AB & Ors v British Coal Corporation (Rulings appended) [2007] EWHC 1948 (QB)

[2007] EWHC 1948 (QB)

Case No 960177 (INTEREST)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

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

Date 13/08/2007

Before

THE HONOURABLE MRS JUSTICE SWIFT DBE

Between

AB & OTHERSClaimants

BRITISH COAL CORPORATIONDefendants

Mr Allan QC & Mr Bowley (instructed by Irwin Mitchell) for Claimants (CG)

Mr Goss QC & Mr Griffiths (instructed by BRM) for Claimants (UDM)

Mr Spencer QC, Mr Cooper, Mr Antrobus & Mr Hutton (instructed by Nabarro) for Defendants

Hearing Hearing dates: 26 July 2007

Judgment

[1]The issue I have to decide is whether interest is recoverable by the Department for Business, Enterprise and Regulatory Reform (the Department) on monies overpaid to claimants’ solicitors on account of costs. The overpayments were made pending final determination of the level of costs to be paid to claimants’ solicitors for work done on live risk offer settlement (LOROS) and deceased risk offer settlement (DOROS) claims. The relevant history

[2]In my judgment on the OROS costs issue, I set out a detailed history of the dispute between the parties relating to the level of OROS costs. I shall not rehearse that history here. Instead, I shall refer only to those events of direct relevance to the recoverability of interest.

The disbursements claimed

[3]On 18 November 2004, Sir Michael Turner ordered that the appropriate figure for LOROS costs was £1,478. On 22 February 2005, he ordered that the appropriate figure for DOROS cases was £1,675. At the hearings before Sir Michael, the Department had contended for significantly lower figures. They therefore decided to appeal Sir Michael’s orders.

The claims handling agreement

[4]At a further hearing on 11 March 2005, the Department made an application to Sir Michael for permission to appeal his orders. As at 11 March 2005, no OROS costs had been paid. LOROS had come into operation only on 28 February 2005 and DOROS was not due to start until September of that year.

The issue

[5]Before the hearing on 11 March 2005, the Department gave notice to the other parties of their intention to apply at that hearing for a stay of Sir Michael’s orders pending the hearing of the appeal. They intended to seek to persuade Sir Michael that, pending the appeal, they should pay OROS costs only at the figures for which they had contended at the previous hearings, not at the much higher figures ordered by Sir Michael.

[6]In a Skeleton Argument filed for the hearing, the Union of Democratic Mineworkers (UDM) indicated that they would oppose the Department’s application for a stay. They argued that a stay was unnecessary since, in the event of a successful appeal, a mechanism for recoupment of any costs that had been overpaid to claimants’ solicitors could easily be instituted. Following receipt of that Skeleton Argument, the Department reconsidered their position. As a result, their solicitors wrote to the CG’s solicitors (with a copy to the UDM’s solicitors) in these terms:

“You will recall that discussion has taken place over the Department’s possible Application for a Stay to relieve them from paying the disputed element of risk offer costs. Having considered the matter and taking into account the point raised by the UDM in their Skeleton Argument served on 1st March 2005, that “in the event of the Appeal being successful, the mechanism for recoupment of costs can easily be instituted”, we do not propose applying for a Stay provided that the CG agree that in the event of successful Appeal, any overpayment of costs can be recovered by the DTI/Capita. We will clearly need to discuss the mechanics of how this can be done. Please confirm your agreement in principle, in order that we can inform the Court at the hearing on the 11th March 2005.”

The problems in obtaining probate

[7]The CG agreed to the Department’s proposal, as a result of which the Department did not proceed with their application for a stay. At the hearing on 11 March 2005, Mr Spencer QC, for the Department, told Sir Michael:

“…It relates to a Stay. We do not need a Stay. It has been agreed that – if ultimately we are successful on the costs, there can be set offs in the future, and my Lord, that will be sorted out between the parties.”

[8]The agreement that led to the abandonment of the application for a stay was reached between the parties informally and was never put into writing. In retrospect, this is unfortunate, since there has been considerable dispute as to the precise nature and content of the agreement; it is not, however, surprising. In litigation on a scale such as this, the parties are constantly in discussion with each other in an effort to resolve issues as they arise. They are often working under pressure of time and dealing with a number of complex issues concurrently. It is very much to the credit of the parties’ legal teams – and to the benefit of the litigation – that they are able to co-operate and reach agreement on such a high proportion of issues that arise. In this instance, however, the manner in which the agreement was reached has led to a lack of clarity which I must now seek to resolve.

[9]After the hearing on 11 March 2005, Sir Michael’s orders remained in force. In due course, OROS costs began to be incurred. The Department made payments of those costs to claimants’ solicitors in accordance with the figures which had been set by Sir Michael.

[10]On 21 December 2005, the Court of Appeal set aside Sir Michael’s orders and remitted the OROS costs issue back to Sir Michael. Thereafter, the Department continued to pay OROS costs at the same figures as previously (i.e. the figures set by Sir Michael), pending final determination of the appropriate figure for those costs. In the event, for reasons that are well known to the parties and are set out in full in my judgment on the OROS costs issue, that final determination was delayed. It was not until 3 April 2007 that I delivered judgment, setting the levels of costs to be paid (at 2005/6 figures) at £1,103 for LOROS claims and £1,192 for DOROS claims. These figures were significantly lower than those previously ordered by Sir Michael. The current position

[11]The result of my order is that large sums of money previously overpaid to claimants’ solicitors now fall to be repaid to the Department. I understand that the total amount of repayments due amounts to approximately £74 million.

The claimants’ case

[12]Since 3 April 2007, discussions have taken place between the Department, the CG and the UDM and firms of claimants’ solicitors as to how the sums owing should be repaid. It is now agreed between the parties that, where it is possible to do so (and where the solicitor wishes to adopt this course), the monies owing will be set off against costs payable to claimants’ solicitors in the future in respect of claims dealt with under the BCRDL. In some instances, that will not be possible because the solicitor concerned has few outstanding cases and the costs he can expect to receive in the future will not cover the sums owing. In that event, the monies owing will have to be paid directly by the solicitor to the Department. Some firms of solicitors have already made contact with the Department and have arranged to repay the monies they owe by way of lump sum.

The Department’s case

[13]Meanwhile, a dispute has arisen as to whether or not interest is payable on the sums overpaid to claimants’ solicitors. The Department contend that they are entitled to interest as from the date when each overpayment was made. The claimants say that no interest is payable on the overpayments. The amounts at stake are large. I am told that the disputed interest on overpayments has been estimated at a total of between £5 and £8 million. The Department’s case The period from 11 March to 21 December 2005 Compulsion

The cut-off date

[14]The Department contend that, during the period from 11 March to 21 December 2005, the payments made to claimants’ solicitors were paid pursuant to the court orders made by Sir Michael. Following the agreement reached with the claimants as to the repayment of any overpayment of costs, the Department did not pursue its application for a stay. Thus, the court orders remained in force.

[15]The Department rely on the right of restitution. A right of restitution arises, inter alia, when payment has been made under compulsion or under the threat (including the implied threat) of compulsion. One example of a payment under compulsion arises when money is paid pursuant to a court order which is subsequently set aside. The position in such a case is explained in the leading textbook Goff and Jones: The Law on Restitution(7th edition), at paragraph 16-001, in these terms:

“A judge may order the unsuccessful party to a suit to pay money or transfer property to the successful party, and the court order may be complied with before appeal. If the judgment is then reversed or set aside, the appellate court will direct the respondent to restore to the appellant the money paid or the property transferred under the original judgment now reversed or set aside. If he refuses to obey the court’s order, further process will issue. The respondent has been enriched at the appellant’s expense. And the enrichment is an unjust enrichment since the appellant’s “acts [were] done in the execution of justice, which are compulsive”

. Indeed, the appellant may recover even though he satisfied the judgment voluntarily, without waiting for execution. It is then settled that a successful appellant can compel the respondent to restore all benefits gained through the judgment which has been reversed. The appellant has a right of “restitution” of money paid by him, and to property transferred which is still in the defendant’s possession, under a judgment now reversed. The court will also order that interest shall be paid or, if land is to be reconveyed, that mesne profits shall be recovered. As Lord Cairns said in his classical judgment in Rodger v The Comptoir D’Escompte de Paris:

“They will by reason of an act of the Court have paid a sum which it is now ascertained was ordered to be paid by mistake and wrongfully. They will recover that sum after the lapse of considerable time, but they will recover it without the ordinary fruits which are derived from the enjoyment of money. On the other hand, those fruits will have been enjoyed, or may have been enjoyed, by the person who by mistake and by wrong obtained possession of the money under a judgment which has been reversed”

. For that reason they have a right to recover interest, and a fortiori mesne profits, in order to prevent the respondent’s unjust enrichment.” “They will by reason of an act of the Court have paid a sum which it is now ascertained was ordered to be paid by mistake and wrongfully. They will recover that sum after the lapse of considerable time, but they will recover it without the ordinary fruits which are derived from the enjoyment of money. On the other hand, those fruits will have been enjoyed, or may have been enjoyed, by the person who by mistake and by wrong obtained possession of the money under a judgment which has been reversed”.

