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The decision in Aaron back in 2004 was that matters of conduct could not be raised on detailed assessment when they should have been raised before the trial Judge or incorporated into a Consent Order. The first point seemed fair, but the latter was a bitter pill for defendants as the Claimants were never going to agree to an order stating that the profit costs were to be reduced by 50% for unreasonably pursuing special damages for instance. The goal posts have now moved following two separate judgments in Northstar Systems v Fielding and also Lahey v Pirelli Tyres. The first case followed a finding that the successful party had lied but was still entitled to costs subject to a percentage reduction. On appeal, it was confirmed that the losing party were entitled to raise conduct as an issue before the Costs Judge in relation to the dishonesty and that a costs order made by a Judge was not the final end to the argument as would be the case under Aaron. In the second case, the Claimant had failed to beat a pre-issue offer of settlement, but the Defendant had failed to protect their position properly when paying damages into court. On assessment, the Defendants requested a percentage reduction to reflect the Claimant’s failings. The District Judge ruled that he did not have the authority to do so, which was upheld on appeal. Alternative tactics could have produced a more favourable outcome to either party. Given the importance of terms of settlement, why not consult us for advice prior to concluding agreements in complex matters.
Disclaimer: Whilst every effort has been made to ensure the accuracy of the information contained in these news items, reliance should not be placed on the content without properly consulting the appropriate legal authorities. |
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In-House Advocacy Team Results Our in-house advocacy team has had a number of successes both locally and nationally to include the SCCO, Nottingham and Liverpool of late. Notwithstanding an indemnity costs order against our client on a Late Payment of Debt case, it was successfully argued that it was not reasonable for a Central London firm to act in such a case for a client based in outer London and hence rates were substantially reduced not only saving our client 40% on the bill, but resulting in costs of the claim being awarded in our favour following our advice on an appropriate part 47.19 offer. An equally successful time was had in Nottingham, when acting for the receiving party. We successfully defended a TAG CFA from technical challenges relating to the scope of the CFA under CFA Regulation 2000 2(1)(a), investigations into alternative funding under 4.2(c ) & (d) and Garrett style challenges under 4.2(e).
Disclaimer: Whilst every effort has been made to ensure the accuracy of the information contained in these news items, reliance should not be placed on the content without properly consulting the appropriate legal authorities. |
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The above matter relating to the reasonableness and recoverability of medical agency fees in matters subject to CPR 45 II is that the matter is being mediated, hence the hearing listed for January 07 did not proceed.
Disclaimer: Whilst every effort has been made to ensure the accuracy of the information contained in these news items, reliance should not be placed on the content without properly consulting the appropriate legal authorities. |
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Master Wright is Right - Myatt and Garrett decisions Myatt v National Coal Board & Garrett v Halton Borough Council On 18 July 2006 the Court of Appeal handed down Judgement in the cases of Myatt v National Coal Board and Garrett v Halton Borough Council. The results were both in favour of the Defendant with the appeals brought by the Claimant being dismissed. Myatt concerned Regulation 4(2)(c) of the CFA Regulations 2000 which requires a solicitor to inform the client whether he considers that the client’s costs risk is insured under an existing contract of insurance such as legal expense insurance or union assistance. It was deemed that whilst questions into the availability had been asked, the wrong questions had been asked based on the intelligence of the Claimants and hence the original Judgement of Master Wright was correct. As such, there had been a material breach of the regulation and the CFA was deemed unenforceable. In the case of Garrett, the argument turned on Regulation 4(2)(e)(ii), which requires the solicitor who recommends a particular policy of insurance to declare any interest he may have in doing so. The solicitors for the Claimant stated that they were a panel member of the referral company, but that they did not have any interest in recommending the policy as no commission was received for taking out policies. At the original hearing, the Defendant argued that there was an indirect interest to declare in that the solicitors would be removed from the panel should they not use the insurance policy. On appeal, it was upheld that remaining on the panel and hence receiving continued referrals was an indirect interest and hence should have been declared to the client. Guidance was given by the Court as to the correct approach that should have been taken by solicitors in relation to CFAs entered into before the revocation of the CFA Regulation 2000 on 1 November 2005. There is an implied obligation to take reasonable steps to ascertain what alternative funding the client has, and that what is reasonable will depend on all the circumstances of the case, and that there was no logical necessity to follow the Sarwar test. Brookes LJ stated “the regulation 4(2)(c) duty does not require solicitors slavishly to follow the detailed guidance given by this court in Sarwar. In particular, the statement at para 45 that a solicitor should normally invite a client to bring to the first interview any relevant policy should be treated with considerable caution. It has no application in high volume low value litigation conducted by solicitors on referral by claims management companies. As the Myatt cases show, the clients will often live far from the solicitor's offices, and face to face interviews may well not take place.” So what should be done. At paragraph 72-76 the following advice was given: 72. First, the nature of the client. If the client is evidently intelligent and has a real knowledge and understanding of insurance matters, it may be reasonable for the solicitor to ask him not only (i) whether he has credit cards, motor insurance or household insurance or is a member of a trade union, (ii) whether he has legal expenses insurance, but also (iii) the ultimate question of whether the legal expenses policy covers the proposed claim and, if so, whether it does so to a sufficient extent. Litigants such as the Myatt claimants and Ms Garrett plainly do not fall into this category: few litigants will. If the solicitor does ask such questions, he will have to form a view as to whether the client's answers to the questions can reasonably be relied upon. 73. Secondly, the circumstances in which the solicitor is instructed may be relevant to the nature of the enquiries that it is reasonable to expect the solicitor to undertake in order to establish the BTE position. 