Kerry Underwood

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.

 

 

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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.

  1. 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 to, 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

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