Tag: clarion legal costs

GK & Anor v EE (formerly known as RK) & Anor [2023] EWCOP 49

Ella WilkinsonLeave a comment

The recent case involves an application by EE’s parents, GK and LK, to prevent EE from undergoing any type of gender affirming medical treatment and to instruct an expert psychologist and an expert psychiatrist in those proceedings.

Background

EE is 18 years old and identifies as non-binary, using the pronouns they/them. EE wished to undergo gender affirming surgery. EE’s parents objected to this, stating “we strongly object to our daughter accessing medical intervention to change her body”. They contended that EE wearing a breast binder was a form of self-harm and were concerned regarding EE’s desire to undergo ‘top surgery’, which is a surgery that removes breast tissue and reshapes the chest, arguing that this procedure was irreversible and would leave EE with adverse health consequences. EE’s parents requested a final declaration and consequential Orders from the Court of Protection. 

Legal Framework

EE’s parents argued that the NHS Service Specification stated that any form of social transitioning in adolescents should not be seen as a neutral act but an active intervention that should only occur with the intervention of qualified clinicians, therefore EE did not have the capacity to make the decision to undergo any gender affirming procedure. EE and the local authorities argued that EE was not undergoing any form of gender affirming surgery and no treatments were scheduled for the future, therefore, in line with the Mental Capacity Act 2005, it would not be appropriate for the Court to make any declaration or Order on EE’s parents’ application at the time. 

Conclusion

As a result of the above, the Court of Protection refused the application on the grounds of there not yet being a clear matter as to which the Court could explore and determine the question of capacity under S2(1) Mental Capacity Act (2005). The Court was further satisfied that expert evidence as to capacity was not needed to resolve the issues in the proceedings.

The door to third party assessments pushed opened by the Court of Appeal…. Or is it?

Daniel MurrayLeave a comment

The door to third party assessments pushed opened by the Court of Appeal…. Or is it?

The Court of Appeal has delivered judgment in the case of Thomson Snell & Passmore v Kenig [2024] EWCA Civ 15. The case concerned two important issues, namely, whether a beneficiary may obtain an order for an assessment of Solicitor’s costs, pursuant to S.71(3) Solicitors Act 1974, and the extent of such assessment.

Background to Third Party Assessments

Section 71 (1) and (3) of the Solicitors Act 1974 make provision for the assessment of a Solicitor’s bill of costs by a party other than the party chargeable with the bill.

The provisions differ, with S.71 (1) dealing essentially with applications by third parties who wish to challenge costs which they are ultimately liable for because of a contractual relationship. Whereas S.71(3) deals with applications by third parties who are beneficiaries of an estate or trustees, and to whom a fiduciary duty is owed.

It is worth highlighting at this point that the provisions of S.70 Solicitors Act are also relevant for the purpose of third party Assessments. This is in respect of the timescales they place on individuals challenging a bill of costs. Pursuant to S.71(4), the Court shall have regard to these under any S.71 application, in so far as they are capable of being applied.   

The First Instance decision

The application for assessment was brought by Mr Kenig, who, along with another individual, was beneficiary to a will. The administrator of the estate had appointed his own firm of Solicitors to deal with the administration of the estate and had subsequently paid bills which were delivered, in the total sum of £54,410.99 from the estate funds. The last bill had been paid 8 months prior to Mr Kenig’s application, but others had been paid more than 12 months before his application.

Mr Kenig sought to challenge the fees, but his attempts were rebutted, on the grounds that the decision in Tim Martin Interiors Ltd v Akin Gump LLP [2011] EWCA Civ 1574, limited the scope of any assessment and therefore any such assessment would be fruitless and should not be allowed. That decision dealt with an application made pursuant to S.71(1), and arose as a result of a contractual relationship. It established that the approach to these assessments was very narrow and with regards to quantification of a bill, it only allowed an assessing judge to apply a ‘blue pencil’ approach and eliminate only items which fell outside of the scope of the retainer, or which would only be allowable on a special arrangement basis between a Solicitor and Client.

