Author: Robert Patterson

Refusal to strike out non-compliant point of dispute overturned on appeal

Robert PattersonLeave a comment

Where points of dispute are served in detailed assessment proceedings, they must comply with the requirements of Practice Direction 47, section 8.2. If it is found that points of dispute do not comply with the requirements  of the Practice Direction, then a paying party runs the risk of the points of dispute being struck out as per Ainsworth v Stewarts Law LLP [2020] EWCA Civ 178 (19 February 2020).

Non-compliant points of dispute can of course be remedied. Documents served in detailed assessment proceedings can be varied in accordance with section 13.10 of the Practice Direction. Permission is not required to vary a document, but the Court may permit it on conditions or disallow it. The Court should only exercise this power in accordance with the overriding objective and if an amended or varied document is not served and filed in good time before a detailed assessment hearing, then it may be disallowed.

The recent case of Ward v Rai (Rev1) [2025] EWHC 1681 (KB) (03 July 2025) underlines the importance of compliance with the mandatory provisions of section 8.2 and also demonstrates the consequences of submitting an variation, very late in the proceedings. It is also a rare example of an appellate Court using its limited powers to overturn a discretionary case management decision.

The decision at first instance

The appeal centred around the document item in the receiving party’s bill of costs, which claimed 134.1 hours for work done on documents. The paying party’s point of dispute raised only general objections and indicated that the paying party would rely on an “annotated documents schedule of objections” (which was not served with the points of dispute). The point of dispute concluded with an offer of 68.3 hours in respect of the time claimed.

In his replies to points of dispute, the receiving party submitted that the point of dispute should be struck out because it did not comply with the mandatory provisions of section 8.2 and relied on the decision in Ainsworth.

The paying party’s “annotated documents schedule of objections” was not served until 2 working days before the commencement of the detailed assessment hearing, which had been listed for 2 days. This schedule was the first and only attempt by the paying party to identify which items in the document schedule were in dispute. Furthermore, the schedule offered a primary case of 58.5 hours and an alternative case of 58.8 hours; circa 10 fewer hours than the original point of dispute.

Unsurprisingly, the Judge at first instance was asked to disallow the point of dispute in respect of the document item, which he refused to do on grounds that the original point of dispute would have enabled a broad-brush assessment to take place. In addition, and whilst being critical of the paying party for serving the schedule late, the Judge was equally critical of the receiving party for failing to chase the paying party’s schedule. Ultimately the Judge permitted the paying party to rely on the schedule and adjourned the hearing into a third day.

At the conclusion of the third day, the receiving party’s bill was assessed in sum of £89,032.62 with £8,234.91 in interest, which was lower than the paying party’s Part 36 Offer. Consequently, the receiving party was ordered to pay the costs of the detailed assessment.

The appeal

The receiving party appealed the Judge’s decision not to strike out the point of dispute in respect of the document item and the Judge’s decision to permit the paying party to rely on its schedule. There were 5 grounds of appeal:

  1. The Judge failed to give proper effect to the correct interpretation of PD 47, paragraph 8.2(b) and in doing so, wrongly applied Ainsworth;
  2. That the Judge had misdirected himself in finding that the original Points of Dispute would have allowed there to have been a “fairly broad-brush assessment in any event”;
  3. The finding that the receiving party should have chased the paying party for the schedule and that both parties were at fault, was wrong;
  4. A finding that a Costs Judge had “very wide powers” to permit a variation; and
  5. That the Judge was wrong to permit the paying party to rely on the schedule as there had been no ambush.

The appeal court dismissed all 5 grounds. Ground 1 was dismissed because the Judge did not find that the original point of dispute was compliant and could not be said to have wrongly applied the law. Ground 2 failed because the Judge did not misdirect himself, while grounds 3 and 4 were dismissed because the Judge was entitled to find that the receiving party had a duty to chase the paying party and it was open to him to find that there was no ambush. Ground 5 failed because, the Judge had correctly identified that his powers under section 13.10 were wide.

However, the receiving party made an overarching point that the Judge’s approach was wrong because the Judge had failed to give sufficient weight to the mandatory aspects of paragraph 8.2(b) and had failed to ensure that the powers in 13.10(2) were exercised in accordance with the overriding objective.

