Does P have capacity to make decisions as to his care, support and education?

In the recent case of ‘A Local Authority v GP (Capacity – Care, Support and Education) [2020] EWCOP 56’, an application was brought by a Local Authority in respect of P’s capacity to make decisions as to his care, support and education.

By way of background, P is a 19-year-old man with a diagnosis of autism, who also suffers from anxiety and severe learning difficulties.

Following P stopping attending his placement at a specialist school, concerns were raised by the Local Authority as to P’s access to the community and engagement in activities. The feeling was that P required targeted support to develop his social skills, and to prevent him from becoming isolated.

A hearing was listed to assess whether he had capacity to make decisions such as accepting or refusing care, education and support. The Local Authority requested interim declarations stating that P lacked the capacity to refuse an assessment of his care needs (pursuant to s11 Care Act 2014), to make decisions as to his care and support needs (pursuant to s9 Care Act 2014), to request or refuse an assessment of his education and health needs for the purposes of an EHC plan (pursuant to S36{1} Children and Families Act 2014), and to make decisions as to his education and health needs (pursuant to the Children and Families Act 2014).

The conclusion was that P did not have the required capacity to make decisions as to his care, support and education, as P could not understand and weigh up the relevant information.

Ella Wilkinson is a Legal Apprentice in the Costs & Litigation Funding Department at Clarion. You can contact her on 0113 288 5693, or by email to ella.wilkinson@clarionsolicitors.com

Update your CFAs now: decision may make thousands unenforceable

The outcome of Belsner v Cam Legal Services Limited [2020] EWHC 2755 (QB) is critically important to lawyers specialising in RTA and EL/PL work subject to fixed costs and will have an immediate effect. However, the consequences may be much more far-reaching, and any lawyer undertaking CFA work would be well-advised to consider whether their terms require amendment.

Background

On 5 February 2016 the claimant, Ms Belsner, was a pillion passenger when the motorbike she was riding was involved in a collision. Following the accident, she instructed the defendant, a law firm, to pursue damages. The defendant offered to act under CFA terms and sent a client care letter which set out the basis on which they would charge her. The relevant details of the CFA are contained at paragraphs 9 to 16 of the judgment. However, importantly (as noted at para 15) “none of the documents provided for an overall cap on the amount recoverable by the defendant from the claimant…”

The defendant did not advise Ms Belsner of the value of her claim, but completed a risk assessment which indicated that the defendant considered the likely value of the matter was less than £2,000.

Matters progressed and the insurer settled Ms Belsner’s claim for £1,916.98 damages, plus fixed costs and disbursements totalling £1,783.48. The defendant then paid on to Ms Belsner the sum of £1,531.48 (the amount of damages less £385.50 in respect of the success fee) but did not send a bill of costs or invoice.

Ms Belsner instructed Checkmylegalfees.com Limited and on 10 May 2018 a claim form was issued seeking an order for delivery of a statute bill. The defendant served a statute bill on 24 May 2018 which totalled £4,306.07 comprising:-

  1. Basic Charges of £2,171.90 plus VAT
  2. 100% success fee capped at 25% damages of £385.50 plus VAT
  3. GP Report of £225 plus VAT
  4. Psychology report of £806 plus VAT
  5. Total £3,588.40 plus VAT

On the defendant’s case therefore, it had been entitled to charge the claimant £4,306.07, which would have left her £605.90 out of pocket. The defendant had therefore chosen not to charge the whole of the fees they were strictly entitled to, and instead charged only the sum of £2,168.98, being the fixed costs recovered plus the success fee.

The court subsequently carried out a provisional (on paper) assessment and at first instance held that the claimant had not given “informed consent” as required by CPR 46.9(2), and on this basis limited to the basic charges to the £500 plus VAT being the amount actually paid in respect of costs by the insurer relating to costs. The court also reduced the success fee from 100% to 15%. Commenting on whether informed consent had been given, District Judge Bellamy said “given the differences in hourly rates and the lack of detailed explanation of the various costs scenarios it is hard to see how informed consent could be given”.

At a subsequent oral hearing the defendant argued that the CFA was sufficiently clear that the amount they could charge were not limited, and that accordingly it was clear that circumstances could arise in which the claimant would have to pay more than they recovered from the opponent. The Claimant argued that it was not sufficiently clear, and that in order to give express permission she should have been given enough information to balance the likely liability with the likely recovery.

Ultimately, the court assessed the defendant’s costs in the sum of £1,392 plus VAT for base costs and £208.80 plus VAT for the success fee.

