COURT REFUSED PERMISSION TO SERVE RESPONDENT’S NOTICE LATE: DENTON PRINCIPLES APPLIED

June 14, 2021 · by · in Appeals, Relief from sanctions

There is a separate aspect of the  decision of Mr Justice Lavender in SGI Legal LLP v Karatysz [2021] EWHC 1608 (QB) that warrants attention, the judge’s refusal to extend time for service of a respondent’s notice.

“The purpose of a respondent’s notice is to identify the issues in the appeal. That is important for the proper management of the appeal, whether or not those issues are subsequently narrowed as a result of a decision in another case.”

 

THE CASE

The claimant had instructed the defendant solicitors to act on her behalf in a personal injury action.  The matter settled and the defendant deducted sums from the damages in addition to the fees payable by the defendant.  The claimant issued proceedings challenging the deduction of damages. At a hearing the District Judge held:

  1. That the amount of costs the solicitors were entitled to receive were limited to the costs recovered from the insurers.
  2. That the solicitors should pay the costs of the assessment given that the bill had been reduced by more than one fifth.

The defendant appealed (successfully).  The claimant/respondent attempted to file a respondent’s notice date.

THE JUDGMENT ON THE LATE RESPONDENT’S NOTICE

On appeal the judge refused the application to serve a respondent’s notice out of time.
(2)(i) The Respondent’s Notice
    1. The time for filing a respondent’s notice expired on 27 February 2020, pursuant to CPR 52.13(4)(a) & (5)(a)(i). The Claimant did not file a respondent’s notice, despite the fact that, pursuant to CPR 52.13(2)(b), the Claimant was obliged to file a respondent’s notice if she wished to ask the court to uphold the district judge’s decision (i.e. the limitation decision) for reasons different from or additional to those given by the district judge.
    1. As to that, one potential basis for asking the court to uphold the limitation decision for reasons different from or additional to those given by the district judge was that:
(1) subsection 74(3) of the Solicitors Act 1974 applied; but
(2) the Defendant could not rely on CPR 46.9(2) as disapplying subsection 74(3) because:
(a) CPR 46.9(2) could only be invoked by a solicitor if his client had given informed consent to the relevant written agreement; and
(b) the Claimant had not given informed consent to that written agreement.
    1. That had, after all, been the Claimant’s primary case for contending that the base costs which the Defendant was allowed to charge the Claimant were limited to the amount recovered inter partes.
    1. It is relevant to note that, when this appeal was commenced, the Claimant’s solicitors and counsel were involved in at least one other appeal which raised some similar issues, namely Belsner v Cam Legal Services Ltd, which was an appeal against an order made by the same district judge on 14 August 2019. Belsner v Cam Legal Services Ltd was an appeal in which:
(1) The construction issue did not arise, because it was not disputed by the parties to that appeal that subsection 74(3) of the Solicitors Act 1974 applied, even though that was, like the present case, a case in which a claim had been made under the Protocol and had been settled before a claim form was issued.
(2) There was a dispute whether a solicitor who wished to rely on a written agreement pursuant to CPR 49(2) had to obtain his client’s informed consent to that agreement. I decided that informed consent was necessary.
(3) There was also a dispute whether, on the facts of that case, the client had given informed consent to her written agreement with her solicitor. I decided that, on the facts of that case, the client had not given informed consent.
    1. At the Claimant’s request, I made an order on 5 June 2020 extending the time for filing the Claimant’s skeleton argument to 14 days after judgment was handed down in Belsner v Cam Legal Services Ltd. That judgment was handed down on 16 October 2020.
    1. In a letter to the court dated 22 October 2020, the Claimant’s solicitors stated, inter alia, as follows:
“In light of the judgment in Belsner and on consideration of the matter by leading counsel the claimant would wish to serve a respondent’s notice which would seek to contend that the District Judge should also have found that s74(3) Solicitors Act 1974 applied. (It would appear – although it is not entirely clear – that the District Judge found that there were not proceedings in the County Court and that therefore s74(3) of the Act did not apply.)”
    1. Thus, for the first time, the Claimant indicated her desire to raise the construction issue on this appeal. The Claimant’s solicitors went on to express concern that the Defendant would not have sufficient time in which to consider the proposed respondent’s notice in advance of the date fixed for the hearing of the appeal, 17 November 2020.
