Hobson & Ors v Ashton Morton Slack Solicitors & Ors

Expectation should not be raised that these proceedings have been concerned directly with the merits of any claim which a claimant in the COPD or VWF litigation might have against any trades’ union or his or their solicitor. The immediate objective of the application which was launched by those appearing for the claimants was to mount group litigation against certain solicitors, a trade union (UDM) and its claims handling organisation Vendside Ltd. For all practical purposes connected with this application there is no material distinction between this union and its claims handlers, they will be referred to as “UDM” throughout this judgment.

At the outset, it is appropriate to announce that the application fails for reasons concerned both with the substance and the form in which it was made. In short, the application was unnecessary; it has been pursued aggressively and without proper regard to the rules which apply to group litigation. As a consequence, the interests of the claimants, which should have been paramount, will not have been met. Other procedures both were, and are, available which would have had the effect of leading to an early adjudication of the underlying merits of the claims and at a mere fraction of the costs which have been incurred. As it is, there has been protracted delay in mounting these claims which would have been avoided had a more sensible approach to the case been adopted from the outset.

It has been one of the historical functions of trades’ unions that they would support any of their members who had a claim arising out of industrial accident or for disability arising out of their employment. Likewise, it has been a feature of such supported litigation that the union would, under its rules and therefore by contract, become entitled to a fixed or small percentage share of the damages awarded in order to defray the cost of unsuccessful claims and to fund future litigation of interest to the union concerned.

Following the judgments in which the former British Coal Corporation (erstwhile National Coal Board) was held liable for various respiratory conditions contracted as the result of undue exposure to mine dust, while working underground, as well as for neurological and vascular damage to the hands (vibration white finger) caused by excessive working with power tools, agreements were made between the claimants’ solicitors in each litigation and the Department of Trade and Industry (DTI) for the non-forensic disposal of these claims. For present purposes it is unnecessary to refer to these agreements in any detail other than to record that it was a feature of both of them that the DTI wo uld pay claimant’s costs, in fixed amounts, if the claim succeeded.

It was also an important feature of both that if the claim did not succeed, no costs would be sought or recovered by the DTI against the claimant. It was the unwritten expectation of all parties that those costs would be borne by the solicitors or, in the separately negotiated agreement with the UDM, from that organisation. Those costs, however, had been incurred and remained to be paid by someone.

It is now public knowledge that both the UDM and some of the independent branch unions of the National Union of Mineworkers (NUM) entered into separate agreements with some of their members who brought proceedings in one or other, and sometimes both, sets of the litigation referred to above. From the sums awarded under the agreements, certain fixed or percentage sums (capped at moderate levels) have been recovered or withheld from the awards of compensation made under them. There has been considerable pressure raised, in the media and elsewhere, which has had the objective of forcing the trades’ unions concerned or solicitors, who have been the vehicle for the recovery of those sums by the union, to disgorge them for the benefit of the claimant himself, the widow or his estate.

Because of reports then circulating in the media concerning the legality of the practice referred to in the preceding paragraph, as the Managing Judge of the COPD litigation, I convened an Extraordinary Review Hearing, in the COPD litigation, on 7 July 2005. The object of this hearing was to reassure claimants that the Court was concerned that such reports, if true, would not interfere with the schemes as they were then running and to explore the possibility that should any of the solicitors firms (which number about 900), now acting in these schemes be forced to withdraw from acting, there was a sufficient reserve capacity among other firms to be able to continue processing the claims without too great an element of disruption to the schemes as a whole.

In addition to those who had an immediate interest in that hearing, the Law Society of England and Wales was invited to attend. It emerged during the course of that hearing that there was challenge to the legality or enforceability of agreements made between the UDM and individual claimants. It also became clear that there was challenge to the propriety of solicitors seeking to collect sums, which the UDM asked them to withhold from awards which had been recovered on behalf of claimants, when those solicitors had been acting on behalf of claimants on the instructions which they had received from the UDM.

Arising from the discussions which took place in open court on that day, it had been the hope and expectation that the Law Society would engage with one or more of the firms concerned with a view to bringing about a Court resolution of the issue. It is a matter of regret that nothing has come of this initiative. Into the void has come the present application.

This has been brought by a number (currently less than one hundred) of Applicants who have all had sums withheld, or have paid, from their compensation recovered under one or more of the schemes either by firms of solicitors or the trades’ union concerned. The precise number is a matter of some doubt, it lies between 65 and 156 together, it is said, with about one thousand more who have expressed an interest in the proceedings and “wish to bring claims falling within the proposed GLO issues”; paragraph 2, Edwards 2nd statement.

An order is being sought from the Court which will enable the present, ‘would be’, claimants to mount group litigation against five firms of solicitors, four of which acted on the instructions of the UDM, the UDM itself and a fifth firm of solicitors which acted on the instructions of the NUM (Yorkshire and Lancashire areas). The sums claimed are modest, the largest being about £500, the mean is £357.50, although they are of obvious importance to the claimants themselves. From the figures so far provided, it is manifest that the total recovery in respect of all present claims, assuming that the action is brought in the form which is now sought, and it succeeds, will be a sum less than £25,000.

