Procedure – Whitestone Chambers

Supreme Court rules that all courts and tribunals are subject to the open justice principle

The Supreme Court has ruled in the case of Cape Intermediate Holdings Ltd v Dring (Asbestos Victims Support Groups Forum UK) [2019] that all courts and tribunals that exercise the judicial power of the state are subject to the ‘open justice’ principle.

The principles of open justice are that the public can understand and scrutinise the court, thereby enabling the public to understand the issues and evidence that is provided by parties.

Civil proceedings have moved from being dominated by oral evidence to proceedings that generate a great deal of written evidence. As this movement has continued, questions have arisen as to how much of the written material placed before the court in a civil action should be accessible to those who are not parties to the proceedings and how this material should be made accessible to them. As most of the evidence is now reduced to writing and is not read out in court it is almost impossible to know what happens in court without access to the written material which, therefore, hinders open justice.

Lady Hale, delivering the Supreme Court’s judgment, said of access to court documents that “the court rules are not exhaustive of the circumstances in which non-parties may be given access to court documents. They are a minimum…”

As per R (Guardian News and Media Ltd) v City of Westminster Magistrates’ Court (Article 19 intervening) [2012] EWCA Civ 420, the default position as to court documents is that “the public should be allowed access, not only to the parties’ written submissions and arguments, but also to the documents which have been placed before the court and referred to during the hearing.”

The court has the power to grant access to these documents, however the applicant does not have an automatic right to be granted access to them. The applicant must put forward a cogent case as to how access will advance the open justice principle following which the court will balance against the possible harm caused by disclosure, such as the release of confidential information.

Also to be considered are the proportional and practical aspects of granting a request. It is advisable that the application for the written material is to be submitted during the trial as the documents would be readily available at this point. After the trial has concluded the likelihood of a successful application diminishes with time as identifying and retrieving the documents becomes practically difficult as the court and parties may not have retained them and, as such, the effort required to reproduce them may not be proportional to the principle of open justice.

Increasing the scope of access beyond the default position in relation to court documents is therefore “the inherent jurisdiction in support of the open justice principle, not the Civil Procedure Rules, CPR rule 5.4C(2).” The aforementioned CPR subsection states that:

“A non-party may, if the court gives permission, obtain from the records of the court a copy of any other document filed by a party, or communication between the court and a party or another person.”

With reference to CPR 5.4C(2), “records of the court” is outlined in the judgment delivered by Lady Hale as meaning “documents and records which the court itself keeps for its own purposes” and is, therefore, distinct from the purposes for which non-parties may be given access to court documents.

Judgment may be viewed at: https://www.bailii.org/uk/cases/UKSC/2019/38.html

www.whitestonechambers.com

law@whitestonechambers.com

Genuine Discretion vs Absolute Contractual rights

Business contracts have become the language and form of commercial transactions. Their ubiquity is only surpassed by their functionality. They are useful for establishing one parties rights and obligations towards others as well as available remedies and dispute resolution mechanisms. Contracts can also confer powers upon a party to decide on issues that affect another party.

As useful as contracts are it is not always the case that all their terms are in writing. Terms are often implied by statue, common law or other mechanism and this can impact the way the contract is performed. Therefore, it can be the case that the interpretation and performance of a contract is not governed by the wording alone.

This is the case when exercising a “genuine discretion” as there is an implied contractual term for the party to use their decision-making power in good faith and “not in a way which is capricious, arbitrary or irrational”. This would imply that there is a limit to how the party can act and their discretion on how to perform the contract is curtailed somewhat. This differs from the application of an absolute contractual right which is not limited by such an implied term. So where do we draw the line between the two?

Whilst the courts have not produce an ultimate distinction between these two concepts, the Court of Appeal in Mid Essex Hospital Services NHS Trust v Compass Group UK & Ireland Ltd (trading as Medirest) [2013] EWCA Civ 200 at para 83 drew the line by stating “The discretion involved making an assessment or choosing from a range of options, taking into account the interests of both parties.”

Following on from this the Supreme Court in Braganza v BP Shipping Limited [2015] UKSC 17,subsequently went to great lengths to describe how such an implied term should operate. Lady Hale found that the decision of the employer, BP shipping in this case, was unreasonable in the sense of Associated Provincial Picture Houses Ltd v Wednesbury Corporation. [1948] 1 KB 223. This implies that the two stage Wednesbury unreasonable test is applicable when assessing the exercise of contractual discretion.

Thus, while this principle is in no way new, the above cases show how it has recently become more prevalent and is applicable to a wider variety of circumstances. This trend does not appear to be slowing with cases as recent of September 2017 (see BHL v Leumi ABL Limited [2017] EWHC 1871 (QB)) discussing contractual discretion in relation to collection fees.

