Neville Springer (Personal Representative of the Estate of Wayne Anthony Springer (Deceased)) v University Hospitals of Leicester NHS Trust
| Jurisdiction | England & Wales |
| Judge | Lord Justice Hickinbottom,Lord Justice Lindblom,Lord Justice Moylan |
| Judgment Date | 15 March 2018 |
| Neutral Citation | [2018] EWCA Civ 436 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2015/3444 |
| Date | 15 March 2018 |
[2018] EWCA Civ 436
Lord Justice Lindblom
Lord Justice Hickinbottom
and
Lord Justice Moylan
Case No: A2/2015/3444
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM LEICESTER COUNTY COURT
HER HONOUR JUDGE HAMPTON
Claim No 2YN54518
Royal Courts of Justice
Strand, London, WC2A 2LL
Roger Mallalieu (instructed by DHF Solicitors) for the Appellant
Alexander Hutton QC (instructed by Acumension Limited) for the Respondent
Hearing date: 27 February 2018
Judgment Approved
Introduction
The Appellant Claimant (“the Claimant”) appeals against the order of Her Honour Judge Hampton dated 2 October 2015, in which she dismissed the appeal against the order of Deputy District Judge Elmer dated 18 July 2015 refusing the Claimant's application for relief against sanction in respect of a failure to serve a notice of funding in accordance with paragraph 9.3 of CPR Practice Direction – Pre-Action Conduct (“the PD PAC”). As a result of the refusal of the application, the sanction for failure to give notice under CPR rule 44.3B(1) applied; and the Appellant is unable to recover from the Respondent Defendant (“the NHS Trust”), as part of his costs, either (i) the success fee under the conditional fee arrangements (“CFAs”) under which his solicitors had been working for the period until notice of the funding arrangement was eventually given or (ii) at least part of the premium for the after the event insurance (“ATE insurance”) policy which had been taken out to protect him from any adverse costs order that might have been made against him.
Before us, Roger Mallalieu of Counsel appeared for the Claimant, and Alexander Hutton QC for the NHS Trust; and I thank them both at the outset for their particularly helpful submissions.
The Law: The Procedural Requirements for Additional Liabilities
With effect from 1 April 2000, section 27 of the Access to Justice Act 1999 amended the Courts and Legal Services Act 1990 by inserting new sections 58 and 58A authorising CFAs between litigants and their legal representatives which might include provision for a success fee. Section 58A(6) provided that rules of court might allow success fees to be recoverable as costs. Section 29 of the 1999 Act provided that, where ATE insurance was taken out against the risk of incurring liability for costs, rules of court might allow for the premium also to be recoverable as a cost.
A new CPR Part 44 was duly made (Civil Procedure (Amendment No 3) Rules 2000 ( SI 2000 No 1317)). Effective from 1 April 2000, it allowed both success fees and ATE insurance premiums to be included in the costs recoverable from another party: CPR rule 43.2(1)(k) defined “funding arrangement” to include an arrangement where a person has entered into a CFA or taken out an ATE insurance policy, CPR rule 43.2(i)(o) defined “additional liability” to include a percentage increase success fee due under a CFA and an ATE insurance premium, and paragraph 9 of CPR PD 44 (“the Costs Practice Direction”, or “the CPD”) provided that the sums payable under an order that one party pay the costs of another included any additional liability incurred under a funding arrangement.
I should say that the provisions allowing for such recovery are to a large extent now of only historical interest, because they were generally prospectively revoked by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LAPSO”), and the Civil Procedure (Amendment) Rules 2013 (SI 2013 No 262) which substituted new Parts 43– 48 of the CPR and a new CPD. From 1 April 2013, recovery of success fees and ATE insurance premiums as costs has not been allowed, save for ATE insurance premiums in respect of clinical negligence matters where recovery continues to be authorised (section 58A(6) and 58C(1) of the Courts and Legal Services Act 1990 as amended by sections 44(4) and 46(1) of LAPSO).
However, importantly, new CPR rule 48.1(1) states that the provisions relating to funding arrangements in Parts 43–48 and the attendant provisions of the CPD as they were in force immediately prior to 1 April 2013 will continue to apply after that date in relation to a “pre-commencement funding arrangement” as defined in CPR rule 48.2(1), i.e. a funding arrangement falling within CPR rule 43.2(1)(k) entered into before 1 April 2013. The two CFAs and ATE insurance in this case all fell within rule 48.2(1)(k) and were entered into before 1 April 2013. As a result, the pre-April 2013 costs provisions apply to them; and references in this judgment are to those provisions.
