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House of Lords: strong criticism

House of Lords: strong criticism

Justice minister Lord Faulks yesterday defended the imminent court fee increases by stressing to peers that litigation is “very much an optional activity”, and suggesting that solicitors should help their clients by advancing them the money.

Meanwhile, leading administrative law QC Lord Pannick expressed confidence that the judicial review of the increases would be successful.

In a debate on the statutory instrument to introduce the increases – to which Lord Pannick sought to attach a ‘motion of regret’ – criticism rained in from other peers, with a focus on the difficulties they will cause in bringing mid-size claims, such as those brought by SMEs and people suing over personal injuries or clinical negligence.

The new fees are set to come into force on Monday.

Lord Faulks suggested that the current fees are “very modest”, adding: “It is also worth bearing in mind that litigation is very much an optional activity. Anybody who is deciding whether or not to sue will have all sorts of factors that they bear in mind.

“There are plenty of reasons for not bringing proceedings, one of which is uncertainty of outcome. Anyone advising a claimant will probably need to satisfy that claimant that there is at the very least a better than even – probably a 75% – chance of success before they commence proceedings. Another relevant factor is the solvency of the defendant or the likelihood of recovery.

“All those are matters that will inhibit somebody in deciding whether or not to sue. Of course, there is also the factor of the cost and extent of their lawyers’ fees. What is important is that the court fees generated here would be recoverable from any defendant in the event of a successful claim.”

He said this was relevant both to the question of access to justice “and also as to whether a solicitor will feel able, as is often the case in personal injury or clinical negligence cases, to provide assistance with the upfront costs on the basis that they will be recovered in the fullness of time”.

Similarly he thought after-the-event insurers could help in personal injury claims. “In appropriate cases where an insurer thinks that a claim has merit, it enables court fees to be incurred, which are, as I said earlier, recoverable from the other side.”

The minister also highlighted the fee remission provisions and that the government did listen to consultees by amending some of its proposals. He insisted that it bore in mind the wider choice of jurisdictions that international claimants have. “[We] are satisfied, having consulted widely, that this is a reasonable and proportionate increase for these large claims.”

Asked about the 80% fall in employment tribunal claims since fees were introduced, Lord Faulks agreed with the comments of crossbencher Lord Brown of Eaton-under-Heywood, who in a speech otherwise hostile to the rises, said that while the tribunal fees had “no doubt” discouraged a number of meritorious claims, “I suspect that it has discouraged at least as many unmeritorious claims – speculative claims, which used regularly to be brought and then bought off or settled because, frankly, that was a cheaper option for the defendant employers than successfully resisting them and then being left to bear their own costs, which were quite likely to be very substantially more”.

Lord Pannick poured scorn on the notion of litigation as an optional activity. “As the minister well knows from his experience as a very successful barrister, for many people – those suing for debts or to recover compensation for personal injury – litigation is often a necessity to keep your business alive or to maintain any quality of life…

“The fee remission provisions to which the minister, perhaps somewhat desperately, referred are not going to assist other than in exceptional cases.”

The power to charge court fees at above cost price is contained in section 180 of the Anti-social Behaviour, Crime and Policing Act 2014. Lord Pannick asked: “But is it a fair, reasonable or proportionate exercise of that power? Plainly not. For litigants to have to pay such substantial sums in advance of bringing a legal claim will inevitably, in practice, deny access to the court for many traders, small businesses and people suing for personal injuries.

“The government have suggested that court fees will be a small fraction of the legal expenses which a claimant will incur, but many claimants will not have to pay their legal expenses at the outset of proceedings. They will not have such a substantial sum of money available at the outset of the case, or they may be able to pay these court fees only by doing without competent legal representation.”

He said section 180 does not alter the Lord Chancellor’s legal duty under section 92 of the Courts Act 2003 to “have regard to the principle that access to the courts must not be denied”.

Lord Pannick argued: “The courts will interpret the powers conferred by section 180 as not intended to authorise regulations which impose an unreasonable or disproportionate barrier to access to the courts…

“If you wrap yourself in Magna Carta, as Mr Grayling sought to do last week at the Global Law Summit, you are inevitably and rightly going to invite scorn and ridicule if you then throw cold water over an important part of our legal heritage.”

He decided not to push his amendment to a vote given his “optimism that the courts will inevitably add this order to the long list of Mr Grayling’s regulations which have been declared unlawful in the past three years”.


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From kebab shop to MRO: "If this makes you sick, we can find a doctor for you"

From kebab shop to MRO: “If this makes you sick, we can find a doctor for you”

Claimant personal injury solicitors are deeply unhappy with the MedCo system for sourcing medical experts in portal cases, two surveys have suggested, with questions raised over some of the tier 2 agencies appearing in search results.

There are stories about new medical reporting organisations (MROs) located above kebab shops, at estate agents trying out a new area of work and at residential addresses.

One survey of 300 firms was conducted by a large MROs that has asked us to withhold its name due to “commercial sensitivities”, while the other was undertaken by the Association of Personal Injury Lawyers (APIL).

The first survey found that 94% of respondents recognised no more than a fifth of the medical reporting agencies listed on the portal, while 26% of those who have already processed cases using the portal would not recommend or ever re-use the agency selected.

Two-thirds of users did not feel they were given enough information to choose the appropriate MRO – 68% or respondents felt tier 1 agencies should be identified in the search results – and there were concerns over the number of new tier 2 agencies starting up with no track record.

This perhaps explained why a third of firms requiring medical reports had not used the portal more than a month after its introduction – the survey said some have not even registered yet, creating delays and backlogs, with many blaming administrative delays at MedCo.

Most respondents thought that the implementation of MedCo was poorly handled, that the administrative burden has increased thanks to its introduction and that their clients were receiving a worse service. Every single one believed there should be guaranteed service levels for all MROs on the portal; as it stands solicitors have establish their own service-level agreements (SLAs) with each agency.

Only 95 APIL members responded to a survey sent to all 3,582 members in England and Wales, but the results echoed those of the other poll, with solicitors complaining about the time taken agreeing SLAs with new providers, and the quality of some of the new MROs also questionable.

APIL said solicitors were particularly concerned that the medical experts suggested by MedCo were too far away from clients, with solicitors unable to locate a local expert even when they knew of one who had signed up to MedCo.

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The Legal Aid Agency has made a legal aid supervision course mandatory for new supervisors and for those who have not supervised recently. This brand new course will satisfy the supervision requirements in the Legal Aid Agency Standard Crime, Civil & Family Contracts.

Get it wrong and you risk your contract being terminated, a breach of SRA regulations and being reported by your COLP – with increasingly lower legal rates and fixed fees and you cannot afford to get this wrong.

This full-day comprehensive course will cover the new supervisor requirements introduced by the LAA, along with tips on how to reduce the risk of your firm losing its legal aid. If you are a new or existing SQM or Lexcel supervisor, family, crime or social welfare supervisor, then this is an essential course for you.

Click here to read the full course outline

For more information on seminar dates and pricing, or to book your place, please email quoting reference ‘LF14’.

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Gabriel Fay

Fay: fundamental dishonesty “goes to the heart” of a claim

National firm DWF has secured one of the first ‘fundamental dishonesty’ rulings, denying a claimant the protection of qualified one-way costs shifting (QOCS).

Chartered legal executive Gabriel Fay, based at DWF’s London office, said the claim was brought by a security guard who fractured his shoulder.

Mr Fay said his client, Severn Valley Railway, had hired an ice rink to entertain families at its station in Worcester while the track was closed. He said the claimant, Brian Creech, sued for negligence on the grounds that he had tripped on matting left behind after the rink had been removed.

However, during the trial at Telford County Court last month, District Judge Rodgers accepted the railway’s evidence that the ice rink was still on the concourse at the time the accident was meant to have happened.

“The judge made a finding of fact that the rink had not been dismantled,” Mr Fay said. “This meant that the claimant could not have been truthful.

“Our counsel argued that this was a case where there could be no mistake, and the claimant could not have believed in the evidence being presented. The judge agreed.”

Mr Fay said the accident in Creech v Severn Valley Railway (unreported, 25 March 2015) occurred in 2011 and proceedings were issued three years later, just before the limitation period expired.

District Judge Rodgers dismissed Mr Creech’s claim, and applying the fundamental dishonesty rule, ordered him to pay over £11,000 in costs. “Fundamental dishonesty is dishonesty that goes to the heart of a claim – it can’t be an ancillary matter,” Mr Fay said.

“The court did not say it had to be specifically pleaded, and was happy to use its discretion, based on the findings of fact from the trial.”

He distinguished Creech from an earlier ruling on fundamental dishonesty in Gosling v Screwfix and Anr (unreported, 29 March 2014) at Cambridge County Court, where the claim had been discontinued.

Mr Fay added that the lack of rulings on the issue could be a result of the nervousness of lawyers in arguing it, or from cases being discontinued and not reported.

In a further case last October, insurer Admiral secured the removal of QOCS in a whiplash case where its customer claimed there was no contact between the two vehicles.

District Judge Dudley ruled that the claimant had been “fundamentally dishonest” in evidence given during a trial at Southend County Court.

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Jordan: culpable failure

The High Court has ordered well-known Formula 1 personality Eddie Jordan to pay indemnity costs after he accepted a “very historic” £15,000 part 36 offer that was still open on the eve of trial – and which was £85,000 less than he had been offered a year earlier.

