A spokesman for the Ministry of Justice said “We are committed to reforming the ‘no win no fee’ system so that legal costs for reasonable compensation claims will be more proportionate, and avoidable claims will be deterred from going to court.”

The spokesman went on to say “this will require changes to legal rules and regulations and we want to give sufficient time to get the complex details right.  We are also conscious that legal business will need sufficient time to plan for the changes, alongside other forthcoming regulatory and funding changes to the industry.  We will therefore implement the new measures, subject to parliamentary approval, in April 2013.”

The President of the London Solicitors Litigation Association, Seamus Smyth, has commented that “the Jackson Consultation process took a long time and highlighted a great deal of disagreement.  Implementing his proposals, even as a whole, would have taken time and would not have been easy but tackling them piecemeal was bound to generate more disagreement and take even longer.  Let’s hope the detail and drafting quality of the outcome justifies the wait.”

Earlier in the debate Lord Wallace had told peers that the proposed reforms can “help business and other defendants who have to spend too much time and money in dealing with avoidable litigation – actual or threatened”.

The bill continues its passage through the Lords.

Comment

Tim Constable. Head of the Litigation and Dispute Resolution Department at Matthew Arnold and Baldwin LLP commented: “Many see these aspects of the Jackson reforms as a victory for the insurance lobby.  I do not differ.  I will be interested to see how quickly or enthusiastically a market develops for any new type of funding system given the understandable fear that time and money spent on developing that system will come to nothing in 10 years time when another government decides on another system. Once bitten, twice shy.”

Although most landlord and tenant disputes are settled before they reach court, these figures prove that problems can escalate. The rise in the number disputes (and legal action) can probably be blamed on the recession, with tenants desperate to reduce their property overheads and landlords keen to protect the investment value of their properties. Particular problems that can – and do – arise include the following:

1. A tenant trying to sublet office space;

2. A tenant wanting to assign a lease to another company;

3. A tenant failing to carry out repairs (during a lease or at termination of a lease);

4. A landlord breaking his obligations under a lease;

5. A landlord refusing to accept that a break clause served by a tenant has been validly given, or the break conditions complied with;

6. Disagreements over the level of service charge payable; and

7. Rent review disputes.

These are of course just some of the problems that can arise between landlords and tenants. Disputes involving commercial leases can threaten a landlord’s investment and a tenant’s livelihood, so it is essential that you take legal advice as soon as possible. 

For more information on how we can help you, please click here and here. If you have any concerns about anything I’ve set out here, or would like any legal advice, please contact me at laura.seaman@mablaw.com.

See my article on the Act published in the Director of Finance magazine in March 2010. The article focusses on two important areas for corporates – hospitality and maintaining adequate procedures to prevent bribery.

(a)   to deal with more extensive disclosure; and

(b)   to participate in ADR

In Elliott Group Limited the applicants (E) sought an adjournment of their trial (which had been fixed for July 2010) against the respondents.  E claimed that the trial should be adjourned and that there should be a new timetable which would lead up to a new trial in October 2010.  E said that they had underestimated the amount of documents, particularly electronic material, which they were likely to have in their possession.  They also said that a delay to the trial would allow a structured ADR to take place. 

When considering an adjournment, Mr Justice Coulson said that the court must consider the overriding objective CPR 1.1 as to whether;-

1. the parties are on an equal  footing
2. the case is dealt with proportionately. expeditiously and fairly; and
3. a proportionate and appropriate share of the court’s resources is allocated to the case

and as to whether it may be necessary to grant an applicant’s request for an adjournment, Mr Justice Coulson said that the court must consider: 

1. the parties’ conduct and the reason for the delay;
2. the extent to which the consequences of the delays can be overcome before the trial;
3. the extent to which a fair trial may have been jeopardised by the delays;
4. the consequences of an adjournment for the claimant, the defendant and the court

Mr Justice Coulson said that it would require a very strong case for a trial to be adjourned merely because a party’s disclosure was a more extensive task than was originally contemplated – no such case existed.  Where a party is aware that disclosure is going to be an extensive exercise, any delays could be ameliorated by the devotion of greater resources to the task. 

Further, the opportunity to allow parties to litigation to settle a case was not in itself a good enough reason for an adjournment of a fixed trial date.  Once started, court proceedings have to be brought to a conclusion as expeditiously and cost-efficiently as possible.  It is not cost efficient to delay a trial or the process leading up to it on the basis that if the parties were granted a bit more time, they might settle the case.  Mr Justice Coulson said that effective case management requires the court to do not only what it can to facilitate the ADR process but also to recognise that, despite their good intentions, the parties may fail to avail themselves of a settlement opportunity and that a trial may be necessary after all.

Although ADR might lead to settlement, ADR could just as easily be used as a “stalling tactic” as in this case, an argument designed to secure the claimant more time to comply with directions.  Here, the judge was keen to adhere to the tight timetable and the avoidance of a loss of a trial date.    It was therefore held that the case could properly and fairly be prepared in the time remaining before the fixed trial date.

Therefore it can be seen that the court is faced with a balancing exercise between the obvious desirability of retaining a fixed trial date (promoting certainty) and avoiding any adjournment (which only leads to increased costs of the proceedings) and on the other hand the risk of irredeemable prejudice to one party if the case goes ahead in circumstance where one party has not had proper or reasonable time to prepare its case.  Although ADR is encouraged, it can be engaged in conjunction with, rather than in priority to, compliance with the court’s directions.

