Costs 2017 on 3rd March 2017 in Nottingham

On 3rd March 2017, I shall be delivering a paper on current issues in litigation funding and costs at the Ropewalk Chambers Personal Injury Conference in Nottingham.

Although primarily of interest to those who work in the fields of personal injury and clinical negligence I shall be covering some issues of general interest including fixed costs, the collective delusion of proportionality and other matters.

Attendance at the conference is notionally free: I do ask however for a small donation to charity. You also get lunch. And some of my greatest gags.

You can book a ticket here:

http://ropewalk.co.uk/knowledge-sharing/events2

I hope to see some of you on the day. In the usual course, the paper will be posted online shortly after the conference.

A thought on fixed costs reforms

Some time ago the Voice of Common Sense on the District Bench reminisced about those halcyon days pre 1999, now long gone, when there was little law on costs, no CFAs and a dispute about costs was usually settled by agreement in advance of any taxation hearing.

I pointed out that was not quite the case: even in the days of scale costs fixed by the County Court Rules, every scale 1 bill seemed to start with a request for the exercise of a discretion for an award of costs in excess of the scale.

There have always been disputes about costs, and always will be, as long as there is a shifting of costs from the losing party to the winning party in litigation. What has changed, is perhaps the enthusiasm for reform.

Each legal generation notoriously has re-invented the wheel, whether in the Civil Justice Review of 1988, the Woolf Report of 1996, the Jackson Report of 2010 or in earlier reforms.

What has changed this time round in my view is the degree of enthusiasm for reform. For instance, after fairly seismic changes in 2013, a period of stability might have been appropriate, if only to assess whether the changes had actually produced a net benefit to the public.

Far from it. At the current time the misleadingly entitled whiplash consultation has closed, which contemplates the enactment of primary legislation to remove from an entire class of claimant a substantive common law right to damages and less significantly a fairly sweeping change in the small claims track limit.

A clear issue exists about whether such claimants will be able to effectively source legal advice and representation. What I found interesting in the documents was the indication that perhaps 70% of claimants in road traffic claims have the benefit of legal expense insurance.

In which case one would have thought that the problems of collective funding and ensuring access to justice would have been best addressed by ensuring that the legal insurance market worked effectively in this field and was extended to cover the remaining 30%.

That however is an issue which is curiously absent from the government’s own documents, the responses I have seen from compensating parties and those who represent claimants. Such a solution, would render the raising of the small claims limit something of a side issue as claimants would claim on their legal expense insurance policies to obtain advice and representation in the Small Claims Court.

In addition, there is further work being undertaken by Jackson LJ, in relation to an overarching scheme of fixed costs, presumably applying to all cases, possibly worth up to £75,000. It is this exercise which I think should be of the greatest concern, as it will represent a development easily on a par with the abolition of additional liabilities in terms of its impact on access to justice and the funding of the legal profession.

Such a change to the recovery of costs would have sweeping consequences for access to justice and whether the “polluter pays” principle is maintained in a recognisable form, whether the viability of litigation is adversely affected or improved and the viability of certain sectors of the legal profession.

It also would be introduced presumably because costs budgeting and management would be perceived to be an expensive failure and hence fixed costs would be the cheaper and simpler solution to bespoke costs management in the context of an individual case.

And yet still further, there is a long promised consultation on fixed costs in clinical negligence cases, and on the horizon a digital bill of costs, whose use is compulsory from October 2017 and which may yet prompt a surge in the sales of “Microsoft Excel for Dummies” as the most modest of the expenditures solicitors would have to make in order to draw their bills.

With these reforms in mind, it struck me that the fires of satellite litigation are being banked ever higher, as rules are tested, explored and arguments made by those who perceive an advantage in doing so. Even relatively small points, which should be uncontroversial can give rise to argument.

A little while ago, I was asked to advise on whether in the context of a road traffic accident case, which concluded at trial where a single firm of solicitors represented three claimants, that meant a single amount of fixed costs should be awarded, or three sets of fixed costs. The paying party contending the former, the receiving party the latter.