[16]The Department contend that, up to 21 December 2005, they paid OROS costs under the compulsion of Sir Michael’s orders. They submit that, once those orders were set aside by the Court of Appeal, the Department were entitled, as of right, to a return of monies overpaid, together with interest thereon. In that way, the claimants’ solicitors would be prevented from being unjustly enriched at the Department’s expense. The March 2005 agreement

Conclusions

[17]The Department accept that, during the period up to 21 December 2005, they had a concurrent obligation to make payments to the claimants’ solicitors pursuant to the agreement made by the parties before the hearing of 11 March 2005. However, they say that this does not detract from their submission that they were under a compulsion to pay by reason of Sir Michael’s orders. They argue that there is nothing inconsistent in their position. It is, they say, perfectly possible for a party to be subject to concurrent obligations to pay money, one under a court order and another under a contract. That, they say, is what happened here. They were compelled by Sir Michael’s orders to make payments. In addition, they had made an agreement with the claimants to do so, on the basis that any monies overpaid would be recoverable in the event of his orders being set aside and the levels of OROS costs being set at figures lower than those that Sir Michael had ordered. The Department contend that I should imply into the March 2005 agreement a term giving them a right to interest in the event of overpayment. I shall deal with that contention later in this judgment. The period after 21 December 2005

[18]On 21 December 2005, Sir Michael’s orders were set aside and the compulsion of those orders no longer existed. The Department continued to make payments to claimants’ solicitors as before. Mr Spencer contends that those payments were made on two concurrent bases, namely(a) a threat of compulsion and

(b) the March 2005 agreement between the parties. The threat of compulsion

[19]Mr Spencer accepts that, following the decision of the Court of Appeal it would, theoretically, have been open to the Department to seek the return of all payments made under Sir Michael’s orders (or at least the disputed element of those payments), together with interest thereon. They did not do so. Mr Spencer reminds me that the OROS schemes were introduced in an attempt to speed up the processing of claims. It was plainly in the interests of all parties to the BCRDL – and in the public interest – that the OROS schemes should continue uninterrupted. Any attempt by the Department to recover the payments of OROS costs previously made, or to reduce the level of payments, would have had the potential to disrupt the smooth running of the OROS schemes. The Department wanted to avoid that.

[20]Moreover, Mr Spencer argues that, if an application had been made to the court for repayment or reduction of OROS costs, the claimants would immediately have sought interim payments of costs in respect of work done, and work continuing to be done, in OROS cases. Such an application would have been highly likely to succeed. Mr Spencer says that these circumstances amounted to an implied threat of compulsion which was sufficient to found a right of restitution in respect of monies overpaid as a result of that threat, together with interest thereon. The March 2005 agreement

[21]The Department contend that, after 21 December 2005, they continued to be under an obligation to make payments to the claimants’ solicitors, pursuant to the agreement made by the parties before the hearing of 11 March 2005. This obligation was, they say, concurrent with the threat of compulsion that obliged them to pay. The Department argue that, although the agreement between the parties was silent on the question of interest, the court should imply into the agreement a term giving the parties a right to interest on overpayments (in the case of the Department) and on underpayments (in the case of the claimants). For the Department, Mr Spencer relies on H Cousins and Co. Ltd. v D and C Carriers Ltd

[1971] QB 230

, a case in which the Court of Appeal found that business efficacy required the insertion into an agreement of an implied term giving a right to interest. He argues that such a term is necessary here. He contends that “the officious bystander”, with knowledge of all the circumstances surrounding the agreement (including the large sums of money that could potentially be involved), would have concluded that the agreement must give the parties a right to interest in the event of overpayment or underpayment. He says that, had I set the level of costs higher than did Sir Michael, the claimants would have contended for – and clearly been entitled to – interest on the monies underpaid. The claimants’ case Compulsion or the threat of compulsion

[22]The claimants accept the propositions of law set out in the extract from Goff and Jones which I have quoted. However, they submit that those propositions have no application here. They contend that the payments on account of OROS costs were made solely pursuant to the agreement reached by the parties immediately prior to the hearing on 11 March 2005 and not by reason of any compulsion under Sir Michael’s orders. No right of restitution arises when money has been paid voluntarily. Therefore, their contention is that the Department can have no right to interest under the principles of unjust enrichment.

[23]In support of their contention that the payments were made pursuant to the March 2005 agreement (as opposed to under any compulsion or threat of compulsion), the claimants point to letters written by the Department’s solicitors in August and September 2006. By that time, both the claimants and the Department were becoming concerned at the length of time that had elapsed since the Court of Appeal hearing. They feared that, if the OROS costs issue were not determined within a short time, there would be an insufficient “reservoir” of unsettled claims (and therefore, future costs) to enable monies that may have been overpaid to claimants’ solicitors to be recovered by means of set-off. On 14 August 2006, the Department wrote to the CG, proposing a 50% reduction in the level of costs paid in respect of OROS claims from then on. They wrote:

“As you know, following the Department’s successful appeal against Sir Michael Turner’s OROS costs rulings (of November 2004 and February 2005) the Department has nevertheless continued to pay the Claimants’ Representatives (CRs) the amounts originally ordered by Sir Michael. This was on the basis of the agreement between the parties that any overpayment would be dealt with by way of set off, following the Court’s final determination of the issue.”

[24]The CG responded to that letter by asking the Department’s solicitors whether the Department considered that an order of the court was necessary in order to implement a reduction in the level of OROS costs paid to claimants’ solicitors. On 11 September 2006, the Department replied in these terms:

“The Department’s position is that neither the Claimants’ consent nor a Court Order is necessary in order to implement the proposal. We draw attention to Section 9 of the Appellant’s Notice, from which it can be seen that the Department was seeking an Order that the Orders of Sir Michael Turner (i.e. the Orders setting the costs tariff on LOROS and DOROS cases) be set aside. Paragraph 1 of the Order of the Court of Appeal dated 21 December 2005, allows the Department’s Appeal. Therefore, as from 21 December 2005, Sir Michael Turner’s Orders ceased to have effect. ”

[25]The claimants argue that the terms of the Department’s letters are wholly inconsistent with the contention that the Department were making the payments under compulsion or the threat of compulsion, either after 21 December 2005 or before. They say that the terms of the letter of 14 August demonstrate that the Department considered themselves to be making payments pursuant to the March 2005 agreement, not as a result of any compulsion or threat of compulsion. Moreover, they argue that the Department’s assertion, in their letter of 11 September 2006, that payments of OROS costs could be reduced without the need for a court order showed that they did not consider themselves under any threat of compulsion.

Applications in progress with the probate service

[26]The claimants also point out that, when Sir Michael’s orders were set aside in 2005, the Department did not stop making payments to claimants’ solicitors. They did not reduce the level of payments. They did not seek an order reducing the level of payments. They did not seek an order to recover any of the OROS costs they had paid. For the claimants, Mr Allan QC argues that the reason that the Department did none of those things was because they had in fact been making the payments under the agreement reached before the hearing of 11 March 2005, not pursuant to Sir Michael’s orders. Accordingly, when the orders were set aside, nothing changed.