As such, the Court held that the defendant was entitled to:-

  1. Base Costs: £1,392 plus VAT
  2. Success Fee: £208.80 plus VAT
  3. GP Fee: £255 plus VAT
  4. Psychology report fee: £806 plus VAT
  5. Total £2,661.80 plus VAT

However, in total Ms Belsner had only ever paid £2,168.98 because the defendant had only charged the amount recovered from the defendant plus the success fee. As such, the provisional assessment did not result in any financial recovery for Ms Belsner.

The Appeal

Ms Belsner appealed the decision on the basis that she had not given “informed consent” to the agreement that she would (or could) pay more to her solicitor than the amount recovered from her opponent in the court proceedings.

Summary of Decisions

  1. The fact that the defendant had not sought to charge everything it was entitled to was not relevant; it was not a part of the agreement.
  2. Had Ms Belsner been provided with sufficient information about the likely damages and the likely costs recoverable from her opponent, it might have affected her decision to enter into the CFA.
  3. The general terms used by the defendant in its CFA were not sufficiently clear to enable Ms Belsner to understand that she might end up with a shortfall.
  4. This case was distinguishable from Herbert v HH Law [2019] EWCA Civ 527 because in Herbert the solicitor had stated in the CFA that the amount recoverable from the client was capped at 25% of damages. There was no such limitation in this case.
  5. As a result of the above findings, Ms Belsner did not give her informed consent to enter into the CFA and it was therefore unenforceable unenforceable to the extent it required the client to pay more than was actually recovered from her opponent.

Protecting Yourself

All lawyers practicing in cases subject to fixed costs, including EL/PL and RTA, as well as those acting in Intellectual Property subject to scale costs and tribunals which may be subject to specialist costs regimes should urgently review their CFAs and ensure that they:-

  1. Make clear that the client may be charged more than they could recover from their opponent; and
  2. Include a cap on the amount which will be taken from damages in the event of success as in Herbert; or
  3. Provide an estimate of the level of damages which the client can expect to recover (and this should be bespoke to each case) and set out the details if what costs are recoverable from an opponent under Part 45. This could be as simple as including tables 6B / 6C / 6D (and the relevant tables for “portal” costs) within a schedule to the CFA.

Of course, if the CFA is not compliant then it will be necessary to take remedial action in relation to ongoing cases. It may be sufficient to send a letter to your clients providing (1) an estimate of their damages, and (2) details of what they may recover from the opponent. It may then be possible to argue that by continuing to provide instructions they have given their “informed consent” to proceed on that basis. However, it may be necessary to go further and give the client an option to terminate. It is also possible that, were it to “get out” that such a letter had been sent, it may put firms which specialise in recovering legal fees for consumers on notice of a potential goldmine of cases.

Therefore, if you find yourself in this position, you should seek advice as soon as possible to protect yourself from potential future claims.

Matthew Rose is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact him at matthew.rose@clarionsolicitors.com and 0113 222 3248. You can contact the Clarion Costs Team on 0113 246 0622.

Part 36 – is it unjust to award CPR 36 consequences when the defendant does not have the money to pay? (Rawbank -v- Travelex)

This article supplements and updates one titled Consequences of Beating a Part 36 Offer: Injustice published on 12 June 2019.

The case of Rawbank SA -v- Travelex Banknotes Limited [2020] EWHC 1619 (Ch) related to a contract that the Defendant would provide banknotes totalling in excess of $40 million to the Claimant. Due to the Coronavirus pandemic the Defendant was suffering from financial difficulties such that it could not fulfil its contract with the Claimant, and required restructuring. However, the Defendant had no defence to the claim, it was simply unable to fulfil its contractual obligations. Judgment was entered against the Defendant which was more advantageous to the Claimant than the terms of a Part 36 offer the Claimant had made.

Giving judgment in relation to the consequences of CPR 36, the Court allowed some of the consequences under CPR 36.17(4), but declined to allow an “additional amount” as provided for by CPR 36.17(4)(d). This decision reinforces a number of previous judgments in relation to the application of Part 36.17, specifically:-

  1. That the Court may adopt a cherry-picking approach and allow some of the consequences of CPR 36.17(4) but not others; and
  2. The court does not have discretion to award an “additional amount” at a rate other than 10% – it is all or nothing,

What is interesting about this case, however, is why the judge declined to make the award of the additional amount.

The Part 36 offer was made on terms that “the Defendant paid £48,290,000 within 14 days of accepting the offer…” At paragraphs 35 – 37 of the judgment, Zacaroli J held that “…acceptance of the Part 36 offer could only be made by actually paying the sum referred to in it…” and that because the Defendant was insolvent, “…it would be unjust to make at least some of the orders identified in Rule 36.17(4)”. The Court effectively found that because the Defendant did not have the money to pay the settlement sum, it could not have accepted the offer, and furthermore the fact of the Defendant’s impecuniosity meant that it would unjust to award the additional amount set out in CPR 36.17(4)(d).

