The Dekagram 16th January 2023

Articles, News | Mon 16th Jan, 2023

This week’s Dekagram reflects the wide range of legal questions the team deals with as part of international practice. First, Thomas Jones considers a recent case on the protection of vulnerable adults resident outside the jurisdiction; then, Jeremy Ford asks when a court might be persuaded to make a costs order against a person not a party to litigation, something the courts were asked to consider only last year in the context of a holiday sickness claim. Something for everyone, then.

International Protection of Vulnerable Adults

In The Health Service Executive of Ireland v. Florence Nightingale Hospitals Limited [2022] EWCOP 52, the Court of Protection allowed an application for an order recognising and declaring enforceable protective measures for a vulnerable adult from the Republic of Ireland to receive medical treatment in England.

The Facts

SV is a 20-year-old Irish citizen who has an eating disorder. She had been admitted to hospital in Ireland and was assessed as lacking mental capacity to consent to her medical treatment. She required treatment for her eating disorder at a specialist eating disorder unit in London, the Nightingale Hospital in Marylebone. The Irish High Court authorised her placement at the Nightingale Hospital.

The Hague Convention on the International Protection of Adults provides a legal basis for the making of reciprocal orders. However, the Hague Convention has not been ratified in the Republic of Ireland, nor in England and Wales. Therefore, the question arose as to whether the order to transfer her to England for treatment should be recognised and declared enforceable in England and Wales.

The Judgment

Mostyn J applied section 63 and schedule 3 to the Mental Capacity Act 2005 which implement the Hague Convention without the need for ratification procedures through which the courts in England and Wales can recognise an order from another state. s.63 reads:

Schedule 3—

(a) gives effect in England and Wales to the Convention on the International Protection of Adults signed at the Hague on 13th January 2000 (Cm. 5881) (in so far as this Act does not otherwise do so), and

(b) makes related provision as to the private international law of England and Wales.

Mostyn J granted the application and was satisfied that the order of the Irish High Court should be implemented by being recognised and declared enforceable. He was satisfied that all of the schedule 3 conditions were satisfied and that the making of the declaration was a matter of “imperative necessity”. 

Comment

Section 63 and schedule 3 to the Mental Capacity Act 2005 bypass the procedures for ratification under the Hague Convention. The judgment recognises the obvious disadvantage of this approach which is that section 63 does not give rise to reciprocity: protective measures made in England and Wales will not automatically be recognised and enforced in other states, even ones operating the Convention. Mostyn J comments on the legal complexity in applying schedule 3 and annexes to the judgment a checklist to apply to the recognition and enforcement of foreign protective measures in the future, which is available here.

About the Author

Thomas Jones was called in 2015 and is a busy junior who practises in the full range of Chambers work. He is ranked in the “up and coming” category in Chambers and Partners (Court of Protection: Health and Welfare) and the “rising star” category in the Legal 500 (Court of Protection and Community Care). Prior to joining Chambers, he worked as a stagiaire at the Court of Justice of the European Union and studied European Law at the College of Europe in Bruges.

Non-Party Costs Orders

Despite non-party cost orders (“NPCO”) being “exceptional”, this week has seen two judgments considering whether such orders should be made. Asprey Capital Limited v Rediresi Limited and Gupta [2023] EWHC 28 (Comm) is a commercial case where, as is most common in this refined area of law, a director is pursued for the costs of litigation involving their company. Far more rarely, Robinson v Liverpool University Hospitals NHS Trust and Mercier [2023] EWHC 21 (KB) is an appeal from a NPCO made against a claimant’s medical expert in favour of a victorious defendant NHS trust.

The source of the Court’s jurisdiction to make an NPCO arises from Section 51(1) of the Senior Courts Act 1981. This provides that the costs of and incidental to all proceedings in the High Court and county court shall be in the discretion of the Court and that it “shall have full power to determine by whom and to what extent the costs are to be paid”.

