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You are here: BAILII >> Databases >> English and Welsh Courts - Miscellaneous >> GW v BW [2011] EW Misc 10 (CC) (22 July 2011) URL: http://www.bailii.org/ew/cases/Misc/2011/10.html Cite as: [2011] EW Misc 10 (CC)

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IN THE ROMFORD COUNTY COURT

		22nd July 2011

His Honour Judge Platt :

1. These two cases have been heard together because they raise both practical and legal issues on which there is some divergence of views between judges in the county court, and on which some guidance may be helpful to judges who are looking for ways to extract more than a quart out of a pint pot in terms of diminishing judicial resources to hear and dispose of civil cases.
2. Both of these cases involve infant claimants who are in legal terms Gillick/Fraser competent but under the law are not able to negotiate a binding settlement of a claim for minor injuries sustained in a road traffic accident while a passenger in a motor vehicle, without obtaining the approval of the court under CPR Rule 21.10. Both of these cases involve road traffic accidents which occurred before 30^th April 2010 when the Part 8B protocol came into force and new costs rules were applied.

A. Whether or not to hold a hearing in a modest value case ?

3. The Rules do not require the court to hold a hearing in order to approve any infant settlement. The decision whether or not to direct a hearing is one for the District Judge on consideration of all the facts disclosed in and in support of the Part 8 claim which has been lodged with the court.
4. I am told that there are some variations in practice among District Judges. For reasons which will become clear when I consider the arguments over costs there are significant advantages for claimant's solicitors in providing information over and above that required by PD 21 paragraphs 5.1. and 2. so that the court can make a reasoned decision whether or not it is necessary to hold a hearing.
5. Two examples of the kind of information which will materially assist the judge in appropriate cases are these. Firstly if the case involving minor neck, back or shoulder injuries as defined by Chapter 6 (A) (B) and (C) of the JSB guidelines and the claimant has made a full recovery then a witness statement should be filed with the claim form either from the litigation friend or the competent child confirming that he or she has made a full recovery from the injuries described in the medical report either within the time frame of the prognosis in that report or within a longer time frame specified in the statement.
6. Secondly in cases involving minor or trivial scarring as defined in Chapters 7 (B) and 8 of the JSB guidelines the filing of good quality up to date photographs may avoid the need for a settlement hearing.
7. There may be other good reasons why the court does not need to hold a hearing. Those reasons may properly be set out in a letter of request addressed to the court on filing the Part 8 claim for approval of the settlement.
8. However solicitors should be aware that the hearing has a dual purpose. Once the settlement is approved the court has an obligation under Rule 21.11(2) to give directions as to how the damages re to be dealt with. For reasons which are set out in Part B of this judgment it may be entirely appropriate for the court to order immediate payment out of the whole sum either to the litigation friend or to the child under PD 21 paragraph 8.1.(2).
9. If the letter of request sets out no information or proposals as to dealing with the money, or proposals which do not appear to be beneficial to the child claimant, the court is almost bound to require a hearing to discuss the matter fully with the litigation friend and the Gillick/Fraser competent child. In the 21^st century it would in my judgment be unnecessarily patronising as well as arguably contrary both to the UN Convention on the Rights of the Child and Article 1 of the First Protocol of the Human Rights Convention to make even modest investment decisions without giving a Gillick/Fraser competent child at least an opportunity to express his or views.
10. Those views can easily be contained in the letter of request or expressed in a short witness statement either from the litigation friend or the competent child filed with the claim form and setting out any proposals for investment or other use to which the money in intended to be put. As a simple example, if the child's parents are genuinely without means, the purchase of a computer will enable the child to acquire vital life skills and would clearly be to his or her immediate benefit under paragraph 8.1.(2).
11. In the case of Master W the draft order submitted with the Part 8 claim form simply provided for investment of the damages in the Special Investment Account. For reasons which will again become clearer in Section B of this judgment it would seem that the solicitors had simply not addressed their minds to other ways in which the damages might be dealt with and the District Judge was entitled to direct a hearing on that ground alone.
12. In the case of Master A no draft order was lodged at all and consequently the District Judge was bound to direct a hearing to deal properly with the question of investment of the damages.