At first instance, Costs Judge Brown distinguished the decision in Tim Martin and ordered that there were ‘special circumstances’ for allowing an assessment of the bills.  He instead felt bound by the historic decision in re Brown (1867) LR 4 Eq 464, which had permitted an assessment of fees by a trustee of a will under the provisions of S.38 of the Solicitors Act 1843, which had essentially become S.71(3) of the 1974 Act.

Key to his decision were several factors. Namely:

  • Lloyd LJ in Tim Martin dealt only with an application conducted under S.71(1) and where S. 71(1) provides limitations on the Court, akin to S.70, S.71(3) placed no such limitations and provided wider discretion
  • There is a material difference between cases in which the legal relations between the person chargeable with the bill and the third parties are ones of contract, and those where fiduciary duties are owed to beneficiaries or trustees.
  • Discrepancies in the case between initial fee estimates and the final charges required justification, and even if Tim Martin was directly applicable, there would still be a realistic prospect that material deductions might be made from the Solicitors’ bills

This was appealed by the Solicitors, on the grounds that the Costs Judge Brown had erred in distinguishing Tim Martin. Other grounds were refused permission or dropped.

The Appeal

At the appeal hearing, Lord Justice Stuart – Smith, with support from Lord Justice Nugee and Lord Justice Coulson , upheld the decision of the High Court, that the Courts were not bound by the principles in Tim Martin in relation to S.71(3) applications, and any observations about that section, or the historic provisions of it’s predecessor S.39 of the 1843 Act were obiter.

Lord Justice Stuart – Smith continued and confirmed that “there are material differences between applications under section 71(3) and those under section 71(1) because of the different nature of the interests of the third party that the different sub sections are intended to reflect. The consequence of Lloyd LJ’s mistaken assumption is that his judgment cannot be relied upon as saying anything authoritative about the position that obtains where an application and assessment are brought under section 71(3)”.

At paragraph 57 the importance of protecting the interests of the beneficiaries / estate was of the upmost importance, because of the fact the executor / trustee carried no risk because of their ability to pay fees out of estate funds.

Where does it leave us?

The decision, first and foremost, is a positive one for beneficiaries / trustees. Executors / Administrators are often in a professional capacity in these types of cases and choose to instruct other departments within their own firms to carry out the administration of the estate. The rights of beneficiaries who have no input in these appointments, to challenge final fees, seems only fair.

It must be remembered that the appeal was only on two limited grounds, whether the Court was bound to apply the principles in Tim Martin, and as a result that application was fruitless.   In the initial judgment (at paragraph 21), the Costs Judge considered issues in relation to the fact that some of the bills challenged had been paid 12 months previously and decided that the scope of S.71(3) was sufficient to allow him to exercise discretion to allow an assessment in any event. This is not the case where individuals chargeable with the bill seek an assessment, which would not be permitted pursuant to S.70(4).

Lord Justice Stuart-Smith (at paragraphs 54-55) comments on this issue, and whilst confirming that he was hesitant to comment beyond the ground of appeal, did acknowledge that this could be a point of jurisdiction. Could it therefore mean that in future cases, where there is a delay and the Court is asked to consider whether the Court’s requirement to consider the factors of S.70 (pursuant to S.71(4)), then an assessment would be barred? If beneficiaries were informed of these payments as and when they are made, does this strengthen any charging party’s case if taking this point?

The judgment also leaves doubt regarding the effects of fully informed consent and approval on any assessment, given the presumptions in CPR 46.9. Although in this case the Court sided with Mr Kenig’s submissions that informed consent was merely a ‘material factor’ and there should be no hard and fast rule when considering its effect. It was acknowledged that ‘fully informed consent by the executor (if proved) is likely to be a major consideration, which in many cases may prove to be determinative’ [58]. Given that bills were approved and paid, steps beyond this are clearly required to demonstrate approval, but if this can be done, could this also mean an assessment would be fruitless?

Only time will tell if third party assessments will now gather momentum and whether the decision really does extend the scope of any quantum reductions. It seems however, that this is still very much a debate for another day.

