Litigationline Yearbook Vol 2

FREE DOWNLOAD: Worth £85+vat

LITIGATIONLINE YEARBOOK VOLUME 2

the

SOLICITORS

group

Quality training for less

Conferences / Webinars / CDs / DVDs / E-Publications / InHouse / Consortium

P L C

A totally professional & personal approach to Legal Costs

PARAMOUNT P A R A M O U N T L ELEGAL GAL C OSTS LIMITED COSTS LIMITED Rural Enterprise Centre Redhills, Penr ith Cumbria C A11 0DT

We are a team of dedicated and experienced Law Costs Draftsmen and Costs Lawyers W: www.paramountlegalcosts.co.uk and we have received accreditation from many quarters including achieving 1st tier APIL experts’ accreditation as Law Costs Draftsmen.

At Paramount Legal Costs we offer:

DX: 63314 Penrith T: 01768 213072 F: 01768 213073 E: info@paramountlegalcosts.co.uk

P L C PARAMOUNT LEGAL COSTS LIMITED

A complete Costing & Negotiation Service that can be tailored to your needs.

P C L Rural Enterprise Centre Redhills, Penr ith Cumbria C A11 0DT

DX: 63314 Penr ith T: 01768 213072 F: 01768 213073 E: info@paramountlegalcosts.co.uk W: www.paramountlegalcosts.co.uk

P L C

Our aim at Paramount is to build a long-term business relationship with each and every client by tailoring our services to fit your individual needs and giving you a single point of contact for your work.

PARAMOUNT LEGAL COSTS LIMITED

Rural Enterprise Centre Redhills, Penr ith Cumbria C A11 0DT

DX: 63314 Penr ith T: 01768 213072 F: 01768 213073 E: info@paramountlegalcosts.co.uk W: www.paramountlegalcosts.co.uk

P L C

PARAMOUNT LEGAL COSTS LIMITED

Rural Enterprise Centre Redhills, Penr ith Cumbria C A11 0DT

DX: 63314 Penr ith T: 01768 213072 F: 01768 213073 E: info@paramountlegalcosts.co.uk W: www.paramountlegalcosts.co.uk

We specialise in all civil litigation matters, including personal, catastrophic, brain and spinal injury, as well as clinical negligence.

P L C

PARAMOUNT LEGAL COSTS LIMITED

Rural Enterprise Centre Redhills, Penr ith Cumbria C A11 0DT

DX: 63314 Penr ith T: 01768 213072 F: 01768 213073 E: info@paramountlegalcosts.co.uk

PARAMOUNT P A R A M O U N T L ELEGAL GAL C OSTS LIMITED COSTS LIMITED Rural Enterprise Centre Redhills, Penr ith Cumbria C A11 0DT DX: 63314 Penrith T: 01768 213072 F: 01768 213073 E: info@paramountlegalcosts.co.uk W: www.paramountlegalcosts.co.uk

Drafting Precedent H Costs Budgets, Statements of Costs for Trial and Applications and Replies to Points of Dispute.

Appropriate and realistic advice based on the merits of the case.

W: www.paramountlegalcosts.co.uk

Please contact us on one of the following to discuss your requirements and our competitive terms of business.

P L C

Accurate and expert costing in order to maximize your costs recovery.

T: 01228 819131 F: 01228 501810 E: info@paramountlegalcosts.co.uk DX: 63314 PENRITH

AL G E L T LIMITED N PARAMOUNT LEGAL COSTS U O D E RAM T I PAwww.paramountlegalcosts.co.uk M I L S T S O C entre

P L C

PARAMOUNT P A R A M O U N T L ELEGAL GAL C OSTS LIMITED COSTS LIMITED

1

Rural Enterprise Centre Redhills, Penr ith Cumbria C A11 0DT

DX: 63314 Penr ith T: 01768 213072 F: 01768 213073 E: info@paramountlegalcosts.co.uk W: www.paramountlegalcosts.co.uk

• Charge our fees as staffing costs rather than as a disbursement – our staff will come to you.

• Add value to your bottom line - send your medical records to us and reclaim your fees at your fee-earner rate.

• Reviewed by qualified scientists.

• Fourteen year’s experience of NHS, Private and Military records.

• Searchable, annotatable electronic records securely shared – no photocopying or courier costs.

Coates House, Gretton Road, Winchcombe Gloucestershire GL54 5EE

2

Contents...

1 Foreword .................................................................................................................................. 4 2

Statements of Truth: Signing for a Client.............................................................................. 61

An Online Civil Court-Full Steam Ahead.............................................................................. 62

December 2015.................................................................................................................. 10 Part 26 - Case Management - preliminary stage............................................................... 10

9

July 2016................................................................................................................................... 64

Practice Direction 2C Starting Proceeding in the County Court...................................... 10

Lowin v W Portsmouth & Co Ltd (2016) QBD (Elisabeth Laing J, LTL 20/06/16)................ 64

Practice Direction 5B Electronic Communications and Filing of Documents................. 10

Lord Dyson Favours Fixed Fees.............................................................................................. 68

PD510 The Electronic Working Pilot Scheme....................................................................... 11

E-Filing: News from the CPR Committee.............................................................................. 11

3

CPR 36: Clarification Requests.............................................................................................. 12 Trial Judge’s View on Costs Budgets and Interim Payments............................................. 12 Wasted Costs Orders and Court Directions......................................................................... 16

January 2016......................................................................................................................... 18

Failure to Mediate: Winner or Loser?.................................................................................... 18 Public Contracts and Procurement: Legal Challenges..................................................... 19

Shutting out an Expert Witness: A Word from Sir Rupert..................................................... 21

Don’t Forget the Court Fee!.................................................................................................. 22

Delay in Funding and the Legal Aid Agency...................................................................... 24

4

10 August 2016............................................................................................................................ 70

Preliminary Points Need Clarity............................................................................................. 28

CPR 36: Two Important Cases............................................................................................... 28

The Facts.................................................................................................................................. 29

Tactical Offers :Jockey Club Racehorse Ltd -v- Willmott Dixon Construction

Limited[2016] EWHC 167 (TCC)............................................................................................. 30

The Facts and Issues............................................................................................................... 31

The Judgement....................................................................................................................... 31

5

6

CPR 36 Offers and Without Prejudice Offers....................................................................... 70

DB UK Bank Ltd (trading as DB Mortgages) v Jacobs Solicitors........................................

[2016 [EWHC] 1614 (Ch)......................................................................................................... 71

Court Fees: Minor Changes................................................................................................... 72

The 85th Update to the Civil Procedure Rules..................................................................... 72

Part 46 and PD46 – Costs – Special Cases........................................................................... 73

Failure to Lodge a Costs Budget –Limited to Court Fees................................................... 73

Re-Opening a Settlement - The Supreme Court Decision in.............................................

Haywood v Zurich Insurance Co Plc (2016) UKSC 48......................................................... 76

Court Fees and Underpayment: Staying an action instead of a Strike Out.................... 79

No Planned Change in Threshold Level for Appeals to the Court of Appeal................. 80

March 2016............................................................................................................................. 34

(2016) QBD (TCC) (Judge David Grant).............................................................................. 70

12 October 2016........................................................................................................................ 82

Decision................................................................................................................................... 29

Stuart Coyne v (1) Alec Morgan (2) Alex Harrison (T/A Hillfield Home Improvement)

Malicious Prosecution in Civil Proceedings: Landmark Supreme Court Decision........... 77

Universal Fixed Costs for Civil Claims up to £250,000.......................................................... 26

11 September 2016................................................................................................................. 76

February 2016....................................................................................................................... 26

Changes to Costs Budgeting................................................................................................ 34 Late Acceptance of Part 36 Offer and Departure from Usual Costs Order.................... 35 Setting Aside a Default Judgment and Discretion............................................................. 37 Unless Orders and Denton Principles.................................................................................... 39

Project Fear or Project Fixed Costs....................................................................................... 82

Third Party Funding: High Court Orders Disclosure of Identity of Third Party Funder....... 83

86th Update to the Civil Procedure Rules............................................................................ 84

Part 2 - Application and interpretation of the rules............................................................ 85

Closure of County Court Hearing Centres........................................................................... 85

Claims for restoration of companies.................................................................................... 85

Practice Direction 8A – Alternative procedure for claims................................................. 85

Part 26 - Case management – preliminary stage............................................................... 86

Practice direction 51O – The Electronic Working Pilot Scheme........................................ 86

Applications for permission to appeal to the Court of Appeal........................................ 87

Court officers........................................................................................................................... 87

Amendments consequential to changes to the routes of appeal.................................. 88

April 2016.................................................................................................................................. 42

Deal or No Deal - Proving a Contract.................................................................................. 42

13 November 2016.................................................................................................................. 90

The Dangers when Withdrawing Offers: Patience v Tanner and another

Court Fees, Limitation and Abuse of Process...................................................................... 90

[2016] EWCA Civ 158, [2016] All ER (D) 203 (Mar)............................................................... 43

Costs Budgeting and Detailed Assessments:

CPR 36 and the Court of Appeal Decision in Webb -v-Liverpool Women’s

Does a Detailed Assessment Trump an Approved Costs Budget?................................... 93

NHS Foundation Trust [2016]EWCA Civ 365 : An End to Satellite Litigation?.................... 45

Online Court: Sky’s the Limit.................................................................................................. 94

Increase in Court Fees: Key Changes.................................................................................. 47

14 December 2016.................................................................................................................. 98 7

May 2016.................................................................................................................................. 50

TUI UK LTD v TICKELL & ORS [2016] EWHC 2741 (QB)

High Contingency Fee for Firm of Solicitors Upheld........................................................... 50

QBD (Elisabeth Laing J, Master Leonard) 01/11/2016........................................................ 98

Bolt Burdon Solicitors v Tariq [2016] EWHC 811 (QB)........................................................... 50

CPR 36 Offers and Adjudication Costs................................................................................. 100

Failure to Attend Trial and Striking Out................................................................................. 53

The Mitchell Principles-Ignoring Orders at Your Peril........................................................... 102

Appeal out of Time and Counsel’s Error.............................................................................. 56

Fixed Recoverable Costs - Update....................................................................................... 104

New Civil Bills by October 2017............................................................................................. 56

8

June 2016................................................................................................................................. 58

Proportionality: Guidance from the SCCO.......................................................................... 58

The Third Party (Rights Against Insurers) Act 2010............................................................... 59

3

Foreword A Foreword to the 2016 Yearbook of Litigation Line

Welcome to this foreword to the 2016 yearbook of the Litigation Line.

When I was first asked to write a monthly review, I thought that it might be difficult to find new developments to write about every month. However, that has not proved to be the case. I’m still surprised at the number of reported cases and how procedural and costs developments continue to affect practitioners as the post Jackson landscape is being mapped out by the judiciary.

I do hope that you have enjoyed reading them, both for their legal content and for my comments. It was a very busy year with, as usual, important cases on CPR 36, costs budgeting, relief from sanctions, proportionality, funding and evidence. These developments have also taken place against the backdrop of a reform agenda which shows no sign of stopping.

I began the year by looking at a helpful costs decision, Reid -v- Buckinghamshire Healthcare NHS Trust [2015] EWHC B21, where the claimant beat its own Part 36 offer on costs but was seeking further penalties because the defendants had refused to mediate. The court once again referred to the established principles in Halsey v Milton Keynes NHS Trust [2004] EWCA Civ 576 and reminded practitioners that there were no further penalties to be imposed upon losing party, where they refused to mediate.

In the same month, I referred to the decision of the Court of Appeal in O’Connor -v- The Pennine Hospitals NHS Trust [2015] EWCA 1244, where expert evidence was sought very late in the day and in breach of directions. Even after the decision in Denton v T.H.White Ltd [2014] EWCA Civ 906, old practices seem to continue, even, though they are patently out of step with the new overriding objective.

In February, I covered a seminal speech delivered by Lord Justice Jackson on the 28th January 2016, Fixed Costs –The Time Has Come. In that speech, he proposed a universal fixed costs regime for all civil cases up to £250,000. He also for the first time introduced what he called a “costs matrix”, which was very similar to the costs matrix which personal injury practitioners are familiar with in fast track cases. This speech would lay the foundation for sweeping proposals for the extension of fixed costs across civil litigation landscape.

4

A conference presented by the IBA Litigation Committee and supported by the IBA European Regional Forum

IBA Annual Litigation Forum Conference Innovation in Litigation – Prepared for 2026 3–5 May 2017, Zurich, Switzerland Topics include: • New Technologies in Court ‘Bold About Change – How Technology is Being Embraced by Smart Litigators and Courts’ • Cutting Edge Ways of Introducing and Taking Evidence ‘New Ways of Taking and Presenting Evidence and Dealing with Big Data’ • Innovation in Litigation – Round Table Discussions/Workshop • Brexit: How to adjust?

• Artificial Intelligence – How much of you will it replace? How much will it enhance?

Social programme: • Conference venue in walking distance to famous Bahnhofstrasse • Dinner in the beautiful Guildhall zur Meisen • Post convention trip – Swiss adventure

FOR MORE INFORMATION AND TO REGISTER YOUR INTEREST VISIT WWW.IBANET.ORG/CONFERENCES/CONF780.ASPX 5

Follow us @IBAevents #IBALit

I also referred to two important cases on CPR 36, namely Sugar Hut Group Ltd & ors v AJ Insurance Ltd (a partnership) [2016] EWCA Civ46 (where the Court of Appeal dealt with the so-called “near miss rule”) and Jockey Club Racehorse Ltd -v- Willmott Dixon Construction Limited [2016] EWHC 167 (TCC) (a High Court case, providing guidance on liability offers).These cases were part of a trend throughout the year of CPR 36 satellite litigation, where the courts have been providing much-needed guidance on what we are repeatedly told is a self-contained code.

In March, I reminded practitioners of the important changes from 6th April 2016 affecting costs budgeting. What is remarkable, is that since these changes, there have been numerous cases where the rules relating to budgeting have simply been ignored or misunderstood.

We also see in the same edition of Litigation Line another important decision from the Court of Appeal, in British Gas Trading Ltd v Oak Cash & Carry Ltd [2016] EWCA Civ 153. Here we have unless order which was breached by a period of two days but where the court delivered another strong message on relief from sanctions and the utterly critical importance of making an application promptly.

In April, I covered another Court of Appeal decision on CPR 36, namely Webb -v-Liverpool Women’s NHS Foundation Trust [2016] EWCA Civ 365. This case was of real significance in dealing with so-called issue based orders and the relevance of CPR 36. In simple terms, the trial costs could have been avoided completely if the defendant had accepted a Part 36 offer.

In May, I referred to the of Mr Justice Spencer in Bolt Burdon Solicitors v Tariq & Ors [2016] EWHC 811 QB. Here we have a whopping contingency fee based agreement for 50% of the client’s damages in a case involving a claim against a bank. The court took the view that client knew exactly what he was entering into, with the agreement been viewed by the court as fair and reasonable under section 57 of the Solicitors Act 1974. I have no doubt this case will be referred to again and again when courts look at fairness of damages based agreements.

I also reported on the news that uniform electronic civil bills were likely to be introduced in 2017. This is perhaps one small but important unfinished business from Lord Jackson’s reforms.

6

AJA Legal Services Ltd

Costs Lawyer/Costs Draftsman/Mediator

Storey and Fellows

We deal with all aspects of costs including

High Court Enforcement and Debt solution

Partes. The bill or claim form can be of any

bill preparation both Legal Aid and Inter

size and we offer a custom fit service to suit your needs.

Executing High Court Writs for over 30 years

Tel: 020 8302 2467

Email: avril.ashley@ajalegal.com Twitter: @thecostlawyer

Click Here For Enquires

LinkedIn: Avril Ashley

hceo@albertchambers.co.uk

the

CPD Webinars 2017 SOLICITORS group

Notes/Slides provided | 1hr CPD per Webinar | All Webinars CPD Accredited | Packages to suit your firm

NEW

Quality Training FOR LESS

Mandatory from 1st November 2016

Complete all 4 sections of the SRA Competency Statement with our CPD Webinars

Available Online or via DVD or CD Viewers

SERVICES

WATCH:ONLINE

Hawkins is a well established and well respected firm of forensic scientists that investigates the full range of losses including fires, explosions, accidents and engineering problems

6

Hours

£199+vat

£54+vat

£249+vat

Civil Litigation

Employment

Personal Injury

Commercial Litigation

Family

Residential Property

Commercial Property

Financial Management & Compliance

Wills & Probate

Company/Commercial Law Criminal Law

UK OFFICES

£44+vat

Departments? Please Call

CPD TOPICS AVAILABLE:

READ MORE

London New London House, 6 London Street, London EC3R 7LP, T: +44 (0) 20 7481 4897 E: london@hawkins.biz

Hour

£34+vat £149+vat

LEADERS IN FORENSIC INVESTIGATION ABOUT US

1

Immigration

BOOK NOW 01332 226601 7

► Visit: thesolicitorsgroup.com

SRA Competency Parts A, C&D

6 HOURS+vat CPD ONLY £149

In the June edition, I covered the background to the new test of proportionality in CPR rule 44.5(3) and the recent case from the SCCO, BNM -v-MGN Limited [2016] EWHC B13 (Costs). In applying the new test proportionality, the court held that proportionality should prevail over reasonableness and the proportionality test should be applied on a global basis.

I also commented on the developments with the so-called online courts, which was part of the Briggs Review of the civil court structure. This development must be seen in the context of a wider, modernising agenda; although many practitioners, including myself, are at a loss to understand the rationale behind this given the poor resources afforded to the current system.

In July, I covered a little gem of a case, Webb Resolutions v Countrywide Surveyors (unreported – High Court 4 June 2016) where costs were awarded against a party even though a claim form had not been served. This is a real elephant trap for civil practitioners and clients, who may think that issuing protective proceedings will not result in any adverse cost consequences.

In August, I returned to the nebulous concept of proportionality, in particular, I covered the SCCO case of May v Wavell Group [2016] 3 Costs L.O 455. This case gave us a clear, if not brutal, insight of into what this concept really means in practice: “It is not the amount required to achieve justice in the eyes of the receiving party but only a contribution to that receiving party’s costs….”.

In September, I covered in some detail the Supreme Court decision in Hayward v Zurich Insurance Co Plc [2016] UKSC 48. For those of us who have long forgotten what we were taught at university on esoteric torts, we have a clear summary of the principles of the law of deceit and how it can be used to set aside an agreement between the parties. Although this was in the context of a personal injury claim, it is still relevant to other damages based settlements.

I also reported in the same month, yet another, Supreme Court decision in Willers v Joyce and Another[2016] UKSC 43, when it was held that the tort of malicious prosecution includes the prosecution of civil proceedings as well as criminal proceedings.

As busy practitioners, we take little notice of reform type statements but in October I summarised in detail some of the key proposals that were set out in a remarkable document, from the Lord Chancellor, the Lord Chief Justice and the Senior President of Tribunals who issued a consultation ‘Transforming Our Justice System’. This document was remarkable because it covered wide ranging reform plans which would affect fundamentally civil justice in England and Wales.

8

Throughout the year there had been a number of cases which had caused disquiet amongst practitioners, where inadequate court fees were paid. I had previously covered, in an earlier Edition of Litigation Line, the case of Lewis v Ward Hadaway [2016] 4 WLR 6 and the consequences of failing to pay the correct court fee on issue.

I then covered in the November edition an eminently pragmatic judgment of Mr. Justice Stuart-Smith in Dixon -v- Radley House Partnership [2016] EWHC 2411 (TCC). In summary, he held that in the absence of abusive behaviour, even if the wrong court fee was paid, that was still effective and would also stop the clock from a limitation point of view.

At the end of the year, I also reported on the review commissioned by Lord Chief Justice, Lord Thomas, and the Master of the Rolls, Sir Terence Etherton, of fixed recoverable costs, to be undertaken by Lord Justice Jackson by 31 July 2017. We knew then, and now of course know, how significant this review was in terms of the future impact on costs entitlement for clients, lawyers and other parties.

That concludes my brief review of last year and no doubt-if anything is certain in the world of civil litigation - the scale and pace of change will continue.

FREE E-Publications

the

SOLICITORS group

Get instant access to an omnibus of legal updates, across a range of legal practice areas, free of charge.

Sign up today ► Visit the website: www.thesolicitorsgroup.com

Not yet registered or referred by a friend? Sign up today to receive the latest updates.

► Select ‘Publications’ from the top navigation ► Select which publication you want to view ► Enter your name and email address It’s that simple, you will be emailed when further updates are available.

9

Conferences / Webinars / CDs / DVDs / E-Publications / InHouse / Consortium

December 2015 82nd Update to CPR: Key Changes

We now have the 82nd Update to the Civil Procedure Rules. Amendments to rules came into force on 3 December 2015, practice direction changes come into force on two dates in November. The changes are set out full in the Statutory Instrument and Practice Direction and appear on the court service website.

The key changes are set out below: Part 26 – Case Management – preliminary stage Amendments make provision that in a County Court claim for a specified sum of money only the claim will be sent to the defendant’s local hearing centre, if and when a hearing is required, if the defendant is an individual. In all other cases, the claim will be sent to the claimant’s preferred hearing centre as indicated on the claim form or directions questionnaire. Other amendments are made within the same rule to make clear where claims must be sent where a claimant specifies on the directions questionnaire an alternative hearing centre to that indicated on the claim form; and where the defendant indicates on the directions questionnaire an alternative hearing centre to the hearing centre local to their address. The amendments come into force on 3 December 2015.

Practice Direction 2C Starting Proceedings in the County Court The amendment provides for the issue of proceedings under the Companies Acts at the Central London County Court hearing centre rather than in the High Court. The changes come into force on 7 December 2015.

Practice Direction 5B Electronic Communications and Filing of Documents The existing practice direction is replaced to give effect to changes that will allow increased communication with and by the County Court by way of e-mail, and to

10

remove references to services which are no longer operational. The changes will come into force on 7 December 2015.

PD51O The Electronic Working Pilot Scheme The existing pilot scheme (as set out in Practice Direction PD51J) allowing for the electronic filing of claims and subsequent documents in the Technology and Construction Court is replaced. The new scheme extends the pilot to the Chancery Division, the Commercial Court, the Mercantile Court, and the Admiralty Court (“the Rolls Building Jurisdictions”). Compliance with the pilot scheme is not mandatory. The scheme will operate for one year from 16 November 2015.

(See below for more details) E Filing: News from the CPR Committee Electronic filing for cases in the Rolls Building in London should become mandatory if not enough parties take it up voluntarily, the Civil Procedure Rule Committee has been advised.

Vannina Ettori, legal adviser to the chancellor of the High Court, said the CE-File Project Board set up to implement the filing system favours making it mandatory for all users.

E-filing has been subject to a voluntary trial in the Technology and Construction Court since April, with the scheme extended to all courts in the Rolls Building from this week.

In a paper presented to the Civil Procedure Rule Committee in October, published last week, Ettori said the voluntary pilot had been ‘satisfactory’ enough to test in other courts.

But data from Thomson Reuters confirmed that uptake in jurisdictions where use of such systems had not been mandated had stalled at 30%.

She said: ‘The system is hugely beneficial and cost saving for HMCTS – it provides with the click of a button statistics and management information about the work of the courts that otherwise would have to be compiled manually over many hours, incurring staff costs, and incorporating errors and uncertainties.

‘It streamlines the filing process and modernises it, allowing parties to file online 24

11

hours a day seven days a week, and therefore greatly reduces the time spent by staff manning the counters at the Rolls Building reception.’

Ettori said the CE-File board has considered the effect of mandating the system on litigants in person, with one possibility being to make the system mandatory for solicitors and barristers but not for LiPs. Another option may be to provide access to online filing through a terminal at the Rolls Building or – for a small fee – offering to create electronic files from a paper file provided by the litigant.

A report on the success of the test scheme and any possible amendments will be submitted by April 2016.