Mr Justice Mann said he was penalising Mr Jordan’s dilatory conduct of his claim – which related to phone hacking – and “the culpable failure to engage in negotiations which would, if conducted more properly, have been likely to have led to a settlement”.

In Jordan v MGN Ltd [2017] EWHC 1937 (Ch), the judge said: “The bottom line is that Mr Jordan did not advance any explanation, let alone a good one, why, having run his case for 2½ years, having failed to respond properly to a number of offers, one of which was close to his own proposed financial settlement, having caused himself and the other side to run up significant amounts of costs, and having exposed the defendant to the prospect of having to pay the CFA uplift and ATE premiums (which I am satisfied is a powerful threat to a defendant), should at the last minute do the equivalent of walking away from the action.

“I consider that all those factors, and the other matters referred to in this section, are good reasons for ruling that the costs be paid on the indemnity basis, and I so order.”

The action began in August 2014. During the course of its progress to trial, there were a number of both part 36 offers and ‘without prejudice save as to costs’ (WPSAC) offers, which were largely ignored.

The first was a part 36 offer in September 2014 that included an offer of £15,000 in damages. The figure kept going up and by June 2016, the defendant was offering £100,000. However, on the eve of the trial last month, Mr Jordan accepted the September 2014 offer.

Under part 36, this meant that Mr Jordan would have his costs until the expiry of the offer in October 2014 (although here an undertaking from the defendant meant the costs started from September 2016), and he would then have to pay MGN’s unless it was unjust to do so.

Mr Jordan sought to argue that it was unjust, but Mann J said his counsel “has not even begun to make a case for departing from the usual order…

“The claimant has been responsible for prolonging litigation for a considerable period and then (basically) caving in. The just result is that the normal consequences of the late acceptance of a part 36 offer should follow.”

MGN went on to seek indemnity costs, with Mann J finding it justified on Mr Jordon’s failure to engage properly in settlement negotiations.

He cited a previous, unreported, ruling he gave in the phone hacking litigation in March 2017, where he said: “It may be that inviting one’s opponent to make a series of offers without ever making on oneself after an initial stab… is a clever tactical manoeuvre to extract ever higher offers, but there comes a point at which it does not facilitate settlement.”

He also quoted the comments of the Chancellor of the High Court, Sir Geoffrey Vos, earlier this year in OMV, in which he warned that parties were obliged to make reasonable efforts to settle, and to respond properly to part 36 offers made by the other side, or face penalties.

Mann J said: “In my view the claimant has fallen short in that process. I leave out of account the early part 36 offers. Not to respond to those at an early stage of the litigation is not so culpable.

“But the failure to start to engage when the 2016 offers started coming in and increasing is culpable. One would have thought that a client who was willing to consider settlement would have started to engage more at that point.

“I find it hard to believe that a normal paying client, who was not litigating under a CFA and with the protection of ATE insurance, would have adopted the tactic of not responding and not engaging further.”

Nonetheless, the lack of engagement would probably not, of itself, have justified indemnity costs, the judge continued. “It is the addition of what happened towards the end of the process which does.”

In April 2017 the claimant made a £90,000 offer, to which the defendant responded that if that had been offered back in July 2009, the proceedings could have been brought to an end.

“On the evidence I have seen I think that that is likely… There was therefore, in my view, a culpable failure to engage in negotiations which would, if conducted more properly, have been likely to have led to a settlement. That is very significant matter.”

Also of significance was Mr Jordan’s late decision not to go to trial, having given every indication that he was ready for it.

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Coulson J: “No presumption” against costs budgets in big money cases

The courts have “unfettered discretion” to order costs budgets, whatever the size of the damages at stake, Mr Justice Coulson has ruled.

Despite arguments to the contrary based on the wording in the CPR, he said: “There is nothing to suggest otherwise. The discretion extends to all cases where the claim is for more than £2m (old regime) or £10m (new regime).”

Ruling at the Technology and Construction Court in a Birmingham property dispute where around £18m is claimed from the main contractors, the judge said there was “no presumption” against ordering costs budgets in claims above these amounts, and “no additional burden of proof” on the party seeking the order.

Coulson J said costs budgets were not automatically required in higher value cases because it was “less likely that issues of proportionality would be important or even relevant”.

However, he said that when a court decided to exercise its discretion, it should “take into account all the relevant material, without prejudging or making any specific assumptions one way or the other”.

Ruling against the claimants in CIP Properties (AIPT) v Galliford Try Infrastructure and others [2014] EWHC (TCC), Mr Justice Coulson said the court had a “complete discretion” to decide whether costs budgets should be filed and exchanged.

He said that if the claimants continued to oppose budgeting, a case management conference would have to be held in November “for the matter to be argued out in detail”.

Coulson J added: “I make no comment at this stage on the facts, although I do observe that, in view of the likely involvement of many experts, whose fees can often be the single largest items of cost in any bill, the provision of costs budgets and the possibility of subsequent costs management orders comprise at least one way of keeping such fees under some control.”

However, the judge ruled in favour of the claimants on ADR, where they “vehemently” opposed the fixing of a ‘window’ before disclosure, on the grounds that they needed disclosure before they could engage in any “meaningful mediation”.

Coulson J went on: “A sensible timetable for trial that allows the parties to take part in ADR along the way is a sensible case management tool. A stay or a fixed ‘window’ is likely to lead to delay, extra cost and uncertainty, and should not ordinarily be ordered.”

He declined to order a ‘window’ of four months prior to disclosure in the case.

Andy Ellis, costs lawyer and managing director of Practico, said: “By not treating the £10m claim limit as a cap, this latest decision is a further example of good sense. I can foresee other situations arising, including perhaps group actions and cases where there is a disparity between the parties’ budgets, when the courts will now exercise discretion to costs manage cases actively as the rules allow.

“Anyone who has monitored the emergent case law in budgeting through the pilot schemes and beyond will have paid particular attention to the judgments of Mr Justice Coulson. He has taken a tough line on adherence and refused attempts at retrospective variations in the Murray and Elvanite cases. Equally importantly, his support for budgetary control has also provided an antidote to the apathy and less than subtle resistance which has been threatening to derail this aspect of the reforms.”

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jpg” alt=”” width=”225″ height=”300″ /> Brain injury: lawyers need to wait to ascertain impact of injury

The Court of Appeal has overturned the High Court and rejected the normal part 36 costs consequences of an offer being accepted two years after it was made

The court said the particular circumstances of the case were sufficient to justify departure from the rule

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Hannah Aziz

Hannah Aziz, In House Solicitor

In December 2016, Lord Hodgson submitted a written request to the MoJ asking the government whether it planned to introduce regulations to ensure that litigation funders are subject to the same statutory duties and obligations as law firms. Lord Hodgson expressed concerns over what he perceived to be the secret nature of the way in which third party litigation funding (“TPFL”) operates and he raised ethical concerns including the risk that because funders have the means to control the litigation they fund, this may operate to a claimant’s disadvantage.

Lord Keen responded in January 2017:

“The government does not believe that the case has been made out for moving away from voluntary regulation, as agreed by Parliament during the passage of the Legal Aid, Sentencing and Punishment of Offenders Act 2012. The market for TPLF remains at a relatively early stage in its development in this jurisdiction and we are not aware of specific concerns about the activities of litigation funders. The government has not therefore undertaken a formal assessment of the effectiveness of the voluntary code of conduct or the membership of the Association of Litigation Funders. The last government gave parliament an assurance that it will keep TPLF under review and this government is ready to investigate matters further should the need arise.”

The response from the government comes as welcome news to us and other third party funders. We believe that rather than hindering access to justice, TPLF offers litigants greater access to justice as meritorious claims can now be pursued where previously they had to be abandoned due to lack of funds to support the litigation.

Acasta is able to offer funding for a variety of commercial disputes in conjunction with Sparkle Capital. Our in house legal team is actively involved in assessing and considering the merits of any funding proposal. We also offer a funding facility that has been specially designed to provide assistance for lower value claims as we understand that such claims cannot often be pursued due to lack of finance.

Hannah Aziz, In House Solicitor
Acasta Europe Limited

T:  0800 668 1350

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In January 2017, Litigation Costs Services, one of the country’s most experienced group action costs firms, will join forces with Elite Law Solicitors, the country’s first Lexcel accredited costs practice.

Sue Nash – Costs Lawyer, MD of Litigation Costs Services (LCS) and former ACL chair – will join Elite as Senior Consultant.

LCS was founded in 2002 by Sue and former ACLD founding member Terry Wisdom and practises from offices in High Wycombe.  Whilst it offers the full range of costs services, it is particularly well known for its specialism in group action costs and has worked on over 50 such actions over the last 15 years.

LCS’ clients will transfer to Elite and will benefit from an increased team and the extensive range of services offered by Elite as well as receiving continuity from Sue and the LCS team.

Elite – born out of HM Law Costs Draftsmen – this year became the first costs firm to gain Lexcel accreditation and is rapidly building upon its existing following and reputation

Elite’s Managing Partner, costs specialist and Solicitor James Scozzi, says that “We are delighted to welcome Sue as a key member of our practice.  As one of the country’s most prominent costs lawyers – and a recognised group action specialist – she will add another dimension to our already respected team.  Sue will also play a part in offering costs and budgeting advice and training to our clients”.

