When cherry picking is not allowed: More on QOCS and CFAs

The Court of Appeal decision of Catalano v Espley-Tyas Development Group Ltd [2017] EWCA Civ 1132 relates to an appeal brought by the Claimant against a decision of Deputy District Judge Harris, who found that she was not entitled to QOCS protection under a post-01 April 2013 CFA after she had previously terminated a pre-01 April 2013 CFA.

Implemented on 01 April 2013, the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) abolished the ability of the winning party to recover both a success fee, and an after the event insurance premium, from the losing party. Instead, any agreed success fee was to be recovered out of the Claimant’s damages, and under CPR 44.13-44.17, Qualified One-way Costs Shifting (QOCS) was introduced. QOCS provides that any adverse costs orders made against an unsuccessful Claimant in a personal injury action could only be enforced to the extent that the amount did not exceed any damages and interest awarded to the Claimant. Therefore, if the Claimant recovered nil (or discontinued their claim or lost on liability) they, in theory, would not have to pay any amount in costs to the Defendant.

The transitional provision in CPR 44.17 states that QOCS does not apply where the Claimant had entered into a pre-commencement funding agreement. CPR 48.2 explains that a pre-commencement funding arrangement includes a pre-01 April 2013 CFA which provides for a success fee.

Ms Catalano originally funded her claim against the Defendant for loss and damages relating to noise induced hearing loss under a CFA dated 13 June 2012 (hence a pre-commencement funding arrangement). This, in the event of success, would have sought a success fee from the Defendant, and the Defendant was advised of this CFA via the letter of claim dated 06 September 2012.  The Claimant applied for ATE Insurance, however, this was rejected, leaving her exposed to adverse costs in the event of loss.

On 01 April 2013, the new QOCS rules came into force. The Claimant entered into a new CFA on 15 July 2013, which replaced the old agreement. An updated Notice of Funding was filed which confirmed that the matter was funded under a CFA dated 15 July 2013, but which also referenced the original CFA dated 13 June 2012. The box which indicated this CFA was terminated remained unticked.

The matter was listed for trial on 14 January 2015 and, just one day prior on 13 January 2015, the Claimant served a notice of discontinuance. The Defendant interpreted this notice as their deemed costs order under CPR 38.6, which automatically entitled them to their costs – they proceeded to serve a bill on the Claimant totalling £21,675.52 excluding interest.

The Claimant argued that she had the protection of QOCS on the basis the matter was funded under a CFA dated after 01 April 2013, and therefore the amount due to the Defendant was nil. However, Deputy District Judge found that the new regime was not applicable, basing his finding on a previous decision of Landau v The Big Bus Company (31 October 2014), in which Master Howarth held that QOCS did not apply where there was a pre and post 01 April 2013 funding agreement that covered only one matter. The Claimant appealed, with the decision being leapfrogged to the Court of Appeal.

On appeal, the Claimant argued that the Solicitors had terminated the first CFA and therefore, in accordance with a county court decision of Casseldine v The Diocese of Llandaff (03 July 2015), they were not entitled to any costs under it. Further, the Claimant argued that the second CFA replaced the first CFA which was no longer in force, and that the matter was therefore funded under a post 01 April 2013 CFA, without ATE insurance, and that she should have the benefit of QOCS.

In response, the Defendant argued that, whilst it was accepted that the first CFA had been terminated once the second CFA had been made, the Claimant was inserting an unwritten word into rule 48.2(1)(a)(i) so that it read “an un-terminated funding arrangement”, and that “it could not have been the intention of the rule to allow a Claimant to cherrypick the advantages of both regimes” and that since the Claimant’s application for ATE Insurance had been declined yet she continued to proceed, she was always going to face costs consequences if she lost.

Lord Justice Longmore considered the wording of CPR 48.2 (1)(a) and found that in this case there was undoubtedly a pre-commencement funding arrangement. He also found that the Claimant was “seeking to read a word into the rules which is not there”, and that “the framers of the rules could not have intended that a claimant should be able to blow hot and cold.”

The appeal was dismissed, with Lord Justice Longmore highlighting the fact that Ms Catalano and her Solicitors faced no injustice as, following the refusal of ATE insurance cover, they were open to adverse costs risks in any event.