CPR 36: Clarification Requests Practitioners often fail to request clarification of a Part 36 offer when the offer is ambiguous. CPR 36.8 states “(1) The offeree may, within 7 days of a Part 36 offer being made, request the offeror to clarify the offer”.

In Bailes -v- Bloom (23/11/2015, Simler J QBD gave some helpful guidance and where clarification had been provided it will have an important impact upon the order for costs. In this case, after the defendant had given clarification of the offer, the claimant had all the information needed to understand the valuation and if the claimant had refused to accept then this could be taken into account.

Trial Judge’s View on Costs Budgets and Interim Payments At the end of the trial, seasoned litigators will quickly focus on costs and with the new regime for costs management will look at whether the costs have come in under budget or exceeded the approved budget. An interim payment will be sought before the Trial Judge has time to put down their pen!

We have from the judgement of HH Judge Pelling QC (sitting as a High Court Judge) in Capital for Enterprise Fund AP -V- Bibby Financial Services Limited (Chancery Division, Manchester, 18/11/2015) a fascinating insight into these issues. During the course of the matter the Defendant had greatly exceeded its approved costs budget but had not made an application to increase the budget. I have set out below the key parts to this judgment: 12

3.

It is common ground that:

I.

The Court does not have jurisdiction to amend an approved costs

budget after trial – see Elvanite Full Circle Limited v. AMEC Earth &

Environmental (UK) Limited [2013] 4 Costs LR 612, for the reasons

identified by Coulson J at paragraph 39;

II.

The only power to depart from a budget is that conferred by CPR

r.3.18 which confers such a power only on a court “… when assessing

costs on the standard basis” and even then only where “…there is

good reason to do so”.

In this case, as all parties either expressly or impliedly recognise, the only judge that will assess the Defendant’s costs on a standard basis will be a costs judge in the event that costs cannot be agreed and assessment proceedings are commenced by the Defendant. It follows that (i) no one has jurisdiction to amend the Defendant’s approved costs budget after trial; and (ii) I do not have jurisdiction to depart or direct the costs judge to depart from it.

4.

Mr Mills’ submission is that I nonetheless have jurisdiction to give an indication

or at any rate am entitled to order an interim payment on account of costs

on the basis that such a departure will be authorised. In my judgment some

care is required here. Although Coulson J was willing to express his views as

to whether there should be such a departure in Elvanite (ante), that was only

on the basis that the parties were agreed that he should do so. Whilst I

accept that the parties cannot confer on a court a jurisdiction it does

not have by agreement, I consider the level of agreement between the

parties inElvanite severely limits its as an authority for the proposition

advanced by Mr Mills because the issues of jurisdiction was not considered or

in dispute. Similar considerations apply to Board of Trustees of National

Museums and Galleries on Merseyside v. AEW Architects and Designers

Limited [2013] EWHC 3025 (TCC); [2014] 1 Costs LO 39 because there both

parties had applied for an increase in budget, the application was not

determined through oversight neither was challenging the other’s revised

budget. Thus again the jurisdictional issues that arise were not in issue between

the parties as far as I can see.

5.

In addition, real caution is needed in this area because (absent express or

implied agreement of the parties to an indication being given) the effect of

an indication by a trial Judge could be construed as being an interference

13

with the independent decision making of the judge actually tasked with

deciding whether to departure was justified. Whilst I can see that it might be

said of this approach that it might force the commencement of detailed

assessment proceedings that could otherwise be avoided, that has to

be balanced against the points that it was open to a party in the position

of the Defendant either to apply to vary its budget or to oppose any

application to vary previously made case management directions on the

basis that it would necessitate an application to vary its costs budget and that

there was insufficient time before trial to make such an application.

6.

In the circumstances of this case, I consider it inappropriate for me to give

the indication sought. First, I consider it doubtful that I have jurisdiction to

do for the reasons that I have given. Secondly, if, contrary to my view, I do

have jurisdiction then I decline to exercise it in the circumstances of this case

for the following reasons.

7.

If there is jurisdiction to do as the Defendant asks, it is a jurisdiction that

should be exercised only in exceptional circumstances since (i) it amounts

to an interference with the decision making of the costs judge; (ii) it

undermines the costs code that now applies – if such indications were given

on a routine basis then it would undermine the costs management regime

for each and all of the reasons identified by Coulson J in paragraph 39 of his

judgment in Elvanite (ante) as to why the court does not have jurisdiction

to amend approved costs budgets after judgment; and (iii) in many and

perhaps most cases there is a perfectly adequate remedy available namely

to apply for a variation of the previously ordered costs budget in accordance

with the costs code within the CPR. This leads me to conclude that the court

should give the sort of indication sought by the Defendant here (if there is

jurisdiction) only where the parties expressly or impliedly agree that it is

appropriate to do so.

Interim Payment on Account 10.

In my judgment the court has jurisdiction to direct an interim payment on

account of costs and to do so without a separate Part 23 application being

made – see CPR r. 44.2(8), which imposes on the court a requirement to

make such an order in every case where it orders a party to pay costs subject

to a detailed assessment. Secondly I do not accept the submission made

on behalf of the Claimant that no such Order ought to be made because an

14

initial letter written by the solicitors acting for the Defendant was written

on behalf of another company within the Bibby Group. Those solicitors acted

throughout on behalf of the Defendant and it is the Defendant that is entitled

to recover its costs. There is no evidence at all that supports the implicit

proposition advanced by the Claimant that the costs incurred in defending

the claim were not costs incurred and payable by the Defendant.

11.

It is submitted by the Claimant that the payment on account should be no

more than 70% of 70% of the Defendant’s approved budget costs. The

Defendant submits that the sums should be 90% of its approved budget costs

following the decision of Birss J in Thomas Pink Limited v. Victoria’s Secret

UK Limited [2014] EWHC 3258, assuming that I am against the Defendant in its

submission that I ought to assess the interim payment on account on the basis

that the approved budget will be departed from.

12.

I accept the submission that the starting point is 70% of the Defendant’s

approved budget costs, because I have directed that the Defendant should

recover 70% of its costs of and occasioned by the claim to be assessed at a

detailed assessment on the standard basis. I do not accept that Thomas Pink

Limited v. Victoria’s Secret UK Limited (ante) establishes any principle other

than that the sum that ought to be awarded by way of a payment on

account should be higher in a case where there has been cost budgeting

than in cases where there has not. Ultimately all costs issues involve a case

and fact specific exercise of discretion.

13.

In all cases where an interim payment is being considered it is necessary

to balance the need to ensure that any sum ordered does not exceed the

sum ultimately assessed to be due against a number of other factors including

the fact that the receiving party has succeeded, and that it will be kept out of

the money it is entitled to receive until the assessment proceedings are

concluded. As to the first of these factors, the budget establishes a ceiling but

it does not follow that the receiving party will be entitled to recover the whole

sum budgeted.

Prior to 1 April 2013, it was common for payments on account to be directed in a range of between about 50% and about 70%. To direct an interim payment at 90% of the approved budget involved the court having a high level of confidence that the receiving party will recover at least 90% of its budgeted costs on assessment. In many cases (including in my judgment this one) the material available will not permit

15

the court to have such a high level of confidence. 70% of the Defendant’s approved budget is £206,072.30. In my judgment the appropriate interim payment is £165,000 – that about 80% of 70% of the Defendant’s approved budget.

Wasted Costs Orders and Court Directions In F-v-M [2015] EWHC 3259 (Fam) Mr Justice Cobb made a wasted costs order against a firm of solicitors. The judgment is another reminder of the powers which the courts have and which are exercised if there is a failure to comply with court directions and court orders: “Whether difficulties in complying with court orders arise out of funding difficulties or otherwise, solicitors must be assiduous in ensuring compliance, or seeking specific alternative direction from the court.”

“Failure to lodge the bundle in an effective and timeous way was a failure on the part of the solicitor which caused considerable disruption to my own preparation of the case for hearing.”

Don’t miss out on the latest updates...

► Visit the website: www.thesolicitorsgroup.com ► Select ‘Publications’ from the top navigation

Sign up today

► Select ‘Property Publication’ ► Enter your name and email address It’s that simple, you will be emailed when further updates are available.

Not yet registered or referred by a friend? Sign up today to receive the latest updates.

16

Conferences / Webinars / CDs / DVDs / E-Publications / InHouse / Consortium

the

SOLICITORS group

CPD Webinars

2017

Notes/Slides provided | 1hr CPD per Webinar | All Webinars CPD Accredited | Packages to suit your firm

Quality Training FOR LESS

NEW

Mandatory from 1st November 2016 Complete all 4 parts of the SRA Competency Statement

Available Online or via DVD or CD the

SOLICITORS group

WATCH:ONLINE Viewers

1

Hour

6

Hours

WATCH:DVD Viewers

1

Hour

6

Hours

LISTEN:CD Viewers

1

Hour

6

Hours

£34+vat £149+vat

£36+vat £169+vat

£36+vat £169+vat

£44+vat

£199+vat

£46+vat

£209+vat

£46+vat

£209+vat

£54+vat

£249+vat

£56+vat

£259+vat

£56+vat

£259+vat

Departments? Please Call

Departments? Please Call

Get instant access to an omnibus of CPD TOPICS AVAILABLE: legal updates, across a range of legal practice areas, free of charge.

Departments? Please Call

Civil Litigation

Employment

Residential Property

Commercial Litigation

Family

Wills & Probate

Commercial Property

Financial Management & Compliance

SRA Competency Parts A, C & D

Company/Commercial Law

Immigration

Sign up today

Injury Criminal Not yet Law registered or referred Personal by a friend? Sign up today to receive the latest updates.

BOOK NOW 01332 226601

6 HOURS CPD ONLY £149

+vat

► Visit: thesolicitorsgroup.com

17

January 2016 Failure to Mediate: Winner or Loser?

Last year saw an increase in the number of cases where it was submitted there should be costs penalties over the failure of a party to agree to mediate.

My predication for this year is that this trend will increase, with a distinct body of law emerging to allow practitioners to understand fully what advice to give to their clients about the perils of not agreeing to mediation.

In Reid -v- Buckinghamshire Healthcare NHS Trust [2015] EWHC B21, the claimant beat its own Part 36 offer on costs. As a result, costs were increased by 10% and additional interest accrued. Master 0’Hare, in assessing the costs in this clinical negligence case, made an important point about a failure to mediate where the losing party was the one who had failed to agree to mediation: “I want to end with a brief note of caution about sanctions imposed on parties who unreasonably refuse to mediate. Case law on this topic is largely about penalties imposed on parties who are in other respects the successful party. In Halsey v Milton Keynes NHS Trust [2004] EWCA Civ 576 and in other cases, penalties imposed upon winners. They do not involve the imposition of further penalties upon losers. One can see that throughout the judgment in Halsey. I will read out a sentence from paragraph 28: “As we have already stated, the fundamental question is whether it has been shown by the unsuccessful party that the successful party unreasonably refused to agree to mediation.”

There are many other such references to this being a penalty against winning parties, for example, see paragraphs 13 and 34.

If the party unwilling to mediate is the losing party, the normal sanction is an order to pay the winner’s costs on the indemnity basis, and that means that they will have to pay their opponent’s costs even if those costs are not proportionate to what was at stake. This penalty is imposed because a court wants to show its disapproval of their conduct. I do disapprove of this defendant’s conduct but only as from the date they are likely to have received the July offer to mediate.”

18

Public Contracts and Procurement: Legal Challenges In Energysolutions EU Limited -v- Nuclear Decommissioning Authority[2015] EWCA Civ 1262, the Court of Appeal has given unsuccessful bidders for public contracts a sigh of relief. The case concerns specific breaches of the Public Contracts Regulations but there are some wider issues relating to injunctions.

The Facts Energy Solutions EU Limited (“Energy Solutions”) was part of a consortium called “Reactor Site Solutions” (“RSS consortium”) which tendered for a major nuclear decommissioning contract procured by the NDA. The RSS consortium subsequently wrote to the NDA expressing concerns about the adequacy of the procurement process but decided not to issue proceedings during the standstill period and thereby bring into play the automatic suspension provisions under the Public Contract Regulations 2006 (the “Regulations”). Energy Solutions subsequently issued proceedings claiming damages from the NDA of approximately £100m in respect of the loss of profit that it would have earned had the contract been awarded to the RSS consortium.

Held: The appeal to the Court of Appeal was concerned two preliminary issues which had been tried by Edwards-Stuart J. The first issue was whether the failure by Energy Solutions to issue a claim form, and inform the NDA it had done so, before the NDA entered into the contract effectively deprived it of the ability to claim damages (this was on the basis that the failure broke the chain of causation between any breaches of the NDA’s obligations and the loss suffered by Energy Solutions). The second issue was whether the English court had a discretion when deciding whether to award damages, even if Energy Solutions could establish that it had suffered loss as a result of the NDA’s alleged breaches of its obligations under the Regulations.

The key parts of the judgement are set out in the extracts below: “73

In my judgment, however, this kind of speculation was unnecessary to provide

a clear answer to the first preliminary issue. Neither party has been able to

point to any authority in English law whereby a claimant has been deprived

of damages otherwise payable on the basis that it failed to seek an

interlocutory injunction. That, as it seems to me, may be partly because

an injunction has always been an equitable remedy, so that it would be

counter-intuitive for an English lawyer to contend that it might be incumbent

on a party to apply for such a remedy. Where the claimant has a common

law cause of action, like a claim for breach of statutory duty, that claim

entitles the claimant to damages to be determined and assessed on normal

principles. It does not entitle the claimant to an equitable remedy, though the

19

court may think it appropriate, if asked, to grant one whether at an interlocutory or a final stage” 74

The NDA does not much resist these points. Its skeleton accepts that

applications to lift the suspension are in effect considered as if they were

applications for an interim injunction, even though they work the other way

around, and that normal American Cyanamid Co v. Ethicon Ltd [1975]

AC 396 principles are applied. Rather, the NDA submits that the CJEU

authorities compel the application of an EU law principle that a claimant

which fails to avail itself of all available legal remedies may be deprived of

its damages. That so-called principle is most clearly stated in paragraph 84

of the Brasserie du Pêcheur case that I have already cited. The CJEU said that

“in order to determine the loss or damage for which reparation may be

granted, the national court may inquire whether the injured person showed

reasonable diligence in order to avoid the loss or damage or limit its extent

and whether, in particular, he availed himself in time of all the legal remedies

available to him” (my emphasis). As I have already made clear, the CJEU

was not laying down any principle that was mandatorily applicable, whatever

was provided for in domestic law. It was simply drawing attention to the fact

that this might be an appropriate approach. Even if it were part of the

Francovich conditions, it would remain a minimum standard, so that it must

be open to national law to apply a more generous approach to the award of

damages. Any other result would violate the principle of equivalence.

75

In short, it seems to me that if, as a matter of English law, there is no legal

principle allowing for a claimant to be deprived of its damages for failing

to apply for interim discretionary relief, such a principle cannot be overlaid by

EU law to the detriment of the claimant injured by the infringement of his EU l

aw rights transposed into English law.

76

Finally, in this connection, there is nothing in either the Remedies Directive or

the Regulations to suggest that a person whose rights under these instruments

have been infringed should be deprived of damages because of a failure

to invoke any other available remedy. The standstill and court application

regime is available as an option to the unsuccessful tenderer. Had the

legislators wished to make it a pre-condition to the availability of damages,

they could easily have said so.

20

77

In my judgment, therefore, the answer to the first preliminary issue ought to

have been “no”. I would therefore allow the appeal on this issue.”

Shutting out an Expert Witness: A Word from Sir Rupert The decision of the Court of Appeal in O’Connor -v- The Pennine Hospitals NHS Trust [2015] EWCA 1244 is yet another case warning to solicitors about obtaining expert evidence until late in the day; here we have the refusal to allow a party (here, a defendant) to adduce expert evidence: directions and orders in the post-Denton world are still to be obeyed at all costs.

The Key Issues.

The claimant brought an action for clinical negligence because of injury to her femoral nerve during an operation. The parties were given permission to rely upon three expert witnesses. Following a joint meeting, the defendant sought permission to rely upon the expert evidence of a Professor Aitkenhead. The District Judge subsequently refused that application and gave the defendant permission to put questions to one of the claimant’s doctors instead. The defendant chose not appeal that decision, nor did they apply to review the decision once they had received a reply from the claimant’s doctor. At the beginning of the trial the defendant sought permission to rely upon Professor Aitkenhead.That application was refused by the trial judge on the grounds that developments did not justify a new report; the application was first foreshadowed in the defendant’s skeleton argument; it would lead to the trial being adjourned and costs increasing; the 2013 reforms militated against an adjournment being allowed.

The Court of Appeal Decision The defendants appeal was heard by Sir Rupert Jackson who dismissed their arguments in a customary terse fashion: Part 5. Did the judge err in refusing to allow additional expert evidence?

48

This ground of appeal is so obviously misconceived that I hope the parties will

forgive me for dealing with it in short order.

49

The views of the expert witnesses developed as more factual evidence

became available and as discussions between the experts proceeded. For

example, the views of Mr Desmond changed both dramatically and

favourably to the defence case when he prepared his second expert report in

August 2013.

21

50

The main change of opinion on the part of Dr Simpson occurred in April

2013, when she responded to the defendant’s questions pursuant to District

Judge Hovington’s order. Dr Simpson’s further shift of opinion between April

and September 2013 was more modest. Indeed the only reason for her letter

of 22nd September 2013 was the need for an expert response to Mr

Desmond’s report dated 10th August 2013. The proposition that Dr Simpson’s

change of emphasis in her September letter somehow entitled the defendant

to bring in a new expert witness is untenable.

51

There are also wider considerations in play. The application for permission to

call an additional expert was made at the latest possible stage, namely

on the first day of trial. If the judge had granted the application, that would

have necessitated an adjournment of the trial with consequential delay and

massive extra costs.

52

Following the civil justice reforms of 2013, that is simply not how we do things

now. See the majority judgment of the Court of Appeal in Denton v T.H.White

Ltd [2014] EWCA Civ 906; [2014] 1 WLR 3926. Also – dare I say it – paragraph 89

of the third judgment in Denton is directly pertinent.

53

If the judge had granted the defendant’s application, I imagine that the

claimant would have launched an urgent appeal. Even though the issue was

one of case management (where judges have a broad discretion) I do not

see how a decision to abort a clinical negligence trial on day 1 for the benefit

of a dilatory defendant could possibly be justified.

Don’t Forget the Court Fee! His Honour Judge Lopez has been a busy Circuit Judge in the Birmingham County. I have counted four important cases from this Judge in the past year and have been before him myself – he is a pragmatic straightforward judge.

In Price -v- Egbert H Taylor Limited (Birmingham County Court 2nd October 2015) a notice of application was sent without a court fee and the action was consequently struck out. The history does not make good reading for the claimants solicitors.

The claimant issued proceedings seven days before the expiration of the limitation period. Prior to the date for service they applied for an extension of time for service of the claim form, Particulars of Claim and Schedule of loss. Time was extended to the 25th November 2014.On the 17th November 2014 the claimant made a further

22

application to extend time. On the 10th December 2014 the court further extended time to the 10th March 2015. On the 22nd December 2014 the defendant’s solicitors applied to set aside the order. On the 16th January 2015 the case was transferred to Birmingham. The court listed the hearing to be heard on the 9th April 2015 and that order was served on the claimant’s solicitors. On the 5th March 2015 (within the existing extension) the claimant’s solicitors sent a copy of a further application (the third application) to extend time to the court. However the application was made to Northampton and not Birmingham. Further the claimant failed to send the fee of £50.00.The application was received at Northampton and marked “no fee enclosed”. That application was sent by Northampton to Birmingham County Court who returned it to the claimant’s solicitor on the 18th March 2015 stating that a fee was needed.

On the 19th March 2015 (outside the extension period) the claimant’s solicitor resubmitted the application with the fee. The application to extend time and the application to set aside the original order were heard at the same time on the 9th April 2015.

The district judge refused the claimant’s application and struck the claim out with costs. HHJ Lopez upheld this decision, stating: “… there [are] numerous authorities which caution that a party leaving things to the last minute runs a very serious risk. In short, if applications are made at the last minute there may be insufficient time for errors in the application to be corrected. That is particularly important when an extension of time is required. The existence of that obvious risk is important to the running of litigation generally in that it promotes doing things in plenty of time; paying fees with application.”

I find that the Appellant’s reliance on Part 23.5 misunderstands the purpose of that rule which provides that an application is made when received by the Court and not when it is heard or determined by the Court or even when date stamped by the Court. It is not an exception to the general rule that Court fees must be paid. If the application did not have a fee with it was not a properly constituted application – as found by the Learned Deputy District Judge. I accept the submissions on behalf of the Respondent on the point.”

Practitioners will be even more careful now given the restructuring of the court service where their local issuing courts no longer issue and significant court fees have to be paid if a claim form has to be issued, which in my view will be treated in the same way as the above case.

23

Delay in Funding and the Legal Aid Agency In R (Kigen) -v- Secretary of State for the Home Department [2015] EWCA Civ 1286 the Court of Appeal stated that delay caused by waiting for the Legal Aid Agency may no longer be accepted as a “good reason” for the court to exercise its discretion in dealing with applications to extend time. In a key, and, in my view, a deeply worrying passage the Court of Appeal stated: “…solicitors in general may have been under the impression that any delay awaiting a decision by the Legal Aid Agency would simply be ignored if an extension of time were required as a result. That is not the case and it is to be hoped that any such misunderstanding will have been dispelled as a result of the decision in this case.

Those acting for parties in the position of these appellants will in future need to take steps either to lodge the necessary form promptly on behalf of their clients or to advise them of the need to do so on their own behalf.”

In a nutshell, this now leaves a solicitor, when faced with the possible breach of an order because of delay arising out of funding, setting out clearly to the client that they must comply as litigants in person. A failure to do so in my view could lead to potential loss of prospects claim.

Don’t miss out on the latest updates...

► Visit the website: www.thesolicitorsgroup.com ► Select ‘Publications’ from the top navigation

Sign up today

► Select ‘Property Publication’ ► Enter your name and email address It’s that simple, you will be emailed when further updates are available.

Not yet registered or referred by a friend? Sign up today to receive the latest updates.

24

Conferences / Webinars / CDs / DVDs / E-Publications / InHouse / Consortium

the

SOLICITORS group

CPD Webinars

2017

Notes/Slides provided | 1hr CPD per Webinar | All Webinars CPD Accredited | Packages to suit your firm

Quality Training FOR LESS

NEW

Mandatory from 1st November 2016 Complete all 4 parts of the SRA Competency Statement

Available Online or via DVD or CD the

SOLICITORS group

WATCH:ONLINE Viewers

1

Hour

6

Hours

WATCH:DVD Viewers

1

Hour

6

Hours

LISTEN:CD Viewers

1

Hour

6

Hours

£34+vat £149+vat

£36+vat £169+vat

£36+vat £169+vat

£44+vat

£199+vat

£46+vat

£209+vat

£46+vat

£209+vat

£54+vat

£249+vat

£56+vat

£259+vat

£56+vat

£259+vat

Departments? Please Call

Departments? Please Call

Get instant access to an omnibus of CPD TOPICS AVAILABLE: legal updates, across a range of legal practice areas, free of charge.

Departments? Please Call

Civil Litigation

Employment

Residential Property

Commercial Litigation

Family

Wills & Probate

Commercial Property

Financial Management & Compliance

SRA Competency Parts A, C & D

Company/Commercial Law

Immigration

Sign up today

Injury Criminal Not yet Law registered or referred Personal by a friend? Sign up today to receive the latest updates.

