England and Wales High Court (Senior Courts Costs Office) Decisions

IN THE HIGH COURT OF JUSTICE
SUPREME COURT COSTS OFFICE

		Clifford's Inn, Fetter Lane London. EC4A 1DQ
		2 May 2006

Master Rogers

INTRODUCTION

1. This is an appeal by the Defendant in respect of six decisions made by Principal Costs Officer Lambert at the hearing of the detailed assessment of the Claimants' Solicitor's bill which took place before him on 30 January 2006. I was provided with a plethora of documentation, but it would have been of more assistance had much of this been lodged with the SCCO within the time limits laid down by, for instance, CPD 40.11. Nevertheless, thanks to the co-operation of the advocates, it was possible to complete the hearing in one day, even though it had only been listed for half a day.

THE BACKGROUND

2. The Claimant was, from 1991 to 2003, a consultant anaesthetist employed by the Defendant Hospital Trust. During the period of her employment she was exposed to latex, in the form of gloves. She and her colleagues were required to use powdered latex gloves in their daily work, which, in her case, consisted of working in the operating theatre, maternity ward, intensive care unit and day surgery. The Claimant usually changed her gloves some ten times per day. She became sensitised to latex and exposure to high concentrations of air borne latex generated by the use of those powdered latex gloves. That gave rise to symptoms of asthma, rhinitis and conjunctivitis. Even after the withdrawal of powdered latex gloves, it was contended on behalf of the Claimant that her exposure to latex continued.
3. She became unwell and noticed recurrent chest infections, to the extent that on 13 June 2001 her GP referred her to the Chest Clinic at Kingston Hospital, where she was diagnosed with asthma, and it was subsequently discovered that she was allergic to latex. She made attempts to continue using latex free gloves after she was diagnosed to be allergic to latex, but her symptoms persisted, and she was medically retired from mid August 2003.
4. She consulted the London offices of Messrs Irwin Mitchell in the autumn of 2003, and after preliminary investigations that firm wrote to the Defendants, on 11 November 2003, with requests for her personnel file, occupational health file and various documents in relation to the use of latex gloves.
5. In view of possible problems with limitation a claim form was issued protectively on 23 January 2004, whilst the solicitors collated the relevant documents. When medical records were received and analysed Dr Rudd, a consultant chest physician, was instructed to prepare a report. This report, when obtained, was supportive on both causation and the claim generally, and as no response had been received regarding the position on liability to the protocol letter, a claim form and supporting papers were served on 7 May 2004.
6. The defence was filed promptly on 8 June 2004, when liability and causation were both denied, and the Defendants put the Claimant to strict proof of the circumstances in which she claimed the allegations of negligence, breach of statutory duty and details of her losses and causation. It is also to be noted that within that pleading the Defendants relied upon the opinion of a Dr Cullinan, an occupational health specialist, and references were made relating to causation which had to be considered.
7. In summary the Claimant's case was that her exposure to powdered latex gloves could have been avoided, whereas it was the Defendant's contention that, because they considered that that exposure had ceased before the Claimant became ill, the allergies from which she was certainly suffering were caused by constitutional factors, and not by exposure to powdered latex.
8. The case was hard fought throughout, and the issues of causation and liability were ongoing. It would appear that latex gloves had been withdrawn from distribution in 1999, which, if proved, obviously would have seriously undermined the Claimant's case. However, Dr Rudd, when this was put to him, commented that the Claimant was already sufficiently sensitised, so that even a lesser exposure to latex from the use of non-powdered gloves would have been sufficient to trigger the emergence of the symptoms about which she complained.
9. A Request for Further Information from the Defendants pursuant to Part 18 extracted the reply that there were apparently three different types of glove which the Claimant had been using, and so, as Counsel advised, it became very important to try to ascertain precisely when the powdered latex gloves were withdrawn from use, for how long the Claimant would have worn latex gloves until a diagnosis, and when her sensitivity had emerged. The Claimant contended that no warnings or guidelines had been given.
10. All the above involved considerable research, not just of a technical nature, but also factually from former work colleagues of the Claimant, many of whom appeared to be willing to try to assist by giving statements to the best of their recollection on a topic about which precise details of dates would, understandably, be difficult to isolate.
11. Meanwhile the action proceeded procedurally, with witness statements being exchanged in January 2005, and the trial being fixed to take place in March 2005, with an estimated length of four days. However, on 4 February 2005, the Defendants made an offer pursuant to Part 36 to settle the claim for £5,000, which was of course considerably less than the maximum claim of some £250,000, which had been put forward on the basis of loss of pension rights, future earnings, etc.
12. After lengthy consultation with Counsel, considering the difficulties with regard to the date of withdrawal of the powdered latex gloves, and the unwillingness of former work colleagues, who had previously provided witness statements to commit themselves to come to trial, the Claimant was advised, and agreed to, accept the Part 36 offer.
13. Accordingly the matter was resolved by means of a Consent Order made and sealed on the 25 February 2005, which provided for the payment of the agreed settlement figure within 14 days, and that:

"The Defendants do pay the Claimant's reasonable legal costs on the standard basis to be assessed if not agreed."

THE CLAIMANTS SOLICITORS BILL

14. This was claimed in sum of £68,147.28, including additional liabilities, the main one of which was the 100% success fee claimed both for Solicitors and Counsel. Understandably, the Defendants Solicitors contested the detailed assessment as strenuously as they had contested the underlying case, and, having failed on six major challenges to the bill, bring all these challenges before me on this appeal. These are:

"I (the appellant) appeal(s) the order(s) at section 5 because:

1. In circumstances where it was clear that the enquiries had been left to the client and the solicitor had in fact not read the policy the Cost Officer was wrong pursuant to CPR 52.11(3)(a) to find that the additional liabilities were reasonably incurred and that there was compliance with the CFA Regulations 4(2)(c) SI No.692 absent proper enquiries as to the existence of BTE. This raises both a point of law and is an appeal against a finding of fact.

