Fixed Costs – the effect of acceptance of a Part 36 offer

The case of Ansell & Evans -v- AT&T (GB) Holdings Ltd (County Court at Oxford 14/12/2017) was an appeal to the County Court in relation to the interpretation and effect of acceptance of a Part 36 offer made in a case to which fixed costs applies.

Further information can be found in Gordon Exall’s blog on this case here

Background

The Claimants had been injured in a car accident and the claim, due to its value, fell within the scope of the RTA protocol (‘the Protocol’). The claims were submitted to the Protocol and the Defendant admitted liability. Subsequently, the Defendant wrote to the Claimants stating that they were concerned that the accident was a low velocity impact and they therefore requested that they have access to the vehicle in order to arrange an inspection “in line with Kearsley -v- Klarfeld…” and that pending such investigations the Defendant “may wish to raise Casey -v- Cartwright”.

Shortly thereafter, the Claimants wrote to the Defendant stating that in light of this request, pursuant to paragraph 7.76 of the Protocol the claim was not suitable for and therefore would no longer continue under the Protocol.

Three months later, the Defendant wrote to the Claimants stating that “LVI is no longer an issue”.

No settlement having been reached, the Claimants issued proceedings under Part 7 and the Defendant thereafter made Part 36 offers, which the Claimant accepted within the relevant period.

The issue between the parties

Following settlement, the Defendant stated that it considered that the Claimants’ conduct in withdrawing the claim from the Portal had been unreasonable, and that the Claimant should be limited to pre-action fixed costs (CPR 45.29B Table 6C).

The Claimants’ position was that:-

  • Pursuant to CPR 36.20 there was no deemed order for costs (CPR 44.9 applies only to settlement under CPR 36.13);
  • CPR 36.20(2) provides that where a Part 36 offer is accepted within the relevant period the Claimant is entitled to fixed costs applicable at the date on which the notice of acceptance was served;
  • The court had no discretion to go behind the self-contained provisions of CPR 36 and make some other order as the court;
  • Even if the court did have such a discretion, the court should not do so because if the Defendant had wished to raise issues of reasonableness it should not have made an offer pursuant to CPR 36; and
  • It is incumbent on a defendant to ‘say what it means’ when making offers. The consequences of CPR 36.20 are designed to give certainty in the event that the claim is settled. The consequences of the Defendant’s offer should therefore have been construed contra preferentem in favour of the Claimants.

The Claimants also alleged that, in the alternative,  it had not been unreasonable to withdraw the claim from the Portal in light of the Defendant’s statement that it “had LVI concerns”

The Decision

At first instance, the Court dismissed the Claimants’ application on the basis that it had been unreasonable to withdraw the claim from the Portal. However, the judge to give any reasons for dismissing the Claimants’ argument that by operation of CPR 36.20 costs payable by the Defendant were fixed to the sums set out in Table 6B for the stage at which the claim settled and that therefore the Court did not have discretion to make an order in a different amount. The judge at first instance refused permission to appeal.

The Claimants made an application for permission to appeal on the grounds that (1) the judge had failed to give reasons for their judgment, (2) that the judge was wrong in law to reject the Claimants’ argument that by operation of CPR 36.20 costs payable by the Defendant were fixed at those set out in Table 6B, and (3) that the judge was wrong in law to conclude that the Claimants’ had acted unreasonably by withdrawing the claim from the Portal.

At the appeal hearing the Court allowed the appeal on the first ground, but dismissed the second and third grounds.

The First ground was a simple question of fact. As to the third, the court held that the letter sent by the Defendant that it “had LVI concerns” was merely an indication that complex issues might be raised, but was not of itself sufficient to give rise to complexity sufficient to justify withdrawal from the Portal.

However, had the Claimants succeeded on the second ground, the reasonableness or otherwise of the Claimants’ conduct would have been irrelevant. Thus it was upon the second ground that the Claimants’ case hinged and therefore the reasons for dismissal require more detailed analysis.

