Source: http://pnblawg.co.uk/category/procedure/?page=2
Timestamp: 2019-05-26 17:34:29
Document Index: 65143797

Matched Legal Cases: ['Ewca ', 'art 36', 'art 36', 'EWCA ', 'art 36', 'art 36', 'art 36', 'EWCA ', 'UKSC ', 'art 36', 'art 36', 'art 36']

pnBlawg | procedure
09 October 2013 Alastair-Hammerton costs, Jackson reforms, procedure, professional negligence (0)
Litigation solicitors up and down the country are no doubt assessing the implications of the latest procedural changes with an eye to their own risk management profile. Of particular importance has been the change to the provisions concerning relief from sanctions under CPR 3.9. The recent decision of Michael v Middleton [2013] EWHC 2881 (Ch) illustrates how tough the courts are becoming in implementing the Jackson reforms. It also raises the possibility of more solicitors’ negligence litigation in the future if caseloads are not managed efficiently. The case was a dispute between claimant business owners and their solicitor, the defendant. A key issue was how the defendant was to be paid, the defendant’s account being that he was to be given an interest in the claimants’ business as part of his remuneration. The claimants issued proceedings but failed to provide satisfactory disclosure and, in 2012, the claim was struck out for non-compliance with an `unless’ order. Approximately one year later (2013) the claimants instructed new solicitors but then waited for several months before finally issuing an application for relief from sanctions under CPR 3.9. It was accepted by the parties that the struck-out claim was not time-barred and that the claimants had been badly let down by their first solicitors. It was also in issue whether the second solicitors had unreasonably delayed in issuing the application for relief. HHJ David Cooke refused the claimants’ application for relief and stated that granting relief would ‘send a wrong message`. As part of his decision, he focussed on two specific aims of CPR 3.9 – conducting litigation efficiently and saving costs, and enforcing compliance with orders. Of particular relevance here, the Judge considered and rejected the submission that any claimant, who was denied relief, was bound to be disadvantaged by having to sue his solicitor instead. On the Judge’s findings, it was still open to the claimants to bring a fresh claim against the defendant, without being met either by limitation or abuse of process arguments. Nevertheless the implications of this decision are that the courts are going to adopt a less pragmatic approach to applications for relief. Instead of granting relief on the (unspoken) basis that there is little point in forcing a claimant to re-start the litigation, they are going to adopt a tough approach with potentially far-reaching consequences for any solicitor having conduct of the litigation at any stage.
Who should determine any questions as to costs at the conclusion of a trial? The standard – and it seems almost always correct – answer, would be the trial judge himself. The rationale is obvious and entirely sensible – that such ancillary issues should be determined by the tribunal which heard the case from which the such issues arise. However, the Court of Appeal last week suggested that this is not the universal rule, in the volubly-named case of Mengiste & Anor v Endowment Fund For The Rehabilitation Of Tigray & Ors: subnom Re An Application For Wasted Costs: (1) Endowment Fund For The Rehabilitation Of Tigray (2) Addis Pharamaceutical Factory Plc (3) Mesfin Industrial Engineering Plc v Rylatt Chubb [2013] Ewca Civ 1003. In this case, the Appellant solicitors appealed the decision of Mr Justice Peter Smith sitting in the Chancery Division below ([2012] EWHC 2782 (Ch)) in refusing to recuse himself from hearing a stage one application for wasted costs, and making such an order against them, in favour of the Defendant’s solicitors. The Appellants submitted that the judge should have recused himself after making such findings about them without hearing evidence, without warning, and without affording them the opportunity to address the court. Additionally, it was submitted that the stage one order should not have been made as the required prima facie strong case of improper, reckless, or negligent conduct had not been satisfied. The Court of Appeal (Arden, Patten, McFarlane LJJ) allowed this appeal in part. They held that whilst the usual rule was for the judge on a substantive application to deal with consequential issues as to costs, even when he had previously made adverse findings towards a party. However, the instant case was exceptional and the judge indeed had showed apparent bias. It was held that thus, he should have recused himself from hearing the wasted costs application because his criticism of the Appellants (which was held to have been designed to ward off an application for a wasted costs order against an expert witness in the case), was made in anticipation of an application that was never in fact made. The Court of Appeal further held that the judge had expressed his criticisms in absolute terms, failing to leave room for any explanation; and that the repetition of the criticisms and their severity made them extreme and unbalanced. Consequently, the stage one cost order was set aside. As to the second ground of appeal, the Court of Appeal noted that the Appellant solicitors has admitted seriously breaching their obligations as regards the instruction of experts to give evidence. It was held also that they had failed to invite the court to ignore and disregard certain offending passages in the expert’s report, which went beyond the proper boundaries of his role and expertise. As a result, it was held that the Appellant had failed to establish that indeed no judge could have concluded that a stage one order was appropriate in the circumstances. Whilst this decision undoubtedly affords guidance to the practitioner and the litigant, it is unlikely to have much practical impact upon judicial behaviour, given the necessity for judges at first instance to identify and (at least implicitly) accept the presence of the appearance of bias in themselves. Rather, the judgments oblique effect upon such tribunals may (perhaps it is optimistic to suggest) act as a further reminder upon judges not to risk putting themselves in such a position in the first place.