For her part Sue is delighted with her new role:  “I have known – and previously worked with – both Steve Howey and John Mistri for some 20 years and have also worked closely with James in the past on a number of projects.  Elite share my commitment to client service and to expanding the role of costs expertise to the benefit of their Solicitor and lay clients.  They are well placed to meet the challenges that are coming for all litigators and I am excited by the opportunity of working with them for many years to come”.

Despite the imminent changes through the expansion of the PI small claims limit and the extension of fixed recoverable costs, Sue remains optimistic about the future for costs practices. “Whilst those firms practising predominantly in costing what the judiciary refer to as ‘low value claims’ will undoubtedly face disruption and the loss of traditional costs drafting work, those individuals and firms who look ‘outside the box’ will find that their skills and experience lend themselves to future areas of work which will become increasingly valuable to solicitor and lay clients alike; legal project management, pricing, WiP valuation, costs ADR and costs auditing are just a few of the areas that spring to mind.

Furthermore, costs budgeting will remain for higher value cases, solicitors will continue to need assistance with the new format bill of costs (particularly in the early years) and in the meantime there will be a long ‘tail’ of traditional bill costs drafting and negotiations work.”

Omnia Legal Software will remain a separate entity and continue to trade from its offices in High Wycombe with Sue remaining as MD.  With a new format ‘electronic’ bill of costs due to become compulsory from October 2017 the role of technology in costs practise is set to become the norm:  

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Supreme Court: case referred

Supreme Court: case referred

Recoverable after-the-event insurance (ATE) premiums are not incompatible with a publisher’s right to freedom of expression, the High Court has ruled – but it is asking the Supreme Court to resolve the case law tension over recoverable success fees in publications proceedings.

Mr Justice Mitting said recovery of an ATE premium met the tests set out under article 10 of the European Convention on Human Rights.

Successful claimants can still seek payment of additional liabilities from defendants in publications and privacy proceedings.

Miller v Associated Newspapers Limited [2016] EWHC 397 (QB) saw proceedings brought by a businessman on a conditional fee agreement against the Daily Mail arising from an article published about his business relationship with the then Commission of the Metropolitan Police, Sir Ian Blair.

The trial took place in 2012 and Mr Miller was awarded damages of £65,000 and his costs.

An appeal to the Court of Appeal was dismissed with costs, and permission to appeal to the Supreme Court was refused.

The costs were then subject to assessment by the Senior Costs Judge, Master Gordon-Saker, who referred to the High Court the question of whether the award of the additional liabilities to the claimant would be incompatible with the defendant’s article 10 rights.

On success fees, Mitting J said that although he was bound to follow the House of Lords’ 2005 ruling in Campbell v MGN, this conflicted with the subsequent European Court of Human Rights decision in 2011, MGN v United Kingdom. He said he would grant a certificate to permit the Supreme Court to resolve the issue, “if it chooses to do so”.

He noted that there was a pending Supreme Court hearing on a related costs issue scheduled for later this year.

However, the judge said the ATE premium should not be treated in the same way. There was a different statutory source and the social considerations which meant it was “possible to envisage an outcome in Strasbourg under which the success fee regime remains condemned but the ATE insurance scheme is not”.

In this case, the Mail had agreed not to claim costs above £360,000 in the event of success, which led to a premium of £234,000 for a policy issued by Temple Legal Protection. The newspaper argued that such arrangements – including agreeing not to claim costs at all so as to avoid the need for ATE – unfairly interfered with its article 10 rights.

Mitting J said: “Publishing allegedly defamatory material about an individual carries with it an unavoidable risk as to costs. Giving the option to a publisher to bear its own costs, even if successful, is not so disproportionate a disincentive to freedom of expression as to be without the margin of appreciation allowed to the UK…

“Applying the three tests required by article 10, it is not in dispute that the scheme for recovery of an ATE premium is prescribed by law and that it serves a legitimate social purpose. I am satisfied that it is necessary in a democratic society that a scheme such as this should exist…

“I am satisfied that the burden imposed by the ATE premium scheme on defendant publishers is not so large and not so lacking in appropriate controls as to amount to a disproportionate interference in their right to freedom of expression.

“I do not, on the material which I have considered, believe that the Strasbourg court, when faced with this as a discrete issue, would conclude that the UK scheme was outwith the margin of appreciation allowed to the UK.”

Steve Ruffle, Temple’s senior underwriting manager for commercial ATE claims, said: “I am delighted that Mr Justice Mitting has fully grasped these important issues and vindicated the fundamental role ATE insurance plays in providing access to justice that might otherwise have not been available.

“Temple has the pleasure of working with a great number of the foremost media and privacy lawyers. I can recall a number of claims over the years which would simply not have been pursued without the comfort of ATE insurance.”

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Caroline Acton, Marie Walsh, Laura Clapton, Sally Clark

From left to right; Caroline Acton, Marie Walsh, Laura Clapton and Sally Clark

Niche law firm, Consilia Legal, has implemented the Proclaim Practice Management Software Solution from Eclipse Legal Systems, the Law Society’s sole endorsed provider.

A new startup in November 2014, Consilia provides Mediation, Family and Employment services to a rapidly expanding clientbase. The firm’s ethos is based around a pragmatic fixed fee approach, eschewing the traditional ‘billable hour’ direction taken by the majority of practices.

The Proclaim Case Management Software system is utilised firm-wide across the practice, with a bespoke Mediation solution complemented by Proclaim’s out-of-the-box Employment and Family systems. The team has access to Proclaim’s centralised productivity-enhancing workflow and task management tools, while Proclaim’s integrated practice accounting solution ensures that Consilia has instant access to live financial performance data.

Sally Clark, partner at Consilia, comments:

“The core of our work is fixed fee and necessitates water-tight processes and workflow to ensure that efficiency and quality of service remains at optimal levels. Proclaim enables us to provide superb levels of accuracy, teamed with speed of case progression and an ability to handle increasing work volumes.”

Laura Clapton, partner at Consilia, adds:

“We simply could not carry out mediation work to this standard without using Proclaim – the system provides a core service delivery backbone, and is – in the words of a colleague – the secretary I’ve always wanted!”


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Gilbert: Walker Morris cannot distinguish itself in market

The LASPO reforms claimed a high-profile victim yesterday with Leeds firm Walker Morris announcing that it is to close its personal injury division, which operates under the brand Distinctly Legal.

Some 48 staff are now at risk of redundancy, with the firm blaming “the LASPO changes and the continuing turmoil in the personal injury market place”.

The division was formerly known as WM Claims and in a statement the firm said: “Over the last 12 months the firm has sought to refocus its personal injury business by investing in a rebrand and a ‘direct to market’ approach.

“The refocus has not achieved the results that we anticipated. This combined with continuing uncertainty in the market and the inevitable shift towards a more process, volume-driven approach, has led the firm to conclude that continued involvement in the PI market does not fit with its long-term strategy.”

Managing partner Ian Gilbert added: “Despite having a very capable and committed team within Distinctly Legal, unfortunately the significant structural changes which have occurred in the PI market recently and those changes which we believe will occur in the future, have led us regrettably, to conclude that this is not a market in which Walker Morris can differentiate itself as well as building a strong recognisable brand.

“We have therefore decided to withdraw from the PI market and focus on our successful core business.”

Co-operative Legal Services has also announced that it is to make redundancies in its 140-strong personal injury division as a result of a “restructuring”.

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High Court: breaches were deliberate and premeditated

High Court: breaches were deliberate and premeditated

A client of third-party litigation funder Therium, who has refused to repay what he owed it from the damages he secured and has gone on the run to avoid doing so, was last week sentenced to 21 months in jail for contempt of court.

The sentence followed a ruling by Mr Justice Popplewell finding businessman Guy Brooke guilty of contempt on several grounds. The maximum sentence was 24 months.

The judge said: “The breaches were deliberate and premeditated and part of a calculated and sustained defiance of the authority of the court.”

Further, he found the contempt “aggravated by the lack of remorse and the public defiance”, as displayed in a recent article in The Sunday Times, in which Mr Brooke openly admitted his intention of keeping out of the reach of Therium by moving regularly “from country to country, from rented flat to rented flat”.

Mr Brooke was a shareholder in a company which successfully sued Dutch law firm De Brauw Blackstone Westbroek for professional negligence. To pursue the quantum stage of the claim, Mr Brooke needed litigation funding, and set up a new company called Cable Plus in the Dutch Caribbean island of Curacao.

Mr Brooke had agreed that in return for £1m in funding from Therium, he would pay the proceeds of successful litigation into the client account of his London law firm, Kemp Little.

He was awarded €3.4m by a Dutch court last summer, and a further €400,000 through a subsequent settlement – a tenth of what he had hoped for, and less than the £4m he owed Therium (made up of a £3m contingency fee and repayment of the £1m).

The judge said Mr Brooke was “disappointed and dissatisfied” by the amount awarded by the court and “deliberately kept” the fact and amount of the settlement secret from Therium until disclosure was ordered by the High Court in April this year.

He failed to pay the litigation proceeds into the Kemp Little account, as was “clearly required” under the terms of the litigation funding agreement, and gave no “satisfactory explanation” for his failure.

Popplewell J said Mr Brooke, aged 78, could be “seen to have been dishonest and/or misleading in a number of respects throughout the history of the dispute”.

Mr Brooke had “secretly arranged” for the claim proceeds to be sent to Curacao, “even though he knew that he was not entitled to do so” and “persistently failed, despite repeated requests” to tell Therium what had happened to the money until ordered to by the court.