This article is jointly written by Tim Constable and Justine Ash

Background

Historically, all forms of contingency fees in litigation (whereby payment of the solicitor depended on the results) were considered to be unlawful. It was felt that they could lead to a conflict of interest between the solicitor and his client. In 1990 CFAs (Conditional Fee Agreements) were introduced which allow for the amount of any fees to be increased, in specified circumstances, above the amount which would be payable if it were not a conditional fee agreement. All other forms of contingency fee agreements are unlawful.

CFAs are often referred to as “no win, no fee” agreements. Essentially the solicitor agrees to forego payment of his fees until the court decides the matter. In the event you win he is entitled to his fees at his normal rates together with a success fee being a percentage of his normal rates, subject to a maximum 100%. Significantly, not only the normal rates but also the success fee are recoverable from the other side in the event you win in the proceedings. In the event you lose the solicitor will not recover any fees from you. You will only be liable to pay disbursements, which will include Counsel’s fees (although rarely some Counsel  will also proceed on CFAs).

A success fee must be expressed as a percentage uplift on the amount which would be payable if there was no CFA. The percentage uplift of the success fee must be reasonable. The reasonable success fee should in general be calculated so that it does not exceed the amount of the fees at risk ie. the conditional fees. On a detailed assessment of costs the Court will consider the reasonableness of the success fee. If the Court finds the level of the success fee to be unreasonable it will reduce it accordingly.

 The legal representatives acting for the client with whom the CFA is to be concluded will calculate the level of the success fee. There are two elements which go into the calculation of a success fee:

• The risk of losing the litigation (the risk element).
• The cost of funding the litigation (the postponement element).

The legal representative will need to calculate separate percentages for these elements which, together, must not exceed 100% of the amount which would normally be payable if there was no CFA.

Discounted CFAs are becoming increasingly common. This is where the solicitor will be paid a discounted rate for his fees during the progress of the matter. In the event you win the claim the solicitor will be able to recover his fees at his normal rates together with the success fee, applied to his normal rates. If you lose the solicitor simply retains the discounted fees he has been paid during the conduct of the litigation. The court will usually take into account the fact that a reduced level of fees would have been recoverable even if the case had been lost when considering the reasonableness of the success fee.

A success fee is seen as the just reward for the solicitor taking the risk of either not being paid at all; or being paid significantly less than their usual going rates (depending on the terms of the CFA) if the client should lose the case.

The Peacock decision

The recent decision in Peacock v MGN Ltd [2010] EWHC 90174 (Costs) on a detailed assessment of costs reconsidered the issue of staged success fees.

In Callery v Gray (2001) EWCA CIV 1117 Woolf CJ explained the logic behind a staged success fee:

“The logic behind a two-stage success fee is that, in calculating the success fee, it can properly be assumed that if, notwithstanding the compliance with the protocol, the other party is not prepared to settle, or is not prepared to settle upon reasonable terms, there is a serious defence [emphasis added]. By the end of the protocol period, both parties should have decided upon their positions …”

In Peacock the success fee was staged so that it was:

• 100% it the claim proceeded to 28 days after service of the defence and beyond.
• 50% if the case settled after proceedings were issued, but before 28 days after the defence is served.
• 25% if the case settled before proceedings were issued.

Proceedings were issued on 2 September 2008, the defence was served on 24 October 2008 and a settlement was reached and embodied in an order dated 30 November 2009. The order included a provision that the defendant would pay the claimant’s costs on the standard basis, to be assessed, if not agreed.

MGN disputed the reasonableness of the 100% success fee. In advancing an offer of 43% success fee, the thrust of MGN’s argument was that where the success fee is staged, it is unreasonable for this to be fixed at 100% at an early stage in the proceedings, such as 28 days after service of the defence. MGN further advanced the proposition that the risk assessment undertaken by Carter Ruck (solicitors acting for Peacock) is not “bespoke” but is akin to block-rating, because if the firm decides to accept a case funded by a CFA, a “one-size-fits-all” success fee of 100% is invariably agreed at the final stage.

MGN did not contend that the “discount” from 25% to 100% “ran out too soon”. This was wise given that the case of KU v Liverpool City Council (2005) EWCA Civ 475 plainly contemplated the second stage of a two stage success fee taking effect on service of the Defence.  

Master Campbell held that the decision to enter into the staged success fees was reasonable. Once the claim had got to the stage where it was apparent that the defendant believed it had a “serious defence” then it was reasonable for the level of success fee to rise in accordance with the other side’s view of the merits and the defendant’s apparent belief that the claim would fail.

