9 March 2020 Edition 304
BC DISEASE NEWS A WEEKLY DISEASE UPDATE
CONTENTS
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Welcome Welcome PAGE 3
Strike Out, Contesting Welcome to this week’s edition of BC Disease News. Jurisdiction and Restoration in Claims Brought Against In this issue, we provide detailed analysis on the Court of Appeal’s latest non- Dissolved Companies: Cowley prescriptive ‘guidance’ for insurers, in cases where proceedings are served v LW Carlisle & Company Ltd against a dissolved insured and uncertainty is created over whether the insurer has legal authority to act, pending restoration. [2020] EWCA Civ 227
What is more, Stuart Bacon, Head of BC Legal’s Southend and London Offices, PAGE 8 comments on conduct which ought to be protected by legal professional
Why Stop at Discontinuance privilege. He does so, in the wake of Hoy v Secretary of State for the Department of Transport (2019), in which Walker Prestons Solicitors was recently ordered to When You Can Recover pay wasted costs arising out of a noise-induced hearing loss claim (NIHL) claim, Wasted Costs? Hoy v Secretary which discontinued only hours before the trial was set to commence. of State for the Department of Transport (Middlesbrough Elsewhere, we report that Kamran Akram, the former Principal of defunct claimant County Court, 17 October firm, Asons Solicitors, has agreed not to ‘apply for a certificate to practice as a 2019) solicitor without first obtaining permission from the High Court’. This has been heralded as a ‘great outcome’ by those who have fallen victim to insurance PAGE 12 fraud.
Setting-Off Costs Against Costs Finally, we reveal possible new methods for detecting ‘acute subconcussive When QOCS Applies: Faulkner injury’, as identified by researchers at the University of Indiana, which may be of v Secretary of State for significant clinical utility if repeated sub-concussive head trauma (e.g. heading Business, Energy And Industrial footballs) is eventually identified as a definite cause of neurodegenerative Strategy [2020] EWHC 296 (QB) disease.
Any comments or feedback can be sent to Boris Cetnik or Charlotte Owen. PAGE 14
‘Good Reason’ to Depart from As always, warmest regards to all. the Costs Budget: Chapman v
Norfolk and Norwich University SUBJECTS Hospitals NHS Foundation Trust (Birmingham County Court, 4 Serving Proceedings Against Dissolved Companies – Wasted Costs – Setting-Off March 2020) Costs Against Costs – ‘Good Reason’ under CPR 3.18(b) – Kamran Akram Compromise Agreement in Committal Proceedings – Updated FA Heading PAGE 15 Guidance.
Former Head of Asons Banned from Legal Practice and Company Directorship
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Football Association Publishes New Heading Guidance, as US Researchers Identify Effects of Heading on Vision and Brain Function
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Strike Out, Contesting Jurisdiction and Restoration in Claims Brought Against Dissolved Companies: Cowley v LW Carlisle & Company Ltd [2020] EWCA Civ 227
The case of Cowley v LW Carlisle & Company Ltd [2020] EWCA Civ 227 regarded a noise-induced hearing loss (NIHL) claim, pursued against 4 former defendant companies that collectively employed the claimant, between 1963 and 2000.
When proceedings were purportedly served at the ‘last known place of business’ of the 3rd defendant (the defendant), on 1 September 2017, the claimant’s solicitors were aware that it had been struck off the Register of Companies and subsequently dissolved.
Around the date of purported service, the claimant’s solicitors also wrote a letter to the defendant (and its insurers), which addressed its assumed position on the legality of the claim, with respect to the defendant’s inactive status.
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Giving instructions on behalf of its employers’ liability (EL) insured, Royal Sun & Alliance (RSA) Insurance PLC contended that proceedings could not be served on the defendant, as it was still dissolved.
However, on 27 April 2018, the defendant’s solicitors (instructed by RSA), indicated that it would likely file an Acknowledgment of Service on behalf of the defendant (‘... we are instructed to act on behalf of L.W. Carlisle & Company Limited’), which would contest jurisdiction on the basis that there had been no attempt to restore the company to the Register, thereby making the proceedings a ‘nullity’.
Accordingly, the defendant filed an application on 2 May 2018, which sought for the claim to be struck out (as an ‘abuse’ of the court’s process and/or for failing to comply with a rule, practice direction or court order), pursuant to CPR 3.4(2). Additionally, or in the alternative, the defendant sought a declaration that the court had no jurisdiction, or would not exercise its jurisdiction, pursuant to CPR 11(6).
The 1st instance application hearing took place on 31 May 2018, before District Judge Etherington, who struck out the claim and ordered the claimant to serve a witness statement showing cause as to why they should not pay the defendant’s costs, summarily assessed at £555, or else the relevant order would be made.
In the course of the hearing, the District Judge rejected the claimant’s submission that restoration of the defendant to the Register would retrospectively validate ‘good service’ of the claim form (per Munby LJ, in Peaktone Ltd v Joddrell [2012] EWCA Civ 1035), as the courts ‘... will only correct errors in procedure where there is imminent restoration ...’
He went on to reject any notion that the claim would be stayed, because the claimant’s solicitors had created a nonsensical excuse with ‘loads of factious technical arguments that all amount to nought’. They had not been ‘practical’ and taken steps to restore the company.
Indeed, it was not until 25 June 2018 that the restoration application was made to the High Court at Manchester (with the order having been granted on 5 February 2019).
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On 14 November 2018, the first appeal of the District Judge’s decision was heard by His Honour Judge Rawlings, at Stoke-on-Trent County Court.