In allowing the appeal, the Court found that had the Judge disallowed the original point of dispute, the detailed assessment would have concluded on the second day and there would not have been a third day. The Court also found that the paying party had been on notice of the receiving party’s intentions to have the original point of dispute struck out for 7 months and took no steps to serve the schedule until two working days before the hearing, which the Court found was an even more egregious an issue than in Ainsworth where there was 5 months’ notice of the issue without remedy.

The Court also rejected the paying party’s reason for the delay, that he hoped the matter would settle, as being circular: settlement would have been more likely if the schedule had been served sooner. The appeal court therefore held that the Judge’s refusal to strike out the original point of dispute and the decision to permit the paying party to rely on the schedule was wrong.

Conclusion

Although the judgment does not say as much, a decision to strike out the non-compliant point of dispute would have brought to an end the paying party’s entitlement to dispute a significant element of the bill (134.1 hours of document time) with the result that this may have been allowed in full.

Whilst those consequences may appear to be severe, they could easily have been avoided by serving compliant points of dispute in the first instance or by acting promptly in submitting a variation when the issues were first raised in the replies to points of dispute.

Robert Patterson is a Senior Associate in the Costs and Litigation Funding Department at Clarion Solicitors and can be contacted on 07810 750 360 or at robert.patterson@clarionsolicitors.com

Lack of care with cost estimates, retainers and time recording leads to reductions on a solicitor/own client assessment

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Although the sums in issue in this detailed assessment under the Solicitors Act 1974 were not significant (the bill totalled £3,841 plus VAT), Costs Judge Nagalingham’s judgment in Jennifer Underhill v Thackray Williams Solicitors [2024] EWHC 3206, gives a useful insight into the consequences of some common failings by solicitors with regard to cost estimates, hourly rates and time recording.

The Facts

The Claimant instructed the Defendant to advise in relation to an employment matter. The Defendant received three instructions from the Claimant. The first was on a fixed fee basis of £250 plus VAT for a meeting and a written advice. The second instruction related to the preparation of a letter before action and conduct of an employment tribunal matter. The third instruction concerned the negotiation of a settlement agreement following a settlement with the Claimant’s employer. The costs associated with the first and third instruction formed no part of the detailed assessment, which focussed solely on the bill delivered by the Defendant in connection with the second instruction, in the sum of £3,841 plus VAT.

The Issues

Due to the modest size of the bill, a formal breakdown was not ordered. Instead, the parties had agreed that the Defendant’s time ledger provided sufficient detail for the costs claimed to be assessed. However, the time ledger was not accurate. It totalled £5,863 plus VAT, but there was no explanation that could be reconciled with a bill figure of £3,841 plus VAT. In addition, the front of the ledger reported time of 26 hours 11 minutes, but the final page totalled the time 27 hours 24 minutes; neither were correct because the individual items amounted to 23 hours 36 minutes.

All work done on that instruction was subject to a conventional private fee-paying agreement. In their engagement letters, the Defendant provided a cost estimate which indicated that their fees should not exceed £1,470 plus VAT for pre-action and without prejudice letters but that if the matter proceeded to a final hearing, costs were estimated at £15,000 to £20,000 plus VAT. The Claimant believed that the cost estimate meant that her total bill would not exceed £1,470 plus VAT as a settlement was agreed before proceedings were issued.

The hourly rates claimed by the Defendant were also in dispute. The claim was conducted by a Grade C solicitor and the Claimant had agreed rates of £195 per hour and £210 per hour for him. However, although the engagement letters indicated that the Grade C would be supervised by a Partner, there was a dispute as to whether the Claimant had been advised of her hourly rate.

The Decision

As with all detailed assessments under the Solicitors Act 1974, the costs were assessed pursuant to CPR Rule 46.9(3), which provides that:

“…costs are to be assessed on the indemnity basis but are to be presumed –

(a) to have been reasonably incurred if they were incurred with the express or implied approval of the client;

(b) to be reasonable in amount if their amount was expressly or impliedly approved by the client;”

In respect of the cost estimate, the Costs Judge found in the Defendant’s favour. He found that, correctly interpreted, the cost estimate related only to the preparation of the letter before action and that the wording of the engagement letters was sufficient to conclude that the Claimant had either expressly or impliedly approved costs to be incurred beyond the initial estimate. However, the Costs Judge could not conclude that the costs beyond the estimate were reasonable in amount, because the Defendant failed provide an updated cost estimate until the conclusion of the matter.

