- I have before me
the bills and supporting papers in eleven cases. All of them concern consent
orders made in housing disrepair cases in the Bridgend County Court. Requests
for detailed assessment were made to Bridgend County Court in September 2003
and all of these cases were later transferred to the Supreme Court Costs
Office for assessment. Accordingly, these cases are now High Court cases and
any appeal from my decisions lies to a High Court Judge. I am told that terms
of settlement have been agreed in 50 similar cases, that three other cases
have gone to trial and were unsuccessful, and that there are approximately 210
cases still pending. It is possible that these eleven cases may be treated as
informal test cases which will help parties resolve some of the remaining
cases. I heard argument on these cases over two days in January 2004 and then
adjourned for another two day appointment commencing 17 May 2004.
- Short
particulars of cases appear in the first two appendices to this judgment. All
of them were funded by way of a CFA agreement claiming a 100% success fee
supported by an after the event insurance policy issued by Fastrack Indemnity
Ltd. The CFAs in these cases were signed by the Claimants in the months
August, September or October 2001. The average period of delay from that date
to the date of the letter before claim is just over 44 weeks. The period from
the letter before claim to settlement is on average 28 weeks. One of the cases
settled in December 2002. All of the other cases settled in the first half of
2003. In all cases the settlement terms included financial compensation
varying between £750 to £3,000 (on average £1,631) plus certain repairs
already done or agreed to be done, plus reasonable costs. The total of the
costs claimed varies between £6,607 and £9,479 (the average being £8,012).
That sum includes the success fee, the insurance premium and VAT. Excluding
those matters, ie, the amount of base costs excluding VAT, varies between
£3,261 and £4,590 (the average being £4,066). All of these cases were fought
and concluded before the pre action protocol for housing disrepair cases was
published in September 2003.
- Of the many
points argued before me at the two day hearing this is my judgment on six
points which are common to all cases: (i) the enforceability of the CFAs, (ii)
the effect in these cases of the availability of legal aid, (iii) the amount
of success fee on profit costs, (iv) questions of proportionality, (v) the
recoverability of the fees paid to Fastrack Litigation Services Ltd for the
housing reports, video evidence and risk assessment reports and, lastly, (vi)
the fees paid for surveyors’ reports.
- At the hearing I
gave judgment on a further point argued before me, the recoverability of VAT
on invoices issued by a company or firm variously described as Street Legal
UK, 4 Street Legal UK and Street Legal UK Ltd. Such fees appear in only three
of the bills (Bowen, Simmons and Austin). Although all of the invoices claim
VAT none of them state a VAT number. I took the view that the receiving
parties should not be allowed to recover the VAT claimed on these fees.
- For the time
being I shall not give a final ruling on points which relate to particular
cases only. In Austin it appears that the CFA was signed by the client but was
not signed by the solicitor. In Farrow the CFA was signed by a Mrs Speight,
described as the Claimant’s daughter: it is unclear whether Mr Farrow also
signed. In Baker it would appear that the CFA and other documents were not
signed by the Claimant (Patricia Baker) but by a Mr Michael Baker who is
described in a housing disrepair questionnaire as the husband or partner or
the Claimant. The requirement for CFAs to be signed by the client and the
legal representative is set out in Regulation 5 of the Conditional Fee
Agreements Regulations 2000 ("the CFA Regulations"). Nevertheless the problem
in Austin was only spotted during the hearing and the problems in Farrow and
Baker were spotted by me after the hearing. Therefore, before making any final
rulings on these points, I will give the receiving parties concerned an
opportunity for further consideration and argument.
- In order to
explain my decisions in these cases it is necessary to set out at length
several of the documents I have seen and many of the submissions I have heard.
Several of my decisions affect other decisions I make. I shall therefore set
out the submissions made and my decisions thereon in separate parts of this
judgment. A summary of my decisions is included in Appendix 3 to this
judgment.
THE FUNDING
ARRANGEMENTS RELIED ON
- For the
Claimants, Mr Goodbody described the funding arrangements as follows. All of
the Claimants instructed PD Associates, a solicitors firm based in Liverpool.
Instructions came to that firm via another company, CMS Investigations Ltd,
who had already interviewed the Claimants, all of whom reside in South Wales.
CMS Investigations Ltd are said to employ a range of methods by which to
contact potential claimants including cold calling and local advertising. As a
result of a first interview with a potential claimant, a CMS Investigations
representative sends to PD Associates a questionnaire completed in manuscript
and a video recording of the items of disrepair relied on. PD Associates would
then sift these cases into three categories, "yes", "no" and "further
information required". The cases in the "no" category are simply returned to
CMS Investigations Ltd with an indication that PD Associates are not prepared
to take them on. Cases in the "further information required" would be resifted
after the further information had been obtained. That information might be as
to the date of commencement of a particular tenancy or as to the person or
persons to whom the tenancy had been granted.
- Cases in the
"yes" category are returned to CMS Investigations Ltd with an invitation to
proceed. The CMS representative makes a second call upon the intending
claimant, checks that the questionnaire answers are correct, checks that the
client wishes to proceed and gives the information said to be required by
Regulation 4 of the CFA Regulations. For this latter purpose a two page
document is read out to the intended claimant whereupon the form is dated and
both the CMS representative and the intended claimant signs it. The intended
claimant also signs the CFA agreement with PD Associates, an insurance
proposal to Fastrack Indemnity Ltd and an application for a disbursement
funding loan with First National Bank Ltd.
- The next stage
is for PD Associates to receive three documents signed by the intending
claimant: (i) the "oral advice and explanation"; (ii) the CFA agreement; and
(iii) the insurance proposal form. They also receive a typed version of the
housing disrepair questionnaire. A representative from PD Associates will then
contact the intending client by telephone in order to repeat the Regulation 4
advice, to assess the risk involved and, no doubt deal with any other matters
the intending client raises. In each of the cases before me the representative
in question has been one or other of the two partners in the firm PD
Associates, Mr Davis or Ms McGlinchey.
- The telephone
conversation is recorded on the file by means of a two page document the first
page of which is headed "Attendance note/ conditional fee agreement compliance
check list" and the second page is headed "Attendance note oral advice". The
first page lists four "matters provided orally to client prior to entering
into CFA": they are as follows:
Circumstances in which [the client] may be liable to pay
costs
Circumstances in which client may seek assessment of fees and
expenses
Whether it is considered that client is at risk of incurring liability
for costs in respect of proceedings is insured under an existing insurance
contract of insurance ie, before the event insurance (car/home etc)
Whether other methods of financing these costs are available and if so
how they apply to the client and proceedings.
- Beside each of
the four matters appear two columns; one is headed "Confirm (Yes/No)" and the
other is headed "Matters Arising/Client’s comments".
- The second page
lists three "Matters to be provided orally and in writing" and also has the
same two adjoining columns as appear on the first page. The three matters are
listed as follows:
Information as to whether any particular method or methods of financing
any or all of those costs is appropriate (ie after the event insurance policy
and reasons for choice of policy)
Was
client provided with Law Society conditions (in writing) prior to entering
into agreement
Was
risk fully assessed and risk document completed and explained to client.
- The time claimed
in respect of each of these telephone calls normally exceeds one hour. I am
told that in some cases, especially if additional questions are raised by the
client, additional telephone calls are made.
- If, as in all of
the cases before me, the tenant wishes to proceed further the solicitors sign
(or should sign) the CFA and write to the insurer to arrange inception of the
insurance policy and to First National Bank Ltd who will grant a disbursement
loan to the client. The solicitors also write a thank you letter to the
client. That letter does not state that it encloses a copy of the CFA and
neither Mr Goodbody nor Mrs McGlinchey who appeared before me were sure
whether a copy, signed by the solicitor, was ever sent to the client. The
thank you letter is standard form. I shall set out in full the text of the
letter sent to Ms Pritchard.
"Re: Housing Disrepair Claim
Thank you for instructing us, via CMS Investigations Ltd, to act on
your behalf.
Because of recent changes in the availability of Legal Aid, in order to
fund your type of case, you now should be insured against the possibility of
not winning, so that your own costs would be paid (e.g. Surveyor’s Report,
etc.).
You
will recall signing an agreement for us to act for you and an agreement for
your case to be financed. The finance agreement includes the cost of an
insurance policy, so that if you do not win your case YOU WILL NOT
HAVE TO PAY ANYTHING TOWARDS THE COSTS OF THE CASE because we will claim
off the policy on your behalf.
We
are required by law to give you advance information on what the action will
cost, which we will claim from your landlords if you win your case against
them.
At
the end of a successful case, we have to show that this letter has been sent
to you now, so that we can claim our costs against your landlords. We
remind you that if you do not win, we cannot claim our costs from
anyone, including you. We are therefore taking a chance that
your case will be successful by carefully considering the merits of your
case. This is commonly known as a "No Win, No Fee" situation.
We
now wish to explain about the insurance cover referred to in paragraph 3
above. The insurers are also taking a chance that your case will be
successful, because the cost of their policy is then recoverable from your
landlords. It is therefore important that once you have agreed to pursue the
case against your landlords for all your repairs to be completed and to obtain
compensation, then you must continue the case to the end. In short you
must co-operate with us as your legal team. If you do not then no costs can be
recovered from the other side.
This is the only time when you could be liable for costs, so we have
to work together to make sure that situation never arises. If you fail to
co-operate, this would be a breach of your insurance policy and also a breach
of our agreement with you. However, we are sure that you will realise that we
aim to do the best we can for you, but we can only do this if you help us to
help you at all times. So, for instance, if we ask you to sign a document or
to be available for a visit from one of our representatives or your surveyor,
then please co-operate in every way, so that we can try to settle your case
more quickly.
