Manchester Messenger – January 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.
The talk of the town this month is the decision of the Court of Appeal in Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416. Although the judgment may initially only affect costs disputes indirectly, its implications for the greater use of Alternative Dispute Resolution are wide. The court held that proceedings can be lawfully stayed, or an order made for parties to engage in a non-court-based dispute resolution process, provided that the claimant’s right to proceed to a judicial hearing is not impaired and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost. It follows that in detailed assessment proceedings, it will be within the discretion of the costs judge to direct that the parties engage in ADR such as mediation or early neutral evaluation, before either side can have their day in court.
Next in a long running dispute about costs, in Boodia v Richard Slade & Co [2023] 2963 (KB), Freedman J considered whether a clear contractual term in the retainer between a solicitor and client reserving the right deliver an interim statutory bill, needed to spell out the legal consequences. He held that it did not. The bills could be final statutory bills without the need for “informed consent”, and the Court ought to give effect to the contractually agreed retainer and to the entitlement of the solicitors to have negotiated such terms.
For an important case emphasising the difficulty in obtaining relief from sanctions, see Tan v Idlibi [2023] EWHC 2840 (KB). Ritchie J dismissed the Claimant’s application on appeal for relief from sanctions in relation to a late delivered costs budget which had left the effects of CPR r.3.14 in place, thereby preventing the recovery of future costs of £18,500. The budget had needed to be served by 1st December 2022 (a Thursday). The attempt at service on the following Monday, had used the wrong method of service, namely email. Ritchie J held that the court below had followed the sanctions set out clearly in the Rules for failing to serve a costs budget on time. Accordingly, he dismissed the appeal.
Next the Guideline Hourly Expense Rates (GHR). The Master of the Rolls has announced that following his acceptance of the Civil Justice Council recommendations last May, these will be raised from 1st January 2024 in accordance with the Services Producer Price Index. In practice, that means a rise of about 6% across the board.
Still with hourly rates, in HLIP Oriental [2023] EWHC 3151 (Ch), the court rejected an argument when deciding the issue on the papers, that “home working” should have a bearing on the figure to allow. GHR were awarded, whilst in H v GH [2023] EWFC 235, the court considered whether the guideline rates apply in family proceedings. He held that whilst, strictly, the rates might not apply, there were good reasons for using them.
Next costs budgets. In Hope Capital Ltd & Anor v Alexander Reece Thomson LLP [2023] EWHC 3157 (KB), Constable J rejected an ingenious argument that the successful defendant’s standard costs after winning the case, and having beaten its own Part 36 offer, should be assessed disregarding the firm’s costs budget, as would be the case had indemnity basis costs been awarded. In the judge’s view, that would be a “back door” to seeking an indemnity basis order, and only the costs judge could decide whether there should be a departure from the last approved or agreed budget under CPR 3.18.
Finally, a reminder that solicitors who claim more costs from an opponent than the figure which their client has agreed to pay them, do so at their own peril. Under the indemnity principle, as solicitors should know, the losing paying opponent’s liability is capped at the figure which the receiving winner is liable to pay his own solicitors. In Commissioner of Police of the Metropolis v Malik [2023] EWHC 3213 (Admin), the solicitors appeared not to know this, in having claimed £32,161.92 in their costs schedule, although they had made an express agreement to limit their charges to less than 25% of that sum. Fortunately, the Court of Appeal took a lenient view when making no order as to costs on the Commissioner’s appeal, having accepted the solicitors “unreserved apology” and deciding that no further action was needed, since “… all concerned now understand the indemnity principle and its implications”.
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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