    1. The Claimant filed and served her skeleton argument on 27 October 2020 and also purported to file and serve a respondent’s notice. In section 6 of that notice the Claimant stated that she wished the court to uphold the district judge’s order on different or additional grounds because:
“the judge was wrong to find that s. 74(3) Solicitors Act 1974 did not apply to this claim. Proceedings should be construed to include claims that settle within the MoJ Portal.”
    1. On 30 October 2020 the Claimant issued an application notice seeking an order extending the time for filing the respondent’s notice. The evidence relied on in the application notice was the following statement by Mark Carlisle, a consultant with the Claimant’s solicitors:
“1. The Respondent waited until the High Court determined the issue of whether informed consent was required to displace the presumptions as (sic) s. 74(3) and r. 46.9(2) in Belsner v CAM Legal [2020] EWHC 2755 (QB). The High Court found that informed consent was required. Had it found to the contrary, the issues raised in the Respondent’s Notice filed on (sic) would not be relevant. The question whether s. 74(3) and r. 46.9(2) apply to cases that settle within the MOJ portal was fully argued at first instance. The Appellant is fully aware of the issue and will suffer no prejudice by having to address this point at the appeal.
2. Those representing the Respondent alerted the Court, and the Appellant, to the proposed Respondent’s Notice on 22nd October, by way of a latter to the Court, which was copied by email to the Appellant’s representatives.”
    1. On 2 November 2020 I directed that I would hear the Claimant’s application at the hearing of the Defendant’s appeal.
(3) The Claimant’s Application
    1. The legal background to some of the issues which the Claimant sought to raise by her respondent’s notice is set out in paragraphs 32 to 63 of my judgment in Belsner v Cam Legal Services Ltd. I do not propose to repeat what I set out in those paragraphs. However, my judgment did not deal with the construction issue because, as I have explained, that was not an issue in Belsner v Cam Legal Services Ltd.
    1. On behalf of the Claimant, Mr Kirby submitted that the Claimant’s application was in substance an application for relief from sanctions and that, applying the well-known three-stage test:
(1) While the delay from 27 February to 27 October 2020 was significant, the breach of the CPR was neither serious nor significant, since:
(a) the issue which the Claimant sought to raise by the respondent’s notice had been fully argued before the district judge; and
(b) ground 2 in the grounds of appeal addressed at least part of the issues which the Claimant sought to raise by the respondent’s notice.
(2) The reason for the default was that the Claimant had been unable until judgment was handed down in Belsner v Cam Legal Services Ltd to give proper consideration to the need for a respondent’s notice because, if I had decided against Ms Belsner on the issue as to the need for informed consent under CPR 46.9(2), the question as to the application of subsection 74(3) of the Solicitors Act 1974 would have become otiose. Mr Kirby quite properly accepted that there had been a deliberate choice not to file a respondent’s notice in time.
(3) Having regard to all the circumstances of the case, I ought to grant the relief sought, particularly because:
(a) The respondent’s notice did not raise a new point which would ambush or surprise the Defendant. It had been fully argued before the district judge. The construction issue could be dealt with at the hearing of the Defendant’s appeal. The question whether the Claimant gave informed consent for the purposes of CPR 46.9(2) had been raised by the Defendant itself in ground 2 of the grounds of appeal.
(b) There was likely to be no real prejudice to the Defendant.
(c) The point was an important one to the profession and needed to be dealt with at High Court level.
    1. There was no evidence before me as to whether the construction issue had or had not been raised in other similar appeals. Mr Marven’s recollection was that it had and Mr Kirby’s was that it had not.
    1. For the Defendant, Mr Marven submitted, in particular, that:
(1) The breach of the CPR was both serious and significant.
(2) There was no good reason for it.
(3) He was not ready to deal with the construction issue at the hearing. Although it had been argued below, the Claimant had advanced on appeal arguments which had not been advanced before the district judge, namely the arguments set out in paragraphs 47 to 57 of the Claimant’s skeleton argument, which advocated, by reference to two authorities, an “updating construction” of subsection 74(3) of the Solicitors Act 1974.