More in hope than expectation, the claimant’s 1st ground of appeal was that the judge had, in actual fact, declined jurisdiction under CPR 11(6). The defendant, in having filed and served its notice of Acknowledgment by 18 May 2018 (the delay having been caused by the fact that the claim was sent to the address of an inactive business), was posited as having been non-compliant with CPR 11(2) and the consequence of doing so therefore had to be that jurisdiction was conceded.
On a 2nd ground of appeal, the claimant submitted that, if the District Judge had instead acceded to an application made by a non- existent party, pursuant to CPR 3.4(2), then he had erred in striking out the claim by this method.
Ultimately HHJ Rawlings concluded that the claimant’s 1st ground of appeal was redundant, as DJ Etherington had clearly acted under CPR 3.4 and not CPR 11. Moving on to the 2nd ground, he reasoned that:
‘... it remained open to the court to exercise its case management powers to strike out a claim on the basis that the purported defendant did not exist and no sensible steps had been taken on the Appellant’s behalf to procure the company’s restoration to the register’.
Strike out was the ‘appropriate’ resolution and fell within the ambit of the District Judge’s discretionary powers of case management – see CPR 3.1(2)(m).
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It was ‘remarkable’ to the Circuit Judge that proceedings were being ‘held up’ by such ‘excessive delay’ in taking steps that were necessary, i.e. restoring the defendant to the register, in conjunction with a stay of proceedings.
So, can a party ‘subvert’ a jurisdictional challenge ‘by the backdoor’, by invoking CPR 3.4 powers?
Based on the decision of HHJ Rawlings, the claimant argued, during the most recent Cowley appeal, that the judge at 1st instance had erred in striking out the case, in accordance with CPR 3.4(2)(c), when the ‘proper challenge’ was to contest jurisdiction under CPR 11 [per Dyson LJ, in Hoddinott & Ors v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 120], with an Acknowledgment of Service filed within the prescribed time limit. Alternatively, the claimant submitted that the defendant’s strike out application waived any right that it had to oppose jurisdiction.
This two-pronged line of argument mirrored the claimant’s 2nd submission in Peaktone, but because the appeal in that case succeeded on the 1st ground (retrospective validation of proceedings was achieved through restoration, under s.1032(1) of the Companies Act 2006), it was not necessary to provide an answer.
In Cowley, Lord Justices McCombe, Holroyde and Jackson also avoided this submission, albeit for a different reason. Claimant counsel’s entire argument centred around the unconvincing assertion that service had been validly effected ‘upon a company which at that time [i.e. when DJ Etherington struck out the claim] did not exist’. Put frankly, one cannot waive jurisdiction to null proceedings.
On the flipside, the Court of Appeal judges struggled to accept that the EL insurer could rely on subrogated authority when making its application in the defendant’s name, if the company was regarded as being non-existent:
‘... it seems such an authority to the Insurers to act as agents for the company may well have lapsed along with its dissolution, just as any agent’s authority would lapse on the death of the principal’.
N.B. If the right of subrogation ‘dies’ with a company, is it fair to assume that an insurer’s contractual liability to indemnify the dissolved is simultaneously extinguished (until it is resurrected by way of restoration)?
Despite this technicality, namely whether the defendant’s application had been ‘properly brought’, it was concluded that DJ Etherington was entitled to consider how best to progress the action in the exercise of his case management powers.
Following the dicta of HHJ Rawlings, the 1st instance judge could not have been faulted for striking out the claim:
‘In our judgment ... he was entitled to consider whether the overriding objective was properly served by the continued presence in the action of the name of a non-existent company. He was entitled to consider whether he should exercise the power to strike out the claim purportedly brought ... and he did not err in principle in making the strike out order ...’
Moving forwards, the Lord Justices of Appeal proposed a non-prescriptive protocol for parties to follow in similar cases involving dissolved companies:
‘An order restoring a company to the register might render insurers retrospectively liable for significant sums in proceedings which they have been in no position to resist. Without being prescriptive, we think that the wise course would be for such an insurer to notify the claimant of the dissolution of the company (if he or she did not know of it already) and to invite/require him or her to make an application for restoration of the company to the register and to apply to the court seised of the main claim for a stay of the substantive proceedings in the interim. In the absence of co-operation in this respect on the part of the claimant, the insurer should write to the court notifying it of the situation and asking it to consider making an order for a stay of its own motion until notified of any order for restoration. Following such a stay, if nothing is done after a sensible time, it would (we think) be open to the insurer to invite the court (of its own motion) to strike out the proceedings’.
It was ‘most disturbing’ to them that the costs expended on this ‘satellite litigation’ were around £50,000, when the NIHL claim was valued at just £5,000.
Full text judgment can be accessed here.
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If it is indeed the case, from Cowley onwards, that insurers are deemed not to have the necessary authority to file an Acknowledgment of Service that contests jurisdiction, pending restoration of the dissolved insured, it may be wise cast aside any possible conflict with Barton v Wright Hassell [2018] UKSC 12 and Woodward v Phoenix [2019] EWCA Civ 985, which assert that a defendant is under no duty to ‘warn the opposing party of its mistakes’.
In proceedings involving a dissolved company, there may be practical benefits of following the ‘Guidance’ of the Court of Appeal over simply doing nothing.
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While Mr. Cox indicated that the claimant could be diagnosed with NIHL, notwithstanding evidence of asymmetrical hearing loss (AHL), Mr. Johnson did not.* What is more, Mr. Cox disagreed with Mr. Johnson, in having concluded that the claimant’s calculated NIHL was not de minimis non curat lex.