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

Sandwell and West Birmingham Hospitals NHS Trust v GH [2023]

maidiedeightonLeave a comment

This case involved GH who is a 52 year old woman with a diagnosis of schizoaffective disorder. GH was diagnosed with breast cancer in March 2023 however she does not believe the diagnosis and refuses all treatment.  

The problem was not that GH could not understand the key concepts involved, it was that she had delusional beliefs that prevented her from understanding that she has cancer and weighing this information up. 

Due to the refusal of treatment, the NHS Trust (who were responsible for managing her treatment) applied to the Court for declarations and orders that GH lacked capacity to conduct these proceedings. GH also was unable to make decisions on whether or not to undergo breast cancer surgery therefore the Trust applied that it was lawful and in her best interests for the Applicant to deliver care and treatment in accordance with her care plan. This involved sedation, anaesthesia and a right mastectomy. 

The Application was considered and discussed as long ago as May 2023. This raised concerns as it was made nearly seven months after diagnosis and so shortly before the listed surgery. 

Following the application, the Court made the declarations and concluded that it was in GH’s best interests to undergo the proposed surgery. The Trust was also ordered to pay 80% of the costs of the Official Solicitor because of the unreasonable delay in the Trust making the application. 

You can find out more about our services here or you can contact Maidie Deighton at Maidie.Deighton@clarionsolicitors.com for further information.

Reductions to costs won’t be applied automatically- rules the High Court

ujjainimistryLeave a comment

Where a paying party requests a reduction in costs on the basis that “there is always a reduction,” the request will not necessarily be granted and a lower figure automatically awarded, where the costs are deemed reasonable and proportionate.

In his decision in Next Generation Holdings Ltd & Anor v Finch & Ors [2023] EWHC 2925 (Ch), HHJ Johns KC said that it ‘would be wrong’ to lower any costs payable, simply on the assumption that reductions are often made.

Background Information

The case involved a financial dispute which arose following a Share Purchase Agreement. Subsequently, allegations of fraudulent misrepresentation were made against the Defendant, who proceeded to seek a contribution from a Third Party (KD).

At the end of the 3-week trial in June 2023, HHJ Johns KC decided that the third party was not liable, but the initial defendants were.

A consequential judgment on matters resulting from the initial judgment, including costs, was handed down on 17 November 2023.

Summary Assessment

The sum of £65,640 plus VAT was sought by the third party for costs, which included advice and representation by the direct access barrister instructed on her behalf, with this figure including a sum of £52,500 for representation at trial. It was at this stage that Counsel for the Defendants, sought a reduction of costs on the basis that ‘there always is’ […] a reduction in costs. He also insisted that the hourly rate of Counsel, at £495, was too high and that trial preparation claimed, at over 5 days was too long.

Delivering judgment, HHJ Johns KC opined that the £52,500 trial fee was reasonable for a complex fraud trial that involved a significant amount of documentation. It was highlighted that the role of the Third Party’s Counsel was a smaller role than that of the other parties instructed Solicitors but five days trial preparation was proportionate in the matter.

The suggestion that the hourly rate was too high was also immediately dismissed, on the basis that the guideline rate for an equivalent Solicitor was £512. Furthermore, the Defendant’s Counsel fees of £525,425 were also deemed demonstrative of the fact that the sums claimed by the Third Party’s Counsel were proportionate. HHJ Johns KC considered that the total sum of £65,640 was “well within the range of proportionate figures” and it would have been wrong for any reductions to have been made, especially considering the fact the Third Party would have been defending a claim with a value of over £3 million if found liable. 

This case demonstrates that to obtain reductions to costs claimed, paying parties must have legitimate reasons for seeking to do so.

Ujjaini Mistry is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Kenton v Slee Blackwell [2023] EWHC 2613 (SCCO)

ujjainimistryLeave a comment

Senior Costs Judge Gordon-Saker found that providing a ‘hopelessly inaccurate estimate’ and an inadequate risk assessment regarding a success fee will result in the claim for costs against the client being decreased significantly.