This is a further case which considers QOCS and the parameters by which it protects unsuccessful Claimants in personal injury claims. In this case, the Claimant and her solicitors sought to benefit from the new QOCS regime so that she was protected from adverse costs risks after she was declined ATE Insurance. This, however, was unsuccessful and the Claimant was faced with not only the Defendant’s bill totalling £21,675.52 excluding interest, but also the Defendant’s costs of assessment, and the appeal costs. The Claimant was ordered to make a payment on account in respect of the appeal costs in the sum of £10,000.

If you have any questions or queries in relation this blog or legal costs in general please contact Joanne Chase (joanne.chase@clarionsolicitors.com and 0113 336 3327) or the Clarion Costs Team on 0113 246 0622.

CFAs, Counsel and Rectification – Permission to Appeal granted

The case Frade & Ors v Radford & Anor [2017] EQCA Civ 1010 involved a renewed application for permission to appeal against an Order of Warby J from July 2016, which dismissed two appeals brought by the Appellant Defendants following the detailed assessment of their costs.

Master Howarth, Costs Judge, had found at the original detailed assessment of the Defendants’ costs that there was no agreement between the Defendants, their Solicitors Taylor Hampton, and Counsel, Augustus Ullstein QC, for the payment of any fees, and thus there was no liability for the Claimants to pay under an inter partes costs order. This was due to the wording and scope of the CFAs, and the omission to name all four Defendants within the CFA with Counsel.

Counsel’s CFA, dated 6 July 2011, named two Individual Defendants, but failed to include the remaining two Corporate Defendants. Following the making of the final inter partes order, the Defendants became aware of their oversight, and entered into a deed of rectification with Counsel on 30 July 2015 whereby the CFA was extended, with retrospective effect, to cover the proceedings against the Corporate Defendants.

The Claimants had argued on detailed assessment that, due to Counsel’s CFA failing to name the two Corporate Defendants, those clients had no liability to pay Counsel for any work done, and that on an inter partes assessment, the Claimants should only be liable for the fees incurred that the Individual Defendants were liable for.

On appeal, Warby J found that the deed of rectification was irrelevant inter partes. Warby J accepted that the deed of rectification “was effective to cure the position as between Counsel and his clients”, but that “events subsequent to the costs order against the Claimants were to be disregarded for the purpose of assessing their liability – at least if those events increased rather than diminished that liability”.

The Defendants therefore sought to appeal the Order of Warby J on 7 grounds, with ground 6 dealing with Counsel’s CFA and the finding that the rectified CFA was ineffective on an inter partes basis.

The Defendants argued that there was powerful evidence on file to support the fact that the failure to name the Corporate Defendants within the CFA was a simple oversight. He submitted that the CFA should be rectified to reflect the true agreement with Counsel, and that there was no rule of law that rendered the deed of rectification ineffective inter partes.

In response, Counsel for the Claimants argued that, whilst case law such as King v Telegraph Group Ltd [2005] and Holmes v Alfred McAlpine Homes (Yorkshire) Ltd [2006] allowed for a CFA to have a retrospective effect, Kellar v Williams [2004] made it clear that a variation in the charging basis between a receiving party and their client made after an inter partes costs order was ineffective against the paying party, particularly if it resulted in a larger costs burden. Counsel recognised that Kellar v Williams [2004] was persuasive authority only, being a Privy Council case, but argued that costs judges had previously followed it.

LJ Hickinbottom was persuaded that the circumstances of this case could be distinguished from Kellar v Williams on the basis it related to the rectification of a contract rather than a variation to the terms, and he found that this case raised a point of general importance that should further be considered by the Court. He therefore granted permission to appeal on Ground 6.

We await the appeal decision with interest. If a receiving party finds themselves in a similar position, this appeal decision may assist in recovering Counsel’s fees inter partes when a genuine mistake is identified and rectification of the CFA is required after the making on the order.

If you have any questions or queries in relation this blog please contact Joanne Chase (joanne.chase@clarionsolicitors.com and 0113 336 3327) or the Clarion Costs Team on 0113 2460622.

Qualified One-way Costs Shifting – when tactics are not an abuse of process

In Shaw v Medtronic [2017] EWHC 1397 (QB), the Court of Appeal found that the claimant had not abused the Court process by filing a notice of discontinuance against the fifth defendant to benefit from the protection of qualified one-way costs shifting (QOCS).