As regards hourly rates, the engagement letters all indicated that the Grade C would be supervised by a Partner. However, none of the engagement letters mentioned the Partner’s hourly rate or that the Claimant would be charged £350 per hour. In the circumstances, all Partner time was removed from the bill.

The inaccuracies in the time ledger did not result in any significant reductions, as there had been a significant write off in the sum of £1,772 plus VAT. However, it was beyond doubt that there had been errors and that was taken into account in respect of costs of the assessment.

The bill was assessed in the sum of £3,150 plus VAT, a reduction of circa 15%. Pursuant to section 70(9) of the Solicitors Act 1974, a reduction to the bill of less than 20% would normally have resulted in the Claimant paying the costs of the assessment. However, the Costs Judge held that the errors in the time recording and the fact that an updated cost estimate was not provided until all the costs had been incurred (thus depriving the Claimant of an opportunity to approve the costs) were special circumstances which justified a different order. Consequently, the Costs Judge made no order as the costs of the assessment.

Robert Patterson is a Senior Associate in the Civil and Commercial Costs Team at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Failure to explain costs budget overspend prevents costs recovery from client

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The recent case of JXC v NIS [2023] EWHC 1000 (SCCO) (21 April 2023) is an example of a solicitor who had successfully concluded a claim of the utmost severity, but went on to encounter difficulties in securing payment from their client of costs which could either not be claimed from the Defendant or were not recovered from the Defendant.

In this case the solicitor represented a 19-year-old Royal Marines Commando, who sustained catastrophic head injuries when he fell 20 feet from an assault course, which had no safety netting installed. The claim, naturally enough, took a long time to conclude; the CFA was entered into in August 2013 and the award of damages, which had a total capitalised value of £14,000,000, was not approved until March 2021. At the conclusion of the claim, the solicitor presented the Defendant with a bill of costs in the sum of £1,300,488.44 and went on to secure a negotiated settlement amounting to £1,050,000. Subsequently the solicitor sought payment of the shortfall, which had been limited to £212,974.69.

The Court was therefore principally concerned with the nature of information provided to the client’s litigation friend as to base costs recovery from the Defendant and the costs budget.

Although the solicitor had informed the litigation friend that not all of their costs would be recovered and had indicated on 6 occasions between 2017 and 2021 that there would be a shortfall (even going as far as to quantify the shortfall at £245,000 in January 2021), the solicitor had not advised the litigation friend on anything to do with the Court approved costs budget. The client’s budget was first set by the Court on 27 January 2015 and was updated twice more in July 2018 and again on 22 June 2020. The solicitor went on to incur costs in excess of the approved budget which were calculated at £204,759.17.

The solicitor conceded that she had not asked the litigation friend to approve any of the costs budgets, had not given any specific advice to the litigation friend in respect of any budget overspend and had not advised on any corrective action that could be taken. It was nevertheless argued on her behalf that the litigation friend was aware that there would be a shortfall and that the shortfall would be approximately £245,000, which was higher than the claimed shortfall in any event. In other words, the advice given was sufficient to enable the litigation friend to make informed decisions notwithstanding the lack of specific advice on the costs budget.

The Court did not agree. In any solicitor/own client assessment, the solicitor is afforded a degree of protection by the presumptions in CPR rule 46.9(3)(a) and (b) that costs are presumed to be reasonably incurred and reasonable in amount if they were expressly or impliedly approved by the client. The Court found that the client had not been aware of the limits imposed by the costs management order, they could not have expressly or impliedly approved the expenditure. Accordingly, the solicitor was not entitled to rely on the presumptions in CPR rule 46.9(3)(a) and (b). Furthermore, the Court concluded that a budget overspend was not of itself unusual in nature for the purposes of CPR rule 46.9(3)(c), however the scale of the overspend was found to be unusual in amount.