Together, the experts prepared a joint statement for the Court (dated 3 June 2019). There was some consensus over the implications of asymmetrical hearing loss detection and it was agreed that supplementary MRI scans would be required to rule out alternative pathology. These scans, however, were never arranged by Walker Prestons Solicitors (the claimant’s solicitors).
Why Stop at Discontinuance When You Can Vis-à-vis the extent of the claimant’s actionable injury, neither expert was Recover Wasted Costs? Hoy v Secretary of State inclined to budge from their original positions expressed in the joint statement. for the Department of Transport (Middlesbrough On account of the disparate medical County Court, 17 October 2019) opinion shared, DJ Cook granted permission for both parties to call their An unfortunate by-product of qualified one-way costs shifting (QOCS) is that defendants experts to give oral evidence at trial, by (and their insurers) often incur costs to defend tenuous personal injury (PI) claims that will order of 10 June. foreseeably discontinue late in the day. Defendants recognise that their costs, until the receipt of discontinuance, are as good as ‘wasted’. Meanwhile, opportunistic claimants, However, just 3-days after the order was with protected costs liability, recognise that brokering early settlement may be cheaper for made (13 June), Walker Prestons informed defendants than winning at trial. the defendant’s legal representatives that its expert would not be called ‘merely to be In these circumstances, are discontinuances truly commendable, or should defendants be present’ and would therefore not be pushing harder for wasted costs and/or QOCS disapplication? attending trial.
Probative commentary on this subject was recently delivered by District Judge Robinson, in The claimant firm advised that the upshot of the County Court case of Hoy v Secretary of State for the Department of Transport (2019). this arrangement would be that Mr. Johnson would respond to Mr. Cox’s reports Our special thanks are due to Damian Powell,1 of Ropewalk Chambers, for supplying BC on cross-examination by claimant counsel. Legal with a copy of the full-text judgment. Having emailed Walker Prestons to find out FACTS OF THE CASE who had been instructed as counsel, the defendant’s solicitors received a response, Hoy regarded a noise-induced hearing loss (NIHL) claim, which had been listed for multi- on 8 July, which named a specific barrister track trial, from 15 to 17 July 2019.2 from a set of Chambers in Middlesbrough as ‘attending the hearing’ (use of the The bone of contention in this case was causation, i.e. whether the claimant’s noise affirmative verb, ‘is’, was deemed to be exposure, between 1972 and 1976, had caused or materially contributed towards the especially relevant). hearing loss. Armed with this information, appointed Both parties instructed ear, nose and throat (ENT) Consultants to provide expert medical defendant counsel (Rochelle Rong, of reports – Mr. Cox (for the claimant) and Mr. Johnson (for the defendant). Ropewalk Chambers) attempted to
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exchange skeleton arguments with I do not intend to set any measure by which percentage a case ceases to be "hopeless", opposing counsel on the final working day but nor would I suggest a case with only a 1 % chance could still be considered to have before trial (12 July), but were soon made hope by virtue of that 1%. Every case must be determined on its own facts, weighing all of aware that no counsel had been the evidence in the balance. Factors such as the amount in dispute, the importance of the instructed. The purported barrister’s clerk issues and the nature of the claim are all relevant to that process’. verified that he was, in fact, unavailable on the dates of trial. In essence, the threshold for ‘hopelessness’ was judged to have been surpassed from the moment at which Walker Prestons intimated that its expert would not face cross-examination Then, in a somewhat inevitable twist, just 1- at trial (13 June). hour before the close of business (4pm), Walker Prestons filed and served a Notice of The inference of DJ Cook’s order granting permission for both experts to give oral evidence Discontinuance. was that, without such evidence, the proceedings could not be ‘resolved’ (for the purposes of CPR 35.1) by the party with whom the burden of proof rested: As a result of this, the defendant made an application that sought to set aside the ‘In the absence of Mr. Cox the Court ... would not be able to ask anything by way of discontinuance (though no application to clarification or amplification, it would not be able to have both Mr. Cox and Mr. Johnson disapply QOCS was made) and recover together to be able to contrast and compare their opinions and further understand the wasted costs. nuances of any differences’.
THE APPLICATION HEARING
Guided by the decision of DJ Baddeley, in Mayfield v Matthews & Sheffield Smelting Company (2019), the hearing Judge was not obliged to set aside the discontinuance before the defendant’s application wasted costs was appraised. Put simply, the claimant had ‘no hope’ of discharging its burden of proof at trial (the ‘... A formal judgment dismissing the claim defendant rated the opposition’s prospects of success as ‘“possible” but “fanciful”) and the cannot be a requirement before a wasted claim was doomed to fail. order can be made on the ground that the lawyer pursued a hopeless case’ [para 34 Hence, from 13 June 2019, ‘the writing was on the wall’ and the claim had become of Mayfield]. ‘hopeless’.