Our
basic hourly rates excluding VAT are:
1.
Partners £165.00
2.
Solicitors £140.00
3.
Litigation executives £140.00
4.
Other staff of equivalent experience £100.00
(We
would remind you once again that the above rates relate to the costs we will
be claiming from the other side in the event of a successful
claim)
The
hourly rates will be reviewed on the review date as specified in the
conditional fee agreement and on the anniversary thereof. The rates will not
be increased any more than the rise in the retail prices index.
This matter is being dealt with by Mr John Humphries who is a
litigation executive. However, overall responsibility for your case rests with
Mr Paul Davis, a partner of this firm.
We
aim to offer all our clients an efficient and effective service at all times
and we are confident that we will meet the same. However, should you be
unhappy with any aspect of our service please write to Mr Paul Davis or his
partner, Ms Elaine McGlinchey at the above address.
Yours sincerely
PD Associates"
- I have not been
shown a copy of the insurance proposal or any documents relating to the loan
agreement with First National Bank Ltd. The solicitors’ letter just quoted
refers to a "finance agreement [which] includes the cost of an insurance
policy". I have seen an insurance policy in each case and will describe them
below. I have also seen bank statements in all cases which refer to an
interest rate of 1% per month which is described as 13.9% APR.
- The procedure I
have just described is in some respects different from the procedure set out
in the witness statement of Ms McGlinchey dated 22 January 2004. After
describing the first interview by the CMS Investigations representative and
the yes/no/further information required sift, she states, in paragraph
11:
"Assuming the client gives instructions for PD Associates to act (and
there have been many cases where clients have refused to continue) the details
are then given to the marketing company to visit the client in person. Their
staff give the paragraph 4 advice again and assuming that the client is still
happy to proceed we ask for the marketing company to arrange to see the client
so that the conditional fee agreement can be signed and the loan agreement for
payment of the "after the event" insurance premium. The insurance in these
particular cases was provided by Fastrack Indemnity Ltd which was paid for
through a funder for each case. The funding was provided by First National
Bank Ltd."
- That evidence
describes the second explanation of the Regulation 4 information being given
by "the marketing company" not by the solicitor. There are discrepancies also
in the dates of signing of some of the CFAs. In three cases (Farrow, Baker and
Wintle) the solicitor is shown as signing on the same date as the client. Ms
McGlinchey invites me to deduce from this that at the second interview by the
CMS Investigation representative, the representative telephoned PD Associates
and so the Regulation 4 information was given by the CMS representative and
then by the solicitor, both on the same day. That explanation works if one
further assumes that, when the solicitor later received the CFA signed by the
client, she signed it and then backdated it to the same date as the date of
the telephone conversation.
- I note that in
at least five other bills (Jones, Simmons, Owen, Pritchard and Austin) the
costs draftsman always claims costs from the date of the client signing the
agreement not the (potentially later) dates of the solicitor’s signature.
- More date
problems arise in another case, Bowen. The client’s date of signature of the
CFA is shown as 20 September 2001. That is consistent with the date of the two
questionnaires (which are dated 5 September and 20 September). However the
solicitor’s date of signing is shown as 20 August 2001 a date which also
appears on the two page document recording the telephone conversation between
solicitor and client. Other documents in the papers supporting this file lead
me to assume that, in fact, the solicitor signed the CFA and the two page
record of the telephone conversation on 20 November 2001 but incorrectly
backdated them to a date one month before the client’s date of signature.
- The conclusions
I draw from the discrepancies between the case as explained to me by Mr
Goodbody, the case as explained in Ms McGlinchey’s witness statement and the
varying dates of documents I have mentioned are as follows. The true position
is as Mr Goodbody described it. Ms McGlinchey’s witness statement is
inaccurate to the extent that it disagrees with Mr Goodbody’s account. In
cases in which the solicitor’s telephone interview takes place before the
solicitor receives the CFA signed by the client, the costs of the telephone
interview are not recoverable. There is nothing in the CFA to suggest that it
can operate retrospectively. On a few occasions the solicitors have been
willing to backdate documents incorrectly. On more occasions the costs
draftsman has been willing to backdate the claim for costs incorrectly. On one
occasion (in Bowen) Mr Davis has backdated a document to an impossible date.
20 August 2001 is more than two weeks before the date shown on the manuscript
copy of the housing disrepair questionnaire which is said to have been
prepared by the CMS Investigations representative on first interviewing Ms
Bowen.
FORM OF CFA
USED
- In each of the
cases before me the same form of CFA was used. It is heavily based on the Law
Society model and indeed the last four sides comprise the standard Law Society
conditions. I shall set out the full text below save that, where clauses are
identical to clauses in the Law Society model, I shall reproduce the heading
only, not the full text.
"CONDTIONAL FEE AGREEMENT (Terms and Conditions)
The
agreement is a legally binding contract between you and your legal
representative. The Law Society Conditions which are set out below are part of
the agreement. Before you sign, please read everything carefully. Please also
read the Appendices to this agreement. If you do not understand anything
please ask before you sign. For an explanation of words like "our
disbursements", "basic costs", "win" and "lose", see the Law Society
Conditions. For a general explanation of the Scheme see below.
Agreement date ….
We,
the solicitor/s: PD Associates
You, the client: ….
A.
The Agreement between us covers:
…
B.
The Agreement between us does not cover:
…
C.
Paying us
…
D.
Basic Costs
These are calculated for each hour engaged on your matter from now
until the review date on January 1st next year.
Routine letters and telephone calls will be charged as units of one
tenth of an hour. Other letters and telephone calls will be charged on a time
basis.
The
hourly rates are
Basic
Costs Rates
|
Partners,
Consultants and Solicitors with over 4 years experience |
£165 |
per
hour |
|
Other
Solicitors |
£150 |
per
hour |
|
Legal
Executives (FILEX) |
£150 |
per
hour |
|
Senior
Litigation Executives |
£150 |
per
hour |
|
Litigation
Executives |
£140 |
per
hour |
|
Trainee
Solicitors |
£120 |
per
hour |
|
Junior
Executives |
£100 |
per
hour |
We
will review the hourly rate on the review date and on each anniversary of the
review date. We will not increase the rate by more than the rise in the Retail
Prices Index and will notify you of the increased rate in writing.
The
hourly rates are the same as would be charged if the work was done under a
non-conditional fee agreement.
E.
Success Fee
This is 100% of our basic charges.
The
reasons for calculating the success fee at this level are set out in Schedule
1 to this agreement.
You
cannot recover from your opponent the part of the success fee that relates to
the cost to us of postponing receipt of our charges and disbursements (as set
out at paragraphs(a) and (b) at Schedule 1). This part of the success fee
remains payable by you.
F.
Value added tax (VAT)
…
G.
Law Society Conditions
…
H.
Your relationship with Legal Direct Limited
You
have, by signing this agreement, agreed with Legal Direct to pay a premium of
£729.75 for a legal expense insurance policy, administered by Fastrack
Indemnity Limited ("the Policy"). The effect of the Policy is that if you lose
your case, the Policy will cover our Disbursements to a maximum of £5000 and
your Opponent’s costs and disbursements. The maximum cover is £50,000. We
shall attempt to recover the premium from you opponent, if you win your case,
but the Court may disallow it in whole or in part. In such circumstances your
loan for the Policy premium, disbursements (if applicable) and any interest
and charges due and payable by you in respect of your loan will be deducted
from your damages (compensation). In any event, the Court will not allow you
to recover interest on any loan taken out to purchase the Policy even if you
win your case. Such interest will be deducted from your compensation if you
win. If you lose your case then any loan (including interest) taken out to
purchase the premium for the Policy and disbursements (if applicable) is
covered by the Policy and you will not be called upon to pay the same;
provided that you have complied with the terms and conditions of the
Policy.
I.
Your obligations to repay your loan
You
have, by signing this agreement agreed to purchase a legal expenses insurance
policy ("the Policy"), administered by Fastrack Indemnity Limited ("FT") the
cost of which you are borrowing from First National Bank Plc ("the Bank") who
may also provide you with additional funding in relation to the disbursements
incurred in pursuing your claim against the other side. Accordingly, by
signing and returning a copy of this agreement to us you irrevocably and
unconditionally authorise us to:
1.
Pay any monies received by us, on your behalf, as a result of the legal action
being pursued by you and insured under the Policy (save where monies are
received in respect of a prior obligation to pay credit hire or repair
charges) to the Bank. You understand that the Bank will then deduct and keep
the amount outstanding under your loan agreement with them and deal with any
balance (and interest on that balance) according to your
instructions;
2.
Allow FT, LD and/or the Bank to have full access to your file of papers as may
be required;
3.
Provide to FT, LD and/or the Bank any information requested by them relating
to your claim;
J.
Other points
Immediately before you signed this agreement, we verbally explained to
you the effect of this agreement and in particular the following:
a)
the circumstances in which you may be liable to pay our disbursements and
charges;
b)
the circumstances in which you may seek assessment of our charges and
disbursement and the procedure for doing so;
c)
whether we consider that your risk of becoming liable for any costs in these
proceedings is insured under an existing contract of insurance. In particular
we drew to your attention that you had, prior to our instruction, agreed to
purchase a legal expenses insurance policy from Fastrack Indemnity
Limited;
d)
that you had also agreed to fund the purchase of the legal expenses insurance
from Fastrack Indemnity Limited by a loan from First National Bank
Plc
e)
Having regard to points (c) and (d) above that we were unable to discuss other
methods of financing those costs, including private funding, Community Legal
Service funding, and other legal expenses insurance policies, trade union
funding;
(f)
(i) Having regard to the fact that you appear to be contractually bound to
purchase the legal expenses insurance policy referred to in point (c) and (d)
we have not recommended Any particular insurance product to you. Detailed
reasons are set out in Schedule 2.