Background

In Kenton v Slee Blackwell [2023] EWHC 2613 (SCCO), the Claimant sued her previous solicitors who had acted for her in a professional negligence claim against another firm, ABC. They had entered into a Conditional Fee Agreement (CFA) in May 2018, with a success fee of 80% if the claim concluded before trial and 90% if it concluded at trial. After mediation, ABC agreed to pay Kenton’s costs in the sum of £138,000.

Slee Blackwell, subsequently, sent Ms. Kenton a bill which amounted to approximately £342,000, where approximately £90,000was payable to the Claimant after damages.

The Defendant’s did not adduce their own evidence or cross-examine Ms Kenton’s witness statement.

But this raised numerous concerns and questions by the Claimant as she had relied on the estimates provided by the Defendant’s, as well as the success fee outlined in the CFA. Judge Gordon-Saker addresses the two key issues of: reliance on costs estimates, and the risk assessment in creating the success fee. This blog will explore his reasoning and decision in turn.

Costs Estimate

Ms Kenton clearly relied on the estimates provided by the Defendant; it was one of the reaons why, she decided to proceed with them to act on her behalf. Slee Blackwell’s estimates outlined as follows:

£5,000 to £20,000 if settlement was reached before issuing of proceedings.
or
£30,000 to £50,000 if the case went to a contested hearing.

In addition to the above estimates, Slee Blackwell’s Ms Slade also explained how she was ‘yet to have a single case where [her] basic fees have been £100k […] the closest is £85k with a fully contested trial’. So, it was expected, from the Claimant’s point of view, that fees would not exceed this, especially since the case settled prior trial.

Unfortunately, the reliance on the estimates by the Claimant was heavily disputed by the Defendants, claiming that it would have been ‘unreasonable’ as it would not have accounted for the ‘unanticipated work required in considering the documents from ABC’. They argued that Ms Kenton did not complain about the original estimates after the costs exceeded £100k as per the costs spreadsheets that were sent to her 5 times over the period of the claim.

However, Judge Gordon-Saker found in the Claimant’s favour that the estimate was ‘inadequate’ and ‘a reasonable estimate of profit costs would have been about £50,000 before issue of proceedings’– not between £5,000 and £20,000. The Defendant’s did not provide a reason as to why the costs far exceeded the estimate and the Judge deemed it would be ‘reasonably expected for [the client] to pay a figure close to the estimate upon which she relied’’. He also added how the Claimant did not have the opportunity to ‘do something different’ as she had already signed the CFA and knew she would ultimately be liable if she tried to terminate it- ‘she could not escape it’. Therefore, £40,000 was the sum that the Claimant was expected to pay.

Success Fee

A risk assessment was carried out by the Defendant’s, which justified the success fees of 80% or 90% (as explained above). Mr Brighton, for the Defendant’s, argued to the Court that the success fees were reasonable and in accordance with the uncertainties involved and was given to the Claimant in an informed manner, to which she had approved. The Claimant contended this line of reasoning by stating these fees were unreasonably high.

Judge Gordon-Saker also agreed with the Claimants in this issue in that the risk assessment was ‘lacking’ and, therefore, there was no informed approval of the Claimant in accordance with CPR 46.9 (3) and (4). He points to paragraph 37 from Herbert v HH Law Ltd [2019] EWCA Civ 527 where informed approval means “that the approval was given following a full and fair explanation to the client” and Judge Gordon-Saker clearly states that the assessment was not a ‘proper assessment of the prospects of successes.’  The risk assessment that would be deemed reasonable and realistic would have generated a success fee of 50% of the basic charges; which was the final decision of the Court in this matter.

Summary

This case emphasises the importance of informed communication with the client, alongside the significance of correctly estimating figures and costs as the figures produced and presented to the client could be the last factor that contributes to the client’s decision in proceeding with the case. Solicitor’s should set out all estimates and charges in a clear format and any risk assessment’s should be undertaken with all factors of the case considered. 