2. The Cost Officer was wrong pursuant to CPR 52.1 1(3) (a) to be convinced, in lieu of evidence of reasonable enquiries as to the existence of BTE to accept (to the extent he did) that a copy of the Claimants Household Policy dated April 2005 was conclusive evidence that there was no BTE when the relevant policy for 2001 was not available to the court. This raises an appeal against a finding of fact.

3. The Cost Officer was wrong pursuant to CPR 52.1 1(3)(a), in any event, to allow recovery of the additional liabilities for the period where the Defendant had no notice of funding as required by the Practice Direction to the Protocols 4A.I and where the specific sanction is disallowance cf. CPR 44.3B(1)(c). Furthermore no application for relief had been made and yet on the face of it relief was granted. This raises a point of law.

4. The Cost Officer was wrong CPR 52.1 1(3)(a) to find that Counsels success fee was recoverable in circumstances where the insurance policy appeared to cover all disbursements to include counsel's fees if written consent of the insurer had been obtained. The Fee earner present at the hearing could only offer (as evidence) that she had operated on the assumption that like all after-the-event policies it did excluded counsels fees as it was envisaged counsel would be on a CFA and could not produce any correspondence to the insurer on this issue. This raises an appeal against finding of fact.

5. The Cost Officer was wrong CPR 52.11(3)(a) to award the claimant solicitor the "Grade A" rate in all the circumstances and rates (in any event) in excess of the published "Guideline rates". In doing so the Cost Officer awarder excessive rates when he failed to apply the factors in accordance with CPR 44.5 and to take into account the close involvement of counsel. This raises a point of law.

6. The Cost Officer was wrong pursuant CPR 52.1 1(3)(a) to assess the risks in this case as being high and to then award an 82% success fee for both the Claimant Solicitor and Counsel were on terms of the CFA "win" was defined as recovery of damages and where Dugmore v Swansea [2002] EWCA Civ 1689 provided for strict liability. This raises a point of law."

15. The appeal was well presented by Mr Patel, on behalf of the Defendant, based on a skeleton argument, which, to some extent, parted company with the original Grounds of Appeal. Mr Wignall, who represented the Respondents, resisted the appeal with equal competence, suggested that one at least of the heads of appeal should not be allowed to proceed, because it had riot been dealt with below, but it seemed to me that, as Mr Wignall had dealt with all issues, admittedly on a without prejudice basis, in his own skeleton argument it would be better to deal with all the issues, rather than to rule against the Appellant on purely procedural grounds. It is my experience that to decide appeals or hearings on purely procedural points tends to leave the unsuccessful party with a sense of grievance, that they have not had the opportunity to present the merits of their particular point before the court, for reasons which are purely technical.
16. Mr Wignall also sought to appeal the decision of Mr Lambert to allow only a success fee of 82% for both Solicitors and Counsel, and sought 100% which his Solicitors claimed before the Costs Officer. However, during the course of the argument he withdrew that cross-appeal, which had not been formally put into document form, but which he contended was validly before the Court, because of the nature of an appeal from a Costs Officer to a Costs Judge.

THE FIRST HEAD OF APPEAL -INADEQUATE ENQUIRES MADE AS TO

BTE COVER AND THEREFORE NON COMPLIANCE WITH CFA

REGULATION 4(2)(c)

17. As is well known, Regulation 4 of the Conditional Fee Agreements Regulations 2000 laid down a number of pre-conditions which had to be complied with before a conditional fee agreement is entered into, if it is to be enforceable against the paying party.
18. Paragraph 4 reads, in full, as follows:

"Information to be given before conditional fee agreements made

4. -(1) Before a conditional fee agreement is made the legal representative must -

(a) inform the client about the following matters, and

(b) if the client requires any further explanation, advice or other information about any of those matters, provide such further explanation, advice or other information about them as the client may reasonably require.

(2) Those matters are -

(a) the circumstances in which the client may be liable to pay the costs of the legal representative in accordance with the agreement,

(b) the circumstances in which the client may seek assessment of the fees and expenses of the legal representative and the procedure for doing so,

(c) whether the legal representative considers that the client's risk of incurring liability for costs in respect of the proceedings to which agreement relates is insured against under an existing contract of insurance,

(d) whether other methods of financing those costs are available, and, if so, how they apply to the client and the proceedings in question,

(e) whether the legal representative considers that any particular method or methods of financing any or all of those costs is appropriate and, if he considers that a contract of insurance is appropriate or recommends a particular such contract -

(i) his reasons for doing so, and

(ii) whether he has an interest in doing so.

(3) Before a conditional fee agreement is made the legal representative must explain its effect to the client.

(4) In the case of an agreement where -

(a) the legal representative is a body to which section 30 of the Access to Justice Act 1999 [2] (recovery where body undertakes to meet costs liabilities) applies, and

(b) there are no circumstances in which the client may be liable to pay any costs in respect of the proceedings, paragraph (l) does not apply.

(5) Information required to be given under paragraph (1) about the matters in paragraph (2)(a) to (d) must be given orally (whether or not it is also given in writing), but information required to be so given about the matters in paragraph (2)(e) and the explanation required by paragraph (3) must be given both orally and in writing.

(6) This regulation does not apply in the case of an agreement between a legal representative and an additional legal representative."

19. The essence of Mr Patel's challenge under this head was that the Claimant's Solicitor, Mr Ettinger, had abdicated responsibility for satisfying himself that the Claimant had no relevant BTE insurance, as required by Regulation 4(2)(c) "whether the legal representative considers that the client's risk .. ." (my emphasis). Accordingly, he said that the decision of the Costs Officer that there had been proper compliance with Regulation 4(2)(c) was at variance with the judgments in Sarwar v Alam [2002] 1 Costs LR 37; [2001] EWCA Civ 1401, and subsequent decided cases.
20. Before considering the cases it is obviously important to note what actually happened, as recorded in the documents placed before me in relation to this issue. Firstly, there is an attendance note from Mr Ettinger's file for 4

"Colin Ettinger giving oral explanation to the client prior to entering into a Conditional Fee Agreement of the following matters:

1. Whether costs risk is insured

Whether there is a policy of legal expenses insurance which could cover the client in relation to the risk of having to pay their opponent's legal costs in pursuing the claim.

e.g. cover under a section of their home insurance (your building and contents) policy.

e.g. cover under a credit card company

Advising the client to let us know if any of these apply so that we can contact them.

