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Birmingham Exeter London Manchester Nottingham
www.brownejacobson.com 1
2
Page
Removal requests and assignment on TUPE transfers
Sarah Hooton 2 – 3
First Supreme Court judgment on the Public Contract Regulations 2015 handed down
Emma Graham
4 – 6
More planning changes ahead?
Katherine Hall 7 – 10
Implications of the Education and Adoption Bill
Katie Michelon 11 – 14
Ordinary residence – lifting the ‘Vale’?
Mary MacGregor 15 – 17
QOCS – what you need to know!
Helen Forman and John Appleyard 18 - 22
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Where an organisation (the Client) outsources services, it often retains the right to require the provider of
services to remove any employees on request. This right may be caveated with certain restrictions so that it
can only be exercised in certain circumstances or it can be absolute. It can be particularly useful where a
Client is looking to change the provider of services and does not want a particular employee to transfer to
that new provider. But what happens when a Client makes such a request prior to a service transfer and this
is not immediately acted upon by the provider or the provider challenges the request? Does the employee
still transfer to the new provider?
Yes, held the Employment Appeal Tribunal in the case of Jakowlew v Nestor Primecare Services Limited T/A
Saga Care and Westminster Homecare Limited UKEAT/0431/14 (Jakowlew).
In the Jakowlew case, the Client was the London Borough of Enfield (Enfield). Mrs Jakowlew worked as a
Care Manager for Saga Care (Saga), working principally on a contract with Enfield. There was an incident at
Saga’s Enfield branch office involving Mrs Jakowlew, her line manager and another employee. All three were
subsequently suspended by Saga on full pay. Enfield became concerned about the continued employment of
all three individuals on its contract. It had taken some four months for Saga to decide whether they should
be disciplined and Enfield informed Saga that it wished to hear the outcome of those proceedings. Saga did
not respond. Enfield therefore decided to exercise its contractual right to require the removal of these three
individuals from its contract.
Saga protested and objected against the instruction. In the meantime, the disciplinary proceedings were
concluded and a warning was given to Mrs Jakowlew.
The services were then transferred from Saga to Westminster Homecare Limited (Westminster). Mrs
Jakowlew was initially informed that her employment had transferred to Westminster. However, following
meetings between Saga and Enfield, Saga accepted that Enfield had reasonable grounds to exercise their
contractual rights to ask for the removal of Mrs Jakowlew from the contract; Saga therefore informed
Westminster that Mrs Jakowlew had not transferred to it. Mrs Jakowlew was subsequently made redundant
by Saga.
Although Enfield did not change its position in respect of Mrs Jakowlew, it did relent in respect of one of the
employees and allowed that employee to continue to work on the contract following the transfer of services.
The Employment Appeal Tribunal concluded that although Enfield had a contractual right to instruct Saga to
remove employees from its contract, this did not permit Enfield itself to assign the employee; it was in fact
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for Saga to decide what action to take. Had Saga agreed to Enfield’s request, Mrs Jakowlew would no longer
have been assigned to the organised grouping of employees for the purposes of TUPE. This was the position
in the earlier case of Robert Sage Ltd v O’Connell [2014] IRLR 428.
Saga did not, however, take this course of action. It protested the instruction and tried to change Enfield’s
mind, successfully in the case of one of the other employees. As a result, Saga did not remove Mrs Jakowlew
(or the other employees) from the organised grouping of employees and she transferred to Westminster with
the services.
The Jakowlew case is a reminder that where a Client is unhappy with the provision of services by particular
employees, these concerns may not be resolved by changing service provider. When entering into
outsourcing contracts, Clients will need to be very clear on their rights to request removal and how those
should be implemented by the contractor. For example, in the Jakowlew case, the Employment Appeal
Tribunal made it clear that simply excusing an employee from working on the contract whilst attempting to
persuade the Client to change their mind would not have the effect of removing the employee from the
assigned grouping. It is not clear whether insisting on (and the contractor acting upon) a reallocation to carry
out other work during any period of challenge, rather than a suspension by the contractor, would be
sufficient or whether this would be deemed to still be a temporary ‘excusal from attendance’. Further, in
many cases, there may not be any alternative reallocation available. The Client may therefore wish to
strengthen any indemnities in its agreements with its contractors to address any non-compliance with
requests for removal and/or build in specific requirements for how poor performance or misconduct cases
should be dealt with.
