CH (By his Litigation Friend the Official Solicitor) and a Metropolitan Council (2017)

An application was made on behalf of the claimant for approval of a proposed settlement of his claim against the Local Authority. The claim originated following proceedings that were issued in the Court of Protection and a claim for damages pursuant to the Human Rights Act 1998 (HRA 1998). A Part 8 claim was brought under the Civil Procedure Rules, pursuant to the decision in Luton v SW (2017).

CPR 21.10, stipulates where a party is a Protected Party, the Court must approve any proposed settlement. CH was identified as a Protected Party and a declaration had been made that he lacked the capacity to litigate. The Court of Protection itself, does not make specific provisions for approving a settlement, however the Court has the power to do so, as  explained by Charles J in YA (F) v A Local Authority (2010).

Facts of the Case
The Protected Party was was 38 years of age and was born with Downs Syndrome and had associated learning difficulties. He married WH in 2010 and they lived together in his parents home. They enjoyed normal conjugal relations until 27 May 2015.

The Protected Party and his wife, WH sought fertility treatment as they wanted to start a family. The Local Authority had a duty towards the Protected Party, and in late 2014 he was assessed by a Consultant Psychologist who determined that he lacked the capacity to consent to sexual relationships. The Protected Party and WH were informed by a letter, dated 27 March 2015. The letter stated that WH was to abstain from sexual relations with the Protected Party due to his apparent lack of capacity to consent and if not adhered to, relations would amount to a serious criminal offence under the Sexual Offences Act 2003. WH was also informed that if she failed to comply, safeguarding measures would be implemented and one of the parties would be removed from the home.

The parties complied and WH moved into a separate bedroom and any physical contact with the Protected Party ceased, which obviously had a detrimental affect upon the Protected Party himself, as he could not fully comprehend the reason for his wife’s actions.

The Consultant Psychologist stated that the Protected Party required a sex education course to help him achieve the necessary capacity. This advice was in line with Section 3 of the Mental Capacity Act 2005 which provides “a person is not to be treated as unable to make a decision unless all practicable steps to help him to do so have been taken without success.” The Local Authority failed to implement that advice, despite numerous requests to do so and having received protracted correspondence.

The Protected Party’s sister, SH acting as his Litigation Friend initiated proceedings in the Court of Protection in February 2016. It required an Order of the Court to implement the original psychological advice, following which the relevant course began on 27 June 2016. It was reported that the Protected Party had made sufficient progress in all areas, however further sex education was required, which was undertaken in Early 2017. On 19 March 2017, the Psychologist stated in writing that the Protected Party now had the required capacity to consent to sexual relations. The Local Authority thereafter accepted this decision.

A letter before action was sent to the Local Authority on behalf of the Protected Party, in compliance with the guidance set out in the case of H v Northamptonshire CC (2017). The Local Authority are a public body and are subject to sections 6 and 8 of the Human Rights Act 1998. Section 6(1) provides that “it is unlawful for a public authority to act in a way which is incompatible with a convention right.” Article 8 also states that ” everyone has the right to respect private and family life, his home and his correspondence.”

Breaches
The issues identified were the delay in implementing the advised programmes of education. This stemmed from 27 March 2015 when conjugal relations were required to cease, to the start of the first sexual education programme on 27 June 2016. The Local Authority did not contest the same.

Remedy
The remedy lies in damages governed by Section 8 of the HRA 1998. Section 8(3) states where an “award is necessary to afford justification to the person in whose favour it is made.” Where an award is made, the Court must under section 8(4), “take into account the principles applied by the European Court of Human Rights in relation to the award of compensation under Article 41 of the Convention.

The Defendant offered;
(1) to make a formal apology for the delays
(2) to pay the Protected Party damages in the sum of £10,000 as a result of the delay
(3) to pay the Protected Party’s pre-action costs in the sum of £7,395 (inclusive of VAT)
(4) to pay the Protected Party’s costs of the Part 8 application and seeking approvals of the Court for the settlement.

