piBlawg

the personal injury and clinical negligence blog

A collaboration between Rebmark Legal Solutions and 1 Chancery Lane

Should the solicitor pay up?

Can a solicitor be liable for costs if he or she takes on a case for an impecunious claimant under a CFA where there is no ATE insurance policy in place and where he or she funds the disbursements necessary to allow the case to proceed?   Neil Hamilton famously sued Mohammed Al-Fayed for defamation over ‘cash for questions’, lost and was ordered to pay £1.3m in costs. Mr Al-Fayed then pursued Mr Hamilton’s financial backers (not parties to the litigation) for costs, lost and was ordered to pay their costs. Unsurprisingly there has not been as much media attention and public interest in the case of Tinseltime v Eryl Roberts [2012] EWHC 2628 which was a case in the technology and construction court. There was no personal injury involved: the claimant claimed that the defendant had created dust whilst demolishing a building and the dust had damaged machinery and caused a loss of profit. The claim was unsuccessful and the claimant was ordered to pay the defendant’s costs. The defendants applied for an order under section 51(3) of the Senior Courts Act 1981 and/or CPR 48.2 that the claimant’s solicitor pay the costs as a non-party funder. The claimant’s solicitor had entered into a CFA. He had been unduly optimistic about how straightforward the issue of liability would be. It was clear that he was aware that if the claimant lost it would not be able to pay costs. He estimated the overall costs likely to be incurred to be £20,000 and disbursements, £10,000. In the event disbursements amounted to £22,270 and so burnt a sizeable hole in his pocket. He had expected to recover the disbursements from the defendant (if successful). The judge concluded that the following were the correct legal principles to apply. The first question was whether it just in all the circumstances to make an order. Secondly, when considering a solicitor, had he acted beyond or outside his role as a solicitor conducting litigation? Thirdly, the fact that a solicitor is acting under a CFA and stands to benefit financial from the outcome does not mean he has acted beyond or outside his role as a solicitor. Fourthly, the starting point is that the position of a solicitor funding disbursements is no different from one who is not as both positions are legitimate and meet a legitimate public policy aim. The judge was of the view that, in order to be successful in applying for a non-party costs order there would have to be present either some financial benefit to the solicitor over and above the benefit which he could expect to receive from the CFA or some exercise of control of the litigation over and above that which would be expected from a solicitor acting on behalf of a client (or a combination of both). By way of example the judge suggested that a solicitor’s desire to achieve a successful outcome might cause him to take over the running of the litigation for his own ends. Another example was of a case where the damages claimed were modest in comparison to costs incurred so that the client had lost interest in the proceedings but the solicitor was wedded to them in order to recover his costs. The circumstances of a case might justify the conclusion that a solicitor was making all the decisions for his own benefit. The defendants argued that the claimant’s solicitor had acted improperly, unreasonably or negligently in his conduct of the case. The judge said this was the province of wasted costs (which were not awarded - although pursued in the alternative). He said courts should be astute to keep wasted costs and non-party costs separate. The claimant’s solicitor may have misjudged the case but he came out of the judgment rather well. The judge commented that he was not motivated solely by financial self-interest but with the laudable aim of providing access to justice to the claimant. He thought the claim was genuine and had written a file note stating “the company has been crippled by the defendant tortfeasors and needs assistance.” The judgment draws to a close effectively with a warning against letting financial self-interest get the better of you and an encouragement from a judge to practitioners to be motivated not solely by financial self-interest but by a concern for justice and access to justice. Such a consideration (and file-note for the record!) might well prove worthwhile… Photograph courtesy of freefoto.com

