Manchester Messenger May 2024
Here, in Kain Knight Costs Lawyers’ regular monthly legal costs update, we focus on those cases which we believe are likely to have a practical relevance for its members. We welcome feedback and if there is an area, topic or case you would like us to address, please let us know.
A bumper month for judgments with space dictating we can provide just short summaries!
We start with three (yes three) decisions of the Court of Appeal. In Heathcote v Asertis Ltd [2024] EWCA 242, a single claim form had been issued to start two claims which were capable of disposal within the same proceedings. The Claimant succeeded in one claim but failed in the other. Below, the court had ordered the defendant to pay 75% of the Claimant’s costs. That decision was upheld on appeal: the Judge had not erred in exercising his discretion and the parties had not invited him to distinguish between the claims for the purpose of the costs order and had, in fact, asked the judge to consider the question of costs globally.
Next, an unusual case on interest on costs. In the never ending dispute between Mr Vik and his company’s former bankers, in Deutsche Bank v Vik and Sebastian Holdings [2024] EWCA Civ 24, on appeal from Dias J (see [2023] Costs LR 881), the court reversed her decision about interest which had been disallowed owing to limitation. The Limitation Act 1980 Pt I s.24(2) states that “No arrears of interest in respect of any judgment debt shall be recovered after the expiration of six years from the date on which the interest became due.” Dias J had held that “due” meant the date on which the interest liability accrued which was on the date of a Costs Order back in November 2013! Since the detailed assessment had not been completed until 2023, that had meant that the bank could not collect 3 ½ years’ interest on the assessed costs, worth £775,000. On appeal, the court held that “due” meant “payable” and where costs were ordered to be assessed, time began to run for limitation purposes on interest on those costs from when the costs were quantified in the final costs certificate, which was when they became enforceable. It followed that Dias J had been wrong, so the appeal was allowed.
Finally in the Court of Appeal, in Brearley v Shepherd & Co [2024] EWCA (Civ) the court upheld the decision below that where a residual beneficiary had challenged (under the Solicitors Act), the entitlement of one of the executors to charge fees for administering his late mother’s estate without a charging clause in her will, nothing was payable. To establish an entitlement to charge, the executor would need to rely on (i) s.29 of the Trustees Act 2000 which required “each other trustee” to agree in writing to the executor’s remuneration or (ii) the inherent jurisdiction of the Court to a permit such remuneration. Since not all trustees had agreed and in the absence of any evidence to explain the lack of a charging clause in order to justify the exercise of the inherent jurisdiction in the executor’s favour, the appeal failed.
Next a warning to solicitors about wasting court time. In Rainer Hughes Solicitors v Liverpool Victoria Co Ltd [2024] EWHC 585 (KB), Martin Spencer J upheld the decision below that the claimant’s solicitors pay wasted costs in a personal injury claim, plus the costs of the wasted costs application, on the basis that their failure to provide properly translated statements for the claimant was negligent, and a breach of its duty to the court. There was a public interest in costs which had been wasted due to a solicitor’s negligence or misconduct in the proceedings, being visited on the solicitor in the form of a wasted costs order. The judge below had been entitled to make the order that he had.
Two cases on Part 36 this month. In Bell v Commissioner of Police of the Metropolis [2024] EWHC 650 (KB), the claimant had beaten his own Part 36 offer. Hill J held that the CPR 36.17(4) benefits would apply. The defendant’s conduct had prolonged and exacerbated the claimant’s distress. Accordingly, the enhanced interest would be 10% above base rate on damages awarded, plus the additional sum of 10% of £104,399.48 (the award for general damages and past losses), plus indemnity basis costs from the date that the offer should have been accepted. Interest would be allowed on those costs at 10% above base rate plus a payment on account of 90% of the claimant’s budgeted costs, that being the “common” figure to allow. A lesson there for those whose conduct becomes misconduct!
More conduct issues in the second case. In ABFA Commodities Trading Ltd v Petraco Oil Co SA [2024] EWHC 706 (Comm), in October 2019, Petraco had made a valid Part 36 offer to settle for $24m. On 30 January 2024, Foxton J upheld its claim for $27,034,184.87 but there had been misconduct in the conduct of the action. So far as the CPR 36.17(4) consequences were concerned, that did not lead to the conclusion that the Part 36 consequences should be disapplied. Foxton J held that the appropriate means of addressing disapproval of conduct was through the costs order. It followed that taking the misconduct and all other relevant factors into account, the recoverable costs from 10 July 2021 would be reduced to 40% on the indemnity basis, with standard costs at 100% to apply until that date.
Next, a warning about using leading counsel when a junior would do. In Coram v DR Dunthorn & Son Ltd [2024] EWHC 672 (KB), a mesothelioma claim had settled for £75,000, and the claimant had served a bill for £178,207 net of VAT. That had included a brief fee for leading counsel for the trial of £25,000 plus 27.5% success fee discounted by 50% of the full fee to reflect the stage at which the settlement had occurred. Below, the Master had disallowed the brief fee. That decision had been correct. The case had been listed category C and the costs judge had been entitled to weigh the absence of any explanation from the claimant’s solicitor or junior counsel as to the thought process which justified the significant and costly decision to instruct leading counsel. Thus, the claimant lost the fee as between the parties: whether there was “informed consent” by the client to its being incurred, the judgment does not tell us.
Finally, in Various Claimants v Mercedes-Benz Group AG [2024] EWHC 695 (KB), in the NOx Emissions Group Litigation, the issue for the court was whether a disclosure order should be made in respect of the way the claimants were funding of the litigation. This was a prelude, if appropriate, to applying for security for costs under CPR 25 against someone other than the claimant. The court held that whilst the power existed, an order would not be made but the issue would be re-visited after (a) budgets through to 2025 had been fixed and (b) the Claimants had had the opportunity to make good their intentions as to the provision of ATE insurance, which could make the question of security redundant.
As always, these are a selection of the principal recent cases which are likely to be of use to practitioners and if any further information is required, please contact either Nick McDonnell or Colin Campbell at Nick.McDonnell@kain-knight.co.uk or Colin.Campbell@kain-knight.co.uk