[27]Mr Allan contends that, after 21 December 2005, there could be no question of the Department being under any compulsion, or threat of compulsion, to make payments of OROS costs to claimants’ solicitors. Sir Michael’s orders had been set aside and no order for a continuation of the payments had been made. Mr Allan says that any suggestion that the claimants might have sought an interim order from Sir Michael, providing for continuation of the payments, is speculative. Even if such an order had been made, it might have provided for the payment of significantly lesser sums than those which had been paid by the Department since March 2005. Mr Allan contends that it is clear that the Department continued to make payments of OROS costs pursuant to its obligations under the agreement of March 2005.

The March 2005 agreement

[28]Where an obligation to pay arises from a contract voluntarily entered into, the question of whether or not there is a right to interest depends on the terms of the agreement. The right of restitution does not arise. The March 2005 agreement contained no express term relating to interest. Thus, say the claimants, the Department are not entitled to interest on overpayments of OROS costs.

[29]The claimants contend that it is not appropriate to imply into the agreement a term giving the Department an entitlement to interest on monies overpaid to claimants’ solicitors. Mr Allan argues that, in order for a term to be implied into a contract, the court must be satisfied that it represented the intention of the parties at the relevant time. He submits that a term should be implied only(a) if it is necessary to give business efficacy to the contract or

(b) if, although not expressed in the contract, it is so obvious a stipulation that the parties must have intended it to form part of the contract. He submits that, for a term to be necessary to give business efficacy to a contract, the court must be satisfied that, without the term, the contract would not work. He contends that that is not the position here.

[30]With regard to the intention of the parties, he relies on a passage from Chitty on Contracts (29th edition) at paragraph 13.007:

“"Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying; so that if, while the parties were making their bargain, an officious bystander were to suggest some express provision for it in the agreement, they would testily suppress him with a common, “oh, of course”

. A term will not, however, thus be implied unless the court is satisfied that both parties would, as reasonable men, have agreed to it had it been suggested to them.The knowledge or ignorance of each party of the matter to be implied, or of the facts, on which the implication is based, is therefore, a relevant factor. Further, since “the general presumption is that the parties have expressed every material term which they intended should govern their contract, whether oral or in writing,” the court will only imply a term if it is one which must necessarily have been intended by them, and in particular will be reluctant to make any implication “where the parties have entered into a carefully drafted written contract containing detailed terms agreed between them””.

Where real problems are being experienced

[31]Mr Allan says that there is no evidence here that would justify a presumption that the parties intended to include a term in the agreement relating to interest. He submits that it is significant that there is no provision within the claims handling agreement (CHA) for interest to be payable on costs. He says that, had the parties considered the question of interest at the time, they might well have referred to the CHA and its absence of provision for interest on costs. He reminds me that the test to be applied is whether it is “necessary” to imply the relevant term, not merely whether it is reasonable, desirable or convenient. Conclusions as to recoverability of interest Compulsion

Conclusions as to recoverability of interest

[32]It seems to me quite clear that, during the period from 11 March to 21 December 2005, the Department was making payments of OROS costs pursuant to Sir Michael’s orders. The decision of the Department not to apply for a stay meant that the court orders remained in force. If, at any time during the relevant period, the Department had ceased to make payments, or had reduced the level of payments made, it would have been open to the claimants to go back to Sir Michael and contend that the Department was in breach of his orders. The Department would have had no answer to that.

[33]I accept the Department’s contention that there is nothing inconsistent in the existence of concurrent obligations to make payments under the compulsion of court orders and also pursuant to an agreement between the parties. The fact is that the March 2005 agreement would never have been made, had it not been for the existence of the court orders. The effect of the agreement was that the court orders remained in place and the Department were under a compulsion to pay in accordance with their provisions.

[34]That being the case, the circumstances prior to 21 December 2005 fall squarely within the principles set out in the passage from Goff and Jones to which I have previously referred. The claimants’ solicitors have enjoyed the benefits of the overpayments made to them, at the Department’s expense. In order to prevent the claimants’ solicitors from being unjustly enriched, the Department has a right to recover the monies overpaid, together with interest thereon.

[35]I do not accept that the Department’s letters of 14 August and 11 September 2006 militate against them having made OROS payments under the compulsion of Sir Michael’s orders. The letters were written after those orders had been set aside, when the compulsion no longer existed. The fact that the orders had been set aside is specifically referred to in the letter of 11 September. If anything, it seems to me that the contents of that letter tend to support the Department’s assertion that, until 21 December, they were acting under the obligation created by the court orders.

Recent death or incapacity of the claimant or personal representative

[36]It is true that the letters make no mention of the existence of a threat of compulsion after 21 December. Indeed, in the letter of 14 August, the assertion is clearly made that payments have continued to be made “on the basis of the agreement between the parties …”. It must be recognised, however, that these letters were written eight or nine months after 21 December 2005, at a time when circumstances had changed and the Department was proposing a reduction in the OROS costs to be paid. Their contents cannot be regarded as determinative of the legal basis for the making of the payments. They do, however, provide some insight into the way in which the Department viewed its obligation at the time.

The threat of compulsion

[37]I now turn to deal with the Department’s contention that, after 21 December 2005, they were under a threat of compulsion such as to give rise to a right of restitution.

[38]Had the Department suddenly acted in December 2005 to reduce the amount being paid to the claimants’ solicitors, there can be little doubt that the claimants would have brought the issue before Sir Michael and would have sought an order that the Department should continue to pay OROS costs at the same rate as previously. The claimants would have relied on the March 2005 agreement and the fact that payments had been made at the same rate for the previous nine months or so. Had the Department considered the matter at that time, it is in my view likely that they would have concluded that, if an application was made to the court, Sir Michael would have ordered that payments should continue at the same level as before.At the time these events happened, the main priority for the parties and for the court was to ensure that the OROS schemes, which had been introduced only recently, ran smoothly and successfully and achieved their intended objective of accelerating the rate at which claims were settled. It is unlikely that the court would have wished to do anything that might have prejudiced the working of the OROS schemes.

[39]In fact, no threat (whether expressed or implied) was actually made by the claimants. It was not necessary for them to make such a threat since OROS payments continued to be made at the same level as before. Moreover, it seems clear that the Department did not at the time consider themselves to be under any threat of compulsion. I consider that they continued to pay OROS costs as before because of the agreement they had made in March 2005 and because they considered it to be in the interests of the smooth running of the litigation to do so.

[40]Even if the Department had been deterred from ceasing to pay, or reducing their payments, by a belief that, if they did not, the claimants would make a successful application to the court to compel them, I do not consider that those circumstances would have been sufficient to amount in law to a threat of compulsion giving rise to the right of restitution.

The March 2005 agreement

[41]The agreement between the parties, made in March 2005, must be viewed against the background of the continuing existence, until 21 December 2005, of Sir Michael’s orders. If no right to interest were implied into the March 2005 agreement, the effect would be that the Department’s rights under the orders and under the agreement would have been mutually inconsistent. It seems to me that, in order to give efficacy to the March 2005 agreement, it is necessary to imply into it a term giving the Department the same rights as under Sir Michael’s orders.

[42]As to the parties’ presumed intentions, it seems highly likely that, had the parties considered the question of interest, they would have included in the agreement a term relating to it. They would no doubt have wished to eliminate any possible inconsistency between the effect of Sir Michael’s orders and of the agreement. It would plainly have been to the Department’s advantage to include a term entitling them to interest on sums overpaid. They were, after all, putting themselves at risk of being kept out of considerable sums of money for a significant period of time. Furthermore, having regard to the effect of the court orders (orders which they were seeking to keep in place), the claimants would have had no grounds for resisting the inclusion in the agreement of a term relating to interest. Indeed, it is unlikely that they would have wished to resist it, since the inclusion of a provision relating to interest would have ensured that, in the event of the court eventually finding that there had been an underpayment of costs to claimants’ solicitors, they would be entitled to interest on the monies underpaid.