(ii) In any event, we believe it is desirable for you to insure your
opponent’s charges and disbursements in case you lose.
(iii) We confirm that we do not have an interest in recommending that
you maintain this particular insurance agreement save that we are an approved
member of the Legal Direct Solicitors’ Panel.
Signatures
I
accept the terms and conditions set out in this Conditional Fee Agreement, and
I confirm the success fee under this agreement has been inserted into the
agreement (see above) before I have signed below.
Signed by the client …
Date …
Signed by the solicitor …
Date …
Solicitors full name …
Position Held …
I
confirm that my solicitor and/or his agent has verbally explained to me the
matters in paragraphs (a) to (f) under "Other points" above.
Signed by the client …
I
specifically confirm that I verbally explained to the client the matters in
paragraphs (a) to (f) under "Other points" and confirm the matters at (e) in
writing in Schedule 1.
Signed by solicitor or agent on behalf of firm …
SCHEDULE 1
The
Success fee
The
success fee is set at [ %] of basic charges and cannot be more than 100% of
the basic charges.
The
percentage reflects the following:
a.
The fact that if you win, we will not be paid our basic charges until the end
of the claim.
b.
Our arrangements with you about paying disbursements.
c.
The fact that if you lose, we will not earn anything
d.
Our assessment of the risks of your case. These include the following: Risk on
liability, causation needs to be proved, we need to obtain independent
evidence.
e.
Any other appropriate matters.
SCHEDULE 2
The
Insurance Policy
Having regard to the fact that you appear to be contractually bound to
purchase a legal expenses insurance policy from Fastrack Indemnity Limited, we
have not recommended any particular insurance product to you and you may in
these circumstance wish to obtain independent legal advice in this
regard.
In
any event, in all the circumstances, and on the information currently
available to us, we believe, that a contract of insurance is appropriate to
cover your opponent’s charges and disbursements in case you lose.
We
are not, however, insurance brokers and cannot give advice on all products
which may be available."
- Several of the
clauses of the CFA agreement call for comment. Clause D (basic costs) sets out
hourly rates for fee earners which are different from the hourly rates set out
in the thank you letter I have already quoted.
- Clause E
(success fee) specifies the success fee in all cases as 100%. I shall return
to this point when dealing with Schedule 1 to the agreement.
- Clause H (your
relationship with Legal Direct Ltd) introduces to me a third corporate name
which relates to the insurance in these cases. The proposal to take out a
policy is apparently made with Legal Direct Ltd. The policy is administered by
Fastrack Indemnity Ltd. The representative who first shows this draft
agreement and other documents to the intending claimant is employed by CMS
Investigations Ltd. In all of the cases before me clause H of the CFA
describes the premium as being for the sum of £729.75 in fact, a premium of
this size was paid only in three cases (Jones, Austin and Wintle). In four
other cases the insurance policy stipulated a higher premium all of which was
paid (Simmons, Baker, Pritchard and Mellish). In the remaining four cases the
insurance policy stipulated for a premium of £729.75 but only £519.75 was paid
(Bowen, Owen, Farrow and Pace).
- The seven
policies which stipulate for a maximum of £729.75 describe the premium as
payable in two instalments: a first instalment of £519.75 "payable as soon as
the legal representative agrees to represent the insured in the legal action
and proposal accepted by underwriters" and the second instalment of £210 is
"payable at the stage when the solicitor is authorised to issue proceedings".
It therefore seems appropriate to infer that, in the last four cases I
mentioned, either the solicitor failed to obtain authority to issue
proceedings or, if authority was obtained, the underwriters waived payment of
the second instalment. In the four cases I mentioned as having a higher
premium, the premium is payable (and was paid) in one instalment immediately
upon completion of the CFA agreement.
- In clause J
(other points) the opening words ("Immediately before you sign this
agreement") make clear that the "verbal" explanation there referred to is the
explanation given by the CMS Investigations representative at the second
interview, not the explanation recorded as given later by the solicitor by
telephone.
- There are four
comments I wish to make about schedule 1 to the agreement. First the form of
CFA used leaves space for a success fee percentage to be inserted in Schedule
1 even though Clause E, as printed, specifies it to be 100%. Secondly this
part of the schedule was left blank in five of the cases (Bowen, Owen,
Pritchard, Austin and Pace). In another five cases a figure has been inked in,
using the same colour ink as the solicitor who countersigned the agreement
(Jones, Simmons, Farrow, Baker and Wintle). In the remaining case (Mellish)
the figure 90% has been typed into schedule 1 even though in that case, as in
all the other cases, clause E shows a success fee percentage of 100%.
- The third
comment I wish to make about schedule 1 is the provision it makes concerning
the fee deferment element of the success fee quoted. Clause E of the agreement
states that the client "cannot recover from your opponent the part of the
success fee that relates to the cost to us of postponing receipt of our
charges and disbursements (as set out at paragraphs (a) and (b) at schedule
1). This part of the success fee remains payable by you." However, it is not
possible to tell from schedule 1 what part of the success fee is attributable
to paragraphs (a) and (b). This aspect of schedule 1 contrasts substantially
with schedule 1 to the Law Society model. The Law Society model is as
follows:
"The success fee is set at % of basic charges and cannot be more than
100% of basic charges.
The
percentage reflects the following:
(a)
the fact that if you win we will not be paid our basic charges until the end
of the claim;
(b)
our arrangements with you about paying disbursements;
(c)
the fact that if you lose, we will not earn anything;
(d)
our assessment of the risks of your case. These include the following:
(e)
any other appropriate matters.
The
matters set out at paragraphs (a) and (b) above together make up % of the
increase on basic charges. The matters at paragraphs (c), (d) [and (e)] make
up % of the increase on basic charges. So the total success fee is % as stated
above."
- My fourth
comment concerning schedule 1 relates to certain forms of risk assessment I
have seen in seven of the cases before me. These are headed "Landlord and
tenant disrepair claims risk assessment", give short details of the client and
tenancy and then list 19 factors said to have been considered when assessing
the risk. Beside each factor is a box in which either the answer yes or no can
be given. If the answer yes is given there is another box into which may be
recorded the percentage success fee appropriate because of this factor. On all
forms the boxes beside the first three factors are pre printed with
percentages totalling 40% (Bowen, Owen, Farrow and Pace) or 50% (Jones, Austin
and Wintle). On all forms six or more of the other boxes are completed in
manuscript with values bringing the total risk assessment value to 100% or
more. That this was likely to happen appears to be indicated by a sentence pre
printed towards the end of the form which states:
"The success fee is set at 100% of basic charges and cannot be more
than 100% of the basic charges."
- Five of the
seven forms contain passages which appear similar to schedule 1 of the CFA but
which are in fact substantially different. These passages are as
follows:
"The percentage reflects the following:
(a)
Our arrangements with you about paying disbursements.
(b)
The fact that if you lose we will not earn anything.
(c)
Our assessment of the risks of your case. These include the following: See
above for the risk analysis form which states how we have calculated the
success fee.
(d)
Any other appropriate matters.
The
matters set out at paragraphs (a) and (b) above together make up 40% of the
increase on the basic charges. The matters at paragraphs (c), (d) make up 60%
of the increase on basic charges. So the total success fee is 100% as stated
above."
- The division of
success fee into 40% and 60% elements in these five cases is not, upon
examination, a division between the fee deferment element and the risk
element. Factors (a) and (b) of the risk assessment form are different from
the factors (a) and (b) in schedule 1 of the CFA. In my judgment the final
passages which I have quoted are for all practical purposes meaningless. In
two cases (Austin and Wintle) none of these final passages are set out save
one line "(d) any other appropriate matters". Lines (a) (b) and (c) and the
other sentences following the 19th factor are all omitted.
- I mention these
risk assessment forms in case it might be argued that they throw some light
upon the amount of the fee deferment element which, the Regulations require,
must be specified in the CFA. In fact, upon examination, these forms throw no
such light. In any case, I am not told at what stage in the procedure this
form is completed. In three cases the fee earner indicated is the same fee
earner who signed, or should have signed, the CFA with that client (Jones,
Austin and Wintle). In the other four cases the fee earner indicated is a
junior fee earner, either Mr Edwards or Mr Humphries, even though the CFA with
that client was signed either by Mr Davis (Bowen, Owen and Pace) or Ms
McGlinchey (Farrow).
THE INSURANCE
POLICY
- In each case the
insurance document issued by Fastrack Indemnity Ltd gives brief details of the
insured, the defendant and the type of action (housing disrepair). Most of
them specify the same premium £729.75:
"payable in two instalments. The first instalment [£519.75] payable as
soon as the Legal Representative agrees to represent the insured in the Legal
Action and proposal accepted by Underwriters and the second instalment [£210]
payable at the stage when the solicitor is authorised to issue
proceedings."
- In four cases a
higher premium is specified £834.75 (Simmons, Pritchard and Mellish) and
£939.75 (Baker). The policies in these cases also differ as to the provision
they make concerning disbursement funding (see below). In these four cases the
premium is payable in one instalment only
"upon agreement by the legal representative to represent the insured in
a legal action, and where a proposal is accepted by the insurers [or
underwriters]."
