Mar 25

Caselaw Review: Philips v Rafiq & MIB : Deceased client can claim against MIB even though he knew driver was uninsured

Posted in Personal Injury Claims, Practice & Procedure, Road Accidents

The Issues: Mr Rafiq was driving the Claimant’s uninsured car, in which the Claimant was travelling as a front seat passenger. Mr Rafiq lost control of the vehicle and crashed into the central reservation of the M25, overturning the vehicle. The Claimant suffered such serious injuries that he died in hospital later that day, and the claim was brought by his dependants. The question before the Court, was whether the MIB were exempt from paying the claim on the basis that had the Claimant survived the accident he would not have been able to recover damages from the MIB, on the basis that he allowed himself to be carried in a car which he knew, or ought to have known, was being used without proper insurance being in force (6.1(e) of the Uninsured Drivers’ Agreement).Held: Although Mr Rafiq had a policy of motor insurance which covered his own vehicle, this did not cover his use of the Claimant’s car. There was a finding of fact at first instance that the Claimant knew or ought to have known that he was being carried in a car which was uninsured. There was no appeal against this finding of fact.Clause 6.1(e) of the Uninsured Drivers’ Agreement provides the following exception to the MIB’s obligation to satisfy a compensation claim:

“Clause 5 [obliging the M.I.B to satisfy any judgment against the driver] does not apply in the case of an application made in respect of a claim of any of the following descriptions …

(e) a claim which is made in respect of a relevant liability described in paragraph (2) [it being common ground that this is such a relevant liability] by a claimant who, at the time of the use giving rise to the relevant liability was voluntarily allowing himself to be carried in the vehicle and, either before the commencement of his journey in the vehicle or after such commencement if he could reasonably be expected to have alighted from it, knew or ought to have known that –

(i) …

(ii) the vehicle was being used without there being in force in relation to its use such a contract of insurance as would comply with Part VI of the 1988 Act, …”

On considering the previous 1988 Agreement compared to the 1999 Agreement, the Court concluded that because the earlier Agreement had clearly excluded a claim of this type, but the 1999 Agreement had not, a reasonable man could only conclude that the 1999 Agreement meant to allow a dependent’s claim in such circumstances (para 25). The Agreement was between the Secretary of State and the MIB and the teams who drafted the Agreement must have had a high level of knowledge and expertise of the working of the scheme in the past and therefore must have intended to remove the exclusion to compensate dependents in this way.

The Court of Appeal upheld the first instance Court’s decision that the Claimant dependents should be compensated by the MIB.

Comment: This decision resulted in the MIB making a petition to the Government to change the law and amend the Uninsured Driver’s Agreement wording. Lawyers for Ms Philips said that the ruling would cost the MIB millions of pounds but the MIB played down the significance saying that there was only going to be a handful of cases where the “loophole” would apply. But the MIB was clearly concerned, evidenced by its contact with the Ministry of Transport.

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Feb 23

Caselaw Review: Metcalfe v Clipston – Notice of Funding not Mandatory Before Proceedings Issued

Posted in Conditional Fee Agreements, General, Practice & Procedure

The Issues: This dental negligence claim was settled without the issue of Court Proceedings, but the Defendants argued that the Claimant was not entitled to recover a success fee on the basis that they had not been given information regarding funding. Could the Claimant recover any of the success fee given the failure to notify the Defendant about the existence of a CFA; if not, could he obtain relief from the sanction imposed by CPR 44.15?

Held: The Pre Action Protocol for the Resolution of Clinical Disputes applied to this case. That Clinical Disputes Protocol was in turn governed by the Practice Direction in relation to Protocols (“PDP”) which at Paragraph 4 provided:

“A.1 Where a person enters into a funding arrangement within the meaning of rule 43.2(1)(k) he should (emphasis added) inform other potential parties to the claim that he has done so.”

Under section 19.2(5) CPD there is no requirement for any funding information to be provided before the commencement of proceedings. The effect of this, therefore, is that once proceedings are started there is an absolute requirement for the Claimant to provide funding information if he is to recover a success fee, but there is no such requirement before the issuing of proceedings (Para.45).

The Defendants had argued that the PDP required the Claimant in a clinical negligence case to notify a Defendant when a CFA was entered into. But, the Court disagreed, construing the word ‘should’, within the PDP, to mean ‘ought to’ and not ‘has to’ or ‘must’ (Para 49.). The requirement to provide funding information, pre action, is optional and not compulsory and therefore the Claimant could recover a success fee.