As a consequence of the above, the budget overspend was considered to be unreasonably incurred and unreasonable in amount with the result that the solicitor could not recover any shortfall from the client because the budget overspend exceeded the total claimed shortfall.

In this case the Court was carrying out a detailed assessment under CPR rule 46.4(2) of costs payable to a protected party’s solicitor out of money belonging to the protected party. However, as such assessments involve consideration of CPR rules 46.9(3) and (4), the issues considered in this case should be of interest to any party involved in an assessment under the Solicitors Act 1974. The case also demonstrates the importance of giving appropriate advice at all stages of the costs management process.

For further information, please contact Robert Patterson, who is a Senior Associate in Clarion’s Costs and Litigation Funding Department and can be contacted at robert.patterson@clarionsolicitors.com.

Guideline Hourly Rates are the starting point not the finishing point

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Arguments concerning solicitors hourly rates have always been a central issue in the assessment of costs, regardless of whether there is a detailed assessment or a summary assessment. Those arguments can be particularly important in cases where the rates claimed exceed the guideline hourly rates. Indeed, those who represent paying parties will deploy numerous arguments to achieve reductions, but one argument that is becoming increasingly common is the suggestion that an hourly rate in excess of guidelines should not be awarded unless a ‘clear and compelling justification’ has been given.

This particular line of argument derives from the case of Samsung Electronics Co Ltd & Ors v LG Display Co Ltd & Anor [2022] EWCA Civ 466. In that case the court was faced with a summary assessment involving hourly rates ranging from £801.40 to £1,131.75 for a Grade A and £443.27 to £704 per hour for a Grade C. The justification provided for those rates was that it is almost always the case the rates will exceed guidelines in competition litigation. Rates in excess of guidelines were not allowed and Males, LJ that:

“[…] If a rate in excess of the guideline rate is to be charged to the paying party, a clear and compelling justification must be provided. It is not enough to say that the case is a commercial case, or a competition case, or that it has an international element, unless there is something about these factors in the case in question which justifies exceeding the guideline rate.”

Males LJ made a similar finding in Athena Capital Fund SICAV-FIS SCA & Ors v Secretariat of State for the Holy See [2022] EWCA Civ 1061 when faced with rates well in excess of the guidelines.

Although the above decisions are frequently relied on, the point made by Males LJ may not be applicable in all cases. This is because in both Samsung and Athena, the court was dealing with a summary assessment rather than a detailed assessment and the two types of assessment are conceptually different. That difference was recently explained Master Rowley in Various Claimants v News Group Newspapers Ltd [2023] EWHC 827 (SCCO):

“70. I also accept the argument that the GHR may be a useful starting point in a detailed assessment as well as in a summary assessment. I do not, however, consider that the guidance given by Males LJ regarding the need for a “clear and compelling justification” for exceeding the GHR extends with any great force to this particular situation.

71. The GHR are provided predominantly to assist judges who do not specialise in costs cases to deal with a summary assessment of costs when faced with the successful party’s summary assessment schedule and competing arguments from the advocates.

72. The relevance to the GHR being a starting point in detailed assessments is no more than a reflection of the scarcity of any other starting point. Expense of time calculations or other potential starting points, as is demonstrated here, are invariably absent. But a starting point by its very name does not suggest it is the finishing point and that is particularly so where the court has the opportunity for the parties to address it in detail in respect of the CPR 44.4 factors.”

The Master went on to allow hourly rates in excess of guidelines. Accordingly, the decision in Samsung does not represent an additional test for receiving parties to overcome and detailed submissions in respect of the eight pillars of wisdom in CPR rule 44.4 are likely to be more effective in securing hourly rates in excess of guidelines.

Robert Patterson is a Senior Associate in Clarion’s Costs and Litigation Funding Team, and can be contacted at robert.patterson@clarionsolicitors.com.

Update on implementation of the extension to fixed recoverable costs

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This third instalment of Clarion’s mini-series on preparing for the forthcoming fixed costs reforms, looks at recently announced changes following the Civil Procedure Rule Committee meeting on 3 March 2023.