He derived the following propositions in relation to the arguments in the case:

• A party who contends for a high success fee in a matter that has gone a long distance towards trial (the situation here) stands a better prospect of having that fee approved if a lower success fee would have been payable had the claim settled earlier (precisely what could have but did not happen here). A party who enters into a CFA with an unstaged success fee which is payable at that level irrespective of whether the case settles quickly or slowly, will find it more difficult to justify the fee. For that reason, the “high” success fee, having been staged so that it would have been less if the case had settled “quickly”, is justified;
• It is open to the Claimant to choose the date of staging. Since in Ku the Court of Appeal contemplated a low success fee, “perhaps until the service of the defence” and to have the benefit of a high success fee in the cases that did not settle early, Master Campbell considered there was nothing unreasonable in the Claimant choosing 28 days following service of the Defence as the date on which the 100% success fee would come into effect; this gave MGN an extra four weeks above and beyond the period mentioned by Brooke LJ in Ku before it would assume any potential liability for a 100% success fee.
• If a defendant denies liability and serves a Defence the Court can infer that the defendant must believe that it has a realistic chance of the defence succeeding at trial. Having not settled the matter in the protocol period and having thereafter served a Defence giving the particulars of justification in the manner that it did, it is reasonable to suppose that MGN believed it had a “serious defence” in the nature contemplated by Lord Woolf in Callery v Gray.
• A court should be cautious about a suggestion that a claimant firm has not undertaken bespoke risk assessments when fixing success fees but rather, has used a “one size fits all” staged success fee. Such arguments will be put to strict proof and require cogent evidence.

Upon entering into a CFA notice must be given to the other parties to the dispute as soon as possible and in any event within 7 days of entering into it or, where a claimant enters into a CFA before sending a letter before claim, in the letter before claim. The only information that must be provided to the court and the other parties is the date of the CFA and the claims to which it relates. The party with the benefit of the CFA does not need to reveal the terms of it or the applicable success fee.

Lord Justice Jackson’s review of civil litigation costs published in January 2010 included the proposal that success fees should cease to be recoverable. For further information on Lord Justice Jackson’s report see Karen Jacobs blog on 14 January Lord Justice Jackson’s report on costs in civil litigation. However, for the time being at least the current CFA regime remains.  

Comment

Beth Lovell, solicitor at Matthew Arnold & Baldwin, comments “the Peacock case is a further example of the Court’s willingness to penalise in costs a losing party who has passed up the opportunity to settle the claim at an early stage in the proceedings. Entering into a CFA early on and giving notice to the other side, as required by the rules, can be a real tactical weapon in settling claims early in the proceedings. A foolish defendant that carries on regardless runs the risk of paying significant sums in costs with hefty success fees on top”.

If you find that you suddenly need to have a document translated into another language as a matter or urgency, firstly, don’t panic! Secondly, even if you speak the language in which you require the document to be translated into, don’t think you can cut corners and save money by attempting to translate the document yourself, using nothing more than google and a technical linguistic dictionary!  Being bilingual is no guarantee of producing an accurate and professional translation. Never underestimate the fact that translating a legal document is one of the most difficult skills to develop, since it requires not only a complete fluency in another language but also a deep understanding of the national law system of that country, an understanding of the legal clauses that that country uses, together with an understanding of local culture.  This is why you often find that most professional translators limit their work to one or two fields.

Nowadays, there are many professional legal Translation Services for you to choose from.   Most offer a genuine confidential service at a competitive price.  It should effectively boil down to who can offer you the best deal for the service you require so don’t be afraid to shop around.  However, here are some points to note:

Even if you require your translation back as soon as possible, don’t be afraid to tell the agency that you do not expect to see a “rushed job”.  You do not want several different translators working on your document and thus leaving you with a hodgepodge translation.  Consistency and fluency are the keys to a successful translation.  For example, what one translator may call a contract, another may call an agreement.

Never assume your document will be treated as confidential and so don’t be afraid to labour the point.  If your document is highly confidential, say so. Many legal documents contain sensitive information; bank details; home addresses; company information.  Do not be afraid to request that your chosen translation agency limits the number of translators who have access to your document/s.  

The best legal translators you can use are those professional translators recommended by your own legal advisers. A good translation agency will normally only use experienced translators and interpreters who are mother-tongue speakers of the target language of translation. Further, they normally hand-pick translators for each job so that their experience matches your needs.

Most employed translators and interpreters are members of professional associations such as the Institute of Translations and Interpreting and the American Translators Association.

In brief, armed with the legal document to be translated and a selection of carefully chosen requirements, your chosen translation agency should provide you with a perfectly translated legal document, in your specified language of choice which meets all your requirements.

Dave Hartnett, the Permanent Secretary for Tax at HMRC, has admitted that tax inspectors were sometimes too “tough”, and that a change of approach is now required. HMRC is now expected to tell its inspectors to try to settle cases out of court, where possible; it is also planning to launch a pilot scheme involving third-party mediators, to see whether they can be used to help resolve some disputes.

So why is HMRC changing its stance now? This is a pertinent question to ask when you consider that it was only three years ago, in July 2007, that HMRC adopted its ‘Litigation and Settlement Strategy’, which stated that HMRC would pursue all tax disputes through the courts whenever it considered it had a better than 50 per cent of success – a clear statement at the time that HMRC would not enter into negotiated settlements when it felt it had a good chance of winning the dispute through litigation. It is true that HMRC faced some criticism for this uncompromising attitude, but this is certainly not the only (nor the main) reason for its change in stance. Rather, and more importantly at a time of big government spending cuts, HMRC also hopes that the move will make the department more financially efficient and free up billions of pounds that have been tied up in the aforementioned tax avoidance court battles.

However, nobody should misunderstand HMRC’s change in approach as any sort of weakening in its resolve to clamp down on tax avoidance. Mr Hartnett made it perfectly (and graphically) clear in an interview with the Financial Times newspaper this week that “If it is a strong case, we will fight to the death.”