BOOK NOW 01332 226601

6 HOURS CPD ONLY £149

+vat

► Visit: thesolicitorsgroup.com

25

February 2016 Universal Fixed Costs for Civil Claims up to £250,000

Lord Justice Jackson delivered an important speech on the 28th January 2016, Fixed Costs –The Time Has Come. I have included the link to Sir Rupert’s speech in full www. judiciary.gov.uk/announcements/speech-by-lord-justice-jackson-fixed-costs-thetime-has-come, which not surprisingly has found favour with the MOJ. It was perhaps an open secret that he would propose a universal fixed costs regime for all civil case up to £250,000.

In my view, the issue is not if these proposals will be implemented but when and the amounts that are set in the Jackson “Grid”. The “Grid”, referred to in his speech, is very similar to the costs matrix which personal injury practitioners are familiar with in fast track cases. Oddly, we do not know if it includes VAT or if any disbursements can be claimed. More importantly, the figures are not based upon any empirical research underpinning recovery rates in civil claims.

For those who do not have time to read his speech, the key parts are set out below: “The purpose of this lecture is to argue that we should now introduce an extensive regime of fixed costs for civil litigation as proposed in chapters 15 and 16 of the Review of Civil Litigation Costs Final Report. In the light of recent developments the time is now ripe to take this substantial step…”

“A fixed costs regime provides certainty and predictability. This is something which most litigants desire and some litigants desperately need. A fixed costs regime is easier for solicitors to explain to clients than the current costs rules. Also a fixed costs regime dispenses with the need for costs budgeting and costs assessment.

This will achieve (a) a substantial saving of costs for the parties and (b) a substantial reduction in the demands made upon the resources of the court”...

“The first question is whether we should be fixing costs for all civil cases (like Germany and New Zealand) or just for the fast track and the lower reaches of the multi-track.

26

This is a policy decision for others. I would favour the latter course (as recommended in my Final Report), but I acknowledge that some favour the former course. There are two particular reasons why I favour adopting the latter course: (i) Switching to a totally fixed costs regime for all claims, however large, would be too great a change for the profession to accept, certainly in the short term. The justice system only functions because of the high level of support which the profession provides. (ii) Reform is best done incrementally, so that we can see how it is working out. That is why (in FR chapter 16) I recommended deferring consideration of fixed costs in the multi-track until after the implementation of the fast track and IP Enterprise Court reforms. Those reforms are now largely in place and they are successful. It is therefore 11 appropriate to move on to fixing costs in the lower reaches of the multi-track.

Once that regime is in place, people can see how it works and consider whether to introduce a universal fixed costs regime”...

“Avoid Balkanisation. If we are moving to a fixed costs regime for the lower reaches of the multi-track, it is essential that we create a coherent structure. What we do not want to have is a series of separate grids for different types of cases. There should be single fixed costs grid for all multi-track cases up to £250,000. In so far as particular areas of work merit additional costs, the rules can provide percentage uplifts 14 for specified types of case. I am aware that the Department of Health is proposing to introduce a scheme of fixed costs for clinical negligence claims. That would start to take us down the Balkanisation route. I suggest that a better approach would be to include clinical negligence claims in an all embracing fixed costs regime, as proposed above”...

What should happen next? First stage: I suggest that the Government (after consulting appropriately) should take the axial decision whether to have a totally fixed costs regime or – at least at this stage – merely to fix costs for the lower reaches of the multi-track. That is a political decision, which must take into account the views court users, practitioners, judges and all other stakeholders. Second stage: Once the Government has taken that axial decision, the next stage will be to draw up the details of the new fixed costs regime. If the Government does not wish to pursue this reform as a priority or if for reasons of resources it cannot do so, then I suggest that a senior judge who doesn’t mind being pilloried (preferably not me again) should actually draw up the scheme. That judge would consult widely. She/he would be aided by assessors, but not bound by any of their (inevitably conflicting) views. The assessors should include practitioners, court users and an economist. Obviously the judge’s recommendations would then fall to be considered by the Government and the Rule Committee, in the usual way.

27

Preliminary Points Need Clarity In a recent High Court case, Larkfleet -v- Allison Homes Eastern Limited [2016] EWHC 195 (TCC), practitioners, and judges, were reminded once again of the need to ensure that there must total clarity when a court orders the trial of a preliminary issue of law. The old adage of rubbish in and rubbish out seems apt in a judicial context.

The court made pointed out that the claim (a complex construction case, with limitation issues) was highly fact-sensitive but no attempt had been made to establish the factual premise for the issue of law on which the judge was invited to rule.

“As Lord Scarman observed in Tilling v Whiteman [1980] AC 1, 25: ‘Preliminary points of law are too often treacherous short cuts’. The dangers are all the greater where, as here, the preliminary issues are set in motion in a casual and unstructured way”; The right approach to preliminary issues should be (inter alia) that the questions should usually be questions of law and should be decided on the basis of a schedule of agreed or assumed facts”

CPR 36: Two Important Cases The “Near Miss” Rule and Permissible Optimism It is not often that the Court of Appeal hears arguments about whether or not a party has beaten a Part 36 offer. The so called “near miss” rule developed in Carver v BAA, and then quietly reversed in Gibbon v Manchester City Council, and then safely put to bed by the rules committee has occasionally reared its head.

I was the instructing solicitors in Carver so I know what’s like to win but then to lose, so I have every sympathy for anyone who finds themselves in the same position, because not getting your costs when you win is simply not fair play to me.

An attempt was made in Hammersmatch Properties (Welwyn) Ltd v Saint Gobain Ceramics and Plastics Ltd & Anor [2013] EWHC 2227 (TCC), where the defendant argued that by rejecting the part 36 offer and pressing ahead without making a realistic counter offer (the claimant’s part 36 offer was £3.2m), the claimant was no better off than it would have been if it had accepted the offer and that carrying on the litigation after the £1m offer was wholly disproportionate and a waste of time

28

and resources.Ramsey J refused to allow this with a strong message that the courts must now allow back door routes to the near miss rule.

Fast forward 3 years, and we have the Court of Appeal overturning a first instance decision which had ordered the claimants to pay the defendant’s costs for the period following the defendant’s Part 36 offer, even though the claimant had beaten the offer by about 10%: Sugar Hut Group Ltd & ors v AJ Insurance Ltd (a partnership) [2016] EWCA Civ 46.

The Facts The claimants brought a negligence claim against their insurance brokers, after their insurers avoided the policy for non-disclosure. The parties agreed liability on the basis that the defendant would pay 65% of the claimants’ recoverable losses. A number of heads of loss were agreed and the defendant made interim payments, but the parties were unable to agree the quantum of business interruption losses and interest.

At trial, the claimants were awarded some £277,000 after deducting the interim payments. This was based on a figure of £568,670 for business interruption losses and interest at 5% for the whole period claimed.

Part 36 and Calderbank offers had been made on both sides, but it was common ground that none had been “effective”; the claimants’ offers had been higher than, and the defendant’s offers had been lower than, the amount awarded. The last of the Part 36 offers made by the defendant had offered to settle for a payment of £250,000 net of the interim payments. The letter explained that offer had been calculated on the basis of a figure of £600,000 for business interruption losses and interest at 2.5% over various periods.

The High Court ordered the claimants to pay the defendant’s costs for the period from 21 days after the Part 36 offer (save for the costs relating to the issue of interest, which the defendant would pay to the claimants). The claimant appealed, arguing that the judge had, in effect, treated the defendant’s Part 36 offer as effective although the claimants had beaten the offer.

Decision The Court of Appeal allowed the appeal. It concluded the judge had fallen into error by effectively treating the Part 36 offer as containing a free-standing offer to

29

compromise the business interruption claim at £600,000, when it was not an offer to settle on that basis. The judge had recognised that there was no free-standing offer, capable of acceptance by the claimants, to pay £600,000 in respect of that aspect of the claim – though a valid offer in that form could have been made. Nonetheless, he concluded that, given the terms of the Part 36 offer, it was unreasonable for the claimants to continue to pursue a claim for business interruption losses of £862,024, or (in effect) for any figure in excess of £600,000. The Court of Appeal said it could not be unreasonable conduct simply to pursue a claim for an amount greater than it is valued by the opponent; something more is required to make pursuit of the claim unreasonable. The court did not agree that here there were other grounds justifying the order.

As the Court of Appeal was satisfied that the judge’s decision was outside the bounds of reasonable decision-making, the judge’s order had to be set aside and his discretion exercised afresh. The Court of Appeal pointed out that the claimants’ recovery had exceeded the Part 36 offer by a comfortable margin and in any event there is no longer a “near miss” rule. There was therefore no reason to deprive the claimants of their costs following the offer, still less to require them to pay the defendant’s costs. The claimants’ failure to succeed on all of their claim had been adequately reflected in the judge’s order by depriving them of 30% of their costs for the earlier period. That order would be extended to the period following the Part 36 offer.

Of some note to practitioners is how the Court of appeal dealt with the contention that the claimant’s losses were exaggerated. In a brilliant judgment from Lord Justice Tomlinson, he said : “it cannot be misconduct, or unreasonable conduct, simply to pursue a claim in an amount greater than that at which it is valued by the opponent party. Something more is required to render pursuit of the claim unreasonable…..in the happy phrase once coined in this context by a distinguished maritime arbitrator, the question is whether the claim exceeded the bounds of permissible optimism. In my judgment the Judge made no findings upon the basis of which it could be said that it did”.

Tactical Offers :Jockey Club Racehorse Ltd -v- Willmott Dixon Construction Limited[2016] EWHC 167 (TCC).

This is a little gem of a case for anyone interested in the rationale behind CPR 36 and what are generally seen as tactical offers.

30

The Facts and Issues The claimant’s action was in relation to a grandstand at Epsom Racecourse which the claimant asserted was badly designed. The claimant sought damages for the costs of repair. Proceedings were issued and, on the 30th January 2015, the claimant made an offer to settle upon the following basis: that the Defendant would “accept liability to pay 95% of our client’s claim for damages to be assessed.”

The Judgement Mr Justice Edwards-Stuart held that a claimant’s Part 36 offer to settle for 95% was a relevant offer and had costs consequences for the defendant.

He asked the simple question of “whether an offer that comes close to requiring total capitulation can be an offer at all. Mr Brown accepted in argument that an offer of, say, 98% might be difficult to defend, but he submitted that a discount of 5% – although modest (but not insubstantial in the context of a claim in excess of £5 million) – was sufficient to create a real incentive for a defendant to accept it…

He considered a number authorities : “Of all the decisions to which I was referred in those further submissions I regard the two that are most relevant to this point to be Huck v Robson[2003] 1 WLR 1340, a decision of the Court of Appeal, and AB v CD [2011] EWHC 602 (Ch), a decision of Henderson J. I will take the latter first. I need not summarise the facts because it is sufficient to set out Henderson J’s observations of at paragraphs 21 and 22, which were as follows: “21.

The claimant’s Part 36 offer, or purported Part 36 offer, is contained in the letter

of 5 July 2010. Subject to one point, I consider that it complies with the

requirements of form and content in rule 36.2. However, there is an issue

whether it is a genuine offer at all, or merely a lightly disguised request for

total capitulation. If it is a proper Part 36 offer, the question arises whether the

judgment which the claimant has now obtained against the defendants is

“at least as advantageous” to the claimant as the proposals contained in the

letter, within the meaning of rule 36.14(1)(b).

22.

The concept of an “offer to settle” is nowhere defined in Part 36. I think it clear,

however, that a request to a defendant to submit to judgment for the

entirety of the relief sought by the claimant cannot be an “offer to settle”

within the meaning of Part 36. If it were otherwise, any claimant could obtain

31

the favourable consequences of a successful Part 36 offer, including an order

for indemnity costs, by the simple expedient of making an “offer” which

required total capitulation by the defendant. In my judgment the offer must

contain some genuine element of concession on the part of the claimant,

to which a significant value can be attached in the context of the litigation.

The basic policy of Part 36 is to encourage the sensible settlement of

claims before trial, or even before the issue of proceedings . . . The concept

of a settlement must, by its very nature, involve an element of give and take.

A so-called “settlement” which was all take and no give would in my view be

a contradiction in terms.”

With respect, I wholly endorse and adopt this succinct and elegant explanation of what is meant by an offer. Although the Claimant’s offer in this case was hardly generous, in my view it cannot be described as “all take and no give”. However, this does not answer the question as to whether the Part 36 offer has to reflect an available outcome of the litigation, even an outcome that would be most unlikely.

There is, it seems to me, a difference in essence between an offer (“the claimant will take 15% of his claim as ultimately assessed”) which, in a personal injury case, would reflect an available outcome of the litigation, and a similar offer made in, say, a claim under a guarantee, where the quantum of the claim is fixed and the only question is whether or not the guarantee can be enforced. In a personal injury case, where there are issues of contributory negligence as well as quantum, success to the extent of only 15% may be unlikely on the facts of the particular case, but it is theoretically possible. In practice, such an offer probably reflects an assessment of the risk of failure on liability and the uncertainties as to quantum, but that is a different matter. However, in the claim under the guarantee success to the extent of 15% is not an available outcome. The offer is entirely commercial, based on an assessment of the risk of failure.

But does this matter? One knows from experience that cases, like the example that I have just given, are frequently settled on the basis of an assessment of risk which combines both the risk of failure and the uncertainty as to the true value of the claim.

An offer which is made in the light of those considerations will not usually reflect a result that is a likely outcome of the litigation if fought to judgment.

70.

I think Schiemann LJ [Huck v Robson] is right about this. I do not think that

the court is required to measure the offer against the likely outcome in

a case such as this. In this type of litigation a claimant with a strong case

will often be prepared to accept a discount from the full value of the claim

32

to reflect the uncertainties of litigation. Such offers are not usually based on

the likely apportionment of liability but merely reflect the reality that most

claimants prefer certainty to the ordeal of a trial and uncertainty about its

outcome. If such a discount is offered and rejected there is nothing unjust in

allowing the claimant to receive the incentives to which he or she is entitled

under the Rules. On the contrary, I would say that this is a just result.

I would however add that if it was self-evident that the offer made was merely a tactical step designed to secure the benefit of the incentives provided by the rule (e g an offer to settle for 99.9% of the full value of the claim) I would agree with Jonathan Parker LJ that the judge would have a discretion to refuse indemnity costs.

But that cannot be said of the offer made in this case, which I think did provide the defendant with a real opportunity for settlement even though it did not represent any possible apportionment of liability. I would therefore allow this appeal.”

FREE E-Publications

the

SOLICITORS group

Get instant access to an omnibus of legal updates, across a range of legal practice areas, free of charge.

Sign up today ► Visit the website: www.thesolicitorsgroup.com

Not yet registered or referred by a friend? Sign up today to receive the latest updates.

► Select ‘Publications’ from the top navigation ► Select which publication you want to view ► Enter your name and email address It’s that simple, you will be emailed when further updates are available.

33

Conferences / Webinars / CDs / DVDs / E-Publications / InHouse / Consortium

March 2016 Changes to Costs budgeting

From 6th April 2016 the rules for costs budgeting will change again. They apply to proceedings commenced on or after 6th April 2016.

The key changes are: •

Where the value of the claim is under £50,000 the parties will only need to

complete the first page of the Precedent H

•

Claims on behalf of children will be exempted from costs management

•

Where the Claimant has a “limited or severely impaired life expectation” (such

as in mesothelioma cases) the Court will usually disapply costs management

•

The timing for filing Precedent Hs will change. Parties in lower value cases will

need to file budgets with the Directions Questionnaire. In other cases budgets

will need to be filed 7 (clear) days before the CMC

•

There is a new form, a “budget discussion report” which will formalise the

parties’ submissions on the costs claimed

•

The rules are amended to provide that details of the costs claimed in each

phase should be provided when the costs are assessed. Bills divided by

reference to phase will be mandatory where costs are on the standard basis

and the budget has been agreed or approved.

The statutory instrument can be found here, and the PD making document is here.

There were rumours the Precedent H itself would be amended to show the costs of drafting the Precedent H separately, and that further guidance would be provided on the phases in which costs were to be claimed but it is not yet clear whether these changes will occur in April.

34

Late Acceptance of Part 36 Offer and Departure from Usual Costs Order ABC v Barts Health NHS Trust [2016] EWHC 500 (QB) COSTS - ORDER FOR COSTS - DISCRETION - OFFER TO SETTLE - CPR PT 36 OFFER CLAIMANT BRINGING PROCEEDINGS AGAINST DEFENDANT NHS TRUST - CLAIMANT ACCEPTING DEFENDANT’S PT 36 OFFER AFTER EXPIRY DATE OF OFFER - COURT APPROVING TERMS OF SETTLEMENT - PARTIES UNABLE TO AGREE LIABILITY FOR COSTS WHETHER UNJUST TO MAKE RELEVANT USUAL ORDER AND, IF SO, WHAT ORDER SHOULD BE MADE - CPR 36.13(5).

The claimant brought a claim for damages in respect of the delay on the part of the defendant NHS trust in his treatment on 30 January 2003 at a hospital after he suffered a dissection of his aorta which was not diagnosed and only identified on 19 February, which, in turn, led to a surgical repair on 20 February. The claimant contended that the dissection created an abnormality in his aorta, a false lumen, which, due to the negligent delay between 30 January and 20 February, failed to heal when, with timely surgical repair shortly after 30 January, it would have healed.

In addition, it was said that that abnormality had gone on to cause a thrombus or blood clot to form in the aorta and to travel to and occlude the left middle cerebral artery, causing a catastrophic infarction of his brain on 5 April 2006. It was also contended that the negligence prevented the claimant from undergoing renal transplantation. Breach of duty was admitted at a relatively early stage. In particular, the defendant admitted that the aortic dissection should have been diagnosed on 30 January 2003, that successful surgical repair should have followed shortly thereafter and that there was a negligent delay in diagnosis between 30 January and 20 February 2003. Initially, causation of any injury, loss and damage was denied. However, the defendant subsequently amended its defence to admit that the admitted breach of duty had caused the claimant to suffer some injury necessitating a fasciotomy and a femoro-femoral crossover bypass graft repair (which had been carried out on 20 February 2003 at the same time as the repair to the dissection in the aorta). The injury was discrete and, according to the defendant, only sounded in general damages for pain and suffering. The defendant denied that its negligence resulted in the claimant being unable to undergo renal transplantation and his suffering the extensive left-sided middle cerebral artery infarction. The issue regarding causation and consequences of the stroke in 2006 and the claimant’s inability to undergo renal transplantation gave rise, on the claimant’s case, to the overwhelming majority of the claim (put at in excess of £1m, plus annual payments in excess of £230,000) and in respect of which all the very extensive quantum expert

35

evidence and, therefore, costs were incurred. On 24 February 2016, the claimant accepted the defendant’s CPR Pt36 offer of £50,000 which offer had, in fact, expired on 24 June 2015 (it having been made on 4 June 2015). The offer was expressed to be a settlement of the whole of the claimant’s claim. The present court formally approved the terms of settlement. The present proceedings concerned liability for costs.

The claimant contended that there was no good reason to depart from the usual order provided for in CPR36.13(5), namely, the claimant was awarded its costs up until 25 June 2015, with the claimant paying the defendant’s costs between 25 June 2015 and 25 February 2016. The defendant submitted that, having regard to all the circumstances of the case, such an order would be unjust because it failed to reflect that the claimant had failed in relation to the vast majority of his pleaded claim and contended for an order that the claimant’s costs up to 25 June 2015 be limited to the issue of the femoro-femoral bypass graft (thus excluding all the causation costs) and that the claimant should pay the defendant’s costs relating to the causation of the stroke and the losses consequent thereon up until and including 25 June 2015 and all the defendant’s costs of the action thereafter.

The Court Held: The difficulty with the broad thrust of the defendant’s submissions was that the defendant had had the means and opportunity to have protected itself in respect of the costs that it was going to have to incur in respect of the causation issue, but had chosen for whatever reason when it had made its Pt36 offer to frame the offer as a settlement of the whole claim and then, subsequently, when that offer had not been accepted, had not made any revised offer excluding causation. It was true that, in having rejected the offer and pursued the action up to or close to trial, the claimant had acted unreasonably, but Pt36 expressly provided an effective remedy to cater for that very situation, in that the claimant would have to pay all the defendant’s costs incurred post expiry of the Pt 36 offer and, in the circumstances of the present case, the assessment of those costs should be on the indemnity basis.

There was nothing unjust about making the usual order in the circumstances of the case, having accepted the thrust of the claimant’s submissions on the issue (see [17] of the judgment).

The appropriate order in respect of costs was as followed: (i) the defendant was to pay the claimant’s costs up to 25 June 2015 on the standard basis, to be subject to a detailed assessment if not agreed and with the claimant’s solicitor waiving any claim to further costs; (ii) the claimant was to pay the defendant’s costs from 25 June 2015 to 24 February 2016 on the indemnity basis, to be subject to detailed assessment if

36

not agreed; and (iii) the defendant was to pay the claimant’s costs from 24 February 2016 on the standard basis, to be subject to a detailed assessment if not agreed and with the claimant’s solicitor waiving any claim to further costs (see [18] of the judgment).

Setting Aside a Default Judgment and Discretion Albesher v Ryan and Others [2016] EWHC 541 (Comm), [2016] All ER (D) 42 JUDGMENT - DEFAULT OF DEFENCE - SETTING ASIDE JUDGMENT - CLAIMANT, A, PURCHASING PROPERTY - PROCEEDINGS RELATING TO ALLEGED DECEIT AND UNLAWFUL MEANS CONSPIRACY BY DEFENDANTS - A OBTAINING JUDGMENT IN DEFAULT AGAINST SECOND DEFENDANT COMPANY, RYAN - RYAN APPLYING TO HAVE DEFAULT JUDGMENT SET ASIDE - WHETHER DISCRETION TO SET JUDGMENT ASIDE EXISTING - WHETHER COURT SHOULD EXERCISE DISCRETION. The claimant, A, was the Saudi Arabian ambassador to the United Arab Emirates.

He entered into an agreement with the first and second defendants to purchase a property in London. He subsequently claimed that, as the result of a fraud perpetrated by the first, second and third defendants in respect of the purchase of the property, he had suffered loss. He commenced a number of claims, which included claims of £25.4m, for deceit and unlawful means conspiracy. The claim form was issued in March 2015 and service was deemed to have taken place on the first defendant, R, and the second defendant company, Ryan, in April. It was submitted that R had deliberately sought to evade service. Among other things, A claimed against Ryan for a declaration that it held certain rights on trust for A (the declaration claim). The time for Ryan to file an acknowledgement of service expired and A applied for a default judgment against it. In June, Ryan applied to set aside the judgment, accompanied by a witness statement, Ryan 1. R did not produce a draft statement of case. A contended that Ryan 1 was untrue in almost all material respects. He claimed that R had made a number of false factual assertions (the false factual assertions contention). R filed an acknowledgement of service and a defence. Ryan applied to have the judgment in default against it set aside.

Ryan acknowledged that the default judgment had been entered regularly.

That meant that it could only be set aside if, under CPR 13.3(1), Ryan had a real prospect of successfully defending the claim, or there was some other good reason why the judgment should be set aside. First, Ryan submitted that it had a real

37

prospect of defending the claim. Regarding the false factual assertions contention, consideration was given to the quantity of information given in Ryan 1 and R’s failure to provide a statement of case. Secondly, regarding the exercise of the court’s discretion, A submitted that: (i) the express provisions of CPR 13.3(2) emphasised the importance of having regard to whether the person seeking to set aside the default judgment had made an application to do so promptly; and (ii) although CPR 13.3 did not expressly say so, considerations under CPR 3.9 were relevant, with the consequence that the court should apply principles concerning relief from sanction set out in Denton v TH White Ltd[2015] 1 All ER 880.

The application would be allowed.

(1)

On the proper analysis, the false factual assertions contention was not

a contention that could be established on the documents alone. The

failure to produce a draft statement of case was something that ought to be

taken into account when considering the exercise of the court’s discretion.

However, Ryan 1 had given the court much more information than could

have been expected in a statement of case, and had done so in a way that

gave a clear indication of the factual assertions that Ryan relied upon.