- In each of the
cases the insurance does not cover "any appeal" and ceases if "the legal
action moves outside the fast-track system into "multi-track" or any other
higher legal system". Subject to that the policy limits are £45,000 in respect
of adverse orders for costs and £5,000 for disbursements incurred by the
insured’s solicitor which fall within the policy. It appears that the insured
never has cover for own disbursements where the action is settled except where
the settlement is in favour of the defendant and is approved by the insurer or
is a walk away settlement. I infer this from the clause entitled the "insuring
clause" which states as follows:
"In
consideration of the insured having paid the premium shown … underwriters [the
insurers] agree to pay on behalf of the insured:
(a)
all defendant costs which the insured is liable to pay to the defendant for
the legal action pursuant to an order of the court or an approved settlement …
(b)
all own disbursements but only if the insured has agreed to bear them in an
approved settlement or has failed to establish that the defendant has any
liability at the trial of the legal action … [such amount will include any
interest due to the funder]
For
the avoidance of doubt underwriters [the insurers] shall have no liability to
make any payment if the legal action is settled, other than on an approved
settlement on the basis of either any payment from the defendant to the
insured or both the defendant and the insured agreeing to bear their
respective legal costs, expenses and disbursements."
- The term
"approved settlement" is defined to be an agreement to which the insurer has
given prior written consent and under which the insured agrees to pay the
defendant’s costs and bear "its" own costs.
- Each of the
policies contains an exclusion stating that the insurer shall not be liable
for
"any defendant costs and own disbursements which are insured under an
existing policy, regardless of whether such claim is collectable or
recoverable. However, this exclusion shall not apply to any amount in excess
of the limit and deductible of such existing policy."
- In the four
cases in which a higher premium is paid the insurance also covers interest due
to the "funder" if the insured fails to establish any liability or obtain any
favourable settlement. "Funder" is defined as "the entity providing own
disbursement funding to the insured, normally expected to be a bank or other
financial institution". In the other seven policies this provision about
interest is omitted and the term funder is not defined. However, in these
seven other cases, the policy is subject to an endorsement in the following
terms:
"For the avoidance of doubt the funder will be entitled to require the
underwriters to provide an indemnity in respect of the amount of the
outstanding loan together with interest due and payable thereon in all cases
where a request for payment under the policy is made subject to a maximum of
£5,000 (as per the policy disbursement limit) notwithstanding the underwriters
being able to deny liability under the terms, conditions and exclusions set
out herein or endorsed hereon, without prejudice to the underwriters rights of
recovery from the insured or the appointed representative."
- I infer from the
endorsement I have just quoted that, in seven of the cases before me, First
National Bank Ltd will have a right of resort against the underwriters, up to
£5,000, if these seven claimants fail to pay off their loan accounts. Thus, in
those circumstances, First National Bank Ltd have better insurance cover than
the claimants themselves do. If that cover leads to a pay out the underwriters
may have rights of resort against the claimants "or the appointed
representative". I have not as yet seen or been told of any contractual
documents giving the underwriters a right of resort against PD Associates.
- In one respect
the insurance cover under the policies in these cases is better than the cover
under other policies I have seen. Condition 2 provides what shall happen if a
payment into court is made, the solicitor gives written confirmation that the
prospects of beating it are good, the case later goes to trial but the payment
into court is not beaten. In such a case the claimant will have cover in
respect of adverse orders for costs and own disbursements incurred since the
payment in and the insurer or underwriter will not deduct from this cover an
amount equal to the amount of damages in court.
CFA
REGULATIONS
- Regulation 4 of
the CFA Regulations imposed upon PD Associates in these cases an obligation to
inform the claimants about certain matters and, if they required any further
explanation, advice or information about those matters to provide such as
might reasonably be required. The matters about which information must be
given are listed in Regulation 4(2) in five paragraphs lettered (a) to (e). At
the hearing I heard argument as to two of them, (c) and (d) which I now set
out.
"(c) whether the legal representative considers that the clients risk
of incurring liability for costs in respect of the proceedings to which the
agreement relates is insured against under an existing contract of
insurance,
(d)
whether other methods of financing those costs are available, and, if so, how
they apply to the client and the proceedings in question …"
- Regulation 4(5)
requires the information in paragraphs (c) (d) to be given orally whether or
not it is also given in writing.
- Although I did
not hear argument as to it at the hearing I also wish to set out parts of
Regulation 3 which is entitled "Requirements for contents of conditional fee
agreements providing for success fees". Regulation 3(1) provides as
follows:
"(1) A conditional fee agreement which provides for a success fee –
…
(b)
must specify how much of the percentage increase, if any, relates to the cost
to the representative of the postponement of the payment of his fees and
expenses."
- In Hollins v
Russell [2003] EWCA Civ 718 the Court of Appeal gave comprehensive
guidance as to the consequences of non compliance with the CFA Regulations and
also as to the test to be applied when determining whether there has been
substantial compliance with those conditions. Paragraph 107 of the judgment of
the court states as follows:
"The key question, therefore, is whether the conditions applicable to
the CFA by virtue of Section 58 of the 1990 Act have been sufficiently
complied with in the light of their purposes. Costs Judges should accordingly
ask themselves the following question:
"Has the particular departure from a Regulation pursuant to Section
58(3)(c) of the 1990 Act or a requirement in Section 58, either on its own or
in conjunction with any other such departure in this case, had a materially
adverse effect upon the protection afforded to the client or upon the proper
administration of justice?"
If
the answer is "yes" the conditions have not been satisfied. If the answer is
"no" then the departure is immaterial and (assuming that there is no other
reason to conclude otherwise) the conditions have been
satisfied."
SUBMISSIONS MADE
BY BOTH PARTIES
COMPLIANCE/NON
COMPLIANCE WITH CFA REGULATIONS
- For the
Defendant Mr Hogan submitted that PD Associates had failed to comply with
Regulations 4(2)(c) and 4(2)(d) and that those failures had a materially
adverse effect not only upon the protection afforded to the Claimants but also
upon the proper administration of justice. Because the Claimants had not
adduced evidence as to what was said orally by the CMS representative who
attended the second interview in each case or by the solicitor said to have
conducted a telephone interview in each case, I should infer that the
information which was then supplied would have been similar to the information
which appeared in the written evidence before me. I have already set out the
full text of the CFA agreements and the full text of a "thank you" letter sent
to each Claimant after the CFA was concluded.
- It is convenient
here to set out extracts from the document used by the CMS representative at
his or her second interview with each claimant and which is signed and dated
by the CMS representative and by the intending client.
"CMS Investigations Ltd
To
be read out to client before CFA is signed
Conditional fee agreement
Supported with a fast track indemnity policy
Oral advice and explanation
We
are seeking to determine whether it would be appropriate for you to sign a CFA
(conditional fee agreement) in connection with your claim. A CFA is a no win –
no fee agreement with your solicitor. In other words, your solicitor will
agree not to charge you a fee if you ultimately lose your case.
…
Verbal explanations of points A – F (see CFA)
…
(c)
You must advise your legal representative as to whether you already have an
existing contract of insurance in place, which might cover the risk of
incurring legal costs in this case. You should consider whether you have any
form of legal expense insurance attached to a motor insurance policy, relevant
household insurance or whether you are a member of any organisation such as a
trade union which may provide funding for this claim.
(d)
You should consider the alternative methods of funding this claim which
including private funding, Community Legal Service funding (formally known as
legal aid), payment of costs on an hourly rate basis, legal expenses
insurance, trade union funding or any other possible source of funding. Once
you have considered these alternatives, you must advise your legal
representative whether you wish to pursue the claim on a CFA funded basis.
(e)
Having regard to the circumstances and the value of your claim your legal
representative considers a CFA is the most appropriate form of funding your
case and that it would be desirable for you to take out a contract of
insurance with Fastrack Indemnity Limited to insure your opponent’s costs and
own disbursements if you lose.
The
policy is in itself insured so should you lose your case, there is no
requirement to pay the premium. It covers all your surveyor’s fees and other
disbursements that are incurred during the conduct of your claim, and will
cover your opponent’s legal costs if you lose.
(f)
Your legal representative considers the Fastrack scheme will provide the most
appropriate cover at the most reasonable cost together with numerous
additional benefits. Your legal representative is not an insurance broker,
however, and cannot give advice on all the products that may be
available.
Your solicitor does not have an interest in Legal Direct Limited or
Fastrack Indemnity Limited.
If
you want any further information or clarification on any of the above points,
please do not hesitate to contact your legal representative.
Agent No. ..
Verbal advice given (print name) …
Signature …
Claimant’s signature …
Claimant (print name) …
Date …"
- As to Regulation
4(2)(c) (whether the solicitor considers the client has existing insurance) Mr
Hogan invited me to infer that, rather than giving advice or information, both
the CMS representative and the solicitor had failed or refused to give advice:
reliance was placed on paragraphs (c) (e) and (f) of the "oral advice and
explanation" and on the following clauses of the CFA agreement, H, J(c), J(d),
J(e), J(f) and Schedule 2. (These passages of the CFA are set out in paragraph
19, above.)
- Mr Hogan invites
me to draw similar inferences with regard to Regulation 4(2)(d) (the
requirement to consider other methods of financing the costs). In respect of
the information given by the CMS representative reliance was placed upon the
oral advice and explanation, paras (d) (e) and (f). In relation to the
solicitor reliance was placed upon the following clauses of the CFA agreement,
H, J(c), J(d), J(e) and J(f). He also drew my attention to what was said about
legal aid in the "thank you" letter I have already set out, the relevant words
being:
"Because of recent changes in the availability of Legal Aid, in order
to fund your type of case, you should now be insured against the possibility
of not winning, so that your own costs would be paid (eg surveyor’s report,
etc)."
