Here it comes!
Date: 01 July 2011
Authors: Dominic Regan
Issue: Vol 161, Issue 7472
Categories: Opinion, Costs
By the time that you read this the Legal Aid, Sentencing and Punishment of Offenders Bill will already have had its second reading in the House of Commons. The indecent haste is explained by money. As a perpetual defendant in all sorts of costs bearing claims, the state will find itself better off as a result of changing the costs rules. The ponderous title gives no clue to the profound changes to civil procedure contained within.
The essence of Jackson is found in cl 41 to 44 with Pt 36 reform lurking under
cl 51. What precisely is coming?
Clause 41 ends the recoverability of success fees and places a cap on the amount the legal representative can recoup from the damages recovered from his own client, who now becomes liable to pay the uplift. The measure will also limit the categories of damages from which the deduction can be made. Sir Rupert was insistent that, in injury cases, awards for future loss should be ring-fenced.
Contingency fees or, as the Bill calls them, damages based agreements (DBA) are introduced into litigation by cl 42. They will not be allowed in family proceedings. The lord chancellor is given the option, not the obligation, to prescribe rules on two fronts. He may specify what information the client must be given at the outset and he may specify the maximum amount payable from the damages recovered by the client. I would have thought that a percentage cap rather than a specific sum would make more sense but it may be that there is no Reg at all. Noteworthy is the abandonment of the Jackson suggestion that the client should never be allowed to enter into a DBA without first sending the client off for independent advice.
After the event premiums cease to be recoverable under cl 43, thus wiping out a whole segment of the insurance industry. A modest exception is made by inserting into the Courts and Legal Services Act 1990 a new s 58(C). This will permit the continuing recovery of premiums in some clinical negligence cases insofar as the cost is confined to expenditure on experts reports. That is the solitary concession made to clinical negligence practitioners.
We then jump to cl 51 which paves the way for Pt 36 reform. Several commentators have asked why this was excluded from the Bill. It wasn’t. It was just divorced from the other measures. The clause empowers new Rules of Court to be made and two major Jackson proposals are permitted by them. The first is the ability to give a claimant enhanced damages where they have made a good Pt 36 offer which the defendant did not accept. Sir Rupert proposed a straight, fixed uplift of 10% on quantum in cases worth up to £500,000. The claimant so becomes a direct beneficiary of a good offer and the defendant is put under even greater pressure to settle or run the risk of paying out even more.
The second strand is the power to define or rather redefine success. It will be remembered that the Court of Appeal in Carver v BAA [2008] EWCA Civ 412, [2008] 3 All ER 911 brought into account non-pecuniary factors such as anxiety and delay. Within 24 hours His Honour Michael Cooke had identified the impossibility of the new test. How on earth is one to put a value, as one must under the test, on these factors? How much would Miss Carver have needed to recover in order for the court to say she was right to carry on? All we know from Carver is that £51 more than the defendant offered was not enough.What was? This criticism was taken onboard in Gibbon v Manchester City Council [2010] EWCA Civ 726, [2011] 2 All ER 258 where at para 41 of the transcript the Court of Appeal backed away and emphasised that money is the primary indicator of success. Sir Rupert Jackson’s view, identical to that of Michael Cook, was reproduced in the transcript. Carver is now of diminished importance. The Act will enable us to return to the days of beating an offer by a slender financial margin and so being adjudged the winner. Certainty is everything. A moron in a hurry will be able to identify the winner; look at the numbers and leave it there.
I have read this turgid bill twice and cannot see one-way costs shifting, an utter fundamental of Jackson reform. The idea of giving the claimant a 10% uplift on general damages so as to enable them to meet the payment of their own additional liabilities is not there either, although we have seen the Court of Appeal increase damages by diktat in Heil v Rankin [2001] QB 272, [2000] 3 All ER 138 so that could be repeated.
Not a word is said about referral fees but a bandwagon against them is starting to rumble with a leader in The Times this week decrying them and a BBC Panorama special shot and due for broadcast in early July. Legal aid is ravaged and withdrawn from clinical negligence work. I am the first to accept that it is at present expensive, too expensive, but that does not justify a glib solution of killing it off. By all means critically analyse claims, encourage a conciliatory approach but throwing the baby out with the bathwater is plain wrong.
The Ministry of Justice wants to save money. Within the department there are six civil servants who are paid more than the prime minister. What for? As I write, the newspapers are full of the story that prisoners were paid something like £10m to settle various claims according to figures just published. Wait until word gets out that a few weeks ago £5m was paid out in one group action to settle Goodale v Ministry of Justice.
Professor Dominic Regan advises the senior judiciary on law reform. E-mail: dominic@dominicregan.co.uk. Website: www.profdominicregan.blogspot.com
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