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Pre Issue Part 36 Offer

Wed, 22 Jun 2011 00:00:00 +0000

Where a Part 36 offer is made by the Defendant and accepted by the Claimant before proceedings are commenced the Claimant is unable to claim costs on the standard basis in accordance with CPR 36.10 as there are no proceedings.

Background

The Defendant (D) made a Part 36 Offer prior to issue of proceedings. It was headed Without Prejudice Save As To Costs of Assessment and provided that...

"The defendant hereby makes a Part 36 offer in the sum of £4,100. This offer (1) is to settle the whole of your client's claim; (2) is intended to have the consequences of Part 36; (3) has a relevant period of 21 days during which the defendant will be liable for the claimant's costs in accordance with CPR 36.10 if the offer is accepted within that period; (4) is inclusive of interest until the expiry of the relevant period; (5) is made on the basis that there are currently no repayable benefits and the certificate of repayable benefits is valid throughout the relevant period; (6) does not take into account any counterclaim."

The Claimant accepted in the following terms...

"We write further to your Part 36 offer dated 3 February 2009 in the sum of £4,100, which we confirm is accepted. Please make the cheque payable to MTA Solicitors. We also attach a report of Mr Ernshaw, dated 7 January 2009, for your file. Acceptance is subject to payment of our reasonable costs and disbursements, to be assessed if not agreed. Acceptance specifically excludes any credit hire or credit repair claim which could be pursued separately on behalf of our client."

Argument

The Claimant asserted that there was a valid Part 36 Offer engaging CPR 36.10 (the costs consequences of Part 36) and, accordingly, he was entitled to his reasonable and proportionate costs pursuant to Part 44 of the CPR. The Defendant argued that as no proceedings had been issued at the time of acceptance of the offer CPR 36.10 was not engaged and the Claimant was unable to recover his pre-action costs.

Conclusion

Master Haworth favoured the Defendant's argument. Whilst the offer letter had stated that "acceptance is subject to payment of our reasonable costs and disbursements" it made no reference to the engagement of Part 36.10. If the wording had instead been "the Defendant would be liable for the Claimant's costs, including the costs pre-issue of proceedings in accordance with CPR 36.10" he would have found for the Claimant.

In concluding Master Haworth found.....

"Part 36 is a self-contained code. The rules of Part 36 must be complied with to the letter for the costs consequences of Part 36 to be engaged. In my judgment in this case they are not. Therefore the Claimant's costs in relation to the proceedings in which they have brought their Part 8 claim fall to be dealt with under 44.12A and the consequences of that are that the matter must be dealt with in accordance with 45.7, which sets out the costs to be allowed in costs only proceedings under the procedure set out in 44.12A..."

Exceptional Circumstances

The Master however found that exceptional circumstances in view ogf the fact that the Defendant was "giving the claimant the run around" and putting him to "considerably more work than would otherwise be the case" in a low value road traffic accident claim and as such he was entitled to have his costs assessed under Part 45.12 (Road Traffic Accidents - Fixed Recoverable Costs).

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Set Off

Sun, 17 Jun 2001 00:00:00 +0000

On the facts, it was appropriate to follow the principle in Lockley v National Blood Transfusion Service (1992) 1 WLR 492 and set off a costs order made against a publicly-funded claimant against costs and damages recoverable elsewhere in the action. That was so even though the financial burden on the Legal Services Commission would be less if a Lockley order was not made; the Commission had decided to fund the action and the successful defendant was entitled to enforce the costs order in its favour.

ALMAS AHMAD v (1) BRENT LONDON BOROUGH COUNCIL (2) NATIONAL PROBATION SERVICE (LONDON) (3) MINISTRY OF JUSTICE (4) PAROLE BOARD FOR ENGLAND & WALES (2011)

The court was required to determine whether a costs order made against the Claimant (C) in favour of the third defendant (D3) could, pursuant to the principle in Lockley v National Blood Transfusion Service (1992) 1 WLR 492, be set off against any damages or costs awarded to C from the other Defendants. C had brought an action comprising two false imprisonment claims resulting from his recall to prison. The first related to his recall between September 2006 and August 23, 2007 and the second to a failure to release him on time during a one-week period from 24 to 31 August 2007. The action had been funded by the Legal Services Commission. The claim relating to the first period had been struck out on the basis that there were no reasonable grounds for bringing it, and C had been ordered to pay D3's costs. C submitted that it was not equitable to set off D3's costs relating to the first period against damages recoverable for the second period because the two claims were not sufficiently connected.

In rejected the Claimant's arguments, The Hon Mr Justice Supperstone found...

In my view they are so closely connected so as to make it equitable to set one off against the other. They relate to two parts (albeit one longer, one shorter) of the Claimant's imprisonment between 5 September 2006 and 31 August 2007 which the Claimant alleges was, in its entirety, unlawful and in respect of which he brought claims for false imprisonment and for breach of his Article 5 and 8 rights against the Third Defendant...

If a set-off of costs against damages is justified, as in my view it is in the present case, then the fact that the Commission will not recover the benefit of the damages to reduce the burden on the Fund is not to the point. The Commission decided to fund the action which to date has failed. The Third Defendant has incurred very substantial costs and should, in my view, be entitled to enforce the costs order made in its favour (which may not be enforced directly against the Claimant without the leave of the court as he is publicly funded) "by way of set-off against any award of costs and/or damages made in favour of the Claimant in these proceedings...

And lastly...

I reject Mr Bowen's third submission that it is premature to determine a Lockley argument now and it should be for the trial judge to exercise his discretion or the parties to agree terms. In my view the present case is distinguishable from Morgan v MoJ [2010] EWHC 2248 (QB). In Morgan the court had tried three preliminary issues which were not themselves decisive of the Defendant's liability to the Claimants. By contrast in the present case the court has struck out a very substantial part of the Claimant's claim against the Third Defendant as unarguable. I agree with Mr Sanders that all relevant factors going to the appropriateness of a Lockley set-off as against damages are amenable to immediate assessment.

