AB & Ors v British Coal Corporation & Ors [2006] EWCA Civ 1357

Case No B5/2006/0987

[2006] EWCA Civ 1357

IN THE SUPREME COURT OF

JUDICATURE COURT OF APPEAL (CIVIL

DIVISION)

ON APPEAL FROM NEWCASTLE-UPON-TYNE DISTRICT REGISTRY

MR JUSTICE MITTING

Venue Royal Courts of Justice, Strand London, WC2A 2LL

Date 19 October 2006

Before

LORD JUSTICE PILL

LOR D JUSTICE RIX

LADY JUSTICE ARDEN DBE

Between

AB & ORSClaimants

BRITISH COAL CORPORATIONDefendants

(Department of Trade and Industry) & ORSDefendant

MR J HENDY QC&MR C CARLING&MR G WIGNALL (instructed by Messrs Irwin Mitchell, Newcastle-upon-Tyne) for Claimants

MR R J WALKER QC, MISS C FOSTER&MR M FRISTON (instructed by Messrs Nabboro Nathanson, Sheffield) for Defendants DT I

Hearing Hearing date :27 July 2006

Judgment

[1]A very large number of claimants have sought damages from British Coal Corporation ("BCC") on the ground that they have sustained vibration induced injury, commonly known as Vibration White Finger ("VWF") in the course of their employment with BCC. The Department of Trade and Industry ("DTI") (whom I will describe as "the defendants") have assumed responsibility for any relevant liabilities of BCC. DTI have appointed Capita to handle the claims. In their report to the court dated 14 December 2005, DTI stated that they had received a total of almost 170,000 claims of which over 110,000 had been resolved on payment of a total of £1,204,000,000 in compensation. Over 50,000 claims remain outstanding.

[2]These are appeals against decisions of Mitting J, who has been appointed by the Lord Chief Justice to supervise the litigation in circumstances which will be described. Following an oral hearing, he gave rulings on 12 April 2006 one of which is challenged by the defendants, and one by the claimants.

[3]A significant number of claims for VWF were brought against the BCC in the early 1990s and it was thought necessary to co-ordinate them. On 12 January 1994, the Lord Chief Justice issued a Practice Note headed "Vibration White Finger Actions" and setting out "arrangements for the disposal of a group of personal injury actions". They were to be brought in the Newcastle-upon-Tyne District Registry of the Queen's Bench Division and heard by His Honour Judge Stephenson. Lead actions were selected and other actions were stayed pending the decision of the court in the lead actions. Preliminary issues were heard as to the day by which the BCC should have known of the risk of VWF amongst the workforce and the date by which protective steps should have been taken.

[4]Judge Stephenson gave judgment on 15 January 1996 and the defendants' appeal to this court was dismissed on 28 November 1996 (Armstrong v British Coal Corporation [1997] JPIL 50). In a further judgment on 30 September 1997, based on the earlier rulings, the defendants were held liable in damages to seven of the nine claimants in the lead actions. The defendants' appeal against that judgment was, save in some minor respects, dismissed (1l998]JPIL 320).

[5]The parties understandably entered into negotiations to draw up a Claims Handling Agreement ("CHA") to dispose of the many outstanding claims without each of the claims having to go before a court. The first CHA is dated 29 January 1999. The agreement was made between the DTI and the Claimants' Solicitors Group ("CSG"), a large number of solicitors who were acting for claimants in VWF claims. They have appointed a steering group to run the litigation. A cut-off date for claims was fixed and it was by that date that the number of claims had reached almost 170,000. There were further negotiations and agreements in the course of dealing with the claims. The current CHA is dated 16 November 2005 and runs to over 800 pages. It is clear that there has been very considerable co-operation between the parties with a view to making practical arrangements for the disposal of claims on the basis of earlier rulings.

[6]Entitlement to an award and its amount are assessed in accordance with the detailed terms of the CHA. Under the 2005 agreement (Section 3), three categories of claim are identified, claims where court proceedings had been commenced as of 22 January 1999 (Category A),those, much the largest category, where either court proceedings had been commenced after that date and a medical report served with them, or where a medical report had been served or commissioned prior to 25 March 1999 and subsequently served (Category B), and claims where court proceedings have not been commenced and no medical report served (Category C). Claimants are also categorised by reference to their occupational history and what the claimant has to prove to make good a claim depends on the category in which he is placed. Schedules to the agreement provide for the damages payable, under the headings pain, suffering and loss of amenity, disadvantage on the labour market, assistance with services (gardening, window cleaning, DN, decorating, car washing, car maintenance) and other financial losses, including loss of earnings. The schedules provide for tariff or tariff based awards under some heads and for individual negotiations under the heading" other financial losses."