[43]It does not seem to me that the fact that the CHA did not include any provision for interest on costs is of great significance. Any delay by the Department in the payment of costs in an individual case would have resulted in the loss of only a modest sum by way of interest. If widespread problems of late payment had occurred, the court could have been asked to intervene and make an appropriate order. In the case of payments on account of OROS costs, however, very large sums were potentially at stake and, as I have said, I am satisfied that, had they adverted to the matter, the parties would have wanted to include in the agreement a provision for the payment of interest.

[44]Moreover, the “officious bystander”, with knowledge of all the relevant circumstances, would surely have assumed that, in the absence of any specific provision to the contrary, the rights of the parties under the agreement would not be any more or less than under the terms of the existing court orders.

[45]I therefore conclude that it is necessary – as well as reasonable and equitable – to imply into the March 2005 agreement a term providing that, in the event of an overpayment or underpayment of OROS costs by the Department, whichever party was the ‘loser’ should have an entitlement to interest. Since my finding is that, after 21 December 2005, the Department continued to pay OROS costs by reason of their obligation under the March 2005 agreement, it follows that they have an entitlement to interest on monies overpaid throughout that period.

The date from which interest is payable

[46]Interest on payments made under a court order which is subsequently set aside must clearly run from the date on which the payments were made. The purpose of the payment of interest in these circumstances is to prevent the payer being unjustly enriched at the expense of the payee and to place the payer in the position that he would have been had the monies not been wrongly paid to the payee. If interest ran only from the date when the relevant order was set aside, this purpose would be negated. Support for this proposition, if support be needed, is to be found in the case of Woolwich Equitable Building Society v Inland Revenue Commissioners

[1993] AC 55

. Thus, a debt arose at the time each overpayment was made and the Department is entitled to interest from the date of each overpayment.

[47]The term that I have found should be implied into the March 2005 agreement must have the same effect. If it does not, the effect of Sir Michael’s orders and of the agreement would be inconsistent. Moreover, I am satisfied that, if (as I have found) the parties would have intended (had they considered the matter) to include in the March 2005 agreement a provision relating to interest, they would also have intended that interest should run from the date that each overpayment (or underpayment) was made. A term providing that interest should run only from the date of the final determination of the OROS costs issue would not have met the requirements of either party.

[48]Mr Allan refers me to the provisions of section 35A of the Supreme Court Act 1981 (the 1981 Act), which provides for the payment of interest. The Department originally made their claim for interest under that section, although, at the hearing, they contended that their right to interest arose also at common law. The relevant part of section 35A provides:

“(1)….in proceedings … before the High Court for the recovery of a debt … there may be included in any sum for which judgment is given simple interest … on all or any part of the debt … in respect of which judgment is given … for all or any part of the period between the date when the cause of action arose and – (a) in the case of any sum paid before judgment, the date of payment; …” (a) in the case of any sum paid before judgment, the date of payment; …”

[49]Mr Allan submits that the cause of action did not arise until my judgment was given on the OROS costs issue on 3 April 2007 and, therefore, there is no entitlement to interest before that date. This analysis is not, in my view, correct. Where the principle of unjust enrichment applies, it is assumed that the payments made were never due (despite the fact that that was not known at the time of payment). Therefore, the debt is incurred, and the cause of action arises, immediately upon payment.

[50]I am satisfied therefore that interest on each overpayment should run from the date on which the relevant payment was made.

The appropriate rate of interest

[51]It is agreed that interest, if payable, should be at the commercial rate, i.e. 1% over base rate.

Simple or compound interest

[52]The Department mounted a late submission in support of compound interest based on the recent case of Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Her Majesty’s Commissioners of Inland Revenue and another

[2007] UKHL 34

. They contend that compound – rather than simple interest – more accurately reflects their loss and accords with usual commercial activity.

[53]The Department recognise that section 35A of the 1981 Act, under which their claim for interest was originally made, provides only for the payment of simple interest. However, they say that they have a common law right to interest and thus are not restricted to simple interest only.

[54]I do not accept the Department’s submissions in relation to this matter. Insofar as their entitlement to interest is founded on the March 2005 agreement (and I have concluded that it was so founded after 21 December 2005 and, in part, during the whole period since 11 March 2005), there can be no entitlement to compound interest. Compound interest would not have been within the contemplation of the parties at the time of making the agreement. If they had considered the issue of interest, they would have intended that it should be paid under section 35A of the 1981 and that it would be simple interest only.

[55]In addition, the Department have provided no proposals as to how interest on a compound basis should be computed; Mr Spencer submits that I should decide the issue of compound interest in principle now and, if I award compound interest, the detail of how it is to be calculated can be worked out – or adjudicated upon by the court - at a later stage. That seems to me very unsatisfactory. Claimants’ solicitors need to know as soon as possible how much they owe so that they can make the necessary arrangements to repay. A process that imports additional delay and complexity into the process of recoupment of tens of thousands of overpayments is in my view highly undesirable and should be avoided.

[56]I therefore order that the Department is entitled to simple interest only.

Final conclusions

[57]In summary, I find that the Department is entitled to interest on overpayments of OROS costs made to claimants’ solicitors, such interest to be simple interest at the commercial rate (1% over base rate) from the date each overpayment was made to the date of repayment.

[58]I consider that this finding is entirely consistent with the justice of the case. By agreeing to pay OROS costs at the rates set by Sir Michael Turner until final determination of their appeal and of the costs issue, the Department acted entirely responsibly and properly, in the interest of all parties to the litigation, and in the public interest. They ensured that the OROS schemes proceeded uninterrupted. As a consequence of their action, the claimants’ solicitors have enjoyed the benefit of very large amounts of public funds to which events have shown that they were not in fact entitled. There can of course be no criticism of the solicitors in that regard. They were not to know what the eventual outcome of the OROS costs dispute would be. However, the fact is that they have had the benefit of the monies overpaid for a considerable period of time, during which time the Department have been deprived of those monies. It would be manifestly unfair and unjust if the claimants’ solicitors were able to retain, by way of windfall, the benefit derived from having had the use of large sums of money to which the court has decided they were never entitled.

Time for payment

[59]I am asked by the Department to set a time limit within which the recoupment of overpayments by way of set-off should be completed; the suggestion is that the process should be completed by March 2008. I am also asked to set a time limit of 28 days within which repayments other than by means of set-off should be made.

[60]I am not prepared to set time limits of this sort at this stage. I appreciate of course the importance to the Department of recovering the monies owed to them with the minimum of delay, but the process of identifying the precise sums owing is not yet complete and it is not possible at present to predict the problems that might be met in complying with any relevant time limits. In any event, the fact that the Department will be entitled to interest on the outstanding monies is likely to encourage early payment by claimants’ solicitors. It will also mitigate any loss to the Department as a result of delays in payment.

[61]I suggest that the schedules to be sent out to claimants’ solicitors in late August or early September should be accompanied by a requirement for claimants’ solicitors (if they have not already done so) to inform the Department, within, say, 14 days, of their proposals for repayment of the sums owing, including their proposed timescale. The responses can then be collated and, by the time of the October hearings, it should be possible to gain a clearer picture of the scale of the problems likely to be encountered in recovering the monies. At that hearing, I can give further consideration to the imposition of time limits for payment. (DOROS PROBATE CUT-OFF) JUDGE’S RULING Mr David Allan QC (instructed by Irwin Mitchell) for the Claimants (CG) Mr John Cooper (instructed by Nabarro) for the Defendants Hearing date: 27 July 2007 The Honourable Mrs Justice Swift DBE : The background

[1]In order to become eligible for a DOROS payment, a claimant must meet certain ‘qualifying criteria’. Those criteria are set out in Appendix D to the Deceased Claims Cut-Off order that I made on 21 December 2006. Once those criteria have been met, the claimant has demonstrated ‘qualification’ for a DOROS payment. The Department’s claims handlers, Capita, will give the claimant’s representative (CR) official notification of that fact.

[2]No DOROS payment will, however, be made unless and until the claimant’s claim has been ‘validated’. This is done by providing to Capita documentation evidencing a grant of probate or letters of administration (which, for convenience, I shall refer to as ‘probate’) or a signed indemnity. There are obvious risks in providing an indemnity in all but the most straightforward case. In practice, therefore, validation is usually demonstrated by the production of evidence that probate has been obtained.

