Costs protection: warnings and Calderbank offers

Re A (A Patient) was a decision of the president of the Court of Protection handed down in August 2016. It is noteworthy not because of the multiple applications brought by a self-represented applicant which led to what the president described as a ‘grotesque driving up of the costs’ (such outcomes are, unfortunately, all too common) but for what it says about the Court of Protection’s approach to exercising its jurisdiction to award costs.

The issues before the court arose in the context of the exercise of its own discretion both on appeal and on orders for costs reserved in relation to earlier applications. In particular, the court considered the necessity for and the effect of a ‘costs warning’, the applicant’s ability to meet any liability in costs and the effect of a Calderbank (that is, without prejudice save as to costs) letter.  

Procedural background

An analysis of the procedural background culminating in the president’s decision is not worthwhile – it is (hopefully) unlikely to be repeated. It suffices to say that the applicant made a substantial number of applications, the overwhelming majority of which were irrelevant to the issues before the court and, insofar as he did raise issues of relevance, he did so with ultimately no success.  

At the conclusion of one bout of litigation, Senior Judge Lush ordered him to pay the deputy’s costs save for £7,500 to reflect what the application should have cost. (The costs incurred were, in fact, over £127,000). From this decision, the applicant had obtained permission to appeal and, without deciding the point, the president approached the question of costs in this regard exercising his discretion afresh. The remainder of the issues arose in relation to orders for costs reserved made by the president himself.

In relation to the costs warning, it is important to note that at the outset of this rather unfortunate saga between 7 March 2013 and 9 May 2013, the applicant filed no fewer than nine applications before the court. On 8 May 2013, Senior Judge Lush gave a costs warning in terms that ‘the parties’ attention is drawn to the provisions of rule 159 of the Court of Protection Rules 2007’. Such warnings are a feature of the Court of Protection where the possibility of departing from the general rule might arise, certainly in cases concerning a patient’s welfare.

Thus in RC (Deceased), Senior Judge Lush observed when considering departing from the general rule in welfare cases, that there should be a carefully worded warning that costs could be awarded against the parties in question, together with consideration of an ability to pay. He was worried that otherwise the court would be overwhelmed by satellite litigation on costs, enforcement orders and committal proceedings.

Costs in the Court of Protection

The Court of Protection and its predecessors have long since exercised their jurisdiction in relation to the award of costs in a manner distinct from that ordinarily encountered in civil litigation: costs do not ordinarily follow the event. The modern position in relation to applications which concern a patient’s property and affairs is set out in rules 156 and 159 of the Court of Protection Rules 2007 which (as amended and with effect after 1 July 2015) provide that: ‘Property and affairs — the general rule

156. Where the proceedings concern P’s property and affairs the general rule is that the costs of the proceedings or of that part of the proceedings that concerns P’s property and affairs, shall be paid by P or charged to his estate.’

Rule 159 permits the court to depart from rule 156 ‘if the circumstances so justify’. Rule 159 continues:

‘Departing from the general rule 159. (1) in deciding whether departure is justified the court will have regard to all the circumstances, including: (a) the conduct of the parties; (b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and (c) the role of any public body involved in the proceedings.

(2) The conduct of the parties includes: (a) conduct before, as well as during, the proceedings; (b) whether it was reasonable for a party to raise, pursue or contest a particular issue; (c) the manner in which a party has made or responded to an application or a particular issue; (d) whether a party who has succeeded in his application or response to an application, in whole or in part, exaggerated any matter contained in his application or response; and (e) any failure by a party to comply with a rule, practice direction or court order.’

Costs warnings

Before the president, it became necessary to consider whether the costs warning by Senior Judge Lush enabled the award of costs incurred in relation to steps taken before its issue, the applicant contending that he should only have been at risk as to costs from after the date of the first warning. The president rejected this argument, holding (at paragraph 53(ii)) that a warning is not a prerequisite to the application of rule 159 and that the fact that it is given does not provide any immunity to an applicant in relation to the application of rule 159 in relation to costs previously incurred. Accordingly, the applicant had costs awarded against him in relation to the period prior to 8 May 2013.

Consideration of means

Other grounds of the appeal fared little better. The applicant argued (no doubt fortified by the judgment in Re Cathcart) that the respective means of the parties and the amount of costs could not be disregarded by the court when exercising its discretion. This approach had also received recognition by Senior Judge Lush in RC (Deceased), supra, when he had expressed concern in relation to the costs order there under appeal that the first instance judge did not consider the paying party’s ability to pay the costs awarded against her.