[7]On Judge Stephenson's retirement in 1998, Smith J was appointed to replace him as supervising judge. At a review of the progress of the litigation on 7 May 1999, the parties were directed to attempt to agree a draft Practice Direction and draft Group Directions. I use the word litigation as shorthand and without prejudicing the submission made by the defendants that this is not litigation at all. In default of agreement, there would be a further hearing to enable directions to be given. In the event, agreement was reached and a Practice Direction was issued by the Lord Chief Justice on 29 July 1999. A further Practice Direction was issued on 31 July 2003.

[8]The pattern since then has been for "review hearings" to be held three times a year to enable the judge to review and supervise the progress of the litigation towards disposal. There have also been ad hoc hearings to determine specific issues. After Smith J's elevation to the Court of Appeal, Mitting J replaced her. He held review hearings on 7 July and 21 December 2005. At the second of those hearings, Mitting J directed that the present issues be heard, in the event of failure to agree, on 11 and 12 April 2006.

[9]At a hearing on 30 July 2004, Smith W described the nature of the scheme and its objective:

"It was recognised that there were many thousands of former BCC employees who would wish to bring claims for damages for VWF. It was clear that if all cases were to proceed through the courts the amount of investigative work and legal work entailed would be very time consuming and expensive. The government decided to set up a scheme ("the scheme") under which claimants who had been exposed to vibration would receive compensation without the trouble and expenses of court proceedings. The objective was to process claims as quickly and efficiently as possible. It was not intended that a claimant would lose his right to bring a claim at common law. Rather he would be expected to seek compensation under the scheme and only if he remained dissatisfied at the end of that process would he be permitted to proceed through the courts. A handling arrangement ("

HA") was agreed in 1999 and I became the supervising judge. It appeared to me that the HA provided a fair alternative means of compensating the claimants. There were sound public interest reasons for keeping the claims out of the county courts. Accordingly I imposed a stay on all VWF claims against the DTI."

The claimants ' appeal

[10]As stated by Mr Hendy QC on behalf of the claimants, their appeal gives rise to two questions, first, a question as to the source and extent of the judge's powers as supervising judge of the VWF litigation and, secondly, the narrower but practical question as to the extent of the judge's powers to deal with claims allegedly stalled at Capita and whether they include a power to direct that interest be paid from the date of a claim. What was specifically sought by the claimants was interest at the judgment rate, 8 per cent, upon an award from the date on which a particular claim or head of claim had been notified to Capita. The judge headed this part of his judgment: "Claims stalled at Capita".

[11]The judge found, and this is not in issue, that an individual claimant can enforce the terms of the CHA and is subject to them. A feature of the agreement is that it does not prevent a claimant who fails to reach agreement with the DTI from bringing or pursuing a claim in the courts.

[12]There was, the judge held, an implied duty of co-operation on the claimants, CSG and DTI under the CHA. He noted that CSG and DTI were on the point of agreeing a procedure (the stalled claims procedure) to exclude from the CHA those claimants who are in serious breach of their duty of co-operation by failing to attend medical appointments on at least three occasions.

[13]The judge held that he had no jurisdiction to make an order for the payment of interest. His powers were limited to the construction and enforcement of the CHA. The procedure adopted was not group litigation or litigation at all but the carrying into effect of an agreement. No group litigation order had been made under CPR Part 19.10. The order sought would not be an order in relation to litigation, but the addition of an express term to an agreement which is not between parties who are litigating. The judge noted that in the great majority of claims in which the question of delay by Capita had arisen, no claim form had been issued.

[14]The judge held that the CPR did not expressly confer on the supervising judge the power sought. Having referred to CPR 3.1(2), which empowers a court to "take any steps or make any other order for the purpose of managing the case and furthering the overriding objective", the judge stated that it would be an unprincipled exercise of that general power to impose on DTI the terms sought, which he described as penal. If, contrary to his view, he had a discretion to impose the terms sought, he would not do so. The adversely affected claimant's remedy was a claim for damages for breach of contract, the breach being of the implied term of co-operation, and the loss being the interest lost on the award from the date at which it should have been made until the date at which it was made. The power claimed was not necessary to give efficacy to the contract, the judge held. The judge added: "Nothing which I have said should be taken as discouraging the attempt offered by the DTI to agree a proposal for claims delayed at Capita to establish a template for dealing with the consequences of delayed handling of claims by Capita in individual cases. All that I have determined is that I cannot impose such a term".