Considerations
WH had also pursued her own claim under the HRA 1998 and the claim had settled for an undisclosed amount. The Local Authority had also agreed to pay the Protected Party’s costs of the Court of Protection Proceedings which totalled £21,600 (inclusive of VAT). It was imperative  that this information was noted so as to ensure that there was no recouping of costs against damages under Section 25 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, (LASPO).

Quantum
The Judge considered the appropriate quantum of damages for the Protected Party’s deprivation of his normal conjugal relations with his wife for a period of at least 12 months.  It transpired that there were no exact comparators in any reported case in England and Wales either in Tort law or under the Convention relevant to compulsory cessation of conjugal relationships.

Judge Hedley concluded that the proposed settlement was in the best interests of the Protected Party and reflected a fair outcome to the proceedings. As no Deputy was appointed for property and affairs, it was agreed that the monies would be paid into a Court Funds Office Account. The Judge also allowed for an additional £2,000 to be paid immediately to allow for the installation of an en-suite bathroom to the Protected Party’s matrimonial bedroom.

The intrusion was essentially lawful and had been properly motivated as a safeguarding measure, however the delays had led to proceedings being issued and unnecessary costs of litigation.It does however, highlight that vulnerable people with disabilities are entitled to be protected under Article 8 of the Human Rights Act, in the same way as any other member of society.

This blog was prepared by Danielle Walker who is a Costs Lawyer and Associate at Clarion Solicitors. Danielle specialises in Court of Protection Costs. Danielle can be contacted on 0113 222 3213 or at danielle.walker@clarionsolicitors.com.

 

 

 

 

 

 

 

 

 

Advertisements

Non-Party Costs Orders

The case of Housemaker Services & Anor -v- Cole and Anor [2017] is a useful case for any litigant or law firm considering whether to make an application for a non-party costs order.

Facts

  1. The claim was brought under CPR Part 8 for a limitation direction under Section 1028 of the Companies Act 2006. The underlying claim related to three disputed invoices rendered by the First Claimant to the Defendants. The First Claimant had subsequently been struck off the register and dissolved.
  2. The Court dismissed the claim because the First Claimant could not demonstrate that the dissolution of the company had caused the claim not to be brought, and therefore the Court declined to give a limitation direction.
  3. The Court ordered the First Claimant to pay the Defendants’ costs on the standard basis. The Defendants applied for Mr Wayne Williams, the sole director of the Claimant, to be joined as Second Claimant to the proceedings, for the purposes of making an application for a non-party costs order against him.
  4. The Court made the order joining Mr Williams (Second Claimant) and then gave further directions for the application against him to be dealt with on paper. The Judgment essentially deals with those submissions and the Courts determination of the application for a non-party costs order against Mr Williams.

Submissions of Interest/Note

  1. Mr Williams gave instructions to pursue the proceedings and appeared to have funded them. The First Claimant had no assets and it was highly unlikely that they would be able to satisfy an order for costs.
  2. In respect of a non-party costs order, a warning at the earliest opportunity should be given. The first warning of the application was made at a very late stage.
  3. There was no suggestion that proceedings were brought in bad faith, for an ulterior motive or improperly. 

    Useful Information/Comments from the Judgment

     

  • Paragraph 10 – “A decision to make a non-party costs order is exceptional, but this only means that it is outside of the ordinary run of cases. In a case where a non-party funds and controls or benefits from proceedings, it is ordinarily just to make him pay the costs, if his side is unsuccessful, because the non-party was gaining access to justice for himself, and thus can be regarded as the real party to the litigation”. (this was a general comment about non-party costs orders).

 

  • Paragraph 11 – “However, the director of a limited company is in a special position. It is not an abuse of the process for a limited company with no assets to bring a claim in good faith. It is always open to a defendant to such a claim to apply for security for costs. The mere fact that a director who controls the company’s litigation also funds the claim is not enough in the ordinary case to justify a non-party costs order against him if the company’s case fails”. 

