Contents Sally Anne Hyde v- Milton Keynes Hospital NHS Foundation Trust 1 Kai Surrey (by his Mother and Litigation Friend Amy Surrey) v- Barnett & Chase Farm Hospitals NHS Trust 5 Nirjalmit Mehmi v- Mr Richard Pincher 9 The Queen on the Application of Solicitors Regulation Authority v- Imran 12 Contacts and Company Information 14
Pg. 01 Sally Anne Hyde v- Milton Keynes Hospital NHS Foundation Trust Sally Anne Hyde v- Milton Keynes Hospital NHS Foundation Trust Citation SCCO 1 July 2015. Background This was a Clinical Negligence claim. From 10 July 2008, the Claimant had the benefit of a CLS Funding Certificate and because of limitation, Proceedings were issued in August 2011. Whilst the Defendant originally denied liability, breach of duty was subsequently admitted together with an element of causation. Offers to settle were received from the Defendant and a counter offer made by the Claimant. In November 2012 the Legal Services Commission ( LSC ) refused to increase the funding limitation on the Claimant s Certificate. Her Solicitors attempted to persuade the LSC to change its decision but were unable to do so. Consequently the Claimant and her Solicitors entered into a CFA on 25 March 2013 and took out an ATE policy dated the following day. The case settled by way of a Joint Settlement Meeting in November 2013 for damages of 325,000. Details When the funding changed from LSC to CFA and ATE, the Claimant s Solicitors did not request that the LSC discharge the Legal Aid Certificate. The case of Merrick v- Law Society [2007] EWHC 2997 confirmed that Solicitors acting for legally aided clients are not entitled to look to the client for payment. It was the Defendant s case that the Claimant s Solicitors could not lawfully charge for their services in addition to the remuneration recoverable under the extant CLS Certificate and were consequently unable to recover any costs incurred during the period of the CFA. If that submission was not accepted, the Defendant further argued on the facts of the case that it was unreasonable to move away from Public Funding for a CFA. Submissions and Decision Proceeding without discharging the Certificate The Defendant maintained that the Claimant s Solicitors were in the same position as in Merrick. It was suggested that the Claimant s Solicitors were guilty of topping up fees from the client. The Judge was clear this was not a case of topping up, that the Claimant s Solicitors were clear that they were using Public Funding up to the date of the CFA and not thereafter and there was no attempt to seek additional payment from the client.
Pg. 02 Sally Anne Hyde v- Milton Keynes Hospital NHS Foundation Trust The Defendant further argued that whilst a Notice of Discharge was not a requirement in every case to demonstrate that the client had ceased to have the benefit of Legal Aid, exceptions were tightly constrained. These were effectively limited to the client becoming a Litigant in Person, or where the work under the Certificate was spent as in the case of Turner v- Plasplugs Limited. In the latter case there had been a limitation upon the Certificate which had been exceeded, the Court of Appeal had concluded that the work done under the Certificate had been exhausted when Proceedings were settled by Counsel and that from that point the Claimant was not a legally aided party. It was maintained that the Claimant did not come within either of those exceptions. The Claimant argued that once it was accepted by the Court that a Certificate could be discharged once it was spent, it was necessary to look at the circumstances of the individual case. The Certificate had been subject to a number of costs limitations and it was clear that the costs limitations were about to be exceeded. The Judge pointed out that there were sound policy reasons requiring a formal discharge of a Legal Certificate, as it gives clarity to the Opponent about the ending of costs protection as well as to the assisted person. In this case the imposition of a limitation of costs, which was based upon a figure multiplied by the number of experts, placed the assisted party and their Solicitors in a very difficult position and the Judge did not accept the Defendant s argument that the Claimant s Solicitor should continue regardless to represent the Claimant under the terms of the Certificate because its scope was wide enough to do so. An assisted party s Solicitor on an individual case should not reasonably be placed in such a position. The Claimant s Solicitor had tried hard to extend the costs limitation under the Certificate in order to continue to use it and having concluded this was not viable, advised the Claimant of the alternative of a CFA and ATE insurance, entered into the agreements and notified the Defendant of those steps. The service of the N251 Notice of Funding upon the Defendant was just as determinative of a change in the Claimant s status as a Notice of Change to a Litigant in Person would have been: In my judgment, where a party has exhausted the costs that can be claimed under a certificate so that it is spent, they can in principle establish a discharge by conduct in the same manner as certificates in which all of the work up to a limitation of scope has been carried out. The effect of that discharge is to end the services funded by the LSC and enable a private retainer to fund the remainder of the Proceedings. The notification of the new funding arrangement in Form N251 satisfies the need for formality in notifying the opponent of the ending of costs protection. Mr Mallalieu sought to persuade me that notification was not necessary in any event but I take the view that it was required to deal with the costs protection aspect.