Thus, although it seems the courts have not clearly delineated the boundaries between a genuine discretion and an absolute contractual right what is clear is that the law relating to business contracts is changing and taking more consideration of the parties’ behaviour in performing the contract throughout its term. It appears that the distinction is likely to come down to the wording of the clause in the context of the surrounding factual circumstances.

Jerome Wilcox

Note On Costs

COST PRINCIPLES
From the White Book and Cook on Costs
CPR PARTS 44-47

PART 44 CPR – GENERAL RULES ABOUT COSTS
I. SUMMARY OF PART 44(2) CPR
A.THE COURT’S DISCRETION AS TO COSTS
44.2(1)- the court has a discretion as to (a) whether payable; (b) amount; and (c) when they are paid
44.2(2) – general rule is that costs follow the event, i.e. the unsuccessful party pays costs of successful party; but (b) the court may make a different order.
44.2(4) – court must have regard to all the circumstances, including:
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of a case even if unsuccessful overall; and
(c) any offer to settle which does not have Part 36 costs consequences.
44.2(5) – the conduct of the parties includes:
(a) conduct before and during proceedings – in particular compliance with pre-action conduct PD or any pre-action protocol.
(b) whether it was reasonable for a party to raise pursue, or contest an allegation or issue;
(c) manner in which party pursues or defends case or allegation or issue.
(d) whether a successful claimant exaggerated its claim.
44.2(6) – orders the court may make
(a) a proportion payable;
(b) a stated amount;
(c) costs from or until a certain date;
(d) costs incurred before proceedings have begun;
(e) costs relating to particular steps taken in proceedings;
(f) costs relating to only distinct part of proceedings; and
(g) interest on costs from or until date (inc before judgment).
44.2(7) – before making an order under 44.2(g)(f) above court must consider whether practicable to make order under (a) to (c) instead.
44.2(8) – where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so.

II. PRINCIPLES APPLIED BY THE COURT
A. THE GENERAL RULE
(1) Order to pay costs (in full) is an order to pay unsuccessful parties costs in totality subject to assessment.
B. COSTS WHICH ARE RECOVERABLE
(1) Costs are awarded as indemnity to incurring party so that costs in excess of liability to own solicitor not recoverable (Gundry v Sainsbury [1910] 1 K.B. 645) For exceptions see R v Miller & Glennie [1983] 1 W.L.R. 1056; also Hazlett v Sefton MBC [2000] 4 All E.R. 887 DC and others in White Book Vol. 1 (2017), p1327, para 44.2.5)
Question for the court is whether the receiving party has become liable to pay the costs claimed; who actually pays is irrelevant (Edwin LLP v Popat, 12 February 2013, unrep.)
(2) Simple costs order gives entitlement to costs of and incidental to (Newall v Lewis [2008] EWHC 910 (Ch), 20 April 2008, unrep. (Briggs J & assessors), at para 16: a simple order “costs of … proceedings to be assessed on the standard basis” gives entitlement to costs or and incidental to.
(3) Costs prior to proceedings are capable of being recoverable as costs in the proceedings (Societe Anonyme Pecheries Ostendaises v Merchant’s Marine Insurance Company [1928] 1 K.B. 750, CA at p 757; see also [1931] 1 Ch. 428, CA)
(4) (a) Expense of complying with pre-action protocol in respect of claims brought in subsequent proceedings can be costs “incidental to”; but (b) costs incurred at pre-action stage in dealing with or responding to issues that are later dropped are not recoverable save in exceptional circumstances. (McGlinn v Waltham Contractors Ltd [2005] EWHC 1419 (TCC))
C. OTHER
(1) Judge should clearly state reasons when making order for costs, particularly where costs are disproportionate to amount in issue. (English v Emery Reimbold & Strick Ltd [2002] EWCA Civ 605)
(2) Reasons may be apparent from judgment, where counsel are unsure they should seek a note of reasons from the judge (Darougar v Belcher [2002] EWCA Civ 1262, 25 July 2002, unrep., CA at para 7)
D. ‘DIFFERENT ORDERS’
(1) Different orders under r.44.2(6)(a), (b), (c), and (f) demand an “issue-based approach”

Propositions from the Cases
(1) A judge:
(a) may make different orders for costs “in relation to discrete issues”; and
(b) should consider doing so where a party has been successful on one issue but unsuccessful on another issue;
(2) in that event, a judge may make an order which not only deprives him on an issue, but also entitles the other party to costs on that issue;
(3) it is no longer necessary for a party to have acted unreasonably or improperly before requiring him to pay costs on an issue on which he has failed (even if successful overall). (Johnsey Estates (1990) Ltd v Secretary of State for the Environment [2001] EWCA Civ 535, 11 April 2001, unrep., CA; and Summit Property Ltd v Pitmans [2001] EWCA Civ 2020)
—————-
(4) Justification for considering other orders before making a different order (r.44.2(7)) is that an issue-based approach will require a more detailed assessment thereby giving rise to further costs and time which may be disproportionate to the benefit gained (a percentage order under (a) will often produce a fairer result) (English v Emery Reimbold & Strick Ltd [2002] 1 W.L.R. 2409, CA.
(5) Wide discretion under r.44.2 makes predicting the outcome of an issue-based approach extremely difficult. There has been criticism for failing to employ the general starting point (Fox v Foundation Piling Limited [2011] EWCA Civ 790)