Non-compliance by claimants with their disclosure obligations under the Professional Negligence Pre-Action Protocol can prove an expensive mistake. Webb Resolutions Ltd v Waller Needham & Green [2012] EWHC 3529 (Ch) shows why. The Claimant, a purchaser of mortgage loans from institutional lenders – c.f. the preceding post – wished to sue the Defendant solicitors who had been engaged by the original lender. In July 2010 it sent the Defendant a Letter of Claim. After initial exchanges the Defendant wrote in January 2011 requesting sight of 12 classes of documents which it said it needed to prepare its Letter of Response. The Claimant asserted that the documents were for the most part unnecessary and that no more would be provided until liability was admitted. In May 2011 the Claimant made a Part 36 Offer on the usual 21-day terms. The Defendant objected that it could neither serve a Letter of Response nor advise on the merits of the offer without receipt of the requested documents. The Claimant was having none of that. In September 2011 it went ahead and issued proceedings. In its Defence the Defendant pleaded extensively from the Protocol and repeated its stance regarding the documents. In March 2012 the Claimant provided standard disclosure, inspection took place, and in May 2012 the Defendant accepted the Part 36 Offer made a year earlier. As the offer had been accepted after expiry of the 21-day period the automatic costs provision in rule 36.10(1) – defendant pays all – no longer applied, and instead costs became a matter for the court’s discretion under rule 36.10(4). The default setting in that situation is that the claimant gets his costs up to the date when the relevant period expires, and the offeree is liable for the offeror’s costs thereafter until acceptance: rule 36.10(5). The court should depart from the normal order only if it would be unjust not to, having regard to all the circumstances but in particular the four matters set out in the analogous rule 36.14(4): SG v Hewitt [2012] EWCA Civ 1053. In this case the normal order would have resulted in the Defendant paying all of the Claimant’s costs both before and after issue. However the judge (John Baldwin QC sitting as a deputy) was underwhelmed by the Claimant’s conduct. He noted that the stated aim of the Protocol (paragraph A2) is to establish a framework in which there is an early exchange of information so that the claim can be fully investigated and, if possible, resolved without the need for litigation. He found that although the Defendant’s early requests for disclosure were overambitious the Defendant had made out a good case for why it needed some of the documents and the Claimant, if acting reasonably, would have supplied copies of the files and not merely extracts from them. By failing to do so the Claimant offended against the letter and the spirit of the Protocol. That justified a departure from the normal order. What order to make instead? The judge began by holding that the Defendant should pay the Claimant’s costs incurred up until the end of the 21-day period (i.e. until June 2011), notwithstanding that the Defendant had been awaiting sight of the documents since the previous January. He rejected the Defendant’s argument that the Claimant’s costs should be disallowed from that earlier date, reasoning that that would place the Defendant in a better position than if it had accepted the Claimant’s Part 36 Offer in time and the automatic costs order under rule 36.10(1) had taken effect. It would be “rare indeed”, he said, that a party could improve his position on costs by waiting till the relevant period had expired, so as to take advantage of the more flexible position under rule 36.10(4). In so saying the judge was perhaps overlooking two things. First, it didn’t follow that settlement by acceptance of the Claimant’s Part 36 Offer was the best the Defendant could have hoped for. Given the judge’s finding that the Claimant’s conduct had reduced the prospects of early settlement he could have concluded that, if the disclosure had been provided promptly, the case would probably have settled earlier even than June 2011 - for example, as the result of acceptance of a Part 36 Offer made by the Defendant upon viewing the documents. (The Defendant had in fact made its own offer as early as December 2010, albeit at a nuisance level.) So the judge wasn’t bound to treat all costs incurred prior to the end of the 21-day period as necessarily beyond the reach of his discretion. Secondly, the automatic costs order under rule 36.10(1) is not quite as inflexible as it looks. In Lahey v Pirelli Tyres Ltd [2007] EWCA Civ 91 the Court of Appeal held that although the rule deprived the court of its general discretionary powers under rule 44.3, nonetheless on any detailed assessment the costs judge could still disallow entire sections of the claimant’s bill of costs on the footing that they were costs "unreasonably incurred": rule 44.4(1). The Court cited as an example (at [24]) that if the costs judge considered that the claimant had acted unreasonably in refusing an offer to settle made before proceedings were issued, he was entitled to disallow all the costs post-issue. (See too Re (Edwards & Anor) v Environment Agency & Ors [2010] UKSC 57 at [21].) So if the judge in Webb Resolutions had deprived the Claimant of some of its costs incurred before June 2011 he wouldn’t necessarily have been rewarding the Defendant for its delay: even if the matter had concluded with an acceptance of the Claimant’s Part 36 Offer, a costs judge could have disallowed just such costs on a detailed assessment anyway. As for the costs incurred after June 2011, the judge felt unconstrained by the automatic rule and adopted a harder stance. He held that it was significantly more likely than not that such costs would not have been incurred at all had the Claimant acted reasonably and responded properly to the letters of request for disclosure: by implication, the matter would have settled. Therefore the Claimant, far from having its costs in respect of that period, should be ordered to pay the equivalent costs incurred by the Defendant. One further point is worth making. For the purposes of rule 36.10(1) “the relevant period” for accepting a Part 36 offer means, in the case of an offer made more than 21 days before trial, the period stipulated in the offer letter “or such longer period as the parties agree”: rule 36.3(1)(c)(i). So a defendant who receives a Part 36 offer at a time when the information available to him is incomplete should be wary of negotiating any extension of time for acceptance until after provision of the missing documents. If the defendant then accepts the offer within the extended period he will deprive himself of any opportunity to recover any of his own costs from the claimant, because the automatic rule will take effect. Even if he then delays acceptance until after the extended deadline, he is still likely to be met with the argument that he must bear all the claimant’s costs up to the deadline on the authority of Webb Solutions. Better, then, to protest at the claimant’s breach of the Protocol and let the original acceptance period go by default.