It has also to be understood that in addition to the two NUM area unions, each of which is an independent trades’ union, there are other area unions within the umbrella of the NUM which have not been made Respondents to the present application, notwithstanding that agreements similar to those in which Raleys are involved are believed to have been made between them and their members and solicitors have acted on the instructions of the unions concerned. Finally, there is a third trades’ union, NACODS (the National Union of Colliery Overmen Deputies and Shotfirers) of which there are three autonomous sections covering the areas South Wales, National and Scotland that do not feature in this proposed litigation, although it is believed that their practice in respect to agreements made between them and their members was similar to that employed by other unions. Altogether it is believed that there are more than 20 autonomous unions, or sections of unions, which have made agreements of the same general kind as those in issue in this application.

As already noted, this application is, in my judgment, misconceived and constitutes a gross abuse of the system which has been devised for the pursuit of group litigation where there is a valid group litigation issue; as to which see later. Not only was the application itself misconceived, but also it has been pursued in a manner which is both heavy handed and inept. There are features present which reflect no credit on those who have been responsible for bringing it before the court.

The primary issue is as to the legality or enforceability of agreements made between the UDM and individual claimants under which claimants agreed to pay to that union a proportion of the compensation awarded to them under one or more of the CHAs. (It will be understood that any single claimant may have a claim under one or other or both CHAs in respect of respiratory injury and/or VWF). It will readily be appreciated that the primary claim, for recovery of sums paid to the union under those agreements, would be against the union. It would only be in the event that the union was financially unable to meet the claim, that any question of a solicitor’s liability to any claimant for negligent advice, or failure to advise, in relation to the effect or necessity of such an agreement, would eventuate. Unless this were so, the Claimant would have suffered no loss which he could recover from his solicitor.

In the case of the NUM, the position is slightly different. None of the agreements was made directly between the NUM and the claimant. The method devised was for the union appointed solicitors (Raleys, the 5^th Respondent who acted solely for NUM Yorkshire and Lancashire areas), to whom the claimant had been directed by the union, acting as the union’s agents, to require the claimant to enter into an agreement with the NUM for the prosecution of his claim under the CHA(s). The agreement required the claimant to pay a pre-determined sum, which varied according to bands of compensation recovered, to the union for its support of the claim. Raleys would be expected to collect the sum claimed by the union on the successful conclusion of the claim and remit that sum to the union. So, as with the UDM cases, the primary claim lies against the union rather than the solicitors. There is a glaring anomaly, in the cases as presented thus far, in that although it is recognised on the Applicants’ behalf that the NUM areas would be primarily liable to the Applicants, if sued, the fact is that despite having been given the opportunity to join these unions, the Applicants have not done so. Indeed, pursuant to directions made on 10 December 2005, they have stated that it is not their intention so to do.

No reason is given for taking this stand. Quite obviously, it throws doubt on the practical utility of an application such as the present if those who logically would be liable if the present proposed defendants are to be held liable, and others who are in a similar position, will not be bound by the judgment in the group litigation.

There was no evidence of an inability on the part of the UDM to satisfy any judgment recorded against it if the claims were to be successful. There was, on the contrary, evidence that the union would be able to satisfy any judgment entered in respect of the specific claims which have so far been made in the Generic Particulars of Claim, but if the litigation were to have a far greater client base, there were still reserves available to the union to meet substantial numbers of claims, there being a surplus of assets over liabilities of a sum in excess of £1.5m as at 31 December 2004. In addition, informatio n was placed before the court, without objection, which was to the effect that Vendside Ltd had cash at bank, as at 31 December 2004, of almost £3.7m and assets which exceeded liabilities in excess of £6.6m.

In none of the cases which have come to the notice of the court was any advice given to any individual claimant by solicitors, or others, that in the event of the claims succeeding, their legal costs would be met by the DTI or that, in the event that the claim failed, the DTI would not seek costs from the unsuccessful claimant. It is to be supposed that the necessity for the giving of such advice is one of the, if not the, sole and realistic case to be made against the solicitors.

These are to be found in CPR 19.10 and the following Rules. The overarching requirement is that there should exist “common or related issues of fact or law (the GLO issues)”; CPR 19.10. CPR 19.11(1) enables the court to make a GLO “where there are or are likely to be a number of claims giving rise to GLO issues; CPR 19.11(1). The effect of a judgment in GLO litigation is to bind the parties to all other claims on the group register, unless the court otherwise orders. Elaborate Practice Directions have been made in respect of group litigation; see CPR 19BPD.1 and following. (For the purposes of this part of the judgment, the parts underlined above will be omitted when reference is made to BPD 19).

As already noted, it is a mandatory requirement of a GLO that the order must itself “specify the GLO issues which will identify the claims to be managed as a group”; CPR r 19.11(2)(b). Under paragraph 1 of the draft Order which has been put forward by the Applicants’ solicitors, the Order is to apply to claims which meet certain defined criteria. The criteria, simply expressed are that:

On the hearing of this application, it has been in issue whether or not these criteria meet the requirements of the CPR to “specify the GLO issues”. Of course it may be said that, in a general kind of way, the statements at d. (i) and (ii), may inform the reader what the case may be about. It will not be overlooked that paragraph 3.2(4) requires that the application notice or the written evidence filed in support of it should include “the common issue of fact or law (“the GLO issues”)”; see paragraph 19.1 above.