E. SANDERSON AND BULLOCK ORDERS
(1) A “Sanderson order” is an order that(successful) D1’s costs payable by (unsuccessful) D2 These are commonly made where C is legally aided (Sanderson v Blyth Theatre Company [1903] 2 K.B. 533, CA).
(2) A “Bullock order” is an order that costs payable by C to successful D1, to be paid by (unsuccessful) D2.
(3) Often the same term is used to describe a Sanderson order and the form of order remains in the discretion of the court (Bullock v London General Omnibus Co [1907] 1 K.B. 264, CA).
(4) Justification for these orders is that it avoids injustice to C in cases in which he is unsure which of two D’s ought to be sued. Justification does not arise where C completely unsuccessful.
(5) Cases list different factors but common thread is the reasonableness of the original joinder. Some cited factors are:
(i) whether the claim against the successful D had been made in ‘the alternative’;
(ii) whether the causes of action had been connected with those on which the claimant had been successful; and
(iii) whether it had been reasonable for C to join and pursue a claim against the successful D. (Irvine v Commissioner of Police for the Metropolis [2005] EWCA Civ 129).
(6) There are no hard and fast rules with these orders (Moon v Garrett [2006] EWCA Civ 1121)

F. ASSESSMENT OF COSTS OF A COUNTERCLAIM OR OF AN ISSUE
The Medway Principles
(1) Where D succeeds on defence and fails on counterclaim he is entitled to costs which he has actually and properly incurred in defeating C’s claim but not to those he would not have incurred had he not counterclaimed. C will not be entitled to costs of the claim but will be entitled to costs of defending the counterclaim.
(2) Where the matters in controversy are common to both the claim and the counterclaim, the costs should be apportioned by the costs judge (in so far as they are common). The judge should divide common costs notionally. (Medway Oil and Storage Company Ltd v Continental Contractors Ltd [1929] A.C. 88, HL)
(3) Although it is preferable for there to be only a single adjusted costs order where multiple parties are successful in claiming and counterclaiming, the court will sometimes make a cross-order. In the latter case, the principles on attribution in Medway (above) apply.
(4) Where two or more costs orders are made, any successful counterclaim will have attributed to it only the increase in costs which it had brought about (Medway above).
(5) Where both claim and counterclaim are unsuccessful, D will recover costs save those attributable to the counterclaim (Medway above).
(6) In these cases, time records will be important when it comes to assessment (Dyson Technology Ltd v Strutt [2007] EWHC 1756 (Ch).
(7) Unless there a specific order that costs are apportioned between claim and counterclaim, costs cannot be so apportioned.
(8) There is a distinction between ‘division’ on the one hand, and ‘apportionment’ on the other. Some costs will be insusceptible to division because they do not relate solely to a particular claim or issue as between only two parties (Hay v Szterbin [2010] EWHC 1967 (Ch), [2010] 6 Costs LR 926.
(9) The Medway approach will not necessarily be followed where injustice might arise to D merely because C issued proceedings first so that D is not entitled under that approach to any costs in respect of liability since they would have been necessitated by C’s claim in any event (Burchell v Bullard [2005] EWCA Civ 358; Square Mile Partnership Ltd v Fitzmaurice McCall Ltd [2006] EWHC 236 (Ch); Villa Agencies SPF Ltd v Kestrel Travel Consultancy Ltd [2012] EWCA Civ 219)
(10) However, where amounts are large, attempting the set off at the award of costs stage itself creates injustice, instead it may be more appropriate to award a percentage of costs to each party leaving the monetary value to be determined by assessment or agreement (Amin v Amin and 17 ors (costs) [2007] EWHC 827 (Ch D)

G. NO ORDER AS TO COSTS
(1) Where a court makes no mention of costs the general rule is that no party is entitled to costs (CPR r44.10; Griffiths v Metropolitan Police Commissioner [2003] EWCA Civ 313).
(2) Exceptions are when court (1) gives permission to appeal, (2) permission to apply for judicial review, or (3) makes an order on a not on notice application, but is silent on costs then an order for ‘the applicant’s costs in the case’ is deemed (CPR 44.10(2)).
(3) The deemed ‘costs in the case order provided for under CPR 44.10(2)(c) supports the contention that a court can make an order for costs on a not on notice application against the party who has not had notice (Makay and Busby v Ashwood Enterprises Ltd [2013] EWCA Civ 959 (subject to right to apply to set aside/vary CPR r23.10).