Comment: Although this was a clinical negligence matter the Personal Injury Pre Action Protocol is worded in similar terms. Para 3.2 of that Protocol states:

“…Where the case is funded by a conditional fee agreement (or collective conditional fee agreement), notification should (emphasis added) be given of the existence of the agreement and where appropriate, that there is a success fee and/or insurance premium, although not the level of the success fee or premium.”

Therefore the above decision is applicable to personal claims generally, and there is no requirement to provide funding information before proceedings are issued. However, it is recommended and may be best practice to do so.

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Feb 17

Caselaw Review: Garbutt & Anor v Edwards & Anor – Breach of code of conduct does not invalidate CFA

Posted in Caselaw Review, Conditional Fee Agreements, Practice & Procedure

The Issues: In breach of the Law Society’s Code of Conduct, solicitors for the successful Claimant had failed to provide that Claimant with regular costs estimates. The defendant argued that the Solicitors’ Code of Conduct had statutory force (because it was contained in a Statutory Instrument) and any failure to comply was therefore a breach of the law which rendered any retainer unlawful and unenforceable.

Held: that while the Code of Conduct did indeed have statutory force, it was not intended to be utilised by a Defendant to avoid their proper obligation to pay costs including any After the Event Insurance policy. The Code provided instead for disciplinary action against a solicitor and a monetary award in favour of the solicitor’s client, if necessary. If a breach of the Code could be shown by a paying party to have caused an actual increase in costs, then a costs judge had the discretion to disallow that increase, but this was very different from disallowing all costs.

Comment: In November 2005 the CFA Regulations were repealed and CFAs signed after that date were governed only by the Solicitor’s Code of Conduct which was amended to control how solicitors dealt with CFAs. The Court of Appeal’s clear decision is that any breach of the Solicitors’ Code of Conduct will not cause costs to be wholly disallowed, so a failure to follow the Code of Conduct after November 2005 will not have the same consequences as a failure to follow the CFA Regulations which applied to pre-November 2005 CFAs.

The relevant parts of the Solicitors’ Code of Conduct are Rules 2.03 (1), (2) & (3) at: http://www.sra.org.uk/solicitors/code-of-conduct/195.article

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Dec 16

Caselaw Review: Crane v Canons Leisure Centre – Success Fee on Costs Draftsman’s Fees

Posted in Conditional Fee Agreements, Practice & Procedure

The Issues: The parties could not agree costs and the matter proceeded to detailed assessment. The claimant’s solicitors instructed costs consultants, acting under delegated authority. Could the work carried out by the costs draftsmen be considered profit costs, and therefore a success fee be applied and recovered, or were their fees simply a disbursement.

Held: The costs draftsmen were doing work which the solicitors had undertaken to their client to do (para 15). It was solicitor’s work and had they carried out the work themselves then the solicitors would have been able to charge and recover a success fee. In theory, the solicitors remained liable to the claimant for any negligence in the conduct of the costs assessment. There are cases where work done by “outsiders” has been held to have been done, for costs purposes, as a fee earner for the solicitor, e.g. when a solicitor engages another solicitor such as when a London agent acts for a solicitor out of London. LJ May did not think that the classification of the cost of this type of work could sensibly depend on whether the solicitor did the work themselves, whether they delegated the work to another firm of solicitors or whether they delegated it to costs draftsmen who were not solicitors. As an alternative the defendant argued that the success fee of 45% should be significantly reduced because there was little or no risk in proceeding to detailed assessment after the claim had been won and any success fee should therefore have been reassessed. However this argument was not accepted on the basis that a single agreed success fee had to be looked at with the knowledge known at the time the success fee was set, without the benefit of hindsight (para 16), and further the Court has no power to direct that a success fee is recoverable at different rates for different periods of the proceedings (para 17). In the circumstances, the appeal was allowed and the claimant recovered a success fee of 45% for the work carried out by the costs draftsmen.

Comment: This case can assist firms to improve their profitability because a success fee can validly be charged on costs draftsmen’s fees. To do so, it would be best to ensure that:

  • The draftsmen’s fees are treated as a firm overhead and paid from the nominal account rather than added to the client’s ledger as a disbursement.
  • The client should be charged for the time taken (which obviously needs to be recorded by the costs draftsman) at the appropriate hourly rate – normally grade C or D.
  • It may be prudent for the solicitor’s client care letter to include a statement that the firm can outsource certain tasks from time to time but that the client would be charged for the work at the solicitor’s hourly rate as though the work had been undertaken by the solicitor themselves.