[15]It is unfortunate that the present issue comes before the courts, and as far as this court, when the parties have done so much to agree a just and practical way of dealing with the massive number of VWF claims. It is understandable that it is the claims which, for one reason or another, are more difficult of resolution which remain at large and the stalled claims procedure, for example, is a response to a difficulty which claimants have brought upon themselves. It is doubly unfortunate when it is accepted on behalf of the defendants that claimants have a potential remedy in damages for delay and that the supervising judge has jurisdiction to award them.

[16]On behalf of the defendants, Mr Walker QC accepts that the supervising judge could award a claimant damages for being kept out of his money. The award would be based on interest on the money he should have had; interest being awarded as damages. Mr Walker accepts that such a claimant would not be required to issue a claim form.

[17]Mr Walker's submission, in seeking to uphold the decision of the judge, is that claims brought under the CHA are not litigation. The power of the court is limited to enforcing a contract, the CHA. The court cannot introduce a fresh term into the agreement or assume a power to impose obligations on the defendants beyond those created by the agreement. The supervising judge may impose time limits but cannot order a financial payment if time limits are breached. It is submitted that reliance cannot be placed on the provisions of the CPR because, in the absence of a group litigation order, the court is merely construing a contract. The CHA makes provision for the payment of interest when an award is finally made and that is the limit of the obligation to pay interest, it is submitted. Reference is made to the preambular provision in the 2005 CHA that CSG will "in the first instance" endeavour to resolve a claim under the terms of the agreement. That distinguishes the contract from litigation, it is submitted, which would only come at a later stage.

[18]Mr Walker also submits that, whatever view the court takes of the judge's powers, the claimants' appeal should be dismissed because the appeal was against the judge's refusal to make a specific order, the claim for which is no longer pursued.

[19]For the claimants, Mr Hendy submits that to all intents and purposes this is group litigation. Fundamental to the agreement is the staying of the court claims. That demonstrates the intention of the parties to deal with all issues out of court and under the agreement. Because the claims are stayed, the supervising judge is unable to strike out defences and the remedy of removing the stay is neither adequate nor appropriate, given the purpose of the agreement and the public and private interests involved in keeping claims out of court. Appropriate sanctions, including financial sanctions, for delay in dealing with claims are within the powers of the supervising judge. The court is supervising litigation, albeit stayed litigation. When the defendants are at fault in keeping claimants out of their damages, a financial remedy in favour of them or, if they have died, their estates is available to the judge. (The claims are often based on events many years ago and many claimants will have died.)

[20]In analysing the nature of the proceedings, Mr Hendy relies on the fact that practice directions have been made by successive Lord Chief Justices. That, and the judgment of Smith LJ on 30 July 2004, upon the basis of which the parties have worked, demonstrate the case management functions which the supervising judge is intended in the 2005 agreement to have. These, in the case of stayed litigation, include an appropriate remedy for delay in dealing with claims. The parties have a strong common interest in claims being resolved outside the courts and that requires the existence of a power to impose an appropriate sanction for delay.

[21]Mr Hendy refers to the detailed judgments give by Smith J on general matters arising: a judgment in relation to Group 3 claims, a judgment on the issue of accord and satisfaction in relation to claims for loss of services, and a judgment on age at date of claim. On the age issue, where the parties were, the judge found, at cross-purposes and had failed to reach an agreement, the judge ruled that "a claimant's age should be fixed by reference to the date of notification to the CO-defendant concerned". This ruling, it is submitted, went beyond mere construction of the CHA. The order of 25 August 1994, refers to "this litigation" and to "the plaintiffs" as "those plaintiffs whose actions are or become the subject of the practice note." That definition is carried forward to the order of Smith J dated 26 November 1998. The Practice Direction of 29 July 1999 "applies generally to any proceedings" in which VWF is alleged, language carried forward to the Practice Direction of July 2003. Both the language bf the court orders and directions and the substance of judgments demonstrate the nature of the proceedings and the broad powers the supervising judge is intended to have, it is submitted.

