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Kain Knight Case Law Update February 2018

 

Just when you thought winter was over, the “Beast from the East” has arrived, bringing with it Artic conditions and snow expected to bring the country to a grinding halt. Not so in the Law, however, as important costs decisions continue to flow out of the Royal Courts of Justice, undeterred by what is happening outside. This month we highlight a large number of cases and as there are so many, the commentary we are providing is a little briefer than normal. As usual we do not feature every costs decision, only those which are likely to be of practical significance or which raise important points of law. Please contact Matthew Kain at matthew.kain@kain-knight.co.uk or Colin Campbell at colin.campbell@kain-knight.co.uk if you need any further details.

 

Part 36

Another busy month or two! No less than five decisions before Christmas and another five since!

Triple Point Technology Inc v PTT Public Company Ltd [2018] 1 Costs 111 Jefford J is a reminder about the Part 36.14(4) (a)-(d) benefits which apply where a successful party does better than their own Part 36 offer. Here, the defendant having beaten its own Part 36 offer to accept $2,091,075.76 in settlement of both claim and counterclaim, the automatic consequences of CPR 36.14(4) applied. Accordingly, the claimant was required to pay an additional sum of £75,000, enhanced interest and an interim payment of £2,147,094.22 being 100% of the defendant’s last approved costs budget.

Briggs v CEF Holdings Ltd [2017] 1 Costs LO 23 concerns the costs consequences when a claimant accepts a Part 36 offer long after the last date on which it can be accepted without penalty. The usual costs consequences are that the offeree will have their costs up to that date and pay the offeror’s costs thereafter unless it is “unjust” to do so. Was awaiting expert evidence about the strength of the claim so its worth could be calculated, sufficient to bring the claimant within CPR 36(6)/36.17(5) so as to avoid having to pay two years’ worth of the Defendant’s costs, having initially turned down £50,000 on the table? No it was not, held Gross LJ. There had been nothing which was distinguishable from the usual litigation risk and on the facts, the decision on acceptance had not awaited the expert’s report. Until then there had been uncertainties in the litigation and the usual contingencies of litigation risks, so the “usual” costs order would apply.

For how not to make a Part 36 offer, see James v James [2018] EWHC 242 (Ch)! The offer in question stated that “The offer is made pursuant to Part 36”.  So far so good, but it then said that the claimant was liable to pay the defendants’ costs of the claims and counterclaims “… up to the end of the Relevant Period or, if later, the date of service of notice of acceptance of this offer” [Emphasis added]. However, CPR 36.13(1) carries with it an entitlement to costs up to the date “…on which notice of acceptance was served on the offeror”. The words given emphasis introduced a term inconsistent with the rule, so the offer was not a Part 36 offer, even though it said it was; thus the automatic costs consequences under the rule did not and could not apply.

Made a Part 36 offer and later intend making a voluntary payment on account? Take care! In Gamal v Synergy Lifestyle Ltd [2018] EWCA Civ 210, the offeror did just that, forgetting that when doing so, that the effect is to reduce the Part 36 offer by the amount of the payment, unless the offeror tells the offeree at any time prior to judgment or acceptance that it is not to be treated as having that effect. Thus an offer of £15,000  followed by a voluntary payment of £10,000  made the Part 36 offer worth £5,000, so it did not provide the offeror with  any protection when the claimant obtained judgment for  £14,275 (albeit reduced to 25% because the invoice sued upon had been fraudulent!).

What is a “genuine attempt” to settle under Part 36?  JMX v Norfolk and Norwich Hospitals NHS Foundation Trust [2018] EWHC 185 (QB) provides a resume of the law. An offer to accept 90% of the value of the claim had not been a “genuine attempt”, said the defendant, since it had not reflected any realistic assessment of the risks of the litigation, nor had there been any explanation why only a 10% discount had been offered.  Fostkett J disagreed, holding that the court should not ordinarily carry out the exercise of determining how the case should have looked to the offeror before the offer was made. Doing that would almost be akin to embarking on a mini-trial, so the defendant’s attempt to scupper the claimant’s case on good reason, failed.

 

Costs Budgeting

Decisions at Master level are not binding on anyone, but they can be persuasive and, to be frank, often jolly sensible. Sharp v Blank [2017] EWHC 3390 (Ch) is an example about amending your costs budget retrospectively. Master Marsh held that the jurisdiction to do it is under PD 3E 7.6 and that the last agreed or approved budget is taken as the base reference point. Accordingly, in the Lloyds/HBOS litigation in which as the parties’ applications to vary the budgets had been interrupted by a fire drill in the Rolls Building so that hearing had to be adjourned, it did not matter that significant costs had subsequently been incurred outside the budget (the trial was ongoing): “some degree of retrospectivity” was “…inevitable” if the costs management regime was to be made to work, Master Marsh said, when approving the increases.

 

The Solicitors Act 1974

Practitioners may be aware of a cohort of cases in the Senior Courts Costs Office about obtaining disclosure of solicitors’ papers, where the former client wants to see “What’s in the file”, in order to decide whether there has been an overcharge for the work. (see eg Green & Others v SG Legal LLP [2017] EWHC B27(Costs) which said there is no entitlement and Swain v JC & A Ltd (Lawtel 6 February 2018) which says there is).

Parvaz v Mooney Everett Solicitors [2018] 1 Costs LO 125 is an unusual case where the former client had got hold of the file and had located in it, a draft bill, which she wanted to have assessed under s.70 of the Act. No-can-do held Soole J. Delivering a bill and demanding payment is within the gift of the solicitor alone. Since the solicitor had not done either, no order for assessment of a bill that had not been delivered nor payment demanded, could be made. Application dismissed!

 

Conditional Fee Agreements

An important case here. If you make an error in your CFA, when can you correct it? Not after an order for costs has been made, if the affect of the correction is to increase the liability of the paying party. Thus where counsel had signed a CFA with his solicitor and it had only come to light at the detailed assessment that two of the defendants against whom costs orders had been made, had not been mentioned in the agreement, the Court of Appeal held that a Deed of Rectification attempting to put things right, was too late: it was impermissible to allow a retrospective agreement to be enforced which increased the liability of a paying party after the order for costs has been made.

Worse was to follow for the solicitors: their CFA had not covered a swathe of work undertaken by the firm, but who had nonetheless carried on as if retained on a no-win-no-fee basis. Since this basis of working had not been recorded in writing, it was unenforceable under s.58 Courts and Legal Services Act 1990, so the solicitors went unpaid for it.

 

Litigant in person costs under CPR 46.5

It is surprising how much litigation a relatively short (for the CPR) rule can generate. Campbell v Campbell 2018 EWCA Civ 80 is another example. Here the LIP was trying to recover the costs of a firm of Jersey advocates who had helped him.  He was unable to do so. A foreign lawyer is not a person competent to supply services “relating to the conduct of proceedings” for the purposes of CPR 46.5(3) (b). The policy consideration for the rule is that those who provide advice and assistance with litigation ongoing within this jurisdiction, ought to be properly qualified, regulated and insured. The Jersey advocates were not, so their costs were irrecoverable from the losing party. Bit tough on the LIP? Had he gone to the City for help instead of the Jersey lawyers who he knew, it appears that the paying party would have had to pay up!

 

Matthew Kain

Colin Campbell

25 February 2018

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