It was intended that the new rules would take effect in October 2022, however implementation was delayed until April 2023. It was then announced in November 2022 that there would be a further delay until October 2023 due to the complexity of the reforms. It is still intended that the new rules will take effect from October 2023, however there will be changes to the scheme when it comes into effect.

Latest developments

The most important development is that there will be a general transitional provision whereby the new rules will apply to claims where proceedings are issued on or after 1 October 2023, save where the claim is for personal injury (including disease claims). In personal injury claims, the new rules will apply where the cause of action accrues on or after 1 October 2023 and they will apply to  disease claims where the letter of claim has not been sent to the Defendant before 1 October 2023.

A proposed new practice direction has been drafted setting out the rates for the fast track, intermediate track, and noise induced hearing loss claims. Previous versions of the rates were based on an initial report prepared by Lord Justice Jackson in 2017, and it has now been confirmed the rates will be uprated for inflation using the January 2023 Services Producer Price Index. This is an interesting development, as it was not expected that the rates would be uprated.

Other changes being considered include amended provisions in respect of disclosure to achieve a consistent approach between the fast track and intermediate track.

Next steps

Further drafting work will continue and it is anticipated that the final draft amendments will be presented to the committee ahead of the next meeting on 31 March 2023. This mini-series will be updated as and when further information becomes available.

Robert Patterson is a Senior Associate in Clarion’s Costs and Litigation Funding team. You can contact the team at CivlandCommercialCosts@clarionsolicitors.com

Relief from sanctions granted despite 6-year delay in giving notice of funding

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Prior to 1 April 2013, a party wishing to recover an additional liability from a paying party was required to comply with paragraph 9.3 of the practice direction on pre-action protocol, which provided:

“Where a party enters into a funding arrangement within the meaning of rule 43.2(1)(k), that party must inform the other parties about this arrangement as soon as possible and in any event either within seven days of entering into the funding arrangement concerned or, where a claimant enters into a funding arrangement before sending a letter before claim, in the letter before claim.”

Failure to comply with the practice direction led to the imposition of the sanction in CPR rule 44.3B(1); the disallowance of any additional liability for the period of default.

Many parties innocently interpreted the practice direction to mean that notification of a funding arrangement could be delayed until a letter before claim was served without incurring a sanction. Indeed, that interpretation was supported by the authors of The White Book at the time.

That interpretation was however rejected by Court of Appeal in Springer v University Hospitals of Leicester NHS Trust [2018] EWCA Civ 436, which clarified that notification had to be given ‘as soon as possible’. A party that fails to comply with the practice direction is required to seek relief from sanctions, where the approach will be the familiar three stage Denton test.

Springer was a case where the paying party was simply unaware of the existence of any additional liabilities for several years until notice was given in a letter before action. The breach was serious and significant and there was no good reason for it. Central to the decision to refuse relief from sanctions was the prejudice to the paying party in a lost opportunity to act in a different way, which it may have done had it been aware of the existence of the additional liabilities.

The receiving party in EXN v East Lancashire Hospitals NHS Trust & Anor [2022] EWHC 872 (QB) ended up in a similar situation; no notification of the additional liabilities was given until the letter before action was served some 6 years after the funding arrangement had been entered into. Like Springer, the breach was serious and significant and there was no good reason for it. However, where this decision can be distinguished from Springer was in the lack of prejudice to the paying party.

In EXN, the paying party had enquired about the method of funding the claim following a request for disclosure of medical records, and they were informed that the claim was being funded by a conditional fee agreement. Although that statement was insufficient notification because it failed to mention the existence of a success fee, in granting relief from sanctions the Court found that the only reason for the original enquiry about funding was to assess a vulnerability to paying a success fee. The paying party did not seek to clarify whether the funding arrangement provided for a success fee, and it did not file any evidence alleging that it had suffered any prejudice.

Although it has been 9 years since recoverable additional liabilities were abolished for most claims, some serious personal injury and clinical negligence claims can take many years to resolve and it might be that a paying party will be silent on any breach until there is a costs assessment; in EXN the funding arrangement was entered into in 2012, but the application for relief from sanctions was not heard until July 2021 – some 7 months after the damages were agreed. This decision also demonstrates that even a clear breach of the practice direction may not be enough to deprive a receiving party of additional liabilities, if the paying party fails to demonstrate that they have suffered any prejudice.