B. What to do with the money ?

13. Historically modest amounts of damages, typically below £5,000, have simply been placed with the Court Funds Office in the Special Investment Account. This is an issue which has come into increasingly sharp relief since July 2009 when the rate of interest payable on this Investment account was reduced to 0.5% where it has remained ever since.
14. There have been two important developments since that date. The first is the inflation has now been running at a rate in excess of the Government's 2% target for well over a year and is currently around 4%. The second is that the government has given savers who put their money into a bank or building society an unconditional guarantee against loss of up to £50,000. Consequently it is no longer true to say that investing in ordinary High Street savings accounts carries any greater risk than placing money in the Special Investment Account..
15. Judges who simply order damages to be placed in the Special Investment Account without considering alternatives are condemning children to lose up to 3.5% each year of the real value of their damages and very possibly more if current inflation forecasts are correct. That is an abrogation of judicial responsibility.
16. I accept of course that there may be exceptional cases where after considering all the evidence the court has grave doubts as to the trustworthiness of the litigation friend to look after the damages awarded and apply them appropriately for the child's immediate or long term benefit. The court has then to balance that risk against the significant risk of depreciation in the real value of the child's funds during his or her minority.
17. But these cases are and will remain exceptional. I can only recall one case in nearly twenty nine years of judicial experience where a child on reaching the age of majority has discovered that her fund had been misappropriated by her parent.
18. So what is the appropriate solution? A quick glance at http://www.thisismoney.co.uk/money/saving/article-1583863/Best-savings-rates--Childrens-accounts.html shows a number of institutions currently offering four times the rate paid by the Special Investment Account. Two year fixed term accounts, for example from the Post Office, currently offer almost eight times the Special Investment Account rate.
19. These rates can very simply be achieved if the Court simply orders payment out under PD21 paragraph 8.1.(2) of the whole fund either to the litigation friend or the child as appropriate. This is very likely to be the most suitable order for any case where the damages are £5000 or less and the child is aged 11 or over.
20. In the current uncertain financial climate the Special Investment Account should now be the place of last resort for investment of children's damages. Any increase in base rate may produce an increase in the Special Investment Account rate but this is overwhelmingly likely to be met by a similar increase in the rates available on the High Street.
21. Both of these claimants will be 18 in less than nine months time and the sums involved in each case do not exceed £2,000, In both these cases, having discussed the matter with the claimants and their litigation friends, I am satisfied that they can be trusted to make wise decisions which will be of much greater benefit to the claimants. I have therefore decided that it is proper to direct payment out of the whole of the approved damages under CPR PD21 paragraph 8.1.(2) and in each case I direct payment to the claimant for his immediate use and benefit.

Costs for attendance at the settlement hearing

22. This issue is the real bone of contention between each of the claimant's solicitors and the defendants. I say claimant's solicitors because I was assured by Counsel for both claimants that neither had entered into any litigation agreement with their respective clients under sections 59 to 73 of the Solicitors Act 1974.
23. Consequently the provisions of section 74(3) of the Solicitors Act would prevent the claimant's solicitor from recovering from their own client more than the amount of costs which could be allowed as between party and party. Each claimant is therefore protected from any claim for solicitor and own client costs if these costs are disallowed as between claimant and defendant.
24. The case has been very capably argued by Counsel Mr Mason for the claimant Master Walker and Miss Cox for the claimant Adesina on the one hand and by Mr Ashworth for the defendant Prabhakar on the other and I express my gratitude to them for their diligent research. . The solicitors for the Defendant Mr Walker were not represented but sent in written submissions which I have read and taken into account.
25. The essence of the claimant's argument is this. The Court decides whether or not to fix a hearing of the application for approval of the settlement and consequently the claimant and his or her next friend are obliged to attend any hearing fixed. Since solicitors are on the record as acting for the claimant they are also obliged as a matter of professional etiquette either to attend or secure suitable representation by Counsel or solicitor agent at the hearing.
26. The regime of fixed recoverable costs which is contained in Rule 45.7 to 19 applies where the accident occurred before 30^th April 2010 and the damages arising out of a road traffic accident are between £1,000 and £10,000. Since April 2005 this regime has applied also to infant settlements. As HH Judge Tetlow observed in Gidman v Patel, Manchester County Court 22^nd January 2010 this regime is the product of exhaustive negotiations between both sides of the motor insurance industry and their respective solicitors.
27. It sets out a comprehensive formula for calculating fixed costs in claims which fall within its scope which is equally carefully defined. The only issue which is left open for argument is the question of disbursements over which an element of discretion is left to the court.
28. However the clear intention was to lay down a regime of predictable costs which could be ascertained by simple mathematical calculation thereby avoiding expensive and disproportionate arguments over costs. It is inevitable that such a scheme will involve an element of swings and roundabouts but that is the price which has to be paid for predictability. It follows from this statement of principle that the relevant rules must be read bearing that objective clearly in mind.
29. The relevant rules are Rules 45.9 and 45.10 which read as follows:

45.9 Amount of fixed recoverable costs

(1) Subject to paragraphs (2) and (3), the amount of fixed recoverable costs is the total of –

(a) £800;

(b) 20% of the damages agreed up to £5000; and

(c) 15% of the damages agreed between £5000 and £10,000.

(2) Where the claimant –

(a) lives or works in an area set out in the Costs Practice Direction; and

(b) instructs a solicitor or firm of solicitors who practise in that area,

the fixed recoverable costs shall include, in addition to the costs specified in paragraph (1), an amount equal to 12.5% of the costs allowable under that paragraph.

(3) Where appropriate, value added tax (VAT) may be recovered in addition to the amount of fixed recoverable costs and any reference in this Section to fixed recoverable costs is a reference to those costs net of any such VAT.

45.10 Disbursements

(1) The court –

(a) may allow a claim for a disbursement of a type mentioned in paragraph (2); but

(b) must not allow a claim for any other type of disbursement.

(2) The disbursements referred to in paragraph (1) are –

(a) the cost of obtaining –

(i) medical records;

(ii) a medical report;

(iii) a police report;

(iv) an engineer's report; or

(v) a search of the records of the Driver Vehicle Licensing Authority;

(b) the amount of an insurance premium or, where a membership organisation undertakes to meet liabilities incurred to pay the costs of other parties to proceedings, a sum not exceeding such additional amount of costs as would be allowed under section 30 in respect of provision made against the risk of having to meet such liabilities.

('membership organisation' is defined in rule 43.2(1)(n))

(c) where they are necessarily incurred by reason of one or more of the claimants being a child or protected party as defined in Part 21 –

(i) fees payable for instructing counsel; or

(ii) court fees payable on an application to the court;

(d) any other disbursement that has arisen due to a particular feature of the dispute.

('insurance premium' is defined in rule 43.2)

30. It is common ground between the parties that that Counsel's fees for attending the hearing are fees payable for instructing Counsel within the meaning of rule 45.10 (2)(c)(i) and therefore potentially allowable as a proper disbursement payable by the Defendant
31. The claimants point out that the new Protocol regime which applies to accidents post April 2010 now includes a specific provision for a fixed advocate's fee for attending a hearing. There is therefore now a significant inconsistency between on the one hand the fixed recoverable costs regime in rule 45.7 to 45.19 and the new protocol regime
32. That inconsistency also extends to the under £1,000 costs regime which falls outside the fixed recoverable costs regime in Part Ii of Rule 45 and gives the Court a discretion over allowance of Counsel's fees for attending an infant settlement hearing – see William Thaxton v Amber Elizabeth Goodman [2010] EWHC 90182 (Costs)
33. In order to avoid that inconsistency the claimants firstly argue in effect that the phrase "the court may allow" in paragraph 45.10 (1) introduces a test of reasonableness which overrides the Words "necessarily incurred" in paragraph 45.10.(2)(c).
34. The second argument is that the phrase "necessarily incurred by reason of the claimant being a child" means that whenever the court fixes a hearing for an infant settlement the costs of instructing counsel to attend that hearing must be necessarily incurred.
35. The defendant's argument is that this would deprive the words "necessarily incurred" of their normal meaning. In the context of assessment of costs there is very clear and well understood distinction between costs necessarily incurred and cost reasonably incurred and if the rule says "necessarily incurred" it means exactly what it says.
36. In my judgment the defendants are clearly right. This particular argument has been unsuccessfully advanced by claimant' solicitors, including it would appear by these particular firms of solicitors, in a line of appeals heard by Circuit Judges. The cases are:

