Rai (Rainworth Manor Private Hospital) v Commission for Health Audit Inspection [2003] EWCST 253(EA Costs) (14 December 2005)

Dr  Sudaram  Rai 
(Rainworth Manor Private Hospital)
– Appellant
-v-

Commission for Health Audit Inspection
(Healthcare Commission) 
 [2003] 253 EA
- Respondent

Before
Rev. Maureen Roberts - Chairman
Dr. Christopher Treves Brown
Mr Jeff Cohen

DECISION ON COSTS

On the 2nd of December 2005 sitting at the Care Standards Tribunal office in Pocock Street London.

The Appellant did not attend.
The Respondent was represented by Mr. Mullins of Counsel instructed by Bevan Brittan

1.   On the 11th July 2003 the Respondent issued a cancellation notice in respect of the registration of Rainworth Manor, a low secure mental health unit. The Appellant appealed against this decision. The Tribunal dismissed the appeal on 19th October 2004. The decision was reviewed on 24th January 2005, when the original decision was upheld. Following the determination of the case the Respondent has applied for costs. 

2.   The Respondent has supplied the Tribunal with two schedules of costs. The first, showed the Respondent’s costs up to and including the substantive hearing on 18th and 19th October 2004, in the sum of £27,643.05. The second issued in May 2005 included the costs of the review hearing and the preparation of the costs schedules. This is in the sum of £32,253.75.

3.   The Respondent relies on the following grounds in support of its application for costs: 
a.	The Appellant unreasonably brought the proceedings having earlier accepted the failures identified by the Respondent in its notice of proposal to cancel his registration in written representations dated 12th September 2003.
b.	the Appellant at all stages of the proceedings failed to comply with directions made for the proper and reasonable conduct of the proceedings
c.	the Respondent never knowing the applicant's case, incurred substantial costs as a result of his unreasonable conduct.

The Law.

4.   The Protection of Children and Vulnerable Adults and Care Standards Tribunal Regulations 2002, Regulation 24(1) (2), and (3) provides:

(1)  'Subject to Regulation 31  and paragraph 2  below, if in the opinion of the Tribunal a party has acted unreasonably in bringing or conducting the proceedings, it may make an order ( a costs order) requiring that party (" the paying party") to make a payment to the other party (" the receiving party"). 

(2)	Before making costs order against a party, the Tribunal must –
a.	invite the receiving party to provide to the tribunal a Schedule of costs incurred by him in respect of the proceedings; and
b.	invite representations from the paying party as consider any representations he makes , consider whether he is able to comply with such an order and consider any written information which he has provided.

 (3)	When a making a costs order, the Tribunal must –
a.	order the payment of any sum which the parties have agreed should be paid;
b.	order the payment of any sum which it considers appropriate having considered any representations the parties may make; or
c.	order the payments of the whole or part of the costs incurred by the receiving party in connection with the proceedings as assessed.

5.   We have had regard to previous decided cases on costs made in this jurisdiction and in particular the cases of Funcamps Ltd & Ors v Ofsted (2003) EWCST 124 (EY) 12 May 2003 and Akhter & Anor (Woodbine Villa) v NCSC (2002) EWCST 116 (NC) 27 October 2003. Bromfield Rabley v Secretary of State [2004] 324 PC and Mr T Gibson and Mrs L Gibson v The Commission for Social Care Inspection [2004] 265 and 266 EA. These cases give a number of guidelines the following of which are applicable to the facts in this case:

a.	that "the test in regulation 24 (1) is a high one and  the burden is on the receiving party to satisfy the Tribunal to that standard that the paying party has acted unreasonably".
b.	that the Regulation creates a presumption in favour of no order for costs.

c.	a paying party in proceedings before this Tribunal need only to be shown "not to have acted in accordance with reason or good sense"  (definition of unreasonable from the Shorter Oxford Dictionary).
d.	that litigants in person are not to be judged by the standards of qualified and experienced lawyers.
e.	“costs orders are more likely to be made where a party has acted unreasonably in conducting the proceedings”
f.	There is a process for the Tribunal to follow. It must first determine whether there has been unreasonable conduct in the proceedings and if it does so then move on to consider in its discretion whether a costs order should be made. In making this decision it will have regard to the nature gravity and effect of the unreasonable conduct on the proceedings. It will also consider the paying party’s means.