Ujjaini Mistry is a Paralegal in Clarion’s Costs and Litigation Funding Team. You can contact her at ujjaini.mistry@clarionsolicitors.com or on 07436033368.

It’s a final Statutory Invoice…..but only if your retainer allows it

Helen ApplebyLeave a comment

Ivanishvili -v- Signature Litigation LLP (2023)

This case concerns the legitimacy of interim statute bills and potential difficulties in rendering the same. In the substantive action, the Claimant issued proceedings seeking Judgement that 79 invoices (totalling £12,781,354.66) rendered by his previous Solicitors  over a period of more than six years, were not statute bills and should therefore be subject to a Solicitor/Client Detailed Assessment.

It was the Claimant’s position that his retainer with the Defendant firm incorporated a Discounted Conditional Fee Agreement and therefore, the invoices produced only represented a portion of the potential fees that would become due to the firm for the work undertaken. Furthermore, the retainer indicated that a final bill would be rendered upon conclusion of the claim. Therefore, the invoices produced could never be considered as final statute invoices.

The Defendant submitted that the invoices rendered were complete and final bills. It was their submission that only the last bill, dated October 2022, could be open to assessment, but otherwise they had all been paid and therefore the Claimant had no right to challenge them.

Cost Master Leonard did not give a concluded view on whether it was possible to render an interim statute invoice under the terms of a CFA. Rather, he found it ambiguous as to whether the retainer allowed for statute interim bills at all. In this case, he found that none of the invoices could be considered as statutory bills ‘because any such agreement would have been inconsistent with the terms of the retainer under which they were rendered and paid’.

Furthermore, under the retainer the parties had entered into, Master Leonard confirmed “the invoices could be finalised, only when either the firm delivered a bill for any additional fees due (ie success fee), or, the firm accepted that nothing more was due and finalised its billing on that basis. The default position for a contract between a solicitor and the client who retains that solicitor is that it is an “entire contract”.

Therefore, the Solicitor is only entitled to render a statutory bill at the end of the retainer, the completion of a transaction or the conclusion of litigation. As these invoices had been produced throughout the lifetime of the litigation as opposed to the conclusion, Master Leonard allowed the Solicitor/Client Detailed Assessment.

Whilst of course, cash flow for any firm is paramount, this case highlights the importance of truly understanding the pre-existing funding arrangement in place, before attempting to render final statute invoices.

Helen Appleby is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors.

You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Judicial Review issued in relation to October’s Fixed Costs reforms

Daniel MurrayLeave a comment

It has been confirmed that Judicial Review proceedings have been issued by Association of Personal Injury lawyers (APIL), against the Lord Chancellor, in relation to the extended fixed costs rules which are currently due to come into effect on 1 October. Our understanding is that a challenge has been launched in relation to four key grounds:

  • The failure to consult properly on the inclusion of some clinical negligence cases under the extended regime, and specifically when they will apply.
  • The lack of certainty regarding how additional costs incurred because of vulnerable parties is to be dealt with. Including, the fact that no uplift can be applied without an application at the end of a case.
  • The lack of certainty in relation to representation at inquests and how those costs are dealt with.
  • Concerns that the wording of the proposed new CPR 45.1 (3), and the apparent inability of parties to contract out of the extended regime.

All these issues are ones which attracted largely negative commentary in the build up to the implementation of the extended regime. In particular, the lack of clarity as to the timing as to when an admission of breach of duty and causation in a clinical negligence matter might limit a Claimant’s Solicitors to fixed costs. Certainty on all the above is welcomed prior to the implementation of any new rules. Most of the issues are ones which are currently under consultation by the MOJ, with responses to the consultation open until 8 September.

By agreement, the Judicial review proceedings are to be stayed until three weeks after the government responds to the MOJ consultation. Parliament is currently in recess until 4 September, and with just over 5 weeks until the new rules are implemented, there is a race against time to see whether the government pushes ahead with implementation, or perhaps wisely, takes the decision to postpone plans further until key issues are resolved.