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VAT on Medical Records

Thu, 16 Sep 2010 00:00:00 +0000

An appeal concerning the interpretation of disbursements for the purposes of VAT

Makuwatsine v Trathens Travel Services Limited, HHJ Grenfell: Leeds CC (2010)

In dismissing an appeal by the Defendant against the allowance of VAT on medical records HHJ Grenfell found, inter alia, that...

"In my judgment, as to whether the claimant actually received or used the services or goods obtained, in my judgment, the District Judge correctly found that it was the solicitor who received and used the notes, albeit on behalf of the claimant in the conduct of his claim; that there was no reason for the claimant himself to receive or use the notes other than in the context of receiving advice as to his claim as a whole. The District Judge's observation, no doubt borne of practical experience, that in most cases the client would not be supplied with a copy of the notes, seems to be entirely correct. In most cases, the solicitor requires the medical notes for the purpose of completing the necessary medical evidence relevant to the litigation. That plainly goes much further than merely obtaining the notes as a mere agent for the client. I agree with Master Gordon-Saker's view expressed with regard to the obtaining of a medical report. That applies even though in many cases the client will in fact be supplied with a copy of the report, whereas, as I have indicated, it would be rare for the client to be given a copy of the notes."

Consequently, it was held that VAT is properly chargeable on medical notes obtained in the course of preparing a personal injury or clinical negligence claim.

Judgement

Apportionment (2)

Wed, 25 Aug 2010 00:00:00 +0000

Under the terms of a Tomlin order which provided that one of three Defendants was only to pay the Claimant's costs which related exclusively to the action against it, and not those incurred by the Dlaimant in respect of the dispute with the other two Defendants, that Defendant was liable for any common costs which could be attributed to it by division, rather than apportionment.

KARIN LUCY HAY v (1) HENDRYK SZTERBIN (2) JOANNA BARBARA SZTERBIN (3) GREEN WRIGHT CHALTON ANNIS (A Firm) (2010)

The appellant (A) appealed against a decision concerning the interpretation of a costs provision in a Consent Order she had agreed with the Respondent firm of solicitors (R) and two other parties to the proceedings (OP). A had brought a claim against R for professional negligence and against OP seeking a declaration that she was not liable to make a payment under a contract and transfer. A settlement was reached and a Tomlin Order was made. In relation to costs, the Order stated that R would pay A's costs of the action against R only, namely costs which "relate exclusively" to the professional negligence claim against R and did not encompass any costs incurred by A in respect of any dispute with OP. Following a dispute as to the effect of that paragraph, a Master Haworth Ordered that the effect of the Consent Order was that R was only to pay costs incurred exclusively against it and that it was not liable in respect of the costs of the case which were not incurred either exclusively against OP or in common with OP. A submitted that the common costs should be apportioned between the claims against OP and R.

Mr Justice Newey (sitting with assessors) held in accordance with established case law that there was a distinction between apportionment and division Medway Oil and Storage Co Ltd v Continental Contractors Ltd (1929) AC 88 HL applied. In so far as common costs could be attributed to the claim against R (as per the process of division in Medway Oil), they represented costs which "relate exclusively" to the professional negligence claim against R, within the meaning of the Consent Order, Medway Oil applied. However, that part of the Consent Order did not extend to any other common costs. An item of common costs which was not susceptible to division would not "relate exclusively" to the clam against R; it would also relate to the claim against OP. Similarly, where division was appropriate, R could have no liability in respect of so much of the item in question as was not, on division, allocated to the claim against it; the balance of the item could not "relate exclusively" to the professional negligence claim. The words "relate exclusively" precluded ordinary apportionment. Therefore, common costs did not fall to be apportioned. The decision of the Cost Judge could be read as barring both apportionment and division, which was not correct. It was therefore appropriate to set aside the relevant part of the Order he had made and instead order that R was not liable for common costs except to the extent that those costs fell to be attributed to the claim against them by division, rather than apportionment.

Judgment

London Solicitors

Wed, 07 Apr 2010 00:00:00 +0000

The master had been entitled to take into account the claimant's age and the urgency of his case when deciding that it had been reasonable for him to instruct solicitors in central London in respect of his personal injury claim against the Ministry of Defence. The list of factors set out by Kennedy L.J. in Wraith v Sheffield Forgemasters Ltd (1998) 1 WLR 132 in relation to this issue was useful but was not of general application.The master had been entitled to take into account the claimant's age and the urgency of his case when deciding that it had been reasonable for him to instruct solicitors in central London in respect of his personal injury claim against the Ministry of Defence. The list of factors set out by Kennedy L.J. in Wraith v Sheffield Forgemasters Ltd (1998) 1 WLR 132 in relation to this issue was useful but was not of general application.

WILLIAM ALBERT HIGGINS v MINISTRY OF DEFENCE (2010) [2010] EWCH 654 (QB)

The appellant Ministry of Defence (MoD) appealed against a ruling of Master Campbell at the Senior Courts Costs Office upholding a decision of the principal costs officer that it had been reasonable for the Respondent (R) to instruct solicitors (F) in Central London. At the time of instruction, R had been 82 and living in Broadstairs, Kent. He had worked for the MoD and his work had brought him into contact with asbestos. He sought medical advice in November 2007, complaining of breathlessness. In December 2007, he saw a consultant in respiratory medicine, who advised that asbestosis was the main cause of his breathlessness and that he probably had cancer. He told R that the condition was advanced and that there was no treatment. He mentioned the name of F. By that time R was able to walk very little, and his daughter had moved in to care for him. She contacted F, who accepted instructions to act. A settlement was reached before R's death in May 2008. On the issue of whether it had been reasonable for R to instruct solicitors in Central London as opposed to a firm in Kent or Outer London, the master had regard to the list of factors in Wraith v Sheffield Forgemasters Ltd (1998) 1 WLR 132 CA (Civ Div) as well as several other factors. He stated that it was common ground that the matter was of high importance to R. He concluded that the matter was urgent, that there were no factors connecting the case to a particular location and that F were accessible, as had been shown by a home visit that they had made. The master also concluded that "it would not be objectively reasonable to expect an 82 year old man who had just been informed that he was incurably ill, to undertake a trawl of local solicitors, in circumstances where an experienced consultant had given him the name of [F] as solicitors who specialised in this field". For the same reasons, he found that it had not been unreasonable for R not to enquire into the level of F's fees. The MoD argued that the master had been wrong not to hold that R should have instructed other solicitors in Kent or Outer London.