Sarah Hooton | +44 (0)115 976 6033 | [email protected]
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First Supreme Court judgment handed down
Introduction
On 1 July 2015 judgment was handed down in the case of Edenred (UK Group) Limited and another v Her
Majesty’s Treasury and others [2015] UKSC 45 (Edenred case). The Supreme Court’s ruling on this has been
greatly anticipated, following the appellant’s claim being dismissed in both the High Court and the Court of
Appeal.
It is the first ruling by the Supreme Court on the Public Contract Regulations 2015 (the PCR 2015) and
provides important direction on substantial variations of public contracts and also confirms that Regulation
72 of the PCR 2015 applies to contracts whose procurement started before 26 February 2015.
The facts
The Edenred case concerns National Savings and Investments (NS&I), a non-ministerial government
department, who outsourced their operational and back office functions to Atos IT Services (UK) Ltd (Atos)
in 2013. The original Official Journal of the European Community (OJEU) notice indicated that NS&I might
wish to expand its services in the future and that this would increase the original value of the contract of
£660m up to potentially £2bn.
In 2013 the government introduced a new tax incentive for working parents, ‘Tax Free Childcare’ (TFC),
which HM Treasury (HMT) HM Revenue and Customs (HMRC) announced in July 2014 that NS&I were to
operate. This arrangement would be effected by a memorandum of understanding between HMRC and NS&I.
In addition it was decided that NS&I would vary their current contract with Atos in order to include
operational and back office services to provide support for their new role in relation to TFC. The value of
such a variation to the overall contract value was an increase of £133m.
Edenred (UK Group) Limited (Edenred) are a company who were providing free childcare voucher services to
employers under the old tax-relief scheme. They brought a claim against the decision for the Atos contract
to be extended and interim relief to prevent the provision of additional services on three grounds:
1. The amendment to the Atos contract constituted a substantial modification under Regulation
72(8)(d) of the (the PCR 2015) as the new services were not covered by the original contract and
therefore should have been put out to tender as a separate contract.
2. There was a public contract of substance between HMRC and Atos which had not been made under
the public procurement regime.
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3. Such a contract between NS&I and Atos for extension of outsourcing puts the United Kingdom in
breach of its Treaty obligations under Article 56 of the Treaty of the Functioning of the European
Union (TFEU), which is the prohibits restriction on provision of services.
After failing to obtain judgment in their favour in the High Court and the Court of Appeal, Edenred took their
claim to the Supreme Court. It was noted upon hearing the case that any amendment to the contract, should
the appeal be dismissed, should now be made under the PCR 2015 as this was the current procurement
regime in force.
The judgment
The court did grant permission to hear the appeal on the first ground but it was unanimously dismissed. The
second ground for the claim was rejected in earlier hearings as the reliance on this part of the claim was
founded on s.16 of the Childcare Payments Act 2014 and the court held this had been misinterpreted by the
applicant and therefore was not heard before the Supreme Court.
Lord Hodge, with whom the other four Lords concurred, held that the modifications to the contract to allow
Atos to provide the additional services in relation to TFC did not “considerably extend” the scope of the
contract under Regulation 72(8) of the PCR 2015. Specifically, that the additional services do not extend
beyond the original scope of the contract as they were envisaged in the description of the original OJEU
notice. Lord Hodge indicated that “the services appear within a reasonable compass” of the services in the
original contract and that economic operators would have been clear that there was the possibility of the
contract scope being extended.
It was also held that there was no ‘substantial’ modification made under Regulation 72(1)(e) of the PCR
2015. There were provisions in place to ensure the economic balance of the contract was not altered
significantly.
The court also questioned whether the nature of the review clause in the Atos contract was ‘acte clair’ (i.e.
whether it was reasonably clear or whether it should be determined by the European courts), although it was
not deemed necessary to decide such matters in order to determine the appeal. Therefore the court did not
elaborate as to whether the review clause was ‘clear, precise and unequivocal’ as per the criteria required
at Regulation 72(1)(a), however as the amendment was allowed to be made there is implication that the
review clause was valid.
Finally, the judgment appeared to take the position as read that Regulation 72 of the PCR 2015 (and hence
the rules on substantial modifications) applied to all (relevant) contracts whether procured before or after
the commencement of the PCR 2015.
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The impact
The Edenred case is important as it confirms that the PCR 2015 applies to substantial amendments,
whenever the contract to which it applies was procured. This was the opinion of the Cabinet Office, but
there had been some debate as to whether the courts would take the same view.