- As to the
materially adverse effect which Mr Hogan says these failures have had upon the
claimants, he drew my attention to the financial disadvantage to each
claimant. The amounts of interest they have paid on their loan accounts and
the sums if any remaining outstanding after receipt of damages in each case
are set out in the diagram in Appendix 2 to this judgment.
- On the
materially adverse effect he says these failures have had upon the proper
administration of justice Mr Hogan drew my attention to the total amount of
costs claimed in each of these cases (see Appendix 1 to this judgment). In his
submission the Fastrack scheme recommended by the solicitors to their clients
was not only financially disadvantageous to the claimants, it was also
financially disadvantageous to the defendant. There is, he says, a pattern in
each of the cases under which a great deal of expense is incurred and time
spent even before the letter before claim is written.
- In support of
his contention that legal aid was available and should have been used for
these claimants, Mr Hogan produced to me a copy of a judgment given by His
Honour Judge Jones in January 2004 in cases which are not dissimilar from
these cases: Wilton v Rhondda Cynon Taff County Borough Council; Jenkins v
Rhondda Cynon Taff County Borough Council. That judgment relates to an
appeal against certain case management directions made by the District Judge
in those cases. Paragraph 34 of the judgment states as follows:
"Mr
Luba [counsel for the claimants] accepts that – in principle – community
funding is available to bring disrepair claims. He also accepts that had any
legal service providers undertaking community funded work offered their
services to the tenants they might well have been instructed. However, he says
that while publicly funded legal services are theoretically available to those
who need them they are not in practice available. It is to my knowledge, as
the Designated Civil Judge for South and West Wales that there are numbers of
solicitor’s firms practising in the Welsh Valleys who undertake community
funded work. Evidently these firms have not offered their services to the
tenants. What seemed to me to be more significant is that the tenants have not
felt the need to approach them for those services, even though these firms are
close at hand and well known in their localities …"
- Other features
of the Fastrack scheme which Mr Hogan sought to criticise were the levels of
muddle and mistakes indicated in the contractual terms (see in particular
clauses H, I, J(c) and J(d). He also asserts that, just as the solicitor and
his representative appear to pre-judge the suitability of the scheme, they
also pre-judge the appropriate success fee to charge: in the CFAs in all cases
and in the risk assessment form in seven cases the success fee of 100% is pre
printed.
- For the
Claimants, Mr Goodbody started by suggesting that the Defendant’s complaints
in these cases were simply motivated by an unwillingness to pay the Claimant’s
reasonable costs. He drew my attention to paragraph 224 of the judgment in
Hollins v Russell, a paragraph which says the court should be watchful
when considering allegations as to breach of Regulations and should not allow
the Regulations to be used as a means of continuing the bitter trench warfare
which has recently broken out about costs. He confirms that the Regulation 4
advice was given to each Claimant on two occasions before the CFA was
concluded, once by the CMS representative and then again by a solicitor. He
warned me against treating the CMS oral advice and explanation form as if it
were a script. However that document and the attendance record of the
telephone interview were both good evidence that the Regulation 4 advice had
been given and had been given properly. In his submission I should be slow to
go behind these documents. On behalf of Ms McGlinchey, who was sitting next to
him, he stated that she had on occasions advised intending claimants to use
legal aid rather than this scheme. In fact of course most claimants had only
become claimants because of the approach made by the CMS representative and,
therefore, inertia often kept them within the Fastrack scheme. Once within the
umbrella of its arrangements most clients were content to stay within it.
- Mr Goodbody did
not seek to excuse or justify the mistakes in the CFA suggesting that the
client was already bound by insurance. Instead he sought to explain those
errors by saying that this part of the documentation had been cribbed from
another scheme (the Accident Group scheme). He counselled me not to be over
picky as to compliance with the requirement to give written advice if
satisfied that proper oral advice had been given and accepted. He produced to
me (but not to Mr Hogan) a document which I am told is used in the solicitors’
office by way of an aid memoire when conducting a telephone interview with a
client. This document poses questions such as "do you have legal expenses
insurance?" and "are you a member of a trade union". It also invites the fee
earner to describe the "pay as you go" system and "legal aid". I shall save to
the next point his detailed comments as to availability and suitability of
legal aid.
AVAILABILITY OF
LEGAL AID
- The Defendant
relies on the availability of legal aid in these cases in order to challenge
the recovery of the ATE premium. The Defendant also relies on this point in
order to challenge the recovery of a success fee on profit costs even if the
CFA is otherwise enforceable.
- On the legal aid
point and also on the need to consider whether clients have existing insurance
cover, Mr Hogan drew my attention to the Solicitors Practice Rule 15
(solicitors shall … give information about costs and other matters … in
accordance with [the] Solicitor’s Costs Information and Client Care Code …)
and paragraph 4(j) of the Code which is as follows:
"The solicitor should discuss with the client how and when any costs
are to be met and consider:
(i)
whether the client may be eligible and should apply for legal aid (including
advice and assistance);
(ii) whether the client’s liability for their own costs may be covered
by insurance;
(iii) whether the client’s liability for another party’s costs may be
covered by pre-purchased insurance and, if not, whether it would be advisable
for the client’s liability for another party’s costs to be covered by after
the event insurance (including in every case where a conditional fee or
contingency fee arrangement is proposed); and
(iv) whether the client’s liability for costs (including the costs of
another party) may be paid by another person eg, an employer or trade
union."
- In each of the
cases before me it was agreed that the financial circumstances of the
Claimants made them eligible for legal aid. In those circumstances Mr Hogan
submitted that the burden was upon the Claimants to show that their decision
not to apply for legal aid was reasonable. Reliance was placed upon the Court
of Appeal decision in Sarwar v Alam [2002] 1 WLR 125. That case held
that, in modest road traffic accident cases, if an otherwise suitable
alternative method of funding was available (in that case it was BTE insurance
cover) a claimant will normally be expected to use it. Paragraph 41 of the
judgment in that case is as follows:
"In
this case we are concerned only with a relatively small personal injuries
claim in a road traffic accident. We are not concerned with claims which look
as if they will exceed about £5,000, and we are not concerned with any other
type of BTE claim. We have no doubt that, if a claimant possesses pre-existing
BTE cover which appears to be satisfactory for a claim of that size, then in
the ordinary course of things that claimant should be referred to the relevant
BTE insurer."
- The Claimants’
case was that each Claimant had considered the availability of legal aid not
once but twice before the CFA was signed by the solicitor. The first occasion
was at the second interview with the CMS Investigations representative. The
second occasion was in the telephone interview conducted by the solicitor. I
was told that, in fact, some clients did decide to use the legal aid route
and, of course, were left to do so. I was told that no-one was pushed or
steered into the Fastrack scheme. In Mr Goodbody’s submission the Fastrack
scheme enjoyed the following advantages over legal aid:
- it enables the
client to be represented by firms with experience in housing cases;
- it enables
swifter solution to complaints than the legal aid system would
permit;
- it avoids the
hoops, form filling, etc and reporting and limitations etc which abound in
legal aid cases;
- it removes the
possibility of clients being compelled to make payments in respect of costs
(ie legal aid contributions) whilst the claim progresses.
- In legal aid
cases the client has at least at theoretical liability for the opponent’s
costs if the claim is lost (see Section 11 of the Access to Justice Act 1999
and the Regulations made thereunder). In the Fastrack scheme claimants are
insured against such risks. The theoretical liability became practical in
cases where a claimant fails to beat a payment into court.
- Mr Goodbody also
gave an explanation of the statement on legal aid which appears in the thank
you letter each Claimant received after the CFA was completed (set out in
paragraph 46, above). I was told that the recent changes referred to were as
follows: (i) changes in financial limits, (ii) the imposition of the
cost/benefit analysis, (iii) the introduction of the system of franchising so
that local solicitors without a franchise may be unable to help and local
solicitors with a franchise may be too busy to do so, and (iv) the
availability of CFAs. Mr Goodbody accepted that there was an element of non
sequitur in the completion of the statement on legal aid rolled into advice in
favour of legal expenses insurance.
- Mr Goodbody also
sought to justify as reasonable some of the grounds upon which the Claimants
may have chosen the Fastrack scheme rather than legal aid funding even though
that scheme was more expensive for Defendants. PD Associates would visit
Bridgend occasionally and call upon clients. Also some of the Claimants were
known to each other therefore had good cause to be satisfied with the
efficiency of the firm and to be comfortable with them. The Claimants might
well be unfamiliar and less comfortable with other solicitors.
QUANTUM OF
SUCCESS FEE
- For the defence,
Mr Hogan submitted that the claim for a 100% success fee made in all of the
cases (including Mellish) was excessive and unreasonable. The fact that the
figure 100% appeared pre printed in most although not all of the documents
(see Mellish) indicated that no true risk assessment had been made in these
cases. In his submission I should allow no more than 5%.
- For the
Claimants Mr Goodbody conceded that 100% was difficult to justify. Of 53 cases
concluded so far 50 had been successful. However, there were many other cases
in which the solicitors had undertaken work and investigated claims without
commencing them. Also it was likely that the solicitor’s base fees in the
three failed cases would be very much larger than the base fees in any three
successful cases. It was accepted that possession of a housing disrepair
questionnaire which had been checked was of advantage and that, in some cases,
the possession of video evidence might also be of help. However, in his
submission, the primary risk for the solicitors in these cases was that the
tenants may not have given prior notice of disrepair to their landlords. Other
risks were the danger that the landlord might undertake repairs. Such repairs
might derail a case which had not begun. Also they might cause a case to be
allocated to the small claims track thereby preventing the client obtaining
substantial recovery of costs from the landlord. I was told that, in practice,
PD Associates do not make deductions from their client’s compensation.