2. Other methods of funding

Re-affirming that the client is not a member of a Trade Union. or similar organisation and neither do they have a policy of legal expenses insurance which will cover their legal costs in this case.

Re-affirming why public funding not available."

21. In addition, on 6 November 2003 Mr Ettinger wrote to the Claimant, the third

paragraph of the letter reading as follows:

"The second is that you should look at any policy of insurance that you may have in case you are provided with legal expenses cover. Your car insurance, household contents insurance as well as credit cards may provide such cover. If it does can you please let me know as soon as possible. Indeed it will be helpful if you could advise me on the position one way or the other."

22. In addition, in connection with an application for pre-hearing disclosure, Mr Ettinger made a witness statement on 18 January 2006, paragraph 3 of which

rends as follows:

"3. The Claimant was a consultant anaesthetist and as such can be described as a sophisticated client who would understand household and other forms of insurance. Discussions were undertaken prior to the conditional fee agreement being entered into in relation to possible ways of funding the litigation and regarding the BTE. The client was asked to scrutinise any relevant policies and let me know whether she had any legal expenses insurance. A copy of the subsequent letter from the client confirming the position is attached ("CBEI"). A CFA was thereafter entered into on 26 January 2004."

23. The enclosure CBE1 is a letter from the Claimant to Mr Ettinger signed on 17 November 2003. which refers to the letters of 6 November and 13 November, which she had received from Mr Ettinger, and under paragraph 6 said:

"I have no insurance policy to cover my legal expenses.''

24. Mr Patel referred me to paragraphs 45 and 46 of the decision of the Court of Appeal in Sarwar Alam, which read as follows:

v

"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 (see para 14 above) whether his/her liability for costs may be paid by another person, for example an employer or trade union.

46. If these simple steps ace taken. they ought to reduce the burden and extent of the inquiries about which some of the intervenors expressed concern. The solicitor will then be able to read through the policy, and if BTE cover is available, if the motor accident claim is likely to be less than about £5,000, and if there are no features of the cover that make it inappropriate (for instance, if there are a number of potential claimants and the policy cover is only, say, f25,000), the solicitor should refer the client to the BTE insurer without further ado. The solicitor's inquiries should be proportionate to the amount at stake. The solicitor is not obliged to embark on a treasure hunt, seeking to see the insurance policies of every member of the client's family in case by chance they contain relevant BTE cover which the client might use."

25. Mr Patel further submitted that this case had been followed in a number of other cases, the latest of which was the decision of Master Wright in the case of Myatt National Coal Board, a decision handed down by Master Wright on 12 August 2005, and which is on the SCCO page of the Court Service website.
26. In paragraphs 30 to 35 of his judgment Master Wright outlined the defendant's case, as advanced to him by Mr James Carpenter, which obviously referred to the Sarwar v Alam case, and the underlying Solicitor's Costs Information and Client Care Code 1999, in particular paragraph 4(j) therefore. At paragraph 44, Master Wright said:

"44. Mr Carpenter pointed out that in only one of the cases where Regulation 4(2)(c) has been considered has it been held that there was no requirement to make full inquiries into the existence of BTE insurance. That was the case of Pratt v Bull (considered by the Court of Appeal in Hollins) where the Claimant, an 80 year old woman, gave instructions to her solicitor while she was in hospital having been severely injured when struck by the Defendant's car."

27. Master Wright then goes on to summarise the submissions made by Mr McCue, on behalf of the Claimant, and in particular paragraph 57, which reads

"57. Mr McCue submitted that the Court should be wary of transposing guidance given in motor claim cases to cases involving industrial disease. In motor claim cases the motor insurance policy held by the Claimant (which he is obliged by law to have if he is the driver) covers the cost of legal proceedings in relation to the accident concerned. By contrast, in the case of industrial disease there is no requirement on individuals to hold a policy insuring themselves against industrial injury. While he accepted that there was no evidence on the matter, common sense, he submitted, suggests that such policies are rare."

28. Master Wright concludes his detailed judgment in paragraphs 71 to 76, which read as follows:

"71. This, in my judgment, gives rise to a genuine compliance issue. The Defendant says that the solicitors should have asked the clients whether they, or any spouse or partner living in the same household, had any credit cards, motor insurance or household insurance policies or trade union membership without more. They concede that it may have been unnecessary for them to visit the client's home to inspect the policies but say that at the very least they should have asked the clients to send the documents (or copies) to them to inspect. I agree.

72. In my judgment the solicitors did not comply with Regulation 4(2)(c) because they asked the wrong questions. Indeed it appears likely (although there is no evidence one way or the other) that the solicitors gave no warning to the clients that they would be interviewing them on the telephone and should have any relevant documents to hand.

73. Further I am not satisfied that the solicitors asked about relevant documents belonging to other members of the client's household.

74. It may be (as Mr McCue suggested) unlikely that any credit card, household or motor policy or trade union membership would assist in a case of industrial disease but no evidence has been produced to establish the point.

75. The ATE insurance premiums are high when seen in the light of the size of each claim. Although I accept that premiums in industrial disease claims may be higher than in RTA claims, I still have the concern that the solicitors should have made more thorough enquiries about the possibility in these four cases of there being BTE insurance which might have made ATE insurance and CFA success fees unnecessary. In my judgment the bundle of paperwork subsequently sent to the clients (see paragraphs 23 to 26 above) did not make good that lack of thorough enquiry.

76. Accordingly I have come to the conclusion that this preliminary issue must be answered to the effect that the CFA in each of the four cases in unenforceable by reason of a breach of Regulation 4(2)(c) of the CFA Regulations 2000."