Wasted Costs (Step 1): Was This a ‘Hopeless’ N.B. Incidentally, it was after the 1st stage of the wasted costs assessment that DJ Robinson Case? cogently addressed the issue of setting aside the discontinuance, as ‘hopelessness’ is a prerequisite for both types of order. Scrutinising correspondence between both parties’ DJ Robison determined, firstly, that for a solicitors in the run-up to trial, it was deemed, on the balance of probabilities, to be ‘not claim to become ‘hopeless’, it should fall only disingenuous, but ... dishonest ... by the standards of an ordinary, reasonable under the definition specified by Oxford individual who had his knowledge’ for Walker Prestons to play a ‘dangerous game of Learner’s Dictionaries: chicken’, when lying about the instruction of counsel. This was ‘abusive’ and satisfied the defendant’s request for the discontinuance to be set aside. ‘... if something is hopeless, there is no 3 hope that it will get better or succeed’. Wasted Costs (Step 2): What Are the Standards of a Reasonable and Competent Legal Representative? ‘Hopelessness’ must be ‘clear-cut’ and refer to the ‘totality of evidence’. The judge was Having opted not to call its expert to give oral evidence, it was, as recognised above, careful not to give the impression that apparent that there would be ‘no hope of success at trial’, not even enough to encourage solicitors should be deterred from a ‘nuisance offer’. In light of this, DJ Robinson declared: proceeding with ‘perceived “risky” cases’, e.g. those with 20% prospects of success. ‘... I do not find that a reasonable and competent legal representative would have continued with the case’ [per Lantham LJ, in Dempsey v Johnstone [2003] EWCA Civ 1134]. Nevertheless, DJ Robinson was not inclined to identify an objective measure of As a result, it could be said that the claimant’s solicitors had acted ‘unreasonably’, in ‘hopelessness’: accordance with s.51(7) of the Senior Courts Act 1981 and Practice Direction 46 para 5.
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Wasted Costs (Step 3): Did Walker Prestons’ Conduct Induce the Defendant to Incur Costs?
From the moment that the claim turned out to be ‘hopeless’, the judge found, on the balance of probabilities, that the defendant had incurred ‘tangible’ costs, e.g. preparing for conferences, putting together brief to Counsel, final planning, etc.
By allowing this to happen, it was his view that Walker Prestons’ conduct could not be characterised as the conduct of a ‘reasonable prudent solicitor’. In order to meet this description, a solicitor would be expected to ‘act diligently to explore options at the earliest juncture and not leave matters to the wire’, i.e. not discontinue hours before trial after the claim was rendered ‘hopeless’.
Wasted Costs (Step 4): Was it ‘Just’ to Award Wasted Costs, in All Circumstances?
On this final question, counsel for the claimant sought to hide behind legal professional privilege, but this strategy was ultimately ineffective. DJ Robison was able to make a wasted costs order without the issue of privilege having been engaged. His decision had been based on ‘findings of fact’ and the ‘substantive evidence’. It was significant that there had been an additional finding of ‘dishonesty’.
Accordingly, the County Court judge made an order, setting aside the Notice of Discontinuance and further made a wasted costs order against Walker Prestons, in favour of the defendant, from the date that the claim became ‘hopeless’. These costs were assessed at £13,800 and were payable within 21 days of the order being made.
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* [In edition 165 of BC Disease News (here), we analysed medical papers, produced by Dobie (2014)4 and Masterson et al (2016),5 which undermined the association between AHL and occupational noise exposure. In the edition that followed (here), we quoted Her Honour Judge Staite, in Cran v Perkins Engines Company Limited, who further supported this position:6
‘I do not find ... that symmetrical noise exposure might, on balance of probability, cause asymmetrical hearing loss’.
More recently, in a review of de minimis decisions (here), including Harte v Hawker Siddeley Dynamics Ltd & 2 Ors7 and Nicholls v Osram Ltd & Anor,8 we observed that judges had commonly remarked that the presence of AHL had benefitted defendants, i.e. the better ear was typically taken as being the ‘more reliable’ ear.
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Setting-Off Costs Against Costs When QOCS Applies: Faulkner v Secretary of State for Business, Energy And Industrial Strategy [2020] EWHC 296 (QB)
Two weeks ago (here), we recapitulated the case of Cartwright v Venduct Engineering Limited [2018] EWCA Civ 1654, in which BC Legal helped to establish that, in ‘mixed success’ multi-defendant personal injury (PI) proceedings, a triumphant defendant may enforce its costs against a claimant, up to the level specified by an ‘order for damages’ against an unsuccessful, paying defendant.
Our reason for doing so was that the Civil Procedure Rule Committee (CPRC) had just finished considering whether CPR 44.14(1) should also encompass compensation paid by Tomlin orders and Part 36 offers, which could not be described as ‘orders for damages’.
In this article, we move on from enforcement (effectively set-off) of costs against damages, under CPR 44.14(1), to assess whether defendants can similarly set-off costs against costs.
In other words, can a defendant, entangled in PI claims where qualified one-way costs shifting (QOCS) applies, set-off costs (that it has been ordered to pay to a claimant) against awards for costs (in its favour)?
We consider this issue, in light of the recently decided case of Faulkner v Secretary of State for Business, Energy And Industrial Strategy [2020] EWHC 296 (QB).
The brief facts were as follows.
A claim was brought against a defendant former employer (the Government), which had exposed the claimant to tortious levels of occupational dust and allegedly caused him to develop lung disease.
At a case management conference (CMC), which ordered a trial of preliminary issue (on diagnosis and causation), the defendant was awarded costs of £3,500 [of course, these were not enforceable, due to the application of QOCS].
Before the trial took place, however, the claimant discontinued against the single defendant party, safe in the knowledge that its liability for costs was protected.
Consequently, the defendant applied to set aside the notice of discontinuance (with a view to disapplying QOCS), but this was unsuccessful and the defendant was ordered to pay the claimant’s costs of the application hearing, which amounted to £7,000.
In this scenario, was it possible for the claimant’s costs to be set-off against the costs that the defendant was awarded at the CMC, so that the defendant’s total liability was reduced to £3,500 (£7,000 minus £3,500)?
