Hyde v Milton Keynes NHS Foundation Trust
| Jurisdiction | England & Wales |
| Judge | Lord Justice Davis,Lord Justice Lewison,Lord Justice McCombe |
| Judgment Date | 23 May 2017 |
| Neutral Citation | [2017] EWCA Civ 399 |
| Docket Number | Case No: A2/2016/0542 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 May 2017 |
[2017] EWCA Civ 399
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MR JUSTICE SOOLE
2016/0542
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Davis
Lord Justice Lewison
and
Lord Justice McCombe
Case No: A2/2016/0542
Vikram Sachdeva QC (instructed by Acumension Limited) for the Claimant
Roger Mallalieu (instructed by Ashton KCJ Solicitors) for the Defendant
Hearing date: 4 April 2017
Approved Judgment
Introduction
The claimant pursued a personal injury claim, commenced in 2012, against the defendant with the benefit of public funding. There came a time, in circumstances which I will come on to recount, when her solicitors and counsel then proceeded to act under a Conditional Fee Agreement ("CFA"). For whatever reason, no application to discharge the public funding certificate was at any stage made. The proceedings were ultimately settled, with the claimant being awarded costs. The issue arising comes to this. Can the claimant recover, in such circumstances, the full amount of her costs, and in particular the success fee under the CFA and the amount of the After the Event insurance premium, from the unsuccessful defendant?
The defendant argued that the claimant could not so recover. She could not recover, it was said, by reason of the provisions of s. 10 (1) and s. 22 (2) of the Access to Justice Act 1999: which, put shortly, have the effect that lawyers are precluded from "topping up" fees by payments under a private retainer at a time when the client is also publicly funded. The claimant, on the other hand, whilst not disputing the overall general prohibition of "topping up", argued that on the facts here there was no such consequence.
Master Rowley, the costs judge in the detailed assessment proceedings, ruled in favour of the claimant on this point by a reserved judgment handed down on 1 July 2015. The defendant's appeal was dismissed by Soole J (sitting with Master O' Hare as assessor) by a reserved judgment handed down on 20 January 2016: [2016] EWHC 72 (QB), [2016] 4 All ER 374. The defendant now appeals to this court by leave granted by Burnett LJ on 5 May 2016.
The appellant defendant was, as below, represented by Mr Vikram Sachdeva QC. The respondent claimant was, as below, represented by Mr Roger Mallalieu. The case was very well argued on both sides.
Background facts
The facts are fully set out in the judgment of Soole J, to which reference can be made. They can, for present purposes, be summarised as follows.
The claimant was admitted, as an emergency patient, to the defendant's hospital on 18 February 2008. Complications arose in the form of extravasation injury to her left arm. It was said that the defendant negligently failed to respond to such injury or to treat it adequately, thereby giving rise to extensive and serious complications.
A legal aid certificate was issued on 10 July 2008. A letter of claim was not sent until 22 August 2011. It was subsequently amended. Liability was admitted on 9 July 2012. It was further accepted, as a matter of causation, that had the claimant been referred to a High Dependency Unit, as she should have been, the injury would have been avoided.
On 13 July 2012 the claim form was issued. Notice of public funding was sent to the defendant. An application for a consent order, providing for judgment on liability, was issued on 30 July 2012. Quantum, however, remained in dispute. Judgment against the defendant was formally entered on 11 September 2012, with damages to be assessed.
The defendant made a Part 36 offer in the sum of £150,000 in August 2012. The claimant made a Part 36 offer in the sum of £275,000 (excluding CRU) on 24 August 2012. That Part 36 offer by the claimant was withdrawn on 13 March 2013. On 29 April 2013 the defendant then made a further Part 36 offer of £275,000 (including CRU). On 16 May 2013 the claimant responded with a Part 36 offer of £500,000 (excluding CRU). On 8 November 2013, following a joint settlement meeting, an offer of £300,000 (net of a previous interim payment of £25,000 and of CRU) was accepted. A consent order was made to that effect by the court on 6 January 2014.