The parties agreed that section 2 of CPR 44 applied, and in particular CPR 44.14(1) which states subject to rules 44.15 and 44.16, orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the claimant.

In this particular case, the claimant had not received any award for damages or interest, and therefore the rule would in effect mean that no costs order could be enforced against them.

During the main claim, the fifth defendant had filed an acknowledgement of service on 11 October 2016, and on 17 October 2106, they had written to the claimant’s solicitor to highlight the weaknesses of the claim. This prompted a response from the claimant’s solicitor which stated that they were not prepared to file, at that stage, a notice of discontinuance. The fifth defendant therefore, on 25 October 2016, filed an application to strike out the claim. If the fifth defendant were successful it would “bring the fifth defendant within the scope of the exception in CPR 44.15(a) to the general rule concerning qualified one-way costs shifting”.

CPR 44.15 (a) states that Orders for costs made against the claimant may be enforced to the full extent of such orders without the permission of the court where the proceedings have been struck out on the grounds that –

(a) the claimant has disclosed no reasonable grounds for bringing the proceedings;

The first judgment was given on 20 January 2017, and the claimant proceeded to file a notice of discontinuance on the fifth defendant in March 2017, before the fifth defendant’s application could be heard.

The fifth defendant attempted to persuade Mr Justice Lavender to utilise his powers under CPR 38.4 and set aside the notice of discontinuance on the basis it was an abuse of the process of the Court. However, Mr Justice Lavender found that whilst it was striking that the claimant has opted to discontinue against the fifth defendant whilst maintaining claims against the first, third and fourth defendants (through the Court of Appeal), that it may be that the claimant had realised, albeit later than they may have done, that the prospects of success in their claim against the fifth defendant were not favourable. Justice Lavender found that “it does not, in those circumstances, strike me that this is a case of abuse of process of anything sufficient to justify setting aside the notice of discontinuance”.

The fifth defendant was refused permission to appeal on the basis the decision was made on the facts of the case.

Therefore, as a litigator, the power of QOCS should always be borne in mind, particularly if the case being brought by a claimant is for non-monetary award. The filing of a notice of discontinuance is a powerful tool for claimants to have as their exposure to adverse costs would be nil. As a defendant, you should always be on the lookout for any aspects of the case which may kick into effect CPR 44.15 in order to escape the parameters of QOCS.

If you have any questions or queries in relation this blog please contact Joanne Chase (joanne.chase@clarionsolicitors.com and 0113 336 3327) or the Clarion Costs Team on 0113 2460622.

Choose your words wisely – Plevin v Paragon Personal Finance [2017] USKC 23

This judgment concerned a request for an oral hearing by Paragon Personal Finance, the paying party, following a costs assessment by Master O’ Hare and Mrs Registrar dr Mambro in the Supreme Court on 05 February 2015.

Paragon were dissatisfied with the costs assessment, and in accordance with Rule 53 of the Supreme Court Rules 2009, they requested an oral hearing on two points of principle; the first regarding the validity of an assigned CFA, and the second regarding the recoverability of additional liabilities after the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO).

The Supreme Court, by a majority of 4 to 1, dismissed the appeal and upheld the costs assessment from February 2015.

The CFA had originally been entered into on 19 June 2008, and the ATE Policy was purchased on 29 October 2008. Both therefore under the 1999 Access to Justice Act regime, which enabled the receiving party to recoverable additional liabilities from their opponent. However, they were subsequently varied after 01 April 2013, and hence after the introduction of the LASPO regime, to cover firstly Paragon’s appeal in the Court of Appeal, and secondly their appeal to the Supreme Court.

When deciding whether or not the success fee was recoverable, Lord Sumption closely considered the language of LASPO Section 44(6), and in particular where it states if the litigation is in “connection with the matter that is the subject of the proceedings”.

He found that the success fee was recoverable as “an amendment of the existing CFA is a natural way of dealing with further proceedings in the same action”.

However, when looking at the recoverability of the ATE Premium, it was noted that the language used in LASPO Section 46 (3) differed and stated that the “amendments made by this section do not apply to a costs order made in favour of a party to proceedings who took out a costs insurance policy in relation to the proceedings”.

