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The end of PADs?
14 December 2010
The recent decision of Ivey v London Borough of Newham
(17 November 2010 - Willesden County Court) gives some hope to
local authorities seeking to defend applications for costs on
pre-action disclosure applications.
The facts
The claimant made an application against the London Borough of
Newham for pre-action disclosure and for the council to make a
declaration as to liability.
As the council had been unable to provide disclosure in
accordance with the pre-action protocol, the application was not
opposed and, before the hearing, the defendant’s solicitors agreed
the terms of an order for disclosure.
The application for a declaration as to liability was opposed as
the court has no power to award this and the claimant’s solicitors
agreed to withdraw this part of the application in advance of the
hearing.
The only outstanding issue was in relation to costs. The
claimant’s solicitors contended that there had been a breach of the
pre-action protocol, that they had been entitled to issue their
application and that accordingly they should be entitled to their
costs.
The council did not dispute that the claimant was entitled to
issue the application for disclosure but disputed that she was
entitled to her costs and contended that, at best, the correct
order was “no order as to costs”.
A reminder of the rules
The general rule on costs on an application for pre-action
disclosure is that the court will award the defendant his costs of
the application and of complying with any order made on the
application (CPR Part 48.1(2)).
The court may however, make a different order, considering all
the circumstances, including the extent to which it was reasonable
for the defendant to oppose the application and whether the
defendant had complied with any relevant pre-action protocol.
The defendant here contended that it has not opposed to the
claimant’s application; indeed, the defendant had consented to
provide the claimant with disclosure.
The Council accepted that it was in breach of the pre-action
protocol by failing to provide a liability response but submitted
that the reason for this was due to staff shortages at the
defendant council which had prevented the completion of liability
investigations and the collation of relevant documentation.
They also relied on the Court of Appeal decisions in Bermuda
International Securities Ltd v KPMG [2001] and SES
Contracting v UK Coal Plc [2007] which held that the court may
depart from the normal rule as to costs where it was unreasonable
for the respondent to oppose the application or where the manner of
his opposition was so unreasonable as to make it appropriate to
require him to bear the whole of both parties' costs. The council
submitted that these factors did not apply here.
Decision
The District Judge accepted that Newham had not opposed the
application but had agreed to provide disclosure. He also found
that while the council was in breach of the pre-action protocol, in
the current economic climate local authorities with reduced staff
levels would inevitably find it hard to comply with the protocols
and that, while the breach was a factor the court could consider in
deciding whether to depart from the normal rule, it was not
sufficient on its own to depart from the general rule which is that
the applicant should pay the respondent’s costs of the application
for pre-action disclosure.
The District Judge decided that it was reasonable for the
claimant’s solicitors to issue their application and that
accordingly, they should be awarded the costs of issuing the
application. They were awarded the £75 court fee together with the
costs of filing and serving the application, which he summarily
assessed at £150 inclusive.
The District Judge did however see no reason why he should
depart from the general rule that the claimant pay the defendant’s
costs of the application and of complying with the application,
which he awarded to Newham in full, with the costs of compliance to
be assessed in default of agreement.
Implications
This is a welcome decision for local authorities struggling to
comply with their obligations under the pre-action protocols in the
current economic climate due to limited resources.
The decision does not provide a ‘get out of jail card’ to not
comply with the protocols but suggests that, if evidence can be put
before the court to explain why the defendant has been unable to
comply, the court may, in considering all of the circumstances,
determine that this is sufficient reason to not depart from the
general rule on costs.
The decision should also deter claimant’s solicitors from
habitually pursuing unnecessary applications for pre-action
disclosure knowing that costs may be awarded against them and it
also reminds claimants that they should not apply for orders that
the defendant admit liability at the pre-action stage, as the court
has no power to make this order.
Steven Conway acted for the London Borough of
Newham.
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