In respect of the second ground, which was that CPR 36.20 provides that where a Part 36 offer is accepted within the relevant period a claimant is entitled to the costs applicable for the stage at which the claim settlement, the judge held that CPR 36.20(1) incorporates CPR 45.29A(1), which therefore incorporates CPR 45.29A(3) which incorporates CPR 45.24 (consequences of failure to comply or electing not to continue with the relevant pre-action protocol). Simply put, the judge found that where a case settles by CPR 36, the court has discretion to award a different amount to that provided for under CPR 36.20 and Table 6C if the court determines that the claimant acted unreasonably.

Analysis

CPR 36.20(2) provides that where a Part 36 offer is accepted within the relevant period, the claimant is entitled to the fixed costs in Table 6C of Section IIIA of Part 45 for the stage applicable at the date on which notice of acceptance was served on the offeror.

There is no provision within CPR 36.20 which is relevant to these facts. In particular, there is no provision which states that CPR 45 generally shall apply where a Part 36 offer is accepted within the relevant period or which provides for any discretion for the court to award any other amount.

CPR 36.20(1), states “This rule applies where (a) a claim no longer continues under the RTA or EL/PL Protocol pursuant to rule 45.29A(1)”.

So far as it is relevant CPR 45.29A(1) provides that “subject to paragraph (3), this section applies (a) to a claim started under (i) the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (‘the RTA Protocol’)… where such a claim no longer continue under the relevant Protocol or the Stage 3 Procedure in Practice Direction 8B”

CPR 45.29A(3) provides that “nothing in this section shall prevent the Court making an order under rule 45.24.”

The judge found that because CPR 45.29A(1) states that it is “subject to” CPR 45.29A(3), where the court considered that withdrawal from the portal was unreasonable under CPR 45.24, by virtue of CPR 45.29A(3) the claim had not “continued under the RTA Protocol” for the purpose of CPR 36.20(1). Accordingly, the Court was not bound to allow only those costs within Table 6C.

Alternative View

It is possible to argue that the judge on appeal erred in their finding as set out above.

In this case, it was a simple matter of fact that the claim had not continued under the Protocol under CPR 45.29A(1). CPR 45.29A(3) states that “nothing in this section” shall prevent the court from making an order under CPR 45.24. However, it does not state that a finding under CPR 45.24 that the claim had left the portal unreasonably would mean that section CPR 45.29A(1) did not apply. Furthermore as is clear, CPR 36.20 is not “in this section” (i.e. within CPR 45.29A) and therefore CPR 45.29A(3) is specifically dis-applied.

Summary

Claimants should careful to ensure that they do not withdraw a claim from the portal unless the defendant has actually raised a complex issue. Parties should be sure to clarify with their opponent whether there are any issues of conduct prior to the issue of proceedings and in any event before any offer of settlement is made or accepted. It is a common tactic for defendants in particular to only raise issues such as this after settlement has been agreed, as was indeed the position in this case. Written correspondence on the point prior to the acceptance of an offer should at the least give rise to an argument in estoppel should they later try to raise conduct.

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Mr Justice Hayden appointed as the new Vice-President for the Court of Protection – what does this mean for the Court of Protections future?

Further to the recent appointment of Sir Andrew McFarlane as President of the Family Division of the High Court comes the appointment of Mr Justice Hayden as the new Vice-President of the Court of Protection.

Who is Mr Justice Hayden?

Sir Anthony Paul Hayden was called to the bar at Middle Temple and was appointed as Queen’s Counsel in 2002. On 31 July 2013, he was appointed as a judge of the High Court of Justice in the Family Division.

Some of his most noteworthy cases that he has overseen include the legal challenge by the parents of Alfie Evans against Alder Hey Children’s Hospital.

What are the responsibilities of the President and Vice President?

The powers of the President and Vice President are to oversee the daily activities of the Court of Protection and to liaise with lower level judges to ensure effective performance in all aspects of the Court’s work. They require a good level of leadership, detailed knowledge of the Court’s jurisdiction and a comprehensive understanding of the Mental Capacity Act.

What does this appointment mean for the Court of Protection?

Considering the cases overseen by Mr Justice Hayden, his experience in matters relating to families and those who would be under the care of the Court of Protection is extensive, and will be invaluable in the future development of the Court.

Given the Mental Capacity Act (Amendment) Bill currently making its way through the legislative process, changes in the Court of Protection are on the horizon and Justice Hayden’s history in practice will be extremely useful in the implementation of these.