Pg. 03 Sally Anne Hyde v- Milton Keynes Hospital NHS Foundation Trust Was it reasonable to transfer to a CFA? The Defendant argued that it was necessary to find as a matter of fact what the precise position was in terms of costs and whether the costs limitation of 43,000 had been reached. The Court took the view that there was no reason why a broader view could not be taken and the Claimant had set out in Replies that the work that was still required to be done could not reasonably be completed within the figure allowed by the LSC in July 2012, and increased modestly in November 2012. The Judge agreed with that and thereafter the parties raised various submissions on the basis of the decision in LXM v- Mid Essex Hospital, as to the merits and demerits of entering into a CFA rather than using Legal Aid. The Judge pointed out that in this case the overriding consideration of the Claimant and her Lawyers was the perceived exhaustion of the Legal Aid Funding and the Claimant s only alternative option being a CFA and ATE. The Claimant and her Solicitor kept an eye on costs being incurred, were aware of the limitation problem and were not obliged to continue to use the Certificate, come what may. The Judge concluded; Parties are encouraged to consider their legal spend prospectively and, where it is clear that the available public funding is going to be insufficient, a decision to change to another option must be a reasonable step to take. That is the position in this case in my judgment and so I find that the Claimant was entitled to transfer to a CFA and ATE arrangement from 25 March 2013. Finally the Court went on to consider the level of Success Fees claimed in respect of which the Judge considered that there was little distinction between this case and C v- W, this was a case in which liability had been admitted and Judgment had been entered into and Part 36 Offers made. A Success Fee of 20% was reasonable. Notes A significant number of Claimant firms, as a matter of course and rightly so, undertook a review of the funding arrangements on their cases, prior to implementation of LASPO on 1 April 2013. In many cases a decision was made to transfer funding from BTE or Legal Aid to a CFA with ATE. The arguments heard on this case will be heard again on many more cases and practitioners are advised to read the decision in LXM which sets out the detailed submissions on the merits and de-merits of Legal Aid and/or a CFA. The question ultimately
Pg. 04 Sally Anne Hyde v- Milton Keynes Hospital NHS Foundation Trust is whether the decision to change funding was a reasonable decision based on the facts, and in particular based on full information available to the Client. If you are in any doubt on any of your cases, please contact us and we can advise further.
Pg. 05 Kai Surrey (by his Mother and Litigation Friend Amy Surrey) v- Barnett & Chase Farm Hospitals NHS Trust Kai Surrey (by his Mother and Litigation Friend Amy Surrey) v- Barnett & Chase Farm Hospitals NHS Trust Citation [2015] EWHC B16 (Costs). Background This concerned a preliminary issue Hearing in the context of Detailed Assessment Proceedings. Whilst a number of issues were to be determined, the central issue between the parties was whether it was reasonable for the Claimant to change funding from Legal Aid to a Conditional Fee Agreement. Details This was a brain injury at birth case, in which liability was apportioned on a 70/30 basis in the Claimant s favour, shortly prior to a Liability Trial. It took a further 18 months for quantum to be concluded. The Legal Aid Certificate was discharged on 15 March 2013 and the CFA entered into on 21 March, with an ATE policy taken out on 22 March. Following settlement the Claimant commenced Detailed Assessment Proceedings and within the total costs claimed there was a success fee of 57,119.40 and an ATE premium of 50,681.78. The Defendant maintained that the decision to change from using Legal Aid to CFA and ATE resulted in unreasonably incurred costs of 109,968.02. In broad terms the Claimant maintained that he had acted reasonably given his and his Solicitors conclusions about the likely adequacy of the continued funding by the Legal Aid Agency. The issue was whether the Claimant s decision to change funding arrangements was a reasonable one. Submissions The Claimant s Solicitors, Irwin Mitchell, carried out a review of legally aided cases in light of the forthcoming changes to be brought into effect by LASPO, in particular to consider whether there was likely to be sufficient cover to fund all cases until conclusion including Trial or an assessment of damages Hearing and if the Solicitor felt that the Claimant would be in a better position with a CFA and ATE, then the advice had to be given prior to 1 April. The Claimant s Solicitors had set out in a Witness Statement various reasons for the discharge of the Certificate which included;
