Civil Courts Structure Review: Final Report

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My critique of Lord Justice Briggs  long-awaited 299 page final report http://bit.ly/2ayk0qL. on the Civil Courts Structure Review:

The final report follows an extensive series of meetings with judges, practitioners, stakeholders and users of the civil courts, and a series of detailed written and oral submissions after the publication of the review’s interim report in January 2016. The review makes a series of recommendations intended to inform the current programme of wider court modernisation being undertaken by HM Courts and Tribunals Service.

It also makes a number of recommendations on different aspects of the civil justice system, such as enforcement of court rulings, the structure of the courts and deployment of judges. A summary of the main point follows.

Briggs LJ identified five main weaknesses of the civil courts structure:

Weaknesses

a. Lack of adequate access to justice due to excessive costs expenditure / risk and the “lawyerish culture and procedure of the civil courts”

b. Inefficiencies from the “continuing tyranny of paper” and inadequate IT facilities

c. Court of Appeal delays

d. Under investment in civil justice in the regions

e. Weaknesses in the processes of enforcement

Final Recommendations

1. The “Online Solutions Court”

To resolve a perceived access to justice defecit, Briggs LJ recommends introducing an Online Court and the extension of fixed costs. The new court is to have its own set of “user-friendly rules” created by a new cross-jurisdictional rules committee in place of the current Civil Procedure Rules, which will still apply to other cases.

Briggs LJ also sets out the appropriate appeals procedure, where permission would apply. Stage 3, the final adjudication, will be made by judges on paper, via a video/telephone hearing or by way of a traditional trial.

When implemented it should be dealing with “straightforward” money claims valued at up to £25,000. Despite this initial ceiling of £25,000, he suggests it may “pave the way” for change over “much wider ground” and will eventually become compulsory. It is not envisaged that the Online Court will apply to fast and multi-track personal injury cases, but, as Briggs LJ has previously indicated, it may apply to small claims track cases.

Recommendations are made on helping people who need assistance with online systems. Complex and important cases are to be transferred upwards to higher courts. Open justice and transparency issues are to be addressed.

Legal advice and expertise would be by way of unbundled solicitors’ services and direct access to barristers.

A target date of 2020 has been suggested.

2. Digitisation

The Online Court proposed is to be accessible via smart phones and tablets.To avoid duplication and “a parallel paper path”, Briggs LJ has endorsed the development of Assisted Digital resources and proposes the “digitisation of all the processes” of the civil courts, which will eventually be paperless.

Reforms have already been implemented to overcome the chronic workload and backlog of the Court of Appeal.

3. Case Officers

A senior body of court lawyers and other officials who can assist with certain functions currently carried out by judges, such as paperwork and uncontentious matters. To be trained and supervised by judges, and decisions subject to reconsideration by judges on request by a party. To operate independently of government when exercising their functions, transferring some of judges’ more routine and non-contentious work to case officers, under judicial training and supervision.

4. Increase in High Court threshold

A substantial increase in the minimum claim value threshold for commencing claims in the High Court – initially to £250,000 and subsequently to £500,000.

5. Enforcement of Judgments and Orders

There should be a single court as the default court for the enforcement of the judgments and orders of all the civil courts (including the new Online Court). This should be the County Court, but there would need to be a “permeable membrane” allowing appropriate enforcement issues to be transferred to the High Court, and special provision for the enforcement of arbitration awards, in accordance with current practice and procedure. All enforcement procedures to be digitised, centralised and rationalised.

6. Mediation/ADR

Re-establish a court-based out of hours private mediation service in County Court hearing centres prepared to participate, along the lines of the service which existed prior to the establishment and then termination of the National Mediation Helpline.

7. Deployment of Judges

The principle should be that no case is too big to be resolved in the regions. The current acute shortage of Circuit judges specialising in civil work in the County Court needs an urgent remedy.

8. Number of Courts and Future of the Divisions

There should be no general unification of the civil courts (ie combining the High Court and County Court). The time has come for a decision about the future of the High Court’s Divisions, but that is beyond the scope of the current review.

9. District Registries and Regional High Court Trial Centres

The concept of the District Registry as a place for the issue of High Court proceedings will eventually be replaced by a single Portal for the issue of all civil proceedings, and should then be abolished.

10. Routes of Appeal

There should in due course be a review of the question whether the recent reforms to the procedure of the Court of Appeal should be extended to cover appeals to the High Court and to Circuit Judges in the County Court, based upon better time and motion evidence than is currently available, and in the light of experience of the reforms in the Court of Appeal.

11. Boundaries between jurisdictions – the Family Court should be given a shared jurisdiction (with the Chancery Division and the County Court) for dealing with Inheritance Act and disputes about co-ownership of homes. There continues to be a case for convergence between the Employment Tribunal (and Employment Appeal Tribunal) and the civil courts, but the detail is a matter beyond the scope of this review.