29. Mr Patel relied strongly on this case, though it is fair to say that he conceded

that it is under appeal, and due to he heard by the Court of Appeal in June of

this year

30. In response Mr Wignall referred me to the witness statement of Tracey Storey,

which was made shortly before the hearing before me, which I consider should

be set out in full:

"I, Tracey Storey associate of 150 Holborn, London, EC1N

2NS

Will say as follows:

1. I am an associate solicitor with the firm of Irwin Mitchell based at 150 Holborn, London. I took over conduct of this case from Colin Ettinger, a partner in my firm and the head of our personal injury team in London. 1 did not have conduct of the case at the outset but I understand from the file that Colin Ettinger asked Dr Choudhury to scrutinise her insurance policies and to let him know whether she had any form of legal expenses cover. Dr Choudhury confirmed that she did not have relevant cover and so a conditional fee agreement was entered into.

2. A detailed assessment hearing was listed for 30 January 2006. Dr Choudhury had been out of the country and I had been unable to speak to her when matters concerning BTE policies had first been raised by the Defendant. I understand that Dr Choudhury had been in Pakistan visiting family. However, on 28 January which was a Saturday, I spoke to both Dr Choudhury and her husband Dr Rahman. Dr Choudhury's husband, Dr Rahman reiterated to me that when his wife had been asked about legal expenses cover he had gone to an agent who organises insurance for him. The agent checked to see whether the family had any legal expenses cover and confirmed to them that they did not.

3. Dr Rahman explained to me that he had a schedule of insurance cover which lie then faxed over to me on the Saturday before the detailed assessment hearing. He explained to me that the insurance was in his name although both Dr Rahman and Dr Choudhury both own their home. Dr Rahman went on to explain that he had had a mortgage with the Alliance and Leicester but had shopped around for insurance cover and had been with Allianz Cornhill for the last 5 years. He explained that over those 5 years he had not opted for legal expenses cover and the schedule attached to the home cover confirmed this.

4. I then spoke to Dr Choudhury herself and she confirmed that her husband had checked with the agent so that she was able to say to Mr Ettinger categorically that she did not have any relevant insurance. Dr Choudhury and Dr Rahman both confirmed that if either of them had been in any doubt, they would have asked Irwin Mitchell for further advice. They also confirmed that they had been with the same insurance broker for some 9 to 10 years and so took his professional advice when asked the question."

31. In the light of that supplementary statement Mr Wignall submitted that there

had been no breach of Regulation 4(2)(c), and that the cases referred to by Mr

Patel, in particular Myatt, could readily be distinguished. All the cases where

it was held that there had been inadequate compliance were cases where either

it turned out subsequently that there had been a policy, or where the policies

purchased were disproportionately expensive,

32. In addition he referred me to paragraphs 136 to 138 in Hollins v Russell [2003] EWCA Civ 718 :

"136. In Pratt v Bull, Dunn v Ward and the TAG test cases regulation 4 is in the spotlight. Under regulation 4(2)(c) a client must he informed "whether the legal representative considers that the client's risk of incurring liability for costs in respect of proceedings to which the agreement relates is insured against under an existing contract of insurance".

137. In Pratt v Bull, the 80 year old claimant was severely injured when she was struck by the defendant's car when using a pedestrian crossing. Initial instructions were given by relatives while she was in intensive care. The following month, when she had recovered enough to give instructions, a solicitor visited her in hospital and a standard CFA was made. When her solicitors sought to recover their costs, the defendant's solicitors demanded to be provided, not only with the CFA, but also with attendance notes and documents to show that she had been given all the oral and written information required by regulation 4. They expressrd concern that other methods of funding might not have been properly explored. They seized upon one reply given to their questions as indicating that the possibility of legal expenses insurance under her home insurance policy had not been fully explored. The claimant's solicitor's response was that other funding possibilities had indeed been discussed. "Evidently our client did not think she had cover. . . . Of course there was consideration of the point but to a reasonable degree where this lady was still lying in her hospital bed recovering from the horrific injuries inflicted by

your insured"

138. For the reasons given earlier (see paras 81 to 86 above) we do not consider that documents such as these should ordinarily be disclosed, nor should the costs judge require this unless there is a genuine compliance issue. In our view, this is a classic case in which there was no good reason to think that the conditions applicable to this CFA had not been sufficiently satisfied. There are limits to what can reasonably be expected of the interchange between solicitor and client in circumstances such as these. It would be ridiculous to expect a solicitor dealing with a seriously ill old woman in hospital to delay making a CFA while her home insurance policy was found and checked. It is sufficient to satisfy section 58 that he had discussed it with her and formed a view on the funding options."

33. On the facts lie pointed out that Mr Ettinger was a past President of APIL (The

Association of Personal Injury Lawyers), and therefore a highly experienced

solicitor, who would be well aware of the requirements of the Regulations. He maintained that Mr Ettinger's client, the Claimant in this case, was a sophisticated client, and, if she said that she had checked all the relevant policies, then that was sufficient compliance with Regulation 4(2)(c). He maintained that if there was any doubt about that, that doubt was completely dispelled by the witness statement of Ms Storey. Finally, he submitted that even if there was a technical breach of Regulation 4(2)(c), it did riot have a materially adverse effect on either the client or the administration of justice.

MY CONCLUSION ON THIS HEAD OF APPEAL

34. I am satisfied that the submissions of Mr Wignall are correct, and should be adopted. On the totality of the evidence I am satisfied that adequate enquiries were made to comply with Regulation 4(2)(c), but, even if that should be held to be wrong, I do not consider that any technical failure had any material effect on either the client, or indeed the administration of justice. Accordingly, this head of appeal fails.

THE SECOND HEAD OF APPEAL: DECISION OF MR LAMBERT TO ALLOW ADDITIONAL LIABILITIES FOR PERIOD PRIOR TO 5 MAY 2003

35. The date of the CFA and notification to the Defendant are already dealt with in paragraphs 22 and 5 above. The Defendant's contention on this head of appeal is that no notice of funding was given to the Defendant in January when the CFA was entered into, and therefore the Claimant's Solicitor should not he entitled to additional funding for the period prior to 7 May, when the proceedings were served and notification formally given. It is important to note what is said about this in the annotated Points of Dispute.

