English and Welsh Courts - Miscellaneous

IN THE MANCHESTER COUNTY COURT

		Civil Justice Centre 1 Bridge Street West Manchester, M60 9DJ
		10th February 2009

DEPUTY DISTRICT JUDGE SMITH: Good afternoon, gentlemen.

MR HOLMES: Sir, can I just pass you the defendant's skeleton argument?

DEPUTY DISTRICT JUDGE SMITH: This is a five minute application. Skeleton argument?

MR HOLMES: It is only very brief, sir. It is in relation to the claimant's CFA.

DEPUTY DISTRICT JUDGE SMITH: I thought this was an application for pre-action disclosure?

MR HOLMES: Sir, the application has been agreed, the disposal part of the application has been agreed, save for the costs part of the application.

DEPUTY DISTRICT JUDGE SMITH: Right. Carry on. Which of you is which please? Who answers to Hughes?

MR HUGHES: Mr Hughes for the claimant, sir.

DEPUTY DISTRICT JUDGE SMITH: You answer to Mr Hughes. You answer to Mr Holmes then?

MR HOLMES: That's correct, sir.

DEPUTY DISTRICT JUDGE SMITH: Right. Yes. Let's have a look at whatever it is. Thank you. Let me make this comment, Mr Holmes, before we go any further.

MR HOLMES: Yes.

DEPUTY DISTRICT JUDGE SMITH: This is a five minute hearing. Providing the Court with a four page skeleton argument and two pages of other documentation renders a five minute hearing completely impossible.

MR HOLMES: Sir, I will try and keep my submissions as brief as possible.

DEPUTY DISTRICT JUDGE SMITH: You may not be making them at all. How long, gentlemen, do you believe this hearing is going to last?

MR HUGHES: On the arguments as I understand them, sir, I would suggest about 15 minutes.

DEPUTY DISTRICT JUDGE SMITH: What do you say, Mr Holmes?

MR HOLMES: Sir, I say the same.

DEPUTY DISTRICT JUDGE SMITH: In that case you are fortunate, gentlemen, that a number of other matters that were listed at 2 o'clock are not effective for whatever reason and therefore the Court can accommodate you for 15 minutes.

MR HOLMES: I am grateful for that, sir.

DEPUTY DISTRICT JUDGE SMITH: But you are lucky in that respect. Tell me please what has been agreed and then tell me what is not been agreed.

MR HUGHES: Sir, let me take you through the draft order attached to the application.

DEPUTY DISTRICT JUDGE SMITH: Yes.

MR HUGHES: Paragraph 1 and paragraph 2 have been agreed.

DEPUTY DISTRICT JUDGE SMITH: Right. Well, let's complete it as we go along. Before Deputy District Judge J P Smith, 10th February 2009, and you tell me now paragraphs 1 and 2 are agreed.

MR HUGHES: Yes, sir. Fine. So it is paragraph 3 that is the subject of dispute. Right. Which of you wants to take the initiative?

MR HOLMES: Sir, it is me raising the objections so I would be happy to make submissions first.

DEPUTY DISTRICT JUDGE SMITH: Fire away then.

MR HOLMES: Sir, I will try not to waste as much of your time as possible but basically the issue centres around whether the claimant's CFA allows for the recovery of pre-action disclosure proceedings, the costs related to them. The claimant's CFA states that it covers: "The claim against the defendant for damages and personal injury, any appeal by your opponent, any appeal you may---"

DEPUTY DISTRICT JUDGE SMITH: Would you like to direct me to what I should be looking at?

MR HOLMES: Sorry, sir, page 2 in my skeleton argument and also I think it is the first page of the claimant's CFA.

DEPUTY DISTRICT JUDGE SMITH: Right. Well, I turn to paragraph 8.2 of your skeleton. Yes. Paragraph 4.

MR HOLMES: Paragraph 3, sir. The claim for damages from personal injury is covered, any appeal by an opponent, any appeal against an interim order, proceedings that are taken to enforce judgments and negotiations about the assessment of costs.

DEPUTY DISTRICT JUDGE SMITH: Yes.

MR HOLMES: There is no provision in the claimant's CFA for the recovery of pre-action disclosure costs and we would argue that those are a separate cause of action, which is why the Court allocate them a separate claim number, and the final issues regarding disclosure will be determined today for ever, so to speak. As a result of the fact that the claimant's CFA does not cover pre-action disclosure costs, we would argue that the Court cannot make an order that the defendant pay costs for which the claimant's solicitor would not be entitled to payment from his client.

DEPUTY DISTRICT JUDGE SMITH: Are you conceding that the defendant ordinarily would pay costs, because is it not the provision that, unless otherwise agreed, the claimant will pay the costs of pre-action disclosure.