- Mr Goodbody
invited me to assess the risk in these cases as approximately 66%. This would
justify a success fee of 50%. In other words if three similar cases finished
at a similar point, two would be successful, one would fail and therefore the
two successful cases would have to fund the unsuccessful case. I was told that
50% was by no means the maximum success fee reasonably allowable: success fees
of 67% had sometimes been obtained in cases in Yorkshire.
PROPORTIONALITY
- It was agreed by
both sides that, when comparing costs incurred and benefit gained, I should
take into account base costs only, excluding VAT (as to this, see Giambrone
v JMC Holidays Ltd [2003] 1 All ER 982). It was also agreed by both sides
that, in each of the cases before me, the base costs excluding VAT which were
incurred before the letter before claim was sent exceeded £1,000.
- Counsel did not
agree upon how I should value the benefit gained in these cases. For the
Claimants, Mr Goodbody invited me to take into account the estimated repair
costs, including VAT, set out in the particulars of claim in each of these
cases. These vary between £1,020 and £6,547, the average being £2,491. I must
also, of course, take into account the compensation agreed (on average £1,631,
see para 2 above).
- For the
Defendant, Mr Hogan suggested I pay little regard to the cost of repair
element. In his submission these repairs would be done by the Defendants "in
house". Thus the commercial costs thereof and the notional VAT on such costs
were wholly irrelevant.
FEES PAID TO
FASTRACK LITIGATION SERVICES LTD
- Fastrack
Litigation Services Ltd is the fourth corporate name I have been given in
relation to the insurance and investigation services supplied to the claimants
in these cases. In each of them an invoice has been issued by Fastrack
Litigation Services Ltd claiming £405.38 (including VAT) for a housing report
and a further £70.50 (including VAT) for the provision of video evidence. For
the Claimants Mr Goodbody said these fees related to the introductory work
done by the CMS Investigations representative. He argued that they were
recoverable from the Defendant in each case because they amounted to
investigation fees, the need for which was anticipated by the contractual
documentation: reliance was placed on the CFA, clause I (your obligations to
repay your loan) and clause 3(f) of the Law Society Conditions which states as
follows:
"Our disbursements
Payment we make on your behalf such as: court fees; expert’s fees;
accident report fees; travelling expenses; investigation fees;"
- Mr Goodbody
described the video evidence as having a long term value, for cases which
later went to trial. It was not used by the surveyors when preparing their
reports (see below) nor by the solicitor when completing the allocation
questionnaire.
- In each of the
cases before me fees of £246.75 (including VAT) under a second invoice issued
by Fastrack Litigation Services Ltd have been claimed in respect of a "risk
assessment report". For the Claimants, Mr Goodbody was unable to identify the
report in question. Since the item could not be described as an investigation
fee relevant to the litigation Mr Goodbody did not seek to justify this item
in any of the bills.
FEES FOR
SURVEYORS’ REPORTS
- In each of the
cases a surveyor’s report was obtained before the date of the letter before
claim. In two of the cases the report date is within one month of the date of
the letter before claim (Pritchard and Austin). In most cases the report is
dated several months before the date of the letter before claim. In nine of
the cases the report was made by John C Batterton & Associates of
Wavertree, Liverpool. In seven cases the fee charged is £293.75 (Bowen,
Farrow, Pritchard, Mellish, Austin, Pace, Wintle). In two cases the surveyors
charged £411.25 (Jones and Owen). In Baker the solicitors instructed Stevens
Scanlan of Manchester to prepare a report which they did for a fee of £411.75.
In Simmons the solicitors instructed Street Legal to obtain a surveyor’s
report and they did so via a company or person called W T Hills. I have not
seen W T Hills’ invoice but Street Legal’s invoice is for the total sum of
£511.13. The Simmons correspondence file contains a copy letter dated 23
January 2003 addressed to Hills Chartered Quantity Surveyor of 2 Cathedral
Road, Cardiff. It refers to seven reports prepared for PD Associates’ clients
and asks the surveyor to alter the reports to show that they were prepared for
the benefit of PD Associates rather than for the benefit of Street
Legal.
- For the
Claimants, Mr Goodbody explained that different surveyors had been instructed
in two cases because Battertons at that time had too many cases to handle. He
could give me no information as to how the fees in those two cases were fixed
and, indeed, no such information appears in the correspondence files.
- At the hearing I
did not notice that on two occasions (Jones and Owen) Battertons had charged
more than their usual fee of £293.75. In Jones, although a fee of £411.25 was
paid (in July 2002) there is no explanation on the file as to why a larger sum
was appropriate in this case. In Owen the papers include two copies of
invoices numbered 94 and dated 16 April 2002. One is for the sum of £293.75
and the other is for the sum of £411.25. On the bank statement on the file
(dated 17 January 2003) the sum of £295.75 (sic) is shown as paid in
January 2002 and a second payment of £411.25 (in May 2002) is marked "over
payment". The file contains a copy letter from PD Associates to First National
Bank dated 9 January 2003 which refers to two over payments in the Owen file
totalling £841.25 and enclosing the solicitors’ cheque in settlement. From the
papers which I have seen the benefit of that credit has not yet reached Mr
Owen’s loan account with First National Bank Ltd.
- For the
Defendant, Mr Hogan criticised the sums spent on surveyors’ fees as
unnecessary and disproportionate. He submitted that although the pre action
protocol for housing disrepair does not apply to these cases, the Practice
Direction on protocols does apply. I set out below relevant extracts from that
Practice Direction:
"Pre Action Behaviour in Other Cases
4.1
In cases not covered by any approved protocol, the court will expect the
parties, in accordance with the overriding objective and the matters referred
to in CPR 1.1(2)(a), (b) and (c) to act reasonably in exchanging information
and documents relevant to the claim and generally in trying to avoid the
necessity for the start of proceedings.
4.2
Parties to a potential dispute should follow a reasonable procedure, suitable
to their particular circumstances, which is intended to avoid litigation. The
procedure should not be regarded as a prelude to inevitable litigation. It
should normally include –
…
(d)
the parties conducting genuine and reasonable negotiations with a view to
settling the claim economically and without court proceedings.
…
4.9
The resolution of some claims, but by no means all, may need help from an
expert. If an expert is needed, the parties should wherever possible and to
save expense engage an agreed expert.
4.10 The parties should be aware that, if the matter proceeds to
litigation, the court may not allow the use of an expert’s report, and that
the cost of it is not always recoverable."
- I am required to
take into account compliance or otherwise with the Practice Direction on
protocols when assessing costs. Set out below is an extract from CPR 44.5(3).
CPR 44.5 is entitled "Factors to be taken into account in deciding the amount
of costs".
"The court must also have regard to –
the
conduct of all the parties, including in particular –
(i)
conduct before, as well as during, the proceedings; and
(ii) the effort made, if any, before and during the proceedings in
order to try to resolve the dispute …"
- Mr Hogan submits
that, in these cases, PD Associates did behave as if litigation was
inevitable. In all of the cases except one (Austin) the period from CFA to
letter before claim is longer than the period from letter before claim to
settlement. The details appear in Appendix 2 to this judgment. In three of the
letters before claim very detailed descriptions of the defects and reporting
dates were given (Owen, Pritchard and Austin). In all of the other cases a
document described as a "Scott schedule" was enclosed. All of the letters
stated a deadline within which the Defendant was to admit liability and/or
make satisfactory proposals otherwise proceedings would be issued. In all but
two of the cases (Bowen and Pace) the deadline specified was 14 days. In Bowen
proceedings were in fact issued before the deadline expired.
- As to the
surveyor’s fees incurred and also on the topic of proportionality generally,
Mr Hogan drew my attention to several passages in the judgment of His Honour
Judge Jones in Wilton v Rhondda Cynon Taff County Borough Council; Jenkins
v Rhondda Cynon Taff County Borough Council, paragraphs 94 to 104.
Paragraph 103 of that judgment is as follows:
"In
my judgment, the District Judge was well within the spirit and letter of the
CPR and well within his discretion in adopting the course he did. The
Claimant’s solicitors chose to incur the disproportionate cost of an expensive
expert’s report in relation to each of these cases without any notice to or
consultation with the Defendant whatsoever. As the District Judge clearly
considered, directly contrary to the Rules, that Claimants’ solicitors made no
attempt to save expense, deal with the cases proportionately or observe the
provisions with regard to expert evidence."
- For the
Claimants, Mr Goodbody submitted that the fees paid for experts were neither
unnecessary nor disproportionate. Taking an hourly rate of £125, the fee
included in most of the cases would cover only two hours work without making
any allowance for extra costs of typing or producing photographs. Allowing one
hour for local travel, the other hour would represent time spent visiting the
premises and then preparing and correcting the report later. Mr Goodbody
criticised the defendant for not revealing the amount of fees charged by the
Defendant’s surveyor in these cases. In Mr Goodbody’s submission the
surveyor’s report was necessary at an early stage in order to assist the
solicitors complete the allocation questionnaire. Housing disrepair cases will
be allocated to the small claims track unless either the amount of
compensation reasonably sought exceeds £1,000 or unless the value of the
repairs specified exceed £1,000.