Secondly, regarding the declaration claim, there was a real prospect that the

entitlement of A to retain the default judgment so as to continue to have the

benefit of the declaration of trust made in it was not an entitlement of the kind

that was the subject of the declaration (see [165], [167], [168] of

the judgment).

Ryan had a real prospect of defending the claim (see [184] of the judgment).

(2)

The first stage of the Denton principles required the court to identify and

assess the seriousness and significance of the failure to file an

acknowledgement of service. If that failure was neither significant nor serious,

then little time might be needed when turning to stages two and three. The

second stage was to consider why the default had occurred. At the third

stage, all the circumstances were to be considered. Particular weight had to

be given to the need for litigation to be conducted efficiently and at

proportionate cost and to the need to enforce compliance with rules,

practice directions and orders (see [184] of the judgment).

On the evidence, the application had been made promptly within the meaning of CPR 13.3(2). In the exceptional circumstances of the present case, the court was

38

not hampered by the lack of a draft defence. For that reason, substantial adverse weight would not be given to Ryan’s failure to provide such a document. The fact that Ryan was one of three defendants did not, in the circumstances of the present case, bar entry of a default judgment. However, R had deliberately not facilitated service. His failure to acknowledge service had resulted in unnecessary proceedings and wasted time and expense comprising, at least, the application to enter default judgment, the hearing of that application, the issue of Ryan’s application notice, and the preparation by Ryan and consideration by A of Ryan 1. Further, setting aside the default judgment would not add significantly to the time required to resolve the claim (see [174], [180]-[183] of the judgment).

Weighing all the factors up, the balance fell strongly in favour of setting aside the default judgment. The court would exercise its discretion accordingly (see [185] of the judgment).

Unless Orders and Denton Principles British Gas Trading Ltd v Oak Cash & Carry Ltd [2016] EWCA Civ 153, [2016] All ER (D) 128 PRACTICE - CIVIL LITIGATION - CASE MANAGEMENT - RELIEF FROM SANCTIONS DEFENDANT FAILING TO FILE PRE-TRIAL CHECKLIST BY DATE SPECIFIED IN DIRECTIONS ORDER - JUDGE MAKING UNLESS ORDER - DEFENDANT NOT COMPLYING WITH UNLESS ORDER - JUDGMENT IN DEFAULT ENTERED AGAINST DEFENDANT - DEFENDANT GRANTED RELIEF FROM SANCTION IN UNLESS ORDER AND DEFAULT JUDGMENT BEING STRUCK OUT - CLAIMANT’S APPEAL SUCCEEDING AND DEFAULT JUDGMENT BEING RESTORED WHETHER DEFENDANT BEING ENTITLED TO RELIEF FROM SANCTIONS - CPR 3.9.

The claimant had issued proceedings against the defendant seeking to recover £200,000 in respect of the supply of electricity. The defendant failed to file its pretrial checklist (PTC) by the return date (3 February 2014). On 10 February, the district judge made an unless order in terms that the defence would be struck out unless the defendant filed its PTC by 19 February. On 13 February, the unless order arrived at the defendant’s solicitors’ office. They failed to comply with that order. On 19 February, the unless order became operative and the defence was automatically struck out.

On 21 February, the defendant’s solicitors (BB) filed the PTC. On 25 February, the claimant applied for judgment in default of defence. That application was granted on 18 March. On 24 March, the defendant applied for relief from the sanction

39

contained in the unless order. That application was supported by a witness statement made by the solicitor who had had conduct of the matter on the defendant’s behalf. He explained that his wife had been suffering with various complications with her pregnancy which had caused him to take numerous periods out of the office. He had entrusted the matter to a trainee solicitor during critical periods in February. He himself had received the unless order on 17 February. The judge granted relief from sanction and set aside the judgment in default. He reasoned that BB had not received the unless order until 17 February, which had allowed only two days for compliance. The defendant’s non-compliance had been trivial upon the application of the tests set out in Mitchell v News Group Newspapers Ltd[2014] 2 All ER 430 (Mitchell). The non-compliance had been caused, in part, because of the solicitor’s wife’s health problems. That was akin to the illness or accident referred to in the Mitchell guidance and constituted a good reason for non-compliance, therefore, relief would be granted. The claimant appealed to the High Court. The judge restored the default judgment, having concluded that the district judge had erred in applying an overly generous interpretation of the Mitchell decision. She found that BB had had three months to comply with the directions of the court, but had failed to do so. The two day delay in complying with the unless order was serious and significant. BB were a firm of significant size and should have ensured that a competent solicitor with available time had dealt with the case. The trainee solicitor should have been properly supervised. There had been no good reason for the default. In considering all the circumstances as required by CPR3.9(1) in accordance with the guidance given in Denton v TH White Ltd[2015] 1 All ER 880 (Denton), it was not right to grant relief from sanction. The defendant appealed.

It fell to the court to assess the appeal by reference to the three stage approach laid down by Mitchell as subsequently modified by Denton.

The appeal would be dismissed.

(1)

The guidance in Denton stated that: ‘The assessment of the seriousness or

significance of the breach should not, initially at least, involve a consideration

of other unrelated failures that may have occurred in the past.’ That reference

to ‘unrelated failures’ was a reference to earlier breaches of rules or orders

which the applicant had committed during the course of the litigation. At

the first stage it was not legitimate to say that a breach was trivial but, set

against a history of failures and delays, the breach was the last straw. At

the first stage the court had to ignore historic breaches and assess the breach

in respect of which the applicant sought relief. However, it was not possible

to look at an unless order in isolation. A party who failed to comply with an 40

unless order was normally in breach of an original order or rule as well as the

unless order. Therefore, in order to assess the seriousness and significance of

a breach of an unless order, it was necessary to look also at the underlying

breach. The court had to look at what the applicant had failed to do in the

first place, when assessing his failure to take advantage of the second chance

he had been given. The fact that the applicant had failed to comply with an

unless order, as opposed to an ‘ordinary’ order, was undoubtedly a pointer

towards seriousness and significance, although not every breach of an unless

order was serious or significant (see [36]-[42], [67], [68] of the judgment).

In the present case, BB had had three months to comply with the court’s

directions. They had not done so. They had filed the PTC 18 days late by

reference to that order. BB had received the unless order on 13 February (not

17 February as the district judge had been led to believe). They had had

six days in which to comply with the unless order. They had failed to do so.

The defendant had not filed a PTC until two days after the expiry of the unless

order. The judge had been right; it was not possible to classify the defendant’s

breach as anything other than significant and serious (see [43], [44], [67], [68]

of the judgment).

(2)

The present case had not been akin to any of the examples of good reasons

for default that had been given in Mitchell. Nor could the present

circumstances have been realistically characterised as good reasons for non-

compliance. The solicitor had seen the unless order on 17 February. The judge

had been correct and, in the circumstances, it had not been open to the

district judge to have found that there had been good reason for the

defendant’s default (see [46]-[51], [67], [68] of the judgment).

(3)

The late filing of the PTC had not had any adverse impact on the smooth

conduct of the action. There had been no adverse effect on the

administrative processes of the court. However, the defendant had not made

a prompt application for relief from sanction pursuant to CPR3.9. Had it done

so, either the claimant might have consented to that application or the

court would have acceded to it. By the time BB applied for relief from

sanction, the trial date had been lost. If the court had granted relief at that

stage, it would have had to fix a new trial date. The serious consequences of

the loss of a trial date were discussed in Denton. When the defendant’s delay

was added to all of the other factors, it could be seen that the defendant’s

default had substantially disrupted the progress of the action. Accordingly,

the application for relief had to be refused (see [56], [57], [60], [61], [67], [68]

of the judgment).

41

April 2016 Deal or No Deal-Proving a Contract Jas Financial Products LLP v lcap PLC (2016) EWHC 591 (Comm), (2016) All ER (D) 163 (Mar)

CONTRACT - CONTRACT FOR SERVICE - FORMATION OF CONTRACT - CLAIMANT COMPANY SUPPLYING SPECIALIST SERVICES TO FINANCIAL SERVICES INDUSTRY - FIRST DEFENDANT COMPANY BEING BROKER - SECOND DEFENDANT COMPANY BEING SUBSIDIARY OF FIRST DEFENDANT - DEFENDANTS CARRYING OUT WORK FOR CLAIMANT IN ONE PARTICULAR TRADE - PARTIES ENTERING INTO DISCUSSIONS AS TO FURTHER WORK - WHETHER BINDING CONTRACT FORMED EITHER ORALLY IN WRITING. The claimant company (JAS) supplied a variety of specialist services to the financial services industry. The first defendant company was a broker, and the second defendant was its subsidiary (together, ICAP). In Autumn 2007, Y, who was then Chief Operating Officer at ICAP, contacted a former colleague, B of JAS, to discuss B’s (and in practice JAS’s) possible engagement to provide ‘middle office support’ to ICAP in respect of ICAP’s Structured Products desk. The desk had recently incurred significant losses whilst being run by M. Y saw ‘middle office support’ from JAS as a means to strengthen ICAP’s position. S oversaw ICAP’s Structured Products business. B and S discussed the terms on which JAS might provide services to ICAP. During those discussions, JAS undertook work for ICAP in relation to one particular trade. In March 2008, JAS set out a proposal to ICAP in an email addressed by B to S. On 13 May 2008, a meeting took place between S and M for ICAP and B and another for JAS. A dispute arose as to what had been agreed at the meeting.

The major issue was whether a legally binding contract had been made between ICAP and JAS on 13 May 2008, and specifically at, or immediately after, the meeting.

The court ruled: On the evidence, at no stage had the parties contemplated, or appeared to contemplate, that a legally binding agreement would be entered into orally.

Further, at no point had the parties entered into an agreement in writing (see [30], [31] of the judgment).

42

No legally binding contract had been made between ICAP and JAS on 13 May 2008, and specifically at, or immediately after, the meeting on that day (see [34] of the judgment).

Note: The judgment of Mr Justice Knowles in this case is wonderful analysis of the difficulties faced in proving that there was an oral contract ( which, can be perfectly valid), particularly where witness recollection is poor. In one specific passage, he stated: “Of course the passage of time can blur or erode recollection. In addition however, in a case such as the present, where there is a considerable and opposing strength of feeling on the part of individuals on each side, the passage of time can cause the recollection that an individual believes he or she has to be affected by the individual’s sense of where the ultimate merits lie”

The Dangers when Withdrawing Offers: Patience v Tanner and another [2016] EWCA Civ 158, [2016] All ER (D) 203 (Mar) COSTS - ORDER FOR COSTS - DISCRETION - APPELLANT CLAIMING SPECIFIC PERFORMANCE TO COMPEL FIRST RESPONDENT TO PROCURE GRANT OF EASEMENTS - FIRST RESPONDENT COMMENCING CPR PT 20 PROCEEDINGS AGAINST SECOND RESPONDENT - SECOND RESPONDENT’S SOLICITORS WRITING TO APPELLANT’S SOLICITORS ENCLOSING DEED GRANT OF EASEMENT FOR EXECUTION BY APPELLANT, STATING EXPECTATION TO RECEIVE EXECUTED DEED WITHIN 21 DAYS (FIRST OFFER) - FIRST OFFER BEING SILENT AS TO COSTS - APPELLANT NOT ACCEPTING FIRST OFFER FIRST OFFER BEING WITHDRAWN - SECOND RESPONDENT’S SOLICITORS SUBSEQUENTLY RE-OFFERING TERMS OF FIRST OFFER (SECOND OFFER) - APPELLANT ACCEPTING SECOND OFFER - JUDGE ORDERING RESPONDENTS PAY APPELLANT’S COSTS UP TO AND INCLUDING DATE FIRST OFFER LAPSING - JUDGE FURTHER ORDERING APPELLANT PAY RESPONDENTS’ COSTS THEREAFTER - WHETHER JUDGE ERRING. In 2012, the appellant (P) issued proceedings, claiming specific performance to compel the first respondent (T) to procure the grant of easements, alternatively damages. T commenced CPR Pt20 proceedings against the second respondent (B).

On 8 May 2014, B’s solicitors (GD) wrote to P’s solicitors (CW), enclosing a deed grant of an easement for execution by P (the May offer). They stated that they expected to receive the deed executed by P by no later than 29 May (21 days from the date of the letter). The May offer said nothing as to costs. CW queried the position as to costs in the event that P accepted the proposed deed of grant. Both T and GD had indicated that they would respond to CW’s query as to costs, but no response

43

was then forthcoming. The date of 29 May came and went without P accepting the May offer. Following a further e-mail in June from CW to GD, continuing to seek clarification of the May offer, GD responded that, among other things, P had failed to accept the May offer within the 21 day period and that the May offer had, therefore, lapsed. On 3 November, GD wrote to CW re-offering ‘the terms’ of the May offer (the November offer). On 5 November, CW confirmed that P was ‘content to accept’ B’s open offer and enclosed the deed of grant of easement, executed

by P. The parties subsequently attended before the judge in respect of the issue of costs. The judge ordered that: (i) the respondents pay P’s costs up to and including 29 May on the standard basis; and (ii) P pay T’s and B’s costs from 29 May on the standard basis. As to the costs for the period post-29 May, P’s costs were in the region of £35-40,000, inclusive of VAT and the respondents’ costs amounted to £80,000, excluding VAT. P appealed.

P contended that the part of the judge’s order requiring him to pay T’s and B’s costs from 29 May should be set aside in favour of an order that he should recover all of his costs of the proceedings, alternatively that, after 29 May, he should recover a reduced portion of his costs. The respondents did not seek to challenge the judge’s conclusion that they pay P’s costs up to and including 29 May. They did, however, seek to uphold the judge’s decision as to the payment of costs in their favour from 29 May. The Court Held: The judge had been amply justified to have held that P should not have his costs after 29 May. It was common ground that the November offer had been in identical terms to the May offer. There had been, thus, no good reason for P not to have accepted the May offer. However, the judge had gone on to order P to pay the respondents’ post-29 May costs, despite the respondents having withdrawn the May offer. Just as there had been no good reason for P not to have accepted the May offer, there had been no good reason for the respondents to have withdrawn the May offer, rather than having let it stand, until they had re-issued the identical offer on 3 November. The continued commercial haggling as to the rights of way on P’s part had not furnished any or any good reason for the abrupt withdrawal by the respondents of the May offer, with a number of questions to which they had promised answers remaining unanswered. The conduct of both P (in not having accepted the May offer) and the respondents (in having withdrawn it) had contributed substantially to the case having come before the judge, when it should long since have settled. Given the parties’ sustained determination to pursue the

44

dispute, no one could be sure that, if the May offer had been accepted or allowed to stand, the hearing before the judge would not have taken place. However, the dynamics of the situation would have been dramatically altered had the May offer been accepted or allowed to stand, so the probabilities were that the case would have settled well before then. While the judge had correctly focused on the failings of P after 29 May, the judgment suggested that, in reaching his conclusions, he had lost sight of, and had not taken into account, the failings of the respondents after that date. That was a material omission. It followed that the present court would be justified in intervening under the test in previous authority; most simply put, the judge had failed to take a matter into account which should have been taken into account. If it was necessary that there be a ‘manifest injustice’ before intervening, then there had been such an injustice in the present case: the judge’s focus on the conduct of P alone, rather than on the conduct of both P and the respondents post-29 May, had cost P some £80,000 in terms of costs which he was liable to pay by reason of the judgment. Such a result was not properly sustainable. The conduct of the parties post-29 May had been such that each party should bear its own costs after that date (see [35]-[40], [43]-[45] of the judgment).

No order as to costs after 29 May would be made, in place of the judge’s order that P should pay the respondents’ costs thereafter. To such extent, the appeal would be allowed (see [43]-[45] of the judgment).

CPR 36 and the Court of Appeal Decision in Webb -v-Liverpool Women’s NHS Foundation Trust [2016]EWCA Civ 365 : An End to Satellite Litigation?

Facts and Background This was a clinical negligence claim involving a serious obstetric injury which was an all or nothing action. C offered by way of Part 36 to accept 65% on liability. This was rejected by D (although remember rejection in this context does not amount to rejection!). D offered an “overly parsimonious 30%” (para 40 of first instance decision). In the event C won and recovered damages in full even though she failed upon a number of specific allegations. The judge decided that the failure of the claimant to establish every single allegation ought to be reflected in a percentage costs award. Nevertheless, he gave C Part 36 rewards in full including the all-important 10% uplift on damages introduced by Jackson in April 2013. The percentage costs deduction is not addressed in the judgment as the parties had underestimated the time needed for the application.

45

His Honour Judge Saffman took the view that there were two discrete allegations of negligence and that following Multiplex Constructions UK Ltd v Cleveland Bridge UK Ltd [2008] EWHC 2280 TCC it was right to make a proportionate costs order. The judge then reasoned that Part 36 did not alter that position and that following Thinc Group Ltd v Jeremy Kingdom [2013] EWCA Civ 1306 the consequences of Part 36.14 apply unless and to the extent that it is unjust that they should do so – permutations were permitted in order to do justice.

However, the first instance decision had attracted a good deal of criticism. Professor Regan, writing in the NLJ ( MAY 2015) , stated :“My most immediate and obvious comment is that, had the claimant’s achingly sensible Part 36 offer been accepted, then the entire trial, including the failed arguments, would never have taken place.

The obvious discomfort of the claimant having to re-live the miserable experience as she gave evidence would not have been necessary. It was Ward LJ in Shovelar and others v Lane and others [2011] EWCA Civ 802, [2011] All ER (D) 111 (Jul) who, with typical pragmatism, emphasised the need in difficult cases to accept realistic offers to settle. Few enter litigation with the certainty of victory. The litigation lottery ought to compel the acceptance of a fair proposal to end the dispute”.

Court of Appeal Judgment Sir Stanley Burnton delivered the judgment on behalf of the court and stated from the outset, the following: “It raises an important question as to the powers of the trial judge under CPR Part 36. It is a sad fact that the provisions of Part 36, intended to promote the settlement of litigation, and thus to minimise costs, have themselves been productive of numerous appeals to this Court, and in consequence substantial costs in what is effectively satellite litigation. This is presumably because Part 36 is highly prescriptive (so that even experienced lawyers may fail to make a compliant offer) and the financial consequences of the application of the provisions of Part 36, or the failure to comply with the requirements of Part 36, may be substantial.”

In allowing the Appeal, he stated: “It is not unusual for a claimant to succeed on some, but not all, allegations, particularly in a personal injury case such as the present. In HLB Kidsons v Lloyds Underwriters 2007 EWHC 2699 (Comm), Gloster J, as she then was, said: “11.

There is no automatic rule requiring reduction of a successful party’s costs if

he loses on one or more issues. In any litigation, especially complex litigation

such as the present case, any winning party is likely to fail on one or more

46

issues in the case. As Simon Brown LJ said in Budgen v Andrew Gardner

Partnership [2002] EWCA Civ 1125 at paragraph 35: ‘the court can properly

have regard to the fact that in almost every case even the winner is likely to

fail on some issues.’ Likewise in Travellers’ Casualty [2006] EWHC 2885 (Comm),

Clarke J said at paragraph 12:

‘If the successful Claimant has lost out on a number of issues it may be

inappropriate to make separate orders for costs in respect of issues upon

which he has failed, unless the points were unreasonably taken. It is a

fortunate litigant who wins on every point.’”

He stated “a successful claimant is to be deprived of all or part of her costs

only if the court considers that would be unjust for her to be awarded all

or that part of her costs. That decision falls to be made having regard to “all

the circumstances of the case”. In exercising its discretion, the Court must

take into account that the unsuccessful defendant could have avoided the

costs of the trial if it had accepted the claimant’s Part 36 offer, as it could and

should have done.”

Note: the practical problem facing civil litigators, where there are a number of specific issues to be tried, has helpfully been considered in this case and the pragmatic approach taken by the court is to be applauded. However, this case is unlikely to be the last word on multiple issue cases because the discretion is still wide.

Increase in Court Fees: Key Changes The Government are at it again. Another increase in court fees, with the Amendments to the Civil Proceedings Fees Order 2008, which came into force on the 21st March this year. In the table in Schedule 1 to the Civil Proceedings Fees Order 2008, we have:

(a)

in column 2 (amount of fee), for the entry corresponding to fee 1.4(b)

(starting proceedings for the recovery of land in the County Court) for

“£280” substitute “£355”;

in column 2, for the entry corresponding to fee 1.4(c) (starting

(b)

proceedings for the recovery of land using the Possession Claims Online

website), for “£250” substitute “£325”;

47

(c)

for fees 2.4 and 2.5, for the entries in both columns, substitute—

2.4(a)

On an application on notice where no other fee is specified, except for

applications referred to in fee 2.4(b). £255

2.4(b)

On an application on notice where no other fee is specified made—

(i) under section 3 of the Protection from Harassment Act 1997(b); or

(ii) for a payment out of funds deposited in court. £155

2.5(a)

On an application by consent or without notice where no other fee is

specified, except for applications referred to in fee 2.5(b). £100

2.5(b)

On an application made by consent or without notice where no other

fee is specified made—

(i) under section 3 of the Protection from Harassment Act 1997;or (ii) for

a payment out of funds deposited in court. £50”

Note: Remember the dire consequences of not paying the correct court fee particularly where limitation is due to expire : see the recent High Court case TMT Asia LImited -v- BHP Billiton Marketing AG [2016] EWHC 287-an error could be corrected by the subsequent payment of the correct fee, which would thereby render, but not retrospectively, the issue a good issue but not if the limitation period had expired.

Don’t miss out on the latest updates...

► Visit the website: www.thesolicitorsgroup.com ► Select ‘Publications’ from the top navigation

Sign up today

► Select ‘Property Publication’ ► Enter your name and email address It’s that simple, you will be emailed when further updates are available.

Not yet registered or referred by a friend? Sign up today to receive the latest updates.

48

Conferences / Webinars / CDs / DVDs / E-Publications / InHouse / Consortium

the

SOLICITORS group

CPD Webinars

2017

Notes/Slides provided | 1hr CPD per Webinar | All Webinars CPD Accredited | Packages to suit your firm

Quality Training FOR LESS

NEW

Mandatory from 1st November 2016 Complete all 4 parts of the SRA Competency Statement

Available Online or via DVD or CD the

SOLICITORS group

WATCH:ONLINE Viewers

1

Hour

6

Hours

WATCH:DVD Viewers

1

Hour

6

Hours

LISTEN:CD Viewers

1

Hour

6

Hours

£34+vat £149+vat

£36+vat £169+vat

£36+vat £169+vat

£44+vat

£199+vat

£46+vat

£209+vat

£46+vat

£209+vat

£54+vat

£249+vat

£56+vat

£259+vat

£56+vat

£259+vat

Departments? Please Call

Departments? Please Call

Get instant access to an omnibus of CPD TOPICS AVAILABLE: legal updates, across a range of legal practice areas, free of charge.

Departments? Please Call

Civil Litigation

Employment

Residential Property

Commercial Litigation

Family

Wills & Probate

Commercial Property

Financial Management & Compliance

SRA Competency Parts A, C & D

Company/Commercial Law

Immigration

Sign up today

Injury Criminal Not yet Law registered or referred Personal by a friend? Sign up today to receive the latest updates.

BOOK NOW 01332 226601

6 HOURS CPD ONLY £149

+vat

► Visit: thesolicitorsgroup.com

49

May 2016 High Contingency Fee for Firm of Solicitors Upheld

In Bolt Burdon Solicitors v Tariq & Ors [2016] EWHC 811 (QB) (see detailed note below), Tariq and the other defendants asked the firm to represent them on a contingency fee basis in a claim against AlIied Irish Bank over a mis-sold interest rate swap.

Bolt Burdon declined after identifying significant difficulties with the case, but the defendants persuaded it to act on the basis it would get 50% of any compensation.

