Children Cases and the Recovery of a Success Fee CPR 47, CPR 21, PD21 and PD46

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1 CPR Update Robert Mills, St John s Chambers Published on 19 th October 2015 Below the key changes to the CPR from the 78 th 81 st Updates are analysed. This is not a complete list of all changes, but is designed to focus on those areas most relevant to personal injury and clinical negligence practitioners. Changes in Force from April 2015 Children Cases and the Recovery of a Success Fee CPR 47, CPR 21, PD21 and PD46 This change provides a mechanism for the court to consider the deduction of costs from damages, if and only if costs have been agreed with the Defendant. The rule changes only apply to cases where settlement is for less than 25,000 in a personal injury claim. The effect is to enable payment out of the child/protected party s damages to meet the success fee provided for in the conditional fee arrangement with their legal representative. An analysis of the exact provisions is important as a court is unlikely to award a success fee unless the provisions have been closely followed: CPR (1A): (1A) Costs recoverable under this rule are limited to costs incurred by or on behalf of a child by way of success fee under a conditional fee agreement or sum payable under a damages-based agreement in a claim for damages for personal injury where the damages agreed or ordered to be paid do not exceed 25,000.; 1

2 CPR 21.12(7) and (8): (7) The amount which the litigation friend may recover under paragraph (1) in respect of costs must not (in proceedings at first instance) exceed 25% of the amount of the sum agreed or awarded in respect of (a) general damages for pain, suffering and loss of amenity; and (b) damages for pecuniary loss other than future pecuniary loss, net of any sums recoverable by the Compensation Recovery Unit of the Department for Work and Pensions. (8) Except in a case in which the costs payable to a child or protected party are fixed by these rules, no application may be made under this rule for a payment out of the money recovered by the child or protected party until the costs payable to the child or protected party have been assessed or agreed.. Importantly there is specific documentation which must be provided if the attempt to recover the success fee is to find favour with the court: PD21: 11.2 In all circumstances, the litigation friend must support a claim for payment out in relation to costs or expenses by filing a witness statement setting out (1) the nature and amount of the costs or expense; and (2) the reason the costs or expenses were incurred Where the application is for payment out of the damages in respect of costs pursuant to rule 21.12(1A) the witness statement must also include (or be accompanied by) (1) a copy of the conditional fee agreement or damages based agreement; (2) the risk assessment by reference to which the success fee was determined; (3) the reasons why the particular funding model was selected; (4) the advice given to the litigation friend in relation to funding arrangements; 2

3 (5) details of any costs agreed, recovered or fixed costs recoverable by the child; and (6) confirmation of the amount of the sum agreed or awarded in respect of (a) general damages for pain, suffering and loss of amenity; and (b) damages for pecuniary loss other than future pecuniary loss, 5 net of any sums recoverable by the Compensation Recovery Unit of the Department for Work and Pensions. The New Part 36 There were significant changes to Part 36 in April The key modifications are outlined below: (i) The Structure of the Rule The rule is split up into two distinct parts. 1. Section I applies to all actions, except those that fall within the personal injury protocols. 2. Section II applies to the RTA, PL and EL personal injury protocols. (ii) Non-Part 36 Offers Parties are free to make offers in any way they choose. Non-Part 36 offers will not automatically have Part 36 costs consequences, although such offers can be considered under CPR (iii) The Scope of Part (3) A Part 36 offer can extend to a counterclaim, additional claim, appeal and cross-appeal. (iv) Appeals and Part Part 36 offers can be made on appeals. That said, an offer made in the initial action does not have Part 36 consequences. A new Part 36 offer must be made in relation to an appeal. 3

4 (v) Part 36 Offers and Interest 36.5(4) An offer is deemed to be inclusive of interest to the date of expiry of the offer. (vi) Wording Requirements of Part 36 Offers 36.5(1)(b) The specific wording that the offer is intended to have the consequences of Section 1 of Part 36 is no longer required. The offer only has to make clear that it is made pursuant to Part 36. (vii) When Offers are Made 36.7 An offer can be made at any time, including before proceedings have begun. An offer is made when it is served on the offeree. (viii) Withdrawing or changing a Part 36 Offer 36.8 and 36.9 There are express rules dealing with withdrawing or changing an offer (36.8 and 36.9). Where an attempt is made to vary an offer in terms which are more advantageous to the recipient of the offer, this is not treated as a variation but as a new Part 36 offer. A Part 36 offer may also now be withdrawn automatically after the expiry of the relevant period in accordance with its terms. (ix) Withdrawing or changing the terms of a Part 36 offer before the expiry of the period An offer can only be withdrawn within the offer period with the permission of the court. Then The court must be satisfied that there has been a change of circumstances and that it is in the interests of justice to give permission. (x) Acceptance of a Part 36 Offer in a split-trial case When there has been a split-trial, but judgment has not yet been obtained, a Part 36 offer cannot be accepted until 7 days after judgment is handed down. (xi) Part 36 Offers and Cost Consequences It is now clear that where a Part 36 offer is accepted late, the court must, unless it is unjust to do so, order that the claimant is entitled to the costs up to the date of expiry of the relevant period and the offeror is entitled to costs thereafter. 4

