ON APPEAL FROM DEPUTY DISTRICT JUDGE SOLOMON
Clifford's Inn, Fetter Lane
London, EC4A 1DQ
B e f o r e :
| JOHN MICHAEL HUTCHINGS
|- and -
|THE BRITISH TRANSPORT POLICE AUTHORITY
Mr Simon J Brown (instructed by Law Direct) for the Respondent
Hearing date: 22 June 2006
Crown Copyright ©
Senior Costs Judge
"establish whether or not the Claimant had the benefit of legal expense insurance and to clarify the relationship between the Claimant's solicitors, the claims management company/insurance providers."
"1) On the date of the accident was the Claimant insured under any home buildings and/or contents insurance taken by anyone in the household?
2) If so, who were the insurers and what is the policy/roll number?
3) Did the policy include legal expense insurance?
4) Disclose the home buildings/contents insurance policy.
5) If the answer to question 3 was "yes", why was the legal expense insurance not used?
6) If the answer to question 3 was "no", did the Claimant's solicitors obtain a copy of the policy and read it themselves?
7) If the answer to question 6 was "no", how did the Claimant's solicitors know that the policy did not include legal expense cover?
8) The evidence disclosed in relation to the existence of insurance premium does not comply with CPR 32.5(2) please provide a copy of the Master Policy.
9) How was the Claimant introduced to the Claimant Solicitors firm?
10) What is the nature of the Claimant Solicitor's relationship with "Compensation Claims Service Limited"?
11) Who instructed "Compensation Claims Service Limited" to undertake the work claimed as Item 15 on the Bill of Costs?
12) In relation to Item 15 when was the work undertaken?
13) What is the nature of the relationship between "Compensation Claims Service Limited" and "Claim Advance."
i) On the date of the accident was the Claimant insured under any home buildings and/or contents insurance taken by anyone in the household?
ii) If so who were the insurers and what is the policy/roll number?
iii) Did the policy include legal expense insurance?
iv) If the answer to question (iii) was "yes", why was the legal expense insurance not used?
v) If the answer to question (iii) was "no", did the Claimant's solicitors obtain a copy of the policy and read it themselves?
vi) If the answer to question (v) was "no", how did the Claimant's solicitors know that the policy did not include legal expense cover?
THE RELEVANT LAW
"44.15(1) A party who seeks to recover additional liability must provide information about the funding arrangement to the court and to other parties as required by rule, practice direction or court order."
"19.1(1) A party who wishes to claim an additional liability in respect of a funding arrangement must give any other party information about that claim if he is to recover the additional liability. There is no requirement to specify the amount of the additional liability separately nor to state how it is calculated until it falls to be assessed "
"19.4(1) Unless the court otherwise orders, a party who is required to supply information about a funding arrangement must state whether he has entered into a conditional fee agreement which provides for a success fee ; taken out an insurance policy to which Section 29 of the Access to Justice Act 1999 applies ; or more than one of these.
(3) Where the funding arrangement is an insurance policy, the party must state the name and address of the insurer, the policy number and the date of the policy, and must identify the claim or claims to which it relates (including Part 20 claims if any).
(5) Where a party has entered into more than one funding arrangement in respect of a claim, for example a conditional fee agreement and an insurance policy, a single notice containing the information set out in Form N251 may contain the required information about both or all of them."
"11.7 when the court is considering the factors to be taken into account in assessing an additional liability, it will have regard to the facts and circumstances as they reasonably appeared to the solicitor or counsel when the funding arrangement was entered into and at the time of any variation of the arrangement.
11.8(1) In deciding whether a percentage increase is reasonable the relevant factors to be taken into account may include
(c) what other methods of financing the costs were available to the receiving party.
11.10 In deciding whether the cost of insurance cover is reasonable, relevant factors to be taken into account include:
(2) the level and extent of the cover provided;
(3) the availability of any pre-existing insurance cover;
(4) whether any part of the premium would be rebated in the event of early settlement;
(5) the amount of commission payable to the receiving party or his legal representatives or other agents."
"(1) Where the receiving party claims an additional liability, a party who serves points of dispute on the receiving party may include a request for information about other methods of financing costs which were available to the receiving party.
(2) Part 18 (further information) and the Practice Direction supplementing that part apply to such a request."
"(1) The court may at any time order a party to
(a) clarify any matter which is in dispute in the proceedings; or
(b) give additional information in relation to any such matter, whether or not the matter is contained or referred to in a statement of case."
"1.2 A request should be concise and strictly confined to matters which are reasonably necessary and proportionate to enable the first party to prepare his own case or to understand the case he has to meet."
"45. In our judgment, proper modern practice dictates that a solicitor should normally invite a client to bring to the first interview any relevant motor insurance policy, any household insurance policy and any stand-alone BTE insurance policy belonging to the client and/or any spouse or partner living in the same household as the client. It would seem desirable for solicitors to develop the practice of sending a standard form letter requesting a sight of these documents to the client in advance of the first interview. At the interview the solicitor will also ask the client, as required by paragraph 4(j)(iv) of the Client Care Code whether his/her liability for costs may be paid by another person, for example an employer or trade union."