Sherred v Carpenter Taunton C C	HH Judge O'Malley	05.03.09
Singh v Adams Nottingham C C	HH Judge Inglis	11.03.09
Drury v Millard Bromley CC	HH Judge Richardson	06.09.10
Gidman v _Patel Manchester CC	HH Judge Tetlow	22.01.10

In addition there are fully reasoned judgments handed down by District Judges in the following cases:

Miles v Lodon Road Vet Clinic Regional Costs	Judge Sparrow	?2007
Woodruffe v Deeks Peterborough CC	DJ Farquhar	1011.08
Bartholemew v Hunter Southend C C	DJ	08.06.09

All of these decisions arrive at the same conclusion.

37. I mean no disrespect to the judges in each of these cases when I say that it is not necessary for me to refer in detail to any of these judgments. Each one addresses the argument which has been put forward by the claimants in this case as set out at paragraph 30 above and each one concludes that necessarily incurred means exactly what it says. There is simply no basis for allowing Counsel fees for attending the settlement hearing in a straightforward case.
38. Against this weight of judicial authority the claimants can only point to obiter comments by two Circuit Judges or Recorders which are set out in the judgement of DJ Farquhar in Woodruffe v Deeks . The first is Lee v Telycra Coventry County Court 2005 in which a solicitor advocate was arguing for an additional payment for attending a settlement hearing. HH Oliver Jones QC is reported to have said:

"There is no provision for recovering more than fixed costs in respect of attending the approval hearing (unless Counsel is instructed)"

39. The second is Woolard v Fowler 2006 a decision of Senior Costs Judge Hurst sitting as a Recorder and for that reason deserves greater respect. However the case actually concerned the recovery of medical agency fees but paragraph 22 of the judgment is as follows:

"Mr Bacon points out that the work done by Counsel may also be "solicitor work" in that some solicitors may choose not to instruct counsel but may instead undertake the work themselves. Clearly they are unlikely to do so since the profit costs element is fixed, but if Counsel is instructed those fees are recoverable quite legitimately under the predictable costs regime."

40. This passage seems to me to be wholly unremarkable in that it simply restates the provisions of rule 45.10 (2) (c) (i). It is is quite clear from the provisions of PD21 para 5.2. (1) that the opinion on quantum may be provided either by a solicitor or by Counsel. There is also no specific reference by Master Hurst to Counsels fees for attending the settlement hearing. Although HH Judge Oliver- Jones was concerned with fees for attending the settlement hearing he did not have to consider the question of whether Counsel's fees should be necessarily as opposed to reasonably incurred.
41. I accept that the inconsistency between the various costs regimes as pointed out by counsel for the claimant exists but as Master Gordon Sacker , another former Senior Costs Judge, has recently pointed out in Lisbie v SKS Scaffolding Ltd [2011] EWHC 90203 (Costs) at paragraph 34 the fact that

"inconsistency may be the result is not a reason that justifies replacement of the words of the rule or a rewriting of the rule. As Simons J said in Butt v Nizami [2006] EWHC 159 (QB) (cited with approval by Dyson LJ, as he then was, in Lamont v Burton [2007] EWCA Civ 429):

22 … the provisions of sections II to V of CPR 45, were introduced following 'industry wide' discussions under the aegis of the Civil Justice Council. Agreement was reached on the recoverable costs in the different situations covered by the various sections.