“In his first affidavit he gave as his address what purported to be a residential address in Taunton, but turned out to be a rented mailbox whose operator had been specifically instructed by Mr Brooke not to sign for any letters sent there. His second affidavit gave his address as ‘no fixed abode’.

“His third ‘affidavit’ was not sworn. He has consistently declined, without good reason, to reveal his whereabouts. I am therefore cautious of attaching weight to Mr Brooke’s uncorroborated assertions especially where they are contrary to the inherent probabilities.”

Popplewell J said Therium applied to commit Mr Brooke to prison for a number of contempts of court, including a failure to comply with various court orders made between April and July 2016.

The judge said Mr Brooke did not attend the High Court hearing in August this year, and instead sent an email on the eve of the hearing saying he was “unable to travel to attend for medical reasons”.

Counsel for Mr Brooke made an application for adjournment on his behalf, but the judge concluded that he was “unwilling to attend, not unable to do so” and rejected the application.

Mr Justice Phillips had ordered the litigation proceeds to be paid into the Court Funds Office in April this year, and when Mr Brooke failed to comply, Therium issued its application for committal for contempt.

Ahead of the sentencing hearing, Mr Brooke’s direct access barrister, Simon Williams, emailed the judge’s clerk a copy of a report on the businessman’s medical condition, but did not copy it to Therium or its lawyers.

Popplewell J said: “That was an entirely improper approach to take. It will very rarely be appropriate to put material before the court which is relevant to the substance of an application, without making it available to the other side. This is not such a very rare case…

“It is doubly wrong for material to be sent to the judge, in the way which Mr Williams did, without even alerting the other side to the fact that such a course is being taken.

“I therefore responded through my clerk to Mr. Williams, making clear that this course was inappropriate, alerting Therium’s advisers to the fact that it had taken place, and explaining that I had not looked at the attached medical report.

“Following that, the medical report was made available to Therium’s advisers. The request that I consider it without it being provided to them was withdrawn and no objection was taken to it being put before me. I have, therefore, read it. Mr Williams has apologised for the course he took.”

Mr Brooke was reported by the Daily Mail last week to be “on the run in Europe”.

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London lawyers: ruling not carte blanche for their use

The High Court has overturned a costs judge’s ruling that a radiographer based in Devon could not claim the cost of using solicitors in London.

However, Mr Justice Cranston – sitting with assessor Master Simons and solicitor Peter Todd – warned that the ruling “is no carte blanche for the instruction of central London solicitors in this type of case”.

In Acres v Royal Devon and Exeter NHS Foundation Trust [2013] EWHC 652 (QB), Margaret Acres, who worked as senior radiographer in the trust’s nuclear medicine department, developed repetitive strain injury and was medically retired. The Society of Radiographers, of which she was a member, typically instructed London-based Howard Kennedy for employer’s liability claims because the firm had built up specialist expertise on how its members worked.

In Mrs Acres’ case, however, the society advised her to consult the Plymouth branch of Thompsons, which decided there were not reasonable prospects of establishing liability. A second opinion was sought from Howard Kennedy, which believed there was a claim valued at £140,000. It eventually settled for £8,000, with Mrs Acres judged medically unfit to litigate the case. Costs were £79,000 and an argument over whether it was reasonable to instruct central London solicitors ensued.

Master O’Hare decided that it was not and to the extent that the case was out of the ordinary, the hourly rate could be up-rated (which he did, by 30%).

Mr Justice Cranston disagreed, finding the use of Howard Kennedy to be reasonable. He said Master O’Hare had failed to consider the reasonableness of the decision to instruct the firm in the light of Thompsons declining to act on the merits.

The judge accepted the submissions of Mrs Acres’ counsel, John Foy QC – using the factors outlined in the leading case of Wraith v Sheffield Forgemasters Ltd [1998] 1 WLR 132 – that the claim was of considerable importance to Mrs Acres since the case had a potential six-figure value, and there were the legal and factual complexities.

Mrs Acres was dissatisfied with Thompsons and so she had to seek help elsewhere, making it natural and reasonable for her to turn to her professional association’s usual and preferred solicitors, Mr Foy added.

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High Court: unjust and unreasonable

A client’s loss of mental capacity in the course of proceedings does not automatically terminate their solicitor’s retainer, the High Court ruled yesterday.

Mr Justice Phillips acknowledged that his decision was particularly important for solicitors conducting pre-April 2013 personal injury claims under conditional fee agreements (CFAs), given the change in recoverability.

Overturning the first instance ruling of Regional Costs Judge Harris in Manchester, he said that whilst incapacity has the effect of removing the authority of a solicitor to act on behalf of the party lacking capacity for the duration of that incapacity, “such authority can be restored when a deputy is appointed and provides instructions to the solicitors in that capacity, or otherwise if and when the claimant regains capacity.

“There is no reason, as a matter of authority or legal principle, why an inability to instruct solicitors in the intervening period (which may be quite short) should be taken to have the effect of immediately ending a solicitor’s retainer.”

The case, Blankley v Manchester NHS Trust [2014] EWHC 168 (QB), involved a clinical negligence claim that started in 2002 with the client lacking capacity, then regaining it in May 2005, only to lose it again in February 2007. The costs of Manchester firm Linder Myers under dispute for the period when she had capacity were £185,000.

Phillips J considered the issues of capacity and contractual frustration. He said: “The supervening inability of a party to give instructions personally, with the likelihood (if not the certainty) that a deputy will be appointed, does not change the nature of the contract of retainer, radically or even significantly.” Any delay caused would not on its own frustrate the contract, he noted.

The judge added: “The possibility that the client will at some point lose mental capacity is plainly a matter which was within the reasonable contemplation of the parties. The fact that the CFA here contained an express provision that the retainer would terminate on the death of the claimant, far from supporting the case that supervening incapacity was a frustrating event, indicates that the parties did not regard incapacity of the claimant as something which should bring the contract to an end.”

He also ruled that it would be “unjust and unreasonable” to treat a retainer as terminated by reason of what may be a fleeting period of incapacity.

To do so would be contrary to the principle that the doctrine of frustration should be confined within narrow limits and cannot be lightly invoked. “It would result in the frequent termination of retainers (on the basis of arguments advanced by a non-party to the contract, such as the defendant) where neither party wished that to be the outcome and neither saw any difficulty in continuing to perform their obligations.”

Mark Walmsley, senior costs draftsman and head of costs management at Linder Myers, said: “This was a significant ruling which challenges previously held judgments that a solicitor’s retainer is automatically terminated if a client becomes incapacitated during proceedings.

“In this particular case, the claimant had suffered significant brain injury as a result of medical negligence so it was reasonable to expect that there was a risk that she would lose mental capacity after temporarily regaining it. Linder Myers acted properly when this occurred and continued to win a substantial amount of compensation.”

Phillips J sat with Master Campbell and Colemans-ctts partner Greg Cox as assessors.

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Birmingham: District judge disapproved of conduct

A district judge has decided to halve the costs awarded to claimant solicitors for unreasonable and improper conduct in concealing from the paying party the existence of a previous conditional fee agreement and before-the-event (BTE) insurance.

District Judge Griffith, sitting at Birmingham County Court, said: “The word ‘improper’ is not limited to situations where there would be a significant breach of professional conduct, but encompasses conduct which can be regarded as improper according to a consensus of professional or judicial opinion.

“Although I have not been referred to a professional code of conduct, I would be surprised if the conduct of the claimant’s solicitors which I have described, has not fallen foul of some provision of the rules which govern solicitors.

“Misrepresenting the position in a bill of costs intended for consideration by an opponent in litigation and use at a court hearing in order to gain practical advantage, can be regarded as improper conduct. It is, in any event, likely to be so regarded by a consensus of solicitors or judges, in my view.”

The claimant solicitors in the case were Rapid Solicitors, based in Hull, which was acquired by Neil Hudgell Solicitors in October last year.

Managing director Neil Hudgell told Litigation Futures: “The conduct that is the subject of this ruling predates our involvement in the case.

“As a result of this and other conduct by Rapid, the brand has been consigned to history.”

Delivering judgment in Kerins v Heart of England NHS Trust, DJ Griffith said the case involved a medical negligence claim which settled in September 2013.

The defendant argued that costs should be disallowed entirely because of abuse of process and misconduct under CPR 44.11.

DJ Griffith said the claimant, Ryan Kerins, entered into two conditional fee agreements with Rapid, one signed in April 2012 even though the BTE policy was known about at the time, and one in March 2013 when proceedings began and he was able to choose Rapid as his solicitors under the policy. The notice of funding, served in July 2013, only referred to the first CFA, however.

The claimants’ costs bill, as originally drafted, was for £127,885, but, following an “unofficial response” from the defendant, was reduced to £49,369.

Neither bill referred to the second CFA nor to the BTE cover, and they were only disclosed four days before the hearing.

Given the lack of a notice of change of CFA under CPR 44.15, the district judge said the success fee in the case was not recoverable, as the claimant had conceded.

DJ Griffith said he was “of the firm view” that the claimant could be criticised “with regard to the way that the existence of the second CFA and the available BTE funding was intentionally kept secret from the defendant. They had ample opportunity to put right the position they had misrepresented, but failed to do so”.

