Defining “disease” claims

The dispute as to whether noise induced hearing loss (NIHL) claims are “disease” claims for the purposes of the fixed success fee regime stems from the complete failure to define “disease” in the Civil Procedure Rules. What is less obvious is whether this was a careless oversight or a deliberate decision.

Males J when faced with the issue of determining whether a certain condition was a disease, in the case of Patterson v Ministry of Defence [2012] EWHC 2767, held:

“Notwithstanding the objective of CPR 45 to provide a clear and certain test for the award of success fees, inevitably questions may arise as to whether particular conditions are to be characterised as ‘diseases’. When that occurs, and when the answer is not obvious, there is in my judgment no single test or definition which can be applied. In circumstances where the Rule itself provides no definition of ‘disease’, and where the dictionaries do not assist, it would not be practicable or sensible for the court to attempt to supply its own definition.”

Phillips J, in the recent case of Dalton v British Telecommunications plc, recognising he was taking the opposite approach to Males J, attempted to define disease:

“In my judgment consideration of the legislative history in this case strongly indicates that Parliament intended the term ‘disease’ in sections IV and V of CPR 45 to include any illness (whether physical or physiological), disorder, ailment, affliction, complaint, malady or derangement other than a physical or physiological injury solely caused by an accident or other similar single event. The provisions of section IV are therefore restricted to injuries caused by accidents (or other single events), preserving the long-established distinction.”

I take this to mean that under Phillips J’s definition:

  1. Symptoms caused by a single accident or event = injury
  2. Symptoms caused by more than one accident or event = disease

This would mean that if I bang my thumb with a hammer, I have suffered an injury. If I bang it a second time I am suffering from a disease.

With respect, that is nonsense.

Therein lies the difficulty with trying to provide a definition for disease. This is, in part, the very issue that arises in most NIHL claims. If my hearing is damaged as a result of an explosion in a factory, that appears to be clearly an injury. If my hearing is damaged as a result of a single acoustic shock caused by defective electrical equipment, that would also appear to be an injury I have suffered. Does it really become a disease if the hearing loss follows a number of minor acoustic shocks or exposure to a high level of noise over a prolonged period?

The rule makers may well have made a conscious decision not to define “disease” recognising the difficulties of the process.

However, if it has been intended that NIHL claims would fall within this category, it would surely have been preferable if Category C claims had been defined something along the following lines:

“‘Type C claim’ means a claim relating to a disease not falling within either type A or type B, including noise induced hearing loss claims”

That would have still left scope for some argument over more obscure conditions, such as in Patterson, but would have left the situation clear for most claims.

Costs Judge vacancies

The Judicial Appointments Commission is advertising for three Costs Judges (two immediate, one future vacancy).

So far as I can work out, in light of the retirements of Master Hurst, Master Campbell and, presumably, another Master in the not too distant future, this will not represent an increase in overall numbers. On the other hand, at least cuts to the court service have not led to a decrease in numbers.

I note the position is open to solicitors and barristers but still not Costs Lawyers. The level of knowledge expected is high: “Detailed knowledge of the law of costs and its application is required and this will be assessed as part of the selection process for these roles. As well as requiring knowledge of all aspects of costs law, Costs Judges need a general knowledge of all other civil, family and criminal law.  Typical civil cases will involve such diverse areas of law as defamation, clinical negligence, planning, personal injury, commercial law or marine law.”

Fixed success fees in disease claims

The issue of what amounts to a “disease” for the purposes of the old fixed success fee regime rumbles on. Judgment has now been given by Mr Justice Phillips in Dalton v British Telecommunications plc ruling that noise induced hearing loss (NIHL) claims are “disease” claims for the purposes of the rules.

This is unlikely to be the end of the matter. Permission to appeal is being sought. It needs to be understood why this matter was heard by a High Court judge given the claims were County Court matters. Both parties, and the Regional Costs Judge, had agreed that the issue had “Court of Appeal” written all over it and it would be preferable for the issue to be determined at High Court level. (There had already been a number of conflicting first instance decisions at County Court level.) With the matter heard by a High Court judge, that would finally decide the matter subject to any appeal that would move straight to the Court of Appeal.

Watch this space.

Costs budget “slashed”

The recent costs management case of CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd & Ors (Costs No. 2) [2015] EWHC 481 (TCC) has been widely reported as an example of the court “slashing” the claimant’s excessive costs budget.