HELD: It was not in dispute that a reasonable litigant would normally be expected to investigate the hourly rates of solicitors whom he might instruct, and that he would normally be expected to consider a number of other factors, including the time and costs associated with geographical location, before choosing whom to instruct, and to take advice on these and other matters before proceeding. He had to keep down the costs of litigation, and that might well mean that if he went to London solicitors who charged London rates for a case which had no obvious connection with London, and which did not require expertise only to be found there, he might not recover costs on the basis of those rates. However, the master had been entitled to reach the decision that he had in the instant case. What the master had to do was to exercise his own judgment on a number of relevant considerations, and there was no error in what he did. He had considered the submission that R should have investigated, or taken advice on, the level of fees that would be charged by F; he rejected it, because of R's age and the urgency of the case. The list given by Kennedy L.J. in Wraith was a list prepared in that case. It was not of general application, although it certainly was useful. A number of the points that the master considered, and rightly considered, in this case did not appear in that list, such as H's age and the urgency of the case, Wraith considered.

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Costs of Preliminary Issue

Sun, 25 Oct 2009 00:00:00 +0000

A master had erred in assessing costs awarded on a preliminary issue at nil on the ground that the receiving party had ultimately failed very badly in its case. The costs order had been intended to deal with the costs of the preliminary issue as a discrete set of costs, irrespective of the overall fate of the action.

BUSINESS ENVIRONMENT BOW LANE LTD v DEANWATER ESTATES LTD [2009] EWHC 2014 (Ch)

The Appellant lessor appealed against a decision of Master Gordon-Saker to assess its costs of a preliminary issue at nil after it had failed in its overall claim against the Respondent lessee.

Background

The Appellant ("A") had brought proceedings against the Respondent ("R") in respect of a schedule of dilapidations. R defended the claim based on grounds of a previous collateral contract and/or promissory estoppel, which was tried as a preliminary issue and ultimately failed in the Court of Appeal. R was ordered to pay the costs of that trial and the appeal. The action proceeded and was ultimately compromised upon agreement that R should pay A fraction of the sum that had been claimed. At a subsequent hearing to determine costs, it was found that the claim had been grossly exaggerated, and R was awarded its costs of the action, save for those subject to the Court of Appeal's Order on the preliminary issue, on the indemnity basis.

Detailed Assessment

At the detailed assessment of costs related to the preliminary issue R disputed whether it should have to pay any of those costs, on the basis that if the claim had not been exaggerated, it would never have had to argue a preliminary issue. The Master hearing the assessment reduced R's liability under the Court of Appeal's costs order to nil.

Appeal

A argued that it was entitled to enforce the costs that it had been awarded on the preliminary issue on the basis that that was a self-contained order, and it was wrong to infect the assessment of it with the final findings as to the exaggeration of the claim.

Decision

On 31^st July 2009 Mr Justice Mann held that (1) It was important to give proper effect to the order of the Court of Appeal, which involved construing it in its proper context, Ultraframe (UK) Ltd v Fielding (Costs) (2006) EWCA Civ 1660, (2007) 2 All ER 983 applied. That order had been intended to deal with the costs of the preliminary issue as a discrete set of costs, which were to be paid by R to A irrespective of the ultimate fate of the action. The Master should accordingly have assessed the costs of the preliminary issue by reference to their reasonableness and propriety within the issue, not by reference to the ultimate fate of the action, no matter how misconceived it might have been. It was the duty of the assessing tribunal to carry out the assessment which the previous court had directed it to carry out. It was common for costs orders to be made for interim matters in order to fix liabilities and allocate costs to the activities to which they related. Such orders should be dealt with on a self-contained basis; otherwise part of their purpose would be lost. It had been open to the Court of Appeal to make an order which catered for the fact that the claim might be lost, but it had not done so. Further, it would not have been open to R to run its argument had the Court of Appeal summarily assessed the costs; the ability to take such points should not depend on a slightly arbitrary matter such as that. It could not be seriously argued that if a case which failed had not been brought, then costs orders made on the way would not have been made because the relevant applications would not have been necessary, and the fact that the receiving party had lost the action badly made no difference. The fact remained that R had fought the preliminary point and lost it, and that attracted cost consequences. The Master's order had undermined the Court of Appeal's ability to determine its own costs incidence: any court making an order relating to an interim application before it was in the best position to understand the merits of the case and order costs accordingly. There may have been discretionary factors at play in the preliminary issue of which the subsequent tribunal was not aware, and the subsequent tribunal could not undo the costs order either in terms or in effect, Koshy v DEG-Deutsche Investitions- und Entwicklungs Gesellschaft GmbH (2003) EWCA Civ 1718 applied. (2) (Obiter) Although the result in the instant case was fair and logical, if there was a harsh case which needed addressing, that could be done under CPR r.3.1(7). While the scope of that rule was very limited, if there was a genuine change of circumstances, or some entirely false basis for something having been done, the court might vary or revoke its earlier order, Collier v Williams (2006) EWCA Civ 20, (2006) 1 WLR 1945 considered.

Appeal Allowed.

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Success Fee

Sat, 17 Oct 2009 00:00:00 +0000

A firm of solicitors was entitled to assess a claim for clinical negligence that was accepted under a conditional fee agreement as having a 50% chance of success, which allowed it to charge a 100% success fee. The claim was of a kind that had uncertain prospects, and based on what the solicitors knew when the fee agreement was made, the claim could easily have been assessed as having chances of success lower than 50%.