MY
DECISIONS
NON
COMPLIANCE WITH CFA REGULATIONS
- In my judgment
PD Associates and their agents have failed to comply with the obligations
placed upon them by Regulation 4(2)(c) (whether the solicitor considers the
client has existing insurance). Paragraph (d) of the oral advice and
explanation (see para 37 above) wrongly places on the client the
responsibility for considering the insurance questions. In the CFA, which is
signed by the client on the same date that he signs the oral advice and
explanation form, clause H falsely suggests that the client is already bound
to take out insurance with Fastrack Indemnity Ltd. Because of that clause J(e)
wrongly states that the solicitors or their agents are "unable to discuss …
other legal expenses policies" and Schedule 2 of the CFA suggests the
possibility of the client seeking "independent legal advice in this regard".
Mr Goodbody is correct to say that I should consider what oral advice was
given to the client and, if I find that sufficient, I should pay little heed
to the incorrect written advice that was supplied. However, the Claimants put
before me no evidence which suggests that the oral advice given is likely to
have been any better than the written information supplied. Indeed, the fact
that a record of the oral advice given by the CMS representative is, in each
case, signed and dated indicates to me the importance which I should attach to
it.
- In my judgment
PD Associates or their agents have also failed to comply with the obligations
placed upon them by Regulation 4(2)(d) (the requirement to consider other
methods of financing the costs). The mistakes and failings in the written
documents which I have already described in relation to Regulation 4(2)(c)
also apply here. The Claimants give me no reason to think that the CMS
representative would have given a tolerable explanation of the availability of
legal aid to these Claimants. It is, theoretically, possible that the
solicitor may have given such an explanation in the telephone interview
despite the mistakes made in the CFA and in the thank you letter reference to
legal aid. The requirement to give impartial advice on legal expenses
insurance and on legal aid where relevant is or ought to be obvious to every
solicitor given its inclusion in the Solicitor’s Costs Information and Client
Care Code. Had there not been a strong pointer to the contrary I would have
presumed that the solicitors had given proper advice.
- I do not
criticise PD Associates for their use of checklist attendance notes of their
telephone interviews. As a general rule it is perfectly acceptable and
appropriate for a Claimant’s solicitor to give evidence as to the oral advice
given by producing check lists and tick box forms which he or she completed at
the time the advice was given. However, the interview records produced in
these cases are far too brief and too generalised to be of any real assistance
to me. In these eleven cases, there is nothing in the attendance records of
the telephone interviews which assists PD Associates to prove that proper
advice was given. The words "legal aid" nowhere appear in those records. In
nine of the cases no matters arising are recorded. In the remaining two cases
brief notes are recorded concerning health problems (Jones) or concerning the
client’s desire to speak to a relative (Farrow).
- I have come to
the conclusion that, the most powerful indication as to whether or not PD
Associates provided the information required is the fact that all of these
Claimants chose to rely on the Fastrack scheme rather than the legal aid
scheme. In my judgment all of them should have been told to seek legal aid. I
shall set out my reasons for this conclusion in my decision on the next issue.
There does not appear to me to be any likely reason why, had they not been
given good advice, they would not have taken it.
- In my judgment
PD Associates have also failed to comply with the obligations placed upon them
by Regulation 3(1)(b) (the requirement to specify the fee deferment element in
the success fee). Neither the form of CFA nor the risk assessment forms
produced in seven of the cases enable the client to make any sense of the
third paragraph in clause E of the contract.
- I am prepared to
accept that the failure to comply with Regulation 4(2)(c) would not by itself
produce a materially adverse effect upon the protection afforded to the
Claimants in these cases. The possibility that they already had before the
event cover seems to me minimal. However, in my judgment the failure to comply
with Regulation 4(2)(d) has undoubtedly had a materially adverse effect upon
the protection afforded to these clients. It has brought them into the
Fastrack scheme which, in ways I shall explain hereafter, has exposed them to
unreasonably high and disproportionate expenses the costs of which are not
covered by the insurance obtained. That cost has been arranged by means of a
loan account charging interest at 13.9% per annum. The unrecovered expenses
and the interest payable under the loan are likely to consume most if not all
the monetary compensation these Claimants obtained.
- Given my
decision as to Regulation 4(2)(d) it is not strictly necessary for me to
express any decision on whether the breach of Regulation 3(1)(b) has had a
materially adverse effect upon the Claimant’s protection. I see the force of
an argument that its effect is theoretical only: the other disadvantages of
the Fastrack scheme are likely to dissipate most, if not all, of any financial
compensation each Claimant obtains and their other financial resources are
such as to make it unlikely that the solicitors would ever pursue them for any
part of the success fee which they had not recovered from the Defendant.
- In my judgment
the failure to comply with Regulations 4(2)(c) or 4(2)(d) have had a
materially adverse effect upon the proper administration of justice. By their
failures the solicitors have steered these Claimants into litigation which has
caused them and the Defendant to incur unnecessary or unreasonable expenses.
The solicitors knew or should have known that this scheme would be
disadvantageous for their clients. The solicitors knew or should have known
that litigation under this scheme was run in a disproportionate way. The
solicitors knew or should have known that some of the costs they claim in
successful cases are improper. I have in mind here in particular profit costs
claimed by way of backdating, the success fee on profit costs, the fees paid
to Fastrack Litigation Services Ltd and surveyors’ fees to the extent that
they exceed £293.75.
- The consequence
of my decision that the CFAs are unenforceable is that the Defendant’s maximum
liability for costs in these cases is in respect of paid disbursements and any
costs of assessment allowed.
AVAILABILITY OF
LEGAL AID
- The proper test
for me to apply here is whether the Claimants acted reasonably in instructing
a solicitor on CFA terms with insurance rather than instructing a legal aid
solicitor. If their choice of funding was reasonable, the reasonable costs
they incur would be recoverable even if it would lead to extra expense for the
Defendant. I should not approach this topic by considering whether a legally
aided solicitor could reasonably have conducted these cases (cf R v Dudley
Magistrates Court ex p. Power City Stores Ltd (1990) 154 J.P.654, DC). In
my judgment the choice made by these Claimants to participate in the Fastrack
scheme was not reasonable. The advantages which Mr Goodbody claimed for the
scheme are not made out. PD Associates have not shown themselves to be adept
at conducting housing disrepair cases. The Claimants have not obtained a
swifter solution to their disrepair problems than the legal aid system would
have permitted. The form filling and reporting requirements under the Fastrack
scheme are similar to those in the legal aid scheme. I have in mind here
various parts of the ATE policy including item VII, the definition of approved
settlements, exclusion H and conditions 1 and 2. The avoidance of having to
make legal aid contributions is academic given the financial resources of
these Claimants. The last advantage suggested, insurance protection of use
particularly where a claimant fails to beat a payment into court, is negated
by the fact that unrecovered items of costs and unrecovered interest on the
disbursement loan will dissipate most if not all of any monetary compensation
even if no payments into court are made. For these and other reasons I have
already stated that these Claimants should have been advised to rely upon
legal aid.
- I have not put
into the scales against these Claimants the views as to availability of legal
aid expressed by His Honour Judge Jones in the Rhondda Cynon Taff County
Borough Council cases cited to me. I will put into the scales in their
favour the fear often expressed recently as to there being legal aid deserts
in certain parts of the country. I do not accept that those fears would lead
any reasonable claimant, properly advised, to accept instead the heavy
disadvantages of the Fastrack scheme.
- I am persuaded
that Mr Hogan’s submission that I should apply the decision in Sarwar v
Alam [2002] 1 WLR 125, by analogy, is correct. I am also influenced by
paragraphs 56 and 57 of that judgment which I now set out:
"[56] We are not, however, persuaded by the Law Society’s contention
that there is such a strong public interest in maintaining a client’s freedom
of choice of legal adviser that this should override the appropriateness of a
claim as small as that with which we are concerned on this appeal being
handled by a BTE insurer with or without the assistance of a panel solicitor.
The philosophy contained in CPR 1.1(2)(c), and the express provisions of CPR
44.5, require the court to ensure that no costs are incurred which are not
reasonable and proportionate. While we would not interpret the sensible
non-exhaustive guidance given in paragraphs 11.7 to 11.10 of the Costs
Practice Direction as if they were the words of a statute, they point the
reader towards an inquiry into the availability of alternative funding
arrangements which might be less expensive. The same principle is now set out
in regulation 4 of the Conditional Fee Agreements Regulations 2000.
[57] In R v Legal Aid Board ex parte Duncan [2000] COD 159 the
Divisional Court rejected the applicant solicitors’ contention that their
clients had a common law right to representation by the solicitor of their
choice notwithstanding that they were unable to pay for the solicitor’s
services themselves and the limitations on the choice of a publicly funded
solicitor were prescribed by Parliament. We do not consider that it is
necessary to repeat here the powerful dictum of Neuberger J in Maltez v
Lewis (2000) 19 Const LJ 65 quoted in that judgment. It is sufficient to
record that he observed that the right of any citizen to be represented by
advocates and/or solicitors of his or her choice may be cut down by
circumstances. One of the circumstances which may cut it down is the
consideration that the cost of instructing a solicitor of the client’s choice
(and protecting the client from the risk of paying the other side’s costs) is
disproportionate to the value of the proposed claim when an alternative,
reasonable, method of advancing the client’s interests with the help of an
appropriately qualified lawyer is available."
QUANTUM OF
SUCCESS FEE
- Having heard
argument as to it, it is appropriate for me to state my decision as to the
quantum of the success fee in these cases in case it transpires that I am
wrong to say the CFAs in these cases are unenforceable.