When considering whether the corporate veil should be lifted to order directors to pay the costs of their insolvent companies, the guidance remains as helpfully summarised by Coulson LJ in Gokner v Aytacli [2021] EWCA Civ 1037:

“a)     An order against a non-party is exceptional and it will only be made if it is just to do so in all the circumstances of the case (Gardiner v FX Music Limited (2000) WL 33116500 (27 March 2000, unreported), Dymocks Franchise Systems (NSW) Pty Limited v Todd and others [2004] UKPC 39, [2004] WLR 2807, Threlfall v ECD Insight Limited and Anr. [2015] EWCA Civ 144; [2014] 2 Costs LO 129).

b)       The touchstone is whether, despite not being a party to the litigation, the director can fairly be described as “the real party to the litigation” (Dymocks, Goodwood Recoveries v Breen [2005] EWCA Civ 414, Threlfall).

c)        In the case of an insolvent company involved in litigation which has resulted in a costs liability that the company cannot pay, a director of that company may be made the subject of such an order. Although such instances will necessarily be rare (Taylor v Pace Developments Ltd [1991] BCLC 406), s.51 orders may be made to avoid the injustice of an individual director hiding behind a corporate identity, so as to engage in risk-free litigation for his own purposes (North West Holdings Plc (In Liquidation (Costs) [2001] EWCA CIV 67). Such an order does not impinge on the principle of limited liability (Dymocks, Goodwood, Threlfall).

d)       In order to assess whether the director was the real party to the litigation, the court may look to see if the director controlled or funded the company’s pursuit or defence of the litigation. But what will probably matter most in such a situation is whether it can be said that the individual director was seeking to benefit personally from the litigation. If the proceedings were pursued for the benefit of the company, then usually the company is the real party (Metalloy Supplies Ltd v MA (UK) Ltd [1997] 1 W.L.R. 1613). But if the company’s stance was dictated by the real or perceived benefit to the individual director (whether financial, reputational or otherwise), then it might be said that the director, not the company, was the “real party”, and could justly be made the subject of a s.51 order (North West Holdings, Dymocks, Goodwood).

e)        In this way, matters such as the control and/or funding of the litigation, and particularly the alleged personal benefit to the director of so doing, are helpful indicia as to whether or not a s.51 order would be just. But they remain merely elements of the guidance given by the authorities, not a checklist that needs to be completed in every case (Systemcare (UK) Limited v Services Design Technology [2011] EWCA Civ 546).

f)        If the litigation was pursued or maintained for the benefit of the company, then common sense dictates that a party seeking a non-party costs order against the director will need to show some other reason why it is just to make such an order. That will commonly be some form of impropriety or bad faith on the part of the director in connection with the litigation (Symphony Group plc v Hodgson [1994] QB 179, Gardiner, Goodwood, Threlfall).

g)       Such impropriety or bad faith will need to be of a serious nature (Gardiner, Threlfall) and, I would suggest, would ordinarily have to be causatively linked to the applicant unnecessarily incurring costs in the litigation.”

Although helpful guidance, application is necessary highly fact specific. Considering the facts of Asprey, Mr Gupta was made personally liable to pay the claimant’s costs. Arguably it was a better understanding of the facts that led to the overturning of the NPCO made against Mr Mercier in Robinson.

Mr Mercier was a General Dental Practitioner who expressed a positive expert opinion on behalf of a claimant who had been referred for surgery to remove a number of teeth but had not had one tooth removed because the surgeon on the day had decided that the tooth was capable of restoration. Mr Mercier opined that no reasonable dental surgeon could have come to that conclusion. The Defendant trust relied upon the opinion of Mr Webster, an Oral and Maxillofacial surgeon, whose evidence was that, at the time of surgery, the tooth was indeed capable of restoration. Significantly, the defendant’s dental surgeon, Mr Bajwa, was himself an Oral and Maxillofacial surgeon.

The trial did not go well for either Mr Mercier or the claimant. Prior to Mr Webster being called by the defendant, the claimant withdrew her claim. The defendant trust was then given 21 days to join Mr Mercier to the proceedings to pursue their NPCO against him. This was successful before Recorder Hudson in September 2021. The defendant argued that as a general dental practitioner Mr Mercier had no experience of surgical removal of teeth under General Anaesthetic since 2000; he had no experience of consenting patients for the extraction of teeth under General Anaesthetic; and, as he was not an Oral and Maxillofacial surgeon, he should never have given evidence in the case.  Thus, as Mr Mercier accepted, Mr Webster was ‘better placed” to give expert evidence. In her rather scathing judgment, Recorder Hudson held:

“The reality is that Dr. Mercier is simply not in a position to tell me that a reasonable body of oral surgeons, with facilities available within the hospital setting, would have been able to state whether this tooth was restorable upon examination prior to the GA. He cannot opine on the ability of such a surgeon to test mobility, to look directly at the tooth and to have expertise in the analysis of the radiograph or the available methods of restoration. It is simply not his field”.

