England and Wales Care Standards Tribunal

Bhatnagar v Commission for Social Care Inspection [2002] EWCST 360(EA_Costs) (13 February 2006)

Dr M Bhatnagar -v- Commission for Social Care Inspection [2002] 360.EA
Dr R. Bhatnagar -v- Commission for Social Care Inspection [2002] 361.EA
Dr Randhawa -v- Commission for Social Care Inspection [2002] 362.EA
APPLICATION FOR COSTS
-Before-
His Honour Judge David Pearl (President) Mrs Jenny Lowcock Dr David Cochran
DECISION

Preliminary Matters

1. This application for costs arises out of the successful appeals brought by the three Appellants on behalf of Park Manor Nursing Home from decisions taken by the statutory Regulators to close the home. All of the original decisions predated the implementation of the Care Standards Act 2000, at which time the Regulator was either the Health Authority or the Local Authority.
2. The first two of these decisions, namely the notice of cancellation of registration issued by North Cheshire Health Authority on 21^st May 2001, and the emergency closure order made by a Magistrate under s 30 of the Registered Homes Act 1984 were the subject of successful appeals brought before the Registered Homes Tribunal. The Emergency Closure order was in the event not opposed. These two decisions are reported as Decision 457 of the Registered Homes Tribunal.
3. The other two initial decisions, having been adopted by the new Regulator under the Care Standards Act 2000, became subject to the right of appeal before the Care Standards Tribunal. These initial decisions and the Decision of the Care Standards Tribunal were as follows:

An appeal from a notice of proposal under s 31 of the Registered Homes Act served by North Cheshire Health Authority on 18^th January 2002 under appeal number [2002] 126.EA was not contested by the Respondent in consequence upon the Decision of the Registered Homes Tribunal (Decision 457). The withdrawal from those proceedings took place formally at a preliminary hearing before Mr R A Coia sitting as Chairman on 27^th July 2004, and is recorded in his Order dated 13^th September 2004. The CST and the Appellants were apparently advised of this decision of the Respondent by letter dated 23^rd June 2004.

In a Decision dated 30 March 2005, the Tribunal allowed an appeal brought by the Appellants that the Notice of Proposal to Cancel the Registration of Park Manor as a Residential Care Home by Warrington Borough Council dated 15^th February 2002 shall have no effect.

4. The Appellants have sought an Order for Costs in accordance with Regulation 24 of the Tribunal Regulations by letter dated 21^st June 2005 in the initial sum of £452,873.83p.
5. Subsequent to the Decision of the Tribunal being promulgated, the nominated Chairman (Mr R A Coia) resigned as a legal member of the Care Standards Tribunal. Accordingly, in the exercise of provisions under Regulation 5(4), it was necessary for the President to nominate from the appropriate panel another person in substitution for the Chairman. This development was communicated to both parties at a telephone conference dated 19^th August 2005. In the circumstances of this costs application, the President nominated himself.
6. At the telephone conference on 19^th August 2005, it was ordered that the Applicants file a revised schedule, that the Respondent files a Response, and that both parties be at liberty to submit a further document by way of a skeleton argument.
7. The Applicants submitted a Final Submission dated 28^th January 2006 seeking costs to the total amount of £211,749.34p.
8. The Tribunal heard oral submissions from Mr S Burrows of Counsel on behalf of the Respondents and Mr R K Bhatnagar on behalf of himself and the other two Appellants, at a hearing on 6^th February 2006.

