Jackson Reforms - Avoiding Professional Negligence Claims

Section 1: Recorded Webinars

• Webinar
  Written and recorded by Peter Causton

  Hello, My name is Peter Carsten. I'm a Deputy District judge, solicitor, specializing in professional negligence, defense work and also a mediator in this talk. I'm going to be explaining how the NEW CPR introduced in April 2013 and the Jackson reforms have led to an increase in claims against solicitors, particularly in respect of relief from sanctions applications where deadlines are missed, will also be talking a bit about the increase in mediation and how parties can be penalized if they are reasonably refused to mediate and how this could lead to professional negligence claims. I also consider that there is a possibility that with an increased use of mediation there may be an increase in claims against mediators, but that is perhaps for another talk. Welcome to my talk on the Jackson reforms and avoiding professional negligence claims that arise out of those reforms. My name is Peter Carsten, I'm a solicitor working in the field of professional indemnity and also a Deputy District Judge. I'm also a mediator as well. So what we had with the implementation of the Jackson reforms In April 2013 was the new CPR with a focus upon compliance with orders and directions. The overriding objective was brought in, which provided that the there was a new procedural code to deal with the cases justly and at a proportionate cost and that included the factors set out on the slide and in particular a lot into it, an appropriate share of the courts resources while taking into account the needs, a lot resources to other cases and enforcing compliance rules. Practice directions and orders. So, essentially complying with rules, practice directions and orders and the court's own resources became a factor in the case. The court also has power in any event to strike outer case Under CPR Rule 3.4 and that includes where there has been a failure to comply with the rule, practice direction or court order. The courts are meant to actually monitor compliance with the rules and orders. So then controversially, We will see 3.9 provided that there should be a relief from sanctions application made essentially two. If a party failed to comply with a rural Practice Direction or order and it provided that an application for relief from sanctions has to be supported by evidence. It specifically states that on an application for relief from sanctions, the court will consider all the circumstances of the case, just enable it to deal justly with the application. So nowadays You get a notice of proposed allocation like this one and it normally includes a header important notice. If you do not comply with this notice, the court will make such order as appears to be appropriate to. This could include striking out the claim or entering judgment. So compliance with this notice of allocation is in fact uh something that can result in a sanction. That means that all the items set out underneath have to be complied with. Yeah. And if they're not, then sanctions could be imposed or an application for relief from sanctions to be made. So that includes filing the directions questionnaire and exchanging cost, budgets paying the feet such like so that is the position. And essentially, this has created a um satellite litigation industry in relation to relief from sanctions. And as a result, it's likely that there will be more professional negligence claims because the failure to comply with court orders and directions is normally the result of incompetence or problems with the conducting solicitor rather than the client for the client can at least try to allege that that is the case. So CPR all 3.8 provides that sanctions have effects unless the performing party obtains relief. So any sanction for failure to comply imposed by the rural registration or order has effect unless the party applies for and obtains relief where the sanctions for payment of costs. However, the party under fault can only obtain relief by peeling against the order for costs itself. There is a provision that known as the buffer close And the c. r. 3.84 that although the time for doing an act in question may not be extended by agreement between the parties, the time for doing it. The act in question may be extended By written agreement of the parties for up to a maximum of 28 days provided always that such extension does not put at risk any hearing date. So that does allow 28 days for the parties to comply as long as they agree. And that is the question whether the other party will actually agree to this and also whether the extension puts at risk in a hearing date. Justice Jackson, his original um Wording of c. R. 3.9 only provided that the court would consider all the circumstances including the requirements, litigation should be conducted efficiently and a proportionate cost and the interests of justice in the particular case. So his proposed wording was not as strict as that, which has in fact been imposed. One of the issues has been cost budgets. This provides that if there is no specified date, parties have to Find an exchange cost budget seven days before the first case management conference And quite often that deadline is missed. And the key problem was and remains 3.14, which provides that unless the court orders otherwise, any party which fails to file a budget despite being required to do so, we treated as having filed a budget comprising only the applicable court fees. This was a situation that occurred in respect of the case of Mitchell and club gate. That has been followed by the case of Denton. Now, Lord Justice Jackson gave a keynote speech on 30th September 22,000 I should say 14. He said that in the last year the parliament, the royal committee and the judiciary introduced the civil justice reforms and he accepts full responsibility for all those recommendations, including abolition of recoverable success fees