Legal Watch:Personal Injury2nd September 2015Issue: 075

Events

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In this issue:

• Civil procedure/expert evidence

• Costs

Civil procedure/expert evidenceAlthough it is a commercial action, the case of British Airways plc v Spencer and others (2015) EWHC 2477 (Ch) contains some important guidance that is of general application.

In a pension’s dispute with the trustees of its pension fund, the appellant employer sought to adduce actuarial evidence covering a number of issues. The trustees were concerned that the admission of allegedly irrelevant expert evidence would further delay the resolution of the dispute and deprive individuals of payments to which they were entitled. The deputy Master case managing the claim concluded that the expert evidence was not necessary.

The employer appealed and contended that the deputy Master had applied the wrong test by considering that, in order for the expert evidence to be admitted, it had to be reasonably requiredinordertodetermineaspecificissueindispute.Theemployer also contended that the deputy Master’s decision was vitiated by his failure to refer in his judgment to Appendix 1 of the appellant’s skeleton argument which sought to justify the reliance on the expert evidence.

Allowing the appeal, a High Court judge held that appellate courts would not lightly interfere with case management decisions. However, any exercise of a case management power had to accord with the overriding objective, which informed what was reasonably required in terms of expert evidence. The court should not be over-zealous in excluding evidence in order to save time and cost. Evidence could be helpful even if it was not determinative of any issue.

‘The court should not be over-zealous in excluding evidence in order to save time and cost’

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However, it was also necessary to be mindful of CPR 35.1, which required that the evidence had to be reasonably required to resolve the proceedings. Therefore, it had to be considered in each case whether the evidence was necessary - in the sense that a decision could not be made without it - or whether it was of marginal relevance, in which case a balance had to be struck and the proportionality of its admission assessed. In striking that balance, the court had to take into account such factors as the value of the claim, theeffectof a judgment eitherwayon theparties,how the commissioning of the evidence was to be paid for, and any delay likely to be entailed by the production of the evidence.

The deputy Master had not dealt with the content of Appendix 1 in his judgment but had instead moved away from thespecificpleaded issues to the largerpictureandasked himself whether the evidence would be reasonably required for the court to decide the issues. As he had not addressed the relevance of the expert evidence to each separate pleaded issue, it was not possible to conclude that he had properly considered the pleadings in a way which it was necessary for him to do in order to judge whether the evidence should be admitted. The deputy Master’s wholesale decision to reject any expert evidence was thereforeflawed.

There were many areas where expert actuarial evidence might be relevant and would assist the court, and some areas where it would not only assist but be necessary. Factors in favour of admitting evidence which would be of assistance, but not necessary, to the resolution of an issue included: the very large sum of money turning on the outcome of the case for the employer; the undesirability of tying the hands of the trial judge if that could sensibly be avoided; and the fact that the trustees would be at no financial riskbecause thecostsofobtaining theevidencewould be borne by the employer in any event, even if none of it was adduced or relied on in court. Those factors in favour of admission were not displaced by the time and energy required by the court in considering the evidence or the pressure on trial preparation.

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CostsWe report two cases under this heading.

The case of Kerins v Heart of England NHS Foundation Trust [Lawtel 26/08/2015] has already received considerable media attention because of the cost judge’s decision to penalise the claimant’s solicitor in costs for what the judge perceived to be misconduct during the costs process.

The claimant had brought a claim for damages for clinical negligence which had settled shortly after proceedings were served. The defendant agreed to pay his costs on the standard basis.

The claimant had instructed solicitors in February 2012 and they entered into a conditional fee agreement (CFA) in April 2012. The claimant had thebenefit of a before the event(BTE) insurance policy with an insurer which would have provided him with some indemnity in respect of bringing a claim for the injury suffered. However, he decided toproceed without making use of that cover. He contracted with the solicitors without reference to the policy with the BTE insurer. The BTE insurer would not have sanctioned the useofthesolicitor,whichwasnotoneofitspanelfirms.Theclaimant was only able to insist on his choice of solicitor when proceedings came to be issued. At that point, he entered into a second CFA with the solicitor, dated March 2013, the terms of which were in accordance with the BTE insurer’s requirements.

The notice of funding served with the proceedings referred only to the first CFA, despite the fact that the secondCFA was already in place by then, and was intended to replacethefirst.Thebillofcosts,withsignedcertifications,did not refer to the second CFA or the BTE insurance. The defendant raised points of dispute challenging the solicitor’s retainer, stating that there appeared to have been BTE funding, or legal aid, and that that was an important factor in terms of arguing about the success fee. In reply, the solicitor stated that the reasonable investigation which it undertook concluded that the claimant did not have suitable BTE cover for funding a clinical negligence claim

prior to the issue of court proceedings, so that a success fee should be applicable. The existence of the second CFA and the BTE cover was only disclosed four days prior to the instant hearing, and the claimant then conceded the whole of the success fee. The solicitor acknowledged that it had erroneouslyfailedtomentionthesecondCFA,butofferedno explanation for that failure.

The defendant submitted that the claimant’s costs should be disallowed entirely because of abuse of process and misconduct under CPR 44.11. The claimant submitted that the court should not exercise its discretion to disallow all orpartofthecosts,sincetherehadbeensufficientpenaltyalready in the sense that he had conceded the success fee in full.

The district judge held that it was clear that there were not two simultaneous retainers in the instant case. Although the claimanthadhadthebenefitofBTEinsurance,hedecidednot to avail himself of it, and therefore there was no contract between the solicitor and the BTE insurer until the second CFA was entered into. Although a claimant was not obliged to avail himself of such insurance, if he failed to do so, he was likely to face a serious challenge to the additional liabilities. Such vulnerability as to additional liabilities did not mean that the retainer itself was invalid. Both CFAs were virtually identical in key respects. There was a valid retainer in respect of both CFAs.