On 8 December 2005, the court gave directions which were to be complied with so that the full hearing of the application for GLO which was being sought would be effective. By paragraph 4 of that Order, the Applicants were to:

While the Applicants submit that their Generic Particulars of Claim, together with their accompanying schedules, do comply with the CPR and the tenor of the Order, the Respondents contest these propositions on the basis that neither the Particulars of Claim nor the schedules contain a ‘clear and concise statement of the common issues of fact or law’. The point is not just of academic interest because it goes to the rationale for making a GLO, namely that any judgment given in the litigation will bind all parties to that litigation. Hence the absolute necessity for identification of the issues which, when decided, will bind all parties and, I would add, that it is plain that all relevant parties should be included in the proceedings.

Even a cursory examination of the way in which the claims have been assembled and identified in the Particulars of Claim, shows that, whatever may be the position about identifying the GLO issues, there are a number of additional issues which will arise not only individually, but also in cases brought against the different Respondents. Thus, as between the first four Respondents, who are all solicitors who received some instructions from UDM, and the UDM itself, examination shows that, subject to recoverability of any sums ordered to be paid in the judgment against the union, either the claim will succeed against the union, in which case there will be no damage suffered by the applicant which he could recover from the solicitor, or the claim is unenforceable against the union, in which event the Applicant would have no claim against the solicitor.

Moreover, it has been accepted on the Applicants’ behalf that ‘they do not resist the proposal that the case against the UDM/Vendside be tried and determined before proceeding against the solicitor Respondents’. This is obvious good sense, in so far as it goes and for the reasons just discussed. But it throws into doubt what is the point of suing any of the solicitor Respondents at all, let alone through the medium of group litigation. Even this consideration does not deal satisfactorily with the anomaly referred to above with respect to Raleys and the different NUM areas. In addition, it is to be noted that there are other areas of the NUM and other trades’ unions who have made similar agreements with their members; see below.

It is accepted that the arrangements which were made between any Applicants and Raleys were entirely separate from arrangements made between any other Applicants and the UDM and/or their appointed solicitors. Not only that, but the agreements made between the NUM, through Raleys, and the Applicants was in different form from those where the UDM and the first four respondent firms were concerned, some or all of which were in slightly differing forms. In their skeleton argument in support of their application, the Applicants contended (paragraph 28) that:

Quite apart from these obvious difficulties, it will not have escaped attention that, not only are the claims which are to be brought made against different firms of solicitors, in which case issues specific to those Respondents will arise, but also the terms of the agreements are not identical between the Applicants and those four firms. Of greater importance is the fact that since misrepresentation is alleged against the solicitors, these allegations will of necessity be fact specific to the individual Applicant. This was recognised in a letter which the Applicants’ solicitors wrote to the court on 25 November 2005 where they said:

It might also be added that the response of the individual claimant to the representation would “depend precisely upon … the circumstances of the individual claimant at the time that the representation was made to him” and the extent to which he was induced to act, or would have acted, in a particular way; the causation specific argument.

More specifically, it is to be noted that the first Respondents (AMS) did not as a general rule, deduct or otherwise reduce the compensation which the DTI was offering before it was paid over to the claimant. Their practice was to provide their claimant with the copy of the Vendside agreement, which he had signed before this firm was instructed, and to request the client to sign a separate cheque in the amount demanded by Vendside under that agreement. To this extent their position differed from that of the other three Respondents in the proposed action involving the UDM.

Despite the clear need for an authoritative determination of the enforceability of the UDM form or forms of agreement identified at the Extraordinary Review Hearing held in July (see above), there is no evidence, apart from the belated say so (see the Applicants’ solicitor’s fourth statement), that any consideration was given to other means of testing the enforceability of the UDM form of agreement. It was not until this statement, made by Mr Wynne Edwards dated 4 April 2006, after the hearing of the substantive application had commenced, that there was any evidence that any means of testing the enforceability of those agreements, between the unions and their members, had been contemplated otherwise than by a GLO. This was a statement made in respect of issues which had arisen at the hearing, especially with regard to the ATE insurance position; of which see more, later. In paragraph 2 of this statement, Mr Edwards says:

What happened to this last possibility remains an unknown. In paragraph 3, Mr Edwards continued:

What so clearly emerges from these statements is that Mr Edwards appears never to have contemplated some altogether simpler process for resolution of the issue which must surely lie at the heart of all the cases, that is whether there was any valuable consideration for the making of the agreements between union and claimant, in whatever the precise form they were in fact made. Once that issue has been determined in favour of a claimant, all the rest of the potential claims would no doubt have been settled by the unions concerned. There is, in my judgment, no reason why this issue could not have been decided in a single, or at most two or three test cases heard at the same time as, or immediately the one after the other. This is what had been expressly in contemplation at the Extraordinary Review Hearing; see above.

