Offers to settle: HRA damages claims and CPR Part 36 – Part II

Costs consequences of a Pt 36 offer

 

In Part I of this series (https://dbfamilylaw.wordpress.com/2017/03/20/offers-to-settle-hra-damages-claims-and-cpr-part-36-part-i/) the background to making offers to settle claims in civil proceedings, especially in HRA damages claims under HRA 1998 s 8. This article explains the consequences of offers being made, first on costs where an offer is accepted and secondly where a case goes to trial and the court makes an order which is more or less ‘advantageous’ to one or other party relative to the offer made by him or her in Pt 36 correspondence. Finally the importance of attempts to settle and of mediation will be touched upon.

 

Deemed costs awards; acceptance of an offer

 

The emphasis of Pt 36 is very much upon provision for costs being deemed as a result of offers being accepted or offers being beaten by parties – claimant or defendant – so that costs orders can be taken as read. Issues for the courts to resolve as to how costs should be awarded are kept to a minimum. Prescribed or deemed orders rule the scheme.

 

CPR 1998 rr 36.13(1) and 44.9(1)(b) ‘deems’ orders for the claimant’s costs to have been made on acceptance by either party of a Pt 36 offer within the relevant period. Thus:

 

44.9 Cases where costs orders deemed to have been made

(1) … where a right to costs arises under – (b) rule 36.13(1) or (2) (claimant’s entitlement to costs where a Part 36 offer is accepted);… a costs order will be deemed to have been made on the standard basis.

 

An order for costs is treated as having been made if an offer is accepted and acceptance is within the ‘relevant period’ (ie not less than 21 days or up to the termination of the trial if an offer is made less than 21 days before trial (r 36.3(g) or 36.5(1)(c))). After the ‘relevant period’ a respondent to the offer is liable for costs. Costs can include pre-proceedings costs (r 36.13(1)). (Slightly different rules apply where the offer is in respect of only part of a claim (r 36.13(3) and (4)(c); but that is unlikely to affect the main types of claim under consideration here.)

 

The rules encourage early attempts to settle. Different rules apply where an offer to settle is made less than 21 days before trial (r 36.13(4)(a)) or where it is not accepted within the ‘relevant period’ (r 36.13(4)(b)). That represents one of the instances where the court may become involved in determining costs issues if parties cannot reach agreement: r 36.13(4) concludes that ‘liability for costs must be determined by the court unless the parties’ can reach agreement.

 

Deemed costs – unless ‘unjust’

 

If an offer is made less than 21 days before the start of a trial, or is accepted outside the relevant period then – unless the parties can agree – the court will decide the costs order (r 36.13(4)). Subject to this, the deemed orders give the claimant costs up to the end of the relevant period, and the offeree (claimant or defendant) costs from expiry of the relevant period (r 36.13(5)) on the following bases, subject to the overriding check that the court can be asked to find such an order ‘unjust’. What is ‘unjust’ (within the terms of r 36.13(5)) is measured by the factors in r 36.17(5): that is all the circumstances of the case and the following inclusive list:

 

(5) … the court must take into account all the circumstances of the case including—

(a) the terms of any Part 36 offer;

(b) the stage in the proceedings when any Part 36 offer was made, including in particular how long before the trial started the offer was made;

(c) the information available to the parties at the time when the Part 36 offer was made;

(d) the conduct of the parties with regard to the giving of or refusal to give information for the purposes of enabling the offer to be made or evaluated; and

(e) whether the offer was a genuine attempt to settle the proceedings.

 

Judgment ‘more advantageous’

 

The scheme under r 36.17 (costs consequences following judgment), as for all of Pt 36, is to provide for costs which is designed to cater for Pt 36 offers both by claimants and defendants, and to provide a composite rule for both. In either case it depends on the judgment made at trial. If a claimant beats his/her offer, the defendant must pay costs, interest and other payments as set out in r 36.17(4) (below): that is to say, where a claimant’s judgment is ‘at least as advantageous’ (or better) than a defendant’s Pt 36 offer (36.17(1)(b)). In the case of a defendant, a claimant must pay the defendant’s costs in accordance with r 36.17(3) if s/he does not beat the defendants Pt 36 offer (r 3617(1)(a).

 

The terminology used in r 36.17(1) is that the Pt 36 is more ‘advantageous’, so if the offer is no monetary this may have to be taken into account in assessment of how the dice fall under r 36.17(1). Rule 36.17(2) elaborates a little: ‘in relation to any money claim or money element of a claim, “more advantageous” means better in money terms by any amount, however small, and “at least as advantageous” shall be construed accordingly’, but perhaps only deals with the more obvious – ie monetary – aspect of r 36.17(1).

 

(1)        Claimant’s costs

 

The consequences for a claimant who beats a defendants off is intended to reflect that the claimant is regarded, by the rule-makers, as at a disadvantage (as against the pre-CPR rules where there was no requirement on a plaintiff to make an offer to settle). The costs order for the claimant is as follows:

 

(4) Subject to paragraph (7) [ie if the offer is withdrawn or changed adversely], where paragraph (1)(b) applies, the court must, unless it considers it unjust to do so, order that the claimant is entitled to—

(a) interest on the whole or part of any sum of money (excluding interest) awarded, at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;

(b) costs (including any recoverable pre-action costs) on the indemnity basis from the date on which the relevant period expired;

(c) interest on those costs at a rate not exceeding 10% above base rate; and

(d) provided that the case has been decided and there has not been a previous order under this sub-paragraph, an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage set out below to an amount which is—

(i) the sum awarded to the claimant by the court; or

(ii) where there is no monetary award, the sum awarded to the claimant by the court in respect of costs—

Amount awarded by the court Prescribed percentage
Up to £500,000 10% of the amount awarded
Above £500,000 10% of the first £500,000 and (subject to the limit of £75,000) 5% of any amount above that figure.