"Points of Dispute	Claimant's Reply
Notice of Funding
Pursuant to Pre-action protocols practice direction 4A 1 the Claimant who enters a funding arrangement with additional liabilities should inform the other parties that he has done so. Notice of funding was provided belatedly on service on the 7th May 2004 In the above circumstances the , automatic sanction envisaged under CPR 44.3B to apply limiting recovery of the additional liabilities to May 2004 onwards.	The claim form was issued protectively on 23 January 2004 and the Notice of Funding was filed on 27 January 2004 when this was entered into. The Defendants were served with the Claim form and Notice of Funding (N251) on the 7 May 2004. The rules say that a Notice of Funding has to be filed and served when proceedings are issued. The Defendants were aware of the funding arrangements from very early on in the litigation and did not raise any issues then.

36. This head of appeal raises the problem which has exercised lower courts in relation to the provision as to funding in costs only proceedings. Paragraph

19(2)of the Practice Direction in support of Part 44 reads, in part, as follows:

"19.2(1) In this paragraph "claim form" includes petition and application notice, and the notice of funding to be filed or served is a notice containing the information set out in Form N251.

(a) A claimant who has entered into a funding arrangement before starting proceedings to which it relates must provide information to the court by filing the notice when he issues the claim form.

(b) He most provide information to every other party by serving the notice. If he serves the claim form himself he must serve the notice with the claim form. If the court is to serve the claim form, the court will also serve the notice if the claimant provides it with sufficient copies for service.

...

5. There is no requirement in this Practice Direction for the provision of information about funding arrangements before the commencement of proceedings. Such provision is however recommended and may be required by a pre-action protocol."

37. Paragraph 4A. 1 of the pre-action protocol reads:

"Where a person enters a funding arrangement within the meaning of rule 32(2)(1)(k) he should inform other potential parties to the claim that has done so."

38. Mr Patel sought to persuade me that the word "should" in this sub-paragraph of the pre-action protocol should really be construed as if it read "must", and he relied in particular on two decisions of District Judges in the County Court, District Judge Arkless, in Teesside Crown Court, in the case of Ralph Bainbridge MAF Pipelines Ltd, and District Judge Jones, in Manchester v County Court, in the case of Georgeson v Irwell Valley Housing Association. The latter decision was given on 26 November 2002, and the former one on 19 March 2004
39. In Bainbridge District Judge Arkless said:

"13. I accept the contention for the claimant that there is no court order requiring the provision, but I find that the practice direction that relates to the pre-action protocols does apply, and that under 4A.1, "where a person enters a funding arrangement within the meaning of 43.2( l)(k), lie should inform other potential parties of the claim that he has done so". This is such a funding arrangement and the claimant should have informed the defendant under that protocol.

14. It is submitted for the claimant "should" does not mean "must", and that the ordinary meaning for the word "should" does not demand compliance. I find that in the particular circumstances the word "should" does place a requirement upon the claimant to comply with the requirements of this practice direction. Essentially in this context "should" equals "must".

15. It is contended for the claimant that the requirement to comply with 4A.1 and JA.2 of the Protocol Practice Direction includes no time limits, and that notification at the end of the claim is sufficient. I do not accept this interpretation, as to place that interpretation on the requirement would be at odds with 44.3B(1)(c), which states that "A party may not recover as an additional liability any additional liability for any period in the proceedings during which he failed to provide information about a funding arrangement in accordance with a rule, practice direction or court order

16. The Personal Injury Protocol itself, at paragraph 3.5, places a requirement upon the claimant to give sufficient information to enable the defendant's insurer to put a broad valuation on the "risk". The existence of a CFA is information within that requirement of that part of the protocol, and the whole purpose of these provisions is to enable parties, and in this case the defendant, to weigh up all the circumstances, including the possibility of paying an additional liability, to decide how to proceed. So following on from that, the claimant's failure to provide notification of the CFA and the additional liability placed the claimant in breach of that part of the protocol.

17. The claimant's contention was that the requirement to notify the other parties of a funding arrangement is triggered only by the issue of a court action, and I do accept this. The dealings between the parties leading up to the disposal of the substantive claim, even though the dispute was resolved without the need to issue a claim form, ought properly to be included within the term "proceedings" in this particular context, and I have taken into account the comment by Lord Justice Brooke in Crosby v Munro (sic) where he has referred to that at paragraph 37, which is a Court of Appeal decision of the 14th March 2003."

40. It has been noted that there is a reference in that extract to the case of Crosbie v Monroe which is reported at [2003] 3 Costs LR 377, and the reference is to that paragraph 37, where Lord Justice Brooke says:

"After completing this judgment it came to my attention that lower courts are encountering similar difficulties over the meaning of the word "proceedings" as used in paragraph 4A.2 of the Practice Direction: Protocols. Although we have of course not heard argument on this point, it appears to me that this word clearly needs to be interpreted along the lines indicated in paragraph 34 of this judgment. In other words, for instance, the dealings between the parties which lead up to the disposal of a clinical negligence claim are to be treated as "proceedings" for the purposes of that paragraph even if the dispute is settled without the need to issue a claim form."

41. In response Mr Wignall submitted that the cases referred to above were all costs only cases, and therefore not binding authorities in this case, which clearly was not such a case. However, he also relies on what Master Campbell said in the case of Metcalfe v Clipston, another case on the SCCO page of the Court Service website. Paragraph 49 reads as follows [Miss Ward was counsel for the defendant]:

"For Miss Ward to succeed, I consider the obligation on the receiving party to give notification of funding pre issue must be absolute but in my judgment, the word "should" in the PDP does not impose such an obligation. On the contrary, 1 would construe "should" as meaning "ought to" which is not the same as "has to" or "most". Likewise I consider that a step that is "recommended" under the CPD does not involve any element of compulsion but instead means "favoured". It follows that I find against Miss Ward. In my judgment, pre issue, all the CPD does is to recommend that information is provided and although Section 19.2(5) states that notification may be required by a pre-action protocol, there is nothing in the clinical dispute protocol requiring service of any information. The PDP at paragraph 4.A.1 is of no assistance either because the requirement to provide information is optional not compulsory. Nor does paragraph 4A.2 PDP assist because "proceedings" means the issue of court process and not prospective proceedings. It follows that in my judgment the Claimant is not precluded under CPR 43.3B(1)(c) from recovering a success fee prior to the issue of the costs only proceedings in this case."