Given that in both Springer and EXN, the reason for the breach was an innocent and common misinterpretation of a practice direction, there will no doubt still be many claims where this issue could arise.

Robert Patterson is a Senior Associate in Clarion’s Costs and Litigation Funding team, and can be contacted at robert.patterson@clarionsolicitors.com or on 0113 336 3337.

Relief from sanctions granted despite 6-year delay in giving notice of funding

Robert PattersonLeave a comment

Prior to 1 April 2013, a party wishing to recover an additional liability from a paying party was required to comply with paragraph 9.3 of the practice direction on pre-action protocol, which provided:

“Where a party enters into a funding arrangement within the meaning of rule 43.2(1)(k), that party must inform the other parties about this arrangement as soon as possible and in any event either within seven days of entering into the funding arrangement concerned or, where a claimant enters into a funding arrangement before sending a letter before claim, in the letter before claim.”

Failure to comply with the practice direction led to the imposition of the sanction in CPR rule 44.3B(1); the disallowance of any additional liability for the period of default.

Many parties innocently interpreted the practice direction to mean that notification of a funding arrangement could be delayed until a letter before claim was served without incurring a sanction. Indeed, that interpretation was supported by the authors of The White Book at the time.

That interpretation was however rejected by Court of Appeal in Springer v University Hospitals of Leicester NHS Trust [2018] EWCA Civ 436, which clarified that notification had to be given ‘as soon as possible’. A party that fails to comply with the practice direction is required to seek relief from sanctions, where the approach will be the familiar three stage Denton test.

Springer was a case where the paying party was simply unaware of the existence of any additional liabilities for several years until notice was given in a letter before action. The breach was serious and significant and there was no good reason for it. Central to the decision to refuse relief from sanctions was the prejudice to the paying party in a lost opportunity to act in a different way, which it may have done had it been aware of the existence of the additional liabilities.

The receiving party in EXN v East Lancashire Hospitals NHS Trust & Anor [2022] EWHC 872 (QB) ended up in a similar situation; no notification of the additional liabilities was given until the letter before action was served some 6 years after the funding arrangement had been entered into. Like Springer, the breach was serious and significant and there was no good reason for it. However, where this decision can be distinguished from Springer was in the lack of prejudice to the paying party.

In EXN, the paying party had enquired about the method of funding the claim following a request for disclosure of medical records, and they were informed that the claim was being funded by a conditional fee agreement. Although that statement was insufficient notification because it failed to mention the existence of a success fee, in granting relief from sanctions the Court found that the only reason for the original enquiry about funding was to assess a vulnerability to paying a success fee. The paying party did not seek to clarify whether the funding arrangement provided for a success fee, and it did not file any evidence alleging that it had suffered any prejudice.

Although it has been 9 years since recoverable additional liabilities were abolished for most claims, some serious personal injury and clinical negligence claims can take many years to resolve and it might be that a paying party will be silent on any breach until there is a costs assessment; in EXN the funding arrangement was entered into in 2012, but the application for relief from sanctions was not heard July 2021 – some 7 months after the damages were agreed. This decision also demonstrates that even a clear breach of the practice direction may not be enough to deprive a receiving party of additional liabilities, if the paying party fails to demonstrate that they have suffered any prejudice.

Given that in both Springer and EXN, the reason for the breach was an innocent and common misinterpretation of a practice direction, there will no doubt still be many claims where this issue could arise.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.

Guidance given in failed claim for shortfall

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Before the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 ended recoverable additional liabilities in most personal injury claims, it was commonplace for Claimant Solicitors to waive any claims for costs from protected parties in excess of the amounts recovered from the paying party. Since then, however, there has been an increase in claims for the approval of deductions, not only in respect of success fees and ATE premiums, but also in respect of the shortfall between the Solicitors full costs and those recovered from the paying party.

Any deductions from a protected party’s damages can only be approved following an application under CPR Parts 21. Furthermore, since December 2021, such applications have been subject to additional guidance set out in a practice note issued by the SCCO.