Lord Justice Briggs said:

“It is for others to decide which of the above recommendations should be implemented, and by what means. In my view, if they are all substantially implemented, then the essentially high quality of the civil justice service provided by the courts of England and Wales will be greatly extended to a silent community to whom it is currently largely inaccessible, and both restored and protected against the weaknesses and threats which currently affect it.”

Comment

The stated aim of the reforms is laudable; to ensure our civil justice system is fit for purpose and open to all. However, this needs to be viewed in the context of enormous court fee increases e.g. last year’s issue fee increases of up to 600% in some cases, and last month’s application fee increases as follows:

  • contested applications made on notice — £255 (from £155)
  • applications without notice or by consent — £100 (from £50)

In Briggs LJ’s view, the new court, if successful, “may pave the way for fundamental changes in the conduct of civil litigation over much wider ground than is currently contemplated by its first stage ambition”.

The proposed timing for the launch of the system is April 2020, although Briggs LJ acknowledges that this will represent “a real challenge”.

The civil courts have come under increasing strain due to budget cuts and the phenomena of a large rise of litigants in person, the latter unpredicted and itself due to previous reforms and cost cutting exercises. This, combined with the lack of any significant positive track record in computerisation of government services represent significant further challenges, as do the requirement for such changes to be adequately funded and given sufficient Parliamentary and Ministry of Justice attention.

The ongoing hikes in court fees and previous termination of funding for Mediation initiatives contrast with the aspiration of increased access to justice and suggested allocation of funds from the Treasury for such a wide-ranging programme of reform.The challenge now lies in effective implementation of Lord Justice Briggs’ recommendations, and avoiding further reductions in access to justice.

First Published: 5.8.16 http://social.luptonfawcett.com/blog/civil-courts-structure-review-final-report

 

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Companies have Human Rights too!

The High Court has upheld the right of corporations to bring claims under the Human Rights Act.

 

Breyer Group Plc and others v Department of Energy and Climate Change [2014] EWHC 2257

Compensation of £140 million is claimed by the companies against the Department of Energy and Climate Change (DECC) under the review of its solar PV (photovoltaic) feed-in tariff (FITs) scheme.

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The Court of Appeal and Supreme Court had previously decided in Judicial Review proceedings that DECC’s actions were unlawful. The DECC had failed to follow the FITs statutory review procedure for changing tariffs by issuing a consultation on short notice and retrospectively.

     Background

Friends of the Earth and two solar PV companies brought a successful judicial review (JR) challenge to the consultation. The Administrative Court decided that DECC’s proposal to cut FITs on 12 December 2011, 11 days before its consultation on that proposal closed (on 23 December 2011) was unlawful because it breached the statutory scheme for modifying FITs

In the meantime, many proposed smaller solar PV schemes under way were dropped or failed due to the uncertainty created by DECC’s October 2011 consultation announcement and the JR proceedings.

Civil claim for damages

In January 2013, 17 solar PV FITs installation, supplier and developer companies commenced civil proceedings against DECC claiming £140 million of losses resulting from DECC’s FITs 2011-12 solar PV tariff review. The claimants argued that they had been hit by cancelled orders and had to abandon solar PV projects due to DECC’s October 2011 consultation proposals announcement and its breach of the tariff modification procedure under the FITs statutory scheme.

Human Rights Claims

Article 1 of the first Protocol (A1P1) to the European Convention on Human Rights (ECHR) is a qualified right that provides that every natural or legal person is entitled to the peaceful enjoyment of their possessions. Therefore, the right extends to companies, because a company is treated at law as having a legal personality.

Because DECC had unlawfully interfered with the claimants’ possessions in breach of A1P1, the claimants are entitled to damages arising from concluded contracts

Contracts and losses protected by A1P1

  • Signed and concluded contracts were assets, and therefore “possessions” under A1P1. They were tangible, assignable and had a present economic value.
  • Unsigned contracts could not be possessions protected by A1P1. There is no authority for the proposition that an unsigned or incomplete contract is an asset. An unsigned or incomplete contract is no contract at all, intangible, non-assignable and absent present economic value.
  • Loss of future income is not a possession protected by A1P1, unless it has already been earned, or is definitively payable.
  • Goodwill may be an asset, and therefore a possession under A1P1, because it has been built up in the past and has a present-day value, as distinct from only being referable to events that may, or may not, happen in the future.
  • Loss of marketable goodwill caused by interference that at the time of the interference can be capitalised is, in principle, protected by A1P1. On the other hand, interference causing only a potential loss of goodwill for the future is a claim for loss of future profit and so not recoverable.

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Decision

Contracts that the claimants had entered into by 31 October 2011 and that were frustrated because of DECC’s October 2011 consultation proposal were an element of the marketable goodwill in the claimants’ businesses. Therefore, these contracts represented a possession protected by A1P1. The claimants could, in principle, recover for the loss of that element of the marketable goodwill in their businesses.

Even if the loss of unsigned or unconcluded contracts damaged the claimants’ goodwill, such losses are losses of future income and therefore not recoverable under A1P1.

