Gotta lotta bottle

The European Union (Withdrawal) (No 2) Act 2019 provides as follows:

(4) The Prime Minister must seek to obtain from the European Council an extension of the period under Article 50(3) of the Treaty on European Union ending at 11.00pm on 31 October 2019 by sending to the President of the European Council a letter in the form set out in the Schedule to this Act requesting an extension of that period to 11.00pm on 31 January 2020 in order to debate and pass a Bill to implement the agreement between the United Kingdom and the European Union under Article 50(2)of the Treaty on European Union, including provisions reflecting the outcome of inter-party talks as announced by the Prime Minister on 21 May 2019, and in particular the need for the United Kingdom to secure changes to the political declaration to reflect the outcome of those inter-party talks.

The Prime Minister duly sent or caused to be sent, not one, but three letters, copies of which can be found here: Cover_letter_from_Sir_Tim_Barrow, PM_to_Donald_Tusk_19_October_2019  and Letter_from_UK_to_EU_Council. The point that will surely be debated next week and may yet lead to further litigation is whether the Prime Minister’s letter constitutes a spoiling tactic, intended to frustrate the purpose of the 2019 Act by effectively negating the prescribed letter sent as required by the statute.

It is as this point, that the long forgotten Milk Marketing Board will enter the fray, not as a party to the litigation (it was wound up in 1994) but through the principle of public law expressed in a case that concerned the Board, that of Padfield and others v Minister of Agriculture Fisheries and Food and others [1968] AC 997 where it was established clearly, though grounded on earlier authority, that a Minister could not act, by paying lip service to compliance with an Act, but in reality acting so as to frustrate the purpose of an Act of Parliament. As Lord Reid observed:

If it is the Minister’s duty not to act so as to frustrate the policy and objects of the Act, and if it were to appear from all the circumstances of the case that that has been the effect of the Minister’s refusal, then it appears to me that the court must be entitled to act.

On the other hand, the Prime Minister would undoubtedly point to many, many statements by him in and outside Parliament, where he has made plain his opposition to the Act. It might be noted that the sentiments in his letter might have been expressed, wholly consistently in say a press conference.

Moreover, the European Union cannot be in any doubt, that the very existence of the Act, is to constrain an unwilling Prime Minister to a course of action he judges unwise. On a practical level, although an action for judicial review might lie, what would be the utility of a remedy? The letter can hardly be quashed or recalled and a declaration of illegality, would not change anything.

So far, so interesting . But what does all this have to do with costs? It is far too early to see what the effect of Brexit will have on the law and practice of costs though it clearly will in the months and years to come: from the principle of proportionality (European in origin), the charging of VAT on costs (a European Union tax) to the enforcement of costs awards within the European Union, against EU domiciled parties who don’t pay (and often don’t show up to contest awards).

Instead and more immediately I was considering the application of the Padfield principle earlier this week, when reading the excellent material produced by Professor Mulheron and Nick Bacon QC, on a revised regulatory regime for damages based agreements.

The documents they have produced thus far include: Doc-3—Explanatory-Memorandum-(13-Oct-2019)  and DBA-Regs-2019-(NB-and-RM,-13-Oct-2019),-20.30. The context to the review is one of the clear failures of the LASPO 2012 reforms: namely,the failure to put in place an effective regime of damages based agreements, or contingency fees for use in contentious business.

The scheme adopted on 1st April 2013 suffered from the adoption of the Ontario model, but more fundamentally from the horribly flawed Damages Based Agreements Regulations 2013, the worst piece of drafting I have seen in the field of costs and litigation funding, for 20 years.

The government, has in the last 6.5 years, consistently failed to reform either the concept or the regulations. In so doing, at what point might it be said that the Ministry of Justice, through inaction, is acting to frustrate the policy and purpose of the Courts and Legal Services Act 1990?

Section 58AA provides as folllows:

(1)A damages-based agreement which  and satisfies the conditions in subsection (4) is not unenforceable by reason only of its being a damages-based agreement.

(2)But (subject to subsection (9)) a damages-based agreement which  does not satisfy those conditions is unenforceable.

(3)For the purposes of this section—

(a)a damages-based agreement is an agreement between a person providing advocacy services, litigation services or claims management services and the recipient of those services which provides that—

(i)the recipient is to make a payment to the person providing the services if the recipient obtains a specified financial benefit in connection with the matter in relation to which the services are provided, and

(ii)the amount of that payment is to be determined by reference to the amount of the financial benefit obtained;

(4)The agreement—

(a)must be in writing;

(aa)must not relate to proceedings which by virtue of section 58A(1) and (2) cannot be the subject of an enforceable conditional fee agreement or to proceedings of a description prescribed by the Lord Chancellor;

(b)if regulations so provide, must not provide for a payment above a prescribed amount or for a payment above an amount calculated in a prescribed manner;

(c)must comply with such other requirements as to its terms and conditions as are prescribed; and

(d)must be made only after the person providing services under the agreement has complied with such requirements (if any) as may be prescribed as to the provision of information.

(5)Regulations under subsection (4) are to be made by the Lord Chancellor and may make different provision in relation to different descriptions of agreements.

It is tempting to dismiss this section as simply an enabling power. That is, the Lord Chancellor can bring forth regulations, but need not do so.  But the countervailing argument is that it is clearly the purpose of Parliament that there should be available to litigants in this country, an effective option of a damages based agreement.

If the regulatory regime devised by the government, is so ineffective that damages based agreements, are known colloquially as “don’t bother” agreements, I would have thought that there is an intriguing argument, that at some point a failure to review and reform the regulations, might become justiciable against the Lord Chancellor by way of judicial review.

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