"51. [Counsel] for Mr Sarwar, submitted that the test of the adequacy of a solicitor's inquiries and advice should be the same as the test applied when determining whether a solicitor has been professionally negligent. Thus the client would either recover the cost of the premium or have a claim against his/her solicitor for breach of duty. We deprecate any attempt to equate the question of reasonableness that a costs judge has to decide with the question whether the claimant's solicitor has been in breach of duty to his/her client. If a solicitor gives advice which proves unsound, it will not necessarily follow that the advice was negligent. The advice will necessarily be based on information provided by the client. If the information is inadequate or inaccurate, the advice may prove to be unsound without any question of fault on the part of the solicitor."
i) The paying party has a legitimate interest in the existence of alternative methods of funding, including BTE.
ii) The facts as to the existence of BTE are likely to be within the receiving party's knowledge and not the paying party's.
iii) There is, ordinarily, no disclosure in costs proceedings, so that paying parties must rely on their opponents to volunteer information about their funding options.
iv) Requests for information about BTE are contemplated by CPD 35.7, which, uniquely, identifies that subject as an issue on which further information may be sought, suggesting that such Part 18 enquiries are legitimate.
v) As such, receiving parties should answer reasonable requests for information about their insurance position.
vi) Such requests put no pressure on receiving parties as, if their claims have been properly presented, the position would have been looked at by the solicitors at the start.
vii) The obligation for solicitors to investigate alternative methods of funding arises in every case by virtue of Article 4 of the Solicitors Costs Information and Client Care Code 1999, as well as under Regulation 4 of the CFA Regulations 2000, where they still apply.
"We did in fact write to Miller Fisher [the Defendants previous solicitors] on 17 May 2001 advising that we had entered into a conditional fee agreement with our client with litigation insurance from Claims Advance.
Furthermore we can confirm enquiries were made as to whether alternative insurance was available this was confirmed in the negative."
"We are aware that the Claimant had a mortgage with Abbey National Plc and we can safely assume that the Claimant had a home insurance policy with Abbey. It is our experience that the Abbey National Plc Home Insurance includes "family legal protection" (legal expense cover). Given this information please disclose the household policy, which ought to be on your file if you have complied with the proper practice as advocated in Sarwar v Alam  EWCA Civ 1401.
With regard to the insurance premium schedule please confirm who the underwriters of this policy are and let us have a copy of the policy mentioned on the schedule so we can assess reasonableness of the same given the scant detail provided by the schedule."
"Underwriters for Claims Advance are NIG.
We can confirm that enquiries were made as to whether alternative insurance was available. This was confirmed in the negative."
"You say enquiries were made in relation to alternative insurance, however they were confirmed in the negative. You confirmed that there was no alternative insurance?"
"This matter was dealt with by David Slingsby and the usual enquiries with the client were made regarding alternative insurance."
"What we have said in paras 71 to 78 should not be interpreted as giving encouragement to defendants to embark on fishing expeditions in the hope that, if they ask a sufficient number of questions, they may be able to show that the claimant's solicitor did not discharge his Regulation 4(2)(c) duty. We refer to the salutary words of this court in Hollins v Russell at para 81 that the court should not require further disclosure unless there is a genuine issue as to whether there has been compliance with Regulation 4."
"The court may direct the receiving party to produce any document which in the opinion of the court is necessary to enable it to reach its decision. These documents would in the first instance be produced to the court, but the court may ask the receiving party to elect whether to disclose the particular document to the paying party in order to rely on the contents of the document, or whether to decline disclosure and instead rely on other evidence."
" It is sufficient for present purposes to say that a Practice Direction has no legislative force. Practice Directions provide invaluable guidance to matters of practice in the Civil Courts, but insofar as they contain statements of the law which are wrong they carry no authority at all."
"39. I am inclined to take a narrow rather than a wide view of [paragraph 35.7 of the Costs Practice Direction]. It is a request for information about other methods which were available, not that might have been. Where there was an existence of a before the event legal expenses policy, for example, it is difficult to see that the detailed assessment of a conditional fee agreement bill could proceed without information about what that policy said and, in fact, in practice without the policy itself being produced, but I do not think that Part 35.7, in its terms, lends support to the view that information from which the existence or non existence of a policy can be ascertained should be the subject matter of disclosure.
41. Although I have taken the narrower view on the scope of that paragraph than the wider view that might be available and for which Mr Williams contends, I read up that the court, in its general case management powers, can, in an appropriate case, order disclosure so that the justice of any particular case can be met. But on the question of 35.7, I do not regard it, of itself, as lending support to the view that it should be routine for questions directed to the existence of alternative means of funding, rather than to the nature of it, being asked and answered.
53. Even in such a case [where someone may be expected to have comprehensive household insurance], I do not think that paragraph 35.7 is designed to achieve disclosure of details of a policy that may or may not include before the event insurance cover, where the claimant's case is that it provides for no such cover. I think that the paragraph is designed to deal with a situation where there is such cover, where details of it are required in order for the court to evaluate the merits of it not having been used. I do not think that the practice on detailed assessment or justice to the paying party makes it appropriate for the court, as a matter of routine, to compel the claimant to disclose information about the steps that led to the claimant solicitors conclusion that there was no relevant cover, at least in a case where there is nothing in the facts of the case to raise any issue that the solicitor's assertion that there was no cover is wrong."
The Judge accordingly dismissed the appeal.
"The claimant's objected and object now to answer those questions, though as they say they could easily have done so on the information that is already available to them." (paragraph 12)
" Nothing has been raised in this case which points to a real question as to whether there was any before the event insurance and indeed there is a complete statement of prior advice which says that there isn't and there is a statement in correspondence which says that there isn't. This case attempts to raise the kind of satellite litigation and the kind of further detail around completely straightforward bills of costs which the law absolutely deplores and therefore I will not allow the request of 1 7."
"The reason I have read this out is because it is absolutely clear that put at the highest, this is a fishing expedition. See the number of "ifs" in this paragraph, "in the event that", "may", "they may be able to prove", "if they had insurance, that might enable the defendant", so what they are saying is if we can show that there was any before the event insurance and that there was a failure to make reasonable enquiries, then we could avoid liability on the basis it was not binding and also that we might not have to pay the legal expenses insurance."
i) does the Claimant have insurance?;
ii) with whom; and
iii) does the Claimant have any legal expenses insurance?