     

  • Paragraph 12“A company is indeed owned by its members. But this does not mean that the shareholder is the “real” party to the claim. In law, the assets of the company (including any claim) belong to the company, and not to the members. Where the proceedings are brought in good faith and for the benefit of the company (rather than for some collateral purpose), the company is indeed the real claimant. If it were otherwise, the principle of the separate liability of the company from its members would be eroded”. 

     

  • Paragraph 13“Moreover, it is not an unusual thing, let alone wrong, that a director who is a shareholder of a company and who funds the company’s claim will ultimately benefit from it if it is successful. It is simply a consequence of the policies adopted by our company law, allowing businessmen to take some risks in seeking profit without incurring unlimited liability”. 

     

  • Paragraph 14 – “A person choosing to deal voluntarily with (or to sue) a limited liability company does so against the legal background. Any potential unfairness caused to a party who is (involuntarily) sued by such a company is remedied by the security for costs jurisdiction”. 

     

  • Paragraph 15“Accordingly, in order to make it just to order a director to pay the costs of unsuccessful company litigation, it is necessary to show something more. This might be, for example, that the claim is not made in good faith, or for the benefit of the company or it might be that the claim has been improperly conducted by the director”. 


    Conclusion
     

    The Court decided that this was not a case where non-party costs order should be made. The Court did not find that the behaviour of Mr Williams in controlling, funding and ultimately hoping to benefit from the claim went beyond the ordinary case of the director and shareholder of a company pursuing a legal claim (paragraph 22). 

    This blog was prepared by Andrew McAulay who is a Partner at Clarion and the Head of the Costs and Litigation Funding team. He can be contacted on 0113 336 3334 or at andrew.mcaulay@clarionsolicitors.com.

Indemnity Basis Costs in the Court of Protection; The Public Guardian v Matrix Deputies Limited & London Borough of Enfield (2017) EWCOP 14

Costs within the Court of Protection are generally assessed on the standard basis as per Part 44.3 1 (a) of the Civil Procedure Rules. However, this recent case has highlighted that the Courts will order costs to be assessed on the Indemnity basis, Part 44.3 1 (b) in particularly egregious situations.

The Proceedings concerned 44 individuals, whose property and financial affairs were either managed by a Court appointed Deputy or were subject to an application for such an appointment. There was an additional 8 individuals who had been subjected to these proceedings, but had unfortunately passed away during the course of the litigation. This meant the Court only retained a residual jurisdiction in respect of costs.

The Court identified that the common link between all the individuals was Matrix Deputies Limited, or a person who worked for the organisation, such as DW and OM.

The Public Guardian made a number of applications which sought the discharge of Matrix Deputies Limited and DW and OM as property and affairs Deputies, the refusal of any pending applications and the appointment of either the Local Authority or a Panel Deputy instead.

OM was discharged on 17 February 2016 and DW was discharged on 18 May 2016. However, Matrix Deputies Limited contested the applications until shortly before the final hearing upon which an agreement was reached. Issues as to the costs remained between Matrix Deputies and the London Borough of Enfield.

Background

The history was complex and it involved an arrangement between the London Borough of Enfield and Matrix Deputies Limited for referrals to be made where there was a Statutory Duty. Relations between the two broke down and thereafter the Local Authority terminated the arrangement.

The Public Guardian raised concerns in November 2015. An Independent Auditor was instructed to investigate Matrix Deputies Limited. A report was produced and this was used as evidence by the Public Guardian on the first day of the hearing. The allegations within the report were as follows;

Excessive Fee Charging
. Fees excessively charged to individuals in excess of what the Deputyship appointment permitted or in relation to what works had actually been undertaken.

