Manchester Messenger – November 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
Withthe High Court back from the Long Vacation,we canexpect a pick up in the number of costs judgments at that level and above, with the awaited decision of the Supreme Court in Menzies v Oakwood Solicitors (see [2023] Costs LR 1983) at the top of the list. Oakwood is another appeal under the Solicitors Act 1974 which will decide the meaning of the single word “payment” in the context of the Act.Must the client agree to the use of moniesto pay a specific bill or is a prior general agreement sufficient? A surprising question to ask in the 21st century but the answer so far has led the courts to trawl through five Victorian authorities, with Bourne J and the Court of Appeal reaching different conclusions. One or other must be wrong: the Supreme Court will decide when its judgment is given.
Next costs of amendments to pleadings. The general rule is that the party amending pays the consequential costs. In Magee v Crocker [2024] EWHC 2353 (Ch), the claimant had applied successfully at the start of the trial to amend the claim form, particulars of claim and amended reply and counterclaim, to allege that there had been a novation. That claim had succeeded at trial, but the defendants wanted costs to the date of the amendment because without the amendment, the claim would have failed. HHJ Cawson ordered that the costs should be limited to those costs of, and occasioned by the amendments, to be assessed if not agreed, because the case on novation had not been pleaded and needed correction. As to the costs of claim and counterclaim, the judge decided that if a case in novation had been included in the claim as initially formulated, or introduced by way of amendment much earlier, the claim would still have been vigorously resisted, and that the defendants had not been deprived of the opportunity of making a Part 36 offer. It followed that the defendants were ordered to pay (1) the claimant’s costs of the claim and Part 20 counterclaim as to 90%, with a payment on account of £400,000 and (2) the fourth party’s costs of the Part 20 claim against him as to 100%, with a payment on account of £385,723 against whom the defendants had alleged fraudulent misrepresentation.
Costs budgeting and sanctions is next. Deng v Zhang [2024] EWHC 2392 (KB) concerned an action for damages for breach of data protection rights, breach of confidence, misuse of private information and malicious falsehood. The claimant had failed to file a cost budget in time but had obtained relief from sanctions. The defendant had served a notice of appeal arguing that the court had been misled about the date of service of the budget. Notice of the hearing date for the appeal had been sent out by the court, but the claimant failed to notice the listing and did not attend the appeal hearing when the appeal was allowed and the claimant’s budget was confined to court fees. Further delay and default followed in the conduct of the application to set aside the appeal decision, which culminated in a witness statement being filed the day before the hearing itself. Hill J held that the claimant’s explanation of solicitor’s “overwork” was not an acceptable reason for default and the fact that the initial failure to notice that an appeal was listed was not a good reason, so the claimant’s application to set aside the appeal judgment, re-imposing the sanction, failed.
Asertis v Bloch [2024] EWHC 2393 (Ch) concerns security for costs under CPR 25 and whether the security offered in the form of an After-the-Event insurance policy offered as security afforded sufficient protection to the defendant. ICC Judge Mullen held that five features of the policy undermined the sufficiency of the protection offered. They included (i) provisions entitling the insurer to withdraw cover if it believed that the claim lacked reasonable prospects of success; (ii) limits on the scope of cover in relation to interim or incurred costs; (iii) redaction of relevant policy terms; (iv) potential for the policy to be avoided for fraud; and (v) an absence of direct benefits conferred on the defendant. It followed, that the policy could not be regarded as providing the defendant with sufficient protection and a payment into was appropriate instead.
Finally, a very strong judgment by Ritchie J about the perils of applying for wasted costs against solicitors who have acted for a claimant found to have been fundamentally dishonest in a personal injury claim to which Qualified One Way Costs Shifting in section II of CPR 44 applied – see Williams-Henry v Associated Ports [2024] EWHC 2415 (KB). The claimant had suffered a brain injury having fallen off Aberavon pier. At her trial, the judge had dismissed the claim, holding that the claimant had been fundamentally dishonest with costs awarded against her, but unenforceable up to the level of the assessed “honest” damages of just under £600,000. The upshot was that and the claimant’s solicitors would go unpaid and the defendant would not recover their costs. For that reason, the defendant looked to the claimant’s solicitors for those costs. That application failed. Ritchie J held that the defendant had failed to comply with the procedural requirements for simple, clear allegations in respect of the solicitors’ conduct, had not clearly identified the wasted costs allegedly incurred as a result of the claimant’s lies, and had failed to establish the causal link between the conduct and the costs. He recognised that as the claimant’ solicitors had declined to waive privilege on their files, that had provided a barrier to many of the Applicant’s accusations. However, the accusation that the solicitors should have terminated the retainer had not been made out and did not constitute unreasonable or negligent behaviour. Ritchie J added that he questioned the use of two silks at the hearing and the proportionality of the application, leading the inference to be drawn that insurers who pursue claimants’ solicitors for wasted costs where their clients have lied and let them down, will face a very uphill task. 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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