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Dec 13

Caselaw Review: Dimond v Lovell – Credit Hire Agreements

Posted in Practice & Procedure, Road Accidents

The Issues:

The Claimant arranged a replacement car from a credit hire company whilst her vehicle was being repaired. However, the Defendant’s insurers refused to pay the hire charges on the basis that:

  1. the hire agreement had not been prepared in accordance with the Consumer Credit Act 1974 (‘the Act’) and was therefore unenforceable; and
  2. the charges of £364.63 for an 8 day period of hire were unreasonable.

Held:

  1. The Claimant was provided with credit in that the payment of the hire charges was deferred until the conclusion of her case and therefore, as a personal credit agreement, it was a ‘regulated agreement’ within the meaning of ‘the Act’. The Claimant’s and hirer’s agreement did not contain all of the ‘prescribed terms’, and therefore it was unenforceable. As the agreement was unenforceable the Claimant had no liability to the credit hirer and therefore the hire charges could not be recovered from the Defendant’s insurer. Once this point was conceded, it was then argued, on behalf of the Claimant/credit hirer, that the Claimant had been unjustly enriched because she had had the use of the car for nothing and consequently she should be required to pay the hire charges. If the Court had agreed then as this was a liability caused as a result of the accident and the hire charges could be recovered from the Defendant’s insurers. However, this was dismissed on the basis that to accept this argument would be inconsistent with the purposes of ‘the Act’. Parliament intended that if a consumer credit agreement was not executed correctly then the debtor should not have to pay, and this meant that Parliament had contemplated the debtor might be enriched.
  2. On the basis of the above findings, no specific judgment was required on the amount of the hire charges however comment was made, in obiter, as the point was of general importance to credit hire companies and insurance companies. By a majority, it was stated that a Claimant could not recover any additional fee applied by the credit hire company, on the basis of any additional services provided, e.g. providing credit. Therefore, the damages recoverable for loss of use are limited to the ‘spot rates’ quoted by ordinary car hire companies.

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Nov 23

Caselaw Review: Aktas v Adepta (2010) – Issuing second claim form after limitation is not an abuse of process

Posted in Practice & Procedure

The Issues: These were conjoined appeals where the Claimants had issued proceedings towards the very end of the limitation period but the cases were then struck out because of their solicitors failure to serve the Claim Forms within the 4 month period allowed under the CPR. The Claimants then issued fresh proceedings, relying on s.33 of the Limitation Act 1980, but was this an abuse of process?

Held: The Defendant ‘s central submission was that a failure to serve in time in the first action is so serious a misuse of procedure and is so strictly regarded as an act of disrespect to the court that the second claim must be struck out without reference to the s.33 discretion. However, the Claimants’ argued this had never been the case in any of the numerous cases which had considered the problem previously and would be putting the clock back to before the recent House of Lords decision in Horton v Sadler (2006). It is important to note that although the Claimants, through their solicitors, had been at fault for failing to serve their claim forms within the required time, this was the only breach of a court rule and the Defendants had been well aware of the claims before the error had occurred, and had admitted liability. Lord Justice Rix explained that the issue was a tension of, on the one hand the strictness of the rules of court with regard a failure to serve a claim form in time, and on the other hand the statutory concession which Parliament has allowed PI claimants who fail to issue their claims within the limitation period. The s.33 discretion is wide and traverses all the circumstances of the case, but is largely determined by the question of prejudice to the parties. The Court of Appeal concluded that the Defendants argument that to issue a second claim form in these circumstances is an abuse of process failed [para 89]. A “mere” negligent failure to serve a claim form in time has never been held to be an abuse of process, although a single negligent oversight to serve in time (i.e. a “mere” negligent failure) is distinguishable from other cases where there is an inordinate or inexcusable delay, intentional default or a wholesale disregard for the rules [para 90]. The Court therefore allowed both appeals and set aside the orders for striking out the Claimants second actions, although the s.33 discretion point was to be decided as a separate issue.

Comment: Clearly a very useful case and a sensible decision which finally abolishes the previous contradiction that a claimant was in a better position by failing to issue proceedings within the limitation period than by issuing proceedings in time, but then failing to serve the proceedings within the 4 month period allowed. However, a court may consider an inordinate or inexcusable delay is an abuse of process and so a fresh claim should issued without delay on a solicitor discovering that the time for service of a claim form has elapsed.

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