Manchester Messenger – December 2023
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.
In the first case since PACCAR, which decided that Litigation Funding Agreements (LFA) can be Damages Based Agreements and can be unenforceable if they do not comply with the DBA Regulations, Jacobs J had to address the consequences – see Therium Litigation Funding A IC v Bugsby Property LLC [2023] EWHC 2627 (Comm). The claimant had won damages of £27m, but under the LFA, that entire sum fell to be paid to their solicitors and litigation funders. Or did it? If the LFA was now a DBA and unenforceable, were the funders due anything, or could the terms that offended the DBA regulations be severed, leaving an enforceable agreement? Pending a trial of that issue, Jacobs J has preserved the fund by a making freezing injunction.
After that judgment, Bugsby applied for fortification of cross-undertakings in damages which the two litigation funders had given in relation to injunctive relief that they had obtained. Bugsby claimed that the injunction had already cost it £5.14m and wanted from each funder £3,283,489.14, and £4,093,246.48, respectively. Jacobs J refused the application. Having gone through the legal principles relating to fortification. He held that Bugsby had failed to establish a good arguable case that the claimed loss would be suffered as a consequence of the injunctions. Indeed, the loss for which fortification was sought was speculative, so the application failed.
For a case adding to the growing body of case law for non-party costs orders under s.51 Senior Courts Act 1981, see Trafalgar Multi Asset Trading Company (in liquidation) v Hadley [2023] WEHC 2670 (Ch) in which the court was not persuaded that the action had been one of the exceptional cases where it would be just to make the seventh defendant jointly responsible with the sixth defendant for its costs liability to the claimant. The court was not favourably disposed either to order a payment on account for a litigant in person at £150 an hour. Without saying what rate was used, it ordered £15,000 which was “…a very substantially lower level than he [the LIP] was asking for”.
Next, a lesson that winding up proceedings are not the appropriate forum for pursuing a company where the debt is disputed. In Morrison Water Services Ltd v Browning [2023] EWHC 2725 (Ch), the court dismissed the petition with costs and made an order restraining indefinitely the petitioner from applying to wind up the company, where the debt was very clearly disputed.
For an example of a departure from the usual costs order in the Court of Protection, see Sandwell and West Birmingham Hospitals NHS Trust v GH [2023] EWCOP 50. A Trust responsible for managing a woman’s cancer treatment applied to the Court of Protection for declarations and orders regarding her capacity to conduct proceedings and make decisions about whether to undergo surgery. At the conclusion of the hearing the Official Solicitor, acting as her Litigation Friend, applied for a costs order on the grounds of excessive delay in issuing the proceedings, notwithstanding COPR 2017 r.19.3, which says that no costs order would generally be made where personal welfare is concerned. In a helpful judgment going through the law and cases, Poole J held that, taking into account the degree of unreasonableness and the extent of the delay, and its impact, the Trust should pay 80% of the Official Solicitor’s costs.
Finally, a long but clear judgment involving Qualified One-Way Costs Shifting (QOCS) and the extent to which QOCS protection can be diluted under CPR 44.16(2) (where the claim has been made for the benefit of a person other than the claimant). The issue in Amjad v UK Insurance Ltd [2023] EWHC 2832 (KB) was whether a credit hire company (CHC), which had provided a replacement vehicle whilst the claimant’s taxi was being repaired, fell within the rule at sub-section (a) or (b). Below, the court gave judgment for the claimant for £10,029.64, but as he had failed to beat a Part 36 offer, the judge permitted the defendant to enforce its costs order, capped at £15,000 under sub-section (b). Ritchie J on appeal held that QOCS protection should not have been lifted because sub-section (a) not sub-section (b) applied. The CHC, not the claimant, gained the “benefit” of any award under the terms of the CHC agreement. It followed that the judge below had not been empowered to lift the QOCS cap, so his decision to do so was set aside. This is an important decision on the differences between sub-section (a) and sub-section (b) and requires full consideration.
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
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