The Costs Jurisdiction of the Care Standards Tribunal

9. The Care Standards Tribunal has a costs jurisdiction by virtue of Regulation 24(1) of the Tribunal Regulations. It may make a costs order requiring a payment to the other party to cover costs incurred by the receiving party if, in its opinion, a party has acted unreasonably in bringing or conducting the proceedings.
10. The former Registered Homes Tribunal had no such costs jurisdiction, and in consequence it was not possible for the Registered Homes Tribunal to consider the question of costs subsequent to its Decision 457. Mr Burrow must be right in his submission to us that there can be no jurisdiction in this Tribunal to award costs in respect of the proceedings before the Registered Homes Tribunal. Our consideration of costs, in consequence, is limited to the two appeals as set out in paragraph 3 above.
11. The costs jurisdiction of the Care Standards Tribunal is heavily circumscribed, in that it may be awarded only when the Tribunal reaches a view that the paying party (usually of course the losing party) has behaved unreasonably in bringing or in the conduct of the proceedings. In the case of a losing Respondent, attention is directed, primarily to its conduct during the course of the proceedings.
12. The Care Standards Tribunal has considered the test that is to be applied on a number of occasions, usually, although not exclusively, in connection with applications for costs brought by Respondents against unsuccessful Appellants. The Tribunal has suggested (in Ulliott v Secretary of State [Decision on Costs] [2004] 343.PC) that some help can be obtained as to the meaning of "unreasonable", by considering the manner in which the courts have dealt with costs in the small claims jurisdiction under CPR r27.14(2)(d). Examples that can be given would include the making of totally unnecessary applications, or refusing to negotiate.
13. If one looks at CPR r27.14(2)(d), and adopts it in the context of the Care Standards Tribunal, it can be seen that the Tribunal does not need to be satisfied that the conduct was "wholly unreasonable"; rather it needs only to be satisfied the paying party did not act "in accordance with reason or good sense." (Woodbine Villa (Shahid Akhter and Tanveer Salam) v NCSC [2002] 116.NC.)
14. The Tribunal has consistently said, however, that the test is a high one, and that there is a presumption in favour of no order as to costs. Counsel appropriately referred us to the decision in Dr Ravi Kant Agarwal v CHAI [2003] 208.EA where that approach was set out by the nominated Chair (Ms H Clarke).
15. There was some discussion at the oral hearing as to whether the test to be applied by the Tribunal is a subjective test or an objective test. The Tribunal does not think that the distinction is particularly helpful in this context. It would prefer to consider the question in this way. It is always, with the benefit of hindsight, easy to decide that a decision taken in the course of proceedings was the wrong decision. The Tribunal would accept the argument advanced by Mr Burrows that the test is not whether a decision taken in the course of the proceedings, in the event, was the wrong decision. A wrong decision does not make it an unreasonable decision.
16. Rather, the Tribunal should concentrate on what the position was at the time that the party made a particular decision which it is alleged now was unreasonable, examine that decision and form a view on whether the paying party, at that time, was conducting the proceedings in an unreasonable manner or not.