MR HOLMES: That is right, sir, I am conceding that point, but what I am saying is there is no provision within the claimant's solicitor's retainer to recover pre-action disclosure costs as they are in effect a separate cause of action and it is not listed under what is covered on the CFA. That is my first point, sir.

DEPUTY DISTRICT JUDGE SMITH: Yes.

MR HOLMES: My second point is that if you disagree and you say that costs are recoverable under the claimant's CFA for pre-action disclosure costs, that, given the definition of "win" within their CFA, the claimant's liability to pay his solicitor costs does not crystallise until conclusion of the claim when he is deemed to have won, ie the no win no fee nature of the agreement.

Those are the defendant's points, sir.

DEPUTY DISTRICT JUDGE SMITH: Right. Thank you. Mr Hughes.

MR HUGHES: Sir, if I address the defendant's first point in respect of whether advocation for pre-action disclosure is dealt with by the conditional fee agreement, sir, I would refer you to the front sheet of the conditional fee agreement. It is the document which has been signed by the claimant.

DEPUTY DISTRICT JUDGE SMITH: Yes. I have two copies of it, presumably one from each of you.

MR HUGHES: Sorry, sir, I may have passed you a copy in error.

DEPUTY DISTRICT JUDGE SMITH: Yes. Yes, Mr Hughes, I have it in front of me.

MR HUGHES: Sir, if I can refer you to, I think it is about paragraph 3, possibly paragraph 4, "What is covered by this agreement."

DEPUTY DISTRICT JUDGE SMITH: Yes, on page 1.

MR HUGHES: It would be the applicant's contention that the first section of the claim against Wigan Council and/or any other responsible party for damages for personal injury suffered on or about 15th October 2007 would cover an application for a pre-action disclosure, and the reason for that would be because the applicant is not making an application for random documents, they are applying for documents which are specific to this particular accident, this particular injury and this specific claim. The conditional fee agreement in the applicant's view would cover all costs in relation to that claim for damages for personal injury. The applicant would further say that the application is so intrinsically linked to the main claim that it is not possible to separate the two. The costs in the applicant's view are, therefore, incidental to the claim for personal injury. My response to my friend's argument that the Court would give a separate cause of action and a separate claim number is purely administrative and therefore the applicant's submission is that the CFA does cover this type of work.

In relation to the second point, sir, as I understand it the cost practice direction paragraph 14.3 - I do have a copy if you would like to---

DEPUTY DISTRICT JUDGE SMITH: I will look at the White Book if necessary. Go on.

MR HUGHES: It does allow, where there is a conditional fee with additional liabilities it does allow for the Court to summarily assess costs and order that costs be paid at this stage, albeit that the success fee will not be payable until the end of the claim.

DEPUTY DISTRICT JUDGE SMITH: Yes. Just the base fee.

MR HUGHES: Yes, sir, provided, as much as one could have the retainer as well, which has already been dealt with. Therefore, sir, my submissions would be that costs are recoverable at this stage. Those are my submissions.

DEPUTY DISTRICT JUDGE SMITH: Do you want to come back briefly, Mr Holmes?

MR HOLMES: Yes, sir. Sir, we dispute entirely that the pre-action disclosure application formed part of the claim against the defendant for damages for personal injury. The claimant's CFA goes to great lengths to say which part of the proceedings are recoverable under the CFA, for example the appeal, negotiations about costs, for example. This is an application for disclosure. It might not be that the claimant has a claim for damages following this disclosure so I don't see how, sir, it could be categorised as part of the claim against the defendant for damages or personal injury.

DEPUTY DISTRICT JUDGE SMITH: Thank you both.

MR HUGHES: Sir, if I could make one further point in response to that. The documents would be necessary in order for the applicant to be advised on prospects of success in order to advise the insurance funding the claim on prospects of success and also to allow the applicant to prepare her claim, to give Particulars of Claim.

DEPUTY DISTRICT JUDGE SMITH: That is to prepare a claim.

MR HUGHES: Yes, sir.

DEPUTY DISTRICT JUDGE SMITH: Rather than to pursue her claim.

MR HUGHES: Without applying a shotgun approach to the Particulars of Claim.

DEPUTY DISTRICT JUDGE SMITH: In fairness your opponent can add another two sentences. Do you want to add anything? I doubt it.

MR HOLMES: All I would say is that there is no evidence in the claimant's solicitor's retainer to say that the claimant has agreed to pay these pre-application disclosure costs. These are separate proceedings and so, sir, I would urge the Court not to make an order for costs against the defendant because the claimant is not herself liable to pay them.

DEPUTY DISTRICT JUDGE SMITH: Right gentlemen. Thank you both.