Whilst the claimant contended that such a mechanism was not comprised in CPR 44.14(1), as costs are plainly not ‘orders for damages and interest’, the defendant submitted that the court had the power to circumvent QOCS by ordering a set-off against costs, under CPR 44.12(1).
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Unlike the primary issue (whether set-off of costs is possible), it could not be said that there was conflicting case authority on this auxiliary issue. There was no aspect of Lewison LJ’s judgment, in Howe, which was capable of casting doubt over the soundness of the approach employed in Darini.
HHJ Dight had heard full arguments on the issues relevant to the exercise of discretion and would have exercised his discretion to overturn set-off, if required:
If the court was bestowed with such a power, the claimant argued that the court retained a ‘But for the defendant's application, the residual discretion not to exercise it. position would have been simple. The claim had been discontinued, the defendant's This issue was fell to be determined by Mr. Justice Turner, at the High Court, and judgment ability to enforce the deemed costs order was handed down on 18 February 2020. in its favour by virtue of CPR 38.6 would have been effectively nil. Can costs be set-off against costs in QOCS-protected claims? It cannot be correct that a defendant is In support of his argument, the claimant cited the factually comparable case of Darini & able ... to bring an unsuccessful Anor v Markerstudy Group (24 April 2017, Central London County Court), which we application which is dismissed with costs summarised in edition 191 (here). On that occasion, His Honour Judge Dight determined but, as a result, places the claimants in a that costs could not be set-off against costs, for the following reason: worse position than they would have been but for that application. The application ‘Section 2 (that is Rules 13, 14, 15 and 16) [of Part 44] is, in my judgment, a self-contained has been brought and has caused the code to the extent that it gives QOCS protection to personal injury claimants. It is to be claimants to incur additional costs. The contrasted to section 1 of Part 44 and, notwithstanding the absence of words such as court has held that the claimants should be “subject to”, it seems to me that it necessarily creates a different procedural environment entitled to those costs in principle, thereby for the costs of personal injury claims’ [paragraph 22 of Darini]. placing the claimants back in the position they would have been but for the Contrast Darini against Howe v Motor Insurers’ Bureau (No 2) [2017] EWCA Civ 2523, in which application. However, the effect of the set- Lord Justice Lewison found that the court had jurisdiction, by virtue of CPR 44.12, to order a off is then to prevent the claimants from ‘set-off of costs’. being placed back in that same position, but rather to leave them effectively paying Rather than seeing ‘set-off’ as a ‘species’ of ‘enforcement’, the Court of Appeal segregated their own costs for the defendant's failed ‘set-off’ and ‘enforcement’ as separate processes. This was substantiated by the fact that: application’.
‘... Part 44.14 enables enforcement without the permission of the court, whereas 44.12 Observing the ‘obvious danger’ of laying requires the permission of the court or at least a court order in order for one set of costs to down general rules on the exercise of be set off against another’. ‘procedural discretion’, which is intended to provide ‘flexibility ... in circumstances of In these circumstances, Turner J declared that Howe was the binding authority on this issue infinite potential permutation’, Turner J and Darini was therefore no longer good law: identified that when exercising discretion to set-off costs against costs, ‘each case must ‘... it would be an act of hubris on my part to embark on any discussion concerning which be decided on its own facts’. of the two irreconcilable decisions is academically the more compelling. In short, depending on the material facts of ... the case, sometimes set-off will be appropriate and other times, it will not. It must follow that the defendant succeeds on this issue’. Faulkner happened to be a case where Should the court exercise its residual discretion to thwart set-off? discretion was exercised against the
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defendant’s attempted set-off, thereby the Court, on a Detailed Assessment, is empowered to sanction such a departure if it is entitling the claimant to gross costs of satisfied that there is good reason for doing so. That, of course, is a significant fetter on the £7,000. Court having an unrestricted discretion: it is deliberately designed to be so. Costs Judges should therefore be expected not to adopt a lax or overindulgent approach to the need Although the claimant’s evidence was to find good reason, if only because to do so would tend to subvert one of the principal ‘vulnerable’, such that the defendant would purposes of costs budgeting and against the overriding objective. have been ‘fairly confident’ of success at the trial of preliminary issue, the ‘strength’ of As to what would constitute good reason in any given case, I think it much better not to the defendant’s case did not amount to a seek to proffer any further, necessarily generalised guidance or examples; the matter can CPR 44.15 QOCS exception (no reasonable safely be left to the individual appraisal and evaluation of Costs Judges by references to grounds/abuse of process/obstruction of the circumstances of each individual case’. just disposal). Last week, County Court judgment was handed down in the case of Chapman v Norfolk Thus, the defendant’s application to set and Norwich University Hospitals NHS Foundation Trust (2020), wherein District Judge Lumb aside the claimant’s discontinuance could provided ‘detailed reasoning’ as to why he had not established ‘good reason’ to depart only be described as ‘very weak’, while its from the costs budget, as laid down in a costs management order (CMO). prospective application for strike out was ‘doomed to failure’. He provided some objective guidance on how judges at detailed assessment might distinguish conduct that constitutes ‘good reason’, for the purpose of CPR 3.18(b), from ‘... the ... notice of discontinuance ... albeit conduct that does not. served late in the day, had had the effect of saving it [the defendant] money.
I can well understand the defendant's frustration that the notice was not served earlier but the resilience of the QOCS regime is such as to limit very strictly the inroads which can be made into the scope of its application’.
Full text judgment can be accessed here.
‘Good Reason’ to
Depart from the Costs Chapman stemmed from a successful claim for damages for clinical negligence against Budget: Chapman v the defendant.