23. It seems to me clear that the intention underlying CPR 45.7-14 was to provide an agreed scheme of recovery which was certain and easily calculated. This was done by providing fixed levels of remuneration which might over-reward in some cases and under-reward in others, but which were regarded as fair when taken as a whole."

Conclusion

42. In my judgement the submissions being made on behalf of the claimant's solicitors are quite simply unarguable. I put specifically to Mr Mason the fact that the regime allows no additional fee for a solicitor advocate who gives advice on quantum or for his attendance at any settlement hearing. His costs for advice or attendance or both form part of his fixed recoverable costs.
43. But if he instructs Counsel and is able to recover counsel's fees as a disbursement then the effect is not only to load an extra expense on to the Defendant but also effectively to increase his net profit costs by around 10%. Mr Mason was unable to provide any logical explanation as to why this should be so. In my judgment this is not a predictable costs regime it would be a variable costs regime, and the fallacy of his argument is clearly exposed.
44. The proper interpretation of rule 45.10 (2)(c)(i) is that a fee paid to Counsel for doing any work including attending a settlement hearing may only be allowed when it has been necessarily incurred by reason of the claimant being a child This takes us back to the provisions of CPR 21.(10) and PD 21 paragraph 5.1.
45. Neither the rule nor the Practise Direction contain any provision which necessarily requires any work to be done by Counsel or for the child to represented by Counsel at the settlement hearing. The division of labour between a solicitor and counsel is a matter for the solicitor to decide. But he cannot get round the constraints of the fixed costs regime simply by passing work over to Counsel at the expense of the Defendant. He must either convince the court that it was necessary to instruct Counsel or he must pay Counsel's fees out of his own fixed costs.
46. To put it bluntly counsel's fees are not necessarily incurred simply because it is in commercial terms more economic for a solicitor to instruct counsel. They are not necessarily incurred for a settlement hearing in an ordinary modest value case where the claimant has made a full recovery. There must be some exceptional feature of the case before the test of necessity is satisfied.
47. The matters to be considered in deciding whether the test of necessity is satisfied are well set out in the judgment of Regional Costs Judge Sparrow in Miles v Lodon Road Vet Clinic at paragraph 25:

25. That is not to say that Counsel is never required, and it seems to me that each case must be looked at in relation to its own particular facts, its complexity, any difficulties that might arise which might need explaining to the court If there is a risk in the litigation if there is a risk regarding liability then that sometimes needs to be explained. If there is some difficulty in relation to the medical evidence then again this may need to be explained to the judge."