The CPR imposed notification requirements on any party who sought to recover an additional liability under a pre-April 2013 funding arrangement. CPR rule 44.15(1) provided that:
“A party who seeks to recover an additional liability must provide information about the funding arrangement to the court and to other parties as required by a rule, practice direction or court order.”
A note to that paragraph confirms that: “Rule 44.3B sets out situations where a party will not recover a sum representing any additional liability”. I shall return to rule 44.3B shortly (see paragraph 13 below).
CPR rule 44.15 was supplemented by section 19 of the CPD, which dealt with the notification of a funding arrangement in the context of issued proceedings. Paragraph 19.4 set out the information of the arrangement that was to be provided in Form N251. Paragraph 19.2 required a claimant who had entered into a funding arrangement before starting proceedings to provide the information to the court when he issued the claim form (paragraph 19.2(2)(a)) and to every other party with service of the claim form (paragraph 19.2(2)(b); and, in all other circumstances (notably, when a funding arrangement was entered into after the commencement of proceedings), the notice was to be filed and served within seven days of entering into the funding arrangement concerned (paragraph 19.2(4)). However, paragraph 19.2 of the CPD had the following note attached:
“[The PD PAC] provides that a party must inform any other party as soon as possible about a funding arrangement entered into prior to the start of proceedings”.
The notification provisions in the PD PAC, and its predecessor (the Practice Direction on Protocols (“the PDP”)), changed over time.
Initially, paragraph 4A.1 of the PDP provided that:
“Where a party enters into a funding arrangement within the meaning of rule 43.2(1)(k) he should inform other potential parties to the claim that he has done so.”
From 1 April 2009, the PDP was replaced by the PD PAC; and paragraph 4A.1 of the PDP was replaced by paragraph 9.3 of the PD PAC in the following terms:
“Where a party enters into a funding arrangement within the meaning of rule 43.2(1)(k), that party should inform the other parties about this arrangement as soon as possible.”
This therefore added the time by which notification had to be given, i.e. “as soon as possible”.
From 1 October 2009, paragraph 9.3 of the PD PAC was replaced as follows:
“Where a party enters into a funding arrangement within the meaning of rule 43.2(1)(k), that party must inform the other parties about this arrangement as soon as possible and in any event either within 7 days of entering into the funding arrangement concerned or, where a claimant enters into a funding arrangement before sending a letter before claim, in the letter before claim.
( CPR rule 44.3B(1)(c) provides that a party may not recover certain additional costs where information about a funding arrangement was not provided.)”
References in this judgment to “paragraph 9.3” are to this version of paragraph 9.3 of the PD PAC, unless otherwise indicated. The new version involved two changes. First, “should” became “must”. That change followed determinations by costs judges that, in the context of the paragraph, “should” did not impose an obligation but merely expressed an aspiration or recommendation ( Metcalfe v Clipson [2004] EWHC 9005 (Costs) and Cullen v Chopra [2007] EWHC 90093 (Costs)). The change made the provision of information in accordance with the paragraph mandatory. Second, it added the words after “as soon as possible”, which are central to this appeal and to which I shall return.
CPR rule 44.3B(1) imposed a sanction on those who failed to provide funding information as required. For CFAs entered into on or after 1 October 2009, it provided, so far as material:
“Unless the court orders otherwise, a party may not recover as an additional liability —
…
(c) any additional liability for any period during which that party failed to provide information about a funding arrangement in accordance with a rule, practice direction or court order;…”.
From 1 July 2000, as part of the changes arising from the new funding arrangements brought in in 2000, a new paragraph (e) was added by the Civil Procedure (Amendment No 3) Rules 2000 ( SI 2000 No 1317), as follows:
“(e) any insurance premium where that party has failed to provide information about the insurance policy in question by the time required by a rule, practice direction or court order;…”.
Paragraphs (c) and (e) do not sit comfortably together, because “additional liability” was defined to include “insurance premium” (see paragraph 4 above). Furthermore, as Mr Mallalieu pointed out, it is arguable that paragraph (e) includes the whole premium of any ATE insurance policy in respect of which notice has not been given in accordance with the requirements of the rules, even where the premium is payable in tranches and notice is given before one or more tranches fall due. However, Mr Hutton conceded before us that recovery of the premium...
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