Each claimant in the proceedings was jointly represented and solicitors issued a single claim form, naming the claimants as first, second or third claimant.

Turning to consider the rules, rule 2.3 defines a claimant as a person who makes a claim. It defines claim for personal injuries as meaning proceedings in which there is a claim for damages in respect of personal injuries to the claimant or any other person or in respect of a person’s death. The rule further defines a statement of case to mean a claim form, particulars of claim where these are not included in a claim form, defence, Part 20 claim or reply to a defence.

A “claim” is not the claim form, nor even the proceedings before the court, but rather the individual demand by a particular person for damages which is included in proceedings. Each claimant has an individual “claim”.

Turning to consider 45.29A, the starting point to note is that section IIIA of part 45 only has application where “a claim” is started under the protocol. Rule 45.29B provides that the fixed costs in rule 45.29C apply where “a claim” is started under the protocol and where the claim notification form is submitted after July 2013 and limits those costs accordingly. It does not limit costs by reference to “proceedings”.

It follows, that the wording of the rule, relates to “a claim”, being the individual’s demand for damages, indicating that costs are awarded per claim, not per claim form or per set of proceedings. It would be an absurd result, if the contrary were true and the fact that three claims are brought in one claim form, as opposed to three claims in three claim forms might make a material difference.

There exists in any case the possibility of individual part 36 offers being made in relation to individual claimants at varying stages, and the rules make no provision for apportionment of a single award of costs.

It can be mere chance that all three claims will go to trial  as opposed to one settling pre-issue, one settling after issue, and one being determined at trial, all of which predicate different awards of costs.

Finally the old PD 45.7 made it plain that costs accrued per claimant, cases of this nature were always settled, per claimant: if a radically different approach were to be taken, then one would have thought that there would be something clear to this effect. The rules are clear, once it is appreciated, what a “claim” is, from rule 2.3.

I was told it took half a day’s argument before the court concluded that indeed three sets of costs were recoverable. If a point like that can absorb so much argument, the new framework of fixed costs as and when it emerges may create just as many difficulties as those it purports to solve.

Legal professional privilege and detailed assessment

An issue that arises in virtually every detailed assessment, is the extent to which a paying party can pore over the file, attendance notes, advices, and other documents of the receiving party’s lawyers which may need to be produced to the court to justify the fees claimed on assessment.

Prima facie most (though by no means all) of the documents in a solicitors file will attract legal professional privilege: the maintenance of that privilege can be very important in practical terms where proceedings are not yet concluded, or there may be further proceedings.

Even if the parties are unlikely to encounter each other again, as in most personal injury claims, the maintenance of privilege concerns a client’s rights, not least to confidentiality in his or her affairs.

Legal professional privilege is a fundamental common law right upon which the whole administration of justice rests. It is not a rule of evidence or procedure. Per R v Derby Magistrates Court ex parte B [1996] 1 AC 487 the court has no power to order disclosure, of privileged material: in that case, the court observed that there was no balance of the parties interests to strike: the balance had been struck by the formulation of the doctrine of legal privilege centuries earlier.

Even where the CPR have assumed a power to order disclosure of privileged material (the former CPR 48.7(3)) that rule has been struck down as ultra vires per the case of General Mediterranean Holdings v Patel [2000] 1 WLR 272.

There has been no attempt to replace that rule and the position of disclosure of documents in the context of assessment proceedings remains that established at common law and embodied in the Practice Direction to part 47 at paragraph 13.13.

The Practice Direction applies where a claim for costs is being pursued and the court is actually being asked to make a decision on the recovery of costs but even then, the court has no power to compel a particular document to be shown to the paying party: the receiving party is free to decline to do so and seek to rely on alternative evidence to prove a claim for costs:

13.13 The court may direct the receiving party to produce any document which in the opinion of the court is necessary to enable it to reach its decision. These documents will in the first instance be produced to the court, but the court may ask the receiving party to elect whether to disclose the particular document to the paying party in order to rely on the contents of the document, or whether to decline disclosure and instead rely on other evidence.