[3]My order of 21 December 2006 set a cut-off date by which all DOROS claims must have fulfilled the criteria necessary to demonstrate qualification for a DOROS payment. On 16 May 2007, because of problems that were being encountered by claimants' solicitors in meeting the cut-off, I extended it by a month, to 27 July 2007. That deadline has now passed. Theoretically, therefore, all DOROS claims that are capable of fulfilling the criteria for qualification should have done so by that date. In reality, however, there may well be large numbers of claims (possibly running into thousands) in which there is a dispute as to whether or not the claim met the relevant qualifying criteria before the DOROS Qualification Cut-Off date, or where the CR is alleging that the claim has been prevented from meeting the DOROS Qualification Cut-Off date by some delay or error on the part of Capita.

[4]As at 1 July 2007, there were just over 10,000 DOROS claims with outstanding issues preventing them from meeting the qualifying criteria. Of those 10,000 claims, 6,430 also required evidence of probate before the claim could be validated and a DOROS payment made. Not all those claims will remain in DOROS; some will proceed to the medical assessment process (MAP). However, a significant number will have achieved qualification before 27 July 2007 and others may do so later, pursuant to the DOROS Qualification Cut-Off dispute procedure; those claims will remain within DOROS. There were a further 14,405 claims in which qualification had been demonstrated (and confirmed by Capita), but evidence of probate had still not been provided so the claim was not yet validated. The number of DOROS claims in which evidence of probate remained outstanding was therefore, as at 1 July 2007, somewhere between 14,405 and 20,000.

The issue

[5]The Department seek the imposition of a cut-off date, by which date claimants who have not provided evidence of probate will (subject to the cut-off dispute procedure) have their DOROS claims struck out. They argue that such a cut-off is necessary as part of the orderly closing down of the BCRDL compensation scheme. Originally, the Department proposed that there should be one probate cut-off date, applying to all deceased claims. Now, however, they have accepted that there should be separate cut-off dates for DOROS and deceased MAP claims.

[6]The cut-off date the Department propose for DOROS claims is 29 February 2008, i.e. over 6 months from now. The CG do not oppose the proposal for a cut-off in principle, but contend for a process which would provide a more comprehensive ‘safety net’ for claims where the obtaining of probate gives rise to real difficulty. I heard argument on this issue on 27 July 2007. The problems in obtaining probate

[7]Claimants' solicitors have for some time been making representations about the difficulties that they encounter with obtaining probate in certain cases. Many claims are brought on behalf of estates, the miner and his widow (if any) having died. In some cases, they will have died many years ago. There can be real difficulties in determining in whose name probate should be obtained. On occasion, multiple grants may be necessary. Those, and other problems that arise on occasion, were fully described in a Report entitled, “Why are so many claims held up awaiting probate?”, which was produced by the CG last year.

[8]Mr Peter Evans, partner in Hugh James, member of the CG and co-author of the Report, provided a witness statement for the hearing on 27 July. He gave an account of the difficulties experienced within his own firm (which has dealt with large numbers of deceased claims) in obtaining probate. Staff within the probate department at Hugh James estimate that, in about 56% of claims, the obtaining of probate is straightforward. In the remaining 44% of claims, there are problems in obtaining probate which can give rise to delay. Mr Evans identified the following circumstances as those most likely to cause delay: i). The involvement of a foreign domestic issue. This occurs where the claimant dies abroad and his/her estate becomes subject to the operation of a foreign system of law. ii). Lost wills, i.e. wills that are known to exist but cannot be found. iii). Wills that are in existence but are physically damaged, to the extent that they would not be acceptable to the probate registry without further evidence. iv). Claims where the widow or personal representative lacks capacity. v). Claims where a special order from the court is required before probate can be obtained.

[9]At the hearing, the CG identified a number of other problems that caused particular difficulty. These were: vi). The need for multiple grants. vii). The entry of a caveat. viii). The need for an invalid prior grant to be cleared. ix). The death of the claimant or personal representative.

[10]The Department produced a witness statement from Mr Peter Burch, the district probate registrar in Manchester, commenting on the various problems identified by Mr Evans and the CG. I do not need to deal in detail with his evidence. Its general effect was that all the problems identified (apart from some cases involving deaths abroad and entry of a caveat) were capable of solution without undue difficulty and delay.

[11]In response, the CG obtained a witness statement from Ms Lynn Wheeldon, partner and probate practitioner of Hugh James. She made the point that Mr Burch was – understandably – viewing matters from the perspective of a probate registrar who is accustomed to applying court procedures to probate applications that had been prepared by others. She observed that his witness statement took no account of the practical difficulties experienced by practitioners in collating the evidence and information necessary to present a probate application to the court and to satisfy the relevant criteria. She went on to set out in some considerable detail the precise difficulties which were in her experience encountered in dealing with the various problems referred to above.

[12]I do not doubt Mr Burch’s expertise, or the accuracy of his observations, but there is force in Ms Wheeldon’s point that he is necessarily viewing the process of obtaining probate from the viewpoint of the court, rather than from that of the practitioner. I suspect also that Mr Burch’s approach to some of the problems that arise may be rather more robust and pragmatic than that of some of his colleagues, with the result that matters that cause little or no problems in Manchester may present greater difficulties elsewhere. I am satisfied that, in some cases, real problems exist for claimants' solicitors and that these problems can give rise to delays which are not caused by any fault on their part or that of their clients. I welcome the Department’s proposals for discussions between Mr Burch and Ms Wheeldon about the way in which some of these problems are best handled. I hope that these discussions will result in a reduction of some of the difficulties currently being experienced by CRs. However, it seems inevitable that certain problems will persist.

[13]I come now to the competing contentions of the parties. These underwent certain modifications during the July hearings and the proposed orders advanced by each party were amended accordingly. The cut-off date

[14]The Department propose an order whereby, in all claims where Capita notifies the CR that the claim has demonstrated qualification for DOROS, there should be a cut-off date of 29 February 2008 to submit satisfactory evidence of entitlement to a DOROS payment (i.e. probate or an indemnity). Claims that fail to meet the cut-off should (subject to the disputes procedure) be struck out.

[15]CRs dealing with claims that met the DOROS Qualification Cut-Off on 27 July 2007 will, by 29 February 2008, have had at least seven months in which to obtain, and provide Capita with, the necessary evidence of probate. Even assuming that no work on the preparation of an application for probate has yet been done, that should still be sufficient time, save in claims involving the most intractable problems.

[16]However, the effect of the Department’s proposal is that the cut-off date of 29 February 2008 would apply also to claims which have failed to meet the DOROS Qualification Cut-Off but which, as a result of the DOROS Qualification Cut-Off dispute procedure, are in the future permitted to re-enter the DOROS process. This might occur if, for example, Capita were to concede (or I were to find) that an error or delay on their part had caused the claim to miss the cut-off. As I have said, there is reason to believe that there may be a large number of cases where CRs will contend that such an error or delay has happened. A claim will also re-enter the DOROS process if the dispute procedure reveals that it had in fact met the qualifying criteria for DOROS before the DOROS Qualification Cut-Off date, despite the fact that Capita had failed to inform the CR of that fact, or had mistakenly informed the CR that the claim had failed to qualify.

[17]The DOROS Qualification Cut-Off dispute procedure will take some time to go through its various stages. By the time those claims that are in dispute have been examined, and a decision has been taken by Capita (or me) as to whether they should be permitted to re-enter the DOROS process, the 29 February cut-off may be very close; it may even have passed. The CG say that, in order to give sufficient time for CRs in these claims to obtain probate, the cut-off date should be set at six months from the date when Capita notifies the CR that the claim has demonstrated qualification for DOROS or 29 February, whichever is the later. That would mean that, in every claim, a claimant would have six months after qualification in which to obtain probate.

[18]At the hearing, the Department opposed an extension of the DOROS Probate cut-off date for claims that have, on the face of it at least, failed to meet the DOROS Qualification Cut-Off, but are in the future deemed to have qualified for DOROS. Their opposition was inconsistent with the contents of their Position Paper, filed in preparation for the hearing, which contained (at paragraphs 22 and 24) a proposal identical to that now made by the CG. Although that Position Paper dealt also with deceased MAP cases, it is clear that the extension period was being proposed for DOROS claims also. At the hearing, the Department, however, argued that there should be no such extension.