DAVID IAN OLIVER (EXECUTOR OF THE ESTATE OF JOHN FREDERICK OLIVER, DECEASED) v (1) WHIPPS CROSS UNIVERSITY HOSPITAL NHS TRUST (2) WALTHAM FOREST PRIMARY CARE TRUST [2009] EWHC 1104 (QB)

Background

The Claimant had brought proceedings on behalf of the estate of John Frederick Oliver, who had died of septicaemia in a hospital run by the primary care trust. He had previously been in a hospital run by the NHS trust, where it was thought that he had acquired MRSA. The deceased's widow had contacted solicitors, who had substantial practice in clinical negligence. She informed them of what had happened to the deceased over the last three months of his life. Her claim was accepted under a Conditional Fee Agreement. The claim ultimately settled and the Claimant was awarded costs, to be assessed on the standard basis.

Detailed Assessment

At detailed assessment Master Campbell reduced the success fee claimed at 100%, representing a notional 50% prospect of success in the action, to 67%. The fee agreement noted that the Claimant's solicitors had not yet had the opportunity to assess the credibility of the evidence or assess the relevant facts or expert witnesses. The Claimant's solicitors contended that given the limited information they had about the claim the prospects of success were uncertain and that it was impossible to assess the percentage chance of success with any mathematical precision. Master Campbell formed the view that the Claimant's solicitors must have thought that there was a more than 50% chance of success otherwise they would not have accepted the claim. On that basis he reduced the success fee to 67% representing a 60% chance of success.

Appeal

On appeal Mr Justice Jack found.....

The crucial question on the appeal is whether on the material which was before the master he was justified in concluding that the prospects of success should have been assessed at 60% rather than 50%, when Gadsby Wicks first decided to accept the claim. The basis of his decision was the firm must have thought that the claim had a better than 50% chance, otherwise it would not have been accepted. In my view, shared by my assessors, that basis was not substantiated. The assessment was that the claim might have a better or worse than even chance of success. Having been addressed as to the merits of the claim by Mr Hutton and also read his note written for the assessment, I agree that the claim was of a kind that faced difficulties and had uncertain prospects. Based on what Gadsby Wicks knew when the conditional fee agreement was made it was one which could easily have been assessed as having chances of success lower than 50%. I therefore consider that the master was wrong to take the view he did...

In his decision Master Campbell cited from the judgment of His Honour Judge Dean QC in Barham v Athreya , Central London County Court, 15 June 2007, unreported, quoting from paragraph 57 :

'In other words, if you chose to enter a CFA at such an early stage, you are, as it were, giving yourself the right to argue for or to bargain for 100% and that cannot be right. It puts a premium on ignorance rather than the contrary.'

This may suggest that a solicitor should not enter an agreement at an early stage. However, as I have said, he is entitled to do so. It follows inevitably from that entitlement that he will be in a position of ignorance compared with that when he has the medical records and expert advice. But he is likely to be experienced in the field and he will have some knowledge of the claim. His 'ignorance' is relative. He may have taken on a winner: he does not know. But equally he may have taken on a case where greater knowledge would show the chances were well below 50 percent. The master considered that he was bound by the decision in Barham v Athreya , but he was not."

The appeal was allowed and the success fee restored to 100%

Third Party Costs Order

Sun, 11 Oct 2009 00:00:00 +0000

Where family had funded a claimant's litigation, there was a reasonable prospect of success in obtaining a third party costs order where the family were directly concerned with the facts of the claim, had taken an active role and gained a benefit from the litigation, and had sought to control its course.

JOHN THOMSON (Claimant) v BERKHAMSTED COLLEGIATE SCHOOL (Defendant) and (1) IAN THOMSON (2) GRACINDA THOMSON (Interested Parties) [2009] EWHC 2374 (QB)

Background

Mr & Mrs Thomson's son, John (J), a former pupil at Berkhamsted Collegiate School (BCS), had brought a claim for damages against BCS for failure to take proper measures to prevent him from being bullied whilst he was at the school. Two weeks into the trial, J discontinued his claim and BCS sought its substantial costs in defending the action which it alleged was wholly misconceived. J was unemployed and the costs of his litigation had been met by his parents (P). Accordingly, BCS wished to claim its costs from P pursuant to the Supreme Court Act 1981 s.51 and CPR r.48.2. Pursuant to that application BCS sought orders requiring P to file and serve disclosure statements setting out correspondence between them and J's solicitors, experts and counsel; in addition they sought orders against J with respect to disclosure and his claim of legal professional privilege.

Decision

On 2^nd October 2009 Mr Justice Blake held that...

(1) Before considering whether it was necessary to make the Orders sought by BCS, the Court needed to consider when a third party costs order was likely to be made in cases such as the instant one. The law as to third party costs was sufficiently stated in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (Costs) (2004) UKPC 39, (2004) 1 WLR 2807 and the following principles were relevant: (i) such an order was exceptional (ii) the application should normally be determined by the trial judge (iii) pure funders with no personal interest in the litigation would not normally have the discretion exercised against them, Hamilton v Al-Fayed (Costs) (2002) EWCA Civ 665, (2003) QB 1175 applied (iv) it was relevant but not decisive that the defendant had warned the non-party of the intention to seek costs or the non-party's funding had caused the defendant to incur costs it would not otherwise have had to incur (v) the conduct of the non-party in the course of the litigation was of relevance (vi) in a family funding context courts had been reluctant to impose third party costs orders against those family members who assisted a party for philanthropic and disinterested reasons and (vii) the inherent strength of the application was always a relevant factor, Dymocks applied. In this case, P were not merely funders but were directly concerned with the facts of the claim and played an active role in the litigation. There was substance to the suggestion that the litigation was speculative as to its prospects of success. It was doubtful that it would have been funded if T had not made funds available themselves. Accordingly, an application for third party costs had a reasonable prospect of success. The only doubt was over whether P gained a benefit from the litigation and sought to control its course.

(2) BCS could only demonstrate the element of control if it knew what communications P had had with the solicitors, counsel and experts in the case. Restricting the period of time during which the disclosure was required reduced the scale of the disclosure sought and any practical difficulties.