For further information on the consultation, please contact Clarion’s Costs and Litigation Funding Department who can be contacted on any fixed costs issues, at our new dedicated fixed costs email addressatFRC@clarionsolicitors.com.

LFAs deemed DBAs: uncertain times ahead for Litigation Funders following significant Supreme Court ruling

Anna LockyerLeave a comment

Last month, the handing down of the judgment in R (on the application of Paccar Inc and others) v Competition Appeal Tribunal and others [2023] UKSC 28 saw the Supreme Court allow an appeal, ruling that Litigation Funding Agreements (LFAs) are Damages-Based Agreements (DBAs) if they provide for a percentage return.

This decision overturned the Divisional Court’s well-established practice of LFAs not being DBAs; the repercussions are particularly significant to opt-out collective actions in the Competition Appeals Tribunal where DBAs are prohibited.

LFAs were previously found not to be DBAs because litigation funding did not amount to “claims management services”, to which the statutory DBA regime applies. The Supreme Court has now decided that “claims management services”, according to their natural meaning, includes litigation funding.

As a result of this decision, swathes of LFAs will be unenforceable, which is significant for the funding of disputes and the wider funding industry; a problem to be addressed by both litigation funders and claimant solicitor firms that rely on third party funding.

Many existing LFAs are now vulnerable to unenforceability challenges on the basis they are not compliant with the statutory regime for DBAs in s58AA of the Courts and Legal Services Act 1990 and the DBA Regulations 2013.

Compliant LFAs

In order to comply with the DBA regulations, an LFA needs to:

  • provide the reasons for setting the percentage return;
  • be limited to no more than 50%; and
  • involve giving credit for any costs paid or payable by the other side (i.e. a solicitor entering into a DBA gives credit for costs recovered and a litigation funder gives credit for costs paid or payable from the other side).

If an agreement has provision for payment of any other sums other than the percentage return, so for example it has a multiple – which means in the event of success the claimants will pay the funder whatever that multiple provides, then arguably that agreement is not a DBA, because the sum payable is not determined by the amount received.

It is common for LFAs to provide for the repayment of the investment plus a percentage return, which can be mathematically provided for in a formula. Similarly, there could be a multiple expressed as a percentage although that could be construed as an artificial way of saying that the payment is with reference to the amount received. In these circumstances there is scope for the agreement to be deemed a DBA, but there is a risk it could be challenged on grounds of non-compliance.

Put simply, LFAs that do not provide for a percentage return should not be caught by the outcome of this case.

Existing LFAs

In relation to existing cases, a re-drafting and re-negotiation of funding agreements seems to be the main way forward in view of this Appeal.

If an LFA contains a severance clause, it may be possible to sever out the percentage provision leaving just the multiple provision. Greater reliance may need to be placed on any severance provision in circumstances where the funded party will not agree to a renegotiated agreement, although in ongoing cases, the funded party is almost certainly going to want more funding for the continuation of the litigation, so it is in the interests of both parties that agreements are renegotiated.

Funders poised to enter into agreements, should ensure they either properly comply with the DBA regulations and section 58AA of the CLSA or alternatively, if preferred, they should make certain their agreement is clearly based solely on a multiple to avoid any scrutiny in a DBA context.

Careful consideration of Collective Proceedings Orders in the Competitions Appeals Tribunal will also now be required in light of this decision.

The Future

There is a very real risk of successful claimants seeking recovery of funds they have paid to their funder as consequence of this case.

In concluded matters, where successful claimants have paid a share to the funder based on a percentage and it now turns out that those agreements will have been unenforceable, there is a risk of those claimants seeking to recover sums paid to their funder. No doubt defences along the lines of limitation, change of position and unjust enrichment will be raised by funders.

These actions are an unfortunate ramification that would have been avoided altogether had the outcome of this case been different. There will likely be legislation to correct this somewhat ‘disruptive’ decision, but there has been no indication as to when or if it will be retrospective in effect. 

Anna Lockyer is a Senior Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com.