Before the PCR 2015, the area of substantial modifications to contracts was governed by case law – the
leading case being Case C-454/06 Pressetext v Austria. In this case there were a series of changes, including
minor amendments such as changes to price to the detriment of the contractor and also more significant
amendments, including a change of contractor for part of the work and a waiver of the right to terminate for
a three year period. It was held that these amendments constituted the award of a new contract, as the
characteristics were materially different from those of the original contract. The PCR 2015 has subsequently
codified this position at Regulation 72 and now refers to a material variation as a ‘substantial modification’
under Regulation 72(8). Regulation 72(1) does provide instances where variation of a public contract is
permitted, providing further clarity as to what is not ‘substantial’.
This case also raises the issue of review clauses and how far they can be used to effect fundamental changes
to a contract; it appears that so long as a fundamental change was foreseen and detailed in the contract
documents, the review clause will be effective within the meaning of Regulation 72 and the amendment will
be valid.
The rationale in this judgment has potential significant implications for contracting authorities in respect of
contractual variation. It also clarifies the ground rules in Regulation 72 around what is needed in drafting
contracts to allow the flexibility for significant amendments to be made.
In summary, the judgment of Lord Hodge in the Edenred case is helpful in starting to shape the new case law
under the PCR 2015 and arguably gives greater comfort to contracting authorities, who can be more
confident in making variations to their contracts in light of this case and the new Regulations.
Emma Graham | +44 (0)115 948 5641 | [email protected]
7
The seemingly never ending raft of changes to the planning legislation looks set to continue under the new
government. Further amendments to permitted development were implemented in March 2015, The Queen’s
speech announced two new bills; a Housing Bill which will make changes to neighbourhood planning law and
an Energy Bill, which will remove certain onshore wind farms from the nationally significant development
process.
Prior to this, the government completed a number of consultations on proposed changes to the planning
system.
‘Technical consultation on planning’, July 2014, proposed to put on a permanent basis the current,
temporary, permitted development right to allow change of use of certain office buildings to residential use.
Making the currently temporary extension to permitted development rights permanent will reduce local
authorities’ ability to control development in their area, which may be desirable nationally, but may not be
desirable locally and by members. It will also give rise to enforcement issues where local authorities will be
required to establish when an alleged breach occurred and whether it is protected under the new permitted
development rights. Potentially, this will increase work for the local authorities in establishing the position
and dealing with complaints received. Additionally, local authorities stand to lose fee income.
‘Consultation: planning and travellers’, September 2014, proposed to amend the definition of a ‘traveller’
for planning purposes and to change policy to address the problem of unauthorised occupation of land.
Amendments to the definition of a ‘traveller’ have been consulted upon with a view to amending it for
planning permissions so that it would exclude those who have permanently ceased from travelling.
Additionally, the government has consulted on whether to integrate sections from the National Planning
Policy Framework on green belt protection with its Planning Policy for Traveller Sites, to reiterate and make
clearer existing planning policy relating to green belt and travellers, but not to change policy.
The proposed amendment to the definition begs the question how is a local authority expected to reasonably
establish that a traveller has permanently ceased travelling? Undoubtedly, travellers likely to be affected by
this amendment will assert that they are on holiday or unwell and recovering or visiting family or friends for
a prolonged period. Similarly, while re-iterating the green belt protections will make clear the land status
and the consequences of infringement, but from a practical perspective this will provide local authorities
with no more powers with which to tackle the associated problems.
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The HM Treasury ‘Autumn Statement 2014’, December 2014, and National Infrastructure Plan 2014,
proposed taking steps to speed up section 106 negotiations and reform the compulsory purchase regime.
Furthermore, removing certain onshore wind farms from the nationally significant development (NSIP)
consent process will add to a burgeoning case load and with it bring issues of whether local authorities hold
sufficient relevant levels of expertise in-house or whether such applications will need to be outsourced
either in whole or for specific experts input and who will bear such costs. Onshore wind farms are usually
contentious within the local area and it is foreseeable that those to be removed from the NSIP process will
be substantial in scale and attract a significant number of representations, adding to the burden on local
authorities at times of ever decreasing resources. On the positive side, local authorities will receive the
planning fees for these applications which will help off-set the loss of fees under the proposed changes to
permitted development rights.
Proposals to speed up section 106 negotiations will, I’m sure, be generally welcomed by all involved. The key
to successful negotiating lies in ensuring both parties engage in meaningful and productive discussions
throughout the planning process, which unfortunately does not always happen for a variety of reasons.