[22]Mr Hendy relies on the judgment of Steyn LJ in AB & Ors v John Wyeth & Bros Ltd & Ors[1993] Med LR 1. Mr Hendy submits that, given the history of the present arrangements the approach is appropriate to the present claims. At page 6,Steyn LJ stated:

"Inevitably High Court Judges assigned to the control of such litigation must depart from traditional procedures and adopt intervention case management techniques. If the judge charged with the control of such actions did not undertake this innovative role, the system of justice in respect of such cases would break down entirely .. . A court of record has an inherent power to control its procedure so as to promote the achievement of justice and to avoid an injustice insofar it is reasonably practicable to do so."

Steyn LJ added: "Subject to the duty to act fairly, the judge may and often must improvise: sometimes that will involve the adaptation of entirely new procedures. The judge's procedural powers in group actions are untrammelled by the distinctive features of the adversarial system. The judge's powers are as wide as may be necessary to control the litigation fairly and efficiently".

Steyn LJ added:

[23]The CHA confers a power to manage the claims in accordance with the overriding objective of enabling the court to deal with cases justly, it is submitted. The extent of the court's supervision, as revealed in Practice Directions, judgments, and reviews held three times a year, demonstrate the intention of the parties to confer wide powers on the supervising judge. The judge has power, it is submitted, to devise a scheme, which is likely to involve money payments, to dissuade the defendants from delay in dealing with claims. The CHA of 2005 must be read in a context which includes the earlier agreements, the practice under them, and successive judicial pronouncements.

[24]In my judgment, the court has power to require a scheme, involving money payments to claimants in case of default, with the object of persuading the defendants to deal with claims promptly. I substantially accept the submissions of Mr Hendy. I bear in mind the following factors: a) A very large number of claimants have agreed to pursue their claims without resort to the courts while the arrangement is operating. b) It is a big advantage to both claimants and defendants if the scheme operates successfully; for both parties it limits costs very considerably and provides a degree of consistency in the way claims are dealt with. c) As was well known to the parties to the CHA, there was a public interest in reducing the court resources necessary to consider over 150,000 claims. d) The court has been closely involved from the start in the management of claims. Involvement has included practice directions by successive Lord Chief Justices and active management by successive supervising judges, including substantive and procedural rulings. e) With the benefit of co-operation between the parties and active case management by the court, very considerable progress has been made in disposing of a very large number of claims. f) A substantial minority of claims remain unresolved. Many of these are likely to be claims in which difficult issues have arisen. g) Because claimants have agreed to act under the CHA, and not resort to the courts, the sanction of striking out defences in default of progress is not available. h) The parties have revealed a strong and prolonged intention not to resort to the courts and the 2005 CHA must be read in that context. i) It follows from the existence of that intention that means should be available to encourage prompt settlement of claims. j) Although not formally group litigation (procedures were devised before the current group litigation rules came into force), considerations as to ensuring that claims are processed fairly and efficiently and promoting the just disposal of cases, apply as if it was group litigation. k) In those circumstances, the CHA must be read in the light of the CPR and the overriding objective in CPR 1.1. Under 1.1(2)(d), dealing with a case justly includes, so far as is practicable, ensuring that it is dealt with expeditiously and fairly. 1) To give efficacy to the CHA, a means of ensuring that the defendants do not delay in dealing with claims is necessary. Because the sanction of striking out the defence is not available, and in the absence of other proposals, the encouragement to proceed may include imposing financial consequences for delay. m) Especially having regard to the long passage of time since many of the breaches of duty, keeping claimants out of their money is likely to have consequences which may not adequately be addressed by the payment of interest when an award is finally made. n) The defendants concede that keeping a claimant (or his estate) out of his money may give rise to a cause of action in contract, and to the award of damages. o) The defendants have accepted that claims for damages for breach of contract may be made to the supervising judge and may be made without the need to issue a claim form. No fresh court action is required. p) It is also accepted that the judge could award the claimant damages for being kept out of his money. Thus the principle of payments for claims stalled at Capita is accepted. q) The remaining issue of principle is somewhat arid; whether the claim is made under the terms of the CHA or by virtue of breach of the CHA. The' procedure anticipated by the defendants could involve a multiplicity of fresh claims and the need to devise a fresh protocol as to how they should be dealt with, with its own timetable.