THE JUDGE’S DECISION ON THIS ISSUE

    1. In my judgment. the Claimant’s breach of the CPR was both serious and significant. It is a serious and significant matter that points which could have been taken in February 2020 were not raised until 8 months later, shortly before the hearing of the appeal, at a time when the Claimant’s own representatives were concerned that the Defendant would not have adequate time in which to respond.
    1. Moreover, there was no good reason for the Claimant’s failure to file a respondent’s notice. An obvious question for the Claimant and her lawyers to consider was whether to assert on this appeal that, if her alternative case on Point 2 (on which she had succeeded before the district judge) was not upheld on appeal, her primary case on Point 2 should be upheld instead. It appears that that question was considered and a deliberate decision was taken not to file a respondent’s notice.
    1. The appeal in Belsner v Cam Legal Services Ltd was not a good reason for delaying the filing of a respondent’s notice. The purpose of a respondent’s notice is to identify the issues in the appeal. That is important for the proper management of the appeal, whether or not those issues are subsequently narrowed as a result of a decision in another case. Moreover:
(1) The construction issue did not arise in Belsner v Cam Legal Services Ltd.
(2) Belsner v Cam Legal Services Ltd was, as I said in my judgment, a test case. All parties will have appreciated the likelihood that, whatever decision I reached on the appeal, my judgment would itself be the subject of at least an application for permission to appeal to the Court of Appeal, with the result that my judgment would not necessarily be the final word on the issues raised in that appeal.
    1. Against that background, I considered all of the circumstances of the case and concluded that it would not be appropriate to grant the relief sought. Those circumstances include the need to enforce compliance with the rules, the seriousness of the Claimant’s breach of the rules and the fact that a deliberate decision was taken not to file a respondent’s notice. In my judgment, those factors outweighed the factors relied on by the Claimant, as to which I make the following observations:
(1) As to the scope of the issues proposed to be raised by the respondent’s notice:
(a) The principal issue to be argued before me would be the construction issue, since my judgment in Belsner v Cam Legal Services Ltd both:

(i) decided that, if subsection 74(3) of the Solicitors Act 1974 applied in the present case, the Defendant needed to establish informed consent in order to rely on CPR 46.9(2) as disapplying subsection 74(3); and

(ii) provided assistance on the question whether the Claimant had given informed consent for the purposes of CPR 46.9(2).

(b) The construction issue did not form part of ground 2 in the grounds of appeal and, in any event, it was accepted that ground 2 did not arise and would not be argued.
(c) Mr Kirby was right to point out that the construction issue was argued before the district judge, but Mr Marven was right to point out that the “updating construction” argument was not advanced before the district judge. A refinement of legal submissions is not unusual on appeal, but this additional argument served to increase the scope of what the Defendant would have to deal with if the Claimant were permitted to file the respondent’s notice.
(d) Understandably, Mr Marven had not come to the hearing of the appeal prepared to argue an issue which the Claimant did not have permission to raise.
(2) There would be prejudice to the Defendant if the application were allowed, not least because the appeal would either have to be adjourned or heard in two parts.
(3) There are, as I have mentioned, a series of similar appeals. I can readily see that there is potential for the construction issue to arise in many of these cases, since many claims brought under the Protocol settle without a claim form being issued. However:
(a) Curiously, Mr Kirby’s recollection was that the issue has not arisen in any other appeal. If he is right, then this may be because the defendants in such cases have taken the same position as the defendant in Belsner v Cam Legal Services Ltd. I do not know, because there was no evidence before me on this point. However, if Mr Kirby was right, then that tends to cast doubt on his assertion that the construction issue is an important issue which needs to be resolved urgently.
(b) Nevertheless, if there is a need to resolve the construction issue, then it will arise in another appeal or appeals and can be dealt with then.
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