The team here at Clarion Solicitors wish to congratulate both Andrew McFarlane and Anthony Hayden.

Departure from the General Rule of Costs in the Court of Protection due to ‘Disorganised Thinking, Planning and Management’

There has been a departure from the general rules on costs within the Court of Protection in the recent case of London Borough of Lambeth v MCS (by her litigation friend) and Anor (2018).

The Official Solicitor (OS) was of the view that all of the costs incurred in respect of the proceedings should be born entirely by the London Borough of Lambeth and the CCG, as it was believed that the proceedings should never have been brought in the first place and also because of the conduct of the parties throughout the  proceedings. Taking this view point, a departure from the general rule of costs would be appropriate.

The background to the matter was that the Protected Party was originally from Columbia and collapsed in a street in the UK in 2014. Following on from the incident, the Protected Party was left with a severe cognitive impairment. She remained in hospital for a significant length of time, despite her requests to return to Columbia, and that it was also deemed in her best interests to return to there under section 4 of the Mental Capacity Act 2005.

An application was made by Lambeth Counsel which resulted in years of hearings and protracted proceedings which not only cost the tax payer in funding the Protected Party’s care and the legal fees, but it meant that the Protected Party was being kept against her wishes and for no good reason. The Judge stated ;

‘if the authority had done what it should have done in a timely professional manner, not only could they have saved themselves over £100,000 a year, and saved the cost to the taxpayer of these protracted High Court proceedings, they could have avoided P the years of misery from being kept a prisoner here, against her will.’

The Protected Party did not leave the UK until 25 January 2018.

Mr Justice Newton thereafter invited parties to submit their submissions on costs at the recent Hearing it was also reported within the Costs Judgement;

‘ The Court is deeply critical of the manner in which this case was handled both before and after the institution of proceedings. It is further troubling that even within the written submissions are many misconceived assertions or contentions as to fact. The proceedings were instigated by P’s RPR in December 2016 because no constructive progress for P was being made. P was unsettled, unable to communicate, frustrated and quite evidently deeply unhappy. A situation which could and should have been avoided.’

Furthermore, the Judge went on to say that he could not ignore the “disorganised thinking, planning and management” which resulted in the Protected Party being detained in the UK for a longer period of time than was necessary.

The Judge ruled that the costs of the proceedings were to be born by the Applicant and the Second Respondent both jointly and severally due to the circumstances of the case being ‘so poor and so extreme’.

This case highlights that even though it is rare, the Court will depart from the general rule if they have good reason to do so and the conduct of the local authority and the delays satisfied section 19.5 (1) (2) of the Court of Protection Rules 2017. It is noteworthy to consider the proceedings as a whole and to ensure that the matter is being dealt with accordingly in order to avoid any unnecessary costs consequences.

The Pilot Scheme on Disclosure in the Business and Property Courts – how this affects Case Management

News story imageThe Judiciary have announced and published a proposed 2 year pilot scheme regarding disclosure across the Business and Property Courts (there are some exceptions that the pilot scheme will not apply to). There are some aspects of the pilot scheme that relate to Costs Management – there will be no obligation to complete the precedent H in relation to disclosure prior to the case management conference. In cases where the cost budgeting regime applies, following the disclosure order that has been made at the case management conference, the parties must complete the disclosure section of the precedent H within the period ordered by the court. The purpose of this delay is to enable parties to be able to reach an informed view regarding the likely costs of the disclosure exercise. A further short hearing may be necessary to approve those costs.

Of course, the decision regarding disclosure may have an impact on other stages within the budget resulting in additional amendments to the budget. The Judiciary recognise that there may be problems surrounding this proposal and have suggested that this may need further consideration, their intention seems to be that the calculations surrounding disclosure are based on sound footing rather than what can sometimes be crystal maze thinking in terms of the estimation of the number of documents that will require considering.

Any questions? Please contact me at sue.fox@clarionsolicitors.com or call me on 0113 336 3389.

 

Points of Dispute and Replies: The Dos and Donts

CPR 47 provides that Points of Dispute and Replies should follow “as closely as possible” the format of Precedent G. CPR 47.9 allows for the paying party to raise disputes to points in the Bill of Costs drafted by the receiving party.