[19]On behalf of the Department, Mr Cooper submits that it had never been intended that CRs should delay, until the point at which a claim qualified for DOROS, before starting the process of obtaining probate. He points out that the criteria for qualification for, and entitlement to, a DOROS payment are few. One of the criteria is the requirement to demonstrate entitlement to a DOROS payment by providing evidence of probate or an indemnity. It is, he says, up to CRs to ensure that the criteria, including that requirement, are met expeditiously. Mr Cooper submits that this is particularly so when a claim has failed to meet the DOROS Qualification Cut-Off and the CR is disputing that failure. In such a case, he says, it is incumbent on the CR to get on with the work involved in obtaining probate so that, if the claim is permitted to re-enter the DOROS process, it is in a position to meet (or has already met) the DOROS Probate Cut-Off.

[20]The Department is concerned that, if there were to be a six-month extension of the DOROS Probate Cut-Off, this would have the effect of causing considerable delay. By the time the DOROS Probate Cut-Off dispute procedure has been concluded, a very long time would have elapsed. There would be a ‘knock-on’ effect on other cut-offs and the result could be a delay to the end point of the BCRDL scheme as a whole.

[21]For the CG, Mr Allan QC submits that it has been recognised by both parties throughout the processing of deceased claims under the BCRDL that it is reasonable for CRs to defer the obtaining of probate until entitlement to damages has been established. He says that this is because the BCRDL process is intended to be (and is consistently represented by the Department as being) risk-free for claimants. If monies are expended on obtaining probate in a claim which ultimately proves unsuccessful, the costs associated with obtaining probate will have been incurred unnecessarily and the claimant will be out of pocket. He submits that CRs should not therefore be criticised for their practice in DOROS claims of dealing with the issues of qualification and of obtaining probate consecutively, rather than concurrently.

[22]Mr Allan submits that an extension of the DOROS Probate Cut-Off is needed for claims that have ‘failed’ the DOROS Qualification Cut-Off but are subsequently permitted to re-enter the DOROS process. He submits that it would not be reasonable for CRs to have to proceed to obtain probate – in particular in a case where there are likely to be problems of the nature referred to previously - when they do not know what the outcome of the dispute will be.

[23]There is a need to ensure that claimants whose claims have qualified for a DOROS payment should not be deprived of a DOROS payment because of genuine and unavoidable problems in obtaining probate that cause them to miss a cut-off date. That need has to be balanced with the need, in the public interest and the interests of the parties, to bring the BCRDL to an orderly and timely conclusion. It is important that the cut-off is not such as to encourage claimants' solicitors to delay in obtaining probate in claims where no real problem exists. It is also necessary to consider the ‘knock-on’ effect of the cut-off arrangements for DOROS claims upon future cut-offs that will fall to be imposed (in particular, the deceased MAP cut-off that the Department will be seeking in October) and upon the projected end date for the BCRDL, which is the early part of 2009.

[24]I understand why CRs have in the past adopted the practice of postponing the obtaining of probate until they know that a claimant will be entitled to a DOROS payment. However, as we approach the end of the DOROS scheme, and of the BCRDL compensation scheme as a whole, it seems to me that the need to progress the task of obtaining probate must be given greater priority. It is not acceptable, in a case which has failed the DOROS Qualification Cut-Off, for CRs to take no step at all in connection with probate until after they have been notified that a claim is to be permitted to re-enter the DOROS process. I do not mean that the CR should actually have to make the probate application before that time. However, they must put themselves in a position to act as soon as possible after notification of qualification. I propose to allow a three-month extension period after the notification of qualification of a claim for a DOROS payment for the obtaining of probate: see paragraph 1 of my order. Provided that sufficient preparatory work has been done in advance, this period should be sufficient time in which to deal with all but the most difficult problems associated with obtaining probate.

[25]The sort of preparatory work I have in mind is ascertaining whether there is a will in existence and, if so, obtaining a copy and ensuring that it is in an undamaged state; taking steps to ensure that the claimant and/or personal representative is alive and well; if the claimant or personal representative has died recently, confirming that this did not occur abroad; taking preliminary steps to identify the person most suitable to act as personal representative. There are no doubt other steps that can be taken. Failure to take any such steps, in a claim which subsequently fails to meet the DOROS Probate Cut-Off, will be a relevant matter to be taken into account when considering any application that the case should not be struck out. Applications in progress with the probate service

[26]The Department proposes that the dispute procedure should operate in the same way as with other cut-offs. However, they suggest two additional provisions. The first is designed to deal with the position where, at the time of the cut-off, the application for probate has been submitted, but not yet dealt with by the registry. They propose that, where a CR challenges the DOROS Probate Cut-Off and provides evidence that demonstrates that s/he applied for probate at least 30 days before the DOROS Probate Cut-Off date and the application was ‘fit for purpose’ then, provided that(i) the probate service confirms to the Department that the application was submitted during the period of 30 days prior to cut-off and that the application was fit for purpose;

(ii) the application, once processed, is successful and

(iii) evidence of probate is submitted to Capita within 14 days of receipt from the probate service, the case will not be struck out and the DOROS payment will be made. The Department intends that an application for probate will be deemed ‘fit for purpose’ if it meets the quality criteria contained in a checklist provided by the probate service.

[27]In its proposed draft order, the CG has modified this additional provision, as a result of which its effects have been significantly relaxed. Their proposed order provides that a claim shall be deemed to have met the DOROS Probate Cut-Off if the CR can show that s/he applied for probate at least 30 days before the DOROS Probate Cut-Off date and if s/he submits evidence of probate within 14 days of receiving the same from the probate service. There is no requirement that the probate application should have been fit for purpose. The CG argue that the requirement for a ‘fit for purpose’ application would add an unnecessary additional layer of bureaucracy and complexity to the cut-off provisions. They also say that the proposal is objectionable in that it gives to a third party (the probate service) responsibility for deciding whether or not the probate application is fit for purpose.

[28]The Department, on the other hand, contends that, if there was no requirement that the application should be fit for purpose, this would enable a CR to put in an obviously defective probate application just in order to meet the 30 day deadline and, thereafter, to amend the application on a limitless number of occasions before eventually obtaining probate.

[29]I share the concerns of the CG about the procedure proposed by the Department and, in particular, the involvement of the probate service in adjudicating upon the fitness for purpose of applications made to them. Quite apart from the undesirability (as it seems to me) of giving that function to a third party (rather than the court), it could place an unwarranted burden on the probate service which they may be reluctant to shoulder. Equally, I regard the procedure proposed by the CG as too lax in that it provides no end point for the submission of evidence of probate once an application has been made within the requisite time period.

[30]It seems to me that there is a way in which the concerns of both parties could be met. I am told that, if a probate application meets the probate service’s quality criteria, it will usually be processed quite quickly. I propose to order that, where a CR(a) provides evidence to Capita before the DOROS Probate Cut-Off date for the claim, that s/he applied for probate at least 30 days before the DOROS Probate Cut-Off date; and

(b) submits evidence of probate to Capita within 14 days after the cut-off date, the claim will be deemed to have met the cut-off.: see paragraph 3 of my order. That should ensure that applications that were in order and were submitted well in advance of the DOROS Probate Cut-Off date, but which had not, for some reason, been dealt with by the probate service before that date, will not fail the cut-off. Any further untoward delay on the part of the probate service (and I am told that such delays rarely occur) would have to be the subject of a challenge in the course of the dispute procedure. Where real problems are being experienced

[31]The second addition to the dispute procedure proposed by the Department relates to those circumstances which the Department accept, on the basis of Mr Burch’s evidence, can cause genuine difficulties and delay in obtaining probate. They propose that, where a CR provides satisfactory evidence that one (or more) of three specific circumstances is present, the DOROS Probate Cut-Off date should be extended by three months to 30 May 2008. The circumstances identified are(a) where the claimant or personal representative died, or became a patient, within a period of three months prior to the cut-off date;

(b) where the claim became affected by a foreign domicile issue within a period of three months prior to the cut-off date; and

(c) where a caveat has been entered in respect of the deceased miner’s estate and this was still in force three months prior to the cut-off date.