The president’s judgment was that ‘the short answer… is that, in my judgment, Re RC lays down no principle requiring such an enquiry [as to the paying party’s means to pay any order for costs] before rule 159 is applied, and the court can, as here, properly apply rule 159 without first conducting such an enquiry’ (paragraph 53(iv)). Although the judgment provides no detailed analysis of why this is so, this must, with respect, be right. In less clear-cut cases, where the conduct is not so egregious, it may be appropriate to take into account those costs incurred and the prospective paying party’s ability to pay them; but in circumstances where the conduct complained of has grotesquely driven up costs, it cannot lie in the mouth of such party to say ‘I cannot pay, so I should not have to’.

Finally, it was argued that the appeal should be allowed because there was no indication as to the scale of costs which the applicant was at risk of having to pay and that the same should have been capped so as not to permit what was described as an exorbitant claim; neither of these points had any traction with the president. There was, he held (paragraph 53(iii)) no requirement in law or in practice for an indication of the likely fees to be given (perhaps in marked contrast with the requirement for costs budgets under the CPR) and, to the extent that the fees claimed are exorbitant, they could be addressed on a detailed assessment, which was recognised by the deputy as appropriate in any event.

In a similar vein to the justification suggested in the preceding paragraph, this too must (again with respect) be correct. It cannot be said by a party prone to issuing multiple and repetitive applications of no or peripheral relevance, that he was not told how much this could cost in advance since, by their very nature, they were wholly unpredictable and incapable of advanced quantification.

Accordingly – and in a judgment given by the president in an appellate capacity from the senior judge – a number of issues have been decided which appear to demonstrate a robust approach to the exercise of the Court of Protection costs jurisdiction.

Without prejudice save as to costs

At the conclusion of the hearing, the president indicated that he was minded to order three-quarters of the deputy’s costs of the hearing against the applicant; it was at that stage that the deputy’s solicitors sought to rely upon a letter written by them without prejudice save as to costs in support of an argument that their entitlement should be 100% since the outcome was more favourable in terms of costs awarded than that which the deputy had been prepared to accept under the terms of the letter.

CPR Part 42.2(4)(c) provides that the court, when deciding what order (if any) to make about costs, must have regard to all the circumstances including ‘any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under part 36 apply,’ that is, an offer without prejudice save as to costs. In contrast, the Family Procedure Rules 2010, rule 28.3(7) (having disapplied the relevant provisions of the CPR) provides in relation to financial remedy proceedings that the court must have regard only to any open offer to settle made by a party and that ‘no offer to settle which is not an open offer to settle is admissible at any stage of the proceedings’. In contrast, the Court of Protection Rules, while disapplying that part of CPR Part 42 cited above, makes no other provision in relation to without prejudice offers to settle.

In circumstances where the Court of Protection Rules 2007 are a self-contained code, albeit perhaps more with passing similarity to the Family Procedure Rules than the CPR, the question therefore arose whether and to what extent such offers would be admissible when exercising the jurisdiction of the costs.

The rationale for the prohibition of the court having regard to offers to settle which are not open in the context of financial remedy proceedings is essentially founded upon their overly tactical use and the perceived imposition of unfair prejudice on one side, particularly in circumstances where there was an imbalance in the ability of the parties to fund the litigation. It is not difficult to envisage similar considerations being relevant in the context of Court of Protection proceedings where the risk of costs associated with not bettering the contents of an offer might be used oppressively and otherwise than in the patient’s own interest.

On the other hand, it must be recognised that in Calderbank v Calderbank the court recognised – in the context of the rules of the Supreme Court which then made no provision in relation to such correspondence – that no amendment was necessary to those rules in order to enable the court to consider the correspondence in the exercise of its discretion to award costs – that is, it needed no express authority so to do. What is now CPR Part 42.2(4)(c) can therefore be considered merely reflective of the pre-existing position rather than itself bestowing the necessary jurisdiction.

In his judgment, the president showed no hesitation in departing from his preliminary view and awarding the deputy 100% of her costs, having taken the without prejudice save as to costs offer into account given that the offer which had been made had been handsomely beaten by the outcome of the judgment. In such circumstances it was, in the president’s judgment, fair and just that the reserved costs be paid in full (paragraph 69).

This outcome is clearly – and, again, with respect – correct. Not only must clear policy considerations militate against the admissibility of such offers but also, given that the consideration of such correspondence does not require specific authorisation (see above), its exclusion as a material factor in the exercise of the court’s discretion must be express in the same manner as in the Family Procedure Rules.

Conclusion

Drawing points of general application out of decisions on costs, which must depend upon the facts of each case, is never easy: however, it is clear that ‘costs warnings’ are not a pre-requisite to an adverse costs order, nor is it a pre-requisite to undertake an evaluation of the prospective paying party’s ability to pay before making such an order (likewise, to provide an estimate of the cost beforehand). Finally, there is now a clear decision that Calderbank letters can be taken into account in the Court of Protection when determining costs.

Ian Clarke QC, Selborne Chambers