Inappropriate/inadequate arrangements for holding/recording client funds and transactions
. All client funds were held in one single account. There were unexplained discrepancies between closing and opening balances and no clear record of opening balances

Conflict of interest for, inappropriate relations with other bodies
. No evidence of tendering and best interest’s decisions being made

Failure to provide information requested/comply with order for disclosure
. Various applications had to be made to the Court

Matrix Deputies denied many allegations, however they did admit to some accounting discrepancies and the receipt of payments from an estate agent in respect of property sales of the Protected Parties. This amounted to Matrix Deputies receiving a financial benefit from the property sales themselves at the expense of someone whom they owed a fiduciary duty to.

Paragraph 8.58 of the Code of Practice states,

A fiduciary duty means that Deputies must not take advantage of their position. Nor should they put themselves in a position where their personal interests conflict with their duties. They cannot cause their personal position for a personal benefit, whether or not it is at the persons expense.

Therefore, the breach of duty had clearly been broken.

Determination

After 20 months of litigation and limited admissions, Matrix Deputies Limited conceded the applications. The Court determined that on the basis of the allegations Matrix Deputies Limited were not a suitable organisation for either continued or new appointments as property and affairs Deputies and any appointments should be discharged or refused.

The Judge stated that individual orders would be made in respect of each person named to appoint a permanent Deputy. Where a security bond was effective, directions would be given to the new Deputy to investigate and report any losses to the estate as a result of the actions of the discharged Deputy.

Costs of the Proceedings

The Public Guardian and Matrix Deputies Limited agreed to bear their own costs and no costs would be claimed from the estate of any person listed in the schedules. The Judge noted that this was a departure from the standard rule, Rule 156 of the Court of Protection Rules 2007, which states,

Where the proceedings concern P’s property and affairs the general rule is that the costs of the proceedings or of that part of the proceedings that concerns P’s property and affairs, shall be paid by P or charged to his estate

The Judge, having Regard to Rule 159 of the Court of Protection Rules 2007, was satisfied that the circumstances justified the departure as he applied the rule and looked at the following;

 (a)the conduct of the parties;

(b)whether a party has succeeded on part of his case, even if he has not been wholly successful; and

(c)the role of any public body involved in the proceedings.

(2) The conduct of the parties includes–

(a)conduct before, as well as during, the proceedings;

(b)whether it was reasonable for a party to raise, pursue or contest a particular issue;

(c)the manner in which a party has made or responded to an application or a particular issue; and

(d)whether a party who has succeeded in his application or response to an application, in whole or in part, exaggerated any matter contained in his application or response.
The position as to costs between the London Borough of Enfield and Matrix Deputies Limited was not agreed. The Local Authority sought an order that Matrix Deputies Limited should pay its costs including the costs incurred in the investigations and on an indemnity basis. Matrix Deputies contented that London Borough of Enfield should bear its own costs.

Local Authority Arguments

London Borough of Enfield’s costs were said to amount to approximately £250,000.00. The bulk of the costs were made up of the independent auditor’s reports. The Local Authority identified that the reports were necessary and the Court had requested the same. Two reports and subsequent applications were required because of Matrix Deputies Limited’s failure to supply full documentation as directed in a timely manner.

The Judge was referred to the case of JS v KB & MP (2014) and R (Boxall) v Waltham Forest LBC (2001) where it was determined that the Court had the power to make a costs order when substantive proceedings had been resolved at trial, but when parties had not agreed costs, specifically in relation to compromised cases. It was observed that there would be different degrees of success and how far the Court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of a particular case, not least the amount of costs at stake and the conduct of parties.

The Judge in this case, contended that it was not reasonable for Matrix Deputies Limited to resist the applications due to the investigations and the conduct of Matrix Deputies Limited afterwards which elongated the Proceedings and led to an increase in the costs.

The Judge also looked at the conduct of Matrix Deputies Limited before Proceedings had been issued.

Matrix Deputies Response

The position of Matrix Deputies Limited was that it should not bear any responsibility for the Local Authority’s costs. They argued that the costs of the independent auditor were excessive. They also sought to rely on correspondences from the Local Authority marked as “without prejudice save as to costs.” The Judge was unimpressed by these arguments.  The proceedings themselves were brought by the Public Guardian, not the London Borough of Enfield and full disclosure was only obtained following an application for an enforcement type order.