However, there is nothing preventing local authorities from encouraging and facilitating early discussion of
section 106 agreement requirements. Policies are published and can and should be referenced when
discussing development proposals to ensure that applicants are fully aware of what the development will be
expected to comply with and provide in terms of infrastructure. There should be no last minute unpleasant
surprise requests. Whether the applicant raises viability is another issue and part of the overall process.
Section 106 agreements will be expected to be determined within the relevant statutory determination
period, which will be difficult if not impossible in some circumstances, but if local authorities engage in
prompt discussions, engage an internal working group, including the legal team at an early stage and utilise
template documents where possible, the number of agreements negotiated outside these timescales could
be in the minority rather than the majority. The benefits of promptly completing section 106 agreements are
clear, quick turnaround of applications and issuing decision notices, prompt recovery of both planning and
legal fees and achievement of key performance indicators internally and nationally.
As though these proposals aren’t enough to be working with, on 10 July 2015, the government issued a paper
entitled ‘Fixing the Foundations’ which includes planning reforms. The government considers that there has
been insufficient housing built and so proposes to:
introduce a new zonal system which will effectively give automatic permission on suitable
brownfield sites
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take tougher action to see that local authorities are getting local plans in place and making homes
available for local people, with the possibility of the Secretary of State intervening to arrange for
local plans to be written where necessary
bring forward proposals for stronger, fairer compulsory purchase powers
devolution of new planning powers to the Mayors of London and Manchester
restrict tax relief to ensure all individual landlords get the same level of tax relief for their finance
costs
legislate to allow major infrastructure projects with an element of housing to apply through the NSIP
Regime
tighten the planning performance regime, whereby local authorities making 50% or fewer of
decisions on time are at risk of designation
legislate to extend the performance regime to minor applications
introduce a fast-track certificate process and tighten the planning guarantee for minor applications
reduce net regulation on housebuilders in relation to the carbon offsetting and on–site energy
efficiency standards
introduce a dispute resolution mechanism for section 106 agreements
deliver 200,000 Starter Homes by 2020 which will not be subject to CIL, section 106 contributions or
tariff-style general infrastructure funds
extend the Right to Buy to include housing association tenants.
The proposals include monitoring local plan setting by local authorities and the intention to take further
action to ensure that local authorities put local plans in place by a deadline (such deadline to be confirmed
by the summer recess). League tables will be published and those who are not progressing accordingly may
be subject to intervention from the Secretary of State. Additionally, the government intends to streamline
the local plan process and length of local plans.
The proposed zonal system for brownfield land will include the introduction of statutory registers of
brownfield land suitable for housing in England and “automatic permission in principle on brownfield sites
identified on those registers subject to approval of a limited number of technical details”. Many have raised
the question whether there is sufficient brownfield land to enable this and I would add to that concerns over
the lack of detail currently about how such provisions are to be applied, while ensuring appropriate
consideration of the detailed proposals and the opportunity for comments from members of the public and
statutory consultees. Tying in with the government’s proposals for brownfield land development is the
promise of additional compulsory purchase reforms which are expected in the autumn.
10
The details of these proposals are awaited. In the meantime, it is possible that a number of developers may
refrain from proceeding with some development proposals until the details are received as it may simply be
more beneficial for them to do so. Let’s hope the details are provided without delay.
It is noted that there is a lack of reference to the earlier consultation papers and it therefore is a case of
watch this space on those matters. If those proposals are taken forward, they will present local authorities
with a range of challenges to be addressed with ever decreasing resources adding to the challenge and it will
be essential for local authorities to review their current capabilities and what changes will be necessary to
accommodate these proposals.
Katherine Hall | +44 (0)115 908 4887 | [email protected]
11
After pre and post election promises to tackle failing and ‘coasting’ schools, within just four weeks of the
election result, the government has published a new Education Bill designed to further progress its reform of
the schools sector. The Education and Adoption Bill (the Bill) includes measures to strengthen the Secretary
of State’s school intervention rights and its powers to force schools to become academies. Below we explain
and comment on key parts of the proposed new legislation.
Coasting schools
There has been a great deal of press coverage on the topic of so-called ‘coasting schools’ and the pressure
that might be placed on them to improve under the new government. This is reflected in the new Bill
through the legal definition of ‘eligible for intervention’ (EFI) being widened to cover coasting schools.
Being categorised as ‘coasting’ will cause a school to become EFI. EFI status then gives both the local
authority and the Secretary of State various intervention powers. For example, the imposition of an interim
executive board, the requirement for the school to enter into arrangements (such as collaboration with
another school) or, perhaps most significantly, the power for the Secretary to State to make an academy
order in respect of that school.