[25]The word penalty has been used, including by Mr Hendy, to describe what is sought. In my judgment there is no need to categorise the proposed award in a way which in a routine commercial contract would render it unenforceable. The possibility of a payment constitutes an encouragement to deal with claims promptly. Compensation for being kept out of an award is the sanction for failure to do so.

[26]Since the entire scheme is based on achieving a standardised level of compensation under the several heads claimable, the same approach may be appropriate to the exercise of this power. Once the power is shown to be present, parties who have been so successful in devising a just and practical scheme for dealing with the claims as a whole should not have too much difficulty in agreeing an appropriate formula, or appropriate formulae. Thus I would hold that these arrangements, involving close supervision by the courts, include a power in the supervising judge to make a financial award where claims are stalled by Capita.

[27]Having decided that he had no jurisdiction to order the payment of money, the judge dealt briefly with how he would have exercised his discretion to make the order sought if he had had the power. In my judgment it is not for this court to devise what, if any, scheme for payment is appropriate in the particular circumstances. The supervising judge, with his responsibilities, his broader knowledge of the litigation and of the factors involved, is the appropriate forum. It would be wrong for this court now to make a general order for the payment of interest at the judgment rate or any other rate. The parties should attempt to agree a procedure and the judge may exercise his power in default of agreement. DTI's proposal that CSG should now make a further application to the judge and the "Department will then respond to any such application" will lead to further delay and should not deter attempts to agree.

[28]The claimants succeed on the jurisdictional issue but, the appeal, which is based on a claim for a specific rate of interest, must be dismissed.

Defendants' appeal

[29]The defendants' appeal is against the judge's finding that the CHA permits solicitors acting for claimants to recover a success fee where the agreement provides for the detailed assessment of costs and not for a fixed sum. The CHA provides, in some circumstances, for payment of costs to the solicitor of a successful claimant a sum calculated on the basis of a tariff while, in other circumstances, costs are to be assessed. The rationale for success fees includes encouragement to solicitors to take on difficult cases because the payment of success fees on winning cases allows them to recoup their losses on unsuccessful ones.

[30]At the time of the first CHA in 1999, success fees were not recoverable as between the parties. Sections 27 and 28 of the Access to Justice Act 1999 inserted a new Section 58A into the Courts and Legal Services Act 1990 ("the 1990 Act"). Section 58A(6) provides: "A costs order made in any proceedings may, subject in the case of court proceedings to the Rules of Court, include provision requiring the payment of any fees payable under a conditional fee agreement which provides for a success fee".

[31]By virtue of Section S8A(4) of the 1990 Act, as amended, "proceedings" includes any sort of proceedings for resolving disputes and not just proceedings in a court, whether commenced or contemplated. It is accepted, on behalf of the defendants, that the procedures under the CHA come within that definition.

[32]Sections 27 and 28 came into force on 1 April 2000 as did the Access to Justice (Transitional Provisions) Order 2000 ("the 2000 Order"). Success fees were not claimed under the CHA until 2005 and it is not necessary for present purposes to consider the dates in 1999 and 2000 on which the new provisions took effect.

[33]By virtue of paragraph 2(1) of the 2000 Order a lawyer is not permitted to transfer the funding of proceedings already issued on to a conditional fee agreement which for a success fee. The enforceability of earlier arrangements is preserved by paragraph 2(2) of the 2000 Order. Subject to that, it is not disputed that rules of court provide that costs assessments now sought by claimants will be under CPR Parts 43 to 48, the parts of which material to success fees being introduced by the Civil Procedure (Amendment No.3) Rules 2000 (CPR 5 1.1, 51 PD18, CPD 57.7(1)(2)). It is also common ground that costs are defined in CPR 43 so as to include "any additional liability incurred under a funding arrangement" (CPR 43.2(1)(a)). A funding arrangement exists where a person has entered into a conditional fee agreement which provides for a success fee (CPR 43.2(1)(k)(i)). Detailed provision for the assessment of costs in such cases is made in CPR 44 and 44 PD 11.4 to 11.9.

[34]In 2005, a number of claimants included a success fee in their claims for assessed costs. The defendants submit, first, that on a proper construction of the current CHA, claimants are precluded from recovering a success fee from DTI and, secondly, that it is unreasonable in any event to claim and so to award a success fee. The CHA has not been amended specifically to deal with the change in the law.

