Scott –v- Hull & East Yorkshire Hospitals NHS Trust presents a strong precedent for both the receiving and paying party. The receiving party failed to prove that there was a valid CFA in place and as such recovered no costs.
The Claimant initially put forward a Bill of Costs totalling £112,000.00. The same was calculated on an hourly rate of £400.00 per hour throughout with an additional uplift of 100%. Points of Dispute and Replies were subsequently filed and the matter was listed for detailed assessment.
Shortly before the detailed assessment, the Claimant filed an amended Bill of Costs. The amended Bill of Costs reduced the hourly rate of £400.00 to £146.00 per hour and the success fee down from 100% to 54%. The costs claimed fell from £112,000.00 to circa £36,000.00.
During the detailed assessment it came to light that Rapid Solicitors and their client (the Claimant) had entered into two separate CFAs. This was not previously stated by the Claimant and when the issue was raised by the Defendant in the Points of Dispute, the Claimant maintained that there was only CFA in their Replies. The reply was subsequently conceded.
Rapid Solicitors chose not disclose either of the CFAs but instead relied upon a witness statement from Mr Thompson, a fee earner for the Claimant. Rapid Solicitors wished to retain privilege but did advise that they were happy to show both CFAs to the Court.
During oral examination it came to light that Mr Thompson was not one of the fee earners involved with the file or with the CFAs which were being questioned. Mr Thompson was unable to confirm whether either of the CFAs were limited to Hull and East Yorkshire Hospitals or Hull and East Yorkshire Hospitals and Dr Darren Wheatley. It was also acknowledged that the witness statement of Mr Thompson referred to the wrong dates with regards to when enquiries were made of the BTE insurers.
The Judge commented that the witness evidence put forward by Rapid on the issue of proving the validity of the CFAs was no where near what was normally seen.
The Judge acknowledged that as it was a standard basis assessment any doubt was to be resolved in favour of the paying party. Rapid Solicitors chose to resolve any doubt with the witness statement and oral evidence of Mr Thompson.
Interestingly the Judge commented that he could not order disclosure of the CFA despite the Court urging that there ought to be advance disclosure of such documentation. The Judge stated that once an issue arises it is up to the receiving party how they overcome the objection.
It transpired from Mr Thompson’s evidence that the original Bill of Costs totalling £112,000.00 had been mis-certified as the CFA contractually limited the hourly rate agreed between the client and insurers to guideline rates. The Bill of Costs was only amended as a direct result of the paying party’s Points of Dispute as opposed to an acceptance that the original rate breached the indemnity principle. Owing to the original error the Judge conceded that he did not have confidence in the second bill or its certificate.
The Judge determined given the number of flaws throughout the assessment on the Bill of Costs, the Points of Reply, the witness statement of Mr Thompson and his oral evidence that it cast significant doubt over the position of the CFAs and retainer in the claim. In accordance with Part 44 of the CPR which sets out the basis of assessment, where there is doubt the Court must exercise such doubt in favour of the paying party. The Judge therefore assessed the claim at zero (or at whatever disbursements had been paid prior to the assessment proceedings).
It cannot be said that the case did not represent a just outcome given the facts of the case. What is perhaps most interesting in this case is the precedent that it may set. I very rarely see Points of Dispute in a CFA case that does not raise the case of Hollins v Russell  EWCA Civ 718 in order to elicit the disclosure of the CFA / Retainer documentation. The problem is how does one identify what is a fishing expedition and does this case mean that failure to disclosure documentation creates so much doubt that a claim for costs could be completely invalidated.
Clearly it is unlikely that any Costs Judge would assess a claim for costs at zero solely on the basis that no disclosure of the retainers is provided, there is, however, a looming question over whether a paying party may now chose in addition to Hollins v Russell to attempt to refer to this case also (and in the process mis-apply it).
Myatt v National Coal Board; Garrett v Halton MBC (2006) further adds to the discussion around the disclosure of a CFA / Retainers in that it states that disclosure of the same should only be required where there is a genuine issue. Clearly this case fits that remit. The case of Scott –v- Hull & East Yorkshire Hospitals NHS Trust clearly gives more power to the paying party and rightly so. If a Receiving Party has complied correctly with the rules and regulations then there should be no reservations about disclosing the CFAs and / or retainers. The failure to disclose simply creates more doubt.
The question that arises out of this case and remains unanswered is should CFAs be disclosed at the outset of a costs claim? This would prevent any arguments being raised and resolve any doubts the paying party may have as to their liability to pay. Clearly the only people who would object to such a change would be those with something to lose. Those who do everything correctly would have nothing to lose but everything to gain.
I invite people to put forward their opinions, should CFAs be disclosed at the outset of the costs claim or should such a document remain privileged?
If you have any queries in relation to this blog please contact Sean Linley on 0113 336 3327 or firstname.lastname@example.org or the Clarion Costs Team on 0113 246 0622