The judge said an inaccurate portrayal of the funding position could “serve to strengthen the claimant’s arguments” in justifying the success fee and weaken the defendant’s position.

DJ Griffith concluded that not only was Rapid’s conduct of the case improper under CPR 44.11, but it was also unreasonable.

“The court very much disapproves of conduct of this type in these days of openness between the parties. There is an obligation on legal representatives to assist the court and present the client’s case fairly and without misrepresentation.”

However, he said it would be disproportionate to disallow all of the costs, and so disallowed 50%.

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High Court: Mitchell was applied correctly

The High Court has denied the Lord Chancellor relief from sanctions in a case involving an attempt by the Legal Aid Agency (LAA) to reclaim £160,000 plus interest from a former law firm 16 years after the final payments were made.

The court heard that payments on account were made by the Legal Services Commission (LSC), the LAA’s predecessor, between 1994 and 1998, under two legal aid certificates. Most of the payments were made to Vallance & Co, bought by Taylor Willcocks in 1997. Taylor Willcocks merged with Howell Jones in 2012.

Mr Justice Globe said that Taylor Willcocks made no application for a detailed assessment of the sums due under the legal aid certificates and “it did not appear to be disputed” that in those circumstances the result would be a ‘nil assessment’.

Delivering judgment in The Lord Chancellor v The Former Partnership of Taylor Willcocks and others [2014] EWHC 3664 (QB), Globe J said the LSC carried out a nil assessment in January 2008, almost 10 years after the final payments were made.

There was an exchange of correspondence but the judge said “nothing significant” occurred until the summer of 2013, when the LAA sent out a letter before action.

This was followed by more correspondence until January 2014, when the LAA issued a claim form, serving it in May 2014, the court heard. This was followed by an application, 11 days later, to extend time for service of particulars of claim.

Globe J said the particulars of claim were eventually “purported” to have been served in September 2014. Meanwhile, an application to extend time had been refused in June by Master Leslie, relying on the Mitchell ruling.

In its appeal to the High Court, the LAA argued, among other things that Master Leslie had failed to consider all the relevant circumstances of the case.

Globe J said counsel for the LAA argued that regard should have been given to the fact that failure had no impact on other court users, did not cause any other hearings to be vacated or require the relisting of any trial.

Counsel for the former law firm and three of its partners – Colin Thorpe, Paul Trim and Sarah Addison – argued that Master Leslie had applied Mitchell correctly, and the case did not require further consideration under the ruling in Denton, which was not available to him at the time.

Globe J said the defendants argued that even if Denton had been applied, the result would have been the same: “The claim is almost unbelievably stale. The work was allegedly done 16-20 years ago.

“After discussions about it between 2006 and 2008, there was then an unexplained delay of five years when nothing happened. The defendants are now prejudiced in defending the claim so long after the event.

“There was no good reason for not informing the defendants that a claim form had been issued on 13 January 2014 and not being candid in communications in relation to any difficulties in relation to the particulars of claim.”

Globe J said there was “considerable force” in the defendants’ arguments. He concluded:” In my judgment, the decision of the Master was one that he was entitled to reach. It was within the generous ambit within which a reasonable disagreement is possible.

“I am unable to find it was wholly wrong. It was a considered decision applying the Mitchell guidance correctly. It stands up to scrutiny even when studied alongside the later, amplified Denton guidance. The appeal must be dismissed.”

Globe J added that as costs followed the event, the Lord Chancellor would have to pay the defendants’ costs.

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Brennan: delivering dividend income to investors

Litigation funder Juridica has announced a partial settlement in one of its cases that has generated a gain of $12.5m (£8m).

The return is in line with the company’s expectations, as previously reflected in the AIM-listed company’s unrealised profits.

It has now brought in gross proceeds of $30m in 2013, “with further progress expected during the next 12 months”. Since opening for business, Juridica has generated gross proceeds of $117m.

During 2013 Juridica has paid or announced a total of 23p per share in dividends as its investments mature, and in a statement today it said: “As a result of today's announcement and in anticipation of possible further returns before the year end, the board will consider the declaration of additional dividends by the end of the year.

“If made, such sum would be not less than 4p per share in addition to the 10p per share (or approximately $16m in aggregate) announced on 4 July 2013 which will be paid on 15 January 2014 to shareholders on the register at 13 December 2013.”

After paying the 10p dividend, Juridica will have returned $64m to shareholders in the form of $54m in dividends and $10m as a result of a share buy-back scheme in 2010.

Juridica has so far raised $210m of capital in two tranches.

Lord Brennan, Juridica’s chairman, said: “We are pleased with the portfolio's progress during the year and by our ability to deliver dividend income to investors. Today's win underlines our confidence in the company's investments, validating the mix of opportunities chosen by our investment manager.

“We remain focused on the company’s objectives of dividend income and NAV [net asset value] growth.”

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Thomas: huge differences in rates

The impact of the new rule on proportionality means that there should be a greater emphasis on only instructing London lawyers for non-London work when genuinely necessary, with the issue addressed during costs budgeting, the new Lord Chief Justice has said.

Giving his first speech in the role – the Birkenhead lecture – Sir John Thomas focused on improving the provision of justice outside of the capital, particularly because it “provides access to justice without the cost of parties coming to London”.

Sir John said the “serious impediment” to reducing the costs of litigation is the “trend towards the use of London lawyers and the courts in London to do work that can properly be carried out by lawyers based outside London in courts based outside London”.

The impetus for this, he suggested, may well be the higher rates that can be charged and recovered.

Noting the 1998 Court of Appeal ruling in Wraith v Sheffield Forgemasters – which said judges had to ask themselves whether it was objectively reasonable for London solicitors to be instructed – Sir John said only a few types of case “truly require” London firms, with all the overheads their location adds to the hourly rate charged.

“Of course a party is entitled to employ any firm it wishes in any city, but if the party does instruct a London firm for out of London work, it should do so in the knowledge that in the event of success, it will be necessary to explain to the court at the costs budgeting stage or on any assessment why it was reasonable to use a London firm for such a dispute. The differences in costs are now huge.”

He highlighted a Divisional Court case relating to Wales on which he sat last year in Cardiff, where the two interested parties instructed the Sheffield and London offices of the same national law firm respectively, at partner rates of £198 in Sheffield and £510 in London. It was held unreasonable for the Welsh party to have instructed the London office.

He continued: “But the advent of the national firm, the huge differences in rates and the increased emphasis on proportionality the Jackson reforms have introduced into the conduct of litigation are all matters that have arisen since the judgment of Kennedy LJ in [Wraith].

“It may be that this will necessitate a reconsideration of the factors that go into an assessment of whether it was reasonable to instruct London solicitors in cases where the dispute arises out of London.

“Kennedy LJ may have noted the duty to avoid higher costs. It will be interesting to see the view that the courts take of that duty now. Will it be seen as one that carries with it the requirement that instructing parties have to consider how best to ensure that costs are proportionate to the claim? Will this go beyond simply avoiding higher costs than would otherwise be incurred?

“If proportionality does have this effect, in addition to its wider effects on costs through budgeting and costs assessment, it may well serve to increase the impetus for clients in cases arising out of London to use expert local firms or, if a national firm is instructed, to ask the question of their solicitors why the work, or the bulk of it, was not done in an office out of London and charged accordingly.”

Sir John acknowledged that there has always been work that requires lawyers from a certain part of the country. “London remains one of the world’s financial and commercial centres. It is inevitable that those law firms specialising in such work will locate there. Nothing should disturb that or question the reasonableness of using them for such work.

“However there is a vast amount of litigation, including what has traditionally been seen as specialist, such as much traditional chancery work and administrative court work, that can and should properly be litigated outside London by local firms where that work arises out of London. The courts will do all they can to encourage that.”

While highlighting the need for a better court infrastructure, particularly IT, and the need to stamp out local directions, Sir John said the key to the “proper provision of justice” outside of London is structuring and motivating the legal profession to support it, including preserving local specialist advocacy.

Sir John continued: “London has no monopoly on skill or experience, as any of our law firms and chambers based out of London will tell you with both pride and justification. In the age of the internet, of tele-conferences, Skype and Facetime, there is no reason why a litigant should not or could not properly instruct a lawyer from outside London to work for them at a cost significantly less than in London but with equal quality experience in most fields… And of course such increased competition from a truly national market will affect London prices.”

This in turn means that “there is a real opportunity to reverse the recent historic trend that has seen London gain the largest concentration of the legal profession”, he added.

To read the full speech, click here.

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House of Lords

“Unbridled enthusiasm” for SARAH bill in Antarctica

The government’s Social Action, Responsibility and Heroism (SARAH) Bill passed its third reading in the House of Lords yesterday afternoon, but was lampooned by Lord Pannick as a “monument” to the achievements of the current Lord Chancellor, Chris Grayling.

Quoting from Shelley’s Ozymandias, the cross-bencher continued: “Look on my works, ye mighty, and despair.”

Lord Pannick said that “men and women across the country” had been preparing for acts of heroism – waiting only for Parliament to approve the bill – and in these circumstances it would be “irresponsible” of him to delay it any further.

He said the bill “remained the most ridiculous piece of legislation approved by Parliament in a very long time” and would “barely muster a pass mark in GCSE legal studies – if there was one”.

However, withdrawing an amendment to the bill, he praised the way justice minister Lord Faulks had “dived into the lake” to “rescue this pitiful creature”.