(3) J had claimed legal professional privilege but it did not normally exist in communications between a solicitor and third parties that were not immediately connected with that third party's witness statement or the giving of legal advice to the claimant. An analysis of the documents was required to determine which attracted privilege. The correspondence sought was likely to be probative and not privileged in its entirety and it was not disproportionate for the material to be sought.

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Costs Protection

Sat, 01 Aug 2009 00:00:00 +0000

During any time when a litigant acted in person they were not a legally assisted party within the meaning of the Legal Aid Act 1988 s.17. That extended to any period after their solicitors had ceased to act for them and had communicated that to the opponent's solicitors, even if a period of time then elapsed before they took any active steps as a litigant in person.

LEILA MOHAMMADI v (1) SHELLPOINT TRUSTEES LTD (2) ANSTON INVESTMENTS LTD [2009] EWHC 1098 (Ch)

Background

The appellant (A) appealed against a Costs Order which arose from litigation with the Respondents (R). A had obtained public funding for her litigation by means of several overlapping public funding certificates. Throughout the period of litigation she had several different firms of solicitors. At various times her public funding certificates were discharged and then reinstated when she retained new solicitors. She acted in person during the periods when she was without legal representation.

Costs Assessment

In assessing costs at the end of the litigation the Master Campbell found that for any dates upon which A was acting for herself she did not have costs protection.

Appeal

A submitted that she had been "a legally assisted party" within the meaning of the Legal Aid Act 1988 s.17 for the whole period of litigation, and that during periods without legal representation she had taken no active steps herself.

Decision

Mr Justice Briggs found on appeal that...

Following the plain meaning of s.2(11), during any period when Awas acting in person she was not a legally assisted person, even though she was actively seeking to reinstate the provision to her of legal advice, assistance and representation under the Act in connection with her pending proceedings, Burridge v Stafford (2000) 1 WLR 927 CA (Civ Div) applied.
A was not a legally assisted party for the purposes of s.17 during any period after a firm of solicitors had ceased to act for her and had communicated that fact to R's solicitors, even if a period of time then elapsed before M took any active steps as a litigant in person.
It would be wrong to treat the state of mind of the litigant acting in person as determinative of the question of whether she had at that stage ceased to be a legally assisted person because that was subjective and uncertain, and had nothing to do with the objective question in s.2(11).
The reinstatement of a public funding certificate for the purposes of enabling new solicitors to act after the discharge of that certificate when previous solicitors ceased to act did not have the effect retrospectively that the litigant was deemed to have been a legally assisted party for the purposes of s.17 during the period between the discharge and the reinstatement of the certificates, or during any period between the termination of the old firm's retainer and the commencement of the new firm's retainer.
The question whether at any particular time a litigant was a legally assisted person was of real importance for the other litigants in the case for consequences arising under s.17 and s.18, Burridge applied. Therefore, it could not be right that the other litigants, once informed that the previously legally assisted person had ceased to be in receipt of legal advice and representation, were nonetheless kept in suspense until the outcome of any investigation as to his opponent's motivation, or the outcome of any subsequent application to reinstate the public funding certificate in question.
When a legally assisted person's solicitors had ceased to act, without another firm being retained under a public funding certificate and that fact had been communicated to the opposing party, then from the moment of that communication the litigant ceased to be a legally assisted person.

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Apportionment

Sat, 11 Jul 2009 00:00:00 +0000

On the facts, the Judge had been entitled to apportion costs in line with the Claimant's liability in a road traffic accident as he had had proper regard not only to the Claimant's claim, but also the Defendant's notional cross-claim; the exercise of his discretion could not therefore be criticised.

PARKES v MARTIN [2009] CA (Civ Div)

Background

The Appellant driver (A) appealed against a Costs Order made at the conclusion of a liability trial arising from an RTA with the Respondent lorry driver (R). Following the accident, both parties had intended to issue personal injury claims; however, A did so first. The parties formally agreed that the issue of liability would be determinative of A's claim and of R's intended claim, without the need for R to issue separate proceedings or a counterclaim. A made two Part 36 Offers; first for 75 per cent in his favour and subsequently for a 50:50 split; R refused both and the matter proceeded to trial on liability as a preliminary issue. The Judge determined that A should recover 35 per cent of the value of his claim and that R should recover 65 per cent of the value of his claim. Prior to the Judge making a determination on costs, Counsel for R conceded that a counterclaim had not been made, but made reference to "a claim by the wayside." Consequently, the Judge in exercising his discretion under CPR 44.3(4) determined that A should recover 35 per cent of his costs in line with the ruling on liability, as justice was best served by doing so.

Appeal

A submitted on appeal that it was not open to the Judge to consider R's notional cross-claim as there was no real evidence of it before him save for R's fleeting reference to having "a claim by the wayside", and that, as liability had been established in A's favour, albeit in a reduced fashion, he was entitled to all of his costs.

Decision

Although there was no explicit reference in the Judge's determination to R's cross-claim when making the Costs Order, it was clear from his decision to apportion costs in the same proportion as liability that he had had it in mind. R had made it sufficiently clear to the Judge that, although he did not have a formal counterclaim, he did have a claim "standing by the wayside", thus making the issue of liability relevant to the cross-claim. Further, A had had ample opportunity to make submissions on costs and had understood the argument advanced by R in relation to the notional cross-claim, but failed to make submissions to the contrary. The Judge had correctly exercised his discretion and it was clear that he had had proper regard to the claim and notional cross-claim when making the order for costs.

Previous Solicitors

Sat, 11 Jul 2009 00:00:00 +0000

Where a party was entitled to its costs, it had to include all of its costs on the bill for detailed assessment. If that party was entitled to recover the cost of instructing more than one solicitor, it had to include the costs of each solicitor separately in the bill and, if it failed so to do, could not claim a separate assessment in respect of the costs of the solicitor omitted.

(1) CARL HARRIS (2) SUSAN COLLETE HARTLESS v MOAT HOUSING GROUP-SOUTH LTD [2007] EWHC 3092 (QB)

Background

The Appellants (A) appealed against a Costs Judge's decision that they were only entitled to detailed assessment of one Bill of Costs. The Respondent Housing Association (RHA) had obtained a without notice Anti-Social Behaviour Injunction, a Possession Order and an Anti-Social Behaviour Order against A. A had appealed the various Orders. Their appeals were successful and the Court made three Costs Orders against RHA in respect of the appeals.