The addition of a late expert: case note

Van Niekerk v Carnival Plc & Anor. [2012] LTL 13/6/12 (QB, HHJ Seymour QC)   This claim concerned further directions for a High Court trial that was listed a little over 2 months after a Pre-trial review in which further permissions for expert evidence were sought. The Claimant’s husband had died on holiday while he had been taking part in a diving excursion arranged by or through the Defendant cruise line operator. Liability, causation and quantum were all in issue. The Claimant brought a substantial claim for damages. The Claimant’s schedule of loss included, among other things, a claim for loss of financial dependency based on pension income. In correspondence, the Defendant had queried the calculation of this head of loss. Approximately, two months before the date fixed for trial of liability and quantum the Claimant applied for permission to obtain and rely on a report from an expert forensic accountant on the investment growth rates relating to the financial dependency claim. Each party had also obtained a medico-legal report on the cause of death. The Claimant's expert was a histopathologist. The Defendant's expert was a cardiologist with experience in the cardiological aspects associated with diving. The issues considered at the Pre-trial review concerned: (i) whether permission should be granted to adduce expert accounting evidence; (ii) whether directions should be given for a joint statement by the cause of death experts; (iii) the appropriate order for costs.HELD: (1) Permission was granted to obtain expert accounting evidence limited to the issue of investment growth rates - while this evidence was being sought at a late stage, it would likely assist in the accurate calculation of loss and would be helpful to the Trial Judge. (2) There was potential value in the cause of death experts producing a joint statement, despite the risk that it would simply repeat their individual reports (and in spite of the fact that they were experts in different disciplines). (3) Although the Claimant had succeeded on her application to admit accounting evidence, it had been necessary because there was a deficiency in her case which the Defendant had pointed out some months earlier, and she had sought to adduce additional evidence close to the trial and in circumstances where it raised serious questions about whether the trial could proceed in the event that permission were granted. The issue about a joint experts' report had been a serious issue. Taking those issues into account, the proximity to trial and the matters on which the parties had argued, it was appropriate to consider the hearing as a pre-trial review. In those circumstances, the appropriate order for costs was costs in the case.

Mind the Gap!

At least you know where you are with the NHSLA. The same is true of the various medical defence organisations. Can the same be said for the new regime proposed under the Health and Social Care Bill (HSCB)? If there are gaps in the indemnity arrangements for NHS care, what does this mean for claimants and defendants? On Friday (24 February 2012) the Department of Health (DOH) issued a short guide for providers of NHS-funded services outlining the proposals in the HSCB. Guide for Providers According to the guide the HSCB “establishes a comprehensive, proportionate and robust legal framework for sector regulation to protect patients’ interests”. NHS services will continue to be delivered by a “mixed economy of public, independent and voluntary sector providers”. A joint licensing regime, applicable to “all providers of NHS services” will come into effect for foundation trusts in January 2013 and other providers from April 2013. The guide also refers to the basis of pricing and payments for “independent sector providers, charities and social enterprises”. What is not clear from the guide is how it is proposed to ensure that these new “providers” have and in keep in place adequate insurance for the care which they provide to NHS patients. If, as the current draft of the HSCB would suggest, there are gaps in the indemnity arrangements for NHS care, claimants may face difficulties in obtaining compensation for substandard care and defendants will be operating with uncertainty over who is liable for what under the proposed new regime. The recent problems with PIP breast implants illustrate what happens when responsibilities become blurred. The danger is that with the HSCB encouraging numerous new “providers” of health care services across both the private and voluntary sectors, there will be confusion when things go wrong. Even if a potential defendant can be identified the HSCB does not at present require new “providers” to meet pre-set indemnity levels. What is to happen if a “provider” is under-insured or goes out of business as some clinics have threatened to do in relation to PIP breast implants? Is there then a claim in negligence against “the commissioning consortia” which may be an individual general practitioner arising out of the original referral? The HSCB still has some way to go to provide the certainty that both claimant and defendants will require if the proposed new regime is to gain the confidence of both. For lawyers faced with increasingly shrill demands to reduce both time and costs, any additional delay in establishing who is responsible and whether adequate indemnity or insurance arrangements are in place will be equally unwelcome. The legal advice from the outset on both sides must be to “mind the gap”.

Whiplash: Again ...

