had happened here.

 

The case was brought by the claimant who operated a restaurant within the defendant’s hotel. There was a gas explosion at the hotel which closed the restaurant for approximately 4 months and the claimant sought to recover its expenses arising out of the explosion which totalled £820,000.00 plus interest. The single largest item was a claim for loss of profit as a result of the business interruption.

 

The defendant’s defence consisted of their denials and non-admissions of a kind which is completely against the spirit of the Civil Procedural Rules and harks back to a bygone age of pleading such defences. Despite the fact that the explosion happened in the defendant’s hotel, they did not even admit the cause of the explosion.

 

Following initial exchanges between the parties, the claimant put forward a cost budget in the total sum of £244,676.30. This figure assumed that there will be no need for expert evidence to deal with the cause of the explosion and assumed a single joint expert in accountancy to deal with the loss of profit claim. The judge had ordered during the Case Management Conference that unless the defendant, within 21 days, pleaded a positive defence on the cause of the explosion then they will be taken to admit the claimant’s case on that issue. For the purposes of cost budgeting the judge proceeded on the basis that no expert evidence on that topic would be required. He also ordered that a single joint expert in accountancy was indeed appropriate.

 

The defendant’s cost budget totalled £79,371.23. The judge was unhappy with the budget as, for example, it allowed nothing for experts to deal with the issue of the cause of the fire even though the defendant, during the CMC, was arguing that causation was an issue and an expert was necessary. It had an estimate of a sum of less than £7,000.00 for the preparation of a High Court trial which, on any interpretation, was unrealistically low. As the figure for the overall budget was clearly low the claimant had agreed it and therefore the court approved the budget figure for the defendant.

 

Through the Precedent R the defendant had offered only £46,900.00 in respect of the claimant’s estimated costs and when added to the costs already incurred by the claimant, came to a total of less than £90,000.00.

 

The judge was unhappy with the defendant’s Precedent R because it was totally unrealistic and had been designed to put as low a figure as possible on each and every stage of the process without justification. In the judge’s view it was an abuse of the costs budgeting process.

 

Particular examples of the amounts offered by the defendant in the Precedent R include disclosure where the claimant’s estimate was just below £30,000.00 which the judge believed was reasonable for a claim of this type whereas the defendant’s offer was £10,600.00.

 

In relation to witness statements the claimant’s estimate was £40,235.00 for the preparation of three witness statements and considering two statements to be provided by the defendant, all of which the judge believed was reasonable. The defendant had only offered £5,300.00 for all of that work. The judge said that was incredible in a case of this nature where all of the background and circumstances of the explosion had to be explained and where there was a large claim for loss of profits which would need to be underpinned by detailed factual evidence.

 

In relation to expert’s reports the claimant estimated £28,648.00 which again was not excessive bearing in mind the fees charged by forensic accountants. The defendant put forward £16,000.00 based upon an expert’s fee of £13,500.00 but it was not based on any estimate from a proposed expert and in the judge’s experience it was completely out of step with what a forensic expert accountant would charge for in this type of work.

 

Finally, the claimant allowed £69,765.00 for trial preparation and again the judge believed that in the circumstances of the claim that was not unreasonable. The sum offered by the defendant was £10,000.00 which the judge saw no justification for whatsoever.

 

As a result, the judge concluded that the cost budget of the claimant would be allowed in full as it was both proportionate and reasonable.

 

The judge was understandably critical of the Precedent R filed on behalf of the defendant and levelled that criticism at the defendant’s solicitors, Kennedys and in particular their costs department.

Written by kerryunderwood

May 17, 2017 at 9:02 am

Posted in Uncategorized

FIXED COSTS, COSTS OF BUDGETING AND CASE SETTLING

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I am currently on my Personal Injury Reforms lecture tour, to check available dates and book a place on a course please click here.

 

A case enters the portal and then exits and is likely to be allocated to the multi-track due to complexity and the number of experts and consequently budgets are drawn.

 

However the matters settles before allocation and therefore has not actually been allocated to the multi-track, and therefore the provisions of Qadar v Esure [2016] EWCA Civ 1109, now enshrined in rule 8.1 of the Civil Procedure (Amendment) Rules 2017, do not apply.

 

That case and that rule states that fixed costs apply to any ex-portal claim unless and until it is allocated to the multi-track.

 

On the face of it there is no entitlement to any additional costs for preparing the budget.

 

Obviously one of the benefits of a fixed costs case is that the parties do not need to prepare a budget, but in these circumstances the parties will be in the position of incurring the costs of preparing a budget, but recovering only fixed costs.

 

The successful party may argue that the escape clause should apply, but it may well be that the additional costs incurred would not lead to the claimant achieving more than 20% of the fixed costs figure, which is what needs to be done to get anything extra at all and to avoid being punished in costs.

 

It is of course extremely sensible in a complex matter to draw up a budget early on in the case as part of planning the case generally as well as being prepared for the first CMC before which the costs budgets will have to be served. It is all the more frustrating for the solicitor who carefully plans their case in advance to lose out on costs of preparing the budget.

 

The answer is an amendment to the Civil Procedure Rules to provide for the payment of a fixed fee for Costs Budgeting work in such a scenario, that is where the court would require budgets to be drawn and filed in an ex-portal claim which ends up not being allocated.

 

I am grateful to Mr Idris Dawjee of Parmar & Co Solicitors for bringing this to my attention.

Written by kerryunderwood

May 12, 2017 at 9:01 am

Posted in Uncategorized

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