Finally, it cannot go unmentioned that the timing of HMRC’s conciliatory approach is particularly ironic. In the week that Mr Hartnett held out a metaphorical olive branch, the deputy Prime Minister, Nick Clegg, also announced that the Government is looking at the case for a general anti-avoidance rule “to ensure that wealthy individuals pay their fair share of tax.” A case of give with one hand and take with the other?

When should you use Expert Determination?

Expert Determination is ideally suited to disputes and matters of valuation and/or which are primarily dependent on technical issues eg does the computer match the specification?; is the malfunction due to a design or a manufacturing fault?; valuations of shares; rent reviews and contract performance matters. It can also easily be used in many other areas such as insurance wording disputes, sale of goods disputes, fitness for purpose and boundary disputes.

Although Expert Determination is an Alternative Dispute Resolution process, it can also be used when there is no dispute, but a difference which needs to be resolved for example the valuation of a private business. Due to its flexibility, Expert Determination is ideally suited to multi-party disputes.

What happens if a party does not agree with the Expert Determiner?

The Expert Determiner’s decision is legally binding. There is only a very limited basis to challenge the determination. Therefore, it is very important that the parties select an expert who has both the relevant expertise and experience in addition to knowledge of the Determination process.

Occasionally, the expert’s decision is not binding, but advisory. This is known as Expert Evaluation. Although not binding the evaluation does often form the basis of a settlement.

How to start the Expert Determination Process

Expert Determination may already be a provision in the contract. If not, the first step is for all parties to agree to use Expert Determination.  Similarly all parties will need to agree the terms of the Expert’s appointment.  The next step it so appoint a suitable Expert to help resolve the problem.

How to appoint an Expert Determiner?

A solicitor can put the parties in touch with an Expert Determiner.

Or, the parties can contact The Academy of Experts direct, which has a wide ranging list of members who are experienced in their own fields and are trained in the skills and techniques of dispute resolution. Expert Determiner Members come from a wide variety of disciplines such as arboriculture, accountancy, insurance, medicine, surveying and valuation, and zoology.

The Expert Determines

Each Expert Determiner has his own approach.  However, in general:

• the parties must agree the exact wording of the question(s) to be determined by the Expert. They then provide the Expert with such evidence as they think necessary. The Expert may ask for any further evidence that he considers appropriate. He will decide whether or not to deal with the matter on a documents only basis or if it is necessary to hold a hearing and/or a technical examination. Sometimes the Expert may choose to hold a preliminary procedural meeting to deal with some of these questions.
• Once the Expert’s Determination is completed, he will issue his decision (the determination) in writing in accordance with the agreed procedures.

Costs

The costs of appointing an Expert Determiner will vary depending on the complexities of the matter, but are directly related to the decisions of the parties.

The Appointment fee, the Expert’s charges and costs, will be known in advance; other costs will vary with the extent of the written and other evidence the parties choose to submit. It is usual for the parties to share the Expert’s fees and other purely administrative costs equally.

Does it work?

Expert Determination has been used for many years in a large number of technical arenas.  Anecdotal evidence confirms the view of the Academy of Experts that Expert Determination has a good track record.

How long does it take?

The Expert Determination process can be quick and efficient and generally, takes much less time than the processes of arbitration or litigation.  Obviously parties must bear in mind that the time varies with the number of parties involved and the complexity of the dispute.  Notable examples in the past have dealt with very significant disputes which have taken many months, if not years, to complete.

Of interest is the recent Scottish decision of MacDonald Estates plc v National Car Parks Ltd (4 November 2009).  In this case, the process of Expert Determination was distinguished from the quasi-judicial process that is arbitration.  It was held that an Expert Determiner is not performing a quasi-judicial function in which the rules of due process apply but rather uses his or her expertise in the relevant field to resolve differences of opinion relating to technical issues.  What Expert Determination involves in any particular case depends upon the parties’ agreement and context. Whereas an arbiter sits in a quasi-judicial capacity deciding matters on the evidence and the submissions made to him, an Expert, subject to his remit, may undertake his own investigations and come to his own conclusions, irrespective of any evidence and submissions.

Summary of the advantages of Expert Determination:

• Expert Determination provides Cost Efficient Resolution for disputes and problems (however may not be suited to every dispute)
• Expert Determination is confidential and private
• The parties control the procedures to be used
• The process is quick and a mutually acceptable timetable can be set by the parties
• Matters are determined by an Expert.
• The outcome is final and binding, unless otherwise agreed in advance
• Expert Determination is controlled by the parties not court or arbitration rules
• Expert Determination can be inexpensive compared to other forms of ADR
• Expert Determination can work

Recent developments in Australia and New Zealand concerning the service of legal documents via the social networking website Facebook show the extent to which the internet continues to shape the law.

 Facebook, the popular social networking website which was launched in 2004, has more than 400 million active users worldwide with more than 50% of its active users logging on to their homepage in any given day (employers take note!).   It is fair to say that most users of Facebook and other similar websites such as Twitter and MySpace join the networks to help them stay in touch with friends and family.  However, recent legal developments appear to suggest that members of eg. Facebook may get more than they bargained for if they come up against the wrong side of the law. 