A short article in yesterday’s Guardian caught my eye (Let’s not add insult to personal injury: 20.2.12). It wasn’t the author’s commentary on David Cameron’s recent “Insurance Summit” that attracted my attention (see, Laura Johnson’s PIBLAWG piece a week ago). It wasn’t the reporting of the statistics, although it has to be admitted that these are eye-popping (the CRU apparently reports a 52% increase in reporting of motor personal injury claims – up to 790,999 claims in 2010/11. The reported statistics are not consistent, but everyone seems to agree that there has been an increase in claims and, er/um, the increase has been massive: can we believe that all of these claims are entirely genuine?) Instead, my eye was drawn to the following, “The practice of insurers making a compensation offer to injured people before they have even had a proper medical examination has become more widespread, and they are trying hard to get to third parties quickly and settle their claims before they have gone to a solicitor for independent advice. This all encourages people to have a go. Why, instead, have insurers not challenged in court claims they believe to be bogus? Interestingly, one outcome of the Downing Street summit was a commitment that they will. [emphasis added by me]” It remains to be seen whether the insurers’ “commitment” proves to be real, but we probably all know why such claims are not contested to trial. First, by the time that a modest whiplash claim comes to Court, the costs will usually have outstripped by a considerable margin the amount that is at stake in the claim itself: an obvious reason why insurers will instead seek to settle claims early – even those that are believed to be bogus (indeed, contesting a bogus or fraudulent claim will generate greater costs than taking issue with discrete aspects of a claim believed to be genuine). The problem, of course, with paying Danegeld of this kind is that it simply encourages more claims – as the statistics referred to above make clear. It also removes work from solicitors, although insurers probably won’t lose any sleep over this. Second, it is not easy to satisfy a Court that a claim is bogus; most Judges will apply – whether or not this is acknowledged – a Hornal v Neuberger Products [1957] 1 QB 247 approach to any allegation that a claim is bogus/fraudulent and will require a quantity of cogent evidence in order to find such allegation proved. Some medical expert witnesses are adept at finding a whiplash injury in factual circumstances where it would be surprising (at least to the lay person) that a Claimant had sustained any injury at all. Where such medical evidence is available, it is not easy for the Defendant to challenge this without incurring speculative costs. The result is that, by a default process, the claim will succeed/be settled. Third, it has to be said (on the finest anecdotal evidence) that on occasions the Courts have encouraged questionable claims. One is reminded of the increasing volume of highway tripping claims (some decades ago); the advancing tide was only retarded when the higher Courts started to dismiss these claims and provided guidance on what needed to be proved in order for the Claimant to succeed. If the Judiciary had been less credulous as to whiplash then we might all – genuine Claimants and insurers alike – have been in a happier position. If the Guardian piece is to be believed, we seem now to be reaching a position where only the bravest insurer would challenge a whiplash injury claim at trial; it will be interesting to see whether recent Government action will make any difference.  

The growing perils of litigating on a CFA without ATE...

The High Court has continued chipping away at the iniquitous (as some see it) situation where an impecunious claimant can bring proceedings on a CFA without ATE insurance protection. So if the claimant wins, the costs are paid, if the claimant looses – too bad, the defendant is left to sing for their costs incurred in defeating the claim.   A number of defendants faced with this situation have chosen to go after the claimant’s solicitor for their costs on the basis that, in reality, the Claimant’s solicitor is ‘funding’ the claim (or at least the disbursements) and accordingly they can be held liable for the whole or part of the costs incurred in defeating the Claimant’s claim.   Heretofore the courts have been very reluctant to make any orders that the solicitors firms acting for Claimants pays the winning parties’ costs.   However, very slowly, one senses a change of direction from the senior courts. Most recently in GILL GERMANY v GAVIN FLATMAN : BARCHESTER HEALTHCARE LTD v RICHARD WEDDALL [2011] EWHC 2945 (QB) Mr Justice Eady, in a decision handed down on Thursday 10 November 2011, found in favour of the Defendants on an interim appeal. The Defendants had, at first instance, been refused an order requiring Claimant’s solicitors to disclose the two Claimants’ funding arrangements.   Eady J allowing the appeal made clear that although orders against non-parties were to be regarded as exceptional, that only meant outside the ordinary run of cases where parties pursued claims for their own benefit and at their own expense. The ultimate test was whether it was just in all the circumstances to make the order. A third party costs order could be made in circumstances where the funder was "a real party" not just "the real party". A solicitor would become a funder if he paid out sums on the basis that they would be recovered from the other side in the event of success, or not at all in the event of failure. A solicitor would then be providing funds in the way of business. Any funding role by a solicitor would only be countenanced if it carried with it the risk of having to pay the defendant's costs if he was ultimately successful. A disclosure order was necessary to establish what exactly had passed between a claimant and his solicitor.   This is a trend to watch, I think, and one for firms acting for Claimant’s on CFA’s without ATE insurance to bear in mind.  