[32]The CG contend that the terms of this proposed extension do not go far enough to deal with the myriad problems that can arise in connection with obtaining probate, and with the lengthy delays that can result. They propose a different solution whereby, where a claim has failed to meet the cut-off and the relevant CR provides evidence by means of a statement (in the form of a draft provided) that the claim is affected by one of eight circumstances, the cut-off date should be extended by six months, to 31 August 2008.

[33]The draft statement, when completed, would provide information about the circumstance(s) that is/are causing the delay and the steps that have been taken to obtain a grant. It would require any relevant documents in support of the CR’s contentions to be attached. The circumstances identified by the CG as giving rise to the provision of an extension of time are(a) foreign domicile;

(b) the need for multiple grants;

(d) damage to or marking of the will;

(e) the entry of a caveat;

(f) the need to clear an invalid prior grant of probate;

(g) the personal representative has become a patient;

(h) the claimant or personal representative has died. The solicitor completing the statement would be required to say that his/her firm would use its best endeavours to obtain probate as soon as possible. He or she would also have to sign a statement of truth. The CG say that this provision would ensure that a claim whose progress had been delayed by genuine problems in the obtaining of probate was not unfairly struck out.

[34]The Department oppose this proposal which would, they say, import two distinct stages into the cut-off process and would lead to a delay of the end point of that process. This would, they say, have a ‘knock-on’ effect on future cut-offs – notably the deceased MAP Probate cut-off. The Department also express concern at the level of information (or lack of it) that would be provided in the proposed draft statement. They point out that, although the draft statement contains a section to be signed by Capita, indicating whether they do or do not agree to the extension requested, the CG have made no suggestions as to the basis on which Capita should make its decision. The CG’s proposed order contains no reference to a decision by Capita (indeed it suggests that an extension will follow automatically once a statement has been provided) and provides for no means by which a claimant can challenge Capita’s decision.

[35]As I have said, I accept that, in some cases, the obtaining of probate causes real problems for CRs. However, I do not consider that the proposed procedure for the provision of witness statements outlining the problems being encountered in a claim, followed by an (apparently) automatic ‘blanket’ extension of six months is an appropriate way of dealing with those problems. It seems to me that the time limits within the order I have drafted should permit sufficient time to obtain probate in all claims save for those with the most intractable problems. If claims such as those result in a failure to meet the DOROS Probate Cut-Off, the matter will have to be dealt with through the dispute procedure. It is at that point that the CR should have to set out details of the problems s/he has encountered, the steps s/he has taken, when s/he took them and with what effect, and should produce any relevant correspondence and other documentation. The draft letter provided by the CG might provide a starting point for a suitable template for that purpose. Recent death or incapacity of the claimant or personal representative

[36]I have provided for one exception to this general rule, adopting part of the Department’s proposal. The death of a claimant or personal representative can cause difficulties which could not have been foreseen or guarded against. I have therefore included in my order a provision whereby, where the death of a claimant or personal representative occurs within a period of 90 days before the DOROS Probate Cut-Off date for the claim, and the CR provides evidence to Capita of that fact before the DOROS Probate Cut-Off date, the claimant will have an extension of 90 days to that Cut-Off date: see paragraph 4 of my order. That provision should also catch cases where there are problems associated with the claimant or personal representative having recently died abroad.

[37]I am willing, in principle, to provide for a similar extension in a case in which the claimant or personal representative has become a patient within the previous 90 days, as suggested by the Department. However, I wonder whether this is necessary or appropriate. My understanding is that patients are not subject to the various cut-off and strike out procedures. Furthermore, I was told at the hearing that patients did not qualify for DOROS payments. I should be grateful if this could be clarified by the parties before I finalise my order.

[38]It seems to me desirable that the dispute procedure should not become clogged up with claims where there is, in reality, no dispute between the parties. The two circumstances for which I have provided safeguards, namely where the probate application has been submitted recently and is being processed by the probate service (see paragraph 30 of this ruling) and where the claimant or personal representative dies shortly before the cut-off date (see paragraph 36 of this ruling) should not result in any dispute. Provided that the conditions I have outlined are met, claims where those circumstances arise will either (in the first case) be deemed to have met the cut-off or (in the second case) will be entitled to an extension to the cut-off date. When drafting my order, therefore, I have removed them from the dispute procedure and placed them in the body of the order.

[39]I attach a copy of my order. This will not be finalised until after my ruling has been given formally in Court. (DOROS DISBURSEMENTS) JUDGE’S RULING Mr David Allan QC (instructed by Irwin Mitchell) for the Claimants (CG) Mr James Goss QC (instructed by BRM) for the Claimants (UDM) Mr Simon Antrobus (instructed by Nabarro) for the Defendants Hearing dates: 27 July 2007 The Honourable Mrs Justice Swift DBE : The issue

[1]The fast track, or optional risk offer settlement (OROS), schemes for processing claims within the British Coal Respiratory Disease Litigation (BCRDL) came into operation in 2005. The fast track schemes for live claimants, and for the widows and estates of deceased miners, are known respectively as LOROS and DOROS. The LOROS scheme came into operation on 28 February 2005 and the DOROS scheme was introduced on 1 September 2005.

[2]The issue I have to decide is whether, in a DOROS claim, claimants’ solicitors should be entitled to disbursements, in addition to base costs and an additional payment to cover the obtaining of grant of probate or letters of administration (which, for convenience, I shall refer to as ‘obtaining probate’). The disbursements claimed

[3]No disbursements arise in LOROS claims. However, in DOROS claims, it is sometimes necessary, in order to meet the requirements of the scheme, for a claimant to produce a marriage certificate, a death certificate and/or a birth certificate. If the claimant does not possess a certificate that s/he is required to produce, a copy must be obtained from the local registry office; this involves the payment of a fee. The costs involved are relatively modest: £7 for a birth or death certificate and £12 for a marriage certificate. If a process known as a “priority search” is required in order to produce the relevant certificate, a fee of £20 is payable. The co-ordinating group of claimants’ solicitors (the CG) estimate that costs in connection with the obtaining of a certificate are incurred by claimants’ solicitors in approximately one third of DOROS claims. To put that into perspective, I was told that, to date, about 80,000 DOROS payments had been made and about 20,000 DOROS claims are still to be concluded. The claims handling agreement

[4]Paragraph 60 of the claims handling agreement (CHA) provides that:

“Costs and disbursements will be paid in accordance with Schedule 17.”

Schedule 17 of the CHA sets out the agreed tariff of costs payable for the different categories of claims processed under the CHA. In respect of each category, there is a figure for base costs, which is expressed as being payable in addition to VAT and “reasonable disbursements”. Schedule 17 also provides for additional payments to be made to claimants’ solicitors over and above the base costs in certain circumstances. For example, in deceased claims, a sum (£232 in 2005/06) is payable for the costs of obtaining probate, where it is necessary to do so for the purposes of the claim.

The relevant history

[5]The provisions of Schedule 17 do not apply to OROS claims. When the OROS schemes were devised, it was recognised that the levels of costs appropriate for such claims would have to be set by a separate agreement between the parties or, in the absence of such an agreement, by the court. In the event, no agreement was possible and the matter came before Sir Michael Turner, then the Managing Judge of the BCRDL, for decision.

[6]On 22 February 2005, Sir Michael delivered his reasoned ruling on the appropriate level of DOROS costs. In the course of argument on the issue, the claimants had contended that claimants’ solicitors should be entitled to receive (in addition to base costs at whatever level Sir Michael deemed appropriate) reasonable disbursements, namely the costs of obtaining probate and of obtaining (when necessary) the claimant’s medical records. Sir Michael ruled that the costs of obtaining probate should be recoverable as a reasonable disbursement, but not the costs of obtaining medical records. No application was made for payment of the costs of obtaining any certificate necessary in order to qualify for DOROS, and Sir Michael did not therefore rule upon that matter.

[7]Subsequently, the Department appealed Sir Michael’s ruling of 22 February 2005, together with his earlier ruling on the appropriate level of costs in LOROS claims. The appeal was directed solely at the levels of base costs ordered. There was no appeal in respect of his ruling on disbursements.