 

Costs payable on the indemnity basis under r 36.17(4)(b) are intended to stigmatise the defendant. It is merely part of the Pt 36 scheme to encourage settlement (McPhilemy v Times Newspapers Ltd & Ors [2001] EWCA Civ 933, [2002] WLR 934).

 

(2)        Defendants costs

 

Where costs are due to a defendant then, unless the court considers a payment ‘unjust’ (r 36.17(3)), the court must award:

 

(a) costs (including any recoverable pre-action costs) from the date on which the relevant period expired; and

(b) interest on those costs.

 

In either case the court can override the automatic awards because it considers their award to be unjust, and on the basis set out (see above) in r 13.17(5).

 

Mediation

 

In SW & TW (Human Rights Claim: Procedure) (No.1) [2017] EWHC 450 (Fam), Cobb J (at [3](x)) stressed the dangers that in HRA damages litigation, costs can quickly dwarf the damages which can be claimed. The same point was made by the Court of Appeal in Anufrijeva and anor v Southwark London Borough Council [2003] EWCA Civ, [2004] 1 FLR 8. Cobb J urged mediation (and see Cowl & Ors v Plymouth City Council [2001] EWCA Civ 1935, [2002] Fam Law 265 for use of mediation in administrative law cases).

 

An offer in mediation cannot be a Pt 36 offer: it must be confirmed in writing using the formalities in r 36.5(1); though a written offer, not in r 36.5 terms can, be taken into account by the court in the exercise of its discretion where written in Calderbank terms (CPR 1998 r 44.2(4)(c); Calderbank v Calderbank [1976] Fam 93, [1975] 3 WLR 586, CA: letter written ‘without prejudice save as to costs’).

 

Failure to engage in mediation or to respond to a request to mediate may be amongst the factors under r 36.17(5) which could persuade a court to find a costs order unjust (Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576; PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288).

 

Part 36 is designed to encourage settlement. Mediation can be part of the settlement process. Both are important parts of the courts’ concern to find ways to avoid litigation; and judges are alert to this at all times. Family lawyers rarely have the costs risk approach which most civil litigators have. Costs orders are very rare in children proceedings, and (for different reasons) in ancillary relief cases. If involved with HRA damages claims family lawyers must be alert to the extent to which Pt 36 can help to protect their local authority clients exposure to costs or to the corrosion of a damages award if claimant offers are not made.

Offers to settle: HRA damages claims and CPR Part 36 – Part I

Human Rights Act 1998: damages claims under s 8

 

In SW & TW (Human Rights Claim: Procedure) (Rev 1) [2017] EWHC 450 (Fam), Cobb J expressed the view obiter – the question was not formally before him – that Human Rights Act 1998 (‘HRA 1998’) s 8 damages claims (‘HRA damages claims’) alongside care proceedings Cobb J must be issued under CPR 1998 Pt 8. The terms of HRA 1998 s 8(2) – that damages claims must be ‘in civil proceedings’ – makes this the logical view. This article proceeds on the assumption that Cobb J’s guidance in SW & TW is correct.

 

It follows from this, that the CPR 1998 Pt 36 regime – ‘Offers to settle’ – applies to HRA damages cases. Part 36 represents the modern view for civil litigation: that parties be encouraged to reach a settlement by the modern, and less formalistic, equivalent of payments into court; or a slightly formalised version Calderbank correspondence. It can be contrasted with the primitive rejection of costs restraints in ancillary relief proceedings, where the rules committee have rejected the civilising concepts of costs penalties for financial remedy cases (as narrowly defined); though costs are not rejected in all other forms of family and wider definition financial remedy proceedings (‘clean sheet’ costs applications: eg interim financial hearings; Children Act 1989 Sch 1 claims etc). Part 36 represents a much simpler – dare one say more logical? – scheme than anything known to family proceedings.

 

HRA damages claims: the plot to March 2017

 

The last three months has seen a variety of reported cases of litigation over HRA damages claims for children, and their parents, in care proceedings where there is criticism of the local authority in treatment of such children (HRA 1998 ss 6-8). The plot so far on such claims has progressed a little like a game of judicial tennis between Keehan J and Cobb J – as their views have developed and contrasted:

 