An offer of £821,045 was accepted, and the solicitors invoiced for half that plus VAT and disbursements but the defendants refused to pay. They claimed the law firm was not an “effective cause” of the offer, the firm had incorrectly portrayed the claim as hopeless, and the contingency fee agreement was unfair and unreasonable under the Solicitors Act 1974.

However, Mr Justice Spencer held that the agreement was “not unfair” as Tariq knew “exactly what he was agreeing to”, that the firm fulfilled its duties, and no realistic alternative funding option had been available. The case is of wider significance when looking at financial mis-selling cases and applications under the Solicitors Act for unfair and unreasonable agreements.

Remember, contingency fee agreements are generally unenforceable in England and Wales in litigation because they are considered contrary to public policy and the common law. Rule 2 of the Solicitors Code of Conduct 2007 prohibits the use of the Agreements for what the Law Society deems to be contentious work. If the work is contentious, and oddly this includes employment tribunal and small claims, then they are enforceable.

Bolt Burdon Solicitors v Tariq [2016] EWHC 811 (QB) SOLICITOR - COSTS - CONTINGENCY FEE - FEE PAYABLE ONLY IN EVENT OF PARTY BEING SUCCESSFUL IN ACTION - DEFENDANTS RETAINING CLAIMANT SOLICITOR TO

50

OBTAIN REDRESS FROM BANK UNDER CONTINGENCY FEE AGREEMENT FOR 50% OF SUM RECOVERED - SOLICITOR BEING SUCCESSFUL IN OBTAINED SUM FROM BANK AND SEEKING HALF OF SUM IN PAYMENT - DEFENDANT SEEKING TO IMPLY TERM TO REDUCE AMOUNT PAYABLE TO SOLICITOR - WHETHER TERM NEEDED TO GIVE BUSINESS EFFICACY - WHETHER SOLICITOR ENTITLED TO 50% OF SUM RECOVERED. The defendant clients engaged the claimant solicitors under a Contingency Fee Agreement entered into with the defendant in respect of (non-contentious business agreement) in recovering compensation from a bank (the bank) under the Financial Conduct Authority Redress Scheme. The complaint was that the bank had mis-sold an ‘interest rate swap’. The agreement which had been negotiated entitled the claimants to 50% of any compensation recovered, plus disbursements. When the defendants had approached the claimant, there had been no prospect whatever of obtaining compensation from the bank otherwise than through whatever the claimant could achieve. All other efforts to date had been unsuccessful. There was absolutely no expectation that the bank would change its mind without the intervention of the claimant. By cl 1.4 of the agreement, compensation meant ‘the total financial value of any sums or concessions or other benefits offered by or behalf of the bank and accepted by you in relation to the claim...’. By cl 6, the fee became payable ‘if you agree compensation’. Alternatively, by cl 7.1.2, on early termination by the defendants the fee payable was calculated on the basis that any offer of compensation had been accepted. The bank eventually offered compensation of £821,045.06 (gross of tax) made first in a letter in March and increased in an August letter. Accordingly the sum claimed by the claimants in the action, including disbursements and VAT, was the sum of £498,083.52. The defendants disputed the claimant’s entitlement to so large a fee on the basis of the construction of the agreement. They also asserted that the claimant had wrongly led them to believe that the claim was all but hopeless. Although there was no suggestion of bad faith, it contended that there had been misrepresentations as to whether the limitation period had expired and as to the scope and finality of the review process. The defendants further asserted that in all the circumstances the agreement was unfair and unreasonable, such that the court should exercise its discretion under s 57 of the Solicitors Act 1974 to set it aside or reduce the fees payable.

The main issue was whether as a matter of construction of the agreement, the claimant were entitled to 50% of the final sum recovered as compensation. The claimant submitted that as a matter of plain construction of the agreement it was clear that its fee was to be calculated by reference to whatever sum of compensation was offered by the bank during the currency of the agreement.

51

Reference was made to the width of the definition of ‘compensation’ which included even sums offered by the bank as ‘gestures of goodwill and ex gratia payments’ (see cl 1.4.2). The claimant submitted that there was no basis for the introduction of an implied term that the fee was only payable on compensation which has ‘resulted from the claimant’s efforts’, as contended for in the defence. The defendants’ counterclaimed for misrepresentation.

The claim would be allowed.

The agreement properly construed had not required that any offer of compensation by the bank needed to be obtained through the claimant’s efforts Further there had been no basis for implying such a term into the agreement to give the agreement business efficacy and/or to reflect what had been said to be the true intention of the parties. The starting point was the terms of the agreement itself, which made it very clear that the contingency upon which the claimant’s fee had become payable was the objective fact of an offer of compensation during the currency of the agreement, however that offer had come about. That had been the plain meaning of the words. Neither as a matter of construction or by implication of a necessary term the true meaning of the agreement was that the claimant’s fee was to be based only upon compensation which was obtained through the claimant’s efforts. The agreement naturally provided that the solicitors would use their reasonable endeavours to obtain compensation for the first defendant. The hope and expectation was that their efforts would bear fruit in obtaining compensation.

The defendants had come to the claimant with no prospect whatever of obtaining compensation otherwise than through whatever they could achieve on his behalf.

There was absolutely no expectation that the bank would change its mind without the intervention of the claimant. Any compensation offered after the solicitor had been retained, upon the signing of the agreement was, by definition, a bonus. The very simple and critical term of the agreement was that the first defendant had agreed to pay 50% of any such compensation offered during the currency of the agreement. Furthermore, the implication of a term requiring that the compensation had to be obtained through the claimant’s efforts would pose insurmountable difficulties of interpretation. There was no requirement for the claimant to demonstrate that the it were an effective cause of the bank’s first offer (see [77], [78], [81], [82], [84], [85 ] of the judgment).

The claimant was entitled to recover 50% of the gross amount of the sum offered by the in their August letter, plus disbursements and expenses. It followed that the claimant was entitled to judgment for the full sum claimed, and the defendants’ counterclaim was dismissed (see [114], [172] of the judgment).

52

Failure to Attend Trial and Striking Out The Court of Appeal in Mohun-Smith v TBO Investments Ltd, (see note below) allowed the defendant’s appeal against the judge’s refusal to set aside an order striking out the defence, under CPR 39.3, and entering judgment for the claimants. Both reasons given by the judge for having held that the defendant had not had a good reason for not having attended the trial would be rejected and, in the circumstances, if the judge had applied the relevant guidance in previous authority, he could not reasonably have concluded that the defendant had failed to act promptly once it had found out about his decision.

PRACTICE - PRE-TRIAL OR POST-JUDGMENT RELIEF - STRIKE OUT - COURT STRIKING OUT DEFENDANT’S DEFENCE AND ENTERING JUDGMENT FOR CLAIMANTS - DEFENDANT APPLYING TO SET ASIDE JUDGMENT - JUDGE DISMISSING APPLICATION - WHETHER DEFENDANT HAVING GOOD REASON FOR NOT ATTENDING TRIAL - WHETHER DEFENDANT ACTING PROMPTLY - CPR 39.

The claimants commenced a claim, seeking damages of approximately £2m against the defendant for professional negligence. The defendant defended the claim and retained a firm of solicitors (the solicitors). The defendant was unable to put the solicitors in funds to pay for counsel to represent it at the hearing. The solicitors ceased to act and came off the record. SR, a director of the defendant, thereafter took over the conduct of the litigation on its behalf. On 30 June 2014, which was supposed to be the first day of the trial, the defendant did not appear before the judge. A letter had been sent to the court by the solicitors, attaching a letter from DM (the company’s other director), and stating that, among other things, in light of the circumstances set out within that letter, the defendant asked that the court consider an adjournment. DM’s letter enclosed a statement of fitness for work or ‘sick note’ issued by SR’s general practitioner, which recorded that his case had been assessed on 27 June and, because of family stress, it was advised that SR was not fit for work. The indication on the document was that SR would not be fit for work for the period 27 June to 4 July. On 30 June, the judge dismissed the application for an adjournment, struck out the defence under CPR39.3 and entered judgment for the claimants. The judge concluded that SR had to have become aware of his decision between 3 and 8 July. On 18 July, the defendant applied to set aside the order, pursuant to CPR39.3(2), on the basis that SR (being the only one of the two directors of the defendant capable of representing it) had been certified as unfit to attend trial on 30 June. In addition to the sick note, the defendant also provided further information in support of its application (see [8] of the judgment).

53

It was common ground that the third condition in CPR39.3(5) was satisfied, namely, that the applicant had a reasonable prospect of success at the trial. However, it was in issue whether the first and second conditions were met. The judge dismissed the application. He held that the defendant did not have a good reason for not attending the trial on 30 June because: (i) the defendant had not shown that DM could not have represented it; and (ii) the medical evidence as to SR’s unfitness to attend was ‘wholly insufficient’. He also held that the defendant had not acted promptly once it had found out about his decision. The defendant appealed.

The issues were, first, whether the defendant had a good reason for not having attended the trial on 30 June. In that regard, among other things, the defendant, relying on Bank of Scotland Plc v Pereira ([2011] 3 All ER 392) (Pereira) and Estate Acquisition and Development Ltd v Wiltshire ([2006] All ER (D) 50 (May)) (Estate Acquisition), submitted that the judge had adopted an unduly rigorous approach in his assessment of the sufficiency of the medical evidence. Consideration was also given to art6 of the European Convention on Human Rights. Second, whether the defendant had acted promptly.

The appeal would be allowed.

(1)

An appellate court should be slow to interfere with a decision of a lower

court on the question of whether a litigant had a good reason for not

attending a trial. Such a decision was a fact-sensitive evaluation made in

the light of all the circumstances. It was the kind of decision that an appellate

court would only strike down for reasons analogous to those which justified

interfering with an exercise of discretion. However, in making that assessment,

regard had to be had to the guidance given in Pereira and Estate Acquisition

and the need, when applying CPR39.3(5)(b), to seek to give effect to the

overriding objective of dealing with cases ‘justly’ and to comply with art6 of

the Convention. That was particularly important where the party had a

reasonable prospect of success at the trial. In such a case, the court should

usually not adopt a very rigorous approach to the question whether the

litigant had shown a good reason for not attending. Generally, the court

should adopt a rigorous approach to scrutinising the evidence adduced

in support of an application for an adjournment on the grounds that a party

or witness was unfit on medical grounds to attend the trial. However, there

was a material distinction between an application under CPR39.3(3) and an

application for an adjournment of a trial. If the application to set aside

a judgment under CPR39.3(3) failed, the applicant would have no opportunity

54

whatsoever to have an adjudication by the court on the merits. That

difference between an application under CPR39.3(3) and an application

for an adjournment of the trial was important. Although it had not been

articulated as the justification for generally adopting a more draconian

approach to an application for an adjournment than to an application under

CPR39.3(5), it did justify such a distinction (see [24]-[26], [39], [40] of the

judgment).

Both reasons given by the judge for having held that the defendant had not had a good reason for not having attended the trial on 30 June would be rejected. There had been no basis on which the judge could properly have concluded that the defendant could have attended the trial by DM. As to the sufficiency of the medical evidence, although the judge had correctly referred to the Pereira guidance, he had lost sight of it when he had come to consider whether there had been a good reason for SR not having attended on 30 June. He had made no mention of it when he had come to make his overall assessment of whether a good reason had been established. Having identified shortcomings in the defendant’s evidence, the judge should have reminded himself of the general need not to adopt a very rigorous approach and to have regard to the overriding objective of dealing with cases ‘justly’ and in accordance with art6 of the Convention. That was particularly important in a case where: (i) the claim had been for approximately £2m; (ii) the defendant had had a defence which had had reasonable prospects of success; and (iii) it had to have been apparent that a refusal to set aside the earlier decision would be likely to have very serious consequences for the defendant. The judge had adopted too rigorous an approach to his assessment of the medical evidence. If he had kept the Pereira guidance in mind, he could not reasonably have rejected the doctor’s opinion (see [17], [27], [28], [29], [39], [40] of the judgment).

(2)

The judge had adopted too draconian an approach to the question of

promptitude in the context of the present case. Even if the defendant had not

acted with alacrity by having taken between 10 and 15 days to file the

application, the judge had failed to have regard to the statement in Pereira

that the court should not, at least in many cases, be very rigorous when

considering the applicant’s conduct. Having regard to the Pereira guidance

and the fact that: (i) the present had been a complex and very substantial

claim; and (ii) the period of time taken to file the application had been only

a matter of days, if the judge had applied the Pereira guidance, he could not

reasonably have concluded that the defendant had failed to act promptly

(see [35], [39], [40] of the judgment).

55

There was nothing exceptional about the present case to justify depriving the defendant of the opportunity of defending the substantial claim in circumstances where it had satisfied all three of the conditions prescribed by the rule for setting aside the order (see [37], [39], [40] of the judgment).

Appeal out of Time and Counsel’s Error In in Turner -v- South Cambridgeshire District Council[2016] EWHC 1017(Admin)Mr Justice Warby considered the Denton guidance in relation to an application to appeal out of time. He took the view that the idea that an error by counsel could amount to a “good reason” for appealing out of time. He stated : “The explanation given is an error by Counsel, who wrongly advised that Mr Turner had four weeks to lodge his appeal papers. Counsel’s error cannot amount to a good reason for the two weeks delay.”

New Civil Bills by October 2017 Lord Justice Jackson has suggested a new format of bills of costs could be mandatory for all work by October 2017.

Speaking at the recent Law Society’s Civil Litigation Section conference, and reported by the LSG, Jackson said the current system was outdated, time-consuming and unfit for purpose.

The Hutton committee created the bill of costs last year with automatic generation of electronic time records incorporating standardised J-Codes – standard codes to categorise work.

A voluntary pilot was started in October 2015 and is set to last until December 2016 following intervention from the civil procedure rule committee (CPRC).

Jackson said the CPRC was right to be cautious but there was now ‘deadlock’ affecting the professions and judiciary.

‘The CPRC should choose a future date for the implementation of the new bill,’ said the appeal judge, suggesting October 2017 as the date. ‘Work done before this date may be recorded in the old system and with the old format bill.

56

‘Work done after this date should be done in the new format bill. There will be no retrospective imposition and no need to go through historic information.’

Jackson said this practical solution would preserve the work of the Hutton committee, albeit with references to the J-Codes removed.

He said criticisms about the expense, time and complexity of the new bill of costs were largely unfounded.

Solicitors were not required to pay for expensive new time-recording software and would only need relevant codes. He accepted the new bill may take considerable time to apply retrospectively, but the reform could be made in a way that avoids the need to restructure past records of work done.

FREE E-Publications

the

SOLICITORS group

Get instant access to an omnibus of legal updates, across a range of legal practice areas, free of charge.

Sign up today ► Visit the website: www.thesolicitorsgroup.com

Not yet registered or referred by a friend? Sign up today to receive the latest updates.

► Select ‘Publications’ from the top navigation ► Select which publication you want to view ► Enter your name and email address It’s that simple, you will be emailed when further updates are available.

57

Conferences / Webinars / CDs / DVDs / E-Publications / InHouse / Consortium

June 2016 Proportionality: Guidance from the SCCO

We now have for the first time some authoritative guidance on the new test for proportionality; with the decision of Master Gordon-Saker in BNM -v-MGN Limited [2016] EWHC B13 (Costs).

Practitioners will recall under the old rules, if costs were ordered on a standard basis assessment the court would “only allow costs which are proportionate to the matters in issue” (CPR 44.4(2)(a)). It was unclear if economic factors were relevant.

The Court of Appeal gave some clear guidance on the term “proportionality” in Lownds v Home Office [2002] EWCA Civ 365: “what is required is a two-stage approach. There has to be a global approach and an item-by-item approach. The global approach will indicate whether the total sum claimed is or appears to be disproportionate having particular regard to the considerations that Part 44.5(3) states are relevant. If the costs as a whole are not disproportionate according to that test then all that is normally required is that each item should have been reasonably incurred and the costs for that item should be reasonable. If on the other hand the costs as a whole appear disproportionate then the court will want to be satisfied that the work in relation to each item was necessary and, if necessary, that the cost of the item is reasonable.”

Lord Neuberger summed up how the judiciary viewed Lownds: “One of the problems which beset the successful implementation of the Woolf reforms was the failure effectively to implement proportionality as a test in respect of cost assessments.

The fault at the heart of this as being the approach articulated, ironically by Lord Woolf himself, as Master of the Rolls, in Lownds v Home Office [2002] 1 WLR 2450. That fault was to follow the old approach of allowing costs which were considered to be reasonable and necessary to the litigation, with reasonableness and necessity being

58

considered on a narrow basis, largely without regard to the ultimate value of what was at stake in the proceedings.

Disproportionate costs, whether necessarily or reasonably incurred, should not be recoverable from the paying party. To put the point quite simply: necessity does not render costs proportionate.

Parties and their lawyers must keep firmly in mind that they ought to expend no more than a proportionate amount of money in the pursuit of justice. If they wish to spend more, they must appreciate that such sums will not be recoverable from their opponent. That is proportionality, proportionate costs, as between the parties.” – 15th Lecture in Implementation Programme, 2012.

In BNM -v-MGN Limited, the claimant brought an action in relation to prevent the defendant using confidential information after the defendant obtained her phone.

The claim was concluded, shortly after proceedings, by a consent order whereby the defendant agreed to pay damages of £20,000 and the claimant’s costs.

The new test of proportionality was used to halve profit costs (and counsel’s fees) and make a substantial reduction on the insurance premium. “…. I propose that in an assessment of costs on the standard basis, proportionality should prevail over reasonableness and the proportionality test should be applied on a global basis. The court should first make an assessment of reasonable costs, having regard to the individual items in the bill, the time reasonably spent on those items and the other factors listed in CPR rule 44.5(3). The court should then stand back and consider whether the total figure is proportionate. If the total figure is not proportionate, the court should make an appropriate reduction.”

Comment: Why half? Why not a third? Why not simply have a formula based upon the damages recovered? This could produce certainty, but is this for the judges to decide upon? Perhaps, this is what Jackson LJ, recently endorsed by the Master of the Rolls, has in mind with a fixed costs system? For the time being, his HHJ Michael Cook is arguably right in saying that the truth is “nobody knows what it means”.

The Third Party (Rights Against Insurers) Act 2010 After 6 years, the Third Party (Rights Against Insurers) Act 2010 is finally coming into force.

59

The Act allows a claimant to bring an action against an insurer in circumstances where the original (insured) defendant has become insolvent. The claimant can bring an action against the insurer directly and stands, in effect, in the shoes of the insured. An important development is that the claimant need not bring an action against the insured beforehand but can bring an action directly against the insurer.

One action can be brought to (i) establish the original defendant’s liability to the claimant; (ii) establish the insurer’s liability to pay under the policy.

The complicated process under Third Party (Rights) Against Insurers Act 1930, which required claimants, who were contemplating proceedings against an insolvent company to take proceedings to restore it to the register in order to be able to bring proceedings has now been swept away.

It also allows the right to obtain information about the insurance policy. It was not clear what information the third party was entitled to receive and the information provided under the 1930 Act could omit critical details.

Key Provisions of the Act There central aim of the Act is provide a simple procedure for the transfer of the rights of an insurance policy directly to the person who would be making a claim against a defendant which would be covered by that policy. (Section 1).

There are some technical terms and unfamiliar language but the key provisions are set out below: •

On the 1st August 2016 the Act comes into force.

•

There is a procedure for establishing liability under the Act (s.2 and 3).

•

The situations in which a claim can be made against an individual or

company are set out (sections 4 – 7).

•

It is ensured that the liability of the insurance company is limited to the rights of

the insured under the policy (s.8).

•

There is a section dealing with conditions affecting transferred rights (s.9).

•

The insurer’s right of set off is transferred (s.10).

•

There are detailed provisions dealing with information and disclosure for third

parties (s.11 and Schedule 1).

•

The right of the insurer to rely on a limitation defence that the insured may

have had (s.12)

•

There are sections dealing with jurisdiction (r.13).

•

The effect of transfer on the insured’s liability is confined to the amount not

recovered from the insurer (s.14).

60

•

Reinsurance is excluded (s.15).

•

It is made clear that the Act that it covers insurance that was voluntarily

incurred (s.16)

•

There are anti-avoidance provisions (s.17)

•

It is made clear that the Act applies to cases with a foreign element (s.18)

•

The Secretary of State has power to amend the Act so as to extend or change

the definition of “relevant person” (s.19).

•

There are some complicated transitional rules ( Schedule 3).

Comment: Now that third parties can now deal with liability in one set of proceedings making it easier to pursue the insurer, it is likely that the new Act will lead to more claims, but with a speedier and more cost-effective resolution. The Ministry of Justice has estimated that costs for third parties will be reduced by between £7.3m and £16.8m over 10 years as a result of the new Act.

Statements of Truth: Signing for a Client It is not often we have a decision where the signing by a solicitor of a statement of truth becomes an issue. In Galdikas -v- DJ Houghton Catching Services Ltd [2016] EWHC 1367 (QB) Mr Justice Supperstone had to to deal with a an application to strike out a defence, when the defendant’s solicitor had used the incorrect wording when signing the statement of truth on behalf of a client. The defendant was given permission to amend the Defence with the correct wording.

The court looked at Practice Direction 22, which I have set out below: 3.7

Where a party is legally represented, the legal representative may sign

the statement of truth on his behalf. The statement signed by the legal

representative will refer to the client’s belief, not his own. In signing he

must state the capacity in which he signs and the name of his firm

where appropriate.

3.8

Where a legal representative has signed a statement of truth, his signature will

be taken by the court as his statement:

(1)

that the client on whose behalf he has signed had authorised him to do so,

61

(2)

that before signing he had explained to the client that in signing the

statement of truth he would be confirming the client’s belief that the facts

stated in the document were true, and

(3)

that before signing he had informed the client of the possible consequences

to the client if it should subsequently appear that the client did not have an

honest belief in the truth of those facts (see rule 32.14).

An Online Civil Court-Full Steam Ahead The Law Society Gazette covered in early June an article following Lord Justice Briggs speech at a conference. Lord Briggs made it clear that lawyers and judges will still have important roles in the potential three-stage online court.

Briggs’ report, due out next month, is likely to back a three-tiered approach of triage, conciliation and a final judgment for most civil cases valued up to £25,000. ’Everything that can be done, ought to be done to encourage parties thinking of litigation to get advice as early as possible on the merits of their case from a qualified lawyer. I am quite clear on that.

‘I am not looking at this as creating a lawyer-free zone, that is not any part of my conception,’ he stressed.

Briggs envisaged qualified lawyers being part of the process before the first and third stages, helping clients to decide whether to progress their case, and if conciliation has not worked, help them prepared their argument for the judge.

It is also likely that case officers, who will be the first human point of contact for litigants in the online process, will be legally qualified.

Briggs said he was aware that some vulnerable or elderly people may have difficulty in accessing the new facility, but support services will be made available, possibly staffed by law students. ‘[But] they can’t just be left to get on with it pro bono and they will need funding,’ he added.

62

The judge, who was tasked with a review of civil courts by the lord chief justice last summer, said solicitors will need to change the way they work, although he appreciated the number of checks required at the outset of meeting clients will cause difficulties when it comes to charging for work.

‘I do think the time has come in relation to smaller cases for ways of unbundling solicitors’ ‘I do think the time has come in relation to smaller cases for ways of unbundling solicitors’ services and for the bar to be better with direct access,’ said Briggs. ‘[Lawyers] can also hone skills which would really make the difference in a trial situation for someone who might otherwise not be well represented. They will not need to write endless letters to the other side to ask about how badly they are behaving.’

The biggest task for policy-makers, he conceded, will be creating algorithms for extracting information from potential litigants at the triage stage.

Briggs has already visited the Canadian province of British Columbia, which has a fully functioning online court although he stressed the triage stage in development in England and Wales will not extend to advising on the merits of a case, as happens across the Atlantic. ‘[The first stage] is not going to ask legal questions, it is going to ask pure factual questions and gently delve into what is the heart of your grievance,’ said Briggs.