A had initially been represented by one firm of solicitors, but had transferred instructions to a second firm when they were granted public funding. The first and second solicitors agreed that they would submit separate Bills of Costs, but omitted to inform RHA of that fact. The second solicitors then lodged Notices of Commencement (N252), referring to the first and third Costs Orders. The Bill did not include the first solicitors' costs. RHA agreed to pay the second solicitors approximately £39,000 plus VAT in settlement of H's costs of the appeal. After the agreement had been reached, the first solicitors lodged N252 in respect of Costs Order one, and submitted a bill of £53,000. The Costs Judge dismissed the first solicitors' request for assessment and decided that RHA was entitled to rely on the original Notice served by the second solicitors as a declaration of their full potential liability.

Appeal

A submitted that whilst CPR47 and its accompanying PD envisaged that only one Notice or Bill would be served, there was nothing that stipulated that that must be so. They argued that though the Bill had not been divided into separate parts for each solicitor, that did not lead to the automatic disallowance of the costs. Further, they submitted that there was no clear evidence that the agreement as to costs had been on the basis that the first Bill constituted the entire claim; RHA knew that the first solicitors had been instructed and the Bill clearly had not included their costs. Finally, A maintained that the agreement as to costs could be avoided for mistake.

Decision

Christopher Clarke J held that CPR 47.6 clearly provided that detailed assessment proceedings were commenced by the receiving party serving both a Notice of Commencement and the Bill of Costs, not a bill of costs. The Bill was the receiving party's statement of what he claimed was due to him pursuant to whatever Order entitled him to costs. If A was entitled to recover the cost of instructing more than one solicitor, PD 47 required them to include the costs of each solicitor separately in the Bill. If they failed to include the costs of their previous solicitor, and the Costs Judge completed the final certificate, they could not claim a further assessment, Segalov (Deceased), Re (1952) P 241 PDAD applied. There was nothing in the CPR which qualified the position as stated in Segalov.

Further, where there was an agreement for costs the critical question was what had been agreed. If A had made it clear that the amount claimed was only part of their costs, and they would claim later for their first solicitors' costs, they would not be prevented from making a claim in respect of those costs. There would have been a failure to comply with PD 47 but, subject to any sanction that the court thought fit to impose, there would be no reason why the court should not assess the remaining costs in dispute. If, on the other hand, what was settled was the amount of A's costs pursuant to a particular Order, the position would be different. If they had left some costs out of the Bill and there had been a settlement of the Bill, they could not recover more than the amount agreed. The second solicitors' N252s were notices of A in respect of Costs Orders one and three. The second solicitors had indicated the sums which they would be prepared to accept in settlement of RHA's liability under those Costs Orders.

A's argument that such an agreement could be avoided for mistake was incorrect. On the assumption that there was a mistake as to the terms of what was agreed, it was not common; it was not shown that RHA knew, or that any reasonable person in its position would have known, that A was under such a mistake. RHA had not acted in such a way as to render it inequitable for it to rely on the agreement made, that was particularly so in light of the fact that the agreement did not deal with the second Costs Order.

Finally, no Notice of Commencement was ever served pursuant to the second Costs Order, and no Bill had been prepared which purported to be a bill relating to it. In those circumstances, the agreement could not be regarded as compromising any liability of RHA in respect of the costs awarded to A under that order. A was not precluded from issuing N252 in respect of that Order, which constituted a separate source of entitlement to costs.

As a postscript to his Judgment Clarke J added...

"The result of my [dismissing this appeal] is that the appellants will be unable to recover from the respondent an appreciable amount of costs that they might otherwise have received. I have considered whether that result is such as to demand a different conclusion. In my judgment it is not. Where there has been more than one solicitor, the absence from the bill of one solicitor's costs, if not picked up by the solicitor who has conduct of the assessment proceedings, is likely to be picked up by the costs judge himself. The appellants' problems in this case arise because RJH had no undertaking from, nor agreement with, SWL to include their costs in SWL's bill. On the contrary SWL and RJH, either oblivious or heedless of the provisions of the practice direction, made a deliberate decision not to include anything in SWL's bills in respect of RJH's costs, but did not inform Dutton Gregory that there would be a second bill in respect of those costs. SWL then agreed a figure for the two bills that had been submitted. This is, or ought to be, an unusual set of circumstances.

Master Haworth was influenced by the difficulty that would arise in deciding what costs were reasonably incurred, if there was a duplication of costs as between a first (compromised) bill and a subsequent one, since, in the event of a settlement which simply reduced the total by a particular amount, it would not be possible to know at what figure any particular item had settled. Whilst there may be difficulties, it appeared to me during the course of the argument that they might not be as great as at first sight appeared, and could probably be addressed either by the costs judge focusing on what was a reasonable sum for the item claimed, having regard to what items had been claimed in the compromised bill, or by treating each item in the compromised bill as having been reduced by the percentage by which the total was reduced and, in any event, resolving any doubt in favour of the paying party. Whether that is so or not, I prefer to reach my conclusion on the grounds set out above rather than on the difficulties that might be produced had I reached a different one."

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Retrospective CFA

Thu, 18 Jun 2009 00:00:00 +0000

A retrospective success fee in a retrospective conditional fee agreement was not contrary to public policy.

BIRMINGHAM CITY COUNCIL v ROSE FORDE [2009] EWHC 12 (QB)

Background

The appellant local authority appealed against a decision on preliminary issues about costs in litigation with one its tenants, Ms Forde, the Respondent ("R"). R had entered into a CFA with her solicitors in relation to proceedings against the local authority for failure to repair her property. A short time before settlement of the proceedings the local authority had challenged the validity of similar CFAs. R's solicitors therefore wrote to her asking her to sign a second CFA. The letter explained that the legal costs up to that date would be dealt with under the second CFA unless the court ruled it invalid, in which case they would revert to the first CFA; also, it explained, the second CFA contained a success fee, whereas the first did not. The consideration expressed in and for the second CFA was that the solicitors would continue to act for R.

