No means no

To protect healthcare professionals against vexatious claims, Section 139 of the Mental Health Act requires Mental Health patients to obtain the leave of the court before they commence legal proceedings. In Seal v Chief Constable of South Wales [2007] UKHL 31 the House of Lords considered whether the failure by a patient to obtain leave was just a procedural irregularity which could be corrected or whether it made the proceedings a nullity.

The police had been called to an incident at the Claimant's mother's house and removed the Claimant to a place of safety under the Mental Health Act 1983. He was then released just after a week later. On the eve of the expiry of the limitation period the Claimant brought proceedings against the Chief Constable on the grounds there had been no justification for detaining him. The claim was dismissed at first instance and by the Court of Appeal because the Claimant had failed to first obtain the court’s leave. As claims for wrongful imprisonment have a 6 year limitation period which the court cannot extend, the Claimant could not obtain the necessary leave and then reissue a further set of proceedings.

Before the House of Lords, the Claimant argued that the lack of leave was an irregularity which could be rectified and was not a fatal flaw which invalidated the proceedings. He further argued that the effect of s.139 of the Mental Health Act was to infringe his right of access to the court contrary to Article 6 of the European Convention on Human Rights.

By a majority of three to two the House of Lords found that the failure to obtain leave of a High Court judge in relation to a claim brought in respect of an act purporting to be done under the powers of the Mental Health Act 1983 made the proceedings a nullity. When Parliament had legislated there had been a consensus that the lack of the required leave would render any proceedings null. Whilst such a strict rule might be harsh on some litigants, in this case if the Claimant had issued proceedings at any time before the very end of the 6 year limitation period, his failure to obtain leave would not have debarred him from pursuing his claim.

The majority of the House of Lords felt that the occasional occurrence of such a hard case was a price worth paying for the protection given to those who had the difficult task of caring for the mentally ill.

Playing the Percentages

Under Part 44.3 of the CPR, the court has the power to order that the successful party in litigation should only receive a proportion of their costs either because of their conduct or because they only succeeded on some of the issues that were being contested.

In Lahey v Pirelli Tyres 2007 EWCA Civ 91, the Defendant argued that this could be taken a stage further and that at the outset of a detailed assessment hearing the cost judge had the power to order that the successful party should only receive a proportion of their costs.

In Lahey the Claimant suffered personal injury during the course of his employment. Proceedings were issued and the Claim was quantified at £150,000. The Defendant made an initial Part 36 payment of just £2,000 which was not accepted. However the Payment was subsequently increased to £4,000 and was accepted. Subsequently a Bill of Costs totalling just over £27,000 was served.

The Defendant argued at the detailed assessment hearing that before commencing his assessment the Cost Judge should only award the Claimant a proportion of the assessed costs. The District Judge considered that he did not have the power to make such a general reduction. The Defendant’s appeal was refused by the Circuit Court Judge who heard it and the matter came before the Court of Appeal.

The Defendant argued that a percentage reduction could be made because the cost judge was entitled under Order 44.3 to consider whether the costs had been unreasonably incurred or were unreasonable in amount. The Defendant argued that this meant that the cost judge could consider “in the round” how much of the costs were reasonable before going on to consider the individual items that were being claimed.

The Court of Appeal did not accept the Defendant’s argument. When a Part 36 payment was accepted a costs order was deemed to be made on the standard basis. This meant that the Claimant was entitled to 100 per cent of his assessed costs. Although the court could vary an existing order it had made, it could not vary an order that was deemed to have been made by the operation of the rules.

When negotiating settlement it is important to appreciate that if a Part 36 offer is made and accepted, the Claimant will then be entitled to all of his or her assessed costs. By then the “horse will have bolted” and it will be too late to argue that the Claimant should only be entitled to a percentage.

If there are good reasons why the Claimant should only be entitled to a proportion of the costs, one solution would be to agree to the settlement of damages subject to the court hearing submissions as to an appropriate order on costs.