The Secretary of State will be required to notify a school if she considers it to be ‘coasting’. There has
already been debate within the sector about exactly what characteristics will trigger a school being classed
as coasting and also how the government will prioritise intervening in such schools. The Bill makes provision
for regulations to be put in place to cover what coasting means and we understand that the government
intends to consult on this over summer.
Warning notices
Local authority powers to issue a school with a warning notice on certain grounds (for example, low
standards) have been in place for some time. In addition, under existing law, the Secretary of State can
direct a local authority to issue a warning notice. However, the Bill proposes new legal powers to enable the
Secretary of State herself to directly issue a warning notice to a governing body without having to rely on the
local authority to act.
The grounds upon which a warning notice can be issued remain as before but, crucially, the Bill removes the
governing body’s right to challenge the warning notice by making representations to Ofsted. In addition, the
15 working day ‘compliance period’ (within which the governing body has to either comply with the warning
notice or appeal to Ofsted) will be abolished. This leaves the local authority or the Secretary of State
12
(depending on who is issuing the warning notice) free to set the timescales within which the warning notice
must be complied by.
Despite the removal of a statutory appeal right to Ofsted, public law remedies will remain available to
governing bodies. For example, where a governing body considers that a warning notice has been issued
unfairly or with procedural flaws, it could explore challenging the warning notice, or indeed any decision
taken by the local authority or Secretary of State as a result of it, through judicial review. However, there is
no doubt that bringing judicial review proceedings is a much more time-consuming, costly and risky option
compared to the existing right to make representations to Ofsted.
As before, the effect of non-compliance with a warning notice will be that the school becomes EFI, thereby
making available to the Secretary of State and local authority a range of formal intervention options,
including the making of an academy order.
Forced academisation
The government promised that it would actively progress the academy conversion of failing schools and the
parts of the Bill which amend the Academies Act 2010 see these intentions clearly translated into legislation.
For schools graded inadequate by Ofsted (those in special measures or deemed to be requiring significant
improvement), the Bill places a statutory duty on the Secretary of State to make an academy order in
respect of any such school. The change in language here is significant. Whereas the Academies Act currently
states that the Secretary of State ‘may’ make an Academy Order in respect of such schools, that is changing
to a ‘must’. The effect will be that the ability to challenge such a decision on the grounds that it is
unreasonable or irrational will be removed, or certainly very much diminished, as the Secretary of State will
have a statutory obligation to make an academy order in those cases.
For other schools which are EFI but not graded inadequate by Ofsted (such as those who have not complied
with a warning notice or have been designated as ‘coasting’ schools), the Secretary of State’s powers to
make an academy order remains discretionary.
Consultation on academy conversion
The Bill also proposes some changes around the process of the academy conversion of EFI schools, which are
clearly designed to prevent campaigners or resistant local authorities from delaying a school becoming a
sponsored academy.
In cases where a school is becoming an academy because the Secretary of State has made an academy order
due to it being EFI, the statutory duty to consult is to be removed. This seems sensible as the concept of
genuinely consulting stakeholders on a conversion which the Secretary of State has already directed must
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occur was always difficult to reconcile. Many academy sponsors may of course still be keen to engage with
stakeholders during the conversion process but they will need to be mindful of distinguishing the provision of
information from carrying out an actual consultation process.
Where such EFI schools are foundation or voluntary schools, the Bill retains a statutory duty on the Secretary
of State to consult the relevant body (for example, in the case of a faith school, the Diocese) although only
on the point of who the school’s sponsor will be, not the conversion itself.
Co-operation with the academy process
As well as diminished consultation requirements which will diminish the relevance of opposing stakeholders,
the Bill places a direct legal duty on the governing body of the school itself and its local authority to take
‘all reasonable steps’ to facilitate the school’s academy conversion. This again applies only where an
academy order has been issued by the Secretary of State due to the school being EFI.
Lack of co-operation from governing bodies in this situation is currently generally dealt with by replacing the
governing body with an interim executive board. However, this new ‘reasonable steps’ provision may well
reduce the need for that procedural step. Local authorities opposed to the academies agenda also caused a
number of headaches for the government under the last administration. Their opposition could not be
dismissed quite so easily, particularly where they refused to enter into legal documents necessary for the
conversion to take effect. This new legal duty placed directly upon local authorities aims to prevent such
obstruction. It is also coupled with the right of the Secretary of State to direct the local authority or
governing body to take specific steps in order for the conversion to take place and timescales for doing so,
thereby giving the Secretary of State the ability to very much drive forward the process.