- The assessment
of the success fee in a particular case is a value judgment about which
reasonable people may reasonably disagree. I accept that there is little
guidance in the statutory materials or, in relation to housing disrepair
cases, in case law, which simplifies the task. However, that cannot be used to
justify the course which PD Associates chose to adopt in these cases, ie, to
make no real risk assessment at all but instead to claim the maximum 100%, a
figure which they could not reasonably seek to justify at the hearing before
me.
- The 5% figure
suggested by Mr Hogan would be correct if I should apply by analogy the ruling
made in Halloran v Delaney [2003] 1 WLR 28: in RTA cases which are as
simple as can be and which settle pre issue, the court should award a success
fee on the basis that it would be unreasonable to agree more than a two step
success fee in which the first step was 5%. However I do not think it right to
apply that ruling by analogy. In The Claims Direct Test Cases [2003] 4
All ER 508 it was explained that there is no requirement to agree a two step
success fee in any case which is not the simplest. Also, these cases did not
settle pre issue. Although Mr Hogan makes the point that the litigation was
conducted so aggressively as to leave little time for pre issue settlements, I
observe that, in fact, defences were filed in six of these cases (Bowen,
Simmons, Baker, Pritchard, Mellish and Pace).
- I take judicial
notice of the statistics set out in the Fenn & Rickman Report published on
the Civil Justice Council website. This indicates that an appropriate single
step success fee for all RTA cases (including the most difficult as well as
the most simple) would be 14.25%. On the basis of this report the Civil
Procedure Rule Committee is now in the process of implementing rules under
which, following mediation between interested bodies, the success fee in RTA
cases will be fixed at 100% for cases which reach trial reducing to 12½% in
all other RTA cases. The figures just quoted apply to profit costs only. A
slightly different system is proposed for counsel’s fees.
- There is no
statistical or other information available to me which indicates whether
housing disrepair cases are more or less risky than RTA cases. Mr Goodbody
submitted that the primary risk for solicitors in these cases is the risk that
the tenant may not have given prior notice of the disrepair to their
landlords. In my judgment that risk must be minimised in these cases given
that, on two occasions, a CMS representative has called upon the Claimant and
compiled or reviewed a housing disrepair questionnaire which specifically
deals with this point. Nevertheless, in the absence of any other information
which is particular to these cases, my expectation is they are likely to be
more risky than RTA cases. Putting myself in the position of the solicitors at
the time these agreements were made (in August to October 2001) the reasonable
sum to specify by way of the risk element of a single step success fee then
would exceed the maximum figure suggested for RTA cases in Callery v
Gray [2001] 1 WLR 2112, a case which was widely reported earlier that
year. That figure was 20%.
- In all the
circumstances the single step success fee I would allow in respect of the risk
element only in these cases is 25%.
PROPORTIONALITY
- I am in no doubt
that, in the circumstances of these cases, it was plainly disproportionate to
incur base costs which, excluding VAT, exceed £4,000 on average. I am also of
the view that it was unreasonable to incur base costs exceeding £1,000
excluding VAT before sending off a letter before claim. In valuing the benefit
gained I would take into account the costs of repairs including notional VAT
thereon. Had proportionality been the only preliminary decision I had to make
I would now proceed to assess the bills applying the dual test of necessity as
well as reasonableness to all items. In fact of course this is not the only
preliminary decision I must make. On the basis of the other decisions included
in this judgment the question of proportionality has become academic. I have
already disallowed all profit costs and unpaid disbursements (eg counsel’s
fees and costs draftsman’s fees). I am about to disallow certain paid
disbursements (see below). According to my arithmetic the costs which may be
allowed in any of the eleven bills before me cannot now exceed £1,000 plus the
costs of the detailed assessment. The largest remaining bill is in Bowen
(£853.75 including court fees of £430, Street Legal’s fee of £130 and a
surveyor’s fee). The smallest bill is in Jones (£323.75 including a court fee
of £30 and a surveyor’s fee). That I should take these reduced figures as my
starting point for the overall proportionality test is consistent with the
decision made by Morland J in Giambrone v JMC Holidays Ltd [2003] 1 All
ER 982 (see in particular paragraphs [39], [40] and [46]).
FEES PAID TO
FASTRACK LITIGATION SERVICES LIMITED
- Although the
linkage between Fastrack Litigation Services Ltd and CMS Investigation Ltd has
not been shown to me I accept that, for the purposes of this judgment, the fee
of £475.88 (including VAT) for a housing report and video evidence relates to
work done by the CMS representatives at one or both of the interviews he or
she conducted. In my judgment the Claimants are not contractually bound to pay
these fees. This work would have been done whether or not the Claimants had
decided to proceed with their claims. There is not the glimmer of a suggestion
in any of the documents that I have seen that the Claimants were ever told of
these expenses or ever agreed that their liability to pay fees would be
retrospective. In his arguments in support of these fees Mr Goodbody dwelt
upon their value in the progress of the claims. In doing so he failed to
address what is always the preliminary issue in any detailed assessment, the
indemnity principle. I must first look at the cost of this work to the
Claimants. Questions of value can arise only where there is some cost.
- Points similar
to the points now before me also arose in Master Hurst’s decisions in The
Claims Direct Test Cases, Tranche 2 (a decision which has not been
appealed) and The Accident Group Test Cases Tranche 2. An appeal in
The Accident Group Test Cases Tranche 2 is listed for hearing by the
Court of Appeal in April 2004. In that case each panel solicitor agreed to
appoint a company (AIL) as its agent for the purposes of investigating,
collating and assessing information regarding claims (see [340]). The
arguments in relation to those fees are set out in paragraphs [341 to 373]. I
would particularly draw attention to paragraph [367]. In that case Master
Hurst disallowed the fees claimed because the clients had never expressly or
impliedly authorised the solicitor to incur them (para [379]). For
completeness I should add, although this is not relevant in the cases before
me, that Master Hurst also ruled the payments to AIL to be illegal referral
fees and therefore irrecoverable for that reason.
- In the absence
of any argument at all to justify the second fee of £246.75 including VAT paid
in respect of a "risk assessment report" I disallow this fee also.
FEES FOR
SURVEYORS’ REPORTS
- In my judgment
the surveyors’ reports in these cases were of use to the solicitors in two
particular ways. First, they enabled the solicitors to include full details of
the housing defects in their letters before claim. Secondly, they enabled the
solicitors to estimate more accurately whether, if proceedings were commenced,
the claim was at risk of being allocated to the small claims track. I do not
accept that it was necessary to obtain surveyors’ reports in any of these
cases and had I made a preliminary ruling on proportionality against these
claims I would have disallowed the surveyors’ fees entirely. However, for
reasons already given, I will not apply the dual test of necessity and
reasonableness to all items in these bills.
- Mr Hogan
presented a forceful case for saying that it would be appropriate for me to
disallow these fees on conduct grounds. However, having considered the matter
carefully, I take the view that it was reasonable for these Claimants to
obtain these reports. It certainly cannot be said that, in cases such as these
no reasonable claimant properly advised would have commissioned a surveyor’s
report so early. Although they are experts’ reports the strictures on expert
evidence in the Practice Direction on Protocols do not apply to them: had any
of these cases gone to trial I am sure that further expert evidence would have
been obtained then and that evidence might well have been from a single joint
expert. I accept that PD Associates’ letter style and actions were aggressive
and war-like throughout. However, I do not think that is, by itself,
sufficient to render unreasonable an item of costs which is otherwise
reasonable. (For the avoidance of doubt, I should make clear that I express no
opinion on the reasonableness of early surveyors’ reports in cases which are
governed by the pre action protocol for housing disrepair.)
- On the question
of quantum, neither parties gave me any detailed information as to the sum I
should allow. The Claimant’s case did not include any explanation of how
Battertons’ fee of £250 plus VAT was originally arrived at or why it was
departed from in some cases. Although it was invited to do so the Defendant
did not state what fees it pays to its expert nor what fee would be an
appropriate fee for a Bridgend surveyor to charge for a short house buyers
report.
- In the absence
of any other information to assist me I shall set what I consider to be a fair
sum based upon the time reasonably spent by and an hourly rate for a fee
earner in a surveyor’s office. I would allow an hourly rate of £80 for an
appropriate fee earner from a local surveyors’ office, 45 minutes for
attendance at the dwelling, 45 minutes for local travel and 1½ hours for
preparing, checking and signing the report. Since this would amount to £240
plus VAT, in these circumstances I will allow in each case the amount actually
paid in most cases (£250 plus VAT of £43.75). The higher sums paid to
Battertons. Stevens Scanlan and W T Hills are not justified to the extent that
they exceed £293.75.
TIME FOR
APPEALS
- The last hearing
in this case was on 30 January 2004 and the next hearing, other than for
delivery of this judgment, is listed for 17 May 2004. At the last hearing I
was asked to extend the time for applying for permission to appeal to 17 May
2004. I refused that application saying that the normal time limit fixed by
the rules was appropriate. However, I now take the view that the ordinary time
limit is inappropriate. My ruling that the CFAs in these cases are
unenforceable may well have an effect upon the Claimant’s further
representation in these cases. I am now of the view that the Claimants, and PD
Associates should be given more than the usual amount of time to consider
their positions. I therefore extend the time for appealing this judgment so
that it will not start to run until 17 May 2004.
- I would like to
pay a compliment to counsel for both parties for the clarity and succinctness
of their submissions which necessarily ranged over many points, some of which
were novel and difficult.