The procedure embodied in this document, attempts to balance both the receiving party’s right to protection of his or her privilege and the paying party’s right not to pay more than reasonable and proportionate costs: the assessment of which is heavily bound up with consideration of the documentary material which would justify the claims for costs.

This paragraph of the Practice Direction reflects what has been termed the “Pamplin” procedure, as formulated by Hobhouse J as he then was in the case of Pamplin v Express Newspapers [1985] 1 WLR 689 :see in particular page 696H and 697A.

Thus even  assuming that a court put the receiving party to his election to disclose the entire file of papers, the receiving party can accordingly decline to produce them. Such a decision would not be likely in practice: the Practice Direction is predicated on disclosure of “particular” documents on a document by document basis. The costs judge would have to formulate reasons for his decision and they would be subject to a right of appeal. If, in a truly exceptional case, a party was put to his or her election in respect of an entire file, he or she would still not be obliged to disclose it.  But alternative evidence is unlikely to be judged trustworthy. The likely consequence would be that the Bill of Costs would be assessed at nil.

However even documents disclosed during the process of an assessment do not lose their inherently privileged nature. Longstanding authority running from the case of Goldman.v.Hesper [1988] 1 WLR 1238  to the recent decision of the Court of Appeal in the case of Dechert LLP v Eurasian Natural Resources Corporation Ltd [2016] EWCA Civ 375 confirms that in the case of documents from a solicitors file, provided as part of the election process, the waiver of privilege is partial, not complete and limited to the particular proceedings only.

This principle has real significance in respect of further proceedings between the same parties, or rather where there are recurrent proceedings between a particular firm of solicitors and paying parties.

Sometimes an attempt will be made to use documents disclosed in other cases, or findings in judgments obtained in other cases to seek to argue that that material is probative and relevant in the unrelated proceedings. Such an approach is wrong as it ignores the limited waiver that exists in relation to documents produced during an assessment and in respect of other decisions on particular facts which raise no issue of law, is wrong in principle.

Decisions in individual cases between different parties or even the same parties are generally irrelevant where no issues of res judicata or issue estoppel arise: see the general statements of principle on the admissibility of findings of fact in other litigation in the case of Secretary of State for Trade and Industry v Bairstow [2003] EWCA Civ 321 particularly paragraphs 15 to 27.

Discontinuance and detailed assessment proceedings

From time to time, for a variety of reasons, it may become necessary to discontinue detailed assessment proceedings. This may be because they have misfired, or there are problems with a retainer, or a potential for embarrassment, or some other reason.

When they are discontinued, there is no obligation to give an explanation as to why they are being discontinued, a fact which may be of some comfort to the erstwhile receiving party and may vex the putative paying party.

The usual procedure for discontinuing proceedings under part 38 CPR is modified in certain respects.

The Practice Direction to part 47 CPR provides as follows at paragraph 9.4:

(1) The receiving party may discontinue the detailed assessment proceedings in accordance with Part 38 (Discontinuance).

(2) Where the receiving party discontinues the detailed assessment proceedings before a detailed assessment hearing has been requested, the paying party may apply to the appropriate office for an order about the costs of the detailed assessment proceedings.

(3) Where a detailed assessment hearing has been requested the receiving party may not discontinue unless the court gives permission.

(4) A bill of costs may be withdrawn by consent whether or not a detailed assessment hearing has been requested.                                 

Rule 38.2 provides as follows:

(1) A claimant may discontinue all or part of a claim at any time.