At it nears the end of its parliamentary journey, peers approved one amendment to the bill, tabled by Lord Faulks, which replaced the word “generally” in Clause 3 with “predominantly”.

This means that a person, “in carrying out the activity in the course of which the alleged negligence or breach of statutory duty occurred”, must have demonstrated a “predominantly responsible” approach towards protecting the safety of others.

Lord Pannick’s amendment would have replaced the word “activity” with “act or omission”, even though, as Lord Faulks pointed out, the beginning of the clause would no longer have made sense.

The justice minister himself described the bill as “small but important”, and said that it only required courts to “have regard” to certain matters, not to disregard all the other matters relating to a negligence action.

He said he hoped it would encourage volunteering and remove the “shadow” of the fear of litigation.

Lord Faulks said the government considered that the SARAH bill to be a “modest” change, but one that most people would consider to be sensible.

Lord Hunt of Wirral, a Conservative peer and supporter of the bill, said he had just returned from Antarctica, where there was “unbridled enthusiasm” for the bill and a feeling that there had been too much emphasis on health and safety.

However, shadow justice spokesperson Lord Beecham described the SARAH bill as “vanity legislation” which would apply to an “enormously wide range” of claims where there may be no element of public safety at all.

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Chris Grayling

Grayling: “improved, robust system for medical evidence”

Chris Grayling, the justice secretary and Lord Chancellor, has promised new court rules to limit the scope of medical evidence for whiplash claims and discourage ‘pre-med’ offers.

Mr Grayling confirmed in an announcement yesterday that GPs’ fees for whiplash claims would be capped at £180 – £20 lower than the current amount allowed under the Association of Medical Reporting Organisations agreement.

A spokesperson for the Ministry of Justice (MoJ) said the fee cut would come into force in October, at the same time as the new rules.

One of them would be aimed at “discouraging insurers from settling whiplash claims without a medical report confirming the claimant’s injury”.

Another rule would introduce “an expectation that medical evidence will be limited to a single report, unless a clear case is made otherwise” and allow defendants to “give their account of the incident directly to the medical expert, when appropriate”.

A further rule announced by the MoJ yesterday would stop experts who produce reports from offering treatment to injured victims “to ensure there is no incentive for them to encourage unnecessary treatment”.

“We are determined to have an improved, robust system for medical evidence, so genuine claims can still be settled but fraud is driven out of the market,” Mr Grayling said.

In a letter attached to Mr Grayling’s announcement, Lord Faulks said the government had not abandoned its proposed ban on law firms owning medical reporting agencies.

He said the ministry “remained committed to ensuring this independence” and would take this forward as part of a second tranche of whiplash reforms, to be implemented by the end of the year.

The MoJ failed to meet its own deadline to respond for its latest whiplash claims announcement, which fell earlier last week before parliament rose for the summer recess.

The original proposals, the latest stage of the government’s plans to crack down on whiplash claims, were made in a letter sent to stakeholders by justice minister, Lord Faulks, at the beginning of May.

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SRA: proportionate outcome

A solicitor who failed to comply with court orders has been rebuked by the Solicitors Regulation Authority (SRA) after the judge complained to the regulator.

Paul Ireland, a sole practitioner in Warrington, accepted his sanction in a regulatory settlement agreement that means he avoids a referral to the Solicitors Disciplinary Tribunal.

The court told the SRA that Mr Ireland appeared at a county court by telephone, representing the defendant in a civil dispute. An order was made requiring him to file a perfected order, but he did not do so.

Three months later, court wrote to him, requiring him to file it within a week, but again he did not comply.

A further order was made, stating that unless Mr Ireland filed the perfected order by the following week, he should attend the court to explain his failure. Mr Ireland neither filed the order nor attended court as required.

Mr Ireland attributed his failures due to administrative errors at his office. The agreement said: “He confirmed that by the time he became aware of the orders it was too late for him to take action. He did not contact the court to inform it of the reasons for his failures.”

He wrote to the Court some months later apologising for his conduct.

Mr Ireland admitted that he failed to uphold the proper administration of justice in breach of principle 1 of the SRA Principles 2011 and failed to achieve outcomes 5.3 and 5.6 of the code of conduct – you must comply with court orders that place obligations on you, and you must comply with your duties to the court.

The SRA said the agreed outcome was “a proportionate outcome in the public interest” given that the conduct was “neither trivial nor justifiably inadvertent”.

It took into account that Mr Ireland had a clean record up to this point, has put systems in place to avoid future breaches, and has apologised for his misconduct.

Mr Ireland will also pay costs of £300.

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Terry: acquisition helps service growth

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Evans: fairer system

Yesterday’s announcement of how the Ministry of Justice intends to reform the discount rate and publication of the National Audit Office’s (NAO) report on clinical negligence claims drew predictably opposing responses from claimant and defendant groups.

On the discount rate, Huw Evans, director general of the Association of British Insurers, welcomed government decision that would produce a system “that is fairer for claimants, customers and taxpayers alike”.

He added: “If implemented it will help relieve some of the cost pressures on motor and liability insurance in a way that can only benefit customers.”

However, it was noted on social media that he made no direct mention of premiums falling as a result, having warned in February that the decision to cut the rate would send them up.

Backing the government, Mark Burton, a partner at defendant law firm Kennedys, said both claimants and compensators “have in any event been pragmatically negotiating settlements within the 0% to 1% range since February, regardless of the prevailing -0.75% rate, in anticipation of further reforms”.

He continued: “The new methodology may therefore lead to a new rate within a similar range to that widely adopted by the market anyway.

“The more rigorous methodology proposed in the draft reforms, including periodic reviews and independent expertise, will hopefully avoid future controversy and ensure a fairer process.”

Simon Kayll, chief executive of the Medical Protection Society, said the current framework failed to consider the impact on the NHS, the public purse “and the affordability of professional protection for healthcare professionals”.

He added: “It is vital that government gets this right if we are to avoid further sudden shocks to the cost of compensation, and the proposed new framework is welcome step which could result in a more common sense approach with the reality of how claimants invest compensation payments at its core.

“It is however dependent on implementation – the new framework will only apply if and when the proposed law is enacted and it will not apply retrospectively.

“We look forward to seeing swift progress on this – and commitment to whole system legal reform to tackle the underlying issue of rising clinical negligence costs.”

On the claimant side, Brett Dixon, president of the Association of Personal Injury Lawyers (APIL), reacted cautiously to the discount rate decision.

“Someone with a life-long, life-changing injury such as brain damage or a spinal injury cannot afford to take any risks with how his compensation is invested… We need to examine the detail of the Ministry of Justice’s response, but what I can say is that the new formula for calculating the rate will be critical to injured people.

“The last thing people with devastating injuries think about when they are lying in hospital is their insurance premiums. They think about how they are going to manage. Insurers say an increased discount rate will ‘benefit’ customers through their premiums. It is of no benefit if they are severely injured and forced to take risks with the compensation they so desperately need.”

Peter Todd, the partner at London firm Hodge Jones & Allen who advised APIL on the court challenge that led to February’s decision, was less on the fence: “The government… will now require injured people to gamble their compensation in investments with risk in order to be able to fund, in particular, the future care they need.

“Whilst many claimants succeed in their investment risks, inevitably some will fail, and will now no longer have a guaranteed safe, secure and dignified future.

“The Conservative government has prioritised the insurance industry’s profits over the secure and dignified future of injured people. It remains to be seen whether they can find a parliamentary majority to enact the proposed new legislation.”

The most radical thoughts came from Malcolm Henké, partner and head of large and complex injury at insurance industry law firm Horwich Farrelly.

He said the firm has been advocating “a rigorous system” for assessing all accident victims: “One thing for certain is that the current basis for calculation is broken and we hope that this latest news means a more radical approach will come into action.

“There is a truly massive gulf between the cost to the state of providing for catastrophically injured individuals with no claim for compensation and the damages paid to those with similar injuries but with a tortfeasor to sue.”

He called for fundamental reform of the way in which compensation is assessed. “Claimants invariably recover damages which will allow them to enjoy a Mercedes Benz package of care, aids, equipment and therapies – although they have no obligation to spend a single penny on the target expenses).

“Their counterparts, dependent on the state or their own resources, will experience anything between a clapped out old banger service and a Skoda: they are subject to the so called postcode lottery.”

He called on defendants to press for a system “by which multiplicands match actual needs and multipliers set at correct levels, again to represent actual rather than assumed investment”.

Mr Henké continued: “A more accurate parallel would be the advice given to someone with a self-invested pension, balancing the preservation of a capital sum with a regular income flow over their lifetime. The difference here is that in most cases the investment ‘pot’ will be far greater than for most pensions and would not be subject to any restrictions.”

On the NAO report, Meg Hillier MP, chair of the House of Commons’ public accounts committee, said: “The costs of clinical negligence claims are spiralling at a time of immense financial pressures on our National Health Service, taking scarce resources away from frontline services and patients.

“The Department of Health and Ministry of Justice have been too slow to work together to turn the tide, with actions to save £90m a year by 2020-21 a drop in the ocean in the face of forecast costs of £3.2bn a year by 2021. We need government to take a good hard look at the financial and personal costs of clinical negligence.

Dr Pallavi Bradshaw, senior medicolegal adviser at the Medical Protection Society, argued that legal reform was needed “to help achieve a balance between compensation that is reasonable, but also affordable – both to the NHS and to healthcare professionals who are feeling the pressure of rising clinical negligence costs through their professional protection subscriptions.

