Blankley v Central Manchester and Manchester Children's University Hospitals NHS Trust

JurisdictionEngland & Wales
CourtQueen's Bench Division
JudgeMr Justice Phillips
Judgment Date07 Apr 2014
Neutral Citation[2014] EWHC 168 (QB),[2014] EWHC 1622 (QB)
Docket NumberCase No: QB/2013/0303

[2014] EWHC 1622 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand

London WC2A 2LL

Before:

Mr Justice Phillips

Case No: QB/2013/0303

Between:
Diann Blankley (By her Litigation Friend Andrew M. G. Cusworth)
Claimant
and
Central Manchester and Manchester Children's University Hospitals NHS Trust
Defendant

Mr Vikrim Sachdeva (instructed by Linder Myers LLP) appeared on behalf of the Claimant

Mr Matthew Smith (instructed by Clyde & Co LLP) appeared on behalf of the Defendant

Approved Judgment

Mr Justice Phillips
1

This is the hearing to determine the costs orders which should follow from my judgment dated 5 February of this year. There is no dispute that the claimant was successful and should therefore have an order for costs in her favour. The issue is the extent to which there should be a reduction from those costs on a proportionate basis to reflect the fact that she was successful on one argument, which both parties accept was the primary argument, but was unsuccessful on a number of alternative arguments, totalling five in all.

2

There are three aspects of costs which arise. The first is the costs of the original hearing before Deputy District Judge Harris on 9 May 2011 leading to his judgment which was handed on, I think, 8 August of that year. Mr Smith today has accepted that those costs should be the claimant's as there was effectively one argument at that hearing, which was whether or not the mental incapacity of the claimant frustrated or otherwise terminated the contract of retainer, and that was an argument which the defendant has ultimately lost.

3

The costs of the reconsideration hearing have already been awarded in the defendant's favour by Bean J and no not arise for further consideration, so the next issue is the costs of the hearing before Bean J for permission to appeal, the costs of that hearing being reserved in the appeals. Mr Smith suggests, and Mr Sachdeva has not dissented, that those costs should follow the general order which I make for the costs of the two appeals which were before me.

4

So then, turning to the third element, which is the costs of the appeals and the hearing before me on those appeals, there is no doubt that the main argument related to whether or not the retainer in this case had been terminated by frustration. That was the important point of principle which detained us certainly a majority of the hearing, although possibly only a bare majority, and in my judgment it was the defendant's taking of that point which led to this entire set of ancillary costs proceedings and which inevitably resulted in the claimants considering every possible alternative way in which they could seek to recover their costs.

5

The alternative arguments put forward, whilst unsuccessful, were just that: alternative arguments to obtain the same result, namely the recovery of their costs after the date of the claimant's mental incapacity. It is not a case where the claimant has only been successful in part. She has been successful on the entirety of her claim that was before me, although that was on the basis of one rather than all of her arguments. I do not consider it is the type of case where the claimant has only been partially successful.

6

Having said that, evidence was put in on two of the arguments which were unsuccessful, namely, adoption of the CFA and on there having been a new CFA in 2009, and that factor, together with the fact that five arguments were advanced which were unsuccessful, does in my judgment justify some reduction in the claimant's overall recovery.

7

In my judgment the proper percentage to award to the claimant to reflect her overall success is 70 percent of her costs.

8

There is the issue of the fact that there was a second appeal which ultimately did not require consideration. That was in part because, ultimately, the arguments on the second appeal completely mirrored those on the first appeal, and I am urged by Mr Smith to make a single order in relation to both appeals so that it is not necessary to assess how much is attributable to one rather than the other, and I therefore make the same order in relation to the second appeal. In ordering 70 percent I have taken into account the fact that the second appeal was not necessary as from the date of the permission being given and may have led to some increased costs of the two appeals being heard together, but as I say, I have reflected that in the overall costs being awarded of 70 percent.

9

So those are the constituent elements of my order and I would ask if the parties can draw up an order to reflect that.