Summary
There is no doubt that if this Bill is enacted without further amendment, it will represent a significant
increase in the Secretary of State’s intervention powers. With such legislation in force, it is difficult to see
how a failing school would be able to escape academisation. For ‘coasting’ schools, we await some further
detail. However, even where a school does not satisfy the legal definition of coasting (whatever that may
turn out to be), the ability for the Secretary of State to issue a warning notice directly offers a further, and
relatively unfettered, means of intervention which could ultimately end in academy conversion.
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The Bill is not yet in force so none of these powers are in place at present. However, we expect a relatively
speedy route to enactment and once in force, the government’s agenda suggests there will be no delay in
relying on this new legislation. We will be closely following its passage through Parliament and keep you
updated on any amendments and its implementation.
Katie Michelon | +44 (0)115 976 6189 | [email protected]
Birmingham Exeter London Manchester Nottingham
www.brownejacobson.com 15
R (on the application of Cornwall Council (Respondent) v Secretary of State for Health (Appellant)); R (on the
application of Cornwall Council (Respondent) v Somerset County Council (Appellant)) [2015] UKSC 46
We have a new Supreme Court judgment clarifying ordinary residence (OR). The case was considered just
before the Care Act 2014 came into force, but is still very relevant especially bearing in mind the cost of
care packages - in this case around £80,000 per year.
Background
PH was born in Wiltshire in 1986 and has severe physical and learning disabilities, and is non-verbal.
1991 Wiltshire County Council met their duties under the Children Act 1989 to provide
accommodation and they arranged a foster placement in South Gloucestershire.
PH still had contact with his parents and also with his wider family.
In 1991 his parents moved to Cornwall. His parents still have regular contact with PH, and they
continued to be involved in decisions affecting him.
In 2004 it was agreed, by Wiltshire County Council, that a new placement within the ‘M4/M5
corridor’ was appropriate, to allow him the opportunity to continue to have contact with both his
parents and his foster parents, this was identified to be in Somerset.
PH stayed with his parents in Cornwall on occasion and specifically over the Christmas period in
2004, which included the day before his 18th birthday.
Wiltshire County Council, South Gloucestershire Council and Cornwall Council made a referral to the
Secretary of State for a determination as to PH’s OR. He applied his guidance and decided that Cornwall
Council was responsible. He had looked at the ‘Vale’ test and concluded that PH’s ‘base’ for the purposes of
OR was with his parents. And since they had moved to Cornwall, he concluded that he would have moved
there too.
Cornwall Council judicially reviewed that decision, and lost. They then appealed to the Court of Appeal who
found that his OR was in South Gloucestershire since PH had been living there at the time of his 18th
birthday. The Secretary of State and Somerset County Council appealed this decision.
The Supreme Court held by a 4-1 majority, Lord Wilson dissenting, that PH’s ordinary residence at the
relevant time was, in fact, Wiltshire – the third different result in this process!
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Lead judgment
Lord Carnwath delivered the lead judgment, which is a detailed discussion of the obligations on local
authorities under the Children Act 1989, and the obligations under the National Assistance Act 1948. (It
should be noted that the question of Ordinary Residence and disputes of this sort will remain live under the
Care Act 2014.)
Lord Carnwath rejected the Secretary of State’s approach of in trying to establish where PH’s ‘base’ was.
“The seat of the decision-making power in relation to a mentally disabled adult is the authority making the
placement (subject to any contrary determination by the Court of Protection), not the parents.”[51]
He then went on to look at the policy reflected in both the Children Act 1989 and National Assistance Act
1948, and ruled that it was of great importance that local authorities are not able to ‘export’ their children
in need of specialist care, in the knowledge that when they reach 18 they will be the responsibility of the
local authority where the specialist placement is.
Since the Children Act 1989 specifically sets out that the foster placement does not affect his OR, and
Wiltshire County Council would remain responsible for him under that Act until his 18th birthday, Lord
Carnwath held that he should continue to be seen as having OR in Wiltshire at the time of his 18th birthday,
and as such that was his OR regardless of where Wiltshire County Council decided he should live.