“Of course controlling the cost of clinical negligence, once a claim is made, is just one component of a more sustainable system. This must go hand in hand with continual improvements in patient safety to help prevent adverse events, and a shift to a more open, learning environment in healthcare where mistakes are routinely discussed and learned from.”

APIL’s Brett Dixon stressed the important of the NHS learning from avoidable harm, part of which was better data collection and co-ordination.

He added: “We are just starting to see the impact of cuts to legal costs, which will continue to streamline claimant costs significantly. But more savings could be made with co-operation on both sides to avoid unnecessary delays and additional work, rather than simply slashing claimant lawyers’ costs further or denying injured patients full compensation.

“In cases where fixed costs could be workable, the costs should be set to reflect a better procedure. Meanwhile, the NHS needs to put its house in order – 39% of negligence claims are the result of harm caused by needless delays in diagnosis or treatment and more than twice a week someone has a foreign object left inside of them, including broken drill bits, surgical needles, swabs, and bags used for the retrieval of specimen.

“Let’s not forget that the overriding concern here should be the cost in human misery.”

James Bell, a clinical negligence partner at Hodge Jones & Allen, accused the NAO of having failed patients: “The NAO has approached this issue with a narrow focus and seems to have air-brushed out of history the recommendations it made to the NHS to reduce clinical incidents in 2001, preferring instead to give the organisation a clean bill of health. The reality is that little or no progress has been made by the NHS to bring down the cost or number of claims.

“The continued focus on claimant lawyers as a solution for all the NHS’s financial ills is misguided and disproportionate. Lawyers’ fees are already tightly controlled, capped and limited due to recent reforms; they have to be “reasonable and proportionate” before they are paid and the courts rightly already hold the power to reduce any bill found to be excessive.

“Delays caused by trusts and NHS Resolution can be unrelenting and are hugely distressing to clients. Often legal bills are massively increased as a result of the NHS’s failure to admit fault at an early stage and the way it conducts cases.

“While the narrative remains solely on claimant lawyers, nothing will change.”

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London: higher fees could affect international appeal

The government’s proposals to increase court fees for commercial cases could lead to claimants facing a fee demand greater than their legal costs, litigators have warned.

This will probably deter small and medium-sized enterprises from issuing proceedings to recover debts worth hundreds of thousands of pounds, according to the London Solicitors Litigation Association (LSLA).

Among a raft of proposals, the Ministry of Justice has put forward a fee of 5% of the value of the claim for issuing a specified money claim, possibly subject to a cap of £10,000, and also ‘enhanced’ fees for commercial cases to recover more than the actual cost of the service provided by the courts.

In its response to the consultation, the LSLA said that a £20,000 fee for a claim valued at £400,000 could be greater than the legal fees for preparing the proceedings “and will add to the already onerous pre-action costs which claimants are obliged to incur”.

It continued: “In circumstances where the ability of the defendant to pay may be in doubt, such high fees will make litigation at this level considerably more risky. In cases where the lawyers are acting under a CFA type arrangement, the court fees may be the entirety of the costs incurred, and claimants would very probably struggle to afford the entirety of the proposed 5% issue fee up-front.”

The LSLA raised similar concerns in relation to enhanced fees: “There should be proper research into how the proposed fee levels will affect [small and medium-sized] enterprises, and discussion had on how the impact of the increase in fees on those entities will be mitigated.”

More generally the LSLA maintained its long-standing opposition to the principle of full cost recovery, saying access to first instance courts was integral to a civilised society, rather than being a commercially traded commodity – but that parties should have to pay in full for appeals.

It noted that most of the £110m deficit in the civil and family courts arises from the family courts. “It therefore seems inconsistent to increase fees in the civil courts but to standardise, or even reduce, fees in the family courts: users of the civil courts are effectively being asked to subsidise the family courts.”

In its response to the consultation, the City of London Law Society (CLLS) made the same point, arguing that in any case, “not all business in the family courts justifies a subsidy”.

It said: “A dispute over the financial aspects of a divorce is a dispute about money in the same way that a dispute over the assets in a trust, over sums due on a building contract or over damages for breach of contract is a dispute about money.”

Time-related hearing fees were also a bad idea, the LSLA said, : “The LSLA has concerns about the mechanics of estimating the length of trials for the purposes of time-related hearing fees, and considers that the process could well be open to manipulation and result in satellite litigation.”

Both the LSLA and CLLS expressed concern about the impact of fee increases on the attractiveness of London as an international litigation hub.

“Court fees might, in themselves, be a relatively small part of the cost to a foreign party of litigating in England, but overtly increasing fees to a level far in excess of the costs involved in order to subsidise unrelated parts of the justice system does not send a message that the courts of England and Wales welcome international business,” said the CLLS response.

“The more than sixfold increase in court fees proposed for higher value cases potentially makes court fees an issue that litigants must consider and will not promote the competitiveness of the English legal services sector.”

The CLLS’s litigation committee said the consultation paper did not make “any case” for increasing fees, arguing that “it is inappropriate for the government to seek to exploit the courts’ near monopoly position by using them as a means to raise money, especially in an area as vital to the functioning of civil society as a whole as the justice system”.

More generally it complained that the “lack of information and explanation” in the consultation paper.

Also opposing daily fees, the CLLS said that if it were necessary to impose extra fees on cases that make greater use of court resources, these fees should not be confined to litigation in particular courts, but should be general in application.

“In that scenario, the committee would favour additional graduated fees at later stages of proceedings (eg the first case management conference, listing and the pre-trial review) calculated on the same basis as issue fees.”

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Royal Courts of Justice

Vos LJ: “Complete rethink” required if QOCS struck down

The Court of Appeal has ruled that qualified one-way costs shifting (QOCS) is not “ultra vires”.

Counsel for a holiday company argued that the rule, which protects claimants from costs orders even when they lose, breached Section 51(3) of the Senior Courts Act 1981. This provides that courts have “full power to determine by whom and to what extent the costs are to be paid”.

Lord Justice Vos said the introduction of the QOCS regime was “part of a wholesale reform of the funding of personal injury litigation”.

He went on: “It is just one of a raft of interconnected changes. If QOCS were to be struck down, there would need to be a complete rethink of the entire Jackson reform programme.”

Vos LJ ruled that the court’s power to determine by whom and to what extent the costs of any proceedings were to be paid under the Senior Courts Act was to be read “subject to the power of the rules committee to make rules of court applicable to particular circumstances”.

The case involved a personal injury claim following a skiing accident at Chamonix during a package holiday in the French Alps. The skiing instructor was joined to the action as a third party.

Delivering judgment in Wagenaar v Weekend Travel and another [2014] EWCA Civ 1105, Vos LJ accepted the argument put forward by the third party.

She appealed against a finding by the trial judge that QOCS should be extended to cover “claims for an indemnity or contribution” by defendants against third parties.

Rejecting this approach, Lord Justice Vos said: “The defendant was a commercial party in the business of supplying packaged skiing holidays.

“The fact that its insurance was for some reason vitiated in this case is nothing to the point. It chose, in its own commercial interests, to bring the third party into the proceedings as a third party because, no doubt, it thought it commercially to its advantage to do so.

“In doing so, it would have weighed up the pros and cons including the costs consequences, which, on the defendant’s own case, it expected to be the ones normally to be expected in litigation before these courts (before QOCS were introduced).

“The defendant could have chosen to resist the claimant’s claim on its merits and saved itself the trouble and expense of joining the third party and the risk of an adverse costs order.”

Vos LJ concluded: “In my judgment, therefore, the judge was wrong to hold that the QOCS regime applied to the proceedings between the defendant and the third party in this case.

“In these circumstances, the costs order that the judge made as between those parties must be set aside.”

He directed that the defendant should pay the third party’s costs. Lord justices Laws and Floyd agreed.

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DAS UK GroupPosted by Chris Brewin, Principal Associate, Litigation and Dispute Management, DAS Law

The recent Supreme Court ruling in Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67 will have a huge impact upon the test for ‘dishonesty’ in criminal and professional disciplinary proceedings.

Since 1982, dishonesty has been considered on the basis of the two stage, objective and subjective test arising out of R v Ghosh [1982] EWCA, – the “Ghosh Test”.

The Ghosh Test requires the Court to consider:

  • firstly, whether the conduct in question was dishonest by the standards of ordinary reasonable and honest people; and
  • secondly, whether the individual realised that ordinary honest people would regard their behaviour as dishonest.

The second subjective element of the Ghosh Test means that the less the individual’s own standards conform to society’s expectations, the less likely they are to be held accountable for their behaviour in criminal or professional disciplinary proceedings.

For some time the test in civil proceedings has also been the subject of debate. Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 164 and Lord Hoffman in Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37 advocated an exclusively objective test.  They both felt that, once an individual’s knowledge of the facts was ascertained, it was only necessary to consider whether the conduct was dishonest by the standards of ordinary decent people.  This did not sit easily with a House of Lords decision (Twinsectra v Yardley [2002]) that the Ghosh Test should apply equally in civil proceedings.