This Case

17. Both the two CST appeals were stayed pending the outcome of the Registered Homes Tribunal hearings. The stays were lifted on the 27^th July 2004. Mr Burrows submitted, correctly in our view, that it would be inappropriate to consider the question of whether the conduct of the paying party was unreasonable prior to the lifting of the Order for stay.
18. Mr Burrows submitted that there should be no award of costs in relation to the appeal against the Notice of 18^th January 2002. We accept that the Respondent acted reasonably in the context of that appeal, in the sense that it withdrew its opposition to that appeal when it realised that it could not continue properly to resist that appeal due to the loss of the two main witnesses for the Respondent, who had exercised their rights not to incriminate themselves by giving evidence. The Registered Homes Tribunal had stated that it would attach very little weight to the documentary evidence provided by these two individuals. Given the decision of the Registered Homes Tribunal, it was inevitable that the Respondent should withdraw its opposition to that appeal. The withdrawal was communicated on 23^rd June 2004, whilst the stay was still in force. In our view, no costs can be awarded in respect of that appeal.
19. The real issue before this Tribunal is whether the Respondent was unreasonable, once the decision of the Registered Homes Tribunal had been promulgated and considered by the Respondent and its legal advisers, in continuing its opposition to the appeal against the s 31 Registered Homes Act Notice of Proposal dated 15^th February 2002 served by Warrington Borough Council.
20. Mr Burrows in his written Submissions submitted that conduct prior to the proceedings is not relevant. The Tribunal has consistently held that it is entitled to take account of prior conduct, not for the purposes of the assessment of costs, but rather to determine whether the conduct was unreasonable (Fun Camps Ltd v OFSTED [2003] 124.EY). We are therefore entitled to look at the whole history of this matter in forming a view on whether the decision taken by the Respondent in the Summer of 2004 to continue to oppose the fourth appeal was unreasonable.
21. The Respondent submitted as follows: "Despite the 'loss' by the Respondent of a substantial amount of evidence relied on in its opposition to the numerous appeals, the Respondent took the decision that it would continue to oppose the appeal against the Notice of 15^th February 2002. This decision was taken on the basis that the Notice contained a substantial amount of further evidence, over and above that due to be given by the two witnesses [who decided not to give evidence following advice given to them by their own solicitors] which indicated that the health, safety and welfare of the service users within the Home had been compromised to such an extent that cancellation of the Appellants' registration remained appropriate. The CST and the Appellants were formally advised of the Respondent's decision to continue to oppose the appeal against the Notice on 23^rd June 2004. The stay of the appeal proceedings in respect of that Notice was therefore lifted on 27^th July 2004 by Direction of the CST."
22. The Respondent further submitted that it was "entirely reasonable for the Respondent to take such a decision in view of its role as regulator, its predominant function being the protection of vulnerable service users." Mr Burrows, in his oral submissions to us developed this approach by stating that the decision to continue its opposition to the appeal was made "in the public interest", that it was appropriate for the issues to proceed to a full hearing in front of the Tribunal, and that it acted in good faith as part of its regulatory function. Such functions should outweigh any "litigation risk."
23. Whilst we fully accept that these are factors that the Respondent must taken into account, we believe that the Respondent has an additional responsibility that needs to be considered in the context of its regulatory function, and that is that it has responsibilities to the providers and the users to ensure that its powers are not used unjustifiably. The point was made by Scott Baker J (as he then was) in Secretary of State for Health v Prospects Care Services Ltd and Stephen Hyland [2001] EWHC Admin 164: "The power to cancel registration…is matched by a great responsibility to see that it is not exercised unjustifiably." A similar observation was made by the Registered Homes Tribunal in Woodfield Lodge Ltd v Hertfordshire Country Council (Decision 323) where the Tribunal said in that case "Respondents should make every effort to present the case to the Tribunal in a balanced way. This means that they should not restrict such evidence to the emphasis of negative aspects but should include positive aspects as well. Only if this is done can a balanced picture be presented to the Tribunal. Further, Respondent should not consider that their role is limited to do everything they can to ensure that the cancellation decision is upheld. If they adopt this approach they are prima facie acting unfairly."
24. One can substitute "unreasonably" for the word "unfairly" in the context of costs applications. It is the view of this Tribunal that the responsibility to act "fairly" or "unreasonably" does not end once the decision to cancel has been made, but extends to any ensuing appellate process.
25. The presently constituted Tribunal has been greatly assisted by the two lay members who were of course members of the Registered Homes Tribunal in its decision 457 as well as members of the Care Standards Tribunal in the present case. They are of the view, on which the President concurs, that the decision to persist in opposing the Appellants in relation to the fourth appeal was unreasonable. It was a decision which was not only "wrong" in the light of the future decision made by the Tribunal, but was "unreasonable" at that time.
26. The Tribunal is not persuaded by Mr Burrows' argument, that in relation to the fourth appeal, there was a substantial amount of further evidence over and above the evidence submitted in relation to appeals one, two and three. The "loss" of the evidence from the two witnesses, in our view, was critical to all four appeals. The Tribunal agrees with the Appellants' submission that "Once Nurses G and E refused to give evidence, the Respondent was left in a difficult position. Either the Respondent had to abandon its opposition to the Appeal or it had to confer on some of the remaining grounds set out in the Notice, an importance that they never bore when the notice was served."
27. Paragraph 5.4 of the Decision of the Tribunal [2002]360,361,362 EA expresses the position, in our opinion, that faced the Respondent in the Summer of 2004: "The Respondent have set themselves the task of demonstrating that there was such a decline in standards from August 2001, that cancellation of registration was necessary by 15^th February 2002. The only significant event which occurred in the intervening period was the death of Mr C, which at the time was a cause of great concern to the regulators, but which was misunderstood because they did not have a complete understanding of Mr C, his condition and the circumstances surrounding his death."
28. The position in relation to Mr C was known to the Respondent in July 2004. We believe that the Respondent should have withdrawn its opposition to appeal number four, as it had in appeal number three. Failure so to do was "unreasonable" and the Appellants are therefore entitled to costs that flow from that decision.