  • P v A Local Authority [2016] EWHC (Fam) saw Keehan J serving. The LAA had said, in separate HRA damages proceedings (for which they refused legal aid) and which followed funded wardship proceedings, that the legal aid statutory charge applied to those earlier proceedings. Keehan J disagreed, firmly.
  • In CZ (Human Rights Claim: Costs) [2017] EWFC 11, Cobb J responded low over the net and deep into Keehan J’s back-hand. He said that a HRA damages claim attracted the charge for the parallel care proceedings (wrongly in my view); and left it to a circuit judge to deal with any final costs order.
  • Late in the proceedings in H (A Minor) v Northamptonshire County Council & Anor [2017] EWHC 282 (Fam) before Keehan J, the LAA conceded that the charge did not apply, where they had issued a separate certificate for the damages proceedings; but, despite the LAA capitulation – in that case – Keehan J was able to respond to Cobb J by setting out guidance for HRA damages claims. The statutory charge issue remained at large.
  • In SW & TW (Human Rights Claim: Procedure) (No.1) [2017] EWHC 450 (Fam) Cobb J conceded the procedural game to Keehan J, and further developed its ramifications. He concludes that Human Rights Act 1998 claims should be in civil proceedings under Civil Procedure Rules 1998 (‘CPR’); but largely left open the legal aid statutory charge issue which is likely to be reconsidered before him in April.

 

My views on the extent to which the charge does not, I believe, applies appears in a number of places (see eg https://dbfamilylaw.wordpress.com/2017/03/03/hra-damages-and-legal-aid-a-pyrrhic-exercise/). In summary, care proceedings and any HRA damages claim are ‘separate’ proceedings (Civil Legal Aid (Procedure) Regulations 2012 reg 37(3)); that they would not be associated in civil proceedings if the solicitor’s lien were to apply (Solicitors Act 1974 s 73); and therefore for LAA to claim a charge over care proceedings costs – and thus almost invariably to wipe out any damages recovered under HRA 1998 s 8 – is unlawful. This is for Cobb J to decide at the adjourned hearing in SW & TW (above). Into this costs law mulch must then be mixed CPR 1998 Pt 36 for the family lawyer, whose clients are now required to take proceedings under CPR 1998 Pt 8 for HRA damages.

 

CPR 1998 Part 36: an introduction

 

CPR 1998 Pt 36 provides a self-contained offer procedure which defines how costs may be awarded where offers are accepted or offers beaten following a final hearing. This article explains how an offer is made. A follow up article will explain the consequences in term of award of costs.

 

Part 36 replaces the former procedure for payment into court (abolished since 2007) and all but replaces Calderbank letters (Calderbank v Calderbank [1976] Fam 93 CA) for civil claims. It provides a procedure which enables the following:

  • Offers to settle to be made before issue of proceedings (CPR 1998, r 36.7(1));
  • Offers to be made in respect of individual issues; and
  • It is intended to encourage claimants to put forward proposals for settlement on similar costs terms as defendants (with the added incentive provided by favourable rates for payment in r 36.17(4)).

 

Part 36 offers can be made by claimant or defendant provided they are in the form required by r 36.5. Proposals then become akin to without prejudice or Calderbank proposals which cannot be disclosed to the court (r 36.16). Specific costs consequences follow from any acceptance of an offer (r 36.13); or from a judgement and from the fact of beating or failing to beat a Pt 36 proposal (r 36.17). In SW v TW Cobb J stressed the importance of claimants being realistic as to the amounts of their claims (paras [41]-[45]); and see HRA 1998 s 8(4): principles of award in European Convention 1950 jurisprudence). Claimants are urged by the new rules to make offers to settle in a way that, pre-Pt 36, they were under no obligation; but in exchange r 36.17(4) provides an extra incentive to place their cards on the table at an earlier stage than might previously have been the case.

 

Rule 36.2(1) makes it clear that Calderbank letters or other forms of offer to settle are still available; but that if the benefits of near automatic costs orders under Pt 36 are to be achieved, offers must be made in accordance to what is required by r 36.5. Thus, even without compliance with r 36.5 the court still has discretion as to award of costs under Senior Courts Act 1981 and CPR 1998 r 44.2 (French v Groupama Insurance Company Ltd [2011] EWCA Civ 1119). For an example of the court holding a defendant to a costs order where she refused pre-proceedings Calderbank proposals in what would now be TOLATA 1996 proceedings, see Butcher v Wolfe and Wolfe [1999] 1 FLR 334, CA.

 

Form and content of a Part 36 offer

 

Rule 36.7(1) makes it clear that a Pt 36 offer made before issue of proceedings is as effective as an offer made following issue. Rule 36.5 sets out the formal terms for an offer, by claimant or defendant. It includes that the offer must be in writing; that it must make clear that it is made pursuant to Part 36; and it must specify ‘a period of not less than 21 days within which the defendant will be liable for the claimant’s costs in accordance with r 36.13 [(see below])… if the offer is accepted’ (r 36.5(1)).

 

Acceptance can only be in writing (r 36.11(1)). It may be in Form 242A; but it must be served (PD36A para 3.1):

  • the offeror or their legal representative (if represented); and
  • the court.

 

The formalities of offer and of acceptance, or preparation for final hearing with offers made, are now in place. In Part II the costs consequences of Part 36 offers will be explained.

Tom Paine: of monarchs, presidents and the cult of personality

Rule of law is king

 

Various reasons over the past three months have sent me back to Tom Paine’s clear political ideas. They help to answer such disparate issues as the fight between Parliament and the courts over who is responsible for EU withdrawal; the need for more clarity over who rules the United Kingdom (so long as it remains ‘united’): Parliament (legislature) or the government (executive); and the mindless adulation which political characters as wide apart as President’s Trump and Putin on the one hand and Jeremy Corbyn on the other have attracted. The main purpose here is to explain why the cult of personality – of anyone, not just the three characters in the previous sentence – is primitive. It harks back to medieval times (and much earlier). Oliver Cromwell tried to rid this country of it; but unlike Gideon (see below) he succumbed; though he clung to ‘Protector’ as his title. The evils of cult are well illustrated by Tom Paine.

