Manchester Messenger – November 2023
In the November 2023 edition of The Manchester Messenger, the monthly magazine of the Manchester Law Society. Colin Campbell and Nick McDonnell provide a legal costs update featuring cases that are likely to have practical relevance.
The most important case this month is the decision of the Court of Appeal in Diag Human SE v Volterra Fietta [2023] Costs LR 1511. In proceedings in which solicitors had acted for the claimant under a Conditional Fee Agreement (CFA), Stuart-Smith LJ held that the court below (see [2022] Costs LR 1209) had been correct to uphold the decision of the Master who had assessed the defendant’s bill of $2,929,928.38 at nil in determining a preliminary issue under s.70 Solicitors Act 1974. It had been common ground that the CFA was unenforceable as it had included a success fee that could exceed 100% and had not stated the success fee percentage contrary to s 58 Courts and Legal Services Act (CLSA) 1990. The solicitors argued that the offending term could be severed, so that at least base costs would be payable, alternatively, that the firm was entitled to payment under a quantum meruit. Those arguments were unanimously rejected: worse for the solicitors, reversing the decision of Garland J in Aratra Potato Co Ltd v Taylor Joynson Hicks, the court directed that any sums already billed and paid should be reimbursed to the client – a mere $1.5m!
Another case where it all went wrong for the lawyers is Glaser KC v Atay [2023] EWHC 2539 (KB). Here two barristers had undertaken work under the Public Access Scheme for fees to include trial. However, the trial had been adjourned, at which point the client withdrew her instructions, and refused to pay the fees. Turner J held that the barristers were entitled to nothing. The payment term had been unfair under s.62 of the Consumer Rights Act 2015, meaning that the contract fell to be treated as if the entirety of the payment term had never existed. It followed that the barristers had no contractual right to payment of the agreed price at any time. In what other walks of life could lawyers do good work and go unpaid, it might be asked? Is the answer that it is the lawyers who write the contract, so they only have themselves to blame?
Next, an unusual costs budgeting case. In South Tees Development Corporation v PD Teesport Limited [2023] EWHC 2270 (Ch,) Trower J held that the successful defendant on an appeal should have the costs. Although the costs of the appeal had not been included in its costs budget and no application to vary it under CPR 3.15A had been made, Trower J found that (1) the costs of any appeal are not to be included in the form of costs budget mandated by the CPR, (2) the defendant was not under any obligation to vary its precedent H and (3) the fact it did not do so did not have any effect on the way in which the court’s discretion ought to be exercised when considering the appropriate costs order to be made in relation to the appeal, so the defendant was entitled to its costs.
For an extraordinary case on the making of an indemnity basis costs order, see X v Transcription Agency LLP [2023] EWHC 2283 (KB) in which the claimant in a claim for a subject access request under the Data Protection Act 2018, had made unfounded allegations of dishonesty and improper conduct against the judge. He had also aggressively pursued litigation against the transcription service, seeking to force it to reveal its insurer, in a manner which was outside the norm. Indemnity basis costs ordered.
Hot of the legal press is a long and thorough judgment by Freedman J in which he refused to make a non-party costs order (NPCO) against the claimant’s solicitors -see The Scout Association -v- Bolt Burdon Kemp [2023] EWHC 2575 (KB). In brief, it was the defendant’s case that the solicitors should satisfy various adverse costs orders made against the claimant which they could not enforce due to QOCS. That argument failed, the court holding that, contrary to the defendant’s assertion, the solicitors could not be described as the “real party” to the litigation. In the context of an NPCO application, that would usually be determined by reference to whether the solicitor was acting “beyond or outside the role of a solicitor.” The firm was not, so the application failed.
Lastly a brief mention of the costs aspect in V (Medical Treatment) [2023] EWCA Civ 1190. See paragraphs 1, 42-43 and 49-57. The Court of Appeal was not persuaded to depart from Rule 19.3 of the Court of Protection Rules 2017 which provide that, “where the proceedings concern P’s personal welfare the general rule is that there will be no order as to the costs of the proceedings”.
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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