48. I would add only two points. Firstly PD21 paragraph 5.2.(!) clearly envisages that advice of quantum may properly be given by the solicitor acting for the claimant child and no additional fee is prescribed for this work. As I have said rule 45.10(2)(c)(i) applies to any fee for instructing counsel.
49. Although no point was taken in either of these cases before me on the fee for instructions to Counsel to advise on quantum, it must follow that the test of necessity applies not just to counsel attending the hearing but equally to any fee for advice from counsel whether on liability or quantum or both. It may be more commonly satisfied for an advice, but the test remains the same.
50. Secondly and following on from that point it may well be that in a particular case the difficulties identified by DJ Sparrow can properly be addressed in a full advice from Counsel which would consequently satisfy the test of being a necessary disbursement rendering the actual attendance of counsel at the hearing unnecessary.
51. But there is another aspect to this case which I find deeply troubling. It is apparent from the number of decisions noted above that that exactly the same arguments are being presented time and again before different District judges and no matter how many times the arguments are being rejected there is no end in sight. This is simply forum shopping by claimant's solicitors.
52. The same attitude of mind is becoming equally prevalent in the field of credit hire where arguments are regularly being presented to District and Circuit Judges which have been clearly rejected by the Court of Appeal and the House of Lords. At a time of huge and increasing pressure on judicial resources this is a real and growing problem. It is time to make it crystal clear that this kind of behaviour is not acceptable for the simple reason that it is totally contrary to the duties imposed upon the parties by rule 1.3 of the CPR which includes the factors set out at CPR 1.1.(2) (b), (c), (d), and (e).
53. The Civil Procedure Rules were not made in order to provide a fruitful source of gainful employment either to solicitors or to the Junior Bar. They were made for the just and expeditious disposal of cases in a world of finite resources. Time spent by the Court listening to argument, and the arguments in this case lasted well over an hour, is time which is not available to deal with other cases more expeditiously.
54. I accept that none of the judgments on this point are strictly binding authority but the degree of unanimity among very experienced Circuit and District Judges is certainly highly authoritative particularly when set against the lack of any contrary decisions at Circuit Judge level and the few decisions at District Judge level in favour of the Claimants which Counsel for the claimants were able to put forward.
55. In my judgment all of these contrary decisions were wrongly decided and must not be treated as carrying any authority for this reason. Very significantly none of the District Judges in any of these cases appear to have been referred to the even one of the appeal judgments set out at paragraph 32. For example District Judge Burn sitting in the Bromley County Court in the case of Wines v Jones 23^rd May 2011 was obviously totally unaware of the appeal judgment of HH Judge Richardson in the same court on 6^th September 2010.
56. The time has come when those who wish to put forward these arguments must in simple terms either put up or shut up. These cases were listed before me rather than a District Judge specifically to give the unsuccessful party a clear and unequivocal opportunity to obtain a binding and authoritative ruling on this issue. Sitting at first instance I am not constrained by CPR rule 52.13 so I cheerfully give the claimant permission to appeal under Rule 52.3.(6)(b). Furthermore I regard this case as raising a point of principle of sufficient importance to justify an order under CPR rule 52.14 that this appeal is to be heard by the Court of Appeal.
57. This judgment will be published on both Lawtel and BAILII and made available to all District and Circuit Judges . If the claimants choose to appeal and continue to attempt to argue these points it is very likely that courts will simply deal with all other aspects of the infant settlement and stay any argument over Counsel's fees until the outcome of the appeal is known.
58. If the claimant's solicitors choose not to appeal and continue to put forward these same arguments it is highly likely that they will face at least the same costs sanctions as I impose in the case of Adesina under CPR Rule 44.14 (1)(b).
59. In conclusion I can see much force in the argument that Part II of CPR Rule 44 should be brought into line with the new Protocol. It would greatly add to the certainty of the predictable costs regime if on an infant settlement there was a fixed allowance payable either to the solicitor or Counsel for an advice and also for attending any settlement hearing. But there also arguments the other way. The solution for claimant's representatives is not to continue to argue the unarguable in court but to present their case to the Rule Committee.

Costs of the settlement hearing

60. In the case of Walker the Defendants solicitors did ask not for any costs order in their favour so I simply disallow Counsels fees for attending the settlement hearing.
61. In the case of Adesina I am satisfied that the claimant's solicitors were properly put on notice that the defendant would be seeking an order for costs against them personally. That application is made under CPR 44.14 (1)(b).
62. I am satisfied that the claimant's solicitors were well aware of the weight of authoritative appeal judgments on this point against them. It is apparent that they have been arguing the same point before other District Judges without drawing to their attention any of those appeal decisions. I consider that their conduct is both unreasonable and improper and consequently in addition to disallowing their Counsel's fees for attendance on the settlement hearing an order for costs will be made against them personally in his case. I have already carried out the summary assessment of those costs in anticipation of this judgment and the figure allows one hour for solicitors work instructing Counsel plus Counsel's fees for attending to argue to costs issue.
63. Although I do not do so in this case, I also draw attention to the power of the court not only to make an order for costs against solicitors under Rule 44.14.(2)(b) but also to disallow costs which are being assessed under Rule 44.14(20(a). This kind of Forum shopping has simply got to end.
64. This is a final decision of the court. The claimants have permission to appeal. Such appeal would normally be to a High Court Judge but in this instance is to be made to the Court of Appeal under CPR 52.14. The notice of appeal must be lodged in the High Court within 21 days after the date on which judgment is handed down. After that time the appellant must also apply for permission to appeal out of time.
65. Judgment will formally be pronounced and orders made at 10 a.m. on 22^nd July 2011. No party is required to attend.