Judgment

DEPUTY DISTRICT JUDGE SMITH:

1. The matter listed before the Court this afternoon is an application for pre-action disclosure. The application is supported by a witness statement and I am told by the two gentlemen who have attended court to argue the liability aspects of the case that substantive issues have been agreed in that attached to the notice of application there was a draft order and paragraphs 1 and 2 of the order are agreed. What is not agreed and what has become the subject matter of a brief contested hearing, is whether the claimant is entitled to have its costs of and incidental to this application either in a sum as claimed or at all.
2. The Court has been provided with a copy of a conditional fee agreement entered into by solicitors and the claimant. The Court has also been provided with a skeleton argument provided on behalf of the defendant. I have already indicated that I think at that point the respective factions are taking liberties with the estimated length of hearing. But, be that as it may, the argument advanced by the defendant is quite simply that the claimant is not entitled to its costs because the costs of this application are not covered by the CFA.
3. If, and I stress that word "if," the Court found against the defendant on that point, the defendant has a secondary point it wishes to argue, but let me deal firstly with the defendant's main thrust of argument.
4. The work undertaking in this application, says the defendant, is not covered by the agreement. On page 1 of the agreement, about 8 lines down, it says "What is covered by this agreement," and then there are five particular matters listed. The defendant says this application does not fall within the ambit of any of the five areas as to what is covered.
5. Not surprisingly, the claimant takes a different view and argues that this application is intrinsically linked with that which the claimant wants to do in bringing a claim against a proposed defendant. It is not possible, argues the claimant, to separate the two.
6. I do not accept that argument advanced by the claimant. The application is for pre-action disclosure. If it is pre-action disclosure then it cannot by definition be the action because what is sought precedes and pre-dates the issue of any substantive claim.
7. In that scenario: "What is covered by the agreement? Answer 1: Your claim against named party and/or any other responsible party." That relates to a substantive claim. It does not relate to a preliminary issue or a pre-action matter of any sort.
8. The other four areas referred to as being covered by the agreement I do not need to refer to in detail because neither of the factions here today seeks to argue that the work which is claimed by the claimant falls within any of those four categories.
9. I reject the suggestion that a pre-action matter is intrinsically linked with a post issue matter that clearly would have been covered by a CFA. The claimant fails. The claimant has not provided evidence that it is covered in respect of this work by the CFA.

Where does that lead us to, gentlemen?

MR HOLMES: Sir, there is a cost schedule from the defendant attached to the back of my skeleton argument and the defendant asks for a payment of their costs from the claimant.

DEPUTY DISTRICT JUDGE SMITH: What does the claimant have to say in that respect?

MR HUGHES: Sir, this cost schedule was not provided to the claimant until 5 minutes before today's hearing.

DEPUTY DISTRICT JUDGE SMITH: That is not fatal.

MR HUGHES: I have not had a chance to review it.

DEPUTY DISTRICT JUDGE SMITH: That is not fatal I think is what Neuberger, J, as he then was, said on that issue.

MR HUGHES: Sir, my only submission would be that the costs do seem quite high when compared to the claimant's own schedule of costs, bearing in mind it is the claimant that has prepared to application and not merely responded to it. That would be my only argument, sir.

DEPUTY DISTRICT JUDGE SMITH: Is there anything specific in the defendant's schedule that you wish to direct my attention to?

MR HUGHES: Item number 2, sir, when compared to the claimant's schedule, and attendance on documents, sir. A two hour attendance the claimant would submit is too high just to review a document.

DEPUTY DISTRICT JUDGE SMITH: Does the defendant want to say anything in response?

MR HOLMES: Sir, what I would say is that our rate is grade D and the work in relation to documents time is mainly down to drafting the skeleton argument. I am not sure whether my friend, my opponent, has taken into consideration the telephone calls that we had this morning in relation to this hearing and that may be why the communications with the opponent are higher on my schedule than on his. I think this schedule was drafted some time ago.

DEPUTY DISTRICT JUDGE SMITH: Thank you both, gentlemen.

I am relying upon the draft order that accompanied the application which I have already dealt with as to paragraphs 1 and 2. I have already altered paragraph 3 so that it reads: "The claimant within 14 days pay the defendant's costs summarily assessed in the sum of."

Now I come to quantum. The rate claimed and the level of fee earner, one cannot go lower unless there is a private agreement with client, of which I have no information. The work done on documents includes an opponent in preparing a skeleton argument that has no place at all in a five minute hearing and it is not, in my judgment, appropriate to award a party for doing that which was absolutely and completely unnecessary. I do not know what element of the two hours is attributable to that aspect of matters but it must be at least half. I think the amount claimed is higher than ordinarily I would expect to find. I will assess the costs at £400 plus VAT, and as the rate of VAT is now 15% that is easy to work out, it is the sum of £460, and I put in brackets "VAT inclusive."

Thank you, gentlemen.

MR HUGHES: Thank you for your time, sir.

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