and premiums, introduction of quarks, Banner of personal injury, referral fees, 10% increase in general damages, authorization of divas, introduction of cost budgeting, case management reforms, increased marketing Provisioned to CPR Rule 3.9 to secure more effective compliance, New disclosure rules, hot tubbing experts and enhanced rewards for part 36 offers by claimants. Standard directions online. What he did say, however, was that I'm not responsible for the one matter for which I am constantly blamed. Sometimes vilified in the press. I was not a member of the court which decided Mitchell If anyone wishes to see how I think rule 3.9 should be applied. They should read my partially dissenting judgment in Denton and white. So that case, Dentyne and White is the one which clarifies allegedly and provides further guidance simulation to relief from sanctions applications following the mitral case Court of Appeal restated the correct test to be applied. What? By introducing a new three stage test which was first identify and assess the seriousness and significance of the failure to comply with any rural practice directional court order. Second consider why the default occurred And third evaluate all the circumstances of the case. So first of all, the court needs to look at whether or not the default is trivial or significant. Well, in fact, it's now significant though it is really the only the other side of the coin. Yeah, that could include service of the cost, budget, failure to pay court fees. Would those be significant defaults? It depends on the circumstances of the case. Does the default imperil the future hearing date or disrupt the litigation? That seems to be a key point? one of the ironies? The situation is that a default may be significant in some cases and not in others, depending upon whether the court has resources available. Whether the courts uh timetables and listing is affected. Are there any other cases in the list that could be affected? Then the Courtney's look at why the failure occurred. Mitchell had provided that well intentioned incompetence for which there is no good reason should not usually attract relief from a sanction unless the default is trivial. We need to look at whether they failure which occurred was outside the control of the party or caused by incompetence, bizarrely, this situation is different really to the Applications that can be made under section 33 of the Limitation Act 1980, where the court has discretion to exclude time limits in relation to personal injury claims and it is necessary to consider claim against solicitors if um incompetence has caused the failure to comply. Although Pay stenton about an intention, insignificant error will not result in a professional negligence action. If the consequence of an error happens to be significant, then the professional negligence claim is likely to result. Thirdly, court will look at all the circumstances of the case so as to enable it to deal with justly with the application in dealing justly with the application. The court will give particular importance to sub paragraphs, factors A and B. Of the cpr part 3.91 These factors were given particular weight when all the circumstances of the case are considered. The term particular importance is a softening from the language of paramount importance used in Mitchell. This is a change of tone, which may not make a huge amount of difference factor. A requires the court to consider the effect of the breach, both the case before the court and all the other cases before it. If the breach has prevented the court or the parties from considering, sorry, prevented the court of parties from conducting either the instant litigation or other litigation and related to the party's efficiently and proportionate costs and that will be a factor weighing in favor of refusing relief. However, any application for relief from sanctions necessarily occupies court time, which might otherwise have been allocated to a different matter factor be emphasizes the importance of complying with rules, practice directions and orders. This also militates against granting of relief from sanctions anyway, the main result of Denton really is that if there is a serious or significant breach and there is no good reason for the breach, the application for relief from sanctions will not automatically fail. One factor, which the court will probably take into account is the promptness of the application. Another factor is other past or current breaches of the rules, say a prompt application for relief and it was and if it is a one off breach, then it's more likely that relief will be granted. Professional agents came will be avoided. There have been a couple of post editing decisions and I'd refer everyone to the website case, watch sanctions civil litigation brief which has a list of all the cases. But in n. n. n. and D. one, the defendant applied to set aside a default judgment entered following a failure to comply with an unless order related to disclosure. And the judge allowed relief that the federal is at risk and in person in yo and times newspapers and other conservative mp. The failure to serve a new FIFA was not regarded as serious or significant. So the courts do appear at the moment to be leaning in favor of a more lax approach but there is always a risk. The result of the Mitchell and Denton decisions is that compliance with rules is becoming more and more important and that increases expense systems have to be put in place two automatically diaries. These deadlines. Yeah, cost budgeting has been brought in and the cost of cases is, um, is captain multi track cases. The problem is that there can be disproportionate sanctions really for both applicants and respondent say applications relief from sanctions are risky business. This was highlighted in Summit navigation and General Row Monia, which said that the defendants in the case sought to rely on Mitchell to turn to their tactical