‘It is going to need a fantastic amount of work by subject matter experts, perhaps some judges, knowledge engagement experts, language experts [and] IT experts.’

The judge revealed it is possible that the online court will have a ‘soft’ launch, featuring one particular type of claim or having a starting limit of £10,000 while the process is further tested.

Lord Briggs should applauded for what he has done but why can’t resources be used to improve what we currently have instead of embarking upon this radical course; evolution over revolution.

63

July 2016 Interest Excluded from Past Part 36 Offer

We now have another Part 36 case to report on. In Purrunsing v A’Court & Co (a firm) & Anor [2016] EWHC 1528 (Ch), HHJ Pelling, sitting as a High Court judge, said that a Part 36 offer was deemed to include only the interest to the date when the relevant period for accepting the offer expired. Accordingly, a claimant who only beat his part 36 offer at trial because of the contractual interest on the damages awarded through to judgment was not entitled to enhanced costs.

HH Judge Pelling QC stated: “By CPR rule 36.5(4), a part 36 offer to pay money is deemed to include all interest down to the date when the relevant period for acceptance of the offer expires. In order to work out whether a judgment is more advantageous than such an offer, it is necessary to ensure that the offer or the judgment sum is adjusted by eliminating from the comparison the effect of interest that accrues after the date when the relevant offer could have been accepted.

“In my judgment, this is the effect of the words ‘better in money terms’ in CPR rule 36.17(2). If that is not done, then comparing the offer with the judgment is not comparing like with like and thus it is not possible to assess whether the judgment is ‘more advantageous’ in money terms than the offer.”

COSTS ASSESSMENTS : INDEMNITY BASIS : PART 36 OFFERS : PROVISIONAL ASSESSMENT : CIVIL PROCEDURE RULES 1998 r.47.15(5), r.36.17(4), r.36.17(4)(c), r.47.20, Pt 47 Lowin v W Portsmouth & Co Ltd (2016) QBD (Elisabeth Laing J, LTL 20/06/16) The cap on the costs of a provisional assessment under CPR r.47.15(5) did not displace a party’s entitlement to having the costs of that assessment on an indemnity basis under r.36.17(4) where the party had been awarded more than their Part 36 offer.

64

The appellant appealed against a master’s order concluding that the costs of a provisional costs assessment were capped under CPR r.47.15(5).

The appellant had claimed against the respondent company for damages, but accepted the respondent’s Part 36 offer. The appellant made a Part 36 offer for her costs. A judge ordered the respondent to pay the appellant’s costs, with a provisional assessment if not agreed. The master provisionally assessed the appellant’s costs at a higher sum than her offer, and ordered the respondent to pay under r.36.17(4), and to pay the costs of the assessment on an indemnity basis. However, the master concluded that r.36.17(4)(c) did not dislodge the application of r.47.15(5), which capped the maximum amount awarded for a provisional assessment.

The issue was whether, if a costs assessment went no further than a provisional assessment, the appellant, who could invoke Part 36 in her own favour, was limited to the capped costs under r.47.15(5), or whether the Part 36 provisions entitled her to a costs assessment on an indemnity basis.

HELD: The intention of r.47.20 was to import Part 36 into Part 47 with four express modifications. The appellant had submitted that the master erred in not applying the principles of Broadhurst v Tan [2016] EWCA Civ 94, [2016] 1 W.L.R. 1928 regarding the effect of an older version of Part 36 on the fixed costs regime in Part 45. That case was concerned with different provisions of the CPR, and a conflict between fixed and assessed costs. The costs in the instant case were subject to a cap, not fixed. In a fixed costs regime, a party received the fixed amount irrespective of the costs incurred, even if they spent less. In an assessed costs regime, they received the costs incurred, subject to assessment principles and whether a standard or indemnity basis applied. Where the costs cap applied, indemnity costs could be assessed and awarded, but would be subject to the cap, Nizami v Butt [2006] EWHC 159 (QB), [2006] 1 W.L.R. 3307 considered. The general scheme of reasons in Broadhurst was of assistance. Rule 47.20(4) considered how Part 36 should apply to the procedural provisions in Part 47. It applied to the costs of a detailed assessment, with modifications. There was a conflict between r.47.15(5) and Part 36, because r.47.15(5) potentially derogated from the entitlement to costs on an indemnity basis for an assessment under Part 36. However, for that derogation to occur in fact, r.47.20 would have to say that Part 36 applied with an additional modification, including r.47.15(5). It did not, so Part 36 applied to the instant case, and was not displaced by r.47.15(5), Broadhurst applied. While that might reduce parties’ incentives to keep the costs of the provisional assessment as low as possible, it would increase the incentive to accept a sensible Part 36 offer.

65

Appeal allowed Proportionality: Stop Press I covered in last month’s Litigation Line the controversial decision of Master GordonSaker in BNM -v-MGN Limited [2016] EWHC B13 (Costs), where the profit costs and an ATE premium were halved after applying the new test for proportionality. I am told on good authority that this case is now being appealed and my prediction is that whilst the profit costs may be reduced considerably, it is difficult to see how an ATE premium can be reduced in this way.

However, hot off the press is another case from the SCCO in May v Wavell Group 2016 (unreported SCCO 16 June 2016). In this case, Master Rowley applied the new proportionality test in a nuisance claim worth £25,000 in damages and a “modest prospect” of an injunction. The costs claimed amounted to £208,000. He adopted a two stage test is approach: firstly on an item by item basis were the amounts reasonable; secondly were costs proportionate. The result of stage one was that a reasonable total would be £99,655. The outcome at stage two was £35,000 was proportionate.

Of some concern to practitioners is yet again the uncertainty of this concept and the approach to be adopted. After savaging the claimant’s bill, he stated: “The amount that can be recovered from the paying party is not the minimum sum necessary to bring or defend the case successfully. It is a sum which it is appropriate for the paying party to pay by reference to the five factors in CPR 44.3(5). It is not the amount required to achieve justice in the eyes of the receiving party but only a contribution to that receiving party’s costs….”

Are we on the road to a different test for proportionality if the claim is modest and one which is significant?

Costs liability Where Claim is Issued but not Pursued – Webb Resolutions v Countrywide Surveyors (unreported – High Court 4 June 2016) The claimant made professional negligence claim in which they alleged that Countrywide had negligently overvalued a property which was to form security for a loan. Webb’s solicitors sent a Letter of Claim alleging that Countrywide had negligently overvalued the property, based on a “preliminary retrospective valuation” which Webb had obtained but was “not prepared to disclose”. The loss

66

claimed was £31,148. Countrywide’s solicitors disputed liability and sought disclosure under the Pre-Action Protocol for Professional Negligence. Further correspondence passed between the solicitors but the claim did not settle, Countrywide maintaining that it had not been negligent. A final post-issue offer failed to produce settlement and the claimant took no further action. The defendant now sought its costs to include pre-issue costs.

The Application was heard by Deputy Master Nurse, who acknowledged that the issue before him was not whether he had a discretion to order Webb to pay Countrywide’s costs, but rather how he should exercise his discretion particularly as regards Countrywide’s pre-action costs. In arguing against having to pay preaction costs, Webb relied on McGlinn v Waltham Contractors Limited which decided that a defendant’s pre-action costs in persuading a claimant to abandon part of its claim were not recoverable. The Deputy Master was largely dimisive of Webb’s argument on the grounds that Webb could not identify any issue debated during the pre-action phase which would not have been part of the litigation, if pursued.

The Deputy Master held that it would be wrong, when exercising his discretion, to ignore the expense that Countrywide had incurred and Webb’s awareness of the disproportionate expense of the course it was pursuing.

The effect of s51 Senior Courts Act 1981and the CPR was that there were three phases so far as recoverability of costs was concerned: (1)

Phase 1 is where there is a dispute and the parties incur costs which would be

recoverable as pre-action costs if a Claim Form is issued, but the potential

Claimant decides not to issue a Claim Form.

(2)

Phase 2 is where a Claim Form is issued but not served.

(3)

Phase 3 is where a Claim Form is both issued and served, but the Claimant

thereafter does not take any steps in the Claim.

Generally costs are not recoverable at phase 1 but they are at phases 2 and 3.

The only question in this case therefore became whether the court ought to exercise its discretion so as to award pre-issue costs. On the facts here the answer to that was yes.

Even if a claimant does not tell the defendant that it has issued, if a defendant subsequently finds out that a Claim Form has been issued, it should be able to be recoverable.

67

This a wakeup call for those who issue at the last minute and fail to advise clients that they may well pick up the tab for the other sides costs. In practice, I doubt there will be many firms who even consider this a possibility.

Lord Dyson Favours Fixed Fees Lord Dyson MR recently attended a conference organised by the Leeds Law Society and the Gazette summarised much of what he to say, which I have covered below.

He asked: ‘How many of you would start proceedings, instructing a solicitor or barrister in the usual way in pursuit of a claim?’

Dyson said he recognised that conditional fee agreements promote access to justice but ‘you have to be pretty desperate or very rich to be willing to engage lawyers in the time-honoured way, being charged at an hourly rate, with no cap and simply not knowing what you’re committing to’.

The government last week conceded that it would not meet its 1 October timetable for introducing fixed recoverable costs in clinical negligence cases.

Dyson said he had been convinced ‘for some time’ that the scope of fixed costs in litigation should be extended to include all fast-track cases and all cases in what he referred to as the ‘lower reaches’ of the multi-track.

Acknowledging that the government has, in principle, agreed to extend the scope of fixed costs, Dyson said: ‘It’s going to happen. It’s going to take a long time. It will be subject to consultation. I suspect there may not be too much resistance to the principle of extending fixed costs. I have little doubt, however, that many will have a lot to say about where the cut-off should be in the multi-track, perhaps even more so as to the figures that are to be determined for the fixed costs.’

He predicted that fixed costs would also reduce the need for costs budgeting, saying: ‘I am horrified that costs litigation is now a recognised specialism.’

Dyson also revealed that the Lord Chancellor had expressed interest in a contingency legal aid fund, ‘not least because he is not keen on CFAs. At a meeting I attended with him only recently he expressed his dislike of the idea of CFAs because he thought it was wrong in principle that lawyers should have a financial stake in the

68

outcome of litigation’.

But, despite the Lord Chancellor’s interest, Dyson questioned whether a fund would be established.

He warned: ‘The rock on which that idea foundered when it was last considered some years ago was the lack of money to provide the seed core for which this crop could grow. I fear that this may happen again. I hope not, because, in principle, I think it is an excellent idea.’

FREE E-Publications

the

SOLICITORS group

Get instant access to an omnibus of legal updates, across a range of legal practice areas, free of charge.

Sign up today ► Visit the website: www.thesolicitorsgroup.com

Not yet registered or referred by a friend? Sign up today to receive the latest updates.

► Select ‘Publications’ from the top navigation ► Select which publication you want to view ► Enter your name and email address It’s that simple, you will be emailed when further updates are available.

69

Conferences / Webinars / CDs / DVDs / E-Publications / InHouse / Consortium

August 2016 Civil Procedure: No Evidence of Expert Shopping

Stuart Coyne v (1) Alec Morgan (2) Alex Harrison (T/A Hillfield Home Improvement) (2016) QBD (TCC) (Judge David Grant) The defendants were employed by the claimant to carry out various building works at the claimant’s property. The claimant alleged that the works were defective and issued proceedings in the Technology and Construction Court in Birmingham.

The defendants applied for permission to rely on evidence from a second expert, to replace the draft report of their original expert. The issue was whether, as a condition of them being given permission, they should be required to disclose the draft report and any other material produced by the first expert.

HELD: The court had a wide and general power to exercise its discretion whether to impose terms when granting permission to adduce expert opinion evidence, under CPR r.35.4(1) and the wide and general nature of its case management powers under r.3.1(2)(m). In exercising that power or discretion, it could give permission for a party to rely on a replacement expert, but that was usually exercised on condition that the first expert’s report was disclosed (Vasiliou v Hajigeorgiou [2005] EWCA Civ 236 followed). However, strong evidence of “expert shopping” was required before imposing a term that a party had to disclose forms of documents other than the original expert’s report, such as a solicitor’s attendance note of discussions with the original expert. There was no evidence of expert shopping in this case. Accordingly, the defendants were required to disclose the draft report but nothing further. See also BMG (Mansfield) Ltd v Galliford Try Construction Ltd [2013] EWHC 3183 (TCC).

CPR 36 OFFERS AND WITHOUT PREJUDICE OFFERS Practice — Settlement of action — Offer to settle — Claimant making Part 36 offer following defendant’s offer to settle — Effect of Part 36 offer on defendant’s offer — Whether common law principle of implied rejection applying 70

DB UK Bank Ltd (trading as DB Mortgages) v Jacobs Solicitors [2016 [EWHC] 1614 (Ch) The claimant bank brought a claim for professional negligence against the defendant firm of solicitors. The claimant’s solicitors sent a letter to the defendant’s solicitors stating that they were accepting the defendant’s offer to settle contained in a “without prejudice save as to costs” letter (“WPSAC letter”) and enclosing a draft Tomlin order. A series of without prejudice letters and conversations followed.

The defendant’s solicitors wrote reiterating the terms of their offer of settlement.

Subsequently, the claimant’s solicitors sent a without prejudice letter containing a CPR Pt 36 offer. The parties differed as to the effect of the claimant’s Part 36 offer on the defendant’s WPSAC letter. The defendant contended that the claimant’s Part 36 offer was a counteroffer and, in law, had the effect of rejecting its WPSAC letter so that thereafter, it was not open for acceptance.

HELD: On the issue whether the claim had been settled, and when dealing with an initial common law offer, the impact on it of any counter-offer had to be addressed by reference to common law principles. A Part 36 counter-offer was still a counteroffer. Once the claimant’s Part 36 offer had been made the defendant’s WPSAC letter was rejected and was no longer available to be accepted. There had been no settlement of the claim and the matter was to proceed to trial. (paras 27–29, 36).

It therefore followed that: 27.

“…because one is dealing with an initial common law offer, the impact on it

of any counter offer has to be addressed by reference to common law

principles. A Part 36 offer is still a counter-offer.”

28.

“The result therefore is that once the Bank’s Part 36 offer was made on 19th

May 2016, the Solicitors’ WPSAC Letter was rejected as a result and was no

longer available to be accepted.”

Note: The judge found that when a Part 36 offer was made in response to another Part 36 offer, the common law principle of implied rejection did not apply, Part 36 being a “self-contained code.” This may appear to be a hair splitting technical point but it is a real distinction for practitioners and an elephant trap.

71

Court Fees: Minor Changes The full list of Civil and Family Court Fees from the 25th July 2016 is available here. The main provisions are: Judicial Review There are increases in the fees payable on applying for judicial review; applying for a request to reconsider a decision and payment once a court gives permission.

Requests for Detailed assessment There are increases in the fees payable when a party is legally aided.

There is a sliding scale of fees on the filing of a request for a detailed assessment ranging from £369 (costs claimed do not exceed £15,000) to £6,160 (costs claimed exceed £500,000).

•

The fee for the issue of a default costs certificate is £66

•

The fee on commencing an appeal in a detailed assessment £231

•

The fee on a request or application to set aside a default costs

certificate £121

Enforcement fees There are increased fees on sealing a write of control, requiring a debtor to attend court, applications for charging orders and similar enforcement processes.

The 85th Update to the Civil Procedure Rules This update introduces changes in relation to cost capping orders in judicial review cases.

The amendments come into force on 8 August 2016 and do not apply to an application for judicial review where the claim form was filed before 8 August 2016. http://www.legislation.gov.uk/uksi/2016/707/contents/made

72

Part 3 – The Court’s Case Management Powers Part 46 and PD46 – Costs – Special Cases Amendments to rules and practice direction are made to create costs capping orders in non-environmental judicial reviews, replacing protective costs orders.

The amendments implement sections 88-90 of the Criminal Justice and Courts Act 2015. Where the court makes a costs capping order limiting or removing the applicant’s liability to pay costs, the order will include a ‘cross-cap’ limiting or extinguishing the other party’s liability to pay the applicant’s costs should they lose.

The rules provide that an applicant for a cost capping order should set out why an order should be made, having regard to the Criminal Justice and Courts Act 2015.

A summary should be provided of their resources, including major assets and likely future contributions from third parties; a summary of the costs the parties are likely to incur through the proceedings; and, if they are a body corporate, whether they can demonstrate they can meet likely liabilities arising from the claim.

The court will consider the financial resources of the parties when determining whether to make a costs capping order and, if one is appropriate, what the terms of that order should be.

Failure to Lodge a Costs Budget –Limited to Court FeesJamadar -v- Bradford Teaching Hospitals NHS Foundation Trust Court of Appeal Lawtel CA 21/7/2016.

The fact that a clinical negligence case had become a quantum-only dispute did not take it out of the costs management regime, meaning that the claimant’s failure to serve a costs budget restricted its recoverable costs to the court fees only, the Court of Appeal has ruled.

This case involved a £3m clinical negligence claim over treatment that resulted in the amputation of one of the claimant’s legs.

73

The trust initially denied liability and the court sent the parties a form N149C stating that as it was a defended claim it appeared to be suitable for allocation to the multitrack. Shortly afterwards, the trust admitted liability and the form N149C was revoked, with judgment entered against the trust for an amount to be determined.

The parties received notice of a case management conference and though the defendant sent the claimant its costs budget, the claimant did not provide his own, despite requests. At the conference the district judge gave directions, including the appointment of five experts on each side, leading towards a five-day trial on quantum.

He also approved the trust’s costs budget and said the claimant’s failure to produce a costs budget meant his recoverable costs be confined to court fees.

The claimant applied unsuccessfully to vary the order or for relief from sanctions. A circuit judge refused his appeal, holding that the claim was self-evidently a multitrack case and that the appellant had been in breach.

On appeal to the Court of Appeal – with Lord Justice Jackson giving the only judgment (Lindblom LJ agreed) – agreed that the case was self-evidently for the multi-track. With an extensive agreed list of expert witnesses and a claim worth around £3m, “nobody could seriously think it could sensibly proceed as a fast-track case”.

The case has not been fully reported but the Lawtel report states: “The fact that it was quantum-only did not take it out of the costs management regime. Quantumonly trials could be very expensive, particularly one with five expert witnesses for each side. Therefore the automatic sanction in rule 13.4 came into operation. The circuit judge had been right to uphold the district judge’s decision.”

The decision not to grant relief from sanctions was also upheld. While other judges might have been more lenient, the circuit judge’s decision was within the ambit of his discretion. “He had been very critical of the appellant’s solicitor’s decision not to produce a costs budget. His comments were proper for him to make as part of his exercise of discretion in applying the three-part test in Denton.”

Note: Key changes were made with the 83rd CPR update for dates for filing and service of the budget at CPR3.13 ( see below). The rule stipulates that for matters where the value of the claim on the claim form is less than £50,000, the budget must

74

be filed and served with the Directions Questionnaire but in any other case (value equal to or exceeding £50,000) the budget must be served no later than 21 days before the first CMC. Practice Direction 3E, para 6 has been expanded to state that the Precedent H must follow the Guidance Note in all respects and where the budgeted costs do not exceed £25,000 or the value of the claim as stated on the claim form is less than £50,000, then parties must only use the front page of the Precedent H. CPR 3.13.— (1)

Unless the court otherwise orders, all parties except litigants in person must file

and exchange budgets—

(a)

where the stated value of the claim on the claim form is less than £50,000,

with their directions questionnaires; or

(b)

in any other case, not later than 21 days before the first case

management conference.

(2)

In the event that a party files and exchanges a budget under paragraph (1),

all other parties, not being litigants in person, must file an agreed budget

discussion report no later than 7 days before the first case

management conference.”

The sanction for breach of the requirement to file a costs budget remains the same.

Failure to file the budget in time means that the party in default has its costs budget limited to court fees (unless relief from sanction is obtained).

There are changes to Practice Direction 3 – E Costs Management. (b)

Parties must follow the Precedent H Guidance Note in all respects.

(c)

In cases where a party’s budgeted costs do not exceed £25,000 or the value

of the claim as stated on the claim form is less than £50,000, the parties must

only use the first page of Precedent H.”

The first of these requirements is as important as the second. The Precedent H Guidance Note must be followed “in all respects”.

75

September 2016 Re-Opening a Settlement - The Supreme Court Decision in Haywood v Zurich Insurance Co Plc (2016) UKSC 48

Contract — Rescission — Settlement of action — Employee claiming damages against employer for injury at work — Employers’ insurers suspecting that defendant exaggerating effect of injury but entering into settlement agreement on basis of inability to prove suspicions in court — — Insurers subsequently receiving proof that employee had exaggerated claim so that settlement excessive — Insurers bringing action for rescission of settlement agreement — Whether sufficient to prove materially false misrepresentation which intended to induce and inducing representee to act to his detriment — Relevance of representee’s belief as to truth of representation — Whether employee’s false representation inducing insurers to enter into settlement — Whether insurers estopped from retrieving amount overpaid under settlement agreement In 1998 the defendant employee was injured in an accident at work and claimed damages of over £419,000 against his employers. The employers’ insurers, who were dealing with the claim, suspected that the defendant had exaggerated the extent of his injuries and carried out investigations but were unable to find evidence sufficient to prove that in court. In 2003 the insurers reached a settlement with the defendant to pay him £134,973 in full and final settlement of the claim and a Tomlin order was made to that effect. In 2005 the insurers received proof that the employee had recovered from his injuries a year before the settlement had been reached. The insurers brought proceedings for, inter alia, rescission of the settlement agreement.

The defendant applied for the proceedings to be struck out or for summary judgment in his favour. The district judge refused the application but the circuit judge reversed that decision. The Court of Appeal allowed the insurers’ appeal and the claim proceeded to trial. The trial judge, having found that the defendant had exaggerated the effects of his injury, assessed the quantum of damages at £14,720 and ordered the defendant to repay the amount received under the settlement less £14,720. The Court of Appeal allowed the defendant’s appeal on the grounds, inter alia, that although the defendant had misrepresented the extent of his injuries, the insurers had not relied on that misrepresentation when they had reached the settlement agreement.

76

On the insurers’ appeal— Held, appeal allowed. In a claim for deceit based upon alleged misrepresentation it had to be shown that the defendant had made a materially false misrepresentation which had been intended to induce, and had induced, the representee to act to his detriment. It was not necessary as a matter of law to prove that the representee believed the misrepresentation to be true although the representee’s state of mind might be relevant to the issue of inducement. A claimant alleging deceit did not have to show that he had believed the misrepresentation and his reasonable belief as to whether the misrepresentation was true was not the test. The representee might settle the claim on the basis that he thought the misrepresentation would be believed by the judge. The fact that the insurers did not wholly believe the defendant did not preclude them from having been induced to reach a settlement by the defendant’s misrepresentations. Qualified belief or disbelief did not rule out inducement, and it was sufficient to establish that the fact of the misrepresentation had been a material cause of the defrauded representee entering into the settlement. The questions whether the insurers had been induced to enter into the settlement agreement and whether doing so had caused them loss were questions of fact which had been correctly decided in the insurers’ favour by the judge.

Accordingly, the judge’s order would be restored.

Note: this case represents a major victory for insurers and opens up a Pandora’s Box for claimants and their lawyers. This case is not only applicable to personal injury cases but all insurance based claims and settlements .The reversal of the Court of Appeal decision, which was aimed at bringing finality to litigation, now means that many years after a claim is concluded, the insurers can argue that the settlement was arrived at by deceit.

We are of course living in a Big Brother world of social media, with insurers using automated intelligent software to detect key phrases designed to track claimants so it is very likely this will be extended post settlement in high value claims.