 

‘Monarchy’ means rule by one person. It is associated with hereditary monarchs; but it could as easily be applied to any system which concentrates a disproportionate amount of power in one person: a President, a prime minister, a party leader. It is the nature of their rule and the power they wield (eg choosing their group of adherents (cabinet)) which defines the extent of mon-archy (rule by one), not their constitutional trappings.

 

Paine was brought up a Quaker. His philosophy is none the worse for that. You don’t have to be a Christian to see that ‘Love thy neighbour’ should be the basis for any left wing political philosophy. Whether it was what a Jewish carpenter’s son said, or is part of the next development from an earlier system of Jewish law (the Ten Commandments) does not really matter. It is the political philosophy distilled in parts of the Bible which counts.

 

In his 1776 pamphlet, Common Sense, Paine illustrates his dislike of kings and the hereditary system by the Bible story of Gideon. When asked to be king by the Jews, Gideon ‘in the piety of his soul replied: “I will not rule over you neither shall my son rule over you, the Lord shall rule over you”’. And Paine develops this: Gideon was not turning down the honour. He denied the right of the people to give it.

 

If in the 21st century you replace Paine’s ‘Lord’ with the rule of law; and recognise that, as does the Miller Brexit case, it is the law not politicians which rule, then a constitutional equilibrium begins to emerge. As Paine said: ‘The law is king; not the king law’. It is a short adjustment between these two stand-points to say that the rule of law is law; and that the rule of an individual – literally a ‘monarch’: prime minster, president, party leader, duke or duchess – is wrong and must not be the law. Rule by one person in the 21st century – especially after our experiences of dictators in the 1930s and early 1940s – must be anathema.

 

Rule by the 21

 

So what is the alternative? Paine examines the earliest societies and points out that government is a ‘necessary evil’. It should be equality ruling freedoms (liberty) in the interests of society (fraternity/sisterliness) – but that is for another day. Government must be by a selected body – the ‘elected’, as Paine calls them – for the whole body – the ‘electors’. Society then works towards a true commonwealth as the Levellers would have understood the term.

 

In a way we have that elected body already, surely? Yes and no. We have a representative body (with some form of proportional representation it could be more representative). We still have the personality cult of a prime minister, who personally chooses his or her cabinet and all her ministers; and as we have seen with Mr Corbyn, he weeds out anyone who does not agree with him. Compare Atlee’s cabinet where all ‘wings’ of the Labour party worked together to produce the most effective modern government this country has probably ever known.

 

I would have the country elect the MPs (broadly as now). A majority of MPs (say, if the same system persists as now, a party) chooses 21 MPs from a list of those willing to be chosen. That 21 (‘cabinet’: a random odd number: it could be 17 of 23 (no more I suggest)) chooses the heads of government departments and other ministers. All the 21 chose, it is not left to one mon-archical figure (as now). The ‘cabinet’ then meets as regularly as need be to run the country; and at its first meeting it chooses a chair. If possible – this needs thinking through – the chair would be re-elected every few months (three to six, say); and there would be no president, or prime minister, or leader (no il duce: leader in Italian from which comes our duke).

 

I am sure if Paine had guessed that his beloved New Englanders would one day combine with other USA people to elect Trump as president, he would have kept his Gideon idea and have warmed to my cabinet rule idea. He would have rejected the idea of one president or leader.

Legal aid statutory charge Part 3: avoidance and evasion

Legal aid advice: statutory charge and separate proceedings

 

So far, on the subject of legal aid and the legal aid statutory charge, this series has looked at (1) HRA damages and legal aid: a Pyrrhic exercise; and (2) legal aid statutory charge and care proceedings. The next question is: what are the duties of the solicitor and of barristers towards the legal aid fund? And, especially, is there any question of lawyers abusing the fund if they take separate proceedings to recover Human Rights Act 1998 (‘HRA’) damages and the charge cannot thereby operate on those damages?

 

A legal aid lawyer’s job is not unlike that of a tax specialist accountant. It is legitimate for an accountant to help clients to minimise their tax: that is tax avoidance. Tax evasion (eg declaring a false income), by contrast, is illegal. It is the same for lawyers. Lawyers may not, as Lord Denning MR put it in Manley v Law Society [1981] 1 WLR 335, CA, ‘manipulate the destination [of damages or property] so as to avoid the statutory charge’ (348E). His successor Lord Donaldson MR in Watkinson v Legal Aid Board [1991] 1 WLR 419, [1991] 2 FLR 26, CA told solicitors that they should not apply for a certificate to be amended if they could equally well apply for a fresh certificate, and thereby avoid the charge for their clients. The question here is what is manipulation (ie Manley evasion), and what legitimate (ie Watkinson good practice).

 

Duty to the legal aid fund; duty to the Treasury

 

So it is with tax advice: it is not for the accountant to arrange for a client to pay as much tax as possible, any more than a legal aid lawyer must cause his/her client needlessly to forego money for the benefit of the legal aid fund; but neither accountant nor lawyer can advise their client illegally to evade payment where it is legitimately due to the Treasury.

