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Letter to Ministry of Justice - Amendments to the requirement for providing information about funding arrangements


The Rules Committee

21 December 2009



Post Point 4.10

Ministry of Justice

DX 152380 Westminster 8



Our Ref: 602/JCC/FOCIS



By DX & email: Jane.wright@justice.gsi.gov.uk



Dear Sirs



Amendments to the requirement for providing information about funding arrangements



On behalf of FOCIS, the Forum of Complex Injury Solicitors, we would like to express our concerns regarding the recent amendments to the requirements for providing information about funding arrangements made by the 50th up-date to the CPR as set out in CPR 44.15, Section 19 to the accompanying Practice Direction and 9.3 of the Pre-Action Conduct Protocol. 


The first observation we would make on the current requirements for Funding Notices is that it is anomalous that they require a party (usually a Claimant with CFA and ATE) to provide details of the indemnity limit, whereas there is no equivalent requirement in relation to the claims funded by before the event insurance, nor for claims defended pursuant to policies of liability insurance. For equality between the parties, either there should be a requirement to notify indemnity limits, identity of the insurer and their policy number, relating to all methods of funding, or to none. We accept that because the paying party would be ask to meet the insurance premium relating to ATE insurance it is appropriate for them to be notified as to the existence of the cover and the stages (if any) at which the premium increases.


The requirement that Notices of Funding or Notice of Change of Funding must be served on all parties within seven days, even pre-proceedings, is in our view likely to cause substantial satellite litigation. Seven days is a very short period of time and it is easy to imagine numerous scenarios in which there may be non-compliance, for instance if there were any delay in the issue of an ATE policy (which were not previously expressly covered by 44.3B), or even receipt of such a policy after it has been issued (the recent timescale for the delivery of post could  itself create a problem). The Fee Earner with conduct of a claim being away on holiday is another scenario in which there could be a more than 7 days delay in the filing and service of such a Funding Notice. It is in our view unusual and unwarranted to have such a potential draconian rule apply pre-proceedings. Provided the Funding Notice is served within a reasonable period there is unlikely to be any prejudice to the paying party. We propose the period of notification be extended to 21 days.


Section 10 of the Practice Direction relating to Rule 44.3 (B) requires a party in default to apply for relief from sanction as quickly as possible after he becomes aware of the default. In the above example this would commonly be at an early stage in the claim process, quite often before Proceedings are underway. It would be inconsistent with the overriding objective to require a party to commence Proceedings purely for the purpose of making such an Application for a relatively minor time default. Even when Proceedings in the main action are underway we take the view it would be an unwelcome and unnecessary diversion, incurring extra costs in the process, for an Application for Relief against Sanctions to be dealt with at that stage. Liability for the claim may not have been resolved and so it may well transpire that there will never be any additional liability, if the claim is ultimately unsuccessful.  It is probable that the reference in Section 10.1 to an Application "to a Costs Judge or a District Judge" is intended to refer to an Application to be made within Costs Proceedings only. However, the Practice Directions are insufficiently clear on the point and we would invite the Rules Committee to consider an amendment to clarify that such an Application for Relief Against Sanction is not required until Costs Proceedings are underway, or alternatively (and preferably) until Points of Dispute have been served in those Costs Proceedings, because in the cases of relatively minor time default the paying party may not even seek to take the point as they clearly will have suffered no prejudice.


Rule 3.9 provides a checklist of factors the Court will take into consideration when considering whether to do otherwise than order non-recovery of the additional liability. However, 3.9 (1) (b)refers to an Application for Relief having been made promptly which leads us back into the ambiguity as to whether or not there is a requirement to make such an Application prior to Costs Proceedings. If as above Section 10 to the Costs Practice Direction were amended then this further provision would be much less problematic.


Whilst it could be said that the Courts are unlikely to interpret the rules and Practice Directions in the ways that cause us concern, there is a long history of technical challenges to CFAs that suggest points such as these will be taken and will cause considerable uncertainty in the meantime. They may also cause real difficulties for solicitors in cases of minor non-compliance having to report such matters to the ATE provider and to their Professional Indemnity insurer, in case it results in a claim against them.


Yours faithfully


Julian Chamberlayne


On behalf of The Forum of Complex Injury Solicitors (FOCIS)


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