The key difference being the language used and the interpretation of the scope each provides. Paragon argued that the language used regarding the recoverability of the success fee was much wider than that for the ATE Premium. Whilst recognising “in the ordinary course…there is also a presumption that differences in the language used to describe comparable concepts are intended to reflect differences in meaning”, Lord Sumption concluded that the use of different language was no more than recognising that the CFA was an undertaking and that “the relationship between the body and the beneficiary of the undertaking may be wider than just the conduct of the litigation”, whilst an ATE policy “by their nature are concerned with specific litigation”.

It was therefore concluded that if an ATE policy had been taken out for the costs of a trial, the insured is entitled, after the commencement date, to top up the cover for appeals, and to include them within his assessable costs under the 1999 costs regime.

It must be remembered that litigation is often commenced over the different interpretations of rules. Language is therefore fundamental. With LJ Jackson set to introduce new rules in the foreseeable future in relation to fixed costs, it is essential that those drafting the rules do so with precision and clarity to ensure LJ Jackson’s intentions are exactly what the rules say.

If you have any questions or queries in relation this blog please contact Joanne Chase (joanne.chase@clarionsolicitors.com and 0113 336 3327) or the Clarion Costs Team on 0113 2460622

Clearing the Special Circumstances Hurdle; Section 70 (3)(c) of the Solicitors Act

The case of Eurasian Natural Resources Corporation Ltd v Dechert LLP [2017] EWHC B4 (Costs) addressed what is a special circumstance for the purpose of securing an application for the assessment of a solicitor’s bill where payment had been made, but 12 months had not yet lapsed.

Section 70 (3)(c) of the Solicitors Act 1974 states that, where a paying party wishes to have the costs assessed but has failed to make an application within one month of delivery of their solicitor’s invoice, and where the paying party has either; allowed 12 months to lapse following delivery of the invoice, had judgment against them for recovery of the costs billed, or where they have paid the bill in full but 12 months has yet to lapse post payment, the court will not make an order expect in special circumstances.

Eurasian Natural Resources Corporation Ltd addresses what those special circumstances could look like. This particular case was subject to private proceedings; however, the Judgment has been made public with a small number of redactions.

The defendant rendered invoices totalling circa. £13.6 million, which were all paid in full. The claimant was unable to seek an assessment of invoices totalling £3.9 million on the basis they had been rendered and paid more than 12 months prior – the Court had no jurisdiction to assess those costs. The parties also agreed that invoices totalling £5.5 million could be assessed on the basis one month had not yet passed. A balance of £4.2 million remained, spread across 15 invoices where the Claimant had to show special circumstances in order to obtain an order for their assessment.

The claimant identified seven different reasons why this was a special circumstance, with Master Rowley accepting six of those seven reasons.

The starting point for the claimant was whether there was a special feature in the case which required an explanation, and whether this meant it was reasonable to proceed to a detailed assessment.

Firstly, Master Rowley accepted that a special circumstance existed in the discrepancy between the estimates provided to the client and the costs actually billed by the solicitor. This provided reason to proceed to a detailed assessment. He continued, however, to also comment on whether further submissions amounted to special circumstances.

Master Rowley found that the size of the bills, whilst not a direct special circumstance, could be a ‘magnifying prism’ to billing irregularities, which was also identified as a low hurdle to demonstrate a special circumstance in this case.

He also found that the relationship between the claimant and his solicitor was very important, as the claimant in this case highly valued their solicitor’s relationship with the Serious Fraud Office. The claimant was aware that a relationship breakdown with their solicitor would not only lose their prized expertise, but may also undermine the Serious Fraud Office’s confidence in the investigation. This point, whilst very case specific, highlights the fragility of some relationships and demonstrates why some claimants may not, despite wanting to, challenge the levels of fees within the one month as required by s.70 of the Solicitors Act 1974.

Secondees from Addleshaw Goddard had assisted the claimant’s legal department during the matter and as part of their duties they had queried the defendant’s billing. The claimant submitted that the defendant’s hostile reaction to these modest queries showed how unrealistic it was to expect the claimant to formally challenge the fees during the course of the retainer, to which Master Rowley agreed. This, again, amounted to a special circumstance.

Finally, Mr Rowley also concluded that the parties’ conduct in Solicitors Act proceedings could be relevant. In this case, the defendant’s conduct of these proceedings (in that they sustained attempts to avoid scrutiny of their charges), would amount to a special circumstance in that they called for an explanation.