Access to Justice Prevails : Court of Appeal rules that Translator Fees for Trial are recoverable in Fixed Costs Cases

Daniel MurrayLeave a comment

In a significant ruling for litigators who deal with cases captured by the current fixed costs regimes, the Court of Appeal in Santiago v Motor Insurers’ Bureau [2023] EWCA Civ 838 has ruled that the fees of a translator or interpreter were recoverable in a case which settled on the morning of Trial.

Background

The dispute regarding the recoverability of the fees was one which arose following a successful personal injury claim brought by Mr Santiago, a Brazilian national who spoke Portuguese. His claim had been brought under Section IIIA of CPR 45 (those falling outside of the Pre-Action Protocol). At first instance, Deputy District Judge Sneddon, felt constrained by the Court’s previous decision in Cham (A Child) v Aldred [2019] EWCA Civ 1780, [2020] 1 WLR 1276, and disallowed the fees, whilst acknowledging that her instinct told her otherwise. Permission to appeal was subsequently granted.

The Court in Cham, a case in which the central issue was the recoverability of Counsel fees for advice, had determined that in cases progressing under Section IIIA of CPR Part 45, those advice fees were not recoverable as a disbursement under CPR45.29I(h), which permits recovery of a disbursement which is “reasonably incurred due to a particular feature of the dispute.” Lord Justice Coulson, sitting in that matter, had went on to summarise that whether the Claimant was a child, or an individual who could not speak English, then those features were a characteristic of the Claimant, not the dispute, and therefore any provision for recovery of such fees were accounted for in the sums allowed for fixed profit costs, and no additional sums should be allowed as a disbursement.

The Decision

Lord Justice Stuart-Smith determined that the comments by Lord Justice Coulson in Cham’ were strictly obiter, with the case determining the position in relation to Counsel fees for advice, and not fees of translators and interpreters. Therefore, the decision was not binding upon him.

He went on to determine that “by CPR 1.2(b), the Court “must” seek to give effect to the overriding objective when it interprets any rule. The first issue, therefore, is one of principal………it seems to me to be clear beyond argument to the contrary that an interpreter is essential if a person or witness who does not speak adequate English is to participate fully in proceedings or give their best evidence.”

LJ Stuart Smith went on to confirm that despite arguments on behalf of the paying party to the contrary, the fees of translators were not encompassed within Table 6B of CPR 45, which contains the specific provisions for recoverable Solicitor’s fees for cases under Section IIIA, and that “the fact that the provision of independent interpreting services will not be provided by a party’s solicitors or counsel as part of the provision of their legal services provides strong support for the submission that they must be recovered”.

The need for advice in cases involving minors or protected parties was distinguished from the need for an interpreter, on the basis that cases involving minors can still proceed to a settlement without the advice, and can still be endorsed by the individuals when they reach the age of majority, whereas  “interpretation of sub-paragraph (h) that precluded the recovery of reasonably incurred interpreter’s fees in a case such as the present would not be in accordance with the overriding objective because it would tend to hinder access to justice by preventing a vulnerable party or witness from participating fully in proceedings and giving their best evidence.”

Commentary

Whilst this ruling is one which will no longer be relevant to cases with a date of incident on or after 1 October 2023, and the new CPR 45.59 expressly permitting recovery of these fees, it will no doubt be most welcomed by litigators dealing with the runoff of cases still captured by the current regime.

It will also be interesting to see if the strong views on access to justice lead to a review of the recovery of translator fees in cases which proceed under the various Pre-Action Protocols, and in which these types of disbursements are currently not recoverable. No variations to this approach are encompassed within the new rules either.

Disbursement disputes on new fixed costs regime is one of the topics which will be discussed at our seminar on 6 September. The seminar will focus key issues in relation to the new rules, including practical guidance on the new banding and allocation rules. Click here for more information and to register to attend.

For further information on this decision, please contact Daniel Murray, who is an Associate in Clarion’s Costs and Litigation Funding Department and can be contacted at daniel.murray@clarionsolicitors.com. 

Failure to explain costs budget overspend prevents costs recovery from client

Robert PattersonLeave a comment

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.