Overall, the judge concluded that Mr Mercier had demonstrated a flagrant, reckless disregard for his duties to the Court and that he did so from the outset in preparing a report on a subject matter in which he had no expertise. Having then further proved a causative link between Mr Mercier’s conduct and the costs sought to be recovered (as required by Travelers Insurance Company Ltd v XYZ [2019] UKSC 48), no claim being likely to have been pursued in the absence of Mr Mercier’s report, an order against Mr Mercier was made in the sum of £50,543.

The appeal was heard by Sweeting J on 24^th May 2022, the approved judgment being dated 11^th January 2023. When considering the legal threshold for NPCOs he highlighted that s.51(6) of the Senior Courts Act 1981 expressly provided a jurisdiction to make a wasted costs order against legal representatives where costs had been incurred “as a result of any improper, unreasonable or negligent act or omission”. Although this had been the agreed test for the court when considering the conduct of an expert witness in Thimmaya v Lancashire NHS Foundation Trust [2020] PNLR 12, a somewhat higher bar was suggested in Phillips v Symes [2004] EWHC 2330, when an expert has caused significant expense to be incurred due to their “flagrant disregard for the duties to the Court”. This higher threshold test was adopted in Walker and another v TUI UK Ltd [2021] 1 WLUK 398 and appears also to have been applied by the Recorder at first instance when considering Mr Mercier’s conduct.

However, Sweeting J concluded that when considering the detailed facts of Mr Mercier’s ability to express an expert opinion on the precise circumstances of the potential extraction, this test was not satisfied. He looked beyond the fact that Mr Mercier was not an Oral and Maxillofacial surgeon. The decision that the material tooth needed to be extracted had been originally made by a general dental surgeon; it is well within the competence and scope of the clinical practice of a general dental surgeon to carry out extractions and report on x-rays for that purpose and therefore Mr Mercier did not need to be an Oral and Maxillofacial surgeon to express an opinion on this issue. Further, to the issue of pre-operative examination, there was no suggestion that a different standard applied to an examination by an Oral and Maxillofacial surgeon as opposed to a general dentist performing an examination prior to extraction. Accordingly, Sweeting J found that the Recorder had been wrong to find that Mr Mercier was not suitably qualified to give an opinion in relation to the viability of the tooth and whether its condition was such that it required extraction. Importantly he concluded that:

“There may well have been grounds to criticise Mr Mercier’s performance as an expert witness and to attack his conclusions, but this is not an exceptional case and did not involve a flagrant or reckless disregard of an expert’s duty to the court. On the facts of this case it would not be just to make a costs order against him for any amount”

The importance of Mr Mercier’s predicament is as a reminder to practitioners to consider carefully the expert’s experience when obtaining expert evidence. Although their title is not conclusive, it is essential that the issues at stake are within the scope of their expertise and it is ordinarily safer to match expertise. Further, when considering whether a NPCO can be made, as opined by Moses LJ in Alan Phillips Associates Ltd v Terrence Edward Dowling & Ors [2007] EWCA Civ 64 “there is now an abundance of authority on the absence of any need for abundant authority on the principles which should guide a judge as to whether to make a third party order for costs”. Put simply, whether an NPCO should be made remains a highly fact sensitive question. As demonstrated by the success of Mr Mercier’s appeal, such orders are likely to remain “exceptional”, the poor performance of an expert at trial being insufficient without flagrant and reckless disregard for their duties to the court.

About the Author

Jeremy Ford was called in 1996 and has been ranked for many years as a band 1 personal injury practitioner in Chambers & Partners and in the Legal 500. He undertakes work on behalf of Claimants only in serious personal injury claims, in particular acting against the Motor Insurers’ Bureau and road traffic insurers.