 

Manley was followed by Clark v Clark (No 2) [1991] 1 FLR 179, where Booth J commented on the duty of a solicitor to act independently of counsel; and in so doing she stressed the three duties of a legal aid lawyer: to the court, to the client and to the legal aid fund:

 

As a general rule, a solicitor is entitled to rely upon the advice of counsel properly instructed, and in doing so he will be absolved from a personal liability for the costs of his actions. But, as May LJ observed in Davy-Chiesman v Davy-Chiesman [1984] Fam. 48 at p.64, this does not operate so as to give the solicitor an immunity in every case. He expressed it thus:

‘A solicitor is highly trained and rightly expected to be experienced in his particular legal fields. He is under a duty at all times to exercise that degree of care, to both client and the court, that can be expected of a reasonably prudent solicitor. He is not entitled to rely blindly and with no mind of his own on counsel’s views.’

In my judgment, those words apply as much to the duty of care owed by a solicitor to the … the Legal Aid Fund as to his client and to the court.

 

Manley v Law Society

 

In his inimitable prose, Lord Denning MR described the facts of the case:

 

Some 10 years ago the plaintiff invented an “echo sounder” by which large ships could tell if they were getting into shallow water. He got the Marconi International Marine Co. Ltd. interested in it. They agreed to exploit it if it came up to their requirements. But it failed to come up to their requirements. So they refused to go on with it. He alleged that they were guilty of a breach of contract. He claimed damages, huge damages, because of the loss of profit that he said he would have made. He also claimed to be reimbursed the money he had spent in developing his echo sounder. It came to £30,000 or more. He borrowed it from the banks and had charged his house as security for it.

The plaintiff had no money of his own to bring an action. So he applied for legal aid and got it…. He started an action in 1972 against Marconi.

 

Eventually the action was settled. Marconi was ready to pay £40,000 to get rid of it altogether, rather than incur the expense of fighting the case over 30 days against a legally aided plaintiff. The lawyers came to an arrangement where a fund in the joint names of Dr Manley’s and of Marconi’s solicitors would buy his debts and no money would go through the hands of Dr Manley. There was nothing on which the charge could bite and Dr Manley’s debts would be cleared. The Law Society was asked to approve this deal, but could not give a clear answer in the short time available. That was not the way to look at the compromise said Lord Denning MR (with whom Ormrod and O’Connor LJJ agreed):

 

… The court should always look for the truth of the transaction. It should not let itself be deceived by the stratagems of lawyers, or accountants. It should not allow them to pull the wool over its eyes. It should not allow them to dress up a transaction in clothes that do not belong to it.

Now the plain truth of this transaction is that the £40,000 was to be used to pay off the plaintiff’s debts. Kennedys were to supply particulars of his debts…. To my mind, once we pull aside the curtain of words, and the supposed rights, the truth is that this £40,000 was to be used to pay off the plaintiff’s debts at his request. It is, therefore, the subject of the statutory charge in favour of the legal aid fund. When money is paid to a party, or at his request to his creditors, it is plainly “recovered … for him” within Legal Aid Act 1974 9 (6).

 

The legal aid fund received what there was to cover the costs charged to it by Dr Manley’s lawyers (around £17,000) and he had what was left to pay his debts which had by then worked out at £48,000.

 

Solicitors must not ‘blindly’ follow counsel

 

In Clarke (No 2) (above) complex enforcement proceedings were issued by sequestration (the husband was in the US). This was on counsel’s advice. At a point in the proceedings counsel advised a course which would deprive the Legal Aid Board of capital, and therefore of fuel for the charge, where some cash was coming in from the husband’s assets. The Legal Aid Board was kept informed by the solicitor, but there came a time when he must rely on his own high training and experience (see quote from Davy-Chiesman above). Booth J explained this:

 

But the scheme to rewrite the sequestration order was of a very different nature. Once it had been mooted, it should have been very clear to the solicitor that the result it was intended to achieve conflicted directly with the duty which he himself owed to the Law Society and to the Legal Aid Fund…

 

The duty to the fund was personal to the solicitor; and s/he cannot ‘blindly’ follow counsel:

 

That duty constituted a personal obligation upon him, as the wife’s nominated solicitor, to protect the Legal Aid Fund. Whatever the advice of counsel, he remained responsible at all times to the Law Society. He was bound to report what it was proposed to do on her behalf, as indeed he did. In my judgment, his duty to the Law Society continued so long as he remained the nominated solicitor on the wife’s legal aid certificate and the certificate was not revoked or discharged. Where, as here, the action which was proposed, and which was followed, placed the solicitor as a legally assisted party’s solicitor in a position which directly conflicted with a duty of care he owed to the Legal Aid Fund, it would have required the clearest authorisation from the Law Society if he were to be absolved from that duty. No reliance upon counsel, however compelling the advice, could have absolved him from that duty.