MY DECISION ON THIS HEAD OF APPEAL

42. I am quite satisfied that the submissions of Mr Wignall should prevail, and whilst not bound by any of the cases cited (Brooke LJ's dictum on paragraph 37 of Crosbie v Munro was intended only to refer to costs only proceedings and, arguably, is obiter). I prefer to follow the decision of Master Campbell in Metcalfe v Clipston to the decision of District Judge Arkless in Bainbridge v MAF Pipelines Ltd. Accordingly, this head of appeal also fails.

RELIEF FROM SANCTIONS IF THE ABOVE DECISION IS WRONG

43. Mr Patel argued that if I had found in his favour, there had been no application for relief from sanctions, and accordingly the Claimant's Solicitors could not claim their additional liabilities for any period prior to 7 May.
44. Mr Wignall has submitted, successfully as I have held, that there is no breach, but if I were to be held at a higher level to have been wrong about this, it is right that I should record that Mr Wignall then made, out of an abundance of caution, a formal application for such relief from sanctions. In that connection he referred me to CPR 23.3, which reads:

"23.3 -(1) The general rule is that an applicant must file an application notice.

(2) An applicant may make an application without filing an application notice if -

(a) this is permitted by a rule or practice direction; or

(b) the court dispenses with the requirement for an application notice."

45. It seemed to me that if an application was needed, it would only add to the already considerable costs of this assessment to insist that the Defendant issue a formal application notice in writing, which necessarily would have to be heard at a later date.
46. I then went on to consider the various points which CPR 3.9.1 say must be considered in this context. The case of Woodhouse v Consignia Plc [2002] EWCA Civ 275, suggests that each individual sub-paragraph of paragraph 3.9.1 should be considered individually. However, in the case of Montlake & Others (Trustees of WASPS) RFC v Lambert Smith Hampton [2004] 4 Costs LR 650, [2004] EWHC 1503 (Comm), Langley J, in the Commercial Court, dealing with an application for relief from sanctions, raised only the day before the hearing before him, said this:

"15. CPR Rule 3.9 sets out the circumstances which the court may consider on an application to grant relief from a sanction. I see no need to address that in any detail. Essentially, in my judgment, LSH has from the outset had the information to which it was entitled and I cannot see any conceivable prejudice to LSH from the breaches of the Practice Direction nor has any prejudice been suggested save the failure to inform LSH whether or not there was an insurance policy available to WASPS in respect of the costs of LSH. But, as I have said, I do not think LSH was entitled to that information. The fact that there was no insurance was stated by Mr Railton QC for WASPS in the course of the hearing.

16. In those circumstances I think WASPS are entitled to relief from the sanction provided for by Rule 43,3(B)(i)(c) and so are not to be deprived of the opportunity in principle to recover the agreed success fee if it is otherwise appropriate for an order for costs to be made in favour of WASPS."

47. Nevertheless, I did go through the various sub-paragraphs of 3.9.1 with both

Mr Patel and Mr Wignall, and it seems to me that the only factor which

weighs in favour of the Defendants in this matter is 3.9.1(b) "whether the

application for relief has been made promptly". Clearly it was not made

promptly, because the issue was raised in the Points of Dispute, and the matter

only came to an application before me on appeal. Nevertheless, weighing up

all the factors, I am quite satisfied that, if it is held that there has been a breach

of the Regulations, contrary to my finding, then I would have granted relief

from sanctions, without the necessity for a formal written application to have

been made by the Claimant.

48. For the sake of completeness I should perhaps say that I do not consider that 3.9(2) is an obstacle in the way of my granting that relief. 3.9(2) reads: "an application for relief must be supported by evidence". Mr Wignall submitted that the "evidence" was clear from the material placed before the Court, and I accept that submission.

FOURTH HEAD OF APPEAL -COST OFFICER'S DECISION TO ALLOW COUNSEL A SUCCESS FEE PURSUANT TO CPR 52.11(3)(a)

49. This turns on the wording of the schedule of insurance called Watermark, provided by First Assist Group in support of the CFA, and in particular the sub-heading "expenses" which reads:

"Expenses

Expenses and other disbursements paid by the solicitor to other parties which are reasonably and properly incurred by the solicitor:

(a) in connection with the legal proceedings

(b) in appealing or resisting an appeal against the judgment of a court in connection with the legal proceedings provided our prior written consent had been obtained to the appeal

The insurers will not be liable for counsel's fees, unless our prior written consent has been obtained."

(The emphasis is mine.)

50. The evidence at the start of the hearing before me was that no request for authority had been made to insurers. Mr Patel argued, therefore, that Counsel should not be allowed a success fee, because the amount of cover (£125,000) which was, as he rightly pointed out, against an adverse Costs Order, would have been adequate to cover all the disbursements, including counsel's fees. We examined such figures as were available from the listing questionnaire and the pre-trial check list, and I have come to the conclusion, albeit a provisional one, because it is unnecessary for my decision in this matter, to make such a finding, that that level of cover would have been adequate to cover Counsel's fees in this case.
51. However, there was clearly further evidence that could be given in this matter, and as Ms Storey was in court, it seemed sensible that she should be sworn, and give evidence on this point, which she did, and was briefly cross-examined on it by Mr Patel.
52. This aspect of the matter can be summarised by saying her evidence was that Ms Storey did not telephone the insurers to ask if counsel's fees could be covered, because she knew that this would not be granted. The whole essence of the CFA basis of funding is that the risk is shared by solicitors and counsel. She was asked whether she had ever asked for cover for counsel's fees. She had some difficulty in answering that question, understandably in my judgment, because she had to try to divorce BTE policies, which normally do require all expenditure to be authorised expressly by insurers, and ATE policies, which normally do not. She believed that she had only ever telephoned in connection with BTE policies, not in connection with ATE policies.
53. In the light of this evidence, I am satisfied that, even if insurers had been requested to cover counsel's fees, they would not have agreed to do so, and accordingly, this head of appeal also fails, and is hereby dismissed

