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	England and Wales High Court (Senior Courts Costs Office) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Senior Courts Costs Office) Decisions >> Jeffrey v Havering Hospitals NHS Trust [2004] EWHC 90015 (Costs) (16 June 2004) URL: http://www.bailii.org/ew/cases/EWHC/Costs/2004/90015.html Cite as: [2004] EWHC 90015 (Costs)

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IN THE HIGH COURT OF JUSTICE
SUPREME COURT COSTS OFFICE

		Clifford's Inn, Fetter Lane London, EC4A 1DQ
		16 June 2004

Master Simons

1. This is an application on behalf of the Defendant for an order that the Claimant and/or the Legal Services Commission should be responsible for the Defendant's costs of the action because a Costs Order was made in favour of the Defendant at trial and representations had previously been made to the Legal Services Commission that funding be discharged.

BACKGROUND

2. On 3 March 1999 the Claimant underwent a vaginal hysterectomy at the Defendant's hospital. Shortly after the operation it was noted that she was unwell and she therefore underwent a laparotomy. During the course of the operation it was noted that the right ureter had been included within a ligature and that the Claimant had lost a lot of blood. She remained in hospital until 10 March 1999.
3. The Claimant alleged that the Defendant had failed to legate or suture the uterine pedicles with sufficient care. The Defendant maintained that the problem was due to the unusual anatomy of the Claimant.
4. The Claimant obtained a legal aid certificate to prosecute a claim against the Defendant on 28 September 1999. On 18 February 2002 the Claimant issued proceedings against the Defendant in the Mayors & City County Court.
5. The matter came for trial on 27 to 29 August 2003 before His Honour Judge Simpson and on 1 September 2003 the Judge gave judgment in the Defendant's favour and ordered that:

i. the claim be dismissed;

ii. the Claimant do pay the Defendant's costs to be subject to a detailed assessment if not agreed, not to be enforced without leave of the court; and

iii. public funding assessment of the Claimant's costs.

THE PRESENT APPLICATION

6. On 1 December 2003 the Defendant erroneously issued this application in the Mayors & City County Court and it was not until 12 May 2004 that the application was properly issued at the Supreme Court Costs Office. No point is taken on this by Mr Gimlette who accepts on the part of the Legal Services Commission ("the LSC") that the application was made on 1 December 2003.
7. The bill annexed to the Defendant's application indicates that the Defendant's costs amounted to £39,043.
8. The Claimant was not represented before me today. Her solicitors had written to the court indicating that the Defendant's solicitors had confirmed to them that it was not their intention to pursue their application against the Claimant personally. Mr Adamson acknowledged that it would appear to be incorrect for the Defendant's solicitors to indicate that they would not be pursing the Claimant personally as this was a matter for the court upon the determination of the Defendant's application and the consideration of the Claimant's resources.
9. It is common ground that as the claim related to a public funding certificate granted before May 2000 the substantive law is governed by the Legal Aid Act 1988 and not the Access to Justice Act 1999. It is also common ground that although the law regarding the substance of the application is determined by the Legal Aid Act 1988 the procedure for this application is determined in accordance with the Community Legal Service (Costs) Regulations 2000 regulations 2 and 9 to 13 ("the Regulations").

THE RELEVANT LAW

10. Section 18 Legal Aid Act 1988.

"18 (1) this section applies to proceedings to which a legally assisted person is a party and which are finally decided in favour of an unassisted party.

(2)  In any proceedings to which this section applies the court by which the proceedings were so decided may, subject to sub-sections (3) and (4) below, make an order for the payment by the Board [the Legal Aid Board] to the unassisted party of the whole or any part of the costs incurred by him in the proceedings.

(3) Before making an order under this section, the court shall consider what order for costs should be made against the assisted party and for determining his liability in respect of such costs.

(4) An order under this section in respect of any costs may only be made if –

(a) an order for costs would be made in the proceedings apart from this Act;

(b) as respects the costs incurred in a court of first instance, those proceedings were instituted by the assisted party and the court is satisfied that the unassisted party will suffer severe financial hardship unless the order is made; and

(c) in any case the court is satisfied that it is just and equitable in all the circumstances of the case and that provision for the costs should be made out of public funds."

11. The Community Legal Service (Costs) Regulations 2000 (as amended)

"2. In these Regulations:

"Statement of Resources" means:

(a) A statement verified by a statement of truth made by a party to proceedings setting out:

(i) his income and capital and financial commitments during the previous year and, if applicable, those of his partner;

(ii) his estimated future financial resources and expectations and, if applicable, those of his partner; and

(iii) a declaration stating whether he and, if applicable, his partner has not deliberately foregone or deprived himself of any resources or expectations, together (if applicable and as far as is practical) with details of those resources or expectations and the manner in which they have been foregone or deprived;

(iv) particulars of any application for funding made by him in connection with proceedings; and

(v) any other facts relevant to the determination of his resources; or

(b) a statement, verified by a statement of truth, made by a client receiving funded services, setting out the information provided by the client under Regulation 6 of the Financial Regulations and stating that there has been no significant change in the client's financial circumstances since the date on which the information was provided or, as the case may be, details of such change.