H. TYPES OF ORDER
(1) CPR PD 44, para 2, sets out a list of costs orders available following interim and appeal hearings: Costs/Costs in any event; Costs in the case/ Costs in the application; Costs reserved; Claimant’s/Defendant’s costs in case/application; Costs thrown away; Costs of and caused by; Costs here and below; No order as to costs/Each party to pay own costs.
(2) An order for ‘costs reserved’ becomes an order for ‘costs in the case’, if there is no later determination of where the responsibility for those costs lies (Cook’s on Costs (2017) at para 22.3, p333).
(3) Where both parties are awarded costs at the end of the claim, an interim order for costs in the case is determined by reference to which parties overall order for costs covered the period when the ‘costs in the case’ order was made so that that party benefits from the order (Ontulmus v Collett [2014] EWHC 4117 (QB)

I. DEEMED COSTS ORDERS
(1) Deemed cost order are available: (1) in favour of the Claimant on acceptance of a Part 36 offer (See Cooks on Costs RE PART 36]); and (2) where a claim is discontinued.
Discontinuance
(2) A C who discontinues is liable for D’s costs up until the date of discontinuance unless court orders otherwise (CPR r38.6).
(3) Where C deletes a claim by amendments to the particulars of claim this is in effect discontinuance with the same costs consequences (Isaac v Isaac [2005] EWHC 435 (Ch).
(4) The burden is on C to persuade court that some other order is appropriate, perhaps because of some unavoidable and unforeseeable change in circumstances (Re Walker Windail Systems Ltd, Walker v Walker [2005] EWCA Civ 247).
(5) It will be unusual for a change in circumstances to amount to a good reason unless connected with some conduct on the part of D which merited departure from the general rules (Teasdale v HSBC Bank plc [2010] EWHC 612 (QB)).
(6) CPR 38.6 (liability for costs on discontinuance) does not create a general discretion as to costs on discontinuance: D starts from position of being entitled to costs and it is for C to justify the making of some other order (Messih v McMillan Williams [2010] EWCA Civ 844).
(7) An example of court exercising its discretion (Webb v Environment Agency (2011) QBD 5 April).
(8) One of the factors the court will consider is the fact that an application to depart from the general rule is made some time after discontinuance (Hoist UK Ltd v Reid Lifting Ltd [2010] EWHC 1922 (Ch)).
Basis of assessment
(9) By CPR 44.9(1) assessment under the above deemed orders is conducted on the standard basis. However, where the court has a residual discretion that extends to making an order for indemnity costs on the application of the party against whom the claim has been discontinued if appropriate (Sharokh Mireskandari v Law Society [2009] EWHC 2223 (Ch) – discontinued claim had always been entirely speculative).
Interest on costs under deemed order
(10) By CPR 44.9(4) interest runs from the dare when the deemed cost order is made.

J. COSTS ORDERS BY CONSENT
(1) Parties may agree costs between themselves, including by Tomlin order which stays a claim on (scheduled) terms – if it is agreed that costs will be assessed if not agreed then this MUST be in the body of the order.
Uncertain and unclear terms
(2) Where a consent order does not include a term on application to vary, the court will likely not have jurisdiction (Richardson Roofing Co Ltd v Colman Partnership Ltd [2009] EWCA Civ 839)
(3) In interpreting a consent order, it seems the courts will treat the issues raised as questions of fact and law rather than discretion (Re Gibson’s Settlement Trusts, Mellors v Gibson [1981] Ch 179, [1981] 1 All ER 233)