 The courts in Australia and New Zealand are increasingly granting permission for formal court documents to be served via Facebook.  Whereas in the USA, although there is no record yet of the courts allowing formal service via Facebook, prosecutors have already been given permission by the courts to admit evidence obtained from on-line profiles to be used in various types of court proceedings ranging from divorce, sexual harassment and murder cases.

 Service of Process via Facebook in Australia and New Zealand

 In December 2008, The Australian Capital Territory Supreme Court allowed formal court papers that gave notice of default on a loan, to be served on a couple via Facebook after repeated attempts to serve them in person failed.  The Supreme Court acceded to the lawyer’s request (who was acting for the lender) to serve the documents on the couple via Facebook, after several attempts to personally serve them at home and by email failed.   

The couple had failed to keep up repayments on a $150,000 (AUS) (£44,000) loan they had borrowed from a mortgage provider and had ignored previous emails from the law firm and did not attend a court appearance. Further, they were no longer living at their last known address and no longer working at the place given in some documents as their last place of employment.  To all intents and purposes, it seemed that the pair had “vanished”. 

Once the solicitor had clearly demonstrated that the information the individuals had provided to the lender was an exact match to the information provided in the individuals’ profile pages on Facebook, The Supreme Court agreed that a method of service via Facebook was both a reliable and valid way to effect service.  The defendants’ Facebook profiles clearly showed their dates of birth, email addresses and friends lists – and crucially showed that the co-defendants were friends with one another.  However, although the judge granted permission for service via the social networking site, he stipulated that the papers should be sent via a private Facebook email so that other people visiting the defendants’ profile pages could not read its contents.

In March 2009, the High Court in Wellington, New Zealand, ruled that court documents could be served on a man living in Britain through the social networking website Facebook.  In this case, the High Court was told that there were “difficulties” serving papers on the defendant, because his exact whereabouts in Britain were not known.  However, it was known that the defendant had an active Facebook page.  Justice David Gendall granted approval for service of court documents, the first time a New Zealand court has allowed such a step.  Facebook has also been used by the police in New Zealand, when the Queenstown police posted surveillance camera footage of a bungling burglar.  A man was later arrested as a result of the publicity.

Most recently, in June 2010, the Australian Court in Adelaide ordered that Facebook can again be used to serve legal documents.  This time, the “defendant” was an elusive father embroiled in a child support dispute.  The suspected father had a brief relationship with a woman who later gave birth to a child.  No father was named on the birth certificate and then when the mother sought an assessment of child support, her application was rejected for lack of legal proof of paternity.  The mother’s solicitor repeatedly wrote to the suspected father asking him to undergo a paternity test, but he moved regularly and there was no reply.  Letters sent via his parents and current girlfriend met with no response and a process server had no success in delivering the legal documents. However, the elusive would-be parent was a regular Facebook user and as a result, the Australian court ruled that the man could be served properly with the documents, electronically via Facebook.  It was later found that the mother was entitled to an assessment of child support, payable by the man in question.

What it might mean for England and Wales

These decisions will inevitably have an effect in the English Courts. All 3 legal systems are based on the common law and all take notice of each others’ legal decisions. Moreover, recent changes to Part 6 of the Civil Procedure Rules provide that where a claimant has reason to believe that the defendant no longer resides or carries on business at an address, the claimant must take “reasonable steps” to ascertain the address of the defendant’s current residence or place of business.  Social cyberspace seems an obvious next step.

It remains to be seen when the UK courts will follow their Antipodean counterparts and allow service of legal documents via the social networking sites such as Facebook and MySpace, but I think the answer has to be when and not if.  Watch this space for more developments…

The Court ruled that Natasha Rashid must pay Ballymore the £279,200 balance due on the flat she agreed to buy, plus interest and legal costs. Ms Rashid had put down a £69,800 deposit on the luxury flat, agreeing to pay the remainder of the purchase price once the flat was completed. The Court also said that if Ms Rashid fails to comply with the order by the end of April, Ballymore will be able to resell the property and seek a court order for damages against her.

This ruling highlights the growing number of claims being brought by housebuilders and developers against purchasers who renege on their contracts. A recent investigation by the property journal Estates Gazette found that between August 2008 and December 2009, nearly 300 claims were lodged against buy-to-let investors who had not completed on off-plan purchase contracts. These findings came to the fore when, in December 2009, the High Court backed housebuilder Prestige Homes South West in its attempt to obtain payments from an investor over two failed completions in its Zero 4 scheme in Plymouth, awarding it damages of £133,000.

There is no doubt that these two recent rulings are good news for developers and housebuilders, who have invested a lot of time and money in their developments and rightly expect purchasers to honour their contracts. However, off-plan buyers have become victims of the decline in the property market, with many of the properties they put deposits down on now worth much less than when they agreed to purchase them. Buyers have been unable to obtain mortgages once the value of their properties fell and buy-to-let investors have been unable to sell their properties on at a higher price than they paid.

It is an unfortunate situation for all concerned, and, although similar disputes are being settled out of court, more court cases should be expected.

See my previous blogs on the new Act and what it means for businesses.