‘Although a claimant was not obliged to avail himself of (BTE) insurance, if he failed to do so, he was likely to face a serious challenge to the additional liabilities’

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It was a reasonable inference that the omission of any mention of the second CFA and the BTE insurance had been deliberate. The court speculated that the inaccurate portrayal of the funding position would serve to strengthen the claimant’s arguments in justifying the success fee, and would weaken the defendant’s arguments. The claimant and the solicitor could be criticised with regard to the way that the real situation was intentionally kept secret from the defendant. The word “improper” in CPR 44.11 was not limitedtosituationswheretherewouldbeasignificantbreachof professional conduct, but encompassed conduct which could be regarded as improper according to a consensus of professional or judicial opinion. It would be surprising if the solicitor’s conduct had not fallen foul of some provision of the rules which governed solicitors. Misrepresenting the position in a bill of costs intended for consideration by an opponent in litigation and use at a court hearing in order to gain practical advantage could be regarded as improper conduct. It was, in any event, likely to be so regarded by a consensus of solicitors or judges. It was clear that the conduct fell within the meaning of “unreasonable” in CPR. 44.11.

The claimant had only conceded what he was likely to lose in any event, once the true facts were known. The court very much disapproved of the type of conduct that had occurred, in these days of openness between the parties. There was an obligation on legal representatives to assist the court and present their client’s case fairly and without misrepresentation. It was appropriate to exercise the discretion to make an order disallowing 50% of the claimant’s costs as assessed.

The second case under this heading deals with the issue of how to apportion costs between the old and new rules as to proportionality and how a bill of costs should be prepared to address the situation.

In BP v Cardiff Vale University Local Health Board [Lawtel 27/08/2015] the claimant had alleged that clinical negligence at the defendant health board’s hospital had caused his mother injury and death.

In 2012 he entered into a conditional fee agreement with a firmofsolicitorswhichprovidedforasuccessfeeof100%.He issued proceedings in June 2013 seeking total damages of £440,000. The defendant denied liability and causation. In September 2014 the court approved the claimant’s costs budget. The claim was settled in January 2015, two weeks before the trial date. The defendant was to pay £205,000 damages with costs on the standard basis.

Following the detailed assessment, the claimant’s costs were assessed in the sum of £340,000. Of the sum allowed, the total base costs were £159,000, of which the base costs incurred after the amendment to CPR 44 on 1 April 2013 were£138,000.Thebillwasnotdividedintopartstoreflectwork done before and after 1 April 2013, the phases of the budget, and the costs of costs budgeting.

TheMasterintheSeniorCostsOfficeheldthattheapproachto proportionality under CPR 44 had changed on 1 April 2013. The old test of proportionality applied to work done before that date. In cases where both approaches to proportionality had to be taken and the costs were to be assessed on the standard basis, it was convenient and necessary to divide the bill into parts so as to distinguish between the two periods. In applying CPR 3.18 (the rule relating to the assessment of costs on the standard basis), the court would need to know which costs were claimed in relation to each phase of the proceedings and would need to know which costs claimed within each phase were incurred before the budget was agreed or approved, as those costs would have to be assessed, and which costs were incurred after. Because the bill had not been drawn in parts corresponding with the phases of the budget, the court had been unable to comply with CPR 3.18. Applying CPR PD 3E - 7.2, on detailed assessment it would be necessary to identify the costs of initially completing Precedent H and all other costs of the budgeting and costs management process. Where a costs management order had been made and the receiving party’s budget had been agreed or approved, it would be necessary and convenient to divide the bill so as to identify the costs of initially completing Precedent H and the other costs of the costs management process, unless those costs couldbeclearlyidentifiedsomeotherway.

The information and opinions contained in this document are not intended to be a comprehensive study, nor to provide legal advice, and should not be relied on or treated as a substitute for specific advice concerning individual situations. This document speaks as of its date and does not reflect any changes in law or practice after that date. Plexus Law and Greenwoods Solicitors are trading names of Parabis Law LLP, a Limited Liability Partnership incorporated in England & Wales. Reg No: OC315763. Registered office: 12 Dingwall Road, Croydon, CR0 2NA. Parabis Law LLP is authorised and regulated by the SRA.

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Because the bill had not been divided appropriately, it was difficult to identify theworkdonebefore1April2013.Themaster assumed that the total base costs claimed before that date were about £45,000. Those costs were not disproportionate. The case was complex and liability and causation had been disputed throughout. Considerable evidencehadhad tobeobtainedandsignificantamountsofworkdone.Thecasewasofsignificantimportancetothedeceased’s family and to those who had treated her. The costs of £138,000 allowed for work done after 1 April 2013 were also proportionate.

Considerable further work had been done and evidence obtained. The costs bore a reasonable relationship to the sums in issue and to the complexity of the litigation. The costs allowed were likely to be within the amount of the budget approved by the court.

The caps imposed by PD 3E - 7.2 included additional liabilities but not VAT. In practice, the only relevant additional liability would be a success fee. Any success fee claimed on work done in relation to the budgeting and costs management process was part of the recoverable costs under paragraph 7.2. VAT also fell within the expression “recoverable costs”. As between the paying party and the receiving party, VAT was not a tax but a sum recoverable by the receiving party under the indemnity provided by the costs order. On that basis, the capped recoverable costs would include both success fees and VAT. However, it seemed unlikely that the intention had been not to follow the only other example where a cap was imposed, namely CPR 47.15(5). The cap on the costs of provisional assessment was £1,500, including additional liabilities, but excluding VAT and any court fees.