Pg. 06 Kai Surrey (by his Mother and Litigation Friend Amy Surrey) v- Barnett & Chase Farm Hospitals NHS Trust (1) This was a complex high value case with up to 15 experts. The round table settlement meeting had been set for July 2013 and assessment of damages on 28 October 2013. There were concerns that should negotiations fail, there was no guarantee that the Legal Aid Agency would increase the reserve to a sufficient level to fund the disbursements or Profit Costs for the assessment of damages Hearing. Based on previous experience, the Solicitor was unable to guarantee the client that the Legal Aid Agency would provide sufficient funding should the matter proceed to an assessment of damages Hearing. (2) Had the concerns arisen after April 2013, then the Claimant s Solicitor would have been left with no alternative but to switch funding to a post LASPO CFA, which would result in the Claimant recovering a lower level of damages than had the claim been funded by a pre LASPO CFA. (3) If the Legal Aid Agency had refused to increase the reserve for the assessment of damages Hearing and the case had not been switched to a CFA, then the client or Irwin Mitchell would have been exposed to unrecoverable disbursements and Profit Costs following the assessment of damages Hearing. (4) Significant cuts had already been made to the Legal Aid funding, there was no guarantee it would continue and that there was a significant prospect of an element of the Solicitors costs and disbursements which had not been recovered from the Defendant, being payable by the Claimant under the statutory charge. (5) The Legal Aid Agency funding did not protect a client s damages from the effects of failing to beat a Part 36 Offer so the client could be liable for such costs and these could be deducted from damages, together with Irwin Mitchell s own costs incurred after the date the Opponent s offer should have been accepted. In order to take into account of the risks referred to above, the Litigation Friend was advised to enter into a pre 1 April CFA with ATE insurance. This would be a CFA lite, a no cost to you CFA, in which the Claimant was guaranteed that any shortfall in costs not recovered from the Defendant would not be charged to the client, provided they complied with the terms of the CFA. The risk of the statutory charge was therefore eliminated. A request was subsequently made to discharge the Certificate. The Defendant highlighted the contrast in evidence between this case and others, where similar matters had been considered such as LXM v- Mid Essex Hospitals Trust, in particular the Claimant had not chosen to
Pg. 07 Kai Surrey (by his Mother and Litigation Friend Amy Surrey) v- Barnett & Chase Farm Hospitals NHS Trust rely on any attendance notes of the advice given for the Litigation Friend and disclosure of such documentation was sought. The Defendant maintained that Irwin Mitchell had not advised the Claimant fully on the merits or otherwise of the change in funding. The Judgment sets out in detail the various submissions and issues which are worthy of further reading, but are too detailed to set out in this summary of the case. Decision The issue was whether the decision made by the Claimant, assisted by his Solicitor, was a reasonable one. The Defendant maintained that the test was only primarily about whether the Claimant made a reasonable choice and that there must be secondary considerations regarding reasonableness and proportionality of the choice. The Judge considered that if the Claimant s actions were reasonable, then secondary considerations would need to be brought to bear. It was pointed out that the relevance of the costs limitation appeared to have been lost in this case and was only considered when a letter to the Commission was being prepared. The strongest reasons for the Claimant changing from Legal Aid to a CFA relate to the shortfall issues and in this case the change of funding was only about the coming into force of LASPO. The Judge stated; There is no evidence before me to indicate whether the Claimant or his Litigation Friend would have considered the abandoning of up to 20,000, which was more or less guaranteed in return for peace of mind regarding future funding. They may have decided that the system that had apparently worked for seven years was unlikely to break down in the final stages and they would rather have the money and risk the funding issues. They may have taken the view that QOWCS protected them sufficiently not to incur an ATE premium. The possibilities for speculation are endless. What is certain however, is that the Simmons damages were of significance and so should have been explained to the Claimant s Litigation Friend so that informed consent to a change in funding could be given. The absence of any evidence from the Litigation Friend on this point, to my mind, speaks volumes. In the absence of being informed of these issues it seems to me impossible to say that the Claimant can have made a reasonable choice to change funding arrangements. Consequently, I find that the additional liabilities flowing from the new arrangements are unreasonably incurred and as such are not recoverable from the Defendant.
Pg. 08 Kai Surrey (by his Mother and Litigation Friend Amy Surrey) v- Barnett & Chase Farm Hospitals NHS Trust Notes The clear failure to provide a Claimant with any advice in respect of the 10% uplift in damages available following the decision in Simmons v- Castle [2012] EWCA Civ 1039 and 1288, was fatal to the recovery of the additional liabilities in this case. Whilst there was a potential get out clause in the case of AMH v- The Scout Association, the level of the potential damages in this case was also an important factor. In those cases where the Claimant has changed funding prior to 1 April and substantial damages are in issue, practitioners are advised to check the advice that was given at the time.