 

The full passage from May LJ in Davy-Chiesman v Davy-Chiesman [1984] Fam 48 at 63-64, [1984] 1 WLR 291 (which was reported in the Times reports under the headline: ‘Solicitors should not blindly follow counsel’) is:

 

… a solicitor is in general entitled to rely on the advice of counsel properly instructed. However, this does not operate so as to give a solicitor an immunity in every such case. A solicitor is highly trained and rightly expected to be experienced in his particular legal fields. He is under a duty at all times to exercise that degree of care, to both client and the court, that can be expected of a reasonably prudent solicitor. He is not entitled to rely blindly and with no mind of his own on counsel’s views. Thus if, despite counsel’s advice that the circumstances postulated by regulation 68(1) [for reporting to the Law Society] do not obtain, he (the solicitor) remains of the view that they do, then he continues under a duty to report that view.

 

Separate legal aid certificates: the solicitor’s lien

 

So where does that leave the solicitor who sees that HRA damages, if claimed in care proceedings, will be merely swallowed up by the costs in the legally aided case? The ‘victory’ will be worthless, literally; and the only people to gain will be the lawyers for their efforts in transferring a few thousand pounds from a local authority to the legal aid fund.

 

The first thing is to imagine is that, as the solicitor, you are acting for the client on a non-legal aid (ie private) basis. This would not be in care proceedings, since legal aid is always available for that. However, imagine a case in which an unmarried client (Mary) is not financially eligible for legal aid, but instructs you to take domestic violence proceedings. After two court hearings in the Family Court the case is concluded and an order for costs assessed at £4,500 is made against her former cohabitant (Frank). Your costs are £5,000. You have a bill for £1,000 for contact discussions and advice over this, alongside a mediated contact agreement. Your total unpaid costs are £6,000.

 

Separately you act for Mary on a further retainer to claim a share in the couple’s former home. It is in Frank’s sole name, but he agreed that Mary should have a half share (a constructive trust). She estimates to be worth £80,000. She pays you £2,500 on account to cover £1,500 for the short-fall on the earlier work (if Frank pays) and £1,000 on account of constructive trust proceedings. You have to issue proceedings under Civil Procedure Rules 1998 in the county court claiming a declaration. Ultimately the case is settled on terms that Frank will pay Mary £60,000 and £8,000 towards her costs. For the civil proceedings your costs are now £12,500). You are owed £16,000 by Mary (you’ve been soft with her knowing she will receive the money from the house) of which £12,500 is owed by Frank.

 

You ask Mary for a charge on her agreed share, which share Frank has agreed to express as a charge on his house till he pays; or she can enforce. You want a charge on her charge. She is evasive about signing a charge. Solicitors Act 1974 s 73 says:

 

73 Charging orders

(1)   … Any court in which a solicitor has been employed to prosecute or defend any suit, matter or proceedings may at any time –

(a)declare the solicitor entitled to a charge on any property recovered or preserved through his instrumentality for his assessed costs in relation to that suit, matter or proceeding;…

 

Only assessed costs can be charged, and the court must declare the availability of the charge; but otherwise the terminology is – in effect – exactly the same as the charge under Legal Aid Sentencing and Punishment of Offenders Act 2012 s 25(1). So you apply in the constructive trust proceedings (CPR 1998 Part 23) for assessment of your bill to Mary (now approaching a total of £17,000 net of the £2,500 she has paid). The judge assesses the amount you claim and you enter a charge against Mary’s charge.

 

But – and this is the main point of the story in relation to separate legal aid – do you imagine the court will allow you to assess and charge the unpaid domestic violence costs against property recovered in the trust case? I am as sure as I can be, not. It is a separate retainer, and wholly separate proceedings. I would expect a costs judge to say you are limited to detailed assessment on the costs which arose in the constructive trust proceedings (£12,500 and to declare accordingly under Solicitors Act 1974 s 73) – that is, where property was recovered or preserved with your help (your ‘instrumentality’). And it is that same point which applies, I believe, to ‘separate’ care and HRA proceedings?

 

Legal aid statutory charge: solicitor’s lien

 

Many questions which crop up in legal aid statutory charge cases can be answered by seeing it – subject to statutory exemptions under Civil Legal Aid (Procedure) Regulations 2012 – as much the same as the Solicitors Act 1974 s 73 solicitor’s lien. This works both ways.

 

In Manley, for example, as soon as you ask the question: would a solicitor or barrister settle a case on terms that they knew that everyone – except them – was to be paid. Of course not. Looked at that way the Manley settlement terms were bound to fail. But in Mary’s case, in the opposite direction, her solicitor could not expect the costs judge to say, ‘there, there, you didn’t get enough costs on account, so I’ll give you a charge for whatever is due from that claimant (ie Mary) to your firm’. The judge would assess your bill for the work which applies under the CPR 1998 proceedings, and leave you to sue for the rest and charge that as well when you’ve gone through the separate charging order process for those costs.

 

Imagine that the HRA damages claim are the domestic violence proceedings, and the care proceedings are the constructive trust proceedings. They are separate; or in my opinion – see Legal aid statutory charge and care proceedings – they should be. You get paid, all being well, by the local authority on the HRA case; though if there is any shortfall on your costs in the HRA proceedings the legal aid charge will, of course, apply to the damages for that short-fall. The care proceedings are a separate retainer. Legal aid costs and a charge for those proceedings on the HRA damages should have nothing to do with one another, in my opinion.

On-line family law, discussion continues

Hello Roger

 

Many thanks for your prompt reply. I do understand your wish to increase understanding of changes which are happening around lawyers (and our clients), in terms of technology.