FIFTH HEAD OF APPEAL -HOURLY RATES AND GRADE OF FEE EARNER

54. Mr Patel's argument was that the rates claimed in this bill, being grade A rates for both Mr Ettinger and Ms Storey, were too high, firstly because work could properly have been delegated to a grade B fee earner with a lower charging rate, and secondly because, even if that was wrong, the rates allowed were too far above the SCCO guideline hourly rates,
55. As to the first point, the main submission advanced by Mr Patel was that, so far as liability was concerned, the Claimant was bound to succeed, because of the authority of the Court of Appeal case of Alison Dugmore v Swansea NHS Trust & Anor [2002] EWCA Civ 1689.
56. The judgment of the court in that case was delivered by Lady Justice Hale (as she then was), and at paragraphs 1 to 3 reads as follows:

"1. The claimant appeals against the order of His Honour Judge Masterman, made on 11 April 2002 in the Cardiff county court, dismissing her claim for damages for the consequences of a latex allergy caused by wearing powdered latex gloves during her employment as a nurse. The claim was framed both in negligence and under the Control of Substances Hazardous to Health ('COSHH') Regulations 1988 and 1994. It raises an issue of some practical importance, not only for nurses, as to the correct interpretation of those regulations and the extent of the duty they impose.

2. The Claimant is now aged 34. She is atopic, having suffered from eczema and asthma since she was a baby. She has worked in health care since leaving school at 16. From about 1990 until December l996 she was employed as a nurse at Singleton Hospital, Sketty, Swansea ('Singleton'). and from January 1997 in the Intensive Care Unit (ITU) at Morriston Hospital, Morriston, Swansea ('Morriston'). During her time at Singleton she developed a Type 1 allergy to latex protein as a result of using powered latex gloves in the course of her work. Her own case was that that had happened around July 1993, and the judge found that it had certainly done so by 1994 or 1995. In June 1996 she suffered such a serious reaction while performing a procedure using latex gloves that she attended the Accident and Emergency Department and was off work for three days. Following her return she was supplied with vinyl gloves instead. When she moved to Morriston, she told the occupational health department of her allergy and was supplied with vinyl gloves there as well. However, the extent of her sensitivity was such that, on 18 December 1997, when picking up an empty box which had contained latex gloves, she suffered an anaphylactic attack and has not been able to return to her work as a nurse since then.

3. There were many issues at trial but on this appeal three remain. (I) What is to be taken as Singleton's date of knowledge of the risk that wearing latex gloves could cause sensation for the purpose of liability in negligence? (2) What is the extent of an employer's duty under the COSHH regulations and in particular to what extent is their knowledge of the risk relevant to that duty? (3) Was Morriston in breach of duty in failing to ensure that the claimant was not exposed to latex in the ITU?"

57. It will be noted that it is only point 2, the relevance of the COSHH

Regulations, which is applicable in this case. After reviewing the authorities

in detail, in paragraphs 12 to 21, Lady Justice Hale concludes this point in

paragraph 22 of her judgment:

"22. In our view, that analysis is correct. The duty in regulation 7(1) is an absolute one: to ensure that exposure is prevented or controlled, for hospitals, sought to persuade us that the words 'so far exposure is either prevented or controlled. There is no warrant for us to rewrite the regulation in this way. Its wording is even stricter than that in s 29(1) of the Factories Act 1961, where the phrase 'so far is as reasonably practicable' came between 'shall' and 'be made and kept safe', If that was an absolute duty, then so must this be."

58. Mr Patel relied on the points made in the Points of Dispute:

"The narrative fails to represent the central sea-change in this case which led to the Claimant solicitors comprising this claim at £5000 as opposed to the pleaded case in excess of &250k. The observation is made as is should influence the Judge's decision-making when deciding whether to allow or reduce costs on the basis of proportionally and/or reasonableness.

There were two mutually exclusive aspects to the latex exposure claim, which stemmed from the symptoms the Claimant exhibited. The first was nasal/eye irritation a claim that was always merited with success given the fait accompli that Dugmore provides.

The second was occupational asthma and here the Claimant solicitors were always in difficulty as the records (which were available very early on -prior to issue) recorded that the Claimant was diagnosed with asthma on 21 July 2001. Dr Rudd in his medical report of March 2004 in extracted from the records that her asthma developed whilst the claimant was convalescing at home and further and key at page at page 8 the final paragraph of the Diagnosis and Consultation section where Dr Rudd states that "Had she ceased to have contact with powdered gloves ...before she developed symptoms of asthma, on the balance of probability, she would not have developed symptoms of asthma". Dr Rudd also records that the claimant states her asthma symptoms recurred after she returned to work when there was "no discernable direct contact with latex". Clearly it always incumbent on the Claimant solicitors to explore this issue of the powdered glove withdrawal.

Patently the issue of when the powdered gloves removed was determinative of the casual link between the asthma and exposure/sensitisation to latex through powered gloves. The powder. in the gloves carrying the protein latex particulate was causative of nasal irritation and potentially asthma. At an early stage and prior to service the Defendant disclosed documentation which showed that the "switch-over" to non-powdered latex gloves occurred circa 1999. Allowing for the allegation that some time elapsed before the stocks were deplete it was clear that powdered gloves were unlikely to have been in use when the Claimant was diagnosed with asthma. Notwithstanding this documentation the Claimants case was pleaded on exposure of powdered gloves and resulting symptoms of asthma and irritation."