The one submission that was rejected as a special circumstance was the fact that there was going to be, in any event, a detailed assessment of the invoices totalling £5.5 million. Master Rowley did not accept that the existence of other invoices resulted in a special circumstance.

There is a wealth of information considered within this one judgment, with Master Rowley succinctly summarising what amounts to special circumstances at paragraph 102;

“The only one which does not amount to a special circumstance is the existence of other bills being assessed (factor 3). The peculiarities of the solicitor client relationship here making Solicitors Act applications unrealistic (4) combined with the defendant’s response to any challenges (5) amounts to a special circumstance in my view. So too does the defendant’s approach to these proceedings (7). The billing irregularities (6) would amount to a special circumstance when viewed through the magnifying prism of the size of the bills (2)”.


This Judgment helpfully provides guidance on what factors may be deemed a special circumstance when attempting to secure an application for the assessment of a solicitor’s bill where payment has been made, but 12 months has not yet lapsed. It must be remembered that this case is very fact sensitive, but for any paying party finding themselves in a position where they are considering an application for the assessment of a bill paid less than 12 months prior, this case may be exactly what they need.

If you have any questions or queries in relation this blog please contact Joanne Chase (joanne.chase@clarionsolicitors.com and 0113 336 3327) or the Clarion Costs Team on 0113 2460622.


Getting it Right – CPR 2.8 and calculating dates for service

So many times, we question ourselves over whether we have calculated the correct date for service or filing of an important Court document. Getting it wrong can be costly, and, in the extreme, fatal to the case.

CPR Part 6 is at the heart of the rules relating to service of documents, and Practice Direction 6A relates to service within the United Kingdom.

CPR 2.8 sets out how we go about calculating time, and parts 2.8 (2) and (3) specifically explains the clear day rule which often catches practitioners out:

“(2) A period of time expressed as a number of days shall be computed as clear days.

(3) In this rule ‘clear days’ means that in computing the number of days –

(a) the day on which the period begins; and

(b) if the end of the period is defined by reference to an event, the day on which that event occurs

are not included.”

For example, where a CMC is listed for March 30th and the Court orders bundles to be filed no later than 7 days before the CMC, the last date for filing is March 22nd.

CPR 2.8 (4) continues to explain that:

“Where the specified period –

(a) is 5 days or less; and

(b) includes –

(i) a Saturday or Sunday; or

(ii) a Bank Holiday, Christmas Day or Good Friday,

that day does not count”

Therefore, where a witness statement must be served 5 days before a hearing listed on Tuesday 14th March, the deadline for service is Monday 6th March.

Interestingly, CPR 44 practice direction 9.5 (4) provides different rules for the filing and service of a statement of costs before a fast track trial and other hearings;

The statement of costs must be filed at court and copies of it must be served on any party against whom an order for payment of those costs is intended to be sought as soon as possible and in any event –

(a) for a fast track trial, not less than 2 days before the trial; and

(b) for all other hearings, not less than 24 hours before the time fixed for the hearing.

Where a fast track trial is listed for 1.30pm on the first Tuesday after Easter, taking into account the clear day rule and CPR 2.8 (4), the statement of costs must be filed and served no later than the Tuesday before. Wednesday and Thursday provide the 2 clear days, with Good Friday, Easter Saturday, Sunday and Monday not counting. Therefore, in this instance, 7 days before the hearing – suddenly the 2 days turn into 7 days.

However, if it were an interim application hearing listed for 1.30pm on the first Tuesday after Easter, the statement of costs must be filed and served no later than 1.30pm on Maundy Thursday.  What is crucial here is that this rule provides for hours and not clear days. Therefore, filing and serving at 1pm on Maundy Thursday would be perfectly acceptable despite it being within no clear days of the hearing. The clear day rule does not apply when the rules specify the deadline as a number of hours rather than a number of days.

Being aware of this subtle difference could prove to be a very useful tool for any practitioners who are under time constraints for the filing and service of Court documents. A note of advice –  if in doubt then check the rules. The rules regarding filing and service can easily catch you out, particularly bearing in mind that there are also rules surrounding the method of filing and service, i.e. service by email, fax etc., in addition to those relating to timing.

If you have any questions or queries in relation this blog please contact Joanne Chase (joanne.chase@clarionsolicitors.com and 0113 336 3327) or the Clarion Costs Team on 0113 2460622.