It is of interest to note that in his first witness statement, Mr Edwards took a slightly different line in regard to the cost effectiveness of the proceedings which he had in contemplation. In paragraph 67 of that statement he said :

“(c)

The value of individual claims is small. In most cases the fee that was deducted from the Applicant’s compensation was less than £1,000. [As a matter of fact, the median value of claims which are currently in issue is about £357.50]. It would be difficult if not impossible in practice for the Applicants to bring unitary actions. The cost of bringing a unitary action would be prohibitive for any individual to bear by comparison to the amount he or she would be likely to recover. The Applicants would be very unlikely to be able to obtain the necessary “after the event” insurance to pursue a unitary action. In practice therefore the Applicants would be deprived of proper access to the Courts unless a GLO is made.

(d)

The most cost effective and proportionate way for the claims to be resolved is by way of a GLO.”

In the light of the figures which appear later in this judgment this last statement is surprising and was either made without having considered the matter sufficiently, or it shows a remarkable failure of judgment on the part of the maker of the statement.

It should be recorded that in a letter (4 April) sent by the Applicants' solicitors to the Respondents and the court, the Applicants' solicitors wrote:

Sight should not be lost of Mr Edwards’s assertion (4^th statement, paragraph 7) that:

I do not overlook the provisions of paragraph 5.7.1 in respect of conditional fee agreements. If it be right, as Mr Edwards asserts, that he could only obtain ATE for group, as opposed to individual, litigation with individual clients signed up to CFAs, then the proposition that the case was suitable for a CFA within this paragraph must surely disappear.

In passing, there should also be noted the following passages in the Funding Code: Decision Making Guidance paragraphs 5.2, 5.5, 15.5, 15.7 paragraph 6. This last has the potential for application to the circumstances of the present case. Thus, paragraph 6:

From the standpoint of the court being asked to make a GLO, the advice contained in this ‘Guidance’ is apposite and might, with considerable advantage, have been considered by the Applicants’ present representatives analogously, in the application which they have made and which is now before the court, whether or not they decided to explore the possibility of obtaining the support of the Legal Services Commission. In my judgment, that is undoubtedly a step which should have been taken before the precipitate decision was made, which was in any event inappropriate, to embark on this application for a GLO.

It is sufficient to conclude this section of the judgment by stating that on the evidence, no consideration other than “sponsored mediation” (see above) was given to employing more cost efficient means of resolving what I believe to be an essentially simple issue of fact. Nothing is said to indicate what came of this suggestion. It is not necessary that I should determine that public funding would have been available if application had been made. It is sufficient if I conclude that there was a reasonable prospect that an application, properly made, would have stood a good chance of being successful and that had it been so, the best option would probably have been for the funding of a suitable case or cases as test actions in the multi-track mode.

It is now a trite proposition that the court should have regard to the necessity of dealing with cases ‘justly’ when deciding whether to make any order and, if it does, the terms in which such order should be made. It is, however, timely to remind ourselves that, in observing this requirement, the court is required to have regard to the equality of footing of the parties with regard to each other, saving expense and dealing with the case in ways which are proportionate to:

Sight should not be lost of the other desiderata contained in CPR 1.1 namely (d), dealing with the case expeditiously and fairly and (e), allotting to it an appropriate share of the court’s resources. As to the latter, this application lasted a (very) full three days after a directions hearing which lasted the equivalent of a (very) full court day. Costs have escalated to a level that is truly staggering, a feature that is attributable to the manner in which the Applicants’ solicitors have managed the litigation thus far. The costs estimates (exclusive of VAT) provided as part of the Directions Order are as follows:

It is an interesting indication of the approach adopted by the Applicants' solicitors that, because of their concerns about the commercial realities of the litigation, Wake Smith made offers to settle the handful of cases in which they were implicated, and which have a total value of £1,351.25, in order that they should avoid the financial consequences of being embroiled in this litigation. The Applicants' solicitors were prepared to abandon the litigation in respect of the former clients of Wake Smith if their costs up to the date of that offer were also included. Despite continued pressure, from Wake Smith from an early stage, for the Applicants' solicitors to quantify their claim for costs, it was only shortly before the commencement of the hearing that the figure of £112,751.18, attributable to the cases in which they were involved, was provided. This figure speaks for itself.

To the sums to be found in the above table have to be added the costs of the ATE premium demanded by the insurers, albeit that it is “deferred”. That amount is £472,500.

If it be assumed that all the ‘would be’ applicants came forward and were joined in the litigation, the total sum claimed would still be only about one half of the costs incurred to date, leaving aside the additional costs which would be incurred if the action were to proceed, as the Applicants’ solicitors envisage. The Applicants sought to meet this obvious and grotesque imbalance by claiming that, if this application was to be successful “there are many more potential claimants who will be bringing like claims. It is simply misconceived, if not tendentious, to invite the court to treat this as a case where only some 65 claimants are what fall to be considered”; see Applicants’ skeleton paragraph 12. The reality is that since July 2005 there has been very substantial publicity and media attention (newspapers, television and radio) quite apart from meetings sponsored by interested Members of Parliament and, yet, the numbers of applicants to date are no greater than as set out above. The evidence in relation to this feature is to be found in the witness statement of Martin Joseph Ryan dated 3 March 2006 and, in particular the exhibit MJR2. It is, in these circumstances, highly speculative whether there will be any significant increase in ‘would be’ claimants coming forward to join in the litigation if a GLO were to be made. Even were there to be a number of ‘would’ be claimants who might be willing to join in the proceedings, it must be doubtful if the making of a GLO would be justified on such a speculative basis.