K. CONTESTED AWARDS BETWEEN THE PARTIES
(1) CPR 44.2(2) (above) contains a rebuttable presumption that the unsuccessful party pays the costs of the successful party.
(2) It is only once the successful party is identified that the court considers the reasons to depart. In Straker v Tudor Rose (a firm) [2007] EWCA Civ 368, Walker LJ provided the following guidance:
(i) Is it appropriate to make an order?
(ii) If it is, the general rule is that costs follow the event
(iii) Identify the successful party
(iv) Are there any reasons for departing from the general rule, in whole or in part. If so, the court should make clear finding of the factors justifying departure.
Who is the successful party?
(3) ‘In deciding who is the successful party the most important thing is to identify the party who is to pay money to the other. That is the surest indicator of success and failure.’ (A L Barnes Ltd v Time Talk (UK) Ltd [2003] EWCA Civ 402 at [28], approach endorsed in Day v Day [2006] EWCA Civ 415).
(4) ‘For the purposes of the CPR success is not a technical term but a result in real life, and the question as to who has succeeded is a matter for the exercise of common sense.’ (Bank of Credit and Commerce International SA v Ali (No 3) [1999] NLJ 1734 Vol 149 at [17] – cited in Day).
(5) That approach applies to what is broadly termed commercial litigation (Al Barnes above). This point is controversial and approach seems to be mirrored in non-commercial cases (although see Hullock v East Riding of Yorkshire County Council [2009] EWCA Civ 1039 which suggests that things might be different in a personal injury quantum only claim).
(6) Often it will be appropriate for the loser to pay the winners costs, even where there had been issues on which the overall winner had lost (Alternative Investments (Holdings) Ltd v Barthelemy [2011] EWHC 2807 (Ch)).
(7) In Fox v Foundation Piling Ltd [2011] EWCA Civ 790 C made a personal injury claim for over £280,000. Only quantum was in issue and on disclosure of surveillance evidence C accepted an offer of £31,000 with the issue of costs outstanding. The Court concluded that from the date of an earlier offer of £23,000 D had been the successful party based on C’s conduct. In delivering the lead judgment Jackson LJ commented that:
(i) ‘Where both parties are over optimistic with their Part 36 positions, C should normally be regarded as the ‘successful party’ because s/he has been forced to bring proceedings to recover ([46])
(ii) A D in possession of surveillance evidence should make a prompt and realistic Part 36 offer (Morgan v UPS [2008] EWCA Civ 1476 – failure to make modest Part 36 offer early prevented costs protection [58-60])
(iii) The fact that the successful party has won and lost some issues may be a good reason for modifying the usual order under CPR 44.2 AND this is commonly achieved by awarding the successful party a specified portion of his/her costs [47-49]
(iv) The growing tendancy of Courts at all levels (including the Court of Appeal) to depart from the starting point in CPR 44.2 too far and too often was an unwelcome trend which had itself increased costs by arguments at first instance and a ‘swarm of appeals’ [62]’
(Cook on Costs (2017), para 22.16, p341)
(8) Cases may be distinguishable from Fox where ‘success’ had been conceded by the time that the appeal. It did not therefore contradict the Medway line of cases on ‘substantial success’ (Magical Marking Ltd & Phillis v Ware & Kay Ltd & 10 ors [2013] EWHC 636 (Ch)).
(9) Following those cases, the Court of Appeal has restated the Al Barnes approach in Northampton Regional Livestock Centre Company Ltd v Cowling and Lawrence [2015] EWCA Civ 651, [2015] 4 Costs LO 477. C recovered for breach of fiduciary duty but failed on negligence. Court found that C was the successful party but then departed from the general rule and awarded a percentage costs order of 50%.

Reasons for departing from the general rule
a. Conduct of the parties
(10) CPR 44.2(4) and CPR 44.2(5) give a non-exhaustive list of factors.
(11) Where a C has been deliberately misleading in the course of the claim by intentionally and fraudulently exaggerating the claim, the Court will usually depart from the general rule (Painting v University of Oxford [2005] EWCA Civ 161 – C’s was ordered to pay costs with result that she would have had very little left by way of damages).
(12) Reductions in cost are justified, at least partly, by the fact that they are likely to provide a disincentive to Cs who seek to make exaggerated claims (Jackson v Ministry of Defence [2006] EWCA Civ 46).
(13) Where a C is successful but dishonest s/he will often be penalised as a result. A failure to engage in negotiation will also be a factor (Wildlake v BAA [2009] EWCA Civ 1256- no order for costs on the basis of exaggeration and failure to negotiate, in spite of fact that C beat Part 36 offer).
(14) However, there is no general rule that a finding of dishonest conduct will replace the general starting point (Neale v Hutchinson [2012] EWCA Civ 345).
(15) In Northstar Systems Ltd v Fielding [2006] EWCA Civ 1660 (cited in Neale above), Waller LJ stated:
‘There is no general rule that a losing party who can establish dishonesty must receive all his costs of establishing this dishonesty, however, disproportionate they may be.’
(16) Exaggeration for the purposes of CPR 44.2(5)(d) must consist in conduct meriting criticism. That is different from merely stating a best case (Morton v Portal Ltd [2010] EWHC 1804 (QB)).
(17) ‘In my judgment it would be wrong to conclude, if there ever was a strict rule that pre-action conduct was relevant to costs only if causative of … an unsuccessful claim or of increased expense in subsequent litigation, that such a rule survives the introduction of the CPR.’ (Bank of Tokyo-Mitsubishi UFJ Ltd v Baskan Gida Sanaya Ve Pazarlama As [2009] EWHC 1696 (Ch)).
(18) Conduct of the proceedings themselves may also lead to a departure from the general rule (R (on the application of Scrinivasans Solicitors) v Croyden County Court [2013] EWCA Civ 249 – abandoned submissions and failed to make right points at the right time; see also Cooper v Thameside Constructions Co Ltd unrep 4.7.16 (TCC)).
b. Partial success
(19) This is a separate question from the identification of the successful party.
(20) ‘… [T]he fact that the claimant has won on some issues and lost on other issues along the way is not normally a reason for depriving the claimant of part of his costs’ (Jackson LJ in Fox above).
c. Calderbank offers

(21) ‘… parties are quite entitled to make … offers outside the framework of part 36. Where a party makes such an offer and then achieves a more advantageous result, the court’s discretion is wider. Nevertheless, it may well be appropriate to order that party which has optimistically rejected the offer to pay all costs since the date when that offer expired (see Jackson LJ in Fox above)’.
(22) a case involving a departure from the general rule on the basis of a number of the above principles is NJ Rickard Ltd v Holloway unrep. 3.11.15 Court of Appeal Civ.