Detailed Assessment

On 30^th April 2008 Master Campbell decided that:

The letter formed part of the second CFA
The solicitors' agreement to act was adequate consideration
The presumption of undue influence did not arise; and
A retrospective success fee was not permissible but that that did not invalidate the second CFA and, accordingly, it was enforceable.

The local authority appealed to the High Court.

Appeal

The local authority submitted on appeal that:

The letter did not form part of the retainer agreement
There was no consideration for the second CFA because the solicitors were already bound to continue acting for R under the first CFA, which was never terminated in accordance with its terms
The second CFA had to be presumed to have been procured by undue influence and it was manifestly to R's disadvantage because of the success fee and because it imposed a retrospective liability whereas, if the first CFA was invalid, she was not liable for the solicitors' fees under it; and
A retrospective success fee was abhorrent and a retrospective CFA, with or without a success fee, was unenforceable, particularly when the CFA was made after the Conditional Fee Agreements (Revocation) Regulations 2005 but related to a period before those Regulations came into force when the solicitor would have had to comply with the notice requirements in the Conditional Fee Agreements Regulations 2000 reg.4.

Held

Christopher Clarke J held on 13th January 2009 that:

The letter had been part of the retainer. It did not only invite acceptance of the second CFA, but also contained two provisions that the parties must have intended to be part of their agreement. As the second CFA had been entered into under the 2005 Regulations it had not been necessary for R to sign the letter in order for it to have contractual effect, nor did a CFA have to be contained in one document, Jones v Wrexham BC (2007) EWCA Civ 1356, (2008) 1 WLR 1590 applied.
The consideration consisted of continuing to act, in circumstances where, if the local authority had been right in its challenge to the validity of the first CFA, the solicitors had no obligation to continue acting, and the right not to do so, Williams v Roffey Bros & Nicholls (Contractors) Ltd (1991) 1 QB 1 CA (Civ Div) and Arrale v Costain Civil Engineer (1976) 1 Lloyd's Rep 98 CA (Civ Div) considered. The provision of an enforceable obligation to provide services in place of one which the local authority asserted to be unenforceable was consideration for a fresh promise to pay. Further, the second CFA provided a benefit to R that the first had not because it extended the scope of work covered by the retainer.
R's willingness to sign the second CFA was readily accounted for by "the ordinary motives of ordinary persons" in that she had been prepared to assist her solicitors recover their fees despite the challenge made by the Council to the validity of CFA 1. Thus, no presumption of undue influence arose Royal Bank of Scotland Plc v Etridge (No2) (2001) UKHL 44, (2002) 2 AC 773 applied. Although the success fee was an additional liability it was subject to assessment as to reasonableness by the Costs Judge, and if and to the extent that R was liable to pay it, it would be recoverable from the local authority, whose ability to pay was not in doubt. So the disadvantage was more apparent than real.
There was no prohibition on CFA's being retrospective and no reason per se why a retrospective success fee was contrary to public policy. At para 150 Clarke J found...

"In respectful disagreement with Master Campbell and Master Hurst [in Adam Musa King v Telegraph Group Ltd, unreported], I do not regard it as necessary to hold that a retrospective success fee is per se contrary to public policy. There is, in my view, insufficient warrant for effectively precluding solicitor and client from making such an agreement. In some, perhaps many, circumstances a retrospective success fee, or its amount, may be unreasonable, either as between the parties or as between solicitor and client. But this will not always be so. The Court has, in my opinion, enough weapons in its armoury, in the form of the criteria applicable on a detailed assessment and the provisions of the Costs Practice Direction and the Practice Direction on Protocols, to disallow or reduce retrospective fees that are unreasonable, as in this case."

The court had the ability to disallow or reduce retrospective fees that were unreasonable. If that were wrong, there was no reason why the court could not delete the success fee leaving the obligation to pay unaffected. There was nothing in the statutory provisions requiring a retrospective CFA to comply with the notice requirements in reg.4 of the 2000 Regulations and no reason to conclude that the second CFA was invalid because the retrospection extended back to before the 2005 Regulations had been introduced.

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Section 11

Wed, 20 May 2009 00:00:00 +0000

A Master had been correct to dismiss an application for an assessment of costs brought under Paragraphs 10(2) and 10(3)(c) of the Community Legal Service (Costs Protection) Regulations 2000 as it was out of time.

(1) LIVERPOOL FREEPORT ELECTRONICS LTD (2) STREED (UK) LTD (3) SHIRIN IQBAL (Claimants) v HABIB BANK LTD (Defendant/Appellant) & LEGAL SERVICES COMMISSION (Respondent) (2009)

Background

The First and Second Claimants were companies which had gone into liquidation and had assigned causes of action to the Third Claimant (3C). Proceedings were brought by the 3C against the Defendant/Appellant (D/A) in 1990 in which she alleged that the D/A had wrongfully debited accounts. She quantified her claim at £2,987,720.

Although successful at first instance, subject to an assessment of damages, the 3C was unsuccessful on a subsequent retrial on 25th September 2007 (which followed a successful appeal by the D/A) and Ordered to pay the D/A’s costs of the trial and retrial on an indemnity basis. At the stage of the Appeal in 2004 the 3C had been in receipt of assistance from the Legal Services Commission and as such had costs protection within the meaning of s11 of the Access to Justice Act 1999. The Order of the Court of Appeal made in relation to costs on 29th July 2004 provided that:

“17) Habib Bank Limited’s costs of this Appeal to be paid by Mrs Shirin Iqbal such costs to be assessed if not agreed.

18) Mrs Shirin Iqbal, a party who was in receipt of services funded by the Legal Services Commission, do pay Habib Bank Limited an amount to be determined by a Costs Judge.

19) Liberty to Habib Bank Limited to apply to a High Court Judge in relation to the assessment of Mrs Iqbal’s liability for costs and in the event that the assessment gives rise to a shortfall, under the Community Legal Services (Cost Protection) Regulations 2000.”