 

I would like to deal with the changes by saying that they provide a real chance to look at family law procedure afresh.

 

The end result which the process must aim to produce is a fair determination for the parties. How best can this be achieved? It must use a combination of existing substantive law and rights in parallel with technology. Law is the master/mistress. Technology is the willing servant. If procedure, as I believe it is, is the means to achieve justice, how far can if work with technology and clarify the process.

 

In your reply you mention a scheme in California derived from Canada. This seemed to you:

 

‘…a good example of how technology is international even if law is irredeemably national. One of the most interesting parts of the project was a focus on the emotional needs of the children involved rather than those of the parties to the litigation – who would generally be their parents….’

 

Yes, but maybe legal principles are not altogether ‘irremediably national’. For example, we could agree that welfare of children ideas can be international (see for example United Nations Convention on the Rights of the Child 1989: noticed hardly at all, it must be said, by English judges). A right to a fair is increasingly international; though you will know more than me of the extent to which it is observed in practice. If these concepts can be part of the bundle of rights which are there in a group as the outcome of justice, then technology and procedure can work towards that.

 

English family breakdown law has four components: children (where they are still dependant); money (income and capital); domestic abuse; and status (if a couple are married or in a civil partnership). These will be replicated in various ways in most other jurisdictions, with money and divorce varying most in all probability. In English law divorce (save where defended) is already an administrative arrangement, one the decision is taken, and is ripe for on-line disposal. Money proceedings may be easy for those with a more modest income – and no doubt crying out for help from a simpler procedure where lawyers are still very expensive. Save for the end result welfare test, child law procedure presents greater challenges; as does – perhaps – domestic abuse.

 

The demand is to redraft a fair set of procedural rules which (a) lay readers can understand and (b) which will work with technology, as it develops. And throughout it must be done in a way which is not designed for geeks (techno enthusiast and lawyers). The comfortable level of understanding of the lay party to a family breakdown must always be kept in mind.

 

The emotional needs of children are only part of a legal process where they are the subject of proceedings; but that process, where it is needed to, must recognise their needs and rights (see eg Charter of Fundamental Rights of the European Union (2000/C 364/01) Art 24: child’s right to be heard). That will be an important challenge for any on-line scheme (save that most children are much more adept on-line than most of their parents).

 

As a family lawyer I see a scheme which must start from the needs and rights of parties which it is designed to protect. Children, and their welfare, is the dimension in family proceedings which other litigation (‘dispute resolution’) does not have. The generic requirements of cases need to be defined; and then a procedure – with technology in mind – can be worked out from there. Many existing rules will be adapted, or incorporated pretty much in their present form; though in modern language, where need be. And all will be developed alongside new technology….

 

A field I know quite a lot about in law, especially in family law, is disclosure. Too many documents are exchanged. This is where proportionality comes in. If the rules are more clear for family proceedings than they are now, surely this is an area – whatever the complexity of family finances or not – which cries out for an IT response? And this response with well-drafted new rules and proper attention to confidentiality (of children and their parents) might be one place to start?

Roger Smith: on-line family law – a reply

Hello, David,
I am more than happy to debate the impact of new technology with you. I have been an admirer of your work for many years. Part of the whole point of the Legal Education Foundation’s initiative in the field of technology is to increase discussion of developments.
Let me make an opening point. The nub of my New Law Journal article was not really a focus on automation. My concern is to increase understanding of what is happening at a time when the provision and delivery of legal services is changing very fast and to indicate best practice and interesting experimentation around the world. Unlike Richard Susskind, I am not an advocate of the brave new world that is approaching: I am more of an analyst – with perhaps an exception to which I will return.
The legal world is changing under the pressure of a number of forces which are different though linked in their relationship to technology. The main drive for automation comes through the deployment of artificial intelligence. The main users are the large corporate firms who can afford the initial investment. Their aim is to cut the cost of processing large volumes of documents for the purposes of commercial transactions and litigations. The consequence will be the threatening of large numbers of jobs and potentially a restructuring of the ‘top end’ of the legal profession. There will be less need for trainees, solicitors, paralegals and outhousing if machines replace people in document review. And they will. That is where I think that if a job is predictable then it will be automatable.
“HIgh Street’ practice will be affected in a rather different way. Traditional, geographical based, relatively small firms will be challenged (though not necessarily over-run) by those which are virtual – maybe based, for example, as you are in France and covering the whole country – or under a national corporate brand like Co-operative Legal Services or Slater and Gordon. And note that word ‘like’. I know that both these businesses face specific financial problems. I don’t think that these are integral to their business model. I don’t think you can take a view about whether this is a good or bad thing. It just is. And practitioners will have to take their own response to what is happening.
A different force for change will be the headlong rush by the Lord Chancellor to introduce online courts at breakneck speed. You might think that this likely to be too fast; at a speed which precludes proper piloting; in a manner which is likely to pay no heed to the need for personal assistance highlighted in I, Daniel Blake; and fuelled too much by a desire to flog off valuable inner city real estate. That certainly is what I have repeatedly written. The jurisdiction which is in the advance in this field is British Columbia and it has been notably more humble, thoughtful and gradual in the implementation of its Civil Resolution Tribunal.
Linked to the proposed introduction of matrimonial on-line courts have been the cuts to matrimonial legal aid. These were outrageous and have manifestly left a whole constituency that even the government feels uneasy about drifting without assistance at a time of emotional turmoil. Their position as a whole will not be helped all that much by long overdue easing of definitions of domestic violence. In the light of these cuts, I am interested in how this gap might be met by technology and I have been impressed by interactive websites like the Dutch Rechtwijzer which have tried to leverage the value of the net by directing information to individual circumstances rather than just using a wallpaper model of dissemination. There is a real need here. The proper answer may be reinstatement of legal aid. That ain’t going to happen. We can lament that: I do. But we have to see how we can improve the information and advice to those who have all too much need for it.
The thing that actually got my interest in the field was a presentation at a conference of how the Californian courts had collaborated with an NGO in Canada to produce information on family breakdown. The Families Change programme has now gone national in Canada. This seemed such a good example of how technology is international even if law is irredeemably national. One of the most interesting parts of the project was a focus on the emotional needs of the children involved  rather than those of the parties to the litigation – who would generally be their parents. This seems to me an example of technology allowing an expansion of engagement with the human consequences of legal action that is not usual in conventional legal practice. I am an enthusiast in terms of encouraging such a trend.
So, I have no brief for legal aid cuts or simplistic implementation of on-line courts. And certainly none for any reduction of standards in relation to the rule of law and the quality of court determination. I do think that technology is going to change our whole world. And law will not escape. And there will be good and bad effects. And we need to analyse which are which. And we need to engage in debate and discussion at a specific level about what can practically be done.
Best wishes