In the recent Ivey case, Mr Ivey was a professional gambler who used a card technique, ‘edge-sorting’, which increases the chances of a player winning.  When the casino realised the technique had been used, it refused to pay and Mr Ivey brought a £7.7 million claim for his alleged winnings. Mr Ivey did not believe he had cheated and had merely sought a more advantageous position. Had the Ghosh Test been applied, Mr Ivey would have escaped a finding of dishonesty.  However, the High Court, Court of Appeal and Supreme Court all found that when measured against the standards of ordinary decent people his behaviour constituted cheating and, consequently, the casino was not required to pay him.

The Supreme Court went on to confirm that a solely objective test for dishonesty should be applied in all cases. In professional disciplinary proceedings, for example hearings in the Solicitors Disciplinary Tribunal, respondents will now no longer be able to rely on their own “lower” standards or a belief – even if genuinely held – that they have been honest, as long as ordinary decent people would consider their behaviour dishonest. I seriously doubt anyone will see this as a change for the worse.

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Omnia200x200Stewarts Law LLP, the UK’s largest litigation only law firm, has decided to adopt web-based costs management solution, Omnia, to deal with the increasing number of budgeted cases they are handling.

Partner Julian Chamberlayne, head of KM at Stewarts (and the firm’s COLP) said, ‘Whilst in the run up to the implementation of LASPO it was assumed that most law firms already had software that would enable them to cost budget, the reality is that even now there are very few systems on the market that can really address this challenge. We concluded that Omnia was the best system through a combination of its intuitive interface, powerful monitoring tools and the agile approach of the Omnia team”.

Omnia Software’s MD, costs lawyer Sue Nash, said, “We are delighted to welcome Stewarts Law to our growing number of users.  We were able to show the firm that Omnia can handle the large and complex matters that they specialize in as it has already produced budgets for multi-million pound group actions.  In addition its comprehensive and flexible budget monitoring capabilities mean that users can always be kept up to date with spend against budget”.  Agreeing that this was one of the main drivers behind the firm’s decision, Julian Chamberlayne added, “The monitoring functionality was absolutely crucial for us; in complex and high value litigation it is inevitable that some cases will go over budget and we need to be able to spot them early and take steps to apply to revise the budget in time.”

Last month, another Omnia user firm, 20 office McMillan Williams, announced the injection of £5M of private equity to fund its expansion plans.  Whist most clients export their work from their own CMS/PMS systems, Macmillan Williams fee earners, who have been using Omnia since April 2013, directly time-record their work into the program in multi-track cases.

Omnia now also functions as a costs drafting program following the roll-out of its bill of costs functionality last month.  The core program already enables the production of Statements of Costs for summary assessment; with the introduction of bills of costs, available as an optional  add-on, Sue Nash commented that, “Omnia is well on the way to being the one-stop solution envisaged by Lord Justice Jackson when he said that, “Software should be developed which will (a) be used for time recording and capturing relevant information and (b) automatically generate schedules for summary assessment or bills for detailed assessment as and when required. The long term aim must be to harmonise the procedures and systems which will be used for costs budgeting, costs management, summary assessment and detailed assessment.”  

She added, “When the J-Codes and new format bill of costs are formally introduced later this year Omnia will be ready for them.  Firms will be able to comply with the regime without necessarily having to upgrade their full case management systems”.



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London bus: alleged accident

London bus: alleged accident

A claimant found to have brought a bogus personal injury claim – but then cleared of fraud in the Crown Court – can only face civil contempt proceedings if there is new evidence, the High Court has ruled.

HHJ Peter Hughes QC, sitting as a High Court judge, instead urged the Civil Procedure Rule Committee to consider creating a fast-track procedure to ensure that “those who make and rely on false statements to make bogus or inflated claims are punished speedily and effectively” by the contempt regime.

While it is well established that being punished for contempt of court is no bar to a subsequent prosecution based on the same facts, Judge Hughes said there appeared to be no authority on whether the reverse could happen.

He was ruling in First Capital East Ltd v Plana & Anor [2015] EWHC 2982 (QB), where a London bus driver claimed he had suffered an accident that had caused a minor brain injury.

The defendant’s insurer admitted liability for 90% of the claim. In support of the claim dealing with quantum, which the claimant put at £637,000, the driver and his son each filed witness statements, signed and verified by statements of truth, which the judge said “sought to present the picture of a claimant who had been left seriously incapacitated and in need of constant care”.

By the time £125,000 of interim payments had been made, the defendant presented surveillance evidence that contradicted these symptoms. HHJ Collender QC in the Central London County Court declared the claim fraudulent, struck it out and ordered the repayment of the £125,000 plus costs on an indemnity basis. In addition, he directed that the case be transferred to the High Court to enable an application to be made for permission to bring contempt proceedings.

This was delayed while the claimant left the country, and when he returned he was arrested; the contempt application was issued two months later and in response the claimant maintained that his claim was genuine.

HHJ Hughes recounted: “After a three-day trial, he was acquitted by the jury… The verdict may seem surprising in the light of Judge Collender’s observations, but these, of course, would not be before the jury, and the surveillance evidence, which I am told was. I have not seen a transcript of the proceedings, and it would not be right for me to comment further on the verdict.”

The judge said he had “no hesitation” in finding that the case against both the claimant and his son were strong. In relation to the claimant, he concluded, two “important and competing considerations” had to be weighed in the balance.

“The first consideration, relied on by the applicant, is that the court should itself punish those who seek to rely on false statements in civil proceedings before it with a view to financial gain. The second, based on the principle of finality in litigation, is that the same allegations should not be litigated twice over.

“Each case must be considered on its merits. I do not believe that the acquittal by the jury is an absolute bar to permission being granted for committal proceedings, but, in my view, permission is unlikely to be granted except, for example, where there is material evidence that was not before the jury, or where important new evidence has since come to light. This is not such a case.

“Were permission to be granted, the judge hearing the committal application would be invited to reach a different conclusion to the jury on the same evidence and applying the same standard of proof. That is not an attractive proposition.”

If it was inappropriate to grant permission to bring committal proceedings against the claimant, he added, then it was the same for the son. He said he came to these conclusions “with reluctance”.

HHJ Hughes said that the lesson of the case was that applications for permission to bring contempt proceedings “need to be made without any delay”, particularly for cases before district and circuit judges, who do not have the power to grant permission.

He concluded: “This difference of approach may be something that the Civil Procedure Rule Committee might wish to consider in view of the importance of ensuring that those who make and rely on false statements to make bogus or inflated claims are punished speedily and effectively…

“It ought… to be possible to streamline the practice and procedure to ensure that applications arising out of county court proceedings are referred to the High Court immediately and fast-tracked to ensure that a decision is made with the minimum of delay.”

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Besford: Decision can no longer stand

A regional costs judge has concluded that he was wrong to rule in a previous case that late acceptance of a part 36 offer automatically entitled the claimant to an award of indemnity costs, and thus provided an escape route out of fixed costs.

Judge Ian Besford decided that his widely reported decision in Sutherland v Khan “is unsupported and can no longer stand”.

Part 36 is silent on whether fixed, standard or indemnity basis costs apply in fixed-costs cases where there has been late acceptance, save that references are made to CPR 36.17.

This provides that the defendant should be encouraged to settle before trial without unfair costs penalties, whereas a claimant does not want to be put to additional work without appropriate costs reimbursement.

In Sutherland, District Judge Besford applied the Broadhurst principle that a claimant beating a part 36 offer that proceeded to trial was entitled to escape fixed costs, to cases that did not proceed to trial but were settled by accepting part 36 offers outside the 21 day period for acceptance.

There have been conflicting circuit judge appeals on whether he was right.

According to national insurance law firm BLM, which acted for the defendant in the new case, the judge’s ruling in Whalley v Advantage Insurance confirmed that unless there were ‘exceptional circumstances’ or conduct justifying indemnity costs, the fixed costs regime applied to acceptance of part 36 offers out of time.

BLM costs specialist Dean Holmes said they decided to tackle Sutherland “head-on rather than simply continue to add to the body of circuit judge appeals by bringing the point before the same regional costs judge”.

Adam Burrell, a partner and head of BLM’s costs practice group, added: “The Sutherland decision has been widely relied upon by claimants seeking to recover additional costs beyond the prescribed fixed costs on cases that do not proceed to trial, and are settled by accepting part 36 offers out of time.

“Hopefully this detailed reconsideration and very clear declaration that it can no longer stand will resolve the significant number of cases arguing this point.”

Speaking about part 36 at the recent Costs Law Reports conference in London, Professor Dominic Regan said the High Court ruling last year in Lowin v W Portsmouth was to be appealed. This case applied Broadhurst in finding that when a receiving party made a good part 36 offer in provisional assessment proceedings, this overrode the £1,500 costs cap set out in CPR 47.15(5).

“Sir Rupert Jackson has suggested in his recent report that a simple percentage uplift be applied to fixed costs where a good part 36 offer takes a matter out of the predicated regime,” Professor Regan said.

“This would obviate the necessity for an assessment of indemnity costs payable.”


A golden opportunity for the ATE market to innovate

Enrique Gomez Head of ATE DAS UK Group

With the key judgement in the BNM v MGN case not expected until the end of the year, and decisions in the fixed recoverable costs arena not due until 2019, the after-the-event (ATE) insurance sector – already burdened by ever-changing regulation – is playing something of a waiting game. But this could be a golden opportunity for the ATE sector – the chance to take advantage of what might otherwise be a relative lull in activity period to set in motion a time of self-analysis and transformation, to develop plans for what the future of ATE insurance will look like.

July 16th, 2018