6.   We do not find that the Appellant was unreasonable in bringing the proceedings. The Respondent relied on the extensive admissions made in the letter of 12th September 2003 to support this ground of its application. However it is not uncommon for Appellants to make admissions which they later seek to withdraw or modify on appeal. The Appellant was also basing his appeal on his intention to engage a new management team to run the hospital in accordance with the standards, although this plan subsequently failed to materialise. 

7.   However, in this case the Tribunal made a number of findings in respect of the Appellant’s failure to comply with directions and prepare papers for the hearing. Our concerns are recorded in our decision in paragraphs 12, 13, 14, 15, 16, 20, 21, 22, and 23.

8.   By way of explanation the Appellant said that his shortcomings were caused by his ill health. It was for this reason that he said he was not able to prepare for the tribunal and the reason why he had asked for a number of adjournments. He also said that he was unable to afford legal help to prepare for the case.

9.   The Appellant said on a number of occasions that he had been a member of a tribunal. If this is the case he would have been well aware of the procedure to prepare papers for a hearing. We also bore in mind that the Appellant is a professional man, qualified as a doctor. He is also a businessman who at the time of the hearing was running eight nursing homes in addition to the premises (then closed) which was the subject of the appeal hearing.

10.  Having considered the Appellant’s conduct prior to the first hearing date in October 2004, we find that it was unreasonable for him not to have complied with the directions issued by the tribunal. The Appellant had a considerable amount of time in which to prepare his own statement and the witness statements and to submit them to the tribunal. It is also clear that on various occasions he did seek legal advice and a number of solicitors' letters were written on his behalf from time to time.  

11.  The Appellant attended the review hearing and his submissions and our findings at that hearing are set out in Appendix 2 to the decision.

12.   When the costs application was made by the Respondent, the Tribunal asked the Appellant for his response and to supply information about his financial means. The Appellant replied by letter dated 2 August 2005 explaining his situation and continuing ill health and stating that he would not be able to pay any costs. Subsequently in reply to a request for further financial details, he gave the Tribunal some information about his financial situation. We note that in effect he gave the Tribunal information about his debts and liabilities but no information about his assets or his income, apart from his pension. He supplied to the Tribunal an Inland Revenue Self Assessment – Statement of Account showing a large sum of tax (over £100,000-00) that he owed to the Revenue on the 9th November 2005. The Appellant is a man who in the past has certainly had considerable assets and income. We conclude that his current financial situation is not clear.

13.    We accepted that the Respondent had been caused considerable extra preparation work for the hearing because of the unreasonable conduct of the Appellant in particular his letter (20th August 2004) stating that he was going to call sixteen witnesses and not providing witness statements for them or for himself and the lack of clarity as to the grounds of his appeal. We were assisted by the Respondent in calculating the amount of additional work. Counsel assisted by the instructing solicitor estimated it was 25 per cent of the costs of preparation for the first hearing.

14.   We therefore order that the Appellant pays to the Respondent 25 per cent of the first costs  schedule which was submitted to us for work up to and including the first hearing; that is a sum of £6,910 -76p. The review hearing was agreed by the Tribunal on the grounds of the non attendance of the Appellant at the first hearing. He attended the review and we propose to make no order for costs in respect of that part of the proceedings.

15.    We were asked to consider making an order for the work carried out by the Respondent since the hearing, in particular the costs relating to this costs application. In our view the same test of reasonableness must apply. We do not consider that it was unreasonable for the Appellant to contest the Respondents costs application and, despite his failure to comply fully with the request for financial information or attend the hearing we propose to make no order in relation to this element of the Respondent’s costs.

16.    The tribunal noted that this case highlights the difficulty of obtaining financial information from a potential paying party. The Tribunal requested the Appellant to give brief but quite specific information to the Tribunal about his financial circumstances. As noted above the Appellant gave the Tribunal some information about his debts, Inland Revenue demands, borrowings and liabilities but gave no information about his assets despite being reminded that this was required. This is an issue, which may need to be addressed in the future with consideration being given to the issuing of a standard form to request financial information.

We order that the Appellant pays to the Respondent the sum of £6,910.76p.

Rev Maureen Roberts
Dr Christopher Treves Brown
Mr. Jeff Cohen
14th December 2005