5 (xii) Practical Procedural Consequences of Accepting a Part 36 Offer The key points from regarding acceptance of offers are: (a) Where an offer relates to the entire claim, acceptance imposes a stay upon the terms of the offer. (b) Where an offer is in relation to part of the claim, only that part of the claim is stayed. (c) If approval of the court is required, then the stay only becomes effective when approval is given. (d) The stay has no affect on the power of the court to enforce the Part 36 offer or to deal with any question of costs or interest in relation to the proceedings. (e) The sum must be paid within 14 days of the date of acceptance. (f) In provisional damages or periodical payment cases the payment should be made within 14 days of the court order. (g) Where payment is not made, the claimant may enter judgment for the unpaid sum. (h) If the offer is not for a sum of money and a party alleges that an offer has been accepted but not honoured then the alleging party can apply to enforce the terms of the offer without the need for a new claim. (xiii) Unaccepted Offers - New Points in In addition to the original section, new provisions set out that where the hearing or trial does not determine all the issues: (a) The judge may be told about any Part 36 offers which relate to the issues decided. (b) The judge must not be told of the terms of any other offers (unless the defence is one of tender before action; the proceedings are stayed following acceptance of a Part 36 offer or the parties agree in writing that 36.16(2) should not apply). (xiv) Where a cost budget is limited to court fees The position prior to this rule change was that when a party has failed to file a costs budget in time and its costs are limited to court fees only, there was little cost incentive for the opposing part to accept a Part 36 offer. 5

6 The new states as follows: Cases in which the offeror s costs have been limited to court fees (1) This rule applies in any case where the offeror is treated as having filed a costs budget limited to applicable court fees, or is otherwise limited in their recovery of costs to such fees. (Rule 3.14 provides that a litigant may be treated as having filed a budget limited to court fees for failure to file a budget.) (2) Costs in rules 36.13(5)(b), 36.17(3)(a) and 36.17(4)(b) shall mean (a) in respect of those costs subject to any such limitation, 50% of the costs assessed without reference to the limitation; together with (b) any other recoverable costs. The sections referred to at 36.23(2) provide as follows: (1) 36.13(5)(b): where parties cannot agree the liability for costs and where the court, unless it is unjust to do so, orders the offeree do pay the offeror s costs for the period from the date of expiry of the relevant period to the date of acceptance (2) 36.17(3)(a): the costs being ordered to be paid by a claimant to a defendant where a claimant fails to beat a defendant s offer. (3) 36.17(4)(b): costs ordered to be paid by the defendant to a claimant when the defendant fails to beat the claimant s offer. (xv) Cost consequences following judgment CPR sets out the consequences if a party fails to beat a Part 36 offer. An additional provision is now included that the court must consider whether the offer was a genuine attempt to settle proceedings. (xvi) The new personal injury claims section The new layout makes no significant changes and the structure by comparison to the previous rules is as follows: (a) The new claims for future pecuniary loss section reflects the previous

7 (b) The new offer to settle a claim for provisional damages section reflects the previous (c) The new costs consequences of acceptance of offers where section IIIA of Part 45 applies reflects the previous 36.10A. (d) The new costs consequences following judgment where section IIIA of Part 45 applies reflects the previous 36.14A. (e) The new deduction of benefits and lump sum payments reflects the previous CPR (xvii) Part 36 and the RTA and EL/PL Protocols The key points from this section are as follows (there are only minor changes from the previous rules) (a) Where the parties have followed the RTA or EL/PL Protocol and issued proceedings under Part 8 the Stage Three Procedure then Part 1 of the Part 36 rules does not apply (all rules above). (b) A Protocol offer must be in the Court Proceedings Pack (Part B) form and contain the final total amount offer of the offers from both parties. (c) A Protocol offer is treated as exclusive of all interest. (d) The Protocol offer must not be communicated to the court until the claim is determined. (e) Any other offer to settle must not be communicated to the court at all. (f) If the claimant fails to beat a defendant s offer the court will order the claimant to pay fixed costs and interest on those fixed costs. (g) If the claimant beats or equals their own offer the defendant will be ordered to pay increased interest on the damages; fixed costs and interests on those costs plus an additional liability based on the percentage set out in (3)(d). 7