advantage. Short delay by the claimants in providing security for costs, which in itself had no material impact on the efficient conduct of the litigation. Unlike the claimants default itself, the defendant's response to it has had a very serious impact on the litigation. It was said following Denton is as unacceptable for a party to try to take advantage of a minor inadvertent error as it is for rules, orders and practice directions to be breached in the first place. So essentially, when it's damned if you do and damned if you don't apply, the court, sending a strong signal that it disapproves of arguments regarding friday to comply with deadlines. And um, but nonetheless, there is an obligation to make an application for relief because otherwise the sanction is deemed to apply. We are reminded of the situation That occurred in respective order 17, Rule 11 9. An automatic strikeout and the applications ensued in relation to that. Until the rule was reversed, a lot of professional indemnity claims resulted from that automatic strikeout position. So what are we going to see the same? Possibly more professional indemnity claims when inadvertent, significant or insignificant error can lead to disproportionate sanctions. Every step in the conduct of litigation is hedged around with potential traps as miss deadlines may still result in disproportionate sanctions post the Denton case. In fact, as A and B are still given weight, as I've said, promptness and number of failings in the case is of relevance. So where are the areas that are particularly of concern? Well, there's a question of pleadings, service of pleadings and the accompanying schedules of loss, for example, which have to be served with the particulars of claim. Then we have the cost, budgets provisions. So I've already discussed. Mhm. In respect of disclosure, CPR part for 3 1.21 provides that a party may not rely on any document which he fells disclosed with respect to which he fails to permit inspection unless the court is permission. So that is a sanction and parties would have to apply for relief from sanctions if they haven't made disclosure following the Jackson reforms, there has been a change to rules for multi track non personal injury claims and standard disclosure is no longer the default option. There are no other options. So parties can look at no disclosure only disclosure documentation upon reliance upon which reliance is placed disclosure documentation on an issue to issue basis or on a train of inquiry basis. Standard disclosure or any other order the court thinks appropriate. Yeah. Two weeks before the first CMC, the parties have to file and serve a report verified by a statement of truth, setting out existing documentation where it's located in the range of costs involved in giving standard disclosure. Then at least seven days before the hearing, the parties are to discuss and agree proposals in relation to disclosure. So far, they don't appear to be in any cases in respect to this. But compliance with the requirement to serve the disclosure report is more honored in the breach than the observance. In my experience, it's quite possible that disproportionate sanctions could be imposed in respect to failure to comply. Yeah. We have other situation recently in respect of applications to set aside default judgment. In the case of Hockley and North lincolnshire and Google NHS Trust, the defendant, NHS trust Applied to set aside judgment on the basis of CPR Part 13.1 B. The basis that there's some other good reason why judgment should be set aside, but they attach no draft defence to the application. The court found that Denton was applicable and it was a serious default. The acknowledgement of service forms 13 days late. Yeah. It remains to be seen if The same situation would have occurred if the defendant had applied underground 13.31. A reasonable prospects and had attached to draft defence witness statements. Your court now has new powers Pursuant to CPR 32.2 to define what issues a witness statement addresses and to limit the length or format of witness statements. Yeah. However this is normally only used in um heavyweight litigation. There's only been one case really reported in relation to this of Mclennan and morgan Sindel Where the claimant wanted to reduce 43 witness statements defendant applied to limit the number of witness stains and 14 were allowed but any event CPL part 32.10 provides that if a witness statement for use at trial is not served in respect of an intended witness within the time specified by the court and the witness may not be called to give it oral evidence and escort gives permission. Mhm. So following the case of Chartwell relief from sanctions is required and they the risk is that the party is unable to rely upon any witness evidence. Respective experts Position is under CPR Part 35.13. Party failed to disclose an expert's report. May not use the report of the trial or call the expert to give evidence orally unless the court gives permission. So again, it's another provision where a sanction applies if an expert report is not exchanged. Yeah, Following April 2013, when seeking permission to construct an expert at all, the parties have to set out the issues which the evidence were addressed and the likely cost of that evidence and courts can make orders limiting the scape of the evidence and setting out the cost. So there is there for a risk that if expert evidence is not obtained because sufficient evidence is not provided to the court as to the need for it, then this may have a serious effect upon the litigation and result in a professional negligence right? This is not an automatic sanction, however, for a missed deadline, this is simply the case that if you fail to disclose a report, you may not use it at trial. If I can see how it could be interpreted as meaning that if it isn't disclosed on time then it cannot be relied upon and the expert cannot give evidence. Yeah. Nonetheless, the court has