MALICIOUS PROSECUTION IN CIVIL PROCEEDINGS: LANDMARK SUPREME COURT DECISION Malicious prosecution already exists in relation to criminal proceedings; but what about civil proceedings? By a majority of 4:1, the Supreme Court has now allowed an appeal and found that the tort of malicious prosecution includes the prosecution

77

of civil proceedings: Willers v Joyce and Another[2016] UKSC 43 Tort — Cause of action — Malicious prosecution — Action brought against company director in respect of breaches of contractual and fiduciary duties — Claim withdrawn before trial — Company director claiming damages for malicious prosecution of civil proceedings — Whether tort of malicious prosecution of civil proceedings existing in English law The claimant was employed by the original defendant, G, from 1986 until his dismissal in 2009. During the course of his employment he acted as a director of a number of companies established and controlled by G, carrying out G’s instructions and implementing his decisions. As director of one such company, L Co, the claimant, on G’s instructions, brought a claim for wrongful trading against a company which went into liquidation. That action was abandoned shortly before trial on G’s instructions.

In 2010 L Co began proceedings against the claimant for alleged breaches as a director of his contractual and fiduciary duties in causing it to incur the costs of pursuing the earlier claim. The claimant defended the action and issued a third party claim against G for an indemnity. In 2013, shortly before trial, the claim was discontinued and L Co was ordered to pay the claimant’s costs on the standard basis. The claimant began proceedings against G for malicious prosecution on the ground that L Co’s claim had been brought without reasonable cause, determined in the claimant’s favour and actuated by malice, and that the claimant had suffered damage to his reputation, health and earnings, as well as loss occasioned by the excess of his legal expenses in defending the action over the amount recovered under the costs order. On G’s application to strike out the claim, the judge held that, having regard to conflicting decisions of the House of Lords and the Privy Council, she was bound to follow the decisions of the former and accordingly struck out the claim as unknown to English law. She also issued a “leapfrog” certificate under section 12 of the Administration of Justice Act 1969 to enable the claimant to apply to the Supreme Court for permission to appeal to seek determination of whether such a claim was available to him. The Supreme Court granted the claimant permission to appeal. While the appeal was pending G died and the executors of his will were substituted as defendants.

On the claimant’s appeal — Held, allowing the appeal (Lord Neuberger of Abbotsbury PSC, Lord Mance, Lord Sumption, Lord Reed JJSC dissenting), that it was unjust for a person to suffer injury as a result of the malicious prosecution of legal proceedings for which there was no reasonable ground and not to be compensated for the injury intentionally caused

78

by the person responsible for it; that the essential, and separate, ingredients of the tort of malicious prosecution were that the injury was suffered in consequence of the malicious use of legal proceedings brought without a reasonable basis; that “malice” signified the deliberate misuse of the court’s process; that those elements applied as much to the bringing of civil proceedings as to criminal proceedings; that the historic case law provided some support for the existence of a remedy where a claimant had suffered provable loss as a result of civil proceedings brought against him maliciously and without proper justification; that there was no good reason for limiting the breadth of the remedy so as to exclude civil proceedings; that the countervailing factors raised against extension to civil proceedings were insufficient to counter the conclusion that malicious prosecution was a tort which applied to civil just as to criminal proceedings; that, further, since the claim for excess of legal expenses could not be characterised as abusive, such a claim was also available to the claimant; and that, accordingly, the whole claim would proceed to trial (post, paras 25–32, 39–41, 43, 54–60, 62–67, 79, 81, 86–87, 90–91).

Glinski v McIver [1962] AC 726, HL(E) and Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd [2014] AC 366, PC applied.

Gregory v Portsmouth City Council [2000] 1 AC 419, HL(E) not followed.

Decision of Ms Amanda Tipples QC, sitting as a deputy judge of the Chancery Division [2015] EWHC 1315 (Ch), reversed.

COURT FEES AND UNDERPAYMENT: STAYING AN ACTION INSTEAD OF A STRIKE OUT This is becoming a real problem for claimants as they have been some harsh decisions from the courts if there is been an underpayment.

This case from Master Clark in Lifestyles Equities C.V. -v- Sportsdirect.Com Retail Limited [2016] EWHC 2092. is to be welcomed for its common sense. Oddly, the decision in Richard Lewis & Others -v- Ward Hadaway [2015] EWHC 3503 (Ch) (deliberate decision not to pay the correct fee was an abuse) did not feature at all.

Instead of an application to strike out for abuse there was a proper and measured application for a stay pending payment of the correct court fee. Inevitably, we are likely to need some guidance from the Court of Appeal.

79

NO PLANNED CHANGE IN THRESHOLD LEVEL FOR APPEALS TO THE COURT OF APPEAL The Gazette reported that the Law Society (24th August-see below) has welcomed a government decision not to raise the threshold for permission to take cases to the Court of Appeal as part of a package of reforms to reduce delays.

However, Chancery Lane expressed disappointment over the decision to remove an automatic right to an oral hearing when seeking permission to appeal to the court.

Earlier this year the Civil Procedure Rule Committee (CPRC) consulted on ways to reduce pressures faced by the Court of Appeal’s civil division. Work has increased by 59% in the past five years.

Committee chair Lord Dyson said that in an environment where there has been no increase in judicial resources, a serious backlog of cases is getting worse and delays are lengthening.

The proposed package of reforms included increasing the threshold for granting permission to appeal to the Court of Appeal from ‘a real prospect of success’ to ‘a substantial prospect of success’.

Responding to the consultation, the Society questioned the impact on perceptions of fairness of the justice system if a litigant whose appeal has a ‘real prospect of success’ were denied the right to have the appeal heard.

A ‘substantial’ prospect of success could also lead to satellite litigation over its interpretation and application, it warned.

A statutory instrument, which comes into force on 3 October, shows that the test will remain unchanged.

Society chief executive Catherine Dixon said Chancery Lane is pleased the threshold will not be raised, noting there is no evidence to suggest that the current test is not sufficient.

She added: ‘It appears that the proposed changes were intended to reduce the Court of Appeal’s workload. The court has many important functions to perform and it is essential that it is appropriately resourced.

80

‘The redistribution of more ancillary matters is therefore sensible as it will free up the much-needed time of Court of Appeal judges to deal with substantive matters.

‘However, if the CPRC are to draft rules relating to delegation of powers we would recommend that such duties remain with qualified court officers (ie solicitors and barristers).’

The statutory instrument states that where an application for permission to appeal is made to the Court of Appeal, the court will determine the application on paper.

However, the application could be determined at an oral hearing if the judge thinks it cannot be fairly determined on paper.

An explanatory memorandum published by the government states that the proposal was backed by most judges who responded to the consultation.

It was not supported by most practitioners and representative bodies – with the exception of the Association of Personal Injury Lawyers and human rights group Justice.

Those in favour thought it would substantially reduce the amount of judicial time spent on determining applications for permission to appeal. Those against were concerned that complex appeals benefit from oral discussion of written arguments.

Some litigants may also feel more comfortable expressing themselves orally, it was argued.

Dixon added: ‘While we are disappointed that the automatic right to oral renewal hearing has been removed, the court’s discretion to “call in” cases and request further information does provide some safeguards to vulnerable parties.

‘Nevertheless, there is still a risk that some applications - which haven’t been presented as strongly on paper as they would have in person (for example due to a language barrier) - will be dismissed as without merit.’

81

October 2016 Project Fear or Project Fixed Costs?

The Lord Chancellor, the Lord Chief Justice and the Senior President of Tribunals have issued a consultation paper (Liz Truss, Lord Chancellor, described it as a vision statement!) ‘Transforming Our Justice System’ outlining almost £1 billion worth of reforms that will seek to “modernise and upgrade our justice system so that it works even better for everyone, from judges and legal professionals, to witnesses, litigants and the vulnerable victims of crime“.

Key proposals in respect of the civil justice system and which are relevant to personal injury practitioners are: •

Increased promotion of the full range of methods of settling disputes more

swiftly, at less cost and with greater choice;

•

Automation and digitisation of the entire process of civil money claims

by 2020;

•

Introduction of processes to allow for faster handling of cases in a more

convenient way;

•

Extension of the fixed recoverable costs regime (with an eye to avoiding

disproportionately high legal costs for losing parties and enabling people to

make more informed decisions on whether to take or defend legal action);

•

Extension of the powers of the High Court, allowing it to make attachment of

earnings orders so that debtors pay back their creditors

“Our reforms will promote the full range of methods of settling disputes more swiftly, at less cost and with greater choice. This is likely to include a number of options: a dispassionate evaluation of the dispute, followed by negotiation, conciliation, mediation or a tailored hearing to resolve the issues on which the parties remain in dispute. These options are designed to minimise combative hearings and help parties settle their disputes with the minimum of stress and acrimony, whether they are members of the public or multi-national corporations. Depending on the complexity of a case – and the needs of all involved – it might be online, paper-based or face-

82

to-face. We want to build on simpler consumer-focused models. In the civil courts, we will automate and digitise the entire process of civil money claims by 2020.

These account for more than four fifths of the 1.6 million claims issued in the county courts and the High Court each year – with the vast majority (83%8) of which are uncontested. We will speed up resolution as we replace paper and post with digital working: currently, a ‘fast track’ claim with a value between £10,000-£25,000 takes 11 months to be resolved. Under our new digital model, cases will be handled faster and in a more convenient way, improving the experience for everyone making and defending claims in the civil courts. More needs to be done to control the costs of civil cases so they are proportionate to the case, and legal costs are more certain from the start. Building on earlier reforms, we will look at options to extend fixed recoverable costs much more widely, so the costs of going to court will be clearer and more appropriate. Our aim is that losing parties should not be hit with disproportionately high legal costs, and people will be able to make more informed decisions on whether to take or defend legal action” In a press release, the Lord Chancellor, Liz Truss stated: “We live in a society where you can apply for a mortgage or a job on-line, you can do your weekly shop from your home, plan holidays, weddings and parties on the internet. It’s high time our courts caught up”.

It seems clear that an extension of the fixed recoverable costs system is on its way with PI claims over £25,000 to £250,000, which would be in line with Lord Justice Jackson’s lecture proposals at the beginning of the year.

Third Party Funding: High Court Orders Disclosure of Identity of Third Party Funder The High Court in Wall -v- The Royal Bank of Scotland PLC [2016] EWHC 2460 (Comm) ordered to reveal the identity of third party funders. The exercise of such a power did not breach Article 8 rights.

The claimant, who is as assignee, brought proceedings against the Defendant Bank for £700 million in relation to alleged mis-selling of an interest rate swap. The defendant sought the identity of third party funders who were funding the claimant and to then seek security of costs.

83

Mr Andrew Baker QC sitting as a High Court Judge stated: “This litigation is large and complex. It raises for investigation events spanning a period of at least six years. There will be expert evidence from up to five different expert disciplines. RBS estimates that to the conclusion of the trial its costs will exceed £9 million (before VAT). On the evidence put before the court at this stage, Mr Wall appears to be an individual without the means to fund litigation of this magnitude, complexity or expense. With no evidence to the contrary to weigh in the balance, which is the position today, the inference I draw is that Mr Wall must be litigating with the benefit of third party funding. The litigation, although now under Mr Wall’s name, is in pursuit of rights against RBS (if any) not of Mr Wall but of OPG. There is no evidence from which to suppose that anyone would be willing to fund the litigation altruistically. The probability must be – absent, again, contrary evidence to put in the balance – that whoever is funding the litigation is doing so in return for a share in any proceeds….

In the round, RBS has a proper basis to pursue an application under CPR 25.14 if only they can identify the correct respondent(s) to such an application. The order sought will require Mr Wall to provide information which he has that will enable RBS to identify that respondent or those respondents. There is a serious argument then to be had, on the merits, not between RBS and Mr Wall, although no doubt Mr Wall formally has an interest, but between RBS and the correct respondent(s), once identified, as to whether they should be required to put up security for RBS’s costs.

There appears to be a real prospect of success for RBS, I need say no more, on that argument. To deprive RBS of the opportunity to pursue that application would be a material prejudice; there is no suggestion of prejudice to Mr Wall if the current application is granted as a pre-cursor to an application under CPR 25.14, except the suggestion, which I have rejected, that the order sought would impermissibly infringe his Article 8.1 right to respect for his private life. I think the balance overwhelmingly favours the order sought”

86th Update to the Civil Procedure Rules The 86th Update to the Civil Procedure Rules makes a number of amendments, the principal changes being to Part 52 Appeals and the supporting practice directions.

The majority of changes come into force on 3rd October 2016. Please note the transitional provisions in Article 16 of the statutory instrument and page 2 of the practice direction making document.

84

Part 2 - Application and interpretation of the rules CPR 2.4 lists the judges who are “the court” and so can perform any functions expressed as functions of “the court”. Registrars in Bankruptcy are not included in that list, although the Registrars hear and determine company matters which fall within the remit of the CPR. An amendment is made by adding Registrars in Bankruptcy to the list of judges who comprise “the court”.

PD2C - Starting proceedings in the County Court Closure of County Court Hearing Centres The practice direction is amended to reflect a number of hearing centres that will have closed on 31 July 2016, and the one hearing centre that will open on the same date. Amendments are made throughout the practice directions where the relevant hearing centres are named.

Claims for restoration of companies The practice direction currently provides that the County Court at Central London is able to issue claims for restoration of companies whose registered address is within their local jurisdiction, the practice direction is amended so that it may also issue claims for restoration for a company whose registered address is anywhere in England and Wales.

PD3E - Costs management A revised Precedent H, the form for filing costs budgets, is substituted.

Practice Direction 8A – Alternative procedure for claims Amendments are made to implement the Telecommunications Restriction Orders (Custodial Institutions) (England and Wales) Regulations 2016 under Section 80 of the Serious Crime Act 2016 to provide that the court may on application order nondisclosure of the information submitted with a TRO application; and this information will not be provided to any of the parties until the application for a non-disclosure order has been considered by the court.

85

Part 26 - Case management – preliminary stage The pilot scheme introduced to provide that cases provisionally allocated to the multi-track are sent to the County Court at Central London (CCCL) rather than one of the London hearing centres has ended. The pilot scheme is put on a formal footing by amendment to Part 26. PD51I is omitted.

Practice direction 51I – the County Court at Central London Multi-Track Pilot Scheme PD51I is omitted (see Part 26 above).

Practice Direction 51L – New Bill of Costs Pilot Scheme The New Bill of Costs Pilot Scheme is extended by a year and is modified to alleviate concerns raised about the existing form’s reliance on J Codes. Parties will be able to file their bill in electronic format which will assist the court in assessing the bill as any adjustment made by the court, to say the rate or hours claimed, will automatically be carried through to all relevant parts of the bill.

Practice direction 51N – Shorter and Flexible Trials Pilot Schemes The scheme is extended by a further year and is modified to clarify the procedure.

Adjustments are made to the scheme as follows: to clarify that the scheme applies to cases commenced in or transferred into the schemes while the practice direction is in force; to permit Chancery Masters to transfer cases in the Chancery Division into the scheme and to provide that the Statements of Case do not need to be repleaded after transfer to bring them within the scheme’s rules; and to allow cases transferred into the scheme to be tried by a Chancery Master if appropriate, or with the consent of the parties.

Practice direction 51O – The Electronic Working Pilot Scheme The current pilot scheme is extended by a year and amendments are made to the scheme in the light of feedback received during the first year of its operation.

Consequential amendments are made to PD5B. Part 52 – Appeals Practice Direction 52A – Appeals Practice Direction 52B - Appeals in the County Court and High Court Practice Direction 52C - Appeals to the Court of Appeal Practice Direction 52D – Statutory Appeals and appeals subject to special provision Part 40 - Judgments, Orders, Sale of land etc.

Part 63 – Intellectual Property Claims

86

The principal amendments to Part 52 and supporting practice directions concern: the procedure for appeals to the Court of Appeal; the exercise, by court officers, of functions of the Court of Appeal; and consequential changes reflecting the changes in routes of appeal brought about by The Access to Justice Act 1999 (Destination of Appeals) Order 2016.

Applications for permission to appeal to the Court of Appeal The main change concerns the way in which an application for permission to appeal to the Court of Appeal is determined. Instead of the application being initially determined on the papers without a hearing, with an automatic right to an oral hearing in the event of refusal, the application will be determined on the papers unless the court considers that it should be determined at an oral hearing. The court is given a discretion to “call in” the application for oral hearing in this way, and is placed under a duty to do so if it is of the opinion that it cannot fairly determine the application on the papers. The court may also direct that the party seeking permission provide further information in support of the application, and that the respondent to the appeal attend the hearing. Unless the court directs otherwise in an exceptional case, the oral hearing, where one is directed, will be listed within 14 days of the direction for an oral hearing, before the judge who “called in” the application.

Court officers The existing position is that with the consent of the Master of the Rolls qualified officers (a solicitor or barrister) may exercise jurisdiction of the Court of Appeal in relation to certain ancillary matters such as applications for an extension of time. An application may be determined on paper by the officer of the court and parties may apply for an oral hearing. There is no change in relation to the court officers themselves, and only a minor change (clarifying that a court officer may not decide an application for a stay of proceedings in the lower court) in relation to the matters which they may deal with. The changes made are in relation to the procedure for making and reviewing decisions, and align the approach to that for applications for permission to appeal to the Court of Appeal. Thus a review of a decision of a court officer by a single judge (and similarly a reconsideration by a judge of a decision made by a single judge) will be undertaken on the papers unless the judge determines there should be an oral hearing (which the judge must do if of the opinion that the matter cannot be fairly determined without an oral hearing).

87

Amendments consequential to changes to the routes of appeal The Access to Justice Act 1999 (Destination of Appeals) Order 2016 simplifies the appeals process to ensure that, as far as possible, an appeal should lie to the next level of judge. Part 40 – Judgments, Orders, Sale of Land etc. is amended to provide that where the High Court is the appeal court, any judgment or order of the lower court must indicate the appropriate division of the High Court to which any appeal must be made. Part 63 – Intellectual Property Claims is also amended to reflect provision in the Order that in cases allocated to the small claims track of the Intellectual Property Enterprise Court, an appeal will lie from a decision of a District Judge to an enterprise judge.

Amendments are made to PD52A consequential on the changes to routes of appeal made by the Access to Justice Act 1999 (Destination of Appeals) Order 2016.

More significant amendments are made to PD52C (Appeals to the Court of Appeal) to streamline the timetable for stages in appeals to the Court of Appeal, change the requirements relating to skeleton arguments, and control the size of appeal bundles.

Consequential amendments are made to PD3C, Parts 45, 47, 76, 80 and 88.

Part 54 - Judicial Review and Statutory Review The Public Contracts Regulation 2015 which came into force in February 2015 amended CPR 54.5(6). The amendment to the rule made by virtue of the Regulation incorrectly identifies the relevant provision as “regulation 92” instead of “regulation 92(2)” and this inaccuracy is amended.

Don’t miss out on the latest updates...

► Visit the website: www.thesolicitorsgroup.com ► Select ‘Publications’ from the top navigation

Sign up today

► Select ‘Property Publication’ ► Enter your name and email address It’s that simple, you will be emailed when further updates are available.

Not yet registered or referred by a friend? Sign up today to receive the latest updates.

88

Conferences / Webinars / CDs / DVDs / E-Publications / InHouse / Consortium

the

SOLICITORS group

CPD Webinars

2017

Notes/Slides provided | 1hr CPD per Webinar | All Webinars CPD Accredited | Packages to suit your firm

Quality Training FOR LESS

NEW

Mandatory from 1st November 2016

Complete all 4 parts of the SRA Competency Statement

Available Online or via DVD or CD the

SOLICITORS group

WATCH:ONLINE Viewers

1

Hour

6

Hours

WATCH:DVD Viewers

1

Hour

6

Hours

LISTEN:CD Viewers

1

Hour

6

Hours

£34+vat £149+vat

£36+vat £169+vat

£36+vat £169+vat

£44+vat

£199+vat

£46+vat

£209+vat

£46+vat

£209+vat

£54+vat

£249+vat

£56+vat

£259+vat

£56+vat

£259+vat

Departments? Please Call

Departments? Please Call

Departments? Please Call

CPD TOPICS AVAILABLE: Civil Litigation

Employment

Residential Property

Commercial Litigation

Family

Wills & Probate

Commercial Property

Financial Management & Compliance

SRA Competency Parts A, C & D

Company/Commercial Law

Immigration

Criminal Law

Personal Injury

BOOK NOW 01332 226601

6 HOURS CPD ONLY £149

+vat

► Visit: thesolicitorsgroup.com

89

November 2016 Court Fees, Limitation and Abuse of Process

I have previously covered, in an earlier edition of Litigation Line, the case of Lewis v Ward Hadaway [2016] 4 WLR 6, [2015] EWHC 3503 (Ch) and the consequences of failing to pay the correct court fee on issue. This case has created a good deal of uncertainty and satellite litigation.

A very helpful summary of the principles can be found in the pragmatic judgment of Mr Justice Stuart-Smith in Dixon -v- Radley House Partnership [2016] EWHC 2411 (TCC).

The claimants were bringing an action in contract and tort claiming breach of contract/negligence against a builder and architect.

Proceedings were issued on the basis of the claim form claiming £35,894.78. The correct fee for this claim (£395) was paid. However the Particulars of Claim made various, much higher, claims for damages.

A second set of proceedings were issued were the claim was put “to be assessed” and a court fee of £2,500 paid. There were various stays and the proceedings were consolidated and transferred to the TCC. The court referred to the earlier Court of Appeal case of [2013] EWHC 2845 (Ch) where it was held that a failure to pay the court fee meant proceedings were not issued and the action was not outside the limitation period.

In the Page case the fee was not paid at all. It is an open question whether payment of an incorrect fee means that proceedings were not “issued”.

I have included some key extracts from Dixon which provide importance guidance to practitioners as follows:

90

“These authorities leave open two possibilities for what should be regarded as “the appropriate fee” for the purposes of the principle laid down by the Court of Appeal in Page v Hewetts when applied to a case where the Court has issued proceedings on payment of a fee which is subsequently said to have been inadequate and therefore inappropriate. The more favourable to Claimants would be to hold that the fee proffered, even if it could be shown to be less than that required by the relevant order, was appropriate because it has proved to be all that the Claimant was required to do to set the wheels of justice in motion. The advantage of this approach would be to discourage satellite litigation such as the present, which could (as Page shows) involve not merely enquiry into the actions of the Claimant but also into the actions of the Court, including investigation into why the Court had issued proceedings as and when it did. It could also be said to meet the justice of the case as articulated by the Court of Appeal: see [47] above. The more rigorous approach is to say that the “appropriate fee” in this context is the fee dictated by the terms of the relevant order. In principle this seems to me to be preferable, because there is no obvious reason why a Claimant should be said to have “brought” a claim for the purposes of the Limitation Act 1980 or any other act when it has failed to proffer the fee to which the Court is entitled and which the Court should normally have demanded as the price for issuing proceedings. Where the proffered fee is less than required by the relevant order, the fact that the Court has subsequently issued proceedings should be seen as good fortune for the Claimant rather than as validating the proffered fee: it does not prevent the Court from requiring payment of the shortfall either on issue or later.

It also seems right in principle that, as Warby J indicated at [35] of Bhatti, the “appropriate fee” should be determined by reference to the terms of the claim form that is issued (or, if Particulars of Claim are issued simultaneously, the claim form and Particulars of Claim combined). Subject to one qualification, the fact that the quantum of a claim or claims is subsequently increased is irrelevant to the calculation of the fee payable on issue, assuming always that the Claimant’s behaviour is not abusive. Thus, assuming that the Claimant’s behaviour is not abusive, the fact that the Claimant hopes or intends to bring a claim which cannot be either articulated or quantified at the time of the issuing of proceedings should not require payment of the fee that would have been payable if it had been articulated or quantified. It is common experience that a Claimant will issue a claim form when he is able to articulate and quantify one claim or one aspect of a claim but not others, even though he hopes and intends to bring them when he can. In such a case it is, in my judgment, both conventional and proper for the Claimant to protect himself by including general words which, he hopes, will be sufficient to be a

91

vehicle for the further claims or quantification if they can subsequently be pleaded.