[8]Pending the appeal, the Department paid OROS costs at the levels ordered by Sir Michael. After the successful appeal, they continued to pay, pending final determination of the OROS costs issue. In addition to the base costs ordered by Sir Michael, the Department paid, by way of disbursement, the costs of obtaining probate, where such costs had been necessary for the purposes of the claim. It seems that, at some point, the question of payment of the costs associated with obtaining any necessary birth, marriage or death certificates was raised with the Department by claimants’ solicitors and/or the CG, but the Department refused to make any payment in respect thereof.

[9]For reasons that are well known to the parties – and set out fully in my OROS costs judgment – the final determination of the OROS costs issue was delayed and it was not until 3 April 2007 that I delivered judgment, setting out the levels of costs to be paid in LOROS and DOROS claims. That judgment was delivered after a hearing which had lasted for four days, from 26 February until 1 March 2007. During the period of 14 months or so between the Court of Appeal’s judgment and the hearing before me, there had been at least five directions hearings before either Sir Michael or myself. At none of these hearings was there (so far as I am aware) any mention of a possible claim by the claimants for the costs of obtaining the certificates necessary to qualify for a DOROS payment.

[10]Nor did any mention of the continuing dispute about the payment of disbursements in DOROS cases appear in the extensive documentation that was prepared for the hearing of the OROS costs issue. The matter was not referred to in oral argument and did not feature in my judgment. At paragraph 30 thereof, I stated that, throughout my judgment, I would be referring to base costs (i.e. excluding VAT and disbursements). I was asked to, and did, deal with the costs of obtaining probate, where such costs were incurred for the purpose of the claim. I ordered that those costs should continue to be paid in appropriate cases, in addition to base costs.

The current position

[11]Following the delivery of my judgment, the CG sought clarification as to whether I had intended that reasonable disbursements should be paid, in addition to the base costs at the level I had set. In fact, for the reasons I have already mentioned, my judgment was clear. I had not considered disbursements at all, save for the costs associated with obtaining probate. That was because I had not been asked to consider any other form of disbursement. The claimants’ case

[12]The claimants now ask me to rule on the question of the recoverability, by way of disbursements, of the costs of obtaining certificates for the purposes of a DOROS claim. They say that the court has not previously adjudicated on the matter, so it is open to me to decide it now. They submit that, since the production of a certificate is, in certain circumstances, necessary in order to qualify for a DOROS payment, any costs involved in the obtaining of such a certificate should plainly be recoverable. They point to Schedule 17 of the CHA, which provides that “reasonable disbursements” are payable, in addition to VAT and base costs. For the claimants, Mr Allan concedes that the question of disbursements should have been raised at the hearing of the OROS costs issue. However, he submits that the fact that it was not raised does not prevent me from deciding the matter now.

The Department’s case

[13]For the Department, Mr Antrobus submits that the claimants are seeking to raise a further issue in connection with OROS costs, which was the subject of a final judgment on 3 April 2007. He argues that it would be inappropriate and inequitable to permit them to do so. He submits that the issue of disbursements was dealt with by Sir Michael in February 2005. If the claimants had wished to raise a further head of disbursements, in addition to the two heads they had contended for on that occasion, they should have done so at that hearing. They did not do so and, moreover, they failed to do so during the period of more than two years that passed between Sir Michael’s ruling and the final determination of the OROS costs issue in April 2007.

[14]Mr Antrobus argues that, at the time he made his ruling, Sir Michael was giving his final decision about the level of DOROS costs. The claimants did not appeal against Sir Michael’s order in relation to disbursements. The Department had acted on that order. They had paid the disbursements that were allowed by the order and no others.

[15]Mr Antrobus says that, some time during 2006, the question of the costs of obtaining the necessary certificates was raised as a generic issue for discussion between the parties. Their discussions did not resolve the issue. However, the claimants did not raise the matter with Sir Michael or with me, or ask either of us to determine the dispute. The Department contend that my judgment brought finality to the OROS costs issue and that it is not open to the claimants to raise a new point at this stage. Their primary contention is that it is not open to them, as a matter of law, to do so. Alternatively, they argue that, if I have jurisdiction in my case management rôle to entertain the claimants’ arguments, I should exercise my discretion by declining to do so.

[16]Mr Antrobus submits that, since Sir Michael’s ruling, the Department have made DOROS payments in about 80,000 claims. Those claims are now closed. If I were to order that the costs of obtaining certificates were recoverable, those claims (or at least a significant proportion of them) would have to be re-visited. This would be so whether the onus was placed on the Department, or on claimants’ solicitors, to identify those claims where such costs had been incurred. He submitted that this would place an excessive administrative burden on the Department. The re-opening of so many closed claims would be an expensive exercise, in terms of both human and financial resources. The use of those resources would not be capable of being compensated adequately by an order for costs. Conclusions

The March 2005 agreement

[17]The Department contend that, the question of costs having been decided by Sir Michael in February 2005 and finally determined by me in April of this year, it is not, as a matter of law, open to the claimants to seek at this stage to raise a new matter upon which the court was not asked to adjudicate at either of the substantive hearings, nor at any of the numerous hearings that took place in the period between them.

The period after 21 December 2005

[18]I am not prepared to go as far as that. In complex ongoing litigation such as the BCRDL, there will from time to time be issues that arise unexpectedly or which may have been overlooked at the appropriate time and have to be determined at a later stage. It seems to me that, when this arises, I should use my case management powers to decide whether to allow the relevant party to raise the issue. In doing so, I must have regard in particular to any possible prejudice to the litigation as a whole, or to any of the parties to the litigation, that would or might result from permitting the party to raise the matter late, or from making or refusing the order sought.

The threat of compulsion

[19]I am quite satisfied that it would not be right to re-open the question of the disbursements payable in DOROS claims. About 80,000 DOROS claims have already been settled. If I were to accede to the claimants’ application, it would be necessary for claimants’ solicitors to check through all their closed DOROS claims in order to identify those where the costs of obtaining the necessary certificates had been incurred. The Department (or their claims handlers, Capita) would potentially have to re-visit, at the least, about 27,000 (i.e. a third of 80,000) DOROS claims. Those exercises would involve a huge expenditure of resources, at a time when both claimants’ solicitors and Capita are under great pressure to process claims and meet cut-off dates. They are also engaged on the complex process of identifying, and arranging the repayment of, large overpayments of OROS costs. The additional work would be a distraction which could only be detrimental to the processing of unsettled claims and to the progress of the litigation as a whole.

[20]The claimants argue that, in practice, it is unlikely that claimants’ solicitors would consider it appropriate to carry out a trawl of past claims, since it would (or may) not be cost effective to do so. That may or may not be the case. I agree with Mr Antrobus that it is not possible to predict the effect of an order in the claimants’ favour. I am not prepared to run the risk of initiating an exercise on the scale I have described.

The March 2005 agreement

[21]It would be possible to avoid the problems I have identified by making an order restricted to those DOROS claims that were settled from now on. However, it seems to me that that would be unfair to those claimants’ solicitors who have dealt with their DOROS claims promptly and efficiently; it might have the unintended effect of benefiting the more dilatory. In any event, the introduction, late in the life of the DOROS scheme, of a new category of disbursements to be paid to claimants’ solicitors would inevitably involve changes of process within Capita (and indeed within claimants’ solicitors’ firms), together with some resultant training and instruction. All this would represent expenditure of resources that could otherwise be deployed in progressing claims.

The claimants’ case

[22]The issue of the costs of obtaining certificates should have been raised at the hearing before Sir Michael or, if not then, at the first opportunity after the dispute had been identified as significant. If it had been raised at an early stage, it is likely that the court would have accepted that the costs constituted a reasonable disbursement. At the very latest, the matter should have been raised at the hearing before me earlier this year. Even then, however, I should have been reluctant to order the making of a separate payment of the costs by way of disbursement, having regard to the fact that such an order would have involved the Department and claimants’ solicitors in re-visiting many thousands of DOROS claims that had already been closed.

[23]As it is, I refuse the claimants’ application.

Cited in 1 later judgment

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