distinguished between experts and witness evidence. Obviously, if the expert fails to provide their report on time, comply with the directions, the expert does their duty to the court in that respect. And there would be a fallback position in that the party could bring a claim against the expert under the case of jones and Caney. Mhm. Following that case, there is the possibility of further professional negligence claims arising respective experts conduct. Yeah. The possibility of hot tubbing was brought in where both parties, experts can give evidence at the same time and it remains to be seen how this actually works in practice because it isn't commonly used. It is a new process really and so um the experts selected needs to be comfortable with this format of presenting evidence and be prepared for it. Um although an expert may be experienced and giving evidence, they may not be familiar with the concurrent evidence process. Sisters can face claims if they haven't fully briefed the expert. And often there is a joint conference of experts and it's crucial to ensure that the experts is fully prepared prior to any meeting. So in terms of these applications for relief, timing is is key because the trial window is pretty much sacrosanct. So if there's any risk of the trial window being factored or the litigation being seriously derailed, then it's unlikely that relief will be given from sanctions. Although all the circumstances of the case will be taken into account. It's quite possible that we may see yet further satellite litigation in the form of professional emergence claims relating to the conduct of relief from sanctions applications and when an application for relief was made, was it made promptly? If not, and the case is lost, there may be a claim against the solicitor. There may also be arguments about whether um solicitors should have made applications for relief from sanctions before the Metro case was brought in. Yeah. Before Mitchell case was decided. one point which has arisen is um what the parties have to do after an agreed stay has expired. It often says in the order that the parties have to update the court if the case hasn't settled, it's often the case, the matter doesn't settle. The consent order may not be, may not speak to. What happens if it doesn't. It's possible for a supplementary form to be attached to the order by the court setting out the directions that apply and such than that form nor notice takes the form of a court order. It often says that the directions questionnaire and all the other applicable documents was who filed not later than the day the stay expires. That means that on the date when the stay expires, the directions question and documents have to be filed. Yeah. Yeah. This is the type of order that is made. Obviously there is a problem then if you don't file your cost budget and you could then be in default and face the mitral situation. one of the other, This is arises out of the Jackson reforms is part 36 CP up at 36 and offers to settle as further evidence is obtained during the course of the investigation. It may be the case that claim Is now considered to have a value less than a part 36 offer previously made and where the 21 day period for acceptance has expired. The key issue to be aware of is that unless a part 36 offer is expressly withdrawn in writing, Then it remains available for acceptance after the expiry of the 21 day period. So withdrawal of the offer may be unattractive due to the loss of cost protection applicable from the date of the offer. However, defendant may not wish to the claimant now to accept the offer the light of further evidence overvaluing the claim. The alternative option is to vary the original offer with the cost protection applying from the data original offer, But in terms of the reduced part 36 valuation for example, £100,000 may have been offered 1st, 2012. Further evidence supports valuation of only £20,000. So the original offer can be varied to £20,000. Such as if the claimant only obtains damages of £19,000 at trial Defendant is entitled to Part 36 Cost Protection from one January 2012. The same time avoiding the possibility of the claim is accepting the £100,000 offer. So there has been a recent decision barrett at Men Cap, which is a county court decision seems to suggest that the receiving party is not entitled to any additional period to consider a varied offer. Also got the case of giving and Manchester City Council LG blower, Specialist, bricklayer and Reeves. There is no reason why party should not make more than one offer and even to the other side to decide which, if any, to accept or if he wishes, he may change the terms of the original offer which then continues to stand and it's buried form is from the date it was originally made. I have to say. I find this quite a bizarre decision that you can vary your original offer to reduce it and that it continues to stand. But they are yeah, suggested wording is has set out on the slide. I've already discussed the situation of applications to set aside judgment. Yeah. One other issue to be aware of is the refusal to mediate which can result in cost sanctions um and therefore sister might face an agent's claim for failing to except the mediation proposal. Jackson set out in his review the importance as he saw it of A. D. R. And encouraged the creation of the A. D. R. Handbook which was published last year under the case of Barbara Joyce, Lady moment, paul, Lindemann and others. A family dispute regarding a will. It was said that no holds barred litigation is now dead. In a recent case of Emirates trading agency, prime mineral mineral exports private limited. The commercial court friendly discussions were there was requirements carry out friendly discussions to try and settle and that was found to be binding obviously undertaking A. D. R. Mediation um is within the overriding objective in terms of proportionality and saving court resources. Yeah, there is the