Referral Fees to be Banned

  The Government has today announced that it will ban referral fees in personal injury claims. Just a week ago I published an article on the Butterworths Public Injury Law Forum (http://www.personalinjurylawgroup.co.uk/index.php?/Opinion/the-insurance-industrys-dirty-secret.html) setting out the criticisms made of referral fees and the proposals for reform.  Lord Justice Jackson recommended a ban in his "Review of Civil Litigation Costs". However the Government initially seemed ambivalent about such a measure, stating in June that referral fees were only "only a small part" of the no win, no fee system for personal injury claims. However in July the Prime Minister indicated that he was ‘sympathetic’ to the idea of a ban. It is now clear that the Government wishes to pursue this measure.  There is currently no timescale for implanting a ban. However the Government is hoping to have such a measure included in the legal aid bill, possibly by Easter next year.  

Clinical Negligence Claims against the NHS Up 30%

The NHSLA published its annual report on 4 August 2011. Last year: (a)    it faced 8,655 clinical negligence claims, an increase from 6,652 the year before (up about 30.11%); (b)   of those,  5,398 cases were settled with only about 4% being resolved by litigation; and (c)    it paid out £729,100,000 pursuant to these, which was an increase from £651,000,000 the year before;   The report welcomes the introduction of the reforms recommended by the Jackson Review and laments the increased costs they have been facing claimed by claimant solicitors. It states: “We paid over £257m in total legal costs, of which almost £200m (76% of the total costs expenditure) was paid to claimant lawyers... we paid over £257m in total legal costs, of which almost £200m (76% of the total costs expenditure) was paid to claimant lawyers.”   The Report raises many issues. Two of note would be: (a)    Why has there been this recorded increase in claims? Are doctors becoming more negligent, or is our culture simply becoming increasingly litigious and the legal markets have facilitated this? Has the Recession contributed to this? (b)   Whilst they will undoubtedly assist in maintaining proportionality between damages and costs, how will the Jackson Reforms (particularly the irrecovarability of CFA uplifts from unsuccessful defendants), affect access to justice?   The Report is available at: http://www.nhsla.com/NR/rdonlyres/3F5DFA84-2463-468B-890C-42C0FC16D4D6/0/NHSLAAnnualReportandAccounts2011.pdf    

TURKEY VOTING FOR CHRISTMAS?

We are told that motor insurance premiums are at an all time high because of small value personal injury claims and an increase in fraud.  Inevitably the press blame the legal profession and politicians jump on the bandwagon and blame lawyers using CFAs, a means of access to justice which they suddenly forget was introduced by them.  What they also conveniently forget is that lawyers have duties to clients; we can’t just tell them not to recover what the law entitles them; we will be NEGLIGENT if we give them wrong advice.  You can’t blame lawyers for applying the law – it is our duty to do so.  More...

Exaggerate and risk indemnity costs

In Desai vs North Essex Partnership NHS Foundation Trust [8MA25049; Judgment 19th April 2011, trial 14th February 2011; HHJ Knight QC; Central London County Court) the Court found that exaggeration of a claim could leave a claimant open to an award of indemnity costs against her. Mrs Desai had an incident at work on 28th December 2005 in an NHS psychiatric ward. More...

When is an agreement not an agreement?

The Claimant suffered very significant injuries at 8 months old which have left her with life long cognitive and physical impairments. The Defendant admitted liability, including causation, at an early stage.  Proceedings have been issued and, thus far, there has been a great deal of co - operation between the parties. Indeed, this even extended to agreement in respect of (1) a substantial interim payment and (2) a costs order whereby the Defendant would pay the Claimant's costs to date in an agreed amount. Very recently the parties attended court for directions and for an order setting out the terms of the aforementioned interim payements.  The night before the hearing it was quite clear both from discussions between the fee earners and from the face of the documents that agreement had been reached as to the date on which the interim payments would be made. In fact the claimant's solicitors had compromised on the amount of the costs on the understanding that  the payment would be received before the end of their financial year. At court however, a different fee earner was in attendance from the Defendant's solicitors and wanted an extra week to make the payments on the basis that the Easter bankholidays would cause difficulties with raising a cheque by the originally agreed date. The extra week took the deadline outside the Claimant's solicitor's financial year. The District Judge gave the Defendant the additional week. Was this the right decision? For what its worth, I do not think so. It makes a bit of a mockery of the consensus that had been reached by the solicitors. Also (and this is not necessarily  a concern for the court), it does not bode well for future relations between the parties....