If and when the further claims or quantification can be pleaded, further fees may become properly payable.

The qualification to which I have referred is the statutory provision introduced shortly before March 2015 that, where a claimant does not identify the value of the claim when starting proceedings to recover a sum of money, the fee payable is the one applicable to a claim where the sum is not limited. The effect of this provision is to alter the position both where the sum of money claimed is entirely unquantified and where the claim is partially but not fully quantified. Before that provision came into force, a claim which was partially quantified but which left open the possibility of further articulation of claims generally covered by the terms of the claim form would have required payment of the fee appropriate to the quantified sum (including interest); after the provision came into force, it would be regarded as a claim where the sum is not limited.

For these reasons, I hold that “the appropriate fee” for the purposes of the principle enunciated by the Court of Appeal in Page v Hewetts is the fee required by the relevant order which is to be determined by reference to the claim or claims articulated in the claim form (and, if issued simultaneously, the Particulars of Claim).

In the absence of abusive behaviour, it is not to be determined by reference to claims which are articulated later, whether or not the later claims are ones which the Claimant hoped or even intended to bring later at the time of issuing proceedings.

Where a party engages in abusive behaviour a range of responses are open to the Court, up to and including striking out a case altogether. Since there is no allegation that the Claimants’ conduct in this case has been abusive it is neither necessary nor desirable to attempt to define or calibrate what the likely response of the Court would be if it decided that a Claimant had been guilty of abusive conduct in relation to the under-payment of fees where proceedings had been issued. It is worth noting, however, that even where a Claimant’s failure to pay the correct fee on issue is not abusive conduct, a range of options would be available to the Court.

If identified before issue, the Court may simply refuse to issue the proceedings until the proper fee is paid. If proceedings are issued, the Court could direct the payment of the missing fee either at the time of issue or later. Non-compliance with that order could result in the proceedings being stayed or in a succession of peremptory orders of increasing severity that could, at least in theory, lead to a claim being struck out for non-compliance. The existence and potency of these procedural responses demonstrates that the nuclear option (i.e. holding that all proceedings that are

92

issued without the correct fee being paid are ineffective to stop time running) is unnecessary as well as being unwarranted”

Costs Budgeting and Detailed Assessments: Does a Detailed Assessment Trump an Approved Costs Budget?

In Merrix -v-Heart of England NHS Foundation Trust Regional Costs Judge District Judge Lumb (sitting in Birmingham) considered the extent to which the costs budgeting rules automatically prevent a costs judge on assessment varying the budget. The answer from this experienced costs judge is an emphatic “no”!

“This judgment concerns a preliminary issue that has arisen in the detailed assessment of the Claimant’s costs following her successful claim for damages arising from the clinical negligence of the Defendants. The preliminary issue may be phrased as “to what extent, if at all, does the costs budgeting regime under CPR Part 3 fetter the powers and discretion of the costs judge at a detailed assessment of costs under CPR part 47.” 3. To answer this question it is necessary to consider the inter-relationship between costs budgeting at the start and throughout a case and the assessment of costs at the conclusion of the claim. In particular there is a need to carry out a detailed analysis of the perceived tension between the wording in the rules for cost budgeting and assessment. This includes a consideration of the meaning of the wording in CPR 3.18 which has been at the heart of the debate The Defendants must be correct in their submission that cost budgeting was not intended to replace detailed assessment. There are numerous examples to support this not least that had that been their intention the Rules Committee would undoubtedly have made wholesale changes to CPR parts 44 and 47. They did not.

The amendment that was made was to CPR 44 was to include an additional factor (h) in the “pillars of wisdom” under CPR 44.4 (3). The receiving party’s last agreed or approved budget is just another factor that the Court will have regard to. No special weight is attached to that budget. The rules were not amended to say that “first consideration” would be given to the budget or that it would be “of paramount importance” which are familiar terms in family law when weighing up the interests of children. No amendment was made to CPR 47.

There is no doubt that the factors in CPR 44.4 (3) to be taken into account when deciding the amount of costs to be allowed apply both at the budgeting and assessment stages. However, as the tests are applied at different times when

93

considering different documents (a budget and a bill) there is no certainty that they would produce identical results. The most obvious difference is the need to apply the new proportionality test as explained by Master Rowley in May at the conclusion of any assessment. It would appear impossible to apply this test if the Claimant’s arguments are correct, for the reasons argued by the Defendant. The more effective and considered the costs management at the case management stage the closer the results of these two exercises should be.

I do not agree with either party’s definition of “budget”. It does not mean either a cap or a fixed amount. The ordinary meaning is more of an available fund. A costs budget for CPR purposes comprises the available fund reflected in the form precedent H, the assumptions accompanying that form, any budget discussion report and any recorded comments by the case managing judge. The available fund is considered to be within the reasonable range of proportionate costs but nowhere is it stated to be a fixed assessed amount. If that had been the intention then the rules would surely state as much.

Budgeting and assessment of costs of any phases are not mutually exclusive. There are different tools available to the Court to manage costs to ensure that ultimately any costs to be paid by a paying party to a receiving party are reasonable and proportionate. A helpful analogy may be to view costs budgeting as setting out the general landscape for the claim, whereas the assessment of costs performs a different function by surveying the terrain within that landscape in more detail.

It is the duty of the parties to help the Court to further the overriding objective by narrowing the issues between them. By adopting an ADR like philosophy in negotiation and the preparation of budget discussion reports it should then be possible, in the majority of cases, to produce a proportionate budget that is so accurate when compared to the actual, yet still proportionate costs, incurred at the conclusion of the case that the difference between the parties should be so negligible that it would not be worth the time, trouble or risk to pursue a detailed assessment.”

Online Court: Sky’s the Limit On the 17th October, the Law Society Gazette reported on comments made by Lord Briggs on the developments with an online court.

I have reproduced this below.

94

The £25,000 threshold in a new online court for dealing with monetary claims could be increased if it proves to be a success, its creator Lord Justice Briggs has hinted.

Briggs, whose final report on the future of civil courts was published in July, said it was a case of ‘suck it and see’ and that ‘if it works it [the maximum level for claims] could grow’.

The judge, who recommended a new online court for dealing with all monetary claims up to £25,000, was speaking in a panel session called the ‘changing landscape’ at the annual bar conference in London last Saturday.

He said £25,000 was a first ambition and that ‘if it works it could grow’, adding that the sky is the limit.

Despite the courts initially being billed as needing ‘minimum assistance from lawyers’ Briggs acknowledged that there would be instances where the input from lawyers would prove useful.

This could be a ‘decisive issue of fact’ that turns on oral evidence where the answer not apparent from documents, he said.

He said there are ‘lots of cases’ where that is true and where ‘at least that part of the trial should be dealt with face to face.’

The online court will include a three-stage process, an automated triage to decide on the merits of a case, arbitration handled by an assigned case officer and a judicial decision if the case cannot be resolved any other way.

When he launched the report, Briggs acknowledged that some would be ‘critical, sceptical or fearful’ of the concept, with the concern that users will be denied justice, the exclusion of lawyers will affect the outcome, or that £25,000 is too high a threshold.

In a separate session on the future of digital courts, Fiona Rutherford, deputy director of business strategy at HM Courts & Tribunals Service, said ‘difficult decisions would lie ahead’ when assessing the department’s estate.

‘Disposal of buildings will enable future funding and in the future we will be less reliant on our estate’, she told delegates.

95

Senior Presiding Judge Adrian Fulford said ‘seismic changes’ are coming thick and fast and that ’we must adapt’ to changes in technology.

He predicted that work across all courts and tribunals could be transferred to the ‘cloud’ within the next four years.

‘There will be no more running after brief papers that are stuck in the back of somebody else’s car,’ he said.

‘We have to change; if we don’t we will get left behind,’ he said.

He added: ‘Judges who vowed never to touch a keyboard are now working entirely digitally’.

FREE E-Publications

the

SOLICITORS group

Get instant access to an omnibus of legal updates, across a range of legal practice areas, free of charge.

Sign up today ► Visit the website: www.thesolicitorsgroup.com

Not yet registered or referred by a friend? Sign up today to receive the latest updates.

► Select ‘Publications’ from the top navigation ► Select which publication you want to view ► Enter your name and email address It’s that simple, you will be emailed when further updates are available.

96

Conferences / Webinars / CDs / DVDs / E-Publications / InHouse / Consortium

the

SOLICITORS group

CPD Webinars

2017

Notes/Slides provided | 1hr CPD per Webinar | All Webinars CPD Accredited | Packages to suit your firm

Quality Training FOR LESS

NEW

Mandatory from 1st November 2016

Complete all 4 parts of the SRA Competency Statement

Available Online or via DVD or CD the

SOLICITORS group

WATCH:ONLINE Viewers

1

Hour

6

Hours

WATCH:DVD Viewers

1

Hour

6

Hours

LISTEN:CD Viewers

1

Hour

6

Hours

£34+vat £149+vat

£36+vat £169+vat

£36+vat £169+vat

£44+vat

£199+vat

£46+vat

£209+vat

£46+vat

£209+vat

£54+vat

£249+vat

£56+vat

£259+vat

£56+vat

£259+vat

Departments? Please Call

Departments? Please Call

Departments? Please Call

CPD TOPICS AVAILABLE: Civil Litigation

Employment

Residential Property

Commercial Litigation

Family

Wills & Probate

Commercial Property

Financial Management & Compliance

SRA Competency Parts A, C & D

Company/Commercial Law

Immigration

Criminal Law

Personal Injury

BOOK NOW 01332 226601

6 HOURS CPD ONLY £149

+vat

► Visit: thesolicitorsgroup.com

97

December 2016 Paralegals and Supervision: What Time Can Be Claimed?

TUI UK LTD v TICKELL & ORS [2016] EWHC 2741 (QB) QBD (Elisabeth Laing J, Master Leonard) 01/11/2016 CIVIL PROCEDURE - COSTS (LTL) ALTERNATIVE DISPUTE RESOLUTION : BILLS OF COSTS : DETAILED ASSESSMENT : HOLIDAY CLAIMS : NECESSITY : PARALEGALS : PROPORTIONALITY In assessing overall base costs, it had not been disproportionate for a master to allow 144 hours of inter-fee earner discussions overall on the individual bills of 205 claimants. The bills made it clear that paralegals had carried out the vast majority of the work, and it was unrealistic to suggest that no inter-fee earner discussions should have occurred.

A travel company appealed against a detailed assessment of the costs of the claimants.

The 205 claimants had travelled on the company’s cruise ship. Their claims fell into three groups: “quality only” claims, minor illness claims, and serious illness claims.

Following assessment of individual bills, the master assessed the overall base costs as £630,456. The agreed method for assessing the individual bills was that the parties each chose a representative sample claimant from each group. The master then did a detailed assessment of two bills from each group. The parties added together the amount of the two bills he had assessed, divided the amount by two, and multiplied the result by the number of claimants in the group. The result was the amount he assessed for each group of claimants. The parties had agreed that such an approach was a sensible and proportionate alternative to an assessment of each of the 205 individual bills of costs. The method inevitably created a risk of distortion, but that was a risk which the parties had agreed to run.

The main issues were whether (1) the master, in assessing the individual bills of costs,

98

failed to give effect to his earlier decision that the costs were disproportionate; (2) the master erred in allowing 144 hours of inter-fee earner discussions overall on the individual bills; (3) certain claimants should have used the ABTA ADR process.

HELD:

(1)

The master had made a global finding that the claimants’ costs were

disproportionate. In accordance with Lownds v Home Office [2002]

EWCA Civ 365, [2002] 1 W.L.R. 2450, he then applied a test of necessity

to the costs challenged by the company. The company had argued

that the master did not apply the necessity test with sufficient rigour.

However, there was nothing in the authorities to support the proposition

that one could identify a “benchmark” of appropriate overall

reduction, on the basis of necessity, by a given percentage of the costs

claimed, Motto v Trafigura Ltd [2011] EWCA Civ 1150, [2012] 1 W.L.R. 657

and Lownds considered (see paras 12-15 of judgment).

The master had recorded that he had been invited to adopt a broad

(2)

brush approach. He had to bear in mind that he had already ruled

that the costs were disproportionate and he had to apply a test of

necessity. He had not seen any detailed attendance notes, but it was

clear from looking at the bills that the vast majority of the work had

been done by paralegals. It was unrealistic to submit that there should

have been no inter-fee earner discussions. There had to be discussions

between the relevant fee earners who were doing different jobs in the

litigation (paras 27, 30).

(3)

On the facts of the case, it would not have been open to the master

to hold that the “quality only” claimants should either recover no

costs at all or be restricted to the costs of using the ABTA scheme. If,

at the detailed assessment stage, a defendant wanted to rely on the

availability of an industry-specific ADR scheme, which was referred to

in the relevant contract but was not binding and did not expressly

oust the court’s jurisdiction, the defendant had to make that clear in

its pre-action protocol response. The company did not do so. It did

not admit liability and it robustly contested the claims. Further, the

company had not responded to the claimants’ offer of ADR. Had the

master concluded that the claimants should receive no costs, or only

recover the costs of using the ABTA scheme, such a conclusion, on the

facts, would have been plainly wrong (para.39).

99

Appeal dismissed Note: This is a wonderful case for anyone involved in a multi-party civil action where paralegals are used and who are heavily supervised. The contention that fee earner discussions were somehow not claimable was firmly rejected.

In my view, this case is of wider significance and applicable to general litigation practices who routinely use paralegals. If there is any inter fee earner discussion, make sure it is properly recorded!

CPR 36 Offers and Adjudication Costs WES FUTURES LTD v ALLEN WILSON CONSTRUCTION LTD (2016) [2016] EWHC 2863 (TCC) QBD (TCC) (Coulson J) 10/11/2016 CIVIL PROCEDURE - COSTS (LTL) - CONSTRUCTION LAW ADJUDICATION : COSTS : PART 36 OFFERS : CIVIL PROCEDURE RULES 1998 r.36.13(4)(b), r.36.13(5), r.36.13(1) : HOUSING GRANTS, CONSTRUCTION AND REGENERATION ACT 1996 : CPR An offer, expressed as a Part 36 offer, made by a sub-contractor to a contractor did not, following its acceptance, entitle the sub-contractor to recover the costs of two sets of adjudication proceedings. That was so irrespective of whether the offer was a valid Part 36 offer or not.

The court was asked to rule on the costs consequences of a compromise reached between the parties to a construction contract.

The claimant had carried out sub-contract works for the defendant at a building in London. By early 2016, it had made a claim for unpaid invoices in the sum of £86,469.21 plus VAT. An adjudication had been commenced the previous year but had not been concluded owing to the adjudicator’s resignation. On 11 February 2016, the claimant’s solicitors put a “Without Prejudice Part 36 Offer” to the defendant, stating that the claimant would accept £65,000 plus VAT in full and final settlement of its claim. The relevant letter stated as follows: “If this offer is accepted at a point which is more than 21 days from the date of this offer you will be liable for all our client’s legal costs incurred in this case”. No sums were paid and in August 2016 the claimant began a second adjudication. The adjudicator upheld its claim for

100

£86,469.21 plus VAT. The defendant refused to pay, so in October 2016 the claimant began adjudication enforcement proceedings in the instant court. In November, the defendant accepted the Part 36 offer made in February. The parties accepted that a binding compromise had been reached.

The issue was the costs consequences of the compromise. The claimant, which wished to recover the costs of the adjudications, argued that its offer did not comply with CPR r.36.13(4)(b) and r.36.13(5), as it purported to exclude the court’s power to determine liability for costs in circumstances where the offer was accepted after the 21 days and therefore precluded the court from deciding what was just in the particular circumstances of the case.

HELD: The claimant’s argument was a rather artificial one. Its offer was a long way from the sort of offers which had been held in Dutton v Minards [2015] EWCA Civ 984, [2015] 6 Costs L.R. 1047 to be invalid Part 36 offers. The claimant’s offer was a valid Part 36 offer, with the result that it could recover the costs of the instant proceedings but not the costs of the adjudications, Dutton followed. It would not make any difference if the claimant’s offer had not been a valid Part 36 offer. The claimant’s solicitors’ letter had expressly referred to Pt 36. The letter therefore presupposed that there were or would be court proceedings in respect of which the offer was designed to operate. Accordingly, even if this was not a Part 36 offer, it was still an offer that was being made in relation to “the costs of the [court] proceedings” as set out in r.36.13(1). The claimant had sought to rely on the words “all our client’s legal costs incurred in this case”, arguing that those words were wider than “the costs of proceedings” and could be construed as including the legal costs incurred/to be incurred in the adjudications. That submission could not be accepted: the words were entirely consistent with the fact that Pt 36 had been identified in the offer letter, and they related to the imminent court proceedings. There were also two wider principles which militated against the claimant’s interpretation of the February letter.

The first was that, in an ordinary case, a party seeking to recover a sum awarded by an adjudicator was not entitled to the legal costs incurred in the adjudication itself.

That was because, pursuant to the Housing Grants, Construction and Regeneration Act 1996, costs incurred in adjudications were not recoverable. So if a successful party could not recover its costs in the adjudication itself, it could not recover them in enforcement proceedings either. Second, “costs of proceedings” (which was the relevant wording, whether this was an offer actually made under Pt 36 or simply one that referred to Pt 36) included “recoverable pre-action costs”. Such costs would not normally include the costs of separate, stand-alone alternative dispute resolution proceedings such as adjudication. For all those reasons, the claimant was not

101

entitled to recover the costs which it had incurred in the adjudications (see paras 12-19 of judgment).

Judgment for defendant Note: The Court’s conclusion was that the offer was a Part 36 offer, under which adjudication costs were not recoverable as “costs of the proceedings”. However, the Court also held that the position in relation to the adjudication costs would have been the same whether the offer was a valid Part 36 offer or not.

The Mitchell Principles-Ignoring Orders at Your Peril CLEARWAY DRAINAGE SYSTEMS LTD v MILES SMITH LTD (2016) CIVIL PROCEDURE DELAY : JUDGMENTS AND ORDERS : NON-COMPLIANCE : RELIEF FROM SANCTIONS : WITNESS STATEMENTS : WITNESS SUMMARIES : CIVIL PROCEDURE RULES 1998 r.32.9, r.3.9(1)(a) : CPR A company was not entitled to relief from sanctions where it had provided no good reason for its failure to serve witness statements by the required date, it could have applied for an extension of time to serve the statements, and it had been less than prompt with its application for relief from sanctions. Although the trial date had been maintained, the progress of the litigation had been affected, which amounted to a serious and significant breach.

The appellant company appealed against a decision dismissing its application for relief from sanctions concerning the failure to serve witness statements and a witness summary.

The company had brought a claim against the respondent, its former insurance broker, for breach of contract and breach of duty of care. The parties had been ordered to exchange witness statements on 8 April 2016. The company stated on 8 April 2016 that the statements should not be served until issues surrounding disclosure were resolved. The broker responded by letter notifying the company that it was in breach of the order, and at a pre-trial review on 26 May, applied to strike out the claim. The hearing was adjourned to 14 June and on 9 June, the company applied for relief from sanctions. It served the witness statements on 13 June. At the 14 June

102

hearing it emerged that the statements were in a password-protected format, which meant that the broker could not read them. It also became apparent that the company intended to rely on a witness summary of a fourth witness but had not served a copy of the summary in accordance with CPR r.32.9. The matter was adjourned. On 16 June the company unsuccessfully applied for relief from sanctions, the judge ruling that there was no good reason for the witness statements and summary being submitted more than two months’ late and one month before trial, the statements had been provided in an inaccessible form, the application for relief had not been made promptly and that an application for an extension of time could have been made if the company was not ready to exchange statements in light of the disclosure issue it identified. The company had also complained of the broker employing litigation tactics, namely changing its mind about calling witness evidence two months before the April deadline but only notifying the company the day before the pre-trial review, and argued that the broker had breached the Mercantile Court Guide.

The company submitted that the judge (1) placed too much weight on r.3.9(1)(a) and (b), did not follow the statement of principle in Denton v TH White Ltd [2014] EWCA Civ 906 and did not give due weight to the opportunistic litigation tactics; (2) wrongly concluded that the breach was serious and significant, in light of finding that the trial could still go ahead on the planned date; (3) had exercised her discretion in the wrong way and placed too much weight on a number of factors.

HELD: The judge’s judgment had been impeccable. It was important to have consistent application of legal principles. Mitchell v News Group Newspapers Ltd [2013] EWHC 2179 (QB) explained that excusing non-compliance if it could be remedied was no longer the correct approach; the new approach described in Mitchell remained good law, Mitchell and Denton followed. The judge had correctly applied the three-stage test in Denton to the instant case. She had not ignored the litigation tactics employed altogether. She referred to the company’s allegation of the broker’s litigation tactics and the broker’s letter notifying the company of its breach of the order. The judge correctly noted that if the broker had unreasonably refused to serve witness evidence it would bear the costs of that. She also noted that if the company had made an application to extend time for service of witness statements, it would have been granted. (2)Where a trial date could still be kept, in spite of non-compliance, r.3.9(1)(a) and (b) were still important and could be conclusive, which was the approach that the judge had taken. Late service of the witness statements did not affect the trial date but it did affect the progress of litigation and, even if no prejudice had been identified, it was still a serious and

103

significant breach. (3) The judge had made a case management decision and the Court of Appeal should not interfere unless there was an error of law or principle.

The judge had been right to refer to the lack of promptness of the company’s application for relief. The judge had not given insufficient weight to the company’s desire to resolve issues of disclosure before exchanging witness statements. There was no excuse for the two-month delay, regardless of the desire to resolve the disclosure issue between the parties before evidence was filed or served. The judge could not be criticised for the way she had addressed the unresolved issue concerning the witness summary. Even if the fourth witness’s status was unclear, the company could have applied for an extension of time. It was difficult to understand why no steps had been taken. The judge had taken into account the proportionality of the effect of the sanction of the breach. In relation to the need to discourage unnecessary satellite litigation, the judge recognised that refusing relief from sanctions would end the company’s case, Hansom v E Rex Makin & Co [2003] EWCA Civ 1801 considered.

Note: Some Practitioners still believe that Denton v TH White Ltd [2014] gives them a get of jail card-it does not, as can be seen clearly in this case. Orders are to be obeyed at all costs!

Fixed Recoverable Costs-Update The extension of the fixed costs regime has moved on since my last note to our readers.

Lord Chief Justice, Lord Thomas, and the Master of the Rolls, Sir Terence Etherton, have commissioned a review of fixed recoverable costs, to be undertaken by Lord Justice Jackson by 31 July 2017.

The focus of the review will be: •

To develop proposals for extending the present civil fixed recoverable costs

regime in England and Wales so as to make the costs of going to court more

certain, transparent and proportionate for litigants; and

•

To consider the types and areas of litigation in which such costs should be

extended, and the value of claims to which such a regime should apply.

The measure is in line with Jackson’s previous proposal for a universal fixed costs regime to capture all claims worth up to £250,000.

104

It has been reported by the Law Society Gazette that Jackson has an “open mind” which seems curious given his strong views about the need for fixed costs and his early lecture this year where he set out in his “Grid” what costs would be recoverable.

Jackson has invited written evidence or submissions to assist the review by Monday 16 January 2017, to be sent to: fixed.costs@judiciary.gsi.gov.uk.

FREE E-Publications

the

SOLICITORS group

Get instant access to an omnibus of legal updates, across a range of legal practice areas, free of charge.

Sign up today ► Visit the website: www.thesolicitorsgroup.com

Not yet registered or referred by a friend? Sign up today to receive the latest updates.

► Select ‘Publications’ from the top navigation ► Select which publication you want to view ► Enter your name and email address It’s that simple, you will be emailed when further updates are available.

105

Conferences / Webinars / CDs / DVDs / E-Publications / InHouse / Consortium