59. Mr Patel therefore argued that it should have been obvious to a firm as experienced as Irwin Mitchell that this claim was bound to succeed, and that the Claimant would get some damages, and therefore the matter could safely have been left to a grade B fee earner.
60. Mr Wignall, however, took me to the actual wording of the pleadings, and the requests for further information under Part 18, and analysed these in a way which clearly demonstrated that the point that was at the forefront of the Points of Dispute argument was not the way the matter was pleaded in the Defendants defence, or indeed the further information given pursuant to the Part 18 request.
61. I have already indicated that the case was hard fought, and it is clear from the defence that liability and causation remained in issue until the matter was settled. For instance in paragraph 7 of the defence the Defendants plead:

"7. The Defendant cannot plead to paragraph 9 in the Particulars of Claim and the allegations of causation, injury, loss and damage alleged therein until it has obtained its own medical evidence. The Claimant is accordingly put to strict proof thereon and of each and every item claimed in the schedule of past and future losses. The Defendant believes that the claimant has a significant residual earning capacity for which credit must be given: the Defendant notes that the Claimant pleads that she has taken alternative employment and further notes that her calculations in her schedule of past and future losses appear to give no credit for income which may be received from this employment."

62. Even after the Defendants obtained their own medical evidence there was no admission of liability, even in respect of the rhinitis and conjunctivitis, which according to Mr Patel, following the decision in Dugmore, were heads of damage in respect of which the Claimant most have succeeded.
63. Accordingly, I am satisfied that the matter was properly handled by grade A fee earners, Mr Ettinger with his vast experience of this sort of work, and Ms Storey, another grade A fee earner.
64. Turning to the actual rates claimed and allowed for the period 4 August 2003 to 25 February 2005, Mr Ettinger was claimed at £350 per hour, and Ms Storey at £270 per hour. The Defendants offered £200 per hour for the grade B fee earner for 2003/4, and £210 per hour for 2005, but, as I have already indicated, in my judgment this was not a case reasonably delegable to a grade B fee earner.
65. The rates claimed are higher than the rates set out in the SCCO Guide to Hourly Rates, but, as has been said many times, that is a document which is intended to govern fast track cases concluding in one day, and other interlocutory matters that conclude in the same period, the rates set out therein are not intended to cover the generality of litigation. The rates claimed and allowed below are not greatly in excess of the guideline rates, and in my judgment the complications which this case threw up, which I am entitled to take into account in arriving at the correct hourly rate, rendered these rates justifiable. Inevitably, perhaps reference was made to the case of Higgs v Camden and Islington Health Authority [2003] 2 Costs LR 21, [2003] EWHC 9021 , but, as I indicated during the submissions, I think undue reliance on other reported cases on hourly rates is unhelpful. Each case must turn on its own facts, and whilst in Higgs my decision was upheld by the Judge, was upheld on the basis that although the rates I allowed were high, they were within the reasonable bracket within which a higher court should not interfere.
66. The Defendants on the detailed assessment sought to contend that this was a simple and straightforward matter, but I am quite satisfied, from my reading of the Claimant's papers, that this was not in fact the case. Indeed, I would go so far as to say that a less experienced firm than Irwin Mitchell might well, in the light of the evidence about when latex gloves were withdrawn, have advised the client to drop this case well before the offer to settle was actually made, so shortly before trial.

SIXTH HEAD OF APPEAL -LEVEL OF SUCESS FEE

67. As already indicated this head of appeal slightly overlaps the hourly rate point, but the difference of course is that the success fee has to be fixed at a stage when the complexities of the matter as it unravels, which may affect the hourly rate, are not known, and cannot therefore influence the decision taken to fix the success fee level.
68. Mr Patel, quite correctly, in his submissions reminded me that there had been some considerable work done prior to the signing of the CFA, and he asked me to examine the Claimant's files to satisfy myself that there was not so much work done in that period as to identify a lower risk of failure than was obviously arrived at in fixing the success fee at 100%. I have carried out that exercise and am so satisfied.
69. In his judgment below Mr Lambert looked at the conditional fee agreement, and in particular the variation to the Law Society standard agreement, which reads:

"If you reject and supported by our advice you continue to pursue your claim but you recover damages that are less than the sum offered or paid by your opponent, we will not charge you or charge you our basic charges or success fee for the work done after the expiry of 21 days following receipt of the notice of offer or payment."

70. Mr Lambert says in his judgment:

"I am told that Irwin Mitchell CFA goes further than the Law Society standard CFAs on the basis that Irwin Mitchell would waive all of their charges and not just the success fee of not beating a payment into court. They therefore do take on some additional quantum and causation risks.

I also know that Irwin Mitchell had entered into a two-stage success fee, 67% being the first limb of the CFA and 100% being the second limb of the success fee if the matter settled at any point after three months before the trial. In this case the matter settled very close to trial and therefore 100% success fee is claimed. Submissions had been made in respect of the appropriateness of the two-stage success fee. In all the circumstances, I consider that an appropriate success fee in this case is one of 82% and that is what I allow."

71. Obviously an appeal to me is by way of re-hearing, and whilst any decision of Mr Lambert, as a very experienced Cost Officer, deserves respect, I must apply my own experience and mind to the problem to decide what is the appropriate level of success fee.
72. Applying the ready reckoner in Cook On Costs it would appear that 82% equates roughly to a prospect of success of somewhere between 50% and 60%. In my opinion this case was fraught with difficulties. There clearly was a grave danger that the Claimant would fail altogether, if it could be proved that the latex gloves were withdrawn several years prior to the onset of her symptoms. Even if she could overcome that hurdle, there was the causation issue, and it might well have been, in the event of a trial, that she might have recovered a very small sum in respect of conjunctivitis and rhinitis, but not in respect of asthma, the line which it would appear the Defendants adopted tactically in this matter.
73. Accordingly, I have independently come to the same conclusion as Mr Lambert, namely that the appropriate level of success fee in this case is 82%, both for Solicitors and for Counsel, and accordingly this head of appeal also fails. and must be dismissed.
74. When this judgment is formally handed down, I will hear submissions on costs, and on any other issues, unless of course the parties are agreed, in which case there will be no need for an attendance at the formal handing down.