Mediation shouldn’t be seen as optional
April 30, 2012
High Court decision that highlights the importance of mediation
PGF II SA v OMFS Co 2012 EWHC 83 (TCC)
The claimant landlord claimed for dilapidations arising out of alleged breaches of the repairing covenants of an underlease, particularly in relation to the air conditioning system.
The defendant made a part 36 offer to settle the dispute on 11.04.2011. In May, June and July 2011 the claimant offered to mediate. On each occasion the defendant refused.
On 10.01.2012, the day before the trial, the claimant accepted the part 36 offer, as it came to light that the defendant was to amend its defence to the effect that the air conditioning did not fall within the definition of the demised premises in the underlease.
The usual costs consequences of this acceptance are set out in CPR r.36.10(5) which would be that the claimant would be liable to pay the defendant’s costs from the date of the expiry of the relevant period to the date of acceptance.
However, the court ordered:
i) that the defendant pay the claimant’s costs on the standard basis up until the end of the relevant period; but
ii) that there should be no order as to costs from the the end of the relevant period to acceptance.
The defendant therefore lost the right to recover costs under CPR r.36.10(5).
The court found it was unreasonable to have refused to mediate, particularly as the court believed that there was a reasonable prospect that the dispute could have been settled during the mediation.
This decision highlights how the court will use its wide discretion on costs and move away from the default position under CPR Part 36 in circumstances where parties refuse to mediate. Parties must recognise that mediation is a fundamental part of the litigation process, and a refusal to mediate can result in severe costs sanctions.
ECJ ruling on legal expenses; Austrian law
July 12, 2011
The recent ruling in Stark v DAS Osterreichische Allgemeine Rechtsschutversicerung AG by the ECJ, whilst addressing a question of Austrian law, is relevant to all involved in legal expenses insurance.
Two points of Austrian law are relevant:
1. Austrian law provides that legal expenses insurance contracts may state that a policyholder may only select lawyers who have their chambers in the geographical location where judicial proceedings are at first instance to be conducted; and
2. In Austria lawyers in certain ancillary services in civil law disputes are remunerated by a flat fee. That fee is doubled if the service is provided outside of the lawyer’s particular geographical location.
Mr Stark was the policyholder under a legal expenses policy provided by DAS. In 24.03.2006 he brought an employment claim against his former employer in the Labour and Social Security Court in Vienna. Mr Stark lived approximately 600km away from Vienna and instructed a lawyer local to him.
Mr Stark made a claim under his legal expenses policy and DAS paid his lawyer EUR 5,782.19 by reference to the single flat rate not the double flat rate. DAS also made an application seeking an order that Mr Stark pay the premium of EUR 211.46 due under the policy. Mr Stark made a counter-claim for EUR 3,000, being the balance between the single flat fee DAS had paid and the double flat fee which his lawyer charged Mr Stark and which was not paid by DAS.
Mr Stark ultimately asked the European Court of Justice to decide whether the restriction placed on legal expenses policyholders by Austrian law was contrary to Article 4(1) of Directive 87/344/EEC which guarantees freedom of choice of lawyer to legal expenses policyholders.
The ECJ ruled that the question at issue was not, in fact, a question pertaining to the freedom of choice of lawyer, but instead on the scope of cover available under an insurance policy and that such a question is not subject to the Directive. It noted that Mr Stark had been able to freely select his lawyer but that did not mean that the insurer was required to reimburse all the lawyer’s fees, regardless of geographical location.
The Court did note however that this should be “on condition that that freedom is not rendered meaningless. That would be the case if the restriction imposed on the payment of those costs were to render de facto impossible a reasonable choice of representative by the insured person.”
Solicitors liable for failing to advise on ATE
May 14, 2010
Adris v Royal Bank of Scotland plc [2010] EWHC 941 (QB) has held that a solicitor is under a duty to advise its clients on the availability of After the Event insurance. Further, if a solicitor fails to provide such advice its clients are unable to take effective decisions and the solicitor is therefore acting without instructions. A non party costs order was made against the solicitor in this case, and it will be liable for costs on a joint and several basis with the Claimants against whom any costs order will be made. To the extent that the Claimants pays any costs at all, they would be wise to consider a professional negligence claim against the solicitor.
The ATE insurance market is mature and developed in this country and the level of press coverage afforded it recently (notwithstanding the level of knowledge a competent solicitor should be in possession of in any event) means that there can be no excuse for failing to advise clients on the risks of litigation and the methods of mitigating that risk. This case only refers to ATE insurance but BTE insurance on household/commercial policies may also be available. Third party funding is only suitable for a small minority of cases but this too should be considered.
Court of Appeal decision on solicitors’ retainers
March 4, 2010
The Court of Appeal has overturned the decisions of two lower courts, in ruling that a firm of solicitors was entitled to terminate their retainer with a client who had insisted that they advance “unarguable” points of law before the Court.
In reaching its decision in the case of Buxton v Mills-Owen [2008] EWHC 1831 (QB), the Court of Appeal took into account the fact that, pursuant to CPR 1.1, the overriding objective would not be furthered by litigants advancing hopeless arguments.
The Court also held that the appellant solicitors were entitled to be paid all fees incurred up to the date on which they had terminated their client’s retainer.
A complete version of the judgment can be viewed at the following link: http://www.bailii.org/ew/cases/EWCA/Civ/2010/122.html
