Manchester Messenger June 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.
At Costs Judges’ level, this month, the Solictitors Act 1974 has given the profession plenty to think about. In so far as case law is concerned, it is the Act that keeps on giving!
First, Bendriss v Nicholson Jones Sutton Solicitors Ltd [2024] EWHC 1100 (SCCO). Kain Knight acted for the successful Defendant here in an interlocutory application brought by the Claimant (legally represented by Checkmylegalfees) for specific disclosure for documents concerning (i) an ATE premium, and (ii) call recordings, in Solicitors Act 1974 detailed assessment proceedings. The ATE premium had mistakenly been included in the statutory bill as a ‘disbursement’ and the Claimant attempted to argue that, because of that erroneous inclusion it became assessable under the Act. Accordingly, disclosure pertaining to it must be provided. Costs Judge Rowley found that, including it in the statutory bill, does not somehow turn an item which has been found not to be a disbursement (see Herbert v H H Law Ltd [2019] EWCA Civ 527 (03 April 2019)) into one. Costs Judge Rowley also found that it would be wholly disproportionate to allow disclosure of call recordings when the sums they went to in the statutory bill were relatively small. Application dismissed.
Second, Hensley v Morris Law Ltd [2024] EWHC 1101 (SCCO), Costs Judge Rowley (yes, Costs Judge Rowley again !!) was asked to decide whether a bill complied with the requirements of the Act as to its validity. If not, it was the former client’s case that a compliant bill should be delivered by order under s.68 of the Act so that his right to a detailed assessment would arise from that moment. The judge agreed. The bill delivered had sought a success fee over and above the costs recovered from the client’s opponent. However, it had not made any attempt to provide information which would have made it a complete bill such as what costs had been paid, by whom and when and in what way (eg by direct payment, as had been the case). It followed that the solicitors were ordered to serve a fresh bill that complied with the Solicitors Act.
Next in Pickering v Thomas Mansfield Solicitors Ltd [2024] EWHC 1107 (SCCO), Costs Judge Brown found that a series of invoices rendered by the defendant solicitors in a family dispute amounting to £2,533,579.14 of which £1,175,849.50 were unpaid, were “statute bills”. It followed that the date for applying for assessment ran from the date of delivery. He rejected an argument that the requirements for such bills had been expanded by observations made by the Court of Appeal in Karatysz v SGI Legal LLP [2022] Costs LR 1643. However, he declined an invitation by the solicitors to direct that the outstanding balance be brought into court as a condition of ordering a detailed assessment. The judge considered that the costs were high and resembled the level that would be expected in a commercial dispute. However, that would not prevent an application being made for an interim payment when a breakdown of the bill and points of dispute had been served.
Next, in Lorimer-Wing v Hashmi [2024] EWHC 931 (Ch), Mr Justice Edwin Johnson (on appeal) dealt with the costs of a liability trial where the claimant had obtained judgment but quantum had yet to be determined. It was the defendant’s case that the costs should have been reserved until it could be seen whether any offer for the claimant’s shares had exceeded their value, when determined at the quantum trial. That submission failed. The judge below had ordered the defendant to pay the liability costs, but with the detailed assessment not to commence until either the court had determined the value of the shares, or an agreement had been reached as to their value. That meant that the defendant would not have to pay the costs until the conclusion of the quantum trial, either by way of interim payment or following a detailed assessment. It followed that the judgment below had been correct, so the appeal was dismissed.
With a consultation ongoing into whether the Overriding Objective in CPR 1 should be amended to include reference to Alternative Dispute Resolution (see HERE ) the judgment of Northamber PLC v Genee World Ltd & Ors (Rev1) [2024] EWCA Civ 428, is a good indicator of the direction in which the wind is blowing. The claimant had obtained judgment for some heads of claim but its action for inducing a breach of contract had failed, meaning that the award of costs was limited to 70% in its favour. However, there had been silence in the face of an offer to mediate made by the claimant, and to compound matters, an order for an explanation to be provided by a witness statement, had been breached. That justified increasing the Claimant’s costs order by 5%, with the Court of Appeal stating firmly that if breaches of such orders were ignored by courts when deciding costs, parties would have no incentive to comply with them. For that reason, it was right to penalise parties who ignored them in costs.
Finally, a rare journeyinto costs orders in the Employment Tribunal (ET). In Ireland v University College Hospital [2024] EAT 68 Eady J dismissed appeals against dismissal by the ET of the claimant’s claims for direct race discrimination with costs of £14,000, and his application for wasted costs against the respondent’s representatives. The judgment provides a thorough analysis of the law and applicable principles in reaching the conclusion that the ET had not erred in principle, nor failed to take into account all relevant factors, nor had reached a perverse decision in proceeding to hear the respondent’s application for costs at the end of the liability hearing.
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
Read here