Pg. 09 Nirjalmit Mehmi v- Mr Richard Pincher Nirjalmit Mehmi v- Mr Richard Pincher Citation County Court at Liverpool, Appeal No. 91/2014. Background This case concerned a road traffic accident in which the Claimant recovered 2,756. The costs could not be agreed and papers were lodged for a Provisional Assessment. The Provisional Assessment was requested utilising form N258, which required certain documents to be filed as set out in the relevant Practice Direction. That included; Where there is a dispute as to the Receiving Party s liability to pay costs to the legal representative who acted for the Receiving Party, any agreement, letter or other written information provided by the legal representative to the client explaining how the legal representatives charges are to be calculated. The claim was funded under a CFA however this was not filed with the Court. Details The matter came before District Judge Woodburn for a Provisional Assessment Hearing in April 2014. He was faced with a Hollins v Russell 2003 EWCA Civ 718 dispute as to the validity of the retainer and stated; Where a dispute arises in relation to the receiving party s retainer, CPR Part 47n.15[4] and 47nPD.14 paragraphs 14.3[b](sic) as well as 13.2[i] specifically require the receiving party to lodge with the Court documents evidencing the retainer. The Rule and Practice Direction have not been followed. Decision: Bill assessed at nil. The Claimant made a request pursuant to CPR 47.15(7) for an oral Hearing and at the same time made an Application for relief from sanction pursuant to CPR 3.9. On 14 July 2004 a combined Application for relief and oral review came before District Judge Baker. The Claimant accepted that the Application for relief from sanction should be heard first and the matter should proceed to an Assessment if granted relief. Taking into account the relevant Court of Appeal principles set out in Mitchell and Denton, District Judge Baker declined to grant relief from sanction and upheld the nil
Pg. 10 Nirjalmit Mehmi v- Mr Richard Pincher Assessment. The matter was then appealed and came before his Honour Judge Graham Wood QC sitting with the Regional Costs Judge, District Judge Jenkinson, as assessor. Submissions The Claimant pursued the Appeal on the simple premise that the District Judge was wrong to deal with the matter as an Application for a relief from sanction, even though invited to do so. A procedure which allows for an oral review of any decision made on Provisional Assessment was sufficient to enable either party to attempt to correct any deficiencies which may have led to the nil assessment, without the need to apply for relief from sanction. The nil assessment was not a sanction, but a determination. The review was not an Appeal but an opportunity to make representations at an oral Hearing, which would have been the entitlement of the receiving party, if there had been no Provisional Assessment. The Defendant did not accept that a nil assessment did not equate to a sanction it was precisely because there had been non compliance that District Judge Woodburn had come to such a conclusion. It ill-behoved the Claimant to complain that District Judge Baker had dealt with an Application for relief from sanction first, when invited to do so by the Claimant. The Defendant maintained that the Appeal was no more than a challenge to a refusal by District Judge Baker to grant relief from sanction, a factor which was clearly within his discretion. Decision The Judge commented that District Judge Woodburn, when making a nil assessment determination where he could not be satisfied that there was a valid retainer did not in itself amount to a sanction, but was an assessment that the entitlement to costs had not been proved. If the Bill had been struck out for non compliance, the decision would have been more akin to a sanction. It was important also to look at the process - if the Costs Judge had had the parties in front of him or her on an oral assessment but could not be satisfied as to the validity of the retainer and the receiving party would not provide appropriate documentation, then the decision in those circumstances would amount to a judicial determination and not a sanction. There was a built in entitlement to an oral review on any aspect of the Provisional Assessment and the Provisional Assessment was not binding if there was such a review and therefore its effect was nullified with the matter proceeding to Detailed Assessment in the same way as previously, on the indentified aspects.