8 Changes to the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents The Application of the New Provisions Timetable The new provisions relating to soft tissue injury claims apply in accordance with the following table. In particular, the provisions apply to all claims where the CNF is submitted on or after the 1st October 2014 : 4.7 (1) Subject to subparagraph (2), provisions for soft tissue injury claims, and in particular the requirement that the first report from a medical expert must be a fixed cost medical report, apply to any such claim for damages which arises from a road traffic accident where the CNF is submitted on or after 1 October (2) The provisions, in respect of soft tissue injury claims, for accredited medical experts and the MedCo Portal, and the provisions, in respect of all claims, for searches of ask.cuepi.com, identified in the first column (and specified in the corresponding second column) below, apply to claims for damages which arise from a road traffic accident where the CNF is submitted on or after the corresponding date specified in the third column Column 1 Column 2 Column 3 Accredited medical experts Paragraph 1.1(A1) 6 April 2015 In a soft tissue injury claim, the requirement that the Paragraphs first medical report must be a fixed cost medical report 1.1(12A), 7.8A(1), 6 April from an accredited medical expert selected via the 7.8B(3) and 2015 MedCo Portal 7.32A Searches of askcuepi.com Paragraphs 5.10(3), 1 June 5.10A, 6.3A 6.8(2) 2015 and 6.9 8

9 (3) In a soft tissue injury claim, where a medical expert is instructed to provide the first fixed cost medical report before 6 April 2015, but the CNF is submitted on or after that date, that report shall be treated as a fixed cost medical report obtained from an accredited medical expert selected via the MedCo Portal. Completing the Claims Notification Form There are amendments to the steps that must be taken in completing the CNF: 6.3A (1) Before the CNF is sent to the defendant pursuant to paragraph 6.1, the claimant s legal representative must undertake a search of askcuepi (website at: and must enter in the additional information box in the CNF the unique reference number generated by that search. (2) Where the claimant has sent the CNF without the unique reference number required by subparagraph (1), the defendant may require the claimant to resend the CNF with the reference number inserted. The period in paragraph 6.11 or 6.13 starts from the date the CNF was sent with the unique reference number. (3) Where the claimant has sent the CNF without the unique reference number required by subparagraph (1) and the defendant does not require the claimant to resend the CNF pursuant to subparagraph (2), the defendant must respond in accordance with paragraph 6.11 or Fixed Costs There are also amendments to the Stage 1 fixed costs. The defendant must now pay the cost of obtaining the fixed cost medical report: 6.18 Except where the claimant is a child, the defendant must pay the Stage 1 fixed costs in rule and, in a soft tissue injury claim, the cost of obtaining the fixed cost medical report and any cost for obtaining medical records in rule 45.19(2A) (collectively the Stage 1 fixed recoverable costs ) 9

10 The Defendant s Account of the Accident In Soft Tissue Injury Claims 6.19A Where liability is admitted in a soft tissue injury claim, it is expected that in most cases the defendant s account will not be relevant to the procedure in Stage 2. In the limited cases where it is considered appropriate, the defendant may send their account to the claimant electronically at the same time as the CNF response. The defendant s insurer must have the defendant s written authority to provide this account and, in sending it, is certifying that it has that authority. For the purposes of this paragraph, the defendant s written authority may be provided electronically. 6.19B The procedure in paragraph 6.19A applies to the MIB, save that the MIB is certifying that the defendant user of the vehicle has provided such authority. Soft Tissue Injury Claims Medical Reports The Protocol now provides for fixed cost medical reports in soft tissue injury claims. There are detailed provisions on obtaining such reports: 7.8A In addition to paragraphs 7.1 to 7.7, and subject to paragraph 7.8B, in a soft tissue injury claim (1) the first report must be a fixed cost medical report from an accredited medical expert selected for the claim via the MedCo Portal (website at: and (2) where the defendant provides a different account under paragraph 6.19A, the claimant must provide this as part of the instructions to the medical expert for the sole purpose of asking the expert to comment on the impact, if any, on diagnosis and prognosis if (a) the claimant s account is found to be true; or (b) the defendant s account is found to be true. 7.8B In a soft tissue injury claim (1) it is expected that only one medical report will be required; 10