Innovation and an online family law sector

Open note to Roger Smith

 

Hello Roger

 

The nub of your article in New Law Journal 17 February 2017 seemed to be: ‘We are talking of automation of any element of a job which is predictable’. You were talking about automation of appropriate part of the legal process, and predicting job losses of between a third and a half in legal services just as in the motor industry.

 

My lap top is open, Roger (as you urge at the end of your article); but I am sure I am nowhere near your league for technological ability. That said, I am no Luddite. I have felt for years that procedural clarity and reform to achieve savings of costs should precede legal aid starvation; and that if clarification is not achieved – a slightly different point – then the rule of law is threatened. Yes, yes, yes, you say… OK, I’ll come back to earth; but the need for a rule of law in all this must be kept in mind.

 

In my own field a divorce on-line scheme has been introduced by Ministry of Justice (http://www.justice.gov.uk/courts/procedure-rules/family/practice_directions/practice-direction-36d-pilot-scheme-procedure-for-using-an-online-system-to-generate-applications-in-certain-proceedings-for-a-matrimonial-order; and for a discussion of it see https://dbfamilylaw.wordpress.com/2017/02/03/on-line-divorce-scheme-an-update/). That must be one of the most obvious fields for on-line efforts. Unless a divorce is defended there is no need for any exercise of a judicial mind (though even with that I cannot see how a client gets into the scheme – pilot or not – as things now stand). Access apart, a divorce on-line cannot be much of a challenge, for the Ministry of Justice; though my search for it on-line does not enable me to find it any longer. .

 

Let us look at child maintenance. Like income tax as an end, it is essentially a two-dimensional problem. Work out someone’s income; count up the dependent children; and then say what proportion the payer parent must pay. There are relatively few external factors. The Department of Work and Pensions are onto their fourth major reform of that idea over nearly 25 years; and still (if they are honest) I suspect the arrears are mounting. I accept that is as much an administration and an enforcement problem. Maybe online access to, and operation of, the scheme would help a lot; but on-line enthusiasts will see that – even for this two-dimensional issues – there are problems.

 

But, Roger (and while I think of it): you know what you are doing when you open your lap-top. Remember that there are still Daniel and Daniella Blakes out there who cannot – or like a very good classics PhD friend of mine, will not – access the internet. Will our brave new internet world impose that obligation on them? Will conscientious objection be recognised? Or is a right not to use the internet to be lost? Will all of us have to submit to the Big Brother surveillance which internet access makes inevitable? (I remain bewitched by its powers. I could not do my job without it. That doesn’t mean I would deny a person the right not to use it; any more than I would destroy your fountain pen.)

 

But back to my law subject: I entirely agree that we should simplify process. This must be so, and where legal proceedings are needed, where mediation has failed: for more on mediation etc online see Online Dispute Resolution for low value civil claims (February 2015) by the Online Dispute Resolution Advisory Group (of which you were a member: http://www.judiciary.gov.uk/wp-content/uploads/2015/02/Online-Dispute-Resolution-Final-Web-Version1.pdf ; and see my comment on this at https://dbfamilylaw.wordpress.com/2015/02/16/online-dispute-resolution-can-it-work-for-family/).

 

If family litigation, say over money, has not been resolved by mediation, it must be easier to find a largely on-line scheme than the matrimonial finance process we have at present. Whilst, as every family lawyer will say, each family is different, there must be enough common features about most families with relatively straightforward finances to reduce initial – perhaps most – stages to a similar framework. This will cut out a lot of work now done needlessly (eg disclosure of unnecessary documents). Great expense to the parties on lawyers – or, with legal aid reduced, wear-and-tear on their lives to the parties themselves.

 

And once we think about it, I am sure – without disproportionate damage to the family law legal system – that lots of ideas can be developed; and this within a procedurally simplified family law on-line system.

 

Worth a chat?

 

David