How to assess those costs?

29. The Appellants are entitled to recover costs incurred from the date of the preliminary hearing in front of Mr Coia on 27^th July 2004 up until the conclusion of the costs application. They are not entitled to recover costs incurred prior to that date. The Schedule of Costs that has been submitted does not comply with regulation 22(2)(a), and it will now be necessary for the Appellants to submit a revised Schedule. This Schedule must specify the following:

Legal Costs: Details of the Solicitor's hourly rate and a detailed breakdown of every item that has been charged by the Solicitor, including letters, telephone calls, disbursements, from 27^th July 2004 up until the present.

: Details of Counsel's Fees from 27^th July 2004 up until the present

Experts Costs: Details of the Fees paid to the Experts used in Appeal [2002] 360,361,362 EA and which formed part of the evidence in this appeal.

Travelling Subsistence: Full details with invoices of travelling and subsistence costs from July 27^th 2004 up until the present.

30. Once a detailed Schedule has been received, with supporting documentation, the papers will be sent to the Respondent for its comments, in accordance with Regulation 24(2)(b).
31. It will then be necessary to make the costs order. Regulation 24(3) states that the Tribunal must (a) order the payment of any sum which the parties have agreed should be paid; (b) order the payment of any sum which it considers appropriate having considered any representations the parties may make; (c) order the payment of the whole or part of the costs incurred by the receiving party in connection with the proceedings as assessed.
32. The parties are, of course, encouraged to see whether agreement on costs can be reached without the necessity of further costs being incurred. If agreement cannot be reached, it is our understanding that the Respondent would prefer the Tribunal to assess the costs itself rather than to exercise its power under Regulation 24(4) for the costs to be sent to a District Judge in the County Court for the costs to be assessed by him or her (or, quite likely, to be referred by him or her to a Costing Master in the High Court).
33. We consider that this is the more appropriate approach to take in a case such as this. There may be cases where an assessment should be made by a District Judge, but it is likely that such cases are actually few and far between. Far better, in our view, in the absence of agreement, for the costs to be assessed by the Tribunal under Regulation 24(3)(b). This will be quicker and cheaper for all concerned. But in order to engage in such an exercise, the Tribunal must have in its possession the material that a District Judge or Costs Master would require. We strongly advise the Appellants to provide the Tribunal with this information as soon as is possible, so that these very protracted proceedings can be brought to a conclusion.

ORDER:

1. THE APPELLANTS ARE AWARDED COSTS INCURRED IN RESPECT OF THE PROCEEDINGS [2002] 360,361,362 EA AS FROM 27^th JULY 2004 UP UNTIL THE CONCLUSION OF THE COSTS PROCEEDINGS.

2. THE APPELLANTS MUST SUBMIT A DETAILED REVISED SCHEDULE UNDER REGULATION 24(2)(a).

His Honour Judge David Pearl

(President)

Mrs Jenny Lowcock

Dr David Cochran

13^th February 2006.