Points of Dispute ‘must be short and to the point’; parties are expected to make their point in a succinct and concise way. In the recent case of Mead v British Airways PLC, the Defendant spent over seven pages setting out one point of dispute. The claimant’s reply was two pages. District Judge Moss accepted the Claimant’s position and the point was dismissed. This is a clear example that a point can be raised and dealt with concisely without the need for disproportionate and lengthy argument. Indeed, in our experience less is often more and judges can be put off and confused by excessive Points of Dispute or Replies. It is not uncommon to see assessing judges commenting to the effect that Points of Dispute were too long and whilst this may not directly affect the outcome, it may well make the judge less well-disposed to a party in the assessment.

Practitioners tempted to set out Points of Dispute or Reply at great length should bear in mind the cautionary tale of Mylward -v- Weldon [1595] EWHC Ch 1, in which the court held that the matters in dispute could have been set out in 16 pages, rather than the 120 page bundle which the claimant’s lawyer had filed. The court ordered that the claimant’s legal representative should be brought to court, and the warden “shall cut a whole in the myddest of the {bundle}, and put {the lawyer’s} head through the hole, so that it hangs about his shoulders; and then shall lead him bare headed and bare faced round about Westminster Hall whilst the Courts are sitting and shew him at the bar of every of the three Courts within the Hall, and shall then take him back again to the Fleet {prison} and keep him prisoner until he shall have paid £10 to Her Majesty for a fine, and 20 nobles to the defendant for his costs in respect of the aforesaid abuse”.

That said, it is imperative for parties to explaining the reasoning as to why they dispute an item in a Bill of Costs. It is not enough to merely state that an item is disputed; the reasons for the dispute must be disclosed. The onus is on the parties to find the correct balance of getting the point across and providing the required information to ensure the point/reply is agreed with by the DJ.

When filing Points and Replies, it is imperative all parties know the relevant dates they are required to adhere to. For context, when a formal Bill of Costs is served by the receiving party, with an N252 will be served. This gives the date for which Points of Dispute are required to be served, which in general is 21 clear days following the date of service. The paying party is permitted to request an extension of time for this, and it is at the discretion of the receiving party to grant or deny the same and there are consequences for failure to comply. Whilst the Rules state that replies to points of dispute must be filed within 21 days of receipt of the points of dispute, there is no sanction for failure to comply. Therefore there is less risk to a receiving party which serves its Replies out of time, however it is possible for the court to impose a sanction (though this is not automatic). CPR 47.13 stipulates that the receiving party may reply to the points of dispute and the receiving party may do so within 21 days. This was supported in Pipe v Electrothermal Engineering Limited where it was confirmed that the receiving party is not limited to 21 days to respond.

The main differences between the paying and receiving party are as follows: should the paying party fail to serve points of dispute within the 21 days, there could be cost implications and the receiving party would be permitted to apply to the court for a Default Costs Certificate, which is an order that the costs claimed by the receiving party be paid in full (effectively a Default Judgment in costs). Whilst it may be possible to apply to set a Default Costs Certificate aside, there is inevitably a risk that the application will not be granted and it is likely that there will be a costs sanction to the receiving party even if it is.

In summary, parties should always follow Precedent G; always ensure points and replies are short and to the point. When undertaking costs proceedings, always be aware of the deadlines and dates to adhere to ensure you are not subjecting your client to unnecessary costs.

Are you J Code ready?

The J-Codes are a set of electronic codes proposed by Jackson LJ, where time is recorded in phase, task and activity. These codes were first published in July 2014 and over 3 years later the MOJ have now included guidance in their 92nd update to the CPR regarding phase, task and activity time recording. The MOJ have decided not to adopt the full J-Code structure proposed by Jackson LJ and have published an alternative and apparently simpler version of the Phase, Task, Activity (PTA) approach. That said, J-Codes can still be adopted or the Phase, Task, Activity (PTA) method can be used, it is down to choice.

The electronic bill of costs is mandatory for all Part 7 multi-track claims from 6 April 2018 and therefore Phase, Task and Activity codes (PTA codes) are crucial.  J Codes/ PTA codes however are not mandatory, although it is expected that any additional costs associated with the drafting of the electronic bill of costs due to PTA code time recording not being adopted, may not be recoverable on an inter-partes basis.