The submission, made on the Applicants’ behalf which followed, is one which itself falls foul of the epithet applied in paragraph 12 of the skeleton – ‘tendentious’. This submission was to the effect that if the Respondents considered tha t they were only being asked to meet a limited number of small value claims:

“they would not have embarked upon such costly and resolute opposition to this application”.

The fact is that the Applicants’ solicitors had already decided that they would mount this application in June 2005. Further, when it came to making the claim against the Respondents separately, events show that there was a determination to proceed with this application, come what may. This statement can be made good by reference to the letters which were sent before the application for the GLO was in fact launched. Thus:

It is not without interest that in the follow up letter addressed to UDM, in August, the Applicants’ solicitors also wrote:

“As you are probably aware the issue of the lawfulness of the agreements between Vendside Ltd /UDM and Claimants under the claims handling agreements was an issue ventilated before Sir Michael Turner at the [Extraordinary] Review Hearing on 5^th July. We are now seeking to liaise with the Law Society and other parties present at that hearing in respect to their proposal for resolving the [issue of the] legality of the Vendside agreements.”

It may be asked what happened to the pre-action protocol? Other than to enter into correspondence having the aggressive characteristics evident from the letters to which reference has just been made, there is nothing to show that the Applicants’ solicitors took any such action between July 2005 and the date upon which this application was launched. On the contrary, by letter of 7 July, they wrote to the Law Society baldly notifying them of the intention to apply for a GLO and asking that their name be added to the multi-action database in connection with those proposed proceedings. In a subsequent letter, dated 4 August, the solicitors asked to “be kept abreast of any developments” and stated that they would be writing in similar terms both to myself and the CSG. The solicitors did indeed write to me, and were informed that if they wished to appear at any of the review hearings, they would need to make application to that effect. No more was heard from them until the issue of the present application.

Further, it is the fact that two actions had already been started in Small Claims Courts. In one (Strydom v. Vendside Ltd), the claimant sued the UDM for the sum of £352.50 which had been deducted from his compensation. The statements of case are not illuminating as to the real issues between the parties, since among other things, it appears that the claimant had actually paid that sum to Vendside, no doubt in the belief that the agreement which he had made required him to do just that. The Applicants’ solicitors started to act for Mr Strydom and a hearing had been fixed in the Mansfield County Court for 17 October. The solicitors notified the County Court of their intention to issue a GLO application on 26 October. In the result this case was adjourned indefinitely.

In the other case (Vendside Ltd v. Mrs M Young), Vendside sued Mrs Young under an agreement similar to one of those which are in issue in the present application. The claim was for the sum of £587.50. The defence did not adequately raise the issue except by the enigmatic contention that “it is inappropriate for the representatives to charge clients additional sums for work carried out”. There is evidence (see Stevens’s statement “MS 14”, “15”, “16” and “17”) that the Applicants’ solicitors suggested to the Worksop County Court, in their letter dated 11 October 2005 that the proceedings should be adjourned “pending the application for a (GLO)” which they were in the “process of issuing” . It may be an irrelevance, but it is the fact that no notice was given to Vendside’s solicitors of this approach to the Court. Eventually the County Court adjourned the case generally with ‘liberty to restore’. On one view, that action could and should have been permitted to continue, it could always have been reallocated to the Multi-Track and a decision on the issue could surely have been given some months ago.

The application notice for the GLO was not in fact issued until 26 October 2005. As will subsequently appear from the next section of this judgment, the time was taken up in endeavouring to put in place the ATE insurance which is a condition precedent to the success of this application.

Because the Applicants’ solicitors had decided that the application would be funded by way of conditional fee agreements made with the individual Applicants backed by ATE insurance, the sufficiency of that insurance was a material factor in the application. So it was that one of the orders made at the Directions’ hearing was that the Applicants’ solicitors should:

“State whether or not they are prepared to disclose the “After The Event” insurance policy they have obtained to fund this litigation.”

The Applicants’ solicitors having indicated a willingness to disclose that policy, it was correctly anticipated that it would not be long before the Respondents wished to have sight of the document which recorded the terms of the insurance that had been obtained. The Applicants’ solicitors sent a copy of the summary of the insurance cover to UDM solicitors on 23 December. A number of questions were prompted, but left unanswered, by this disclosure, which was, on its face, plainly incomplete. The consequence was that the UDM solicitors (Brooke North) pressed for further information, which was not forthcoming. Accordingly they issued an application against the Applicants’ solicitors seeking full disclosure of the terms of the relevant insurance. Beresfords, who were at the time acting for themselves on this application, joined in that application. On 24 February the Applicants' solicitors wrote to say that a sealed policy had not been issued but that they would disclose such within 24 hours of having received it. Shortly before the application for disclosure was due to be heard, a consent order was made in which the Applicants' solicitors consented to an order which required them to disclose the insurance policy, including the certificate which was to include the terms and conditions of the policy and all schedules, together with the generic proposal form.