Norfolk and Norwich The CMO, made by District Judge Kelly, accounted for phases of the receiving party’s University Hospitals NHS budget (‘Expert Reports’ and ‘ADR’), which, upon conclusion of the case, were incomplete (because the claim settled pre-trial). Foundation Trust In these circumstances, could the claimant expect to recover full costs, as specified by the (Birmingham County CMO, or was this a scenario where a judge would be entitled to find that there was ‘good reason’ to depart? Court, 4 March 2020) DJ Lumb, when introducing the issue before him, acknowledged that ‘good reason’, per In edition 190 of BC Disease News (here), we Davis LJ in Harrison, was a ‘high hurdle’ to overcome. He also revealed that there were not précised the Court of Appeal judgment in many reported judgments in circulation where Courts had found ‘good reason’ to depart Harrison v University Hospitals Coventry & and that this was ‘unsurprising’ to him, as assessment is ordinarily conducted on a case-by- Warwickshire NHS Trust [2017] EWCA Civ case basis. 792, in which Davis LJ elucidated that: Nevertheless, the County Court judge was provided with a transcript of Salmon v Barts ‘... where there is a proposed departure Health NHS Trust, an unreported non-binding judgment.9 In this factually similar case, His from the budget, upwards or downwards, Honour Judge Dight concluded that: PAGE | 14
‘... having regard to what was said by Lord Thus, in cases where the costs outlay is within budget, ‘very clear evidence of obvious Justice Davis in the Harrison judgment, the overspending’ is needed before arguments on ‘good reason’ will be entertained, let alone fact that the sum claimed is lower than the assented to. budgeted figure, because of the indemnity principle, is itself capable of being a good Whilst the District Judge re-affirmed that the CMO is not a ‘rubber stamp of automatic reason’ [paragraph 36]. entitlement’, it is a type of order that allows the spending party to go about their business how he/she wishes: However, DJ Lumb disagreed with the Designated Circuit Judge for Central ‘It is not the role of the Costs Judge at Detailed Assessment to carry out a calculation of London’s proposition that failing to spend what, in his view, is the level of the proportion of a budgeted phase that a prudent receiving ‘the totality’ of budgeted figures amounts to party would have incurred where that phase has not been completed. Such an approach ‘good reason’ and invites the paying party would completely undermine the whole purpose of costs budgeting in the first place. One to make further submissions on a more of the principal objectives of the budgeting regime was to reduce the number of Detailed ‘appropriate’ figure: Assessments. Such an approach would potentially lead to a Detailed Assessment of budgeted costs in every case that settled before trial’. ‘If that approach was correct virtually every case would go to Detailed Assessment and To avoid an opening of floodgates, DJ Lumb implied that ‘good reason’, in principle, must there would be a perverse incentive to a require ‘something amounting to a specific and substantial point arising in the case, as prospective receiving party to overspend opposed to merely a general point’ if it is to be used as an ‘important safeguard against a and marginally exceed every phase in real risk of injustice’. order to avoid a Detailed Assessment ... that cannot possibly have been the intention of In the same way that partially spent budgets are unlikely to constitute ‘good reason’, the the rule makers’. Judge held that complaints of budgets being set ‘too generously’ or ‘on too miserly a basis’ will be met with equal response. He warned against creating ‘double jeopardy’ situations, In the present case, it was clear that DJ Kelly which have the propensity to ‘undermine’ the budgeting process. had created ‘certainty’, by properly assessing the range of ‘reasonable’ and Full text judgment can be accessed here. ‘proportionate’ costs for each phase and determining the ‘limit of recoverability’. Even though phases were left incomplete, Former Head of Asons Banned from Legal Practice work in relation to these phases had been and Company Directorship done:
In the final week of February, The Bolton News reported that Kamran Akram, the former ‘Any suggestion otherwise would be Principal Director of disgraced claimant firm, Asons Solicitors Limited, had agreed to the tantamount to an allegation of fraud and terms of a court order, prohibiting him from obtaining a licence to practice. In a separate serious professional misconduct of wrongful action, Mr. Akram has also been disqualified from becoming a company director for 7- certification of a bill that contravened the years.10 Indemnity Principle’.
Asons was intervened by the Solicitors Regulation Authority (SRA) in March 2017, to protect What is more, it could not be said that there the interests of existing and former clients. In the same month, the business was shut down had been ‘deliberate’ overspending or by the Regulator and Mr. Akram’s practising certificate was automatically suspended. costs building to ‘use up the allowance in the budget’, despite the fact that Disciplinary action was subsequently started, alleging that Mr. Akram had: expenditure was greater than one might have expected for the stage that the • ‘Caused or permitted the presentation of applications for costs in PI claims which parties had reached: systematically misrepresented the grade of relevant fee-earners so as to increase the level of recoverable costs [Allegation 1.1]. ‘... if they had continued to incur those costs • Caused or permitted the presentation of applications for costs in PI claims which at that rate until the ultimate conclusion of were inflated by the inclusion of costs for "file reviews" including in relation to the a trial, they would have exceeded the bills of costs and supervision of the claimants' retainers purportedly carried out by budgeted figures for those phases, at risk of the Respondent or another legally qualified fee earner when no such review of the being unable to recover those excess file had taken place and no supervision had occurred [Allegation 1.2]. costs’. • Caused or permitted the presentation of claims for special damages which contained particulars that were false in that the event, loss or treatment alleged to
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have given rise to the special damages claim had not occurred or did not exist down of judgment. Under the terms of the [Allegation 1.3]. agreement reached, it was arranged that • Caused or permitted Asons to act in circumstances giving rise to a conflict of Mr. Akram would not ‘apply for a certificate interest between Asons and its clients, specifically in relation to the resolution of to practice as a solicitor without first personal injury claims where Asons' applications for costs and/or special damages obtaining permission from the High Court’. were the subject of challenge by the Defendant insurers (and/or their representatives) [Allegation 1.4]. With Mr. Akram having been made • Provided misleading information to the court and/or the SRA in relation to the false bankrupt, in March 2019, following a 11 and inflated claims for costs and special damages presented on behalf of clients petition filed by CLB Insurance, the of Asons [Allegation 1.5]. insurer’s legal costs, totalling £250,000, will be paid by his family. • Caused or permitted payments of prohibited referral fees [Allegation 1.6].