By way of example, the claimant’s estimate sought a budget of £324,880 for drafting witness statements, being 880 hours at a Grade A rate of £370 per hour.

As to hourly rates the judge had commented:

“Although the claimant’s solicitors are based in Birmingham, they are claiming for a partner at a Grade A rate of £370 per hour. This is to be contrasted with the guideline Grade A rate for Birmingham of £217 per hour. I consider the £370 to be unreasonable.”

The judge does not appear to have fixed an appropriate hourly rate when fixing the budgets but clearly considered this excessive. (Note the judge considered guideline rates to be an appropriate reference point for a claim being pursued for £18 million odd.)

The judge further commented:

“In addition, the claimant’s costs budget identifies vast swathes of hours worked/estimated to be done by the lead Grade A partner, with much less work being performed by junior lawyers. Having considered the written submissions on this issue, I consider that this is a specific cause of the unreasonable level of the claimant’s costs. The hourly rate is too high but more importantly, the claimant is using the Grade A partner for work which is inappropriate and could be done more cheaply by lower grade assistants.”

As to the nature of the witness statements that would be required:

“It appears that it is envisaged that the claimant will prepare witness statements from three people who dealt with the claimant’s acquisition of the property, a topic which is likely to be entirely uncontroversial. The budget also envisages multiple witness statements dealing with the remedial scheme. Those statements too are likely to be peripheral at best because the principal issues are going to be what defects emerged and whether the remedial scheme to deal with them was reasonable (which are matters for the experts), not what actually happened.”

At this stage it is worth remembering the views of HH Judge Simon Brown QC that when it comes to costs budgeting he is always dubious about costs budgets that contain significant time for drafting witness statements on the basis that these are documents that are meant to be in witnesses’ own words.

At this stage I’m going to stick my neck out and suggest that those responsible for acquiring the multi-million pound building subject to this dispute and those responsible for the multi-million pound remedial works are probably vaguely literate and could be expected to draft much of their statements with minimal assistance from lawyers.

Taking all into account, the judge “slashed” the claimant’s budget for preparing witness statements to £150,000.

Adjusting the hourly rates to something closer to guideline rates and at a level appropriate for the task (say a combination of Grade B/C) would allow something very close to the original 880 hours estimated or 780 hours at guideline Grade B rates or 691 hours at guideline Grade A rates. This for a case where witness statements were going to be uncontroversial or peripheral.

Thank God for the new costs budgeting regime. Costs being incurred and approved by the courts at silly levels has now become a thing of the past.

You couldn’t make it up.

Defendants’ low costs budgets

In the recent case of CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd & Ors (Costs No. 2) [2015] EWHC 481 (TCC), Coulson J was dismissive of the suggestion a defendant might try to submit a knowingly low costs budget:

“In his written submissions on behalf of the claimant, one of the points made … was that the court should not have any great regard to the costs budget figures put forward by the defendant and the additional parties because they had ‘an incentive’ to advance low figures in their costs budgets. This suggestion of manipulation of the figures by the other parties was, understandably, the subject of considerable protest. It seemed to me to be an unwarranted accusation. In truth, the party who was most vulnerable to such an accusation was the claimant itself.”

Hopefully, this will be an end to similar suggestions made by claimants in other cases that defendants have any incentive to put forward artificially low figures in their budget. I would suggest that in the future, in the absence of very specific evidence to support the same, such a suggestion should be treated as being a serious professional conduct issue and adverse costs orders should be made against those advancing such arguments. The very idea that defendants would pitch their budgets low for tactical reasons…

Appropriate success fee where liability clear

Press release from well known personal injury solicitors commenting on holiday illness claim, where solicitors were acting for 276 clients, quoting their head of travel law:

“It is almost beyond belief that [the Defendant] has continued to deny liability for this terrible outbreak”.

Success fee claimed for this clearly clear-cut claim: 100%.

You couldn’t make it up.

Inaccurate costs estimates

The move from costs estimates to costs budgets has left rather a mess in the rules due to the absence of transitional provisions.

Nevertheless, under the old rules, and to the extent to which the old costs estimate rules continue to apply, the response of receiving parties to objections concerning inaccurate estimates is invariably, in my experience, misplaced.