[35]The 2005 CHA provides, at paragraph 12.1: "Where a claimant recovers damages under this arrangement his costs will be paid as provided for in Schedule 9(1). Where a claim is denied and a claimant does not receive any damages, the claimant will bear his awn costs".

[36]It is accepted that a significant number of VWF claimants fail altogether in their claims, though the percentage of claims which fail is not' agreed between the parties. It follows that a solicitor acting for a claimant is at risk of his costs being irrecoverable from DTI.

[37]Schedule 9.1 is headed "claimants' solicitors costs" and makes detailed provision for their calculation. . In those situations in which the Schedule provides for an assessment of costs, they are subject to a detailed assessment which, in default of agreement, is conducted by a Costs Judge.

[38]The judge found that the word "costs" had not changed its meaning and now includes the possibility of a success fee. He stated:

"The CHA was made subject to the general law of England and Wales. The parties can be taken to have realised that Parliament could change the law. It has done so in a manner beneficial to claimants and their solicitors and detrimental to the DTI. The consequences of that change cannot be excluded simply by consideration of the circumstances in which the CHA was agreed."

[39]For the defendants, Mr Walker QC submits that the CHA prevents claimants from seeking success fees from the DTI. He submits that the word "costs" in the current CHA should be construed in accordance with the law as it was when the original CHA was made in 1999. Success fees were not at that time permitted. Section 12.1 of the CHA expressly provides that an unsuccessful claimant "will bear his own costs", a provision, it is submitted, which goes against the rationale of success fees whereby solicitors themselves normally cover the costs of unsuccessful claimants.

[40]Reliance is also placed on the anomaly, as the judge accepted it was, which arises, for example, under paragraph 4(f) of Schedule 9(1). That provides that if special damages are recovered in a sum of less than £5000 fixed costs are payable, and therefore no success fee is possible, whereas if the sum recovered is £5000 or more the costs are subject to an assessment by a Costs Judge. The judge's finding would produce the result that a success fee may be recoverable if special damages of £5000 are awarded but not if the sum is £4999. In that context, success fees cannot have been contemplated, it is submitted.

[41]Mr Walker also forcefully submits that there is no need for success fees. The scheme worked well for six years without them. There is a whole range of solicitors prepared to act without success fees. Those solicitors who are claiming them should not be permitted to make more money out of the scheme as a result of an adventitious change in the law. Other methods of finance are available to claimants, including going to a solicitor who does not intend to claim a success fee.

[42]For the claimants, Mr Hendy QC submits that the word "costs" in Section 12.1 and Schedule 9(1) of the CHA bears the meaning it has in law at the material time, that is when costs are assessed. Mr Hendy relies on the transitional provisions and the detailed provisions under the CPR as demonstrating that costs are now to be assessed under the current costs regime, which permits success fees. The regime was in place when the 2005 CHA was made and cannot be ignored. Mr Hendy also refers to the change of terminology in later CHAs to reflect the superseding of the RSC by the CPR. In relation to costs, the word "taxed" from the RSC has in the 2005 agreement been replaced by the word "assessed" in the CPR. Changes have been made to reflect the new regime and no attempt has been made in the later agreements to fix the meaning of the word "costs "to the meaning it bore in 1999.

[43]The judge was in my view correct in his construction of the agreement. The issue turns upon the meaning of the word "costs" in Section 12.1 and Schedule 9(1) of the 2005 CHA. The word should be construed, in my judgment, as now defined, which is the meaning it has in the CPR. That meaning permits the possibility of ordering a success fee. Notwithstanding possible anomalies, I see no justification for freezing the word "costs" in the meaning it bore when the 1999 agreement was made. The assessment is to be made by the Costs Judge under the current costs regime. The provision in Section 12.1 that an unsuccessful claimant "will bear his own costs" does not require present provisions in the rules for success fees to be excluded. Moreover, arguments about whether success fees are needed by claimants under the CHA cannot remove the power of the supervising judge to consider awarding them.

[44]Like the judge, I see no justification for a blanket ban upon success fees in the exercise of the court's discretion. Principles are being developed in accordance with which success fees are paid and these can be applied, or adapted as the case may be, to cover the position of solicitors under the scheme. Arguments will no doubt be advanced on both sides in the present context and I agree with Arden LJ that it is inappropriate for this court to express further views as to how they should be resolved. The judge did mention, without deciding the point, the possibility of a higher success fee in the case of Group C claimants whose claims may be more complex and difficult.