On 2 March, the Applicants' solicitors informed the UDM solicitors that in the event of the GLO succeeding, they would not seek to recover the premium payable under the “secondary insurance”, by which was meant “the premium payable in respect of the insurance policy which insures the premium payable under the primary policy”. The solicitors also stated that there would be three separate policies issued. Disclosure of these was sought, together with disclosure of the generic proposal form for the ATE insurance and information as to the premium for the “secondary insurance”.

As late as 10 March 2006, those three policies were said to be in respect of (1) UDM/Vendside up to £1m; (2) UDM/Vendside’s solicitors up to the same level of cover; (3) Raleys (and/or other solicitors in a position that is similar to or the same as the position of these solicitors); cover, as before. Of course had there been policy (3) in force this would have led to the conflict of interest discussed in paragraph 66 below, because it is inconceivable that, at some point, Thompsons would not have become involved, since their role in respect of the Scottish claimants, some Newcastle claimants as well as South Wales claimants was the same as that of Raleys. In this ever changing scene, it comes as no surprise that the suggestion, that there would ever be three such policies, came to be withdrawn. To the extent that cover has ever existed, there is, and has only been, the one policy.

As is already evident, both the court and the Respondents have been kept ill informed about the true state of the insurance arrangements for ATE made by the Applicants' solicitors until they were compelled by orders made during the course of the present hearing to divulge precisely what had been occurring. By order made in the course of the hearing the Applicants' solicitors were required to disclose their files and documents relating to the arrangements for placing the insurance which they had made. In the result no less than 50 separate documents have been disclosed. The contents of those documents provide the explanation for the seeming, and actual, reluctance on the part of the Applicants' solicitors to disclose the full history and contents of the relevant insurance arrangements. After the hearing concluded, the court has received further submissions in writing from all parties. These submissions will be reflected in a later section of this judgment.

One of the documents which was disclosed pursuant to this last order, was a pro forma document setting out the potential advantages to the client entitled MINEWORKERS’ GROUP ACTION in which the Applicants' solicitors set out a prospectus of what they were offering to potential clients who wished to sue “Solicitors and Claims Handlers”. It is of interest that the document is dated 13 July 2005 and claims under heading 2) that:

It is important that, as best as possible, a proper analysis of the insurance position be undertaken. On 7 December, in the course of the directions hearing for this application, Leading Counsel for the Applicants stated that ATE Insurance was available for the existing and any future Applicants. Before the substantive GLO hearing commenced, the only documents which related to insurance which the Applicants' solicitors had disclosed were the proposal form signed by Mr Edwards dated 10 November 2005, the pro forma individual proposal form to be signed by each individual applicant and the summary of insurance cover of the issued policy which was dated 13 March 2006. What these documents revealed was that payment of the premium was a condition precedent to liability under the policy which according to the known provisions was to be paid before the date of inception which was 13 July 2005.

The sum insured was £1m maximum in respect of adverse costs orders and the Applicants’ disbursements. The individual insured (that is the individual Claimant) was liable to pay the premium; in certain circumstances the insurance could become voidable after inception. It is plain that there was justified anxiety on behalf of Respondents about other aspects of the insurance cover, including the circumstances in which the premium might become payable. On 24 February, the Applicants' solicitors wrote to Beresfords’ solicitors (Weightmans) stating that:

In a letter sent some three days later, the Applicants' solicitors wrote stating that they were unwilling to disclose “our insurance in respect to the premium”. They later said that they would not be seeking to recover the premium in respect of this latter policy. On 2 March, the Applicants' solicitors wrote:

The letter, referred to above, supported the expectation on the Respondents’ behalf that there was indeed a policy which had been taken out to insure the premium which had been deferred for, what may be termed, the ‘main’ policy.

During the course of the hearing of the substantive application, the Applicants, through their Counsel outlined six points in respect to the position of the insurance, which had become confused by the information which had up to that stage been filtering in, piece by piece, from the Applicants' solicitors. The explanation for this drip feed of inadequate information will become evident, later in this judgment. These points were:

It was this statement by Leading Counsel which prompted the order which I made on 3 April which, in its turn, prompted the fourth witness statement of Mr Edwards (above). This statement was accompanied by a self-styled ‘confirmation’ from Templeton which was to the following effect:

Despite the order and Mr Edwards’s last statement, there were still a number of matters which required clarification from the Applicants' solicitors. A further order required the Applicants' solicitors to answer additional but, hitherto, unanswered questions. The result was to reveal that no individual Applicant had any obligation to pay the ATE premium. Notwithstanding which, it is claimed that insurers were nevertheless at risk under the policy. As a matter of observation, his last statement makes the ‘insurance’ sound more like a wager than a policy of insurance. By this date, some four of the original Applicants had withdrawn their claims, but in the event that a costs order should be made against them, the Applicants' solicitors would, without admitting liability, pay such costs.

This constant change of position led me to observe, during the hearing, that the Respondents were having to face a situation where the sands were forever shifting.