10. (1) The following paragraphs of this regulation apply where the amount to be paid under a Section 11(1) Costs Order or an application for a costs order against the Commission, is to be determined under this regulation by virtue of regulation 9(5).

(2) The receiving party may within three months after a Section 11(1) costs order is made request a hearing to determine the costs payable to him.

(3) A request under paragraph (2) shall be accompanied by:

(a) if the section 11(1) costs order does not state the full costs, the receiving party's bill of costs, which shall comply with any requirements of relevant rules of court relating to the form and content of a bill of costs where the court is assessing a party's costs;

(b) unless the conditions set out in paragraph 3A are satisfied, a statement of resources; and

(c) if the receiving party is seeking, or, subject to the determination of the amount to be paid under the Section 11(1) costs order, may seek, a costs order against the Commission, written notice to that effect.

(3A) the conditions referred to in paragraph (3)(b) above are that -

(a) the court is determining an application for a costs order against the Commission:

(b) the costs were not incurred in a court of first instance

(4) The receiving party shall file the documents referred to in paragraph (3) with the court and at the same time serve copies of them:

(a) on the client, if a determination of costs payable under Section 11(1) of the Act is sought; and

(b) on the Regional Director, if notice has been given under paragraph 3(c)."

THE LEGAL SERVICES COMMISSION'S CASE

Mr Gimlette submits that the Defendant's application is defective as the purported statement of resources does not comply with the Regulations and that as a compliant statement of resources has to be filed with a request for a hearing of the determination within three months after a Section 11 costs order has been made, the request in itself is defective. The consequence is that as the court has no power to extend the time limit set out in regulation 10(3) of the Regulations, the Defendant's application must fail.

Mr Gimlette concedes that the date of the application, which is the request for a hearing of the determination, complies with the Regulations. He says however that a compliant statement of resources must be filed at the same time as the request for a hearing and that the statement of resources filed on behalf of the Defendant is non-compliant for the following reasons:

i. It is not made by a party to the proceedings. The statement of resources has been made by Stephen Walker the Chief Executive of the National Health Service Litigation Authority ("the NHSLA"). As recited in Mr Walker's statement, the NHSLA's principal task is to administer schemes set up under Section 21 of the National Health Service and Community Care Act 1990 to handle claims for clinical negligence against NHS bodies. The NHSLA will be responsible for paying the Defendant's costs under the Clinical Negligence Scheme for Trusts. Whereas the NHSLA may well be responsible for paying the Defendant's costs they are, Mr Gimlette submits, not a party to the action. The definition of a "statement of resources" set out in regulation 2 of the Regulations requires the statement to be made by a party to the proceedings. The relevant party to the proceedings is the Defendant not the NHSLA.

ii. The statement of resources of Mr Walker contains no statement of income, capital or financial commitments for any period or at all as is required by the Regulations.

iii. The statement of resources does not give any estimated future financial resources and expectations as required by the Regulations.

Mr Gimlette does concede that the statement contains a declaration that NHSLA has not deliberately foregone or deprived itself of any resources or expectations but this, submits Mr Gimlette, is indicative of the fact that the Defendant, and indeed Mr Walker, was aware of the necessary requirements of the Regulations.

Mr Gimlette submits that the effect of a non compliant of statement of resources is that regulation 10 of the Regulations has not been complied with. Section 10(2) requires the request for a hearing to determine the amount of costs payable to the successful defendant must be made within three months of the making of the relevant costs order. Mr Gimlette accepts that the application, which can be regarded as a request, was made within the relevant time limit. However regulation 10(3) requires that the request must be accompanied by a bill of costs, statement of resources and notice of claim against the LSC. Regulation 10(4) requires the Defendant to file the documents referred to in regulation 10(3) with the court and at the same time serve copies of them on the Regional director of the LSC.

Mr Gimlette submits that as no compliant statement of resources has been filed then the request for a hearing is defective as a compliant statement of resources does not accompany it. He says that paragraphs 10(2), 10(3) and 10(4) are non-severable as paragraph 10(3) is mandatory in that it states that the request for a hearing date "shall" be accompanied by the bill and statement of resources and notice of claim.

Mr Gimlette submits that these defects cannot be rectified and in support of that submission refers to CPR PD 44 paragraph 23.4 which states:

"failure to file a request within three months of the time limit specified in Regulation 10(2) is an absolute bar to the making of a costs order against the LSC."

This statement follows what was stated by Lord Phillips in R (Gunn) v Secretary of State for the Home Department [2001] 1 WLR 1634 where he stated:

"We wish to take this opportunity to emphasise a fact that we understand is not generally appreciated. The three month time limit for seeking an order against the Commission is mandatory – there is no power to extend it."

Mr Gimlette concedes that there is power in regulation 12 of the Regulations to extend the time for determining the amount that the assisted party is required to pay subject to certain stringent criteria. However there is no equivalent power in respect of applications against the LSC.