Pg. 11 Nirjalmit Mehmi v- Mr Richard Pincher The Judge said that he had come to the clear and unequivocal conclusion that there was no sanction imposed by the Order of District Judge Woodburn, which had to be the subject of any application for relief, the decision of District Judge Baker was therefore based upon procedural irregularity and could be set aside. In terms of the procedure the reviewing Judge on the oral review could come to any decision which was considered appropriate and was not restricted to a finding that the Provisional Assessment Judge made an error of law or was otherwise wrong in approach, as would be necessary in the event of an Appeal. Provisional Assessment was not; Intended to be a substitute for the Detailed Assessment procedure, as opposed to an alternative modified version paragraph 13.3 has not been curtailed, and when an oral hearing is requested under CPR 47.15(7) although the hearing is limited to those items in the Bill which are challenged under sub paragraph (8) and thus is circumscribed, it is in other respects a Detailed Assessment, in which the Judge must surely have the power to direct the receiving party to produce documents to enable it to reach its decision. As there was no sanction the matter was therefore considered afresh on Appeal and was remitted for an oral Hearing before District Judge Jenkinson. The Judge noted that the issue had arisen on several occasions and therefore a specimen direction had been drawn up by the Liverpool Court to deal with such matters, which essentially provides that a failure to provide the relevant retainer documents with the Provisional Assessment bundle, would lead to the adjournment of the Provisional Assessment and a direction for the Receiving Party to file the documentation by a certain date. Failure to lodge such documentation by a certain date would result in the costs being assessed at nil and in any event the failure to file such documentation in the first instance would lead to the Claimant s costs of Provisional Assessment, whatever the outcome, being reduced by 50%. Notes This is yet another reminder that all relevant documentation must be enclosed with the N258 for Provisional Assessment. As a matter of course, NWL prepare a detailed bundle of relevant documents (including the retainer) with an appropriate index, which is cross checked by two Fee Earners to ensure full compliance with the rules.
Pg. 12 The Queen on the Application of Solicitors Regulation Authority v- Imran The Queen on the Application of Solicitors Regulation Authority v- Imran Citation [2015] EWHC 2572 (Admin). Background This concerned an Appeal against a 28 January 2015 decision of the Solicitors Disciplinary Tribunal which followed two days of Hearing. The Order provided for the Respondent to be suspended from practice as a Solicitor for a period of two years. An Appeal was brought by the Solicitors Regulation Authority, on the basis that the sentence or sanction was excessively lenient and that the Court should substitute an Order striking off the Respondent. Details From a costs perspective, the details of the case are not relevant. However the Appeal was dismissed and on that basis the Respondent sought costs to be paid by the SRA. Costs Practice Direction 9.2 provides that the Court should make a Summary Assessment of the costs; (b) At the conclusion of any other Hearing which has been listed for not more than one day, in which case the Order will deal with the costs of the Application or matter to which the Hearing related. If this Hearing disposes of the claim, the Order may deal with the costs of the whole claim. Whilst the Respondent sought an Order that the SRA pay his costs his Barrister acknowledged to his embarrassment that no Costs Schedule had been produced and consequently a Detailed Assessment of the costs was requested. Submissions The Respondent stated that costs should follow the event and because there was no Schedule, that a Detailed Assessment of such costs should be ordered. The Appellant pointed out that as no Schedule had been served, there was no notice other than by implication that an application for costs would be made and as the Appeal was brought in the public interest it would in any event be inhibitive to order the SRA to pay costs.
Pg. 13 The Queen on the Application of Solicitors Regulation Authority v- Imran Decision The Judge pointed out that costs should be dealt with on the day by Summary Assessment and not by putting the parties to further costs of Detailed Assessment - that was the whole basis of the regime. He stated; I am not willing to order Detailed Assessment in this case because it seems to me that it is simply going to add further to the costs of the parties. I also take the view that there is some force in what Mr Williams says about public interest in these Appeals being heard. However it does seem to me that the respondent having been successful, I should assess costs. And I am going to do so in a notional figure of 5,000. That is the best I can do. Adding to the costs of the Proceedings by ordering a Detailed Assessment, seems to me to be quite disproportionate. Notes The procedures for Summary Assessment of costs in Fast Track Trial cases and in respect of Hearings lasting less than one day have been in force for a considerable period of time. It is surprising in the extreme that there are still parties who do not prepare Schedules of Costs for such Hearings. Failure to prepare such a Schedule of Costs runs the risk of costs being disallowed in their entirety. In this case it is likely that the costs recovered by the Respondent s Solicitors are a fraction of those they would have been entitled to on the basis of a full Summary Assessment.
Pg. 14 Contacts and Company Information Contacts and Company Information Contacts Information If you have any queries about the cases referred to in this Costs Update, want to subscribe for future updates or to discuss any aspect of what we do and can do for you please contact: Name Lee Evans Title Director Tel 01244 317543 e-mail lee.evans@nwlcosts.com Name John Hocking Title Director of Business Development Tel 01244 317543 e-mail John.hocking@nwlcosts.com Company Information NWL Costs Lawyers Queens House, Queens Road Chester CH1 3BQ Tel 01244 317543 Fax 01244 312183 www.nwlcosts.com