L. AGREEMENT EXCEPT AS TO COSTS
(7) In M v Croydon Borough of London [2012] EWCA Civ 595 the Court of appeal held that where a claim had been settled there was a difference between the following types of cases:
(i) Cases where C has been wholly successful whether following a contested hearing of pursuant to a settlement;
(ii) Cases where C has only succeeded in part following a contested hearing or pursuant to a settlement; and
(iii) Cases where there has been some compromise which does not actually reflect C’s claims
(8) Re (7) above: in type (i) cases C will normally be entitled to costs absent some good reason to the contrary. In type (ii) cases the court will normally determine questions such as the reasonableness of C in pursuing the unsuccessful claim, how important the unsuccessful claim is relative to the successful claim, and how much the costs were increased by pursuit of the unsuccessful claim. In type (iii) cases the court is often unable to gauge whether there is a successful party (Emezie v Secretary of State for the Home Department [2013] EWCA Civ 733.
(9) Where detailed costs information and concessions are before a judge then an alternative approach under which the trial judge combines quantification and liability may be adopted (The Bank of Tokyo-Mitsubishi UFJ, Ltd Baskan Gida Sanayi Ve Pazarlama AS above).

M. NO WINNER OR LOSER
(1) A Court may find that there has been no ‘successful party’ which is to be distinguished from a set-off (Phonographic Performance Ltd v AEI Rediffusion Music Ltd [1992] 2 All ER 299, CA; Verrechia (t/a Freightmaster Commercials) v Metropolitan Police Comr above; Cammertown Timber Merchants Ltd v Sidhu [2011] EWCA Civ 1041).
(2) However, no order as to costs is not a fall back position and judges must still conduct the Al Barnes determination (R(on the application of Mendes v Sowthwark London Borough Council [2009] EWCA Civ 594; Taylor v Burton [2014] EWCA Civ 63).
PART 45 CPR – FIXED COSTS
PART 46 CPR – COSTS – SPECIAL CASES

PART 47 CPR – PROCEDURE FOR DETAILED ASSESSMENT OF COSTS AND DEFAULT PROVISIONS
(1)On a detailed assessment, the court will not depart from an agreed or approved budget unless satisfied that there is good reason to do so (r.3.18(b); and see Thomas Pink Ltd v Victoria’s Secret UK Ltd [2014] EWHC 3258 (Ch), 31 July 2014, unrep. (Birss J)).

law@whitestonechambers.com
www.whitestonechambers.com

Pre-Action Protocol for Debt Claims

The Pre-Action Protocol for Debt Claims, (the “Protocol”), comes into force on 1st October 2017.

The following article examines the concept of ‘debt’; this article focuses on the purpose, procedure and effects of the Protocol.

The objective of a Pre-Action Protocol is to prescribe the conduct the court expects the parties to take prior to commencing legal proceedings. In line with Lord Jackson’s 2010 review of litigation costs, the Protocol aims to encourage early communication and exchange of information and documents between the parties so to enable them to resolve the dispute without litigation. This Protocol expounds the new procedure for a business, (the “creditor”), to follow when claiming repayment of a debt from an individual, (the “debtor”). It does not concern debts between businesses, unless the individual is a sole trader.

Prior to this Protocol, typically the creditor would contact the debtor to secure the outstanding payment; if this failed, the creditor would either enlist a debt collection agency or instruct a solicitor and a ‘Letter Before Action’ would be sent. Under the new Protocol, this Letter is called the ‘Letter of Claim’ and section 3 stipulates the information it must include. This Letter of Claim, along with the Information Sheet and Reply Form (Annex 1 of the Protocol) and the Financial Statement (Annex 2 of the Protocol), must be sent by post to the debtor. The debtor then has thirty days to respond.

The next stage depends on what, if any, response is received from the debtor:

If there is no response within the timeframe, the creditor can commence court proceedings.
If the debtor indicates that they are seeking advice or that they require time to pay, or sends back to the creditor an only partially completed Reply Form; section 4 of the Protocol sets out the corresponding required action.
If the parties disagree about the existence of the debt, they should consider Alternative Dispute Resolution per section 6 of the Protocol. If agreement is still not reached, then the creditor should give the debtor notice of at least fourteen days of its intention to commence court proceedings.
If the creditor receives a completed Reply Form, the debtor should pay the money owed and there will be no need to commence proceedings, provided there is no error on the Form.
There are some specific exemptions and regulatory obligations that take precedence over this Protocol. These mainly concern claims where there is currently another applicable Pre-Action Protocol such as in construction or mortgage arears.