THE DEFENDANT'S SUBMISSIONS

Mr Adamson's basic submission was that the statement of resources as filed did comply with the Regulations.

He states that the NHSLA are funders of the Defendant and therefore it was correct for Mr Walker to make the statement of resources. He states that the NHSLA's income is derived both direct from the Department of Health and from contributions from various NHS bodies including the Defendant. More funding received by the NHSLA comes from budgets which could otherwise be used for patient care. It is clear that there are substantial funds which is precisely what the court requires to know when determining the application.

With regard to future financial resources and expectations it is simply impossible to put any sort of figure on this as the NHSLA Fund varies from year to year.

Mr Adamson submitted that even if the statement of resources did not comply fully with the Regulations, nevertheless the information that was contained in the statement was effective substantial compliance with the Regulations and the case of Jones v Zahedi [1993] 1 WLR 1445 was sufficient authority that the court could properly overlook any technical, formal or insufficient failure to comply with the Regulations. If, therefore, the Regulations have not been complied with strictly, the information that had been supplied was substantial compliance with the Regulations and therefore if there was a defect, which is not conceded by Mr Adamson, it should be overlooked and, if necessary, the court has and should exercise its discretion to permit the statement of resources to be amended .

If, contrary to his submissions, the statement of resources was non-compliant Mr Adamson submitted that it would be appropriate for the court to use its discretionary power to permit the Defendant to amend its statement. Regulation 10(3) was clearly severable from regulation 10(2). Regulation 10(2) had been complied with and this was conceded by the LSC. As long as the request for a hearing date had been made within the three month period, there could be judicial discretion to extend time with regard to the accompanying documents. In support of this submission he relied on R v Gunn , which, he submitted, was authority for the proposition that it was only the request for a hearing date that was mandatory and not the filing and service of the accompanying documents.

MY CONCLUSIONS

I am satisfied that the statement of resources filed in support of this application does not comply with the Regulations. I accept Mr Gimlette's submission that the statement of resources has to be made by a party to the proceedings and not by the funder of the litigation. There is no doubt that the Defendant is the party to the proceedings, not the NHSLA. If the Claimant had been successful in the claim, the damages and the costs would have been met by the Defendant and not the NHSLA. I did question Mr Adamson as to whether or not the NHSLA met costs claims made against the Defendant and he was unable to confirm to me that they did. I am satisfied that the Regulations require that the statement of resources should be made by a party to the proceedings and that has not been done in this case.

The obvious reason why a statement of resources is required is for the court to determine whether, in accordance with Section 18(4) of the Legal Aid Act 1988, the unassisted party will suffer severe financial hardship unless an order is made. In this case the court could not be in a position to make any such determination given the complete absence of any financial information in the statement of resources that has been filed on behalf of the defendant. I do accept that Mr Walker may not be in a position to estimate future financial resources and expectations of the Defendant but it seems to me that the major information that is required is the present income and capital and the financial commitments of the Defendant and in his respect the statement of resources is wholly deficient even had it been made by the correct person.

Having reached the conclusion that the statement of resources does not comply with the Regulations I must now consider what the effect of this failure is.

Regulation 10(2) requires that the request for a hearing must be made within three months after the making of the costs order. It is not in dispute that such a request was made in accordance with the Regulations. What I have to decide is whether or not regulation 10(2) can be severed from regulation 10(3) which states that the request "shall" be accompanied by a statement of resources. The proposition put by Mr Gimlette is that if the statement of resources does not comply with the Regulations then it does not accompany the request for the hearing date and that invalidates the request.

It seems to me that the obvious purpose of the Regulations is to enable the LSC, when receiving a request for a hearing date for a determination, to be able to give proper consideration to the Defendants application to be paid from the LSC's resources. In a matter such as this, where the costs have been incurred in a court of first instance, the LSC will know that the court will only make an order against it if the court is satisfied that the Defendant will suffer severe financial hardship and that it is just and equitable to make such an order. A detailed bill of costs quantifying the amount of costs that the Defendant is seeking and a statement of resources are absolutely essential to enable the LSC to reach any informed decision as to whether they should oppose or consent to the application. A request for a hearing date by itself is completely useless in helping the LSC in making any decision. If regulation 10(2) makes it mandatory for the request for a hearing to be made within three months, surely it must follow, for the request to have any sensible meaning, that the request when served must contain sufficient information to enable the LSC to make an informed decision, and the Regulations require that the only way in which that can be achieved is by the simultaneous service of the documentation as required by regulation 10(3.)

I am therefore of the view that the failure to serve a compliant statement of resources means that the request for the hearing is also non-compliant with the Regulations. I do not consider that regulations 10(3) and 10(4) can be severed from regulation 10(2). There is a specific requirement in regulation 10(3) that the request shall be accompanied by the statement of resources and as the regulation is in mandatory form I do not consider that I have any discretion to waive that requirement.

I therefore dismiss this application.

I propose handing down this judgment on Wednesday the 16^th day of June 2004 at 10.00 am. This will be a short appointment which should enable me to deal with any applications subsequent to this judgment.