possibility that you may face a Jordan or ugly order. The Georgian order providing that the party considering the case unsuitable for A. D. R. Shall not less than 28 days before the start of the trial father witness statement, giving reasons upon which they rely for saying that the case was unsuitable for mediation or A. D. R. The younger the order would be that any party not engaging in such means proposed by another Is to serve a witness statement, giving reasons within 21 days of receipt of that proposal and that witness statement must not be shown to the trial judge until question of costs are decided. Difference being when you serve your witness statement, is it just 21 days after receipt of the proposal? Or is it just before the trial in any event when the same isn't shown to the trial judge until the question costs are decided. But it does ensure that there is some evidence before the judge to decide whether the refusal to mediate has been reasonable or not. Say the Reason for this is set out in the CPR Part 44 to court will take into account when deciding what order to make about costs, conduct, which includes during but also before the proceedings and following whether parties have followed the reaction protocol, practice direction or any other relevant pre action protocol CPR 44.43. The court will also have regard to the efforts made before and during the proceedings. In order to try and resolve the dispute. We have the case of Halsey and Milton Keynes, General NHS Trust which set out the factors to be taken into account as to whether or not um refusal to mediate. It was reasonable. Yeah. And that was followed by further cases such as PGF and OMFS Company Limited in 2013. Yeah, whereby it wasn't reasonable to ignore a request to mediate. Yeah. We also had the case of Garrett Critchley and Andrew Ronin and Solar Power PV Limited in 2014 where the court didn't accept various excuses given for failing to accept a mediation invitations, such as it wasn't at the right stage. The cost a bit disproportionate, the parties didn't like each other. The parties are too far apart. We've also recently had the case of Northrop Grumman Mission Systems, europe LTD B A B A Systems. LTD in 2014 is essentially a no score draw. There were £3m in dispute. The defendant reasonably considered that it had a strong case and the court said that we're a party faced an unfounded claim and wish to contest it rather than buy it off. The court was to be slow to characterize that as unreasonable conduct. It did have a watertight case and that would be a watertight gates. Take watertight case would normally be sufficient justification for refusing to mediate. However, court found that mediation could have a positive effect, even if the claim had no merit, because the mediator would bring new independent perspective to the case. It looked as if the court was likely to go in favor of the climate in this case, in terms of unreasonable conduct, by finding that um have been unreasonable conduct and that's well, I mean to say that be a systems had had acted reasonably, it appeared because they did have a watertight case, but nonetheless, as I say, the court found that mediation could have a possible fact. Yeah. Nonetheless, defendant had made without prejudice offer to settle which was better than the claimant had recovered each time. The claimant of a mediation, the defendant had asked the cost information which would not be provided. Mediation would have cut through. The positions taken by the parties would have cost £40,000 and not affected the litigation. The cost of mediation would not be disproportionately high and it is likely that it would have been a mediated settlement. There are reasonable prospects of success and it was unreasonable to reject it on insufficient grounds, even though the defendant reasonably considered it had a strong case, it had acted unreasonably and refusing to offer to mediate. However, the claimants conduct itself in rejecting the offer made by the defendant had to be taken into account and therefore neither parties conduct would modify the general rule on costs. Nonetheless, this case highlights the risks that face party who um doesn't proceed with mediation. They could end up being penalized in costs and that in turn, could lead to professional negligence claim. What you don't want to see is this type of memo coming around highlighting the failures to comply with court deadlines. How then do you avoid the traps within the CpR issue when everything is in order so that you're not going to face any problems in respect of Yeah, delay and missing deadlines. Make sure that you have your witness evidence and expert evidence lined up that does of course result in front loading of costs. See the importance of die rising dates with prompting systems is key. If you will need an extension, then try to reach an agreement or apply under CPR rule 3.84. If there's been a breach, apply immediately to the court and seek relief as promptness is key. And finally consider mediation as an alternative. So to conclude, it appears that there are many opportunities for mistakes to occur in respect to the new rules and their implementation in particular relation to deadlines in respect of um mediation, I've explained how the courts are penalizing parties who refuse to mediate and that is much easier now to be found to have acted unreasonably in that respect. Yeah, if you do mediate and settle the claim, then, in my view, there's a possibility that the client might turn around and say that a fair settlement is not reached or an unreasonable settlement and then that in turn, could lead to profession oceans claim with the increase in mediations that's occurring. There's also the prospect that uh, there could be more claims made against mediators anyway. Thank you very much indeed for listening. And um, I hope that this talk has been of some use to you. Thank you.

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