Receiving parties almost always rely on the guidance given at paragraph 29 of Leigh v Michelin Tyre Plc [2003] EWCA Civ 1766:

“In our view, para 6.6 of the practice direction gives the court the power to take matters such as these into account in deciding whether, and if so how far, to reflect them in determining what costs it is reasonable to order the paying party to pay on an assessment. We do not, however, consider that it would be a correct use of the power conferred by para 6.6 to hold a party to his estimate simply in order to penalise him for providing an inadequate estimate. Thus, if (a) the paying party did not rely on the estimate in any way, (b) the court concludes that, even if the estimate had been close to the figure ultimately claimed, its case management directions would not have been affected, and (c) the costs claimed are otherwise reasonable and proportionate, then in our view it would be wrong to reduce the costs claimed simply because they exceed the amount of the estimate. That would be tantamount to treating a costs estimate as a costs cap, in circumstances where the estimate does not purport to be a cap.”

However, the guidance given in that case concerned an earlier version of CPD 6.6:

“On an assessment of the costs of a party the court may have regard to any estimate previously filed by that party, or by any other party in the same proceedings. Such an estimate may be taken into account as a factor among others, when assessing the reasonableness of any costs claimed.”

The Leigh judgment gave guidance as to how this should be applied in circumstances where the CPD was silent as to the approach to adopt.

Following Leigh, CPD 6.6 was significantly amended:

“(1) On an assessment of the costs of a party, the court may have regard to any estimate previously filed by that party, or by any other party in the same proceedings. Such an estimate may be taken into account as a factor among others, when assessing the reasonableness and proportionality of any costs claimed.

(2) In particular, where –

(a) there is a difference of 20% or more between the base costs claimed by a receiving party and the costs shown in an estimate of costs filed by that party; and

(b) it appears to the court that –

(i) the receiving party has not provided a satisfactory explanation for that difference; or

(ii) the paying party reasonably relied on the estimate of costs;

the court may regard the difference between the costs claimed and the costs shown in the estimate as evidence that the costs claimed are unreasonable or disproportionate.”

The amended CPD did not simply mirror the guidance in Leigh. It went further and produced a more robust test. Although the CPD was, no doubt, amended as a consequence of the Leigh decision, it was not an amendment designed to simply codify the Leigh guidance. Indeed, it is difficult to see that the guidance in Leigh was (or is) of much, if any, relevance, to detailed assessments undertaken after the CPD was amended.

Top costs expert

The media has a terrible habit of attributing expert status to those who clearly have no right to be called anything of the sort. Fox News famously interviewed a “terrorism expert” who claimed “In Britain, it’s not just no-go zones, there are actual cities like Birmingham that are totally Muslim where non-Muslims just simply don’t go in”.

In similar fashion, Costs Lawyer magazine recently published the views of “some of the country’s top costs experts” on what the coming year holds for the profession. In truth, they were prepared to publish the views of any idiot they could find.

My contribution was:

“The key elements to achieving the Jackson goal of ensuring proportionality in civil litigation were the extension of fixed fees for lower value claims and a new proportionality test for higher value claims.

Costs budgeting is already proving to be an expensive and counter-productive experiment.  The Court of Appeal has already undermined any credibility in the new test for relief from sanctions.  The end to recoverability of additional liabilities has been more than off-set in personal injury litigation by the introduction of Qualified One-Way Costs Shifting.  The extension of fixed fees has inevitably succeeded in bringing a degree of proportionality in the fast-track.

The missing piece in the jigsaw, and the last realistic hope of ensuring proportionality for the multi-track, is the new proportionality test.  Approaching two years after introduction we still do not know how the courts will apply this.  This will be the main battleground for 2015.

I predict a repeat of the relief from sanctions fiasco.  The matter will reach the Court of Appeal and they will deliver a robust decision following the guidance already given by Jackson.  This will be followed by howls of anguish from the usual suspects, with some justification, that the decision will deny access to justice for large numbers of potential claimants.

Shortly afterwards the Court of Appeal will then “clarify” their decision and reformulate their guidance giving such a watered-down test that it would have made the judges in Lownds blush.  The logic of Jackson’s recent calls for a massive extension of fixed fees will then become difficult resist, but only because a dog’s dinner was made of implementation of the original proposals.”

Part 36 costs offers

I recently received an offer as follows:

“We confirm that we can agree to accept the sum of £18,800.00 in settlement of our costs, this offer is made subject to S1 Part 36 CPR, applies to the whole of this matter and is open for acceptance for 7 days.

If we do not hear from you within that period we intend to set this matter down.”

I wonder what possesses people who have clearly never read Part 36 to think that making an offer purporting to be a Part 36 offer is a good idea.