The Judge stated that having regard to Rule 159 of the Court of Protection Rules, he was satisfied that the circumstances of the case justified the departure from Rule 156. The conduct of Matrix Deputies before and after proceedings had fallen below the standard of what was expected of a Court appointed Deputy. Matrix had admitted to a breach of their fiduciary duties and had failed to comply with the Court Orders. Therefore, it was determined that Matrix Deputies Limited should bear the costs of the London Borough of Enfield to be assessed by the Senior Courts Costs Office.

Standard or Indemnity Basis Costs

The effect of an indemnity based costs order as stated in Siegel v Pummell (2015)

To disapply the requirement that, in addition to costs being reasonably incurred, they should also be proportionate to the sums and issues at stake in the litigation and that, in the event of the assessment Judge having a doubt as to whether or not an item of cost has been incurred reasonably, the benefit of such doubt should go to the receiving rather than the paying party. “.

The purpose of indemnity costs is not to punish the paying party, but to provide the receiving party with a more generous measure of recoverable costs. They should only be awarded where a case it outside of the normal realms.

The Judge stated that he was satisfied that this case was wholly “outside of the norm” of proceedings before the Court of Protection. This was based on the number of Protected Parties involved in the litigation, the scope of the allegations, the investigative steps required and the nature of the admitted breach of duty by a paid Deputy. All in accordance with Part 44.4 of the Civil Procedure Rules.

The London Borough of Enfield were advised to recover their costs on the indemnity basis.

Conclusion

This case demonstrates that the Courts have the ultimate discretion as to the assessment of costs and that they will look at all factors throughout the duration of the litigation to determine the basis of assessment.

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.

Sue Fox considers the practical effect of the Harrison budgeting decision

In the eagerly awaited decision in Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] WECA Civ 792 (seearticle, page 8), the key findings of the Court of Appeal were that (1) budgeted costs will not be departed from in the absence of a ‘goodreason’; (2) incurred costs do not form part of the budgeted costs; and (3) the good reason test does not apply to those incurred costs. So, what does this decision mean in practice, and what further observations can we make?

Of particular interest is how the courts will deal with ‘incurred costs’. During the Court of Appeal case, thecourt’s attention was drawn to incurred costs when the respondent presented what was described by Davis LJ as ‘an ingenious argument’ regarding incurred costs being potentially approved ‘through the back door’ at the budgeting stage. The respondent submitted that: ‘The incurred costs will have acquired a special status:
in that, while not “approved” as such, they will have been taken into account by the court at the costs management hearing in managing the future estimated costs.’ Please click here to read the full article.

Sue Fox is a Senior Associate and the Head of Costs Budgeting in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact her at sue.fox@clarionsolicitors.com and 0113 336 3389, or the Clarion Costs Team on 0113 246 0622.

 

The importance of an accurate and correctly certified Bill of Costs…….

The case of Jago v Whitbread Group plc relates to the Defendant’s application for an order pursuant to CPR 44.11(1) & (2), which reads as follows:

“The Court may make an order under this rule where –

  • a party or that party’s legal representative, in connection with a summary or detailed assessment, fails to comply with a rule, practice direction or court order; or
  • it appears to the Court that the conduct of a party or that party’s legal representative, before or during the proceedings or in the assessment proceedings, was unreasonable or improper.”

The Defendant requested that the Court disallow all or part of the Claimant’s entitlement to costs on the grounds of her solicitors improper and/or unreasonable conduct during the detailed assessment proceedings.