Dissenting judgment
The sole dissenting voice was that of Lord Wilson and he sets out in his first paragraph the lack of connection
that PH has with Wiltshire and he is not impressed by the other judges coming up with an answer that was
not advocated by any of the parties:
“…A court should tread cautiously before favouring a solution devised only by itself, particularly where, as
here, it has been addressed by an array of excellent counsel instructed by public authorities widely
experienced in this area of the law.” [63]
It was Lord Wilson’s view that the Court of Appeal was correct when it found that South Gloucestershire was
the place of PH’s ordinary residence. His argument was that since PH was living happily and ‘contentedly’ in
South Gloucestershire then
“One may confidently infer that, had he capacity, PH would have adopted his abode in the foster home
voluntarily. In the light of his incapacity, however, the context requires a modest replacement of the word
“voluntarily” with the word “contentedly” and, on that basis, his ordinary residence in South
Gloucestershire is again plainly established.” [74]
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Comment
The continued move away from treating learning disabled adults as the equivalent of children is welcome,
and Lord Carnwath’s comments that PH’s parents’ residence is not the necessary start point in cases such as
this will be applauded as empowering those who lack capacity.
However it is also easy to have some sympathy with Wiltshire County Council, for the reasons that Lord
Wilson sets out. Neither PH nor any of his family had lived in Wiltshire for some 13 years, and yet they are
going to continue to have to fund an out of area placement, which itself is not encouraged under good social
care practice, for the rest of PH’s life.
This is a case where:
the Secretary of State found OR was Cornwall
the Court of Appeal found OR was South Gloucestershire
the Supreme Court found OR was Wiltshire.
This just goes to show that this is not an easy area of law to navigate and, with further stretches of public
resources, the need to ensure that the correct local authority is funding the care is ever more important.
Combined with the need to integrate health and social care services and the different approach to
identifying the Responsible Commissioner if a clinical commissioning group is involved in provision of care,
the challenge facing local authorities has not been made easier with this judgment. It is more important
than ever to get advice early where appropriate.
Mary MacGregor | +44 (0)121 237 3954 | [email protected]
18
What is Qualified One Way Costs Shifting?
In a personal injury claim, a successful defendant cannot recover their costs from the losing claimant
(expect in five very precise circumstances).
Really?
On the face of it, this seems extremely unfair. However, it was not all bad news for the defendant.
Lord Justice Jackson discovered, during the composition of his report (2008 – 2013) that defendant’s very
rarely recovered costs when they were successful and, when they did, these were only a fraction of what
they had to pay to successful claimants.
The principle of QOCS therefore allowed Jackson to abolish the recoverability of additional liabilities
(success fees and ATE premiums) by eliminating the risk of adverse costs orders against them.
In other words, if the claimant will not have to pay the defendant anything in costs if they lose, what is
there left to insure?
Revolutionary?
While this is a new concept in the 21st century, the position is now back on a par with the way litigation was
run in the 16th century when the same principles applied.
However, it has to be hoped that the Rule was phrased in the 16th century is far better than how it is
written now.
The Rule
CPR 44.14 (1) states:
“…orders for costs made against a claimant may be enforced without the permission of the court but only
to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate
amount in money terms of any orders for damages and interest made in favour of the claimant”.
It therefore follows that if the claimant recovers £0.00, the maximum the defendant can recover from them
at the end of the case is £0.00.
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Strangely, it does not prevent the defendant from proceeding to detailed assessment and having the court
assess the costs – it simply prevents the defendant from recovering anything above the damages amount
(ergo £0.00).
When and how does it apply?
QOCS applies to all personal injury claims from 1 April 2013 and is governed by s44.13 to 44.17 of the Civil
Procedure Rules 1998.
It does not apply to cases which have or had a pre-April 2013 CFA/ATE in place but, disappointingly, there is
no other transitional provision.
Therefore, if a case has been running since prior to April 2013 without a CFA or ATE Premium, then the
defendant is stuck with QOCS.
Unfair?
Yes, extremely.
The case of Arabella Wagenar v Weekend Travel Limited & Anor [2014] WLR(D) 389 (Wagenar) provided
clarification on this issue and stated that aside from the transitional provisions set out in CPR 44.17 QOCS
applied retrospectively.
Therefor if a personal injury claim has been pursed from before April 2013 without a CFA or ATE Premium –
such as one funded by a parties household or car insurance policy – then QOCS will apply regardless of the
issues or for how long the case has been active.
Wagenar continued…
The Wagenar case also provided clarification as to the type of proceedings QOCS applied to. The meaning of
proceedings under CPR was a single claim against a defendant or defendants which included a claim for
damages for personal injuries, or other claim specified in CPR Rule 44.13(1)(b) which included a claim for
personal injury.
It did not apply to Part 20 Claims, nor did it apply to claims in which no element of personal injury attached
(e.g. credit hire/damage to property etc.).