• Acted as a proxy for Imran Akram, who was not on the Roll of solicitors but who Praising the result of this action, Andy Nixon, had de facto management and control of Asons [Allegation 1.7]. Fraud Operations Manager at Esure, stated: • Failed to run his practice or carry out his role as sole principal, COLP [Compliance
Officer for Legal Practice] and COFA [Compliance Officer for Financial ‘This is a great outcome and reflects our Administration] of Asons effectively and in accordance with proper governance determination and commitment in tackling and sound financial and risk management principles [Allegation 1.8]’. insurance fraud. This was an important
result for Esure and the wider industry as it We provided full commentary on the Solicitors Disciplinary Tribunal hearing, in edition 239 demonstrates the action that will be taken of BC Disease News (here). when professional enablers are found to be
aiding fraudulent activity’. While Mr. Akram was cleared of all ‘dishonesty’ charges, he was deemed to have ‘lacked integrity’ and behaved ‘recklessly’, often putting his own interests and the interests of the Mr. Akram’s removal from the industry will firm above the interests of Asons’ clients (by ushering discontinuances via ‘self-serving’ simmer ‘concerns’ that more ‘fabricated letters when costs/damages were disputed). He had breached his duty of trust as Principal, and exaggerated claims’ could be a position which yielded direct control and responsibility of the business. generated if he was not struck off from the
roll. ‘Significant’ harm caused to the reputation of the profession, coupled with ‘high levels’ of culpability, meant that the only appropriate sanction was an ‘immediate suspension’. Elsewhere, Mr. Akram’s failure to ‘exert
adequate control over the financial affairs Although the absence of ‘dishonesty’ precluded the enforcement of an ‘indefinite of Asons’, between late 2013 and early suspension’, the shortest justifiable term was 18-months, within which Mr. Akram was 2015, has caused The Insolvency Service to expected to ‘properly reflect on his conduct and to demonstrate to the profession and the disqualify him from holding a company public how seriously the Tribunal took these breaches’. director role for 7-years, commencing 21
February 2020. On the Service’s website, his He was also ordered to pay costs, in the sum of £115,000. sanctionable conduct was that:
At the time, the fact that Mr. Akram’s misconduct (comprising breaches of the SRA Principles ‘Asons issued 159 bills of costs where the 2011 and the SRA Code of Conduct) had not involved the misappropriation of client funds amount claimed was either misrepresented resulted in no additional restrictions being imposed by the Tribunal. Instead, this or inflated, resulting in Asons insurers having responsibility was deferred to the SRA, once the period of suspension had ceased. to pay £838,854’.12
However, this was not the end of the road for Asons’ sole shareholder.
Recently, the High Court in Manchester was due to deal with committal proceedings, advanced by motor insurer, Esure.
The test case regarded a fraudulent road-traffic accident (RTA) claim, brought by Asons in
2015, which adduced false documentation and included £6,000 of fabricated pleadings
(in relation to medical treatment).
Having listened to the evidence presented at court, Mr. Akram acknowledged that the consequence of his immersion in claims fraud was likely to be severe (potentially a custodial sentence) and was prompted to compromise his position, prior to the handing
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Football Association Publishes New Heading Guidance, as US Researchers Identify Effects of Heading on Vision and Brain Function
In edition 302 of BC Disease News (here), we reported that UK football authorities would soon be releasing detailed guidelines to introduce a phased ban of heading in youth football training sessions.
On schedule and with ‘immediate’ effect, updated heading guidance was disseminated a fortnight ago, courtesy of the Football Association (FA).13
The FA’s Head of Grassroots Coaching, Les Howie, considers this ‘common sense, practical and graduated guidance’ to be a ‘natural evolution of the game’ and has quelled accusations that this is an ‘over cautious’ move. Additional to the information provided in the table above, he advises that coaches also inflate footballs to the ‘lowest pressure authorised by the Laws of the Game’.14
The catalyst for the Association’s program of precautionary measures is mounting scientific evidence that cumulative football-related head trauma (potentially heading of footballs), of a sub-concussive nature, increases the risk of neurodegenerative disease.
In the ‘landmark’ study of 7,676 male ex-professional players: Football's InfluencE on Lifelong health and Dementia risk (FIELD), researchers observed: • A 5-fold increase in risk of Alzheimer’s disease; • A 4-fold increase in risk of motor neurone disease; • A 3.5-fold increase in risk of dementia [including chronic traumatic encephalopathy (CTE), also known as dementia pugilistica]; and • A 2-fold increase in risk of Parkinson’s disease.