 In the case of Rosalba Alassini Italian consumers brought proceedings for breach of contract against their telecoms suppliers. The telecoms companies claimed that the action was inadmissible because the applicants had not first attempted an out-of-court settlement in accordance with Article 3 of Decision No 173/07/CONS.  The claimants complained that the courts’ refusal to hear their cases, because they had not gone through the out-of-court disputes process, amounted to a breach of Article 6(1) of the European Convention of Human Rights (the Convention) which provides for the right to a fair trial.  The court referred a question to the ECJ, asking whether the provision that required end-users to seek an out-of-court settlement before taking out court proceedings was precluded by Community law. 

 Advocate General Kokott concluded that it is not an infringement of the right to effective judicial protection, for an Italian law to require customer complaints against telecoms suppliers to be dealt with in an out-of-court dispute resolution procedure, before judicial proceedings can be brought. The provisions constitute a minor infringement on the right to enforcement by the courts, which is outweighed by the opportunity to end the dispute quickly and inexpensively.

 Background to the Legislation

EC Legislation

Article 1(2) of the Universal Service Directive (2002/22/EC) lays down the rights of end-users, and corresponding obligations on undertakings providing electronic communications networks and services.

 Article 34 of the Directive requires member states to make available out-of-court procedures for dealing with unresolved disputes. These are without prejudice to national court procedures.

Italian Leglislation

Article 3 of  Decision No 173/07/CONS states that no court proceedings may be brought until a mandatory attempt to settle the dispute has been undertaken. The time limit for completion of the settlement procedure is 30 days, after which the parties may bring court proceedings even if the procedure is incomplete.

The disputes procedure in Italy

Italian national law provides that the authority is responsible for setting up procedures to deal with disputes between service providers and end-users.  Under the authority’s procedures there is a time limit of 30 days for the out-of-court settlement procedure to be gone through once it has been started.  Once that period has passed the parties may bring court proceedings even if the settlement procedure has not been finished. 

The Italian government argued that the aim of mandatory procedure was to force would-be litigants to attempt to settle the dispute in a way which was quicker and less expensive before turning to the court system.  It said that a quicker and less expensive method of settlement was in the interests of all parties and also lightened the burden on the court system.  The Italian government said that “an agreement which the parties have reached out-of-court is frequently more likely to bring about the long-term resolution of the dispute that a judicial decision with which the parties are dissatisfied”.

 Advocate General Kokott concluded that the Italian compulsory out-of-court dispute resolution provisions were pursuing “legitimate objectives in the general interest (ie. a quicker, less expensive method of dispute settlement which also lightened the burden on the court system and was likely to produce a more satisfactory long term solution to the dispute”.  The Italian government’s argument was accepted that “an out-of-court dispute resolution procedure that is merely optional is not as efficient as a mandatory one that must be conducted before any legal action can be brought”.

 Under the Italian provisions, there is a delay for 30 days, at the end of which 30 day period the claimant can bring a claim before the courts regardless of whether or not the out-of-court settlement stage has been finished.  In the circumstances, Advocate General Kokott concluded that the “mandatory dispute resolution procedure without which judicial proceedings may not be brought does not constitute a disproportionate infringement upon the right to effective judicial protection…Provisions such as these constitute a minor infringement upon the right to enforcement by the courts that is outweighed by the opportunity to end the dispute quickly and inexpensively”. 

 The UK Approach

 The original Court of Appeal decision in Halsey came out against compulsory  mediation. However the decision has since been subject to some debate.

 For example Lightman J – ”The Court in Halsey appears to have been unfamiliar with the mediation process and to have confused an order for mediation with an order for arbitration or some other order which places a permanent stay on proceedings…An order for mediation does not interfere with the right to a trial; at most it merely imposes a short delay to afford an opportunity for settlement…and indeed the order for mediation may not even do that, for the order for mediation may require or allow the parties to proceed with preparation for trial.” And Sir Anthony Clarke MR:  “mediation….does not interfere with the right to fair trial but simply imposes a short delay on the trial process”. 

 However, the Jackson Report on costs has decided that mediation should not be made compulsory. The Jackson Report states: “in spite of the considerable benefits which mediation brings in appropriate cases, I do not believe that parties should ever be compelled to mediate”.  However, where appropriate, the UK courts should  encourage mediation, point out its considerable benefits, direct the parties to meet and/or discuss mediation and penalise in costs parties which have unreasonably refused to mediate. See also the blog entitled Mediation – The Lord Justice Jackson Review by Tim Constable dated 14 January 2010.

Summary

Although the debate continues in England, across the Channel it seems that opinion is turning in favour of compulsory mediation. Although some believe it is wrong to compel unwilling parties to mediate, believing that such compulsion would be a breach of the right of access to the courts required by the European Convention on Human Rights (ECHR), others see that compulsory mediation is not depriving parties of their rights of access to the court.  Rather it is saying you can have access to the court, but while that procedure is running, you must also attempt mediation.

The Bill has had its second reading in the Commons and goes into its committee stage tomorrow. It looks likely to receive Royal assent before the General Election (probably 6 May 2010).

S20 of the Limitation Act 1980 provides a time limit of 12 years on actions to recover mortgage loans. This starts from the date on which the right to receive the money accrues. 

The issue the Court of Appeal had to decide, however, was not when the starting date accrued because by whatever calculation Bradford & Bingley were out of time, but the meaning of s29(5), which provides that time starts running again from the date, if any, on which the debtor “acknowledges the claim or makes any payment in respect of it”.  By s30 an effective acknowledgment is required to be in writing and signed by the debtor.