In the light of this position, submissions were made on Beresfords’ behalf that the insurance was unenforceable, this was on the basis that if the Applicants were never going to have to pay the premium, there would be no consideration for the insurance contract, alternatively, recovery under the policy would not be possible, since the situation was one where there was no indemnity.

At the conclusion of the oral hearing, I ordered that the Applicants' solicitors make further disclosure of documents relating to the placing of the insurance. This unusual step was taken because there was clear evidence of obstruction on the part of those solicitors concerning the true position in regard to the insurance. Such documents as have been produced in response to this last order confirm that there had indeed been obstruction, the reasons for which now have become clear. The following disturbing features have been revealed:

On 18 December, there was telephone contact between Mr Edwards and the brokers in which the former said that Templeton were jeopardising the case and that “we are being made to look stupid”. This was despite the fact that on 28 November there had been a conversation between the solicitors and the brokers in which it had been reported that Templeton had relented and had said that “the letter (15 November) could be ignored", the writer of the e-mail wrote that, unbeknown to him, the policy had been reinstated on 22 December “following an undertaking from (Mr) Edwards … that Thompsons (E & W Scotland) would not be joined in the action”. At the date of the Directions hearing it must be a matter of doubt if insurance was, as Leading Counsel had stated no doubt on instructions, in place.

This point is of fundamental importance and may serve to explain why, despite express invitation so to do, the Applicants' solicitors have resolutely resisted the obvious step of involving the NUM directly in these proceedings, despite the statement in their letter dated 25 November that:

It is hard to reconcile this position when it is kno wn as a fact that Thompsons cannot be involved in the proceedings without putting at risk such cover as is currently available.

Despite Leading Counsel’s statement to the court on 7 December that insurance was in place, the now disclosed documents reveal that at that date the wording of the cover had not been settled. There was only an oral communication to the effect that the previously cancelled cover, point 3 above, had been reinstated. On 22 December, Mr Edwards sent an e-mail to Templeton setting out the wording that ought to be in the cover note which had to be produced to the court and the Respondents.

In his third witness statement, which is dated 3 March, Mr Edwards stated his belief to be that the policy (which was in force) will cover adverse costs’ orders made against the Applicants. On the basis of the figures for costs given at paragraph 42 above, this must be a doubtful proposition. So it is that Mr Edwards went on to state that he was at that time “in the process of having further negotiations with insurers in order to obtain increased cover”.

There is a problem with this statement. On 28 March Templeton sent an e-mail to the brokers in which they said:

“I confirm that our maximum exposure per risk is £1,000,000. As matters stand, I have been presented with 4 distinct risks all involving miners against various corporate entities. Provided the allegations are different in each case and no single action is dependent upon a decision/judgment in another claim, then I would be able to consider each claim independently of the othe r. However, if the four actions are consolidated or stayed pending the outcome of another matter, Templeton’s maximum liability would revert to £1,000,000.”

The Applicants argued strenuously that consolidation was not a route which the court should be persuaded to adopt because it was procedurally inappropriate. There, must be, at least a suspicion that it was the lack of the prospect of adequate insurance cover, if this is what the court were to find, which was the driver behind this submission.

There is doubt, even, whether or not the cover available for adverse costs is in truth the figure of £1m. This arises from the e-mail of 15 March from Templeton to the Applicants' solicitors in which insurers confirmed that the maximum line which they could write on any risk was £1m. They continued:

“If the premium were insured, the Limit of indemnity [LOI] would be £1,895,734.60. Alternatively, based on a limit of ?£1,000,000 including premium cover, the LOI for own & Opponents costs will be in the order of ?£500,000 in total.”

In a further e-mail from the brokers to the Applicants' solicitors dated 22 March, the brokers wrote that separate policies for NUM and for NUM lawyers could be issued subject to proposal forms, after junior counsel for the Applicants had given his advice on consolidation. Confirmation was also provided that insurers could not support a policy limit “greater than £1m in each case” [emphasis supplied] and cannot support an amount greater than £1m overall should the cases be consolidated. Since it was known that no cover would ever be available if Thompsons were to be put at risk, there was never a prospect of this additional cover becoming available.

Further uncertainty is created by the e-mail from Mr Edwards to the brokers dated 29 March in the course of which the author wrote:

During the run-up to the full application, and during the course of the hearing, a number of “confirmed” variations to the policy terms were announced by Leading Counsel and his instructing solicitors. The question may arise as to the authority which he or they may have had to make these amendments to the insurance which the individual Applicants had been led to believe would have been in place according to the prospectus with which they had been provided from the outset. One of the points which was not addressed during the hearing was the extent of any consideration for these variations and the consequences for the efficacy of the insurance if there was none.

There has been minimal disclosure of the brokers’ files.