For businesses predominantly providing credit for individuals, this Protocol creates a more formal and time-consuming procedure for collecting debts. Creditors will no longer be able to pressure a debtor with the prospect of imminent court proceedings. However, if the creditor fails to comply with this Protocol, the court could impose sanctions.

There is then the potential for debtors to use the Protocol to delay payment, but even if this does not happen, the new procedure is likely to be slower and dearer than pre-October 2017.

Attached is a copy of the Protocol: https://www.justice.gov.uk/courts/procedure-rules/civil/pdf/protocols/pre-action-protocol-for-debt-claims.pdf

www.whitestonechambers.com

law@whitestonechambers.com

LATEST – Multi-Track Fixed Costs

Lord Justice Jackson has tabled plans for extending fixed recoverable costs. He conceded that fixing it would not be possible without reform to procedures. Having previously suggested that fixed costs could be applied to all claims up to a value of £250,000, Jackson’s latest proposals account to a significant scaling back. His report proposed finishing the job of introducing a f…

Lord Justice Jackson has tabled plans for extending fixed recoverable costs. He conceded that fixing it would not be possible without reform to procedures.

Having previously suggested that fixed costs could be applied to all claims up to a value of £250,000, Jackson’s latest proposals account to a significant scaling back. His report proposed finishing the job of introducing a fixed grid of fixed recoverable costs for all fast-track cases, as well as a new ‘intermediate track’ for certain claims up to £100,000, which can be tried in three days or less with not more than two experts on each side. This ‘will make a real contribution to promoting access to justice’, he said.

A voluntary pilot of a ‘capped costs’ regime for business and property cases up to £250,000, for which procedures would follow those of the Intellectual Property Enterprise Court to some extent is also proposed. Jackson recommends new measures to limit recoverable costs in judicial review cases.

Jackson said, “In my view, it is now right to extend fixed recoverable costs above the fast track, but we must proceed with caution in order to protect access to justice”. He described the extension of fixed fees across the fast track as a ‘no brainer’, but said that above the £25,000 limit there was a ‘very substantial divergence of opinion’ on what should happen.

The view was echoed by the Bar Council. Andrew Langdon QC, Chairman of the Bar, said: “The review, in our view correctly, steers away from extending fixed recoverable costs up to £250,000. Encouragingly, there are also proposals in the report for a grid of recoverable fees which include ring-fencing fees for counsel or other specialist lawyers in more complex fast track cases and for intermediate track cases. These include trial advocacy fees.” However, Jackson said “I do not see how I can recommend any reform because it is necessary to protect one part of a profession, the profession exists to serve the public, not vice versa.”

Revealing the extent to which he had listened to lawyers, Jackson said he only ‘floated the idea’ of the intermediate track once his review had started and people had given their opinions.

The president of the Association of Personal Injury Lawyers, Brett Dixon, struck a note of caution over the proposed intermediate track. He said, “Thorough scrutiny of how all elements of Jackson’s recommendations would fit and work together is essential.” Law Society president Joe Egan also commented on this issue, “We hope that the process can be streamlined for cases affected by fixed costs before they’re introduced, in order to ensure that the costs will be manageable for solicitors and claims can still be brought”.

The review’s proposals have been welcomed as good news for solicitors and consumers. A ‘one size fits all’ approach for all cases, regardless of complexity, would have made many cases economically unfeasible, undermining the principle of justice delivering fairness for all. However, the government will want to see further reform and the control of lawyers’ fees in the lower value multitrack cases.

RULE 44. 11 – COURT’S POWERS IN RELATION TO MISCONDUCT:

The misconduct extends to the legal representative of a party as well as to the party personally and includes both summary assessment and detailed assessment proceedings and refers to any failure to comply with the provisions of Part 47 and any direction, rule, practice direction or court order.

Part 44 of the Civil Procedure (Amendment) Rules 2013 (SI 2013/262) was re-enacted on 1st April 2013 and concerns the court’s powers in relation to misconduct. incur Where a party (a) fails to comply with a court rule in assessment or summary proceedings, or (b) acts unreasonably or improperly before or during proceedings the court may disallow all or part of the costs which are being assessed or order the party at fault or that party’s legal representative to pay costs which that party or legal representative has caused any other party to incur. The misconduct extends to the legal representative of a party as well as to the party personally and includes both summary assessment and detailed assessment proceedings and refers to any failure to comply with the provisions of Part 47 and any direction, rule, practice direction or court order.

A costs judge may investigate or make orders of unreasonable or improper conduct by a party or a legal representative. A legal representative who has been found to have acted unreasonably or improperly may be ordered personally to pay costs which another party has incurred. This power is in addition to the court’s power to make wasted costs orders in accordance with s.51(6) of the Senior Courts Act 1981 (Gamboa-Garzon v Langer [2006] EWCA Civ 1246).