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A potential issue, if the repeated impact of closest point at which there is a ‘break in fusion’ between that which both eyes see,17 i.e. heading a football were to be identified as where a single object is perceived as 2 objects, rather than 1. The medical term for double a definite cause of latent brain disease, is vision is diplopia.18 Normal NPC values would typically extend up to 10 cm (from the object that unlike concussion, which presents with to the nose). recognisable signs and symptoms in the immediate aftermath of head trauma, Performing the NPC test relies on eyes converging, which is made possible by coordinated there are currently no known markers of stimulation of the 3rd cranial nerve (oculomotor), which controls the medial rectus muscle in sub-concussive head injury. the eye, and inhibition of the 6th cranial nerve (abducens), which controls the lateral rectus muscle in the eye.19 If this process does not occur (potentially due to sub-concussive head This would therefore put sub-concussion trauma?), NPC test scores may be distorted by convergence insufficiency. sufferers at risk of being overlooked, from a clinical perspective.
However, The Daily Mail,15 a fortnight ago, revealed that researchers at the University of Indiana, have, in the first trial of its kind, pinpointed possible new methods for detecting ‘acute subconcussive injury’.
Findings were published the JAMA Ophthalmology journal, last month.16
67 male footballers, with a mean age of 20.6 years, were split into 2 groups. The test [Source: Wikimedia Commons – OpenStax College (28 May 2013): ‘Illustration from Anatomy & Physiology, Connexions Website’] group, comprising of 36 participants, was asked to head a ball 10 times. The control In 2016, Dr. Kawata conducted a small-scale quasi-experimental study, which hinted that group, by contrast, was asked to kick a ball ‘oculomotor processes are disrupted, at least transiently, by repetitive mild [especially 10 times. Mimicking typical speed of play frontal] head impact’.20 during matches, balls were projected at a speed of 25 miles per hour (mph). This latest study aimed to reproduce earlier findings and was successful in doing so. Heading the ball ‘significantly worsened’ NPC and this persisted for up to 24-hours. However, While the motion of kicking a football did while the NPC change was statistically significant, it was not clinically significant – the not induce detectable levels of head oculomotor impairment was ‘mild’. acceleration with a triaxial accelerometer, linear and rotational accelerations were Based on claims that NFL, football, ice hockey, and rugby players sustain a mean recorded among those that headed the frequency of 650 sub-concussive head impacts per season, yet mild impairment was ball. observed with only 10 impacts, the study authors called for standardised guidelines to monitor athlete safety. Besides head acceleration, the researchers also measured changes in visual and Supplementary to the effects on oculomotor function, it was also hypothesised that sub- cognitive function (oculomotor and neuro- concussive impacts would attenuate neuro-ophthalmologic function (vision, control of eye ophthalmologic) over time [pre-activity movements, pupillary reflexes, etc.). To assess this, participants undertook the King-Devick® (baseline); 0 hrs-post (straight after activity); test (KDT). 2 hrs post; and 24 hrs post], with Lead Author, Dr. Keisuke Kawata, deducing that: The digital application is endorsed by the Mayo Clinic, an American not-for-profit academic medical centre.21 It is a 2-minute number naming examination, in which an in ‘... sub-concussive head impacts may individual reads aloud single digit numbers in a left-to-right sequence, as fast as they can affect neuro-eye function, at least in the (while trying to avoid making errors), thereby allowing clinicians to identify defective eye short term’. movement, attention levels, language function and other areas that correlate with sub- optimal brain function.22 To assess oculomotor function (movement of the eye and eyelid), which was already known to be sensitive to brain trauma, the researchers performed the near point of convergence (NPC) test. This measures the PAGE | 18
BC Legal adaptation of a King-Devick®-style test:
What the researchers witnessed, was that the kicking-control group performed KDT faster than the heading group at every interval, even though both groups improved at every interval. This implies that headers ‘transiently blunted’ the neuro-ophthalmologic ability to learn and adapt to the KDT.
Another difference recorded was that errors (skipping or misreading) made by heading group increased at every stage of the investigation, peaking at the final interval (24 hrs post). Of course, a conceded limitation of this study was that the interval range was small and peak errors could theoretically have extended beyond the 24-hour mark.
In summary, the Indiana University academics concluded by stating:
‘Our data support the concept that repetitive subconcussive head impacts can result in short-term neurophysiological alterations that can be observed as acute neuro- ophthalmologic functional impairment. These data highlight the temporal vulnerability of neuro-ophthalmologic function following subconcussive head impacts. These measures can be a useful clinical tool in detecting acute subconcussive injury’.
Looking to the future, therefore, it will be interesting to see if those who are diagnosed with acute subconcussive injury through KDT and NPC analyses go on to develop neurodegenerative disease.
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References
1 Damian Powell, ‘Court orders Claimant’s Solicitors to Pay Defendant’s Wasted Costs Following Late Discontinuance in NIHL Claim’ (October 2019 Ropewalk Chambers)
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Disclaimer
This newsletter does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to provide an update on issues that may be of interest to those handling occupational disease claims. Specialist legal advice should always be sought in any particular case.
© BC Legal 2016.
BC Legal is a trading name of BC Legal Limited which is registered in England and Wales under company number 08963320. We are authorised and regulated by the Solicitors Regulation Authority. The registered office is 1 Nelson Mews, Southend-on-Sea, SS1 1AL. The partners are Boris Cetnik and Charlotte Owen. More details on the firm can be found at www.bc- legal.co.uk
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Directors: B. Cetnik, C. Owen Registered Office: 1 Nelson Mews, Southend-On-Sea, SS1 1AL PAGE | 22 BC Legal is a trading name of BC Legal Limited which is registered in England and Wales under company number 08963320 We are Authorised and Regulated by the Solicitors Regulations Authority (SRA No 617698)