In a short judgment, the Court of Appeal held the there had been both acknowledgment and part payment The defendant had in the previous 12 years been paying £10 per month albeit it would have taken until 2402 to discharge the debt in full. Proof of part payment would have been sufficient within the previous 12 years to start time running again for limitation purposes. Accordingly the proceedings were not statute barred.

In Gavin Goodale v The Ministry of Justice, Queen’s Bench Senior Master Whitaker dealt with exactly this problem.

The Senior Master ordered the defendants to make a reasonable search for documents, including documents contained in electronically stored information. In so doing, he required them to complete the draft e-disclosure questionnaire which is presently being considered (together with a draft practice direction on e-disclosure by the Civil Procedure Rules Committee (CPRC). The completed questionnaire would provide the claimants and the court with the necessary information in a structured manner, regarding any issues that might arise in relation to searches for electronic documents. This is the first known case in which the draft e-disclosure questionnaire has been used as a tool in case management. The Master attached the questionnaire in a schedule to the judgment, even though it has not been finalised and approved by the CPRC.

The general rule for standard disclosure under CPR31.6 requires a party to disclose the documents on which he relies, the documents which adversely affect his own case or adversely affect another’s party’[s case or support another party’s case and documents which he is required to disclose by a relevant practice direction. CPR31.7 requires a party to make a reasonable search search for these documents. What constitutes a reasonable search is fact-specific. There are additional factors to bear in mind when scoping and conducting a reasonable search for electronic documents, set out in Practice Direction PD 31.2A.

Electronic documents include email and other electronic communications, word processed documents and databases. In addition to documents that are readily accessible from computer systems and other electronic devises and media, the definition covers those documents that are stored on servers and back-up systems and electronic documents that have been “deleted”. It also extends to additional information stored and associated with electronic documents known as metadata.

Parties to litigation should from the outset discuss any issues that may arise regarding searches for and the preservation of electronic documents. This can involve the parties providing information about the categories of electronic documents within their control, the computer systems, electronic devises and media on which any relevant documents may be held, the storage systems maintained by the parties and their document retention policies. Where there is disagreement, the matter should be referred to a judge for directions at the earliest practical date, if possible at the first Case Management Conference.

The Senior Master’s judgment also provides a number of useful reminders as to the general approach which should be taken when dealing with e-disclosure. In particular, he emphasised the importance of taking a staged approach to avoid running up unnecessary and disproportionate costs and explains how this can be done.. The judgment is useful for a number of reminders that are highly relevant to the general approach to disclosure of electronically stored documents. Since every case is different, you should take specific advice on each search as it arises.

Cotswold Geotechnical Holdings is accused over the death of 27 year old employee Alex Wright of Cheltenham. The geologist died in September 2008 when a trench collapsed on him as he collected soil samples in Brimscombe. The Company director, Peter Eaton, also faced a charge of gross negligence manslaughter.

The trial represents the first time a company has been charged under the Corporate Manslaughter and Corporate Homicide Act 2007. The firm has been charged with the criminal offence of corporate manslaughter and the company director, Mr Eaton, has been charged with the common law offence of gross negligence manslaughter. If convicted, the director could be jailed for life. The maximum sentence for his firm, which also faces charges for health and safety breaches, is an unlimited fine.

The Corporate Manslaughter Act 2007, which came into force on 6 April 2008, is a landmark law and was introduced to make corporate manslaughter cases easier to bring. For the first time, companies and organisations can be found guilty of corporate manslaughter as a result of serious management failures resulting in a gross breach of a duty of care.

Penalties that companies face include unlimited fines, remedial orders and publicity orders. A remedial order will require a company or organisation to take steps to remedy any management failure that led to a death. The court can also impose an order requiring a company or organisation to publicise that it has been convicted of the offence, giving the details, the amount of any fine imposed and the terms of any remedial order made. The publicity order provisions will not come into force until the Sentencing Guidelines Council has completed its work on the relevant guidance.

The Act is not retrospective and only applies to deaths that have occurred from 6 April 2008 onwards. Deaths that occur before 6 April 2008 will continue to be covered by the previous law on corporate manslaughter. Further information on the Act can be found here.

UPDATE: Bristol Crown Court has further adjourned the trial. Press reports have suggested that it will not commence until Autumn 2010, due to the ill-health of Mr Eaton.

UPDATE: This case began at Winchester Crown Court on 27 January 2011. Click here for full details.

UPDATE: On 15 February 2011, Cotswold Geotechnical (Holdings) Ltd was found guilty of corporate manslaughter. Click here for further details.

 There are two questions in the consultation:

But now the UK is taking steps to update its anti-corruption legislation in the form of the Bribery Bill.
Commercial organisations should take note.

1. The Bill replaces existing corruption offences which are presently found in a hotchpotch of case law and statute, much of it over a century old.

2. There will now be two general offences: offering, promising or giving an advantage (bribing) and; requesting and agreeing to receive or accepting an advantage (being bribed).

3. The offence will be based on an intention to induce improper conduct rather than the current basis of agent/principal.