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Exceptions to the Rule
There are five exceptions to the Rule:
1. The case is struck out on the grounds that:
a. there was no good reason to bring it
b. it is an abuse of process
c. the conduct of the claimant (or their legal representatives) is likely to obstruct the just
disposal of the proceedings.
2. The case was fundamentally dishonest.
3. The claimant fails to beat a defendants Part 36 offer.
Struck out
The first two points are relatively straightforward, and with the right submissions the court should not have
difficulty in making the right order.
However, to date there is no case law or guidance on what is meant by ‘conduct’.
Does conduct relate the claimant’s conduct during the life of the case, or does it simply relate to one
specific conduct point? Would the claimant’s conduct in failing to comply with a court direction or order?
Or, could this be something as potential trivial as failing to pay the allocation costs with the directions
questionnaire.
All these points are open to argument in our view and should be pursued accordingly.
Fundamentally dishonest
The CPR is yet to provide a definition of ‘fundamentally dishonest’ but it is generally considered to be fraud.
12.4(b) of the Costs Practice Direction on costs suggests that before any finding of fundamental dishonesty
the court would usually require there to be a trial on the issue.
The point was tested in the case of Michael Gosling v (1) Hallo (2) Screwfix Direct 29 March 2014 (Cambridge
County Court).
The claim was for personal injury and loss as a result of an accident where the claimant had allegedly fallen
from a ladder of deficient construction resulting in injury to his knee.
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Surveillance evidence showed the claimant shopping without a crutch, yet he had attended the pre-arranged
medical appointment using a crutch and confirmed to the expert that he still had knee pain which affected
his ability to walk distances.
The matter settled a few weeks later with the first defendant with the claimant discontinuing against the
second defendant.
The second defendant applied under CPR 44.16 to permit enforcement of the costs order.
The court found that the claimant had advanced a claim which was ‘fundamentally dishonest’ and therefore
the order for costs could be enforced to its full extent.
Further guidance can also be taken from the newly introduced s57 of the Criminal Justice Act 2015 which
came into force on 13 April 2015.
This section provides that where the court concludes that there is a valid claim but the claimant has been
fundamentally dishonest, the court must dismiss the claim regardless of whether damages would be awarded
for the ‘non dishonest’ elements, unless it is satisfied that the claimant would suffer substantial injustice if
the claim were dismissed.
Catch
However, there is a catch.
The court’s order dismissing the claim must record the amount of damages that the court would have
awarded to the claimant but for the dismissal of the claim and then, when assessing costs, must deduct this
from the amount awarded in costs.
In a modest claim therefore, this could wipe out the defendant’s costs in their entirety.
The case of Creech v Severn Valley Railway (unreported, 25 March 2015) is a rare decision on the issue of
fundamental dishonesty.
The judge ultimately concluded that the accident simply could have happened as alleged (or at all) and
ordered the claimant to pay costs to the defendant to the tune of £11,000.
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Part 36
Part 36 trumps QOCS.
This means that a claimant who refuses a defendant’s Part 36 offer but fails to do better than this at trial is
at risk at paying the defendant’s costs from 21 days after the offer is made – capped at the level of damages
the claimant recovers.
This highlights the need for a well-placed Part 36 offer being made by the defendant at an early stage in the
proceedings.
Final thoughts
The initial conclusion that all was lost in relation to recoverable costs from the claimant under QOCS has
turned out not to be so clear cut.
The QOCS provision should encourage sensible litigation on the part of the claimant but provides appropriate
sanctions for the foolhardy claimant in the form of ordered payment of at least some (if not all) of the
defendant’s QOCS costs
Our advice is:
if a case is struck out for being an abuse of process and/or has no good reason for being brought,
make sure that counsel is briefed to insist that this is recorded in the court order
if a case is struck out due to a failure of the claimant to comply with either the Rules or a court
order, there is an argument to run that QOCS does not apply
do not be afraid to take a ‘fundamental dishonesty’ point – not all of the claim has to be dishonest
for this to be dismissed or QOCS defeated
if it is a case to settle, make a good Part 36 offer as early as possible to get the
benefit of the costs protection
remember that QOCS will apply to the pre-April 2013 cases where there is no
CFA or ATE Premium
there are clearly still points to be taken and costs to be recovered. Do not be
afraid to take them.
Helen Forman | +44 (0)115 934 2006 | [email protected]
John Appleyard | +44 (0)115 976 6028 | [email protected]