In summary: a party’s financial position is a relevant consideration when considering the injustice test.

This decision appears to contradict, at least in part, the earlier authority of  Cashman -v- Mid Essex Hospital Services NHS Trust [2015] EWHC 1312 (QB), in which it was held that the court cannot take into account the amount of the additional amount when considering the test on injustice. It is a logical extension of that principle that the fact of a defendant’s ability or inability to pay is not a relevant consideration for the court to consider.

Furthermore, the judge appears to have erred in finding that the Part 36 offer ” could only be [accepted] by paying the sums referred to in it…” as CPR 36.14(7) provides that if the settlement sum “is not paid within 14 days of acceptance of the offer… the claimant may enter judgment for the unpaid sum”. It is plainly wrong to say that a party which accepts a Part 36 offer will then be bound to prioritise payment of the settlement sum above secured creditors (as was suggested at paragraph 35 of the judgment); the defendant will simply become liable to pay the amount of the settlement sum. If the defendant does not do so, then the claimant will be entitled to enter judgment. That judgment will be an unsecured debt and will be dealt with in an insolvency in accordance with the usual order of priority.

This decision appears to be a departure from previous authority and raises some significant uncertainty surrounding the meaning of “injustice” in the context of CPR 36.17, which many lawyers had hoped had been settled by a number of judgments in 2018 and 2019. It remains to be seen whether Rawbank will set a new standard by which the test of injustice is measured, or whether future courts will distinguish the case on the basis of its somewhat unique factual background. In either case, it can only be hoped that a case will find its way to a higher court to give some clarity on the question of what precisely “injustice” is.

Matthew Rose is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact him at matthew.rose@clarionsolicitors.com and 0113 222 3248. You can contact the Clarion Costs Team on 0113 246 0622.

What is classed as a net-asset?

Following the case of Penntrust Ltd v West Berkshire District Council & Anor 2020, the ambiguity of whether property is classed as a net-asset when considering a Protected Party’s estate was clarified.

For the purpose of context, the Applicant was appointed as the Protected Party’s Deputy in October 2014 in relation to property and financial affairs.

In January 2019, an Application was made to discharge the of professional Deputy. The Deputy sought the authority for detailed costs assessment by the Senior Courts Costs Office for the work conducted to the date of discharge, even though the asset value (according to PD19B) was below £16,000, because the Protected Party’s property – valued in excess of £300,000 – was disregarded

The Deputyship Order in which the Applicant wished to rely upon contained authority that stated ‘The Deputy is entitled to fixed costs in relation to their application and to receive fixed costs or the general management of affairs of the Protected Party. If the Deputy would prefer the costs to be assessed, the order is to be treated as authority to the Senior Courts Cost Office to carry out a detailed assessment on the standard basis’.

The Protected Party’s liquid assets were substantially less than the £16,000 requirement for costs to be assessed and therefore only provided the Applicant with the fixed costs provision under Practice Direction 19B. It was imperative for costing purposes that the Protected Party’s property that they lived in be established as an asset to increase the asset worth, in order for the Applicant to seek detailed assessment and recover costs incurred throughout the management periods. Ordinarily, the property would be disregarded if the Protected Party or a dependent lived there.

Following the hearing, it was concluded that the term ‘net-assets’ in PD19B effective from April 2017, falls to be interpreted according to the ordinary meaning of the phrase, ‘total assets minus total liabilities’. This meant that the Protected Party’s property would be included within net-assets which resulted in the £16,000 threshold being exceeded, allowing for detailed assessment. It was also noted the Protected Party’s occupation of the property did not exclude it from quantification of assets in this case.

Following this inclusion of the property, the Applicant had sufficient authority to seek detailed assessment from the Senior Courts Costs Office.

In cases where fixed costs are not appropriate, professionals may apply to the Court for clarification if their order gives them authority for a detailed assessment of costs. However, it is noted that the use of fixed costs is still encouraged by the Courts. The provision of the £16,000 threshold does continue to apply if the net-assets of a Protected Party are below the specified amount.

It is positive that the Court recognised that it is not always appropriate to disregard the property as an asset and this case enables Deputies to apply to amend their Order allowing the property to be included as an asset, regardless of whether the Protected Party or a dependent lives there.

Please contact Ellis Tolan at 0113 288 5679 or email Ellis.Tolan@clarionsolicitors.com for more information.