4. Corporate Hospitality will be caught. In an explanatory letter the government has endeavoured to draw a line between “corporate hospitality for legitimate commercial purposes” (legal) and “obviously lavish or extraordinary hospitality” (illegal). It looks ok on paper but it will be more difficult to judge in practice – will it be lavish or extraordinary, for example, to entertain customers at the British Grand Prix, or Monaco, or Brazil?

5. And there is a new offence where a commercial organisation fails to prevent bribery. The organisation will face prosecution where one of its associates commits bribery to obtain business for it. There is one defence to the claim, which is where the organisation can prove on a balance of probabilities that it had in place adequate procedures designed to prevent its associates from engaging in bribery. This is bound to spawn a new industry in anti-corruption management techniques and corporate systems.

6. Perhaps the most controversial aspect of the Bill is a complete defence where the bribery was conducted by any law enforcement agency, the security services or the armed forces. This has given rise to two questions in the media: (1) are the ends worth the means? (2) why should such protection be given to those who receive bribes, rather than giving them? Expect some debate on this clause.

The headlines are:

1. Documents can be filed on any day at any time.
2. Proceedings can be issued on line (which may be important in extreme cases where the limitation period is about to expire)
3. If the claim has been started electronically, the parties may subsequently file all subsequent documents electronically including requests for default judgment, statements of case, application notices etc etc
4. But only the Court’s own online forms are acceptable. To start the process send an email to getForm@justice.gsl.gov.uk for instructions
5. There is no online payment system at the moment, but one is promised. In the meantime it seems that a document will be issued subject to a stipulation that issuing party will be required to pay the court fee within a certain period of time and in default the case will be referred to the Judge. Until court users are comfortable that the system works however, I would not suggest leaving issuing a claim form online until the last minute in reliance the hope of obtaining credit.

The practice direction for online document filing can be found at

www.hmcourts-service.gov.uk/cms/files/PD-ElectronicWorkingPilotScheme.doc

Grateful thanks to Richard Perkoff of Littleton Chambers www.littletonchambers.com/Barrister/Richard-Perkoff.aspx for this news.

The headline proposals are as follows:

• Conditional fees.  These are commonly known as “no win, no fee” agreements.  In his view, these agreements have been a major contributor to disproportionate costs and therefore success fees and after-the-event insurance should no longer be recoverable from unsuccessful opponents.  The “no win, no fee” could still be recoverable from clients’ lawyer, but the success fees will be payable by the client and likely to come out of the damages recovered.
• Qualified one way shifting.  This would mean that the claimant would not pay the defendant’s costs, if unsuccessful, but the defendant would be required to pay the claimant’s costs if the claimant was successful.  There would need to be further consultation on which categories this qualified one way shifting would apply to.
• Contingency fees. This is where a lawyer will only be paid if their claim is successful and the lawyer is paid out of the settlement sum or damages recovered and usually as a percentage of that amount.  Lawyers should now be allowed to enter into contingency fees.  If ordered to pay costs, the unsuccessful party will only be required to pay a conventional amount with any difference paid by the successful party.  This is a very dramatic proposal. Previously, contingency fees have been associated with the perceived problems of litigating in the US.
• Before the event insurance (“BTE”).  This covers legal expenses and is taken out before an event which gives rise to civil litigation.  Lord Justice Jackson proposes that if BTE were to be used more widely it could produce benefits for small and medium sized enterprises. 
• Fixed costs in fast track litigation.  Personal injury costs should be fixed.  For other cases there should be a dual system whereby costs are fixed for certain types of case and in other cases, there be a financial limit on costs recoverable.  The ideal is for costs to be fixed for all types of claims in the fast track.
• Bankruptcy and insolvency.  For routine bankruptcy and insolvency cases the costs should be benchmarked.
• Pre-action protocols.  The specific protocols should remain and have been successful, but substantial parts of the general pre-action protocol should be repealed as “the one size fits all approach” has not worked.
• Alternative dispute resolution (“ADR”).  ADR has a vital role to play.  Lord Justice Jackson has not gone as far as saying that ADR should be compulsory, but proposes that there should be a serious campaign to ensure that everyone is better informed.  An authoritative handbook for ADR should be prepared.
• Disclosure. Disclosure is necessary, but can be an expensive process particularly in higher, complex cases.  Where the costs are likely to be disproportionate there should be a “menu” of disclosure options.
• Witness statements and expert evidence.  There is nothing fundamentally wrong with the manner in which evidence is currently adduced, but the substantial complaint is that witness statements and expert reports are unduly long.  Lord Justice Jackson recommends that for appropriate cases controls should be imposed on the content or length of the statement and costs sanctions should be imposed.
• Case management.  Where practicable cases should be allocated to judges with relevant expertise, a case remains with the same judge (as far as possible), standardising case management directions and ensuring that case management conferences and other interim hearings are not formulaic, but are used for effective case management. 
• Costs management.  Lawyers and judges should receive training in costs budgeting.  There should be a standard costs management procedure, which the Judges would have discretion to adopt.
• Part 36.  Part 36 does not go far enough and defendants need even more encouragement to accept offers made by claimant.  Where a defendant fails to beat a claimant’s offer, the claimant’s recovery should be enhanced by 10%.
• IT.  IT has an important role to play and e-working should be rolled out across the High Court in London and suitably adapted for the county courts.
• Summary and detailed assessments.  This generally works well.  For detailed assessments a new format for bills should be developed.