The following is a brief summary of the substantive case and detailed assessment proceedings:

  1. The Claimant brought a personal injury claim against the Defendant, which settled for damages of circa £41,000, with costs to be subject to detailed assessment, if not agreed.
  2. The matter settled on 4 March 2015 and on 12 March 2015, the Claimant disclosed an informal statement of costs to the Defendant. The statement of costs was a two page document which totalled £101,677.21. The statement included a success fee of 20%, various disbursements in the total sum of £537.00 and two and half hours for preparing and checking the statement of costs. The statement was signed by a senior solicitor and partner at the Claimant’s firm.
  3. On receipt of the statement of costs, the Defendant’s solicitors responded requesting disclosure of the Claimant’s conditional fee agreement, with the Claimant’s solicitors responding on 18 June 2015, stating that the Claimant “……was not subject to a CFA in regards to this matter”.
  4. The Defendant’s solicitors responded querying why therefore a success fee of 20% had been claimed in the statement of costs when no CFA was in existence.
  5. On 19 November 2015, the Claimant served notice of commencement of detailed assessment, with the bill of costs totalling £91,474.41. This bill of costs was of course over £10,000 less than the sum claimed in the statement of costs. Disbursements had been reduced to £430.00 and profit costs had also been reduced. A success fee of 25% was claimed in the bill of costs, despite the correspondence on 18 June 2015 stating that the matter was not subject to a CFA.
  6. The bill of costs was certified by the supervising solicitor and partner. A claim of three and a half hours was included by a law costs draftsman and one hour by the supervising solicitor to check the bill of costs. The certification confirmed that the bill of costs was valid and accurate (and therefore no breach of the indemnity principle).
  7. In December 2015, the Defendants served points of dispute and shortly thereafter amended points of dispute raising a number of significant queries and challenges to the bill of costs.
  8. On 15 January 2016, the Claimant filed and served a fresh bill of costs. Instead of amending the existing bill of costs, the Claimant’s solicitors effectively started the detailed assessment proceedings again with a redrafted bill of costs. The redrafted bill totalled £56,719.00, which represented a reduction of circa. £35,000.00 from the total sum claimed in the bill of costs served in November 2015.
  9. In respect of the revised bill of costs, the success fee was removed. Disbursements were reduced further to £385.00 and the profit costs sought in the bill were significantly reduced. Again, a claim of three and half hours was included in the bill of costs for a law costs draftsman preparing the same, together with an hour for the supervising solicitor/partner checking and certifying the bill of costs.
  10. On receipt of the redrafted bill of costs, the Defendant’s solicitors wrote to the Claimant’s solicitors highlighting the procedural error in that they should have simply amended the existing bill of costs rather than creating a new bill of costs.
  11. In response to that correspondence, on 8 April 2016 the Claimant’s solicitors filed and served a further bill, this time an amended bill of costs. The total sum claimed in the bill was £55,393.19. Profit costs were reduced again together with a further reduction to disbursements. Again, the bill was signed and certified by the supervising solicitor and partner.


    Outcome

    Master Whalan found the Claimant’s solicitors’ actions to be “improper” and “unreasonable” and imposed the following penalty for the “improper” and “unreasonable” behaviour:

  • The Claimant’s entitlement to costs be disallowed to the extent of 50% of the assessed costs allowed on detailed assessment.
  • Specific deductions to the bill of costs (see paragraph 41 of the Judgment). These reductions included time in relation to other work done i.e. preparing, checking and certifying the bill of costs.

    In reaching his decision, Master Whalan stated that the breaches in the case were significant, repeated and either unexplained or unjustified (paragraph 40 of the Judgment).

    This is an excellent case which demonstrates the importance of preparing an accurate bill of costs and ensuring that a bill of costs does not breach the indemnity principle before certifying the same. What is clear from the Judgment is that Master Whalan would probably have been forgiving for the errors made in the first instance, but the failings the second time round and further failings thereafter were not capable of forgiveness and resulted in the severe penalty reduction of only 50% of assessed costs for the Claimant’s solicitors. So ensure statements of costs and bills of costs are prepared and checked properly!

    This blog was prepared by Andrew McAulay who is a Partner at Clarion and Head of the Costs and Litigation Funding Team. Andrew can be contacted on 0113 336 3334 or at andrew.mcaulay@clarionsolicitors.com

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.