[2014] EWHC 168 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Phillips

Sitting with Assessors

Master Campbell and Greg Cox Esq

Case No: QB/2013/0303

Between:
Diann Blankley (by her Litigation Friend Andrew M. G. Cusworth)
Claimant/Appellant
and
Central Manchester and Manchester Children's University Hospitals NHS Trust
Defendant/Respondent

Mr V Sachdeva (instructed by Linder Myers LLP) for the Claimant/Appellant

Mr M Smith (instructed by Clyde & Co LLP) for the Defendant/Respondent

Hearing dates: 5 th and 6 th November 2013

Mr Justice Phillips
1

These costs appeals raise the question of whether, where a party loses mental capacity in the course of proceedings, such loss of capacity has the automatic and immediate effect of terminating their solicitor's retainer.

2

The question is currently of particular importance for solicitors conducting personal injury claims pursuant to conditional fee agreements entered into before 1 April 2013, in respect of which success fees continue to recoverable from defendants (see s.44(6) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012). If such an agreement is found to have terminated by reason of the supervening incapacity of the claimant (such incapacity being by no means a rare occurrence in serious personal injury cases), it would not now be possible to replicate the effect of the original contractual arrangements between solicitor and client given that success fees are not generally recoverable in respect of agreement made on or after 1 April 2013 (see s.58(A)(6) of the Courts and Legal Services Act 1990). No matter how short the period of incapacity (theoretically, even a scintilla of time), nor how quickly a deputy was appointed by the Court of Protection in respect of the claimant, the original CFA would be lost and could not, in real terms, be replaced.

3

In a decision handed down in the Manchester District Registry on 8 August 2011, Regional Costs Judge Harris, sitting as a Deputy District Judge, held that, as a matter of law, supervening incapacity automatically frustrates and thereby terminates a contract of retainer. As a consequence, he struck out parts 4 to 7 of the claimant's Bill of Costs, those parts being in respect of costs charged and disbursements incurred by her solicitors, Linder Myers LLP ("Linder Myers") for services provided after 6 March 2007, by which date the claimant had lost mental capacity.

4

For the reasons set out below, I have reached the opposite conclusion, namely, that the intervening incapacity of a party does not frustrate or otherwise terminate a solicitor's retainer. Whilst such incapacity does have the effect of removing the authority of the solicitor to act on behalf of the party lacking capacity for the duration of that incapacity, such authority can be restored when a deputy is appointed and provides instructions to the solicitors in that capacity, or otherwise if and when the claimant regains capacity. There is no reason, as a matter of authority or legal principle, why an inability to instruct solicitors in the intervening period (which may be quite short) should be taken to have the effect of immediately ending a solicitor's retainer.

The background facts

5

On 6 August 1999 the claimant underwent a suction termination and laparoscopic sterilisation at St Mary's Hospital, Manchester (part of the defendant Trust) which resulted in cardio-respiratory arrest and anoxic brain damage.

6

In 2002 the claimant, then a patient acting through her father as her litigation friend, and with the benefit of legal aid, brought these proceedings claiming damages for the alleged negligence of the defendant in relation to the procedure. Linder Myers acted as the claimant's solicitors. The proceedings were complex and contested, but in February 2005 the parties agreed that judgment be entered for the claimant for damages to be assessed on the basis of 95% liability.

7

By May 2005 the claimant had regained mental capacity and an order was made that she carry on the proceedings without a litigation friend. On 7 July 2005 the legal aid certificate was discharged. The next day, 8 July 2005, the claimant entered into a conditional fee agreement with Linder Myers ("the CFA"). There is no dispute that the CFA was valid when executed and covered all work up to 26 February 2007.

8

On about 9 February 2007 further assessments of the claimant by psychiatrists determined that she no longer had mental capacity to conduct her own affairs and could not provide instructions in relation to her ongoing claim. On 26 February 2007 an application was made to the Court of Protection for the appointment of Mr Cusworth, a trusts partner in Linder Myers, as the claimant's receiver. On 16 April 2007 the Court of Protection duly made such an order, expressly providing that the receiver had authority to conduct these proceedings on the...

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