By 2008 internet access had become perceived as a basic necessity for business travelers, and airline companies turned to the only established WiFi operator in the market. The inelasticity of the new demand meant that the quality or speed of the WiFi weren’t important to secure market share: airlines had to be able to offer the service to match their competitors and Gogo was the only provider with sufficient infrastructure to provide the service.

Where the court makes an order against a party who is legally represented but not present at the hearing, that party’s solicitor must notify their client in writing within seven days of receipt of notice of the order. For the procedure for wasted costs orders, see CPR 46.8.

Part 44.11.2 concerns delays in proceedings. The court has a discretion to decide whether imposing the sanction of disallowance of costs is proportionate to the delay and/or failure to comply with the relevant rule or practice direction.

(Botham v Khan [2004] EWHC 2602).

Section 44.11.3 concerns the solicitor and counsel relationship. In Davy-Chiesman v Davy-Chiesman [1984] 1 All E.R. 311 the claimant applied for an inappropriate form of relief on the advice of counsel. The Court of Appeal held that the claimant’s solicitor was not relieved from responsibility by the fact that he had instructed counsel. Solicitors also have the obligation to withdraw instructions from an incompetent counsel (Re A (A Minor) [1998] Fam Law. 339). However in certain situations a solicitor may be justified in relying upon counsel’s advice (Swedac Ltd v Magnet & Southern plc [1990] F.S.R 89), for instance if a solicitor has no experience in the area concerned (R. v Luton Family Proceedings Court Justices, Ex p. R. (1998) 4 C.L. 51).

Counsel is under a duty to reassess any advice in the light of further information to avoid a wasted costs order. (C v C (Wasted Costs Order) [1994] 2 F.L.R 34)

Counsel should not wholly rely on instructing solicitors to notify them of the dates and times of their cases (Re A Barrister (Wasted Costs Order) (No. 4 of 1992), The Times, 15 March 1994, CA (Criminal Division)); and see Re A Barrister (Wasted Costs Order) (No. 4 of 1993), The Times, 21 April 1993, CA (Criminal Division)).

Where the conduct of both the barrister and the solicitor in a case are the subject of criticism, any investigation of their professional conduct will be conducted by a joint tribunal (Vowles v Vowles, The Times, 4 October 1990).

RULE 16.3(7) – STATEMENT OF UNDER VALUE TO BE INCLUDED IN THE CLAIM FORM?

Sir David Eady J delivered a judgment on 30 March in the case of Mohamed Ali Harrath v Stand for Peace Limited and Samuel Westrop [2017] EWHC 653 (QB) (available here) in which he held that a claimant is entitled to recover damages that exceed the statement of value included in the claim form.

The first defendant’s website described the claimant as a “convicted terrorist”, per paragraph 3 of Eady J’s judgment, those words were “plainly seriously defamatory to the claimant”. At paragraph 6, Eady J held that there “simply was no evidence to support the allegation of terrorism”.

The claimant had indicated on the claim form that he expected to recover no more than £10,000. At paragraph 10 of the judgment, the notional upper limit for damages in libel cases was described as being “around £300,000”. Given that “few if any allegations could be more serious” than that of being a terrorist, Eady J held at paragraph 11 that “an allegation of terrorism is likely to attract in most cases an award towards the upper end of the scale” referred to above.

As a result, had the claimant inadvertently limited his claim to merely £10,000 and not a significantly higher, six-figure sum?

At paragraph 22 of the judgment, Eady J considered Rule 16.3 of the CPR. This rule requires the claimant to provide an estimated value of his claim if it is a claim for value and he is able to provide an estimate. Sub-paragraph 7) of that rule reads as follows: “the statement of value in the claim form does not limit the power of the court to give judgment for the amount which it finds the claimant is entitled to.” On that basis, the court awarded damages in the sum of £140,000.

Paragraph 22 also records the claimant’s understandable willingness “to pay any additional fee if necessary.” This single sentence demonstrates the real interest in this case and is a reference to the fact that the court fee for issuing a claim is directly linked to the estimated value of the claim. Therefore, rule 16.3(7) leaves the door open for a claimant to undervalue his claim substantially so as to pay a much lesser court fee at the time of issue. If the claim is successful, the difference to be paid to the court can be paid at that point, possibly even out of the damages. If the claim is unsuccessful, the claimant will have benefited by paying the lower court fee. This tactic would most likely be more successful in claims for unliquidated damages than in cases for a specified sum, for obvious reasons. However, claimants will need to be able to explain why the statement of value in the claim form backed by a statement of truth does not accord with the final level of damages being sought and defendants should be alert to such differences, as indeed should the court.

Unless the court is alert to this possible tactical advantage being taken, the litigation risk for claimants can be deliberately reduced. According to the court fees applicable from 7 March 2017, the maximum issue fee for a claim valued at less than £10,000 is £455, compared to a fee of £10,000 for claims of £200,000 and above.

Undervaluing a claim could be very valuable indeed and quite naughty.