This only applies to work undertaken from 6 April 2018.
Recording time in line with phase, task and activity will at last enable budgets to be monitored with ease.

Any questions? Please contact me at sue.fox@clarionsolicitors.com or call me on 0113 336 3389.

Hourly Rates: Justification on Assessment

In the recent case of JXA -v- Kettering General Hospital NHS Foundation Trust [2018] EWHC 1747 (QB) the Court provided clarification in relation to how solicitors’ hourly rates are to be assessed.

By way of brief background, the underlying claim related to a case of infant cerebral trauma. Th case ultimately settled on the basis of 90% liability attaching to the Defendant. Damages were not resolved but it was resolved that they would run into many millions of pounds, potentially £20 million.

The Claimant served a bill of costs in which the Claimant claimed hourly rates of £380 – £420 for Grade A fee earners, £270 for Grade C fee earners, and £150 – £190 for Grade D fee earners.

The initial assessment was carried out by Master Nagalingam of the Senior Courts Costs Office, who allowed rates of £350, £200 and £150 respectively.

On appeal, it was alleged that the Master had incorrectly applied the test in in Wraith -v- Sheffield Foremesters Ltd, Truscott -v- Truscott [1997] EWCA Civ 2285 which provides that in assessing hourly rates the court must consider:-

  1. Whether the choice to instruct the firm of solicitors engaged was reasonable; and

 

  1. Whether the charges of that solicitor were reasonable, taking into account the broad averages of charges of firms practicing in that area.

If the answer to the first limb of the test is “no” then the court will determine what firm or class of firm it would have been reasonable to instruct, and then apply the second stage of the test on the basis of that notional firm.

The Claimant alleged that the Master had failed to directly address the first stage of the test in Wraith. In fact, the Master had implied a finding that he considered the appropriate comparator for the purpose of the first stage of the test to have been a solicitor practicing in Outer London.

In judgment, the appellate court held that the Master had not addressed the first limb of the test in Truscott. However, the court went on to find that despite this, the Master had correctly considered the charges of comparable solicitors undertaking comparable work and that therefore the hourly rates allowed were within the ambit of the Master’s wide discretion on costs. Accordingly the Court dismissed the appeal.

Analysis

Following the decision in Surrey -v- Barnet & Chase Farm House Hospitals NHS Trust [2018] EWCA Civ 451, “the choice does not have to be the best one, but merely a reasonable one”. This means that the mere fact that there is or was an alternative solicitor who could have conducted the matter at a lower hourly rate does not in itself indicate that the decision was unreasonable for the purpose of the test in Wraith.

Nevertheless, it is relatively easy for a paying party to conduct a search of solicitors practicing in the same area in the locality of the receiving party on the Law Society website. Of course, it is usually the case that even if other solicitors can be identified, neither party will be able to prove what their charging rates. However, on a standard basis assessment any doubt will be resolved in favour of the paying party (CPR 44.3). Furthermore, where there are a large number of firms it may be possible to argue that such competition will or should have the effect of forcing hourly rates down. What is more, it should be usual practice for paying parties to enquire what investigations were undertaken by the receiving party into the availability of alternative solicitors and any quotes or information regarding hourly rates were received. If the receiving party fails to provide such information, the paying party can argue that either it indicates that no investigations were undertaken (and that therefore the choice was unreasonable), or that the solicitors instructed charged rates in excess of those charged by other firms. In either case, doubt should be resolved in favour of the paying party.

Summary

Solicitors should carefully consider the level of their hourly rates at the outset, and be prepared to justify them. One case which will assist is Higgs -v- Camden & Islington Health Authority [2003] EWHC 15 (QB) in which the Court set out a matrix for the calculation of hourly rates enhanced above guideline rates. Some form of “risk assessment” conducted at the outset, applying the test in Higgs, may well assist in justifying the hourly rates claimed on a detailed assessment of costs.

Matthew Rose is a Solicitor in the Costs and Litigation Funding department at Clarion Solicitors. You can contact him at matthew.rose@clarionsolicitors.com, or the Clarion Costs Team on 0113 2460622