On 18th December 2007 the D/A applied under Paragraphs 10(2) and 10(3)(c) of the Community Legal Service (Costs Protection) Regulations 2000 for (1) a hearing to determine the costs payable by the 3C to themselves in respect of the proceedings in the Court of Appeal, and (2) an Order that those costs be paid by the Commission. The level of Judge specified on the Application was Costs Judge. The following day the D/A applied for a High Court Judge to assess the 3C’s personal liability for costs at nil, or such figure as the Court thought fit, reflecting Paragraph’s 18 and 19 of the Court of Appeal’s Order.

Arguments

The Legal Services Commission (LSC) argued that the Applications had been made out of time because the (then mandatory) three month time limit imposed by Paragraph 10(2) of the Costs Protection Regulations ran from the date of the Court of Appeal’s Order in July 2004, as opposed to the date of the re-trial in September 2007.

The D/A submitted that in the circumstances, where there was going to be a re-trial, the intention of Paragraph 19 of the Court of Appeal’s Order was to give them the option of applying to a High Court Judge instead of a Costs Judge and that the three month period would only begin to run when he had made an assessment of what was recoverable from the 3C and found a shortfall.

Decision

At a hearing of this preliminary issue on 5th September 2008 Master Rogers held that because the 3C’s original funding certificate was granted on 21st August 1996 (and so the application for funding must have been prior to 3rd December 2001) the Court’s discretion to extend the three month limitation period (brought in by an amendment to Paragraph 5(3)(b) of the Cost Protection Regulations) was not available. The Master further held that Paragraph 19 of the Court of Appeal Order did not extend the period, or defer its commencement and, consequently, dismissed the Applications.

Master Rogers’ decision was upheld by Mr Justice Jack (sitting with Master Hurst and Simon Versey Esq in the High Court on 30/4/09) who found, inter alia, that:

“I do not consider that it is possible to construe Paragraph 19 [in the way suggested by the D/A]. It does not say that. If it had been sought to secure such an unusual provision, it would have been necessary to spell out fully what was intended in the draft and to persuade the Court of Appeal there was power to make such an order and that it was appropriate. On the contrary, counsel suggested to the Court of Appeal that paragraph 19 simply sought to preserve the position under the Regulations. What is clear is that paragraph 19 does nothing, either expressly or by necessary implication, to somehow extend the 3 month period or to defer its commencement. Mr Farber [for the D/A] rightly accepted that paragraph 18 was a section 11(1) order. The making of such an order was a pre-condition of the Bank’s right to apply for an order against the Commission. This right was provided by the Regulations and could only be exercised in accordance with the Regulations. That included the 3 month window in which to apply which runs from the section 11(1) order. Mr Farber also sought to rely on the wide discretion as to costs provided by 5 1(1) of the Supreme Court Act 1981. That cannot affect the provisions of the Regulations. The section begins ‘Subject to the provisions of this or any other enactment and to rules of court’.”

Inquest Costs

Sun, 05 Apr 2009 00:00:00 +0000

Costs incurred during an inquest can, in principle and subject to the usual tests of reasonableness and proportionality, be recovered as costs of subsequent civil proceedings. On 25th February 2009 the Honourable Mr Justice Davis handed down judgment in the case of Roach v Home Office and Matthews v Home Office [2009] EWHC (QB).

(1) GERALD LAURENCE ROACH (2) JEAN ROACH v HOME OFFICE : FRANCES MATTHEWS v HOME OFFICE (2009)

This is an important decision concerning the recoverability of costs incurred during an inquest in later civil proceedings. It will affect clinical negligence, personal injury and HRA practitioners alike. TMC were instructed by Hodge, Jones & Allen in the case of Roach to draft the subject Bill of Costs and attend before Master Hurst on the assessment of costs. Andrew Post of Hailsham Chambers represented them on their successful appeal to the High Court.

Background

Craig Roach was a heroin addict. He was arrested on 16^th January 2004 for shoplifting and remanded into custody the following day. On 18^th January 2004 he was found hanging from his bed having used his sheets as a ligature. The family consulted Hodge Jones & Allen who represented them at an inquest, which concluded after 14 days on 27^th March 2007 when the Jury reached a narrative verdict. Based upon the findings of the Inquest a civil claim was instigated and settlement reached at an early stage for damages in the sum of £10,000, plus costs. A Bill of Costs in relation to the claim for damages was served upon the Defendant. This could not be agreed principally as a result of the Defendant's contention that they were not liable for any costs incurred in attending the inquest other than, if any, those equal to that of a noting brief. This was not accepted and the matter proceeded to detailed assessment before the Senior Costs Judge on 6^th May 2008.

Detailed Assessment

Master Hurst in Roach allowed only half the costs of participation in the inquest on the basis that involvement had been for two equal purposes i.e. helping the coroner and gathering evidence for the civil claim. The Home Office appealed the decision arguing that a series of decisions over the last 60 years had established a binding rule that costs incurred in a prior proceeding (i.e. an inquest) can never be recovered as part of a subsequent civil claim. Therefore, they contended, Costs Judges had no jurisdiction to allow inquest costs either in part or in full. It was argued that the decision in the Bowbelle, which had concluded otherwise, had been decided per incuriam. The Claimant cross appealed the decision to divide the inquest costs equally, or indeed at all, on grounds that it was contrary to practice, authority and principle.

Appeal

In rejecting the Home Office’s argument and allowing the Claimant’s Appeal Davis J found, inter alia, that:

“I am not bound by authority to accept the proposition for which Mr Morgan [counsel for the Home Office] argued; and I do not think the general principle for which he argued can be extracted from the cases. Since I can see no other convincing rationale for such a proposition, I can see no other basis for restricting the operation of the wide language of section 51 itself and the extent of the court’s jurisdiction.”

The decision establishes that the costs of attendance at and participation in inquests may, subject to relevance and the usual principles of reasonableness and proportionality, be recoverable in civil proceedings.

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