What approach are the courts now likely to take to these applications?

One example can be found in BCX v DTA (Costs Judge Brown, 16 December 2021). In this case the Claimant’s costs were agreed with the paying party in the sum of £330,000, the Claimant’s Solicitor then claimed a shortfall on profit costs of £94,977.38, and £64,780.92 by way of success fees and an ATE premium. The Judge carried out a detailed assessment of all the costs claimed against the Claimant and concluded that the reasonable sum that the Claimant was required to pay his Solicitors was £274,859. As this was less than the amount the paying party had agreed to pay, the claim for a shortfall on profit costs was not approved.

This decision demonstrates that claims for shortfalls on profit costs are likely to be the subject of detailed scrutiny and considerable caution should be exercised before maintaining a claim for a shortfall from a protected party.

This article originally featured in our March 2022 newsletter which can be found here.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com

“Exceptionally large increases” to solicitors hourly rates lead to a finding of special circumstances

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Under the Solicitors Act 1974, a client only has an absolute right to an assessment of a solicitor’s bill if an application is made within one month of receiving the bill. While an assessment can still be ordered where the bill is unpaid 12 months of receipt of the bill, once those 12 months have expired, the client must demonstrate that there are special circumstances before an assessment can be ordered.

In Raydens Ltd v Ms Julie Cole [2021] EWHC B14 (Costs), the defendant asked the court to make a finding of special circumstances based on the adequacy of costs estimates, billing irregularities and unilateral increases to hourly rates.

The merits of the defendant’s case on cost estimates and billing irregularities were not considered, as those issues represented a new case not addressed in witness evidence. The issue of increases to hourly rates did, however, result in a finding of special circumstances.

The claimant represented the defendant in matrimonial proceedings from 2013 until 2018. The engagement letter provided for hourly rates to be reviewed at the beginning of April each year. The claim was conducted by a partner and a junior assistant. Between 2014 and 2017, the partner’s rate increased from £245/hr to £320/hr and the junior assistant’s rate increased from £100/hr to £165/hr.

In making a finding of special circumstances, the Master found that the increased hourly rates were presented to the defendant as a fait accompli and if there was an explanation to justify the increases, it was not given to the defendant. The Master also considered that there must be an issue about informed approval by the defendant of the hourly rate increases.

The fact that the contract of retainer provided for increased hourly rates and the claimant had communicated those to the defendant in accordance with their contractual obligations, does not seem to have been enough in this case defend the application for assessment.

This article originally appeared in our August 2021 Newsletter which can be found here.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.

Default costs certificate overturned due to multiple errors in service

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The case of Gregor Fisken Ltd v Carl [2021] EWHC B9 (Costs), is an example of the court setting aside a default costs certificate where the claimant was not entitled to it under CPR 47.12(1).

In this case, the defendant’s solicitors had indicated that they were no longer instructed and had, incorrectly, indicated that they did not need to file a notice of change as judgment had been handed down. They provided an email address for correspondence and costs solicitors acting for the claimant purported to serve a bill totaling £510,743.61 on the defendant, not only at the email address provided, but also at an address of a property in London owned by the defendant.

Following the issue of a default costs certificate, the defendant made applications to set aside the default costs certificate and for a general extension of time to serve points of dispute. The claimant also made an application asking the court to remedy any error in service of the bill of the costs.

It was held by Master Leonard that the bill of costs was served on the wrong person, by the wrong method and at the wrong address. Service at the email address provided by the defendant’s former solicitors was not valid because the defendant had not authorised service there in accordance with CPR 6.23(6) and paragraph 4.1 of Practice Direction 6A. Because the defendant’s former solicitors had not served a notice of change, all that was required was to serve the bill on them.

The Master went on to find that the court’s general power to rectify matters where there has been an error of service in CPR 3.10, could not be used to validate service where documents had been served on the wrong person, at the wrong address and by the wrong method.

Furthermore, the Master held that there were no good reasons to retrospectively authorise service under CPR 6.27, as the Claimant had not taken reasonable steps to effect service under the rules.

This article was featured in our July 2021 newsletter, see the full newsletter here.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.