(2) However –

(a) a claimant must obtain the permission of the court if he wishes to discontinue all or part of a claim in relation to which –

(i) the court has granted an interim injunction(GL); or

(ii) any party has given an undertaking to the court;

(b) where the claimant has received an interim payment in relation to a claim (whether voluntarily or pursuant to an order under Part 25), he may discontinue that claim only if –

(i) the defendant who made the interim payment consents in writing; or

(ii) the court gives permission;

(c) where there is more than one claimant, a claimant may not discontinue unless –

(i) every other claimant consents in writing; or

(ii) the court gives permission.

(3) Where there is more than one defendant, the claimant may discontinue all or part of a claim against all or any of the defendants.

Rule 38.3 provides as follows:

(1) To discontinue a claim or part of a claim, a claimant must –

(a) file a notice of discontinuance; and

(b) serve a copy of it on every other party to the proceedings.

(2) The claimant must state in the notice of discontinuance which he files that he has served notice of discontinuance on every other party to the proceedings.

(3) Where the claimant needs the consent of some other party, a copy of the necessary consent must be attached to the notice of discontinuance.

(4) Where there is more than one defendant, the notice of discontinuance must specify against which defendants the claim is discontinued.

Rule 38.4 provides:

(1) Where the claimant discontinues under rule 38.2(1) the defendant may apply to have the notice of discontinuance set aside.

(2) The defendant may not make an application under this rule more than 28 days after the date when the notice of discontinuance was served on him.

Rule 38.7 provides:

A claimant who discontinues a claim needs the permission of the court to make another claim against the same defendant if –

(a) he discontinued the claim after the defendant filed a defence; and

(b) the other claim arises out of facts which are the same or substantially the same as those relating to the discontinued claim.

It is noteworthy that the requirements of part 38 where permission is required, are primarily concerned with instances, where the claimant has received interim payments or an interim remedy, or given undertakings to the court, or might be contemplating a further set of proceedings.

This supports the conclusion that the requirement to obtain permission is to ensure that a claimant has to come to court to satisfy the court that such matters are “tidied up” and not left unaddressed when proceedings are concluded by way of discontinuance, or that a claimant has not obtained a collateral advantage by discontinuance or abused the process of the court by starting proceedings and discontinuing them by eg retaining interim payments.

The power to discontinue proceedings post dates the Judicature Acts of 1873-75 and replaced the common-law power of non-suiting a litigant. The root of modern authority lies in the case of Castanho.v.Brown & Root [1981] AC 557where the House of Lords per Lord Scarman at pages 571-572 considered when it might be appropriate to strike out a Notice of Discontinuance as an abuse of process (there being no requirement in the RSC as then formulated to seek the court’s permission) and the conclusion at page 577 that discontinuance would be permitted once the issues of costs, repayment of interim payments and future proceedings had been settled.

Similarly, in the case of Gilham.v.Browning and Another [1998] 1 WLR 682 a defendant was debarred from adducing evidence on his counterclaim, and sought to discontinue proceedings in order to circumvent the debarral, by fresh proceedings. The judge at first instance struck out the notice of discontinuance as an abuse of process. The defendant offered no evidence at the trial of the counterclaim and it was dismissed. The Court of Appeal upheld the judge’s reasoning (and the result). See in particular the discussion of the origins do discontinuance at pages 686 and 691 of May LJ’s judgment. The key to striking out the notice or by way of analogy, granting or refusing permission or applying terms, was the seeking of a collateral advantage.

In the recent case of High Commissioner for Pakistan in the UK.v.National Westminster Bank and others [2015] EWHC 55 (Ch)the High Court set aside Notice of Discontinuance, because the claimant was attempting to obtain a collateral advantage by doing so, the resumption of sovereign immunity. See paragraph 78 of the judgment. See further the discussion at paragraphs 79 to 83 in which the court discussed what terms would have been imposed in order to grant a discontinuance.

It should be noted that due to rule 38.7 a second set of proceedings cannot be started as of right against the same parties: in such a scenario it may well be necessary to lift the cloak of privilege when applying for permission, in order to explain to the court why it would be just to give permission.