[45]As with other aspects of this scheme, it may be appropriate (in default of agreement) for the supervising judge, possibly with the assistance of a costs judge, to give guidance on the award of success fees by hearing test cases. Applications for success fees are currently stayed and it is for the supervising judge to decide how they should be managed.

[46]I would dismiss the defendants' appeal.

[47]I agree, and would like to add two comments.

The claimants' appeal

[48]The first is in relation to the claimants' appeal. I agree entirely with Lord Justice Pill's analysis and solution, which I understand as saying that the parties have intended, and agreed, by virtue of the CHA and the stay, to confer directly on the court very wide powers. In my judgment that solution is itself supported by considerations of the inherent powers of the court, but also by the following considerations. Lord Justice Pill has already mentioned that it is common ground that damages would be available to individual claimants for being kept out of their money. He also records the judge's holding, which is not disputed, that the CHA contained an implied duty of co-operation. Such an implied duty is a not uncommon feature of even commercial contracts: see CHITTY on Contracts, 29th ed, 2004, Vol I, para 13-011. In the present context, it seems to me that that implied duty arises in a special form. The history of the CHA has shown the parties to it to be alive to the duty and acting in accordance with it. Problem after problem has been worked out consensually. Where complete agreement has not been possible on some issue which has arisen, the parties have sought the court's assistance to a solution. Even in the present context, the parties have gone a very long way in their negotiations with one another to find their own solution to the problem of stalled claims. Their present failure to reach complete agreement has resulted in this excursus to the court. Nevertheless, their attempts, which came close to bearing fruit, have been disclosed. The defendants' appeal

[49]My second comment is in relation to the defendants' appeal. I agree with Lord Justice Pill that the word "costs" in the CHA prima facie bears the meaning which it currently has in the CPR. However, the provision in Section 12.1 of the CHA that an unsuccessful claimant "will bear his own costs" also has to be given effect. It seems to me that such a provision is inconsistent with the costs of unsuccessful claims being recovered in the success fees of successful claims. The agreement that unsuccessful claimants will bear their own costs also means that BCC will not bear those costs. The agreement is therefore a qualification upon what "costs" in general has come to mean. Just because the meaning of "costs" has changed with changes in legislation does not by itself wipe away other contractually agreed provisions of the parties. It seems to me therefore that, whereas claimants and their solicitors might be entitled to recover success fees, those success fees should not bring with them the costs of unsuccessful claims. The CHA is an agreement which, while providing for the settlement of individual claims, does so in a manner which takes account of the context of such claims as part of a huge cohort.

[50]What is the practical effect of this qualification? I agree with Lord Justice Pill that that is for the costs judge to work out and that it is not for the supervising judge or this court to ban the recovery of success fees as a matter of construction or discretion. I trust, but I am not entirely sure, that it will be possible for the costs judge to give effect to the contractual qualification inherent in "will bear his own costs". My point is simply that the contractual qualification cannot be ignored.

[51]I agree with both judgments and wish only to add supplementary observations on what Pill LJ has said about the powers of the court to impose sanctions in relation to the claims stalled at Capita and not be processed in accordance with the CHA.

[52]Pill LJ has referred to compensation and he has disassociated any monetary payment by way of compensation from a payment by way of a penalty for the purposes of the law of contract.

[53]The court has power under the Civil Procedure Rules to apply "sanctions" of various kinds, but monetary sanctions usually take the form of interest or costs. Sanctions of this kind are, however, in my judgment intended to be compensatory in a broad sense to the party who has been wronged.

[54]I would anticipate that the supervising judge would wish in this case to maintain that characteristic. On the other hand, as with orders for costs, I would doubt whether it was necessary for the compensation to be scientifically worked out in individual cases. The judge, if asked to approve a compensation scheme for claims stalled at Capita, must of course act judicially but CPR 3.1(m) confers very wide powers of case management on him for the purpose of achieving the overriding objective of dealing with cases justly.

The defendants' appeal

[55]Like Rix LJ, I agree with the judgment of Pill LJ on this appeal. Rix LJ makes some additional points on this appeal in his judgment. While acknowledging that the supervising judge may need to deal with these points in due course, I express no view on them as they were not fully argued on the hearing of these appeals.