11 (2) a further medical report, whether from the first expert instructed or from an expert in another discipline, will only be justified where (a) it is recommended in the first expert s report; and (b) that report has first been disclosed to the defendant; and (3) where the claimant obtains more than one medical report, the first report must be a fixed cost medical report from an accredited medical expert selected via the MedCo Portal and any further report from an expert in any of the following disciplines must also be a fixed cost medical report (a) Consultant Orthopaedic Surgeon; (b) Consultant in Accident and Emergency Medicine; (c) General Practitioner registered with the General Medical Council; (d) Physiotherapist registered with the Health and Care Professions Council. Submitting the Stage 2 Settlement Pack The Stage 2 Settlement Pack must include an invoice for the cost of obtaining the fixed cost report. The Stage 2 Settlement Pack will be of no effect unless the medical report is a fixed cost medical report: Settlement of the Claim Any offer to settle at any stage by either party will automatically include an agreement to pay the cost of the fixed cost medical report. Further, in a soft tissue injury claim, an offer to settle made by either party before a fixed cost medical report has been obtained and disclosed will have no adverse costs consequences until after the report has been disclosed. 11

12 Appeals to the Court of Appeal PD 52C A change was made regarding a respondent s actions when served with an appellant s notice. The respondent should, within 14 days of service of the appellant s notice or skeleton argument if later, file and serve upon the appellant and any other respondent a brief statement of any reasons why permission should be refused, in whole or in part. The statement should be no more than 3 pages long and should address the relevant threshold test for grant of permission to appeal. The statement should identify the issues. A respondent need then take no further steps prior to being notified that permission to appeal has been granted. New Pre-Action Protocol for Personal Injury Claims The revised Protocol is in most ways very similar to the previous version. Changes of note include: (a) Clarity on when cases fall under the PI protocol having exited either of the low value portals. (b) Improved sections dealing with noncompliance, the status of letters of claim/response and the quantum information which must be provided by the Claimant. (c) A statement confirming that the protocol applies to litigants in person and that Defendants should provide their own version of events and supporting documents where liability is in dispute. Litigant in Person Costs PD27 A small amendment is made to (1) the hourly rate that litigants in person may claim for legal work ( 18 up to 19) and (2) the amount a party or witness may be paid for attending a small claim hearing ( 90 up to 95). Changes in Force from October 2015 Early Neutral Evaluation CPR 3.1 It is now within the court s case management powers to hear an Early Neutral Evaluation with the aim of helping the parties settle the case (CPR.3.1(2)(m)). 12

13 Case Management Unrepresented Parties CPR 3.1A It is now explicit that when the court is exercising any powers of case management, it must have regard to the fact that at least one party is unrepresented. Standard directions must be the starting point for both parties and the court drafting case management directions. This provides clarity and greater certainty for those parties not represented. The procedure of all hearings should be based upon furthering the overriding objective. If evidence is being taken at a hearing, it may include ascertaining from an unrepresented party the matters about which the witness may be able to give evidence or on which the witness ought to be cross-examined. Filing Particulars of Claim CPR 7.4 It is now explicit that the Claimant must lodge a copy of the Particulars of Claim at court as well as serving them on the Defendant. Breakdown of Costs CPR 47.6 and the new Precedent Q CPR 47.6 concerning detailed assessment is amended from 1 October 2015: if a costs management order has been made, a breakdown of the costs claimed for each phase of the proceedings Precedent Q is the new model form of breakdown of costs claimed for each phase of the proceedings. It is found at Appendix 1 to these notes. Service out of the Jurisdiction PD6B There are now additional scenarios in which the claimant may serve a claim form out of the jurisdiction with the permission of the court under CPR In addition to the preexisting scenarios, a claimant may serve the claim form out of the jurisdiction in the following circumstances. (1) A claim is made against the defendant for breach of confidence or misuse of private information, and detriment was or will be suffered within the jurisdiction or to acts that are committed or are likely to be committed within the jurisdiction (PD 3.1(21)). (2) PD 3.1(9) is extended to cases where a claim is made in tort, and damage will be sustained within the jurisdiction or where damage has been or will be sustained from 13

14 acts committed, or likely to be committed, within the jurisdiction. It is no longer confined to cases where damage has already been suffered. (3) A claim is made for restitution where the defendant s alleged liability arises out of acts committed within the jurisdiction, or the enrichment is obtained within the jurisdiction, or the claim is governed by the law of England and Wales (PD 3.1(16)). (4) A claim is made against the defendant as constructive trustee, or as trustee of a resulting trust and the claim arises out of acts committed or events occurring within the jurisdiction, or relates to assets within the jurisdiction. Robert Mills St John's Chambers robert.mills@stjohnschambers.co.uk 19 th October