As a matter of law and common sense, DECC’s publication of its October 2011 consultation proposal amounted to an interference with “possessions” under A1P1. DECC acted carefully, deliberately and unlawfully. It could not be characterised, as DECC argued, as “merely a proposal”.

Comment

This High Court decision on the preliminary issue is important:

DECC is potentially liable for claims of approximately £140 million due to its failure to comply with the FITs statutory scheme.

It provides a useful analysis of the extent to which commercial contracts and goodwill can be protected by bringing a claim under A1P1.

To establish an A1P1 claim for interference with possessions, it was necessary to show material economic consequences, due to state action.

The UK Government was liable for a Consultation Document, rather than a final decision.

The DECC indicated an intention to appeal.

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More Noise: Loser pays on CFA’s?

  Coventry v Lawrence (Part 2)

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A Supreme Court case I commented on recently, elsewhere described as “…an important judgment on the principles of private nuisance for the 21st century…”[i] now has wider ramifications for legal costs in CFA cases. In the supplemental judgment of 23 July, Coventry v Lawrence [2014] UKSC 46[ii] a five member Supreme Court panel decided on the grant of an injunction and damages in a private nuisance case brought by a house owner against operators of a speedway stadium.

One of the remaining issues was whether the injunction for nuisance should be suspended until the house was again habitable, following fire damage. Damages were thought likely to be even more of an adequate remedy in the meantime.

However, the pronouncements on CFA costs have assumed far greater importance than on this case alone. The house owner had been awarded 60% of his costs to be paid by the operators, including base costs, success fee and after the event costs insurance (AEI). On a detailed analysis of the figures, Lord Neuberger said

 the figures are very disturbing

The base costs were £398,000, success fee £319,000 and AEI £350,000 (total £1,067,000). This was “regrettable” in the context of the house being worth a maximum of £300,000, and the nuisance reducing this by £74,000 at most. The operator’s liability to pay the householder’s costs would leap from £238,000 (60% of basic costs only) to £640,200, being 60% of all three elements, based solely on how the householder had chosen to fund their case.

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It had been thought that satellite litigation on costs or CFAs and AEIs at least had subsided, following Callery v Gray [2002] 1 WLR 2000, where the House of Lords decided that, subject to reasonableness, success fees and ATE premiums were recoverable. In Campbell v MGN Ltd (No 2) [2005] 1 WLR 3394, the House of Lords held that the 1999 Act[iii] costs recovery regime did not infringe Article 10 of the European Convention on Human Rights (“ECHR”) (freedom of expression).

However, the operators argued that following the Strasbourg Court in MGN Limited v United Kingdom (2011) 53 EHRR 5 and Dombo Beheer BV v Netherlands (1994) 18 EHRR 213, Article 6 (right to a fair trial) would be infringed if the court required them to pay 60% of the success fee and the ATE premium.

In MGN v UK at para 217, the Strasbourg Court said that “…the depth and nature of the flaws in the system…” introduced by the 1999 Act and the provisions of the CPR were “…such that the Court can conclude that [it] exceeded even the broad margin of appreciation to be accorded to the State in respect of general measures pursuing social and economic interests…”.

As to Article 1 of the First Protocol to the Convention (“A1P1”), the operators rely on the reasoning of the Strasbourg court in James v United Kingdom (1986) 8 EHRR 123.

Faced with these contentions and giving the lead judgment, Lord Neuberger held that it is

open for argument

whether the home owner’s costs claims (success fee and AEI) are a breach of the operator’s entitlement to a fair trial under Article 6 ECHR and/or A1P1. The Supreme Court ruled that if the operator wishes to pursue that argument, it would be wrong for it to decide the point without representations from the Government and other interested parties as interveners. These would include the Attorney-General and the Secretary of State for Justice, and any other intervener sanctioned by the Court.

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Comment

Following the Jackson Reforms, the success fee and AEI would no longer be recoverable in cases where such arrangements were entered in to after April 2013. However, in the instant case (and a vast number of cases continuing through the Courts under the “old” fee regime), until now such success fee and AEI have been regarded as entirely valid and enforceable against the losing side.

A number of questions arise, including whether, if the court considered that there was an infringement of the operator’s rights this ought to be recognised by a declaration of incompatibility. However, the forum for this decision has yet to be resolved, whether this should be again at the Supreme Court, or as stated in Callery v Gray at the Court of Appeal, being “…the primary supervisory and judicial policy-making functions in connection with case-management, procedural and costs issues…” with greater experience on matters concerning costs.

Further affected by this renewed doubt however, are litigants in ongoing cases subject to the old costs regime, where the funding, CFAs, retainers and AEI premiums will now be questioned, to say nothing of all previous cases decided (or settled) on the assumption by the courts that the old regime did not offend against ECHR. If there is a declaration of incompatibility, this could lead to a deluge of compensation claims against the UK Government.

 

[i] (Planning permission no defence to private nuisance claim) http://wp.me/p4DFLr-c

[ii] http://supremecourt.uk/decided-cases/docs/UKSC_2012_0076_Judgment.pdf

[iii] Legal Services Act 1990 Part II, Access to Justice Act 1999

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