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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 defendants 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 claimants solicitors agreed to withdraw this part of the application in advance of the hearing.

The only outstanding issue was in relation to costs. The claimants 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 claimants 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 respondents costs of the application for pre-action disclosure.

The District Judge decided that it was reasonable for the claimants 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 defendants 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 claimants 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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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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