During this time the claimant was represented by various firms of solicitors. Initially she was represented by Scrivenger Seabrook, in whose favour a Community Legal Services funding certificate for Investigative Help was issued with effect from 10 July 2008. There was then a change of solicitors to Osborne, Morris & Morgan, with the certificate being transferred on 15 October 2009. There was a further transfer of the certificate to Kester Cunningham John on 2 June 2011, full representation being granted on 12 September 2011. The certificate was ultimately transferred to Ashton KCJ on 17 May 2012. In the meantime an Individual High Cost Case Contract had been entered into by the Legal Services Commission ("LSC") and Kester Cunningham John in June 2011.
The Current Certificate Status of the funding contract schedule expressly stated that the certificate imposed both scope and financial limitations on the work to be done under it. It was stipulated, among other things, that payment would not be made for work undertaken outside the scope specified or in excess of the costs limit. It was also stipulated that there was a need to apply for amendment of the certificate "where the total costs for the work to be done under the whole of the certificate are likely to exceed the highest limitation". A Note to the certificate indicated that the costs limitations were a final costs figure and the limitation imposed on the final version of the certificate would be the relevant limitation on assessment.
From time to time there had been various increases, by amendment, in the financial limitations set by the certificate. As at 15 September 2011 the limit was set at £25,000 excluding VAT. On 23 July 2012 and 5 November 2012 the total limits were increased in order to complete stage 5 (Quantum Investigation Funding) of the check list: to £39,400 and then £43,000 respectively. This latter increase extended to the instruction of five experts, £18,000 being allocated to the quantum investigations.
Ashton KCJ corresponded with the LSC at this time. They complained that the increase to £43,000, excluding VAT, was wholly insufficient to fund the required experts and meetings with experts, let alone thereafter to bring the case to a conclusion. They requested a further increase. The LSC rejected the request on 20 November 2012. It also subsequently rejected a request by Ashton KCJ to "credit" £14,000 previously incurred by former solicitors (as it was asserted, unproductively incurred).
As found by the costs judge, Ashton KCJ then undertook an internal costs review. That concluded that the total work done to date was approaching the £43,000 limit and that the permitted public funding was insufficient to complete the quantum investigations or case. The claimant was so advised. She was informed that Ashton KCJ were nevertheless willing to continue to act on the basis of a CFA; and she assented to that.
A CFA was entered into between the solicitors and counsel (not Mr Mallalieu) on 20 March 2013. It included a success fee. A CFA was entered into between the solicitors and the claimant on 25 March 2013. It included a success fee. It related to the "work that has been done since our initial instructions 20 March 2013 (sic)". It among other things stated: "If you win your claim, you pay our basic charges, our disbursements and a success fee. You are entitled to seek recovery from your opponent of part or all our basic charges and disbursements, a success fee and insurance premium…" Further provisions indicated that the claimant, if successful, was liable to pay to the solicitors any difference between basic charges and disbursements and what the court allowed on assessment.
Notice of funding of case or claim, in standard form N251, dated 26 March 2013 was sent to the defendant. Among other things, it gave notice that "all claims…. is [sic] now being funded by a conditional fee agreement dated 25 March 2013 which provides for a success fee" and by an identified insurance policy. That notice was received the following day.
At no stage did the solicitors seek a discharge of the funding certificate. Whether that was through oversight, or in the belief that such a discharge was not needed, was not explained in the evidence.
It should be noted that these changes in the arrangements were made not only after liability had been admitted but also shortly before the changes to the funding of litigation (in particular with regard to CFAs) introduced, with effect from 1 April 2013, by the Legal Aid, Sentencing and Punishment of Offenders Act 2012. For the avoidance of doubt it should be recorded that it was expressly found by the costs judge, and affirmed by Soole J, that the entry into the CFA of 25 March 2013 was in good faith and reasonable.
Statutory Scheme
For present purposes, the starting point is the Access to Justice Act 1999. By s. 8 and s. 9 provision is made for the preparation of a Code relating to the provision of funded services, to be laid before each House of Parliament. Section 10 (1) is in these terms:
"An individual for whom services are funded by the Commission as part of the Community Legal Service shall not be required to make any payment in respect of the services except where regulations otherwise provide."
By s. 22 (1) and (2) it is provided as follows:
"(1) Except as expressly provided by regulations, the fact that services provided for an individual are or could be funded by the Commission as part of the...
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