The above history, although incomplete, because of the failure of the Applicants' solicitors to disclose or obtain disclosure of the brokers’ files, make good the assessment that there has been obstruction with regard to the necessary disclosure of the insurance position. As consequences the court has been left in doubt in regard to:

Section 29 of the Access to Justice Act 1999 provides for the recovery of the ATE premium as part of the costs of an action, subject to Rules of Court. In the instant case, accepting at face value the confirmations which have been forthcoming, albeit at a very late stage in the application and under pressure from the court, to the effect that:

As I have heard no detailed submissions in relation to these issues which have been brought to my attention by the 1^st, 2^nd, 3^rd and 5th Respondents’ counsel in their written submissions made after the conclusion of the oral hearing and since the answers will not be determinative of the present application, these interesting questions must await future decision, when they may become decisive considerations. I have noted the Applicants’ Supplemental Submissions Regarding Further Disclosure and The ATE Policy, the contents of which raise matters which, if they were to have been determinative of the application would have necessitated reconvening the hearing. As it is, and as I have said, this is unnecessary.

All Respondents have drawn attention to the multiple inaccuracies which are contained in the generic Particulars of Claim. These inaccuracies involve claimants who have either not been clients of the individual firms, claimants who have not suffered deductions from the award of compensation to them, claimants who had withdrawn their claims and claimants who have made payments directly to the union rather than to the solicitors for onwards transmission to the union concerned. This list of inaccuracies may not be exhaustive of the types of inaccuracy which exist, but is illustrative of the fact that much wasted effort has been incurred in investigating the allegations made in respect of claims which do not, in the event, exist, whatever the underlying merits of the claims might have been. One of the disturbing aspects of this pattern of carelessness, although it is not determinative of any particular issue in the case, is the fact that despite having their attention drawn to many of these inaccuracies at the time of or immediately after the Directions’ hearing, the Applicants' solicitors have ignored them when preparing the schedules to the Generic Particulars of Claim. The consequence is that costs have been incurred which may not in the event prove to be recoverable.

For the reasons discussed during the course of, and summarised in, this section of the judgment, this application fails and must be dismissed. In summary, they are as follows:

By way of reply to the submissions made on behalf of the Respondents, Counsel for the Applicants presented an exercise of what may fairly be called ‘damage limitation’. Expressly, Leading Counsel recognised the cogency of the arguments which had been marshalled in opposition to the application. He agreed that the issues which had to be resolved could proceed by way of test or lead cases. He accepted that the single most important question was how the court should facilitate the formulation and resolution of the underlying dispute and that the court “should consider what is wrong with the notion that the litigation should go forward as group proceedings”. It should by now be clear that any such approach is wrong in law as being the antithesis of what is required for group litigation. What is required before such an order is made is that there must be no other satisfactory means of resolving the dispute. Leading Counsel drew attention to the possible advantages of a GLO, namely the improved ability of the court to control proceedings and the publicity which would be an integral part of the process. There were also advantages which would flow from the existence of a claims register which would enable the court to fix the terms and timing of a cutoff for the receipt of new claims. Leading Counsel also accepted that bringing test cases was a valid alternative to a GLO. Equally, a representative action would be available. The submission was that the claims which were contained within the Generic Particulars of Claim fell naturally within the rule in that they were “essentially addressing the same type of complaint(s)” which were

It was also accepted on the Applicants’ behalf that if a claim against the solicitors Respondents were to be brought as a consolidated action which could then be stayed, this would enable the potential problem in regard to limitation to be resolved. In the same way, Leading Counsel accepted that there were compelling reasons why solicitors should not be involved until the issue between the claimants and the union or its claims handlers had been settled.

As must by now be obvious, the extent of the concessions made by way of reply effectively undermine the whole basis upon which the application was, and needed to be, made if the court was going to accede to it.

The period which was allowed to elapse between the original threat of proceedings and the date of the application for a GLO raises questions about the motivation behind it, about which some of the Respondents have made submissions. These were to the effect that this application was brought in order to further the transfer of cases from solicitors who are instructed on behalf of clients in the main CHA litigation. There is no doubt that in some of the publicity material which was put out by or on behalf of the Action Group for Miners misleading information was published. Such information could have persuaded miners to transfer their cases from their existing solicitors to one of the four firms who are on the panel of solicitors instructed, or referred, by the AGfM. I make no finding about this, since it is not determinative of the present application. It is sufficient if I indicate that had it become necessary to determine this issue, there was enough suspicion concerning it, that it would have been necessary to have conducted an in depth enquiry, thus adding more costs to this already excessively expensive attempt to bring a group action.

As I have already indicated, these proceedings have done nothing to advance the cause of those claimants who may have had deductions made from their compensation in circumstances where there was no legal right for such deductions to have been made. Unnecessary delay has resulted by the adoption of a method of proceeding which was, from the outset unlikely to succeed. Any disinterested observer who had been present at the Directions Hearing would have been able to see, without the assistance of clairvoyance, what the outcome of a full scale application was going to be. It was characteristic of the manner in which the application has been pursued that no consideration appears to have been given to the overwhelmingly probable outcome. Much will have been wasted by way of costs, whether such may be recoverable from the insurers is neither here nor there. That there is some uncertainty about the recovery of those costs and the extent of such recovery adds weight to the charge that this is an application which ought never to have been made. Hopes may have been raised among those whose claims may have a sound basis that a ready solution was at hand for the ir resolution. Those hopes will have been encouraged by the imperfect appreciation of what could be achieved by the mistaken approach which has been employed. For this, a heavy burden of responsibility lies on the lega l advisers who instituted the present application, which was, in my judgment, doomed from the start.