74. Thirdly, the nature of the claim may be relevant. If the claim is one in respect of which it is unlikely that standard insurance policies would provide legal expenses cover, this may be a further reason why it may be reasonable for the solicitor to take fewer steps to ascertain the position than might otherwise be the case. 75. Fourthly, the cost of the ATE premium may be a relevant factor. This is the point made at para 50 of Sarwar. In our judgement, it is as relevant to a question of breach of regulation 4(2)(c) as to a question of the reasonableness of the premium for the purposes of an assessment of costs pursuant to CPR 44.4. 76. Fifthly, if the claim has been referred to solicitors who are on a panel, it may be relevant that the referring body has already investigated the question of the availability of BTE. Whether it is reasonable to rely on any conclusion already reached will be a matter on which the panel solicitor must exercise his own judgement That said should one leave themselves open to a change in opinion by the powers that be? It is our opinion that where ever possible, previous guidance given on these pages be followed in that the solicitor should operate a belt and braces approach and inspect the documents themselves in order to be able to advise the client properly and one cannot accept a claim referrer’s word for it as the Solicitor cannot satisfy themselves that the clients’ best interests are to be represented by entering into a CFA. One further point to note is that if the oral advice is to be provided by telephone, notice should be given in advance in order to enable the client to prepare for the questions and hence enabling them to forward all policies to you in advance It is strongly recommended that the Judgement be read, the same being found at Bailii or other source of full case law. Disclaimer: Whilst every effort has been made to ensure the accuracy of the information contained in these news items, reliance should not be placed on the content without properly consulting the appropriate legal authorities. |
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In the Court of Appeal’s Judgment of Rogers v Merthyr Tydfil County Borough Council [2006] EWCA Civ 1134, handed down 31 July 2006, the Claimant/Appellant successfully appealed to the Court of Appeal and restored the three stage premium to its full amount. In the first instance, the premium had been allowed in full, but the judgement had been overturned at the first appeal, and the premium reduced considerably, having regard to the amount of damages and information contained in Litigation Funding. However, following considerable involvement of DAS and other interested parties, Brooke LJ found that the Judge was wrong to rely on the information and on his interpretation of proportionality given the complexities of the insurance industry, and was also wrong to compare block-rated policies with staged premiums. Furthermore, there was clear merit in the staged approach. Guidance given by the Court at paragraph 116 was that “a party who has an ATE insurance policy incorporating two or more staged premiums should inform its opponent that the policy is staged, and should set out accurately the trigger moments at which the second or later stages will be reached. This obligation should be undertaken in addition to the obligations set out in CPR 44.15(1) and in paras 19.1(1) and 19.4 of the Costs Practice Direction. If this is done, the opponent has been given fair notice of the staging, and unless there are features of the case that are out of the ordinary, his liability to pay at the second or third stage a higher premium than he would have had to pay if the claim had been settled at the first stage should not prove to be a contentious issue.” Lady Justice Smith in an annex to the Judgement provided further comments. Statistics relied upon by the Claimant had indicated that 5% of slip and trip cases proceed to court where 70% are lost by the Claimant. It was her opinion that serious consideration should be given by each party to the merits of pursuing a case to trial, as “it would hardly ever be sensible to risk paying £10,000 in costs for the sake of recovering £5,000 in damages” and would never have happened had the matter been privately or union funded, and “this lack of rigour is resulting in the system being more expensive (eventually to the premium paying public) than it should be.” Disclaimer: Whilst every effort has been made to ensure the accuracy of the information contained in these news items, reliance should not be placed on the content without properly consulting the appropriate legal authorities. |
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For a while now, it has been accepted that it was permissible to change from a private or union funded retainer to a CFA or CCFA as per Kitchen -v- Burwell Read & Kinghorn Ltd QB/2005/ANC/0131/A. Whether it was reasonable to recover a success fee and the amount of the same depended on the risk at the time of change. Haines -v- Sarner (SCCO 27/04/05) for instance allowed 5% whereas Ellerton -v- Harris EWCA Civ 1712 allowed 20% on a quantum only matter where the solicitor had stated he would not claim base costs or success fee if he failed to beat a part 36 offer. However, what happens if you discover that your CFA is defective in light of one of the many cases, is one open to amend the existing one? Recently, Master Hurst has given judgment in Owen John Oyston -v- Royal Bank of Scotland PLC (SCCO 16/05/06) and Jill Brennan -v- Associated Asphalt Ltd (SCCO 18/05/06). In the first case, the CFA stated that the success fee was for 100% and in addition, you will pay £50,000 provided you recover damages in excess of £1 million. Damages recovered were less than £1 million. A deed of variation was entered into after issue had been raised regarding the enforceability of the CFA, omitting reference to the payment of £50,000. It was deemed that the original CFA was in breach of s58(4) of the 1990 Act, the deed of variation was ineffective and there had been a material adverse effect on justice resulting in no base costs being recovered. Furthermore, severance from the original reference to £50,000 was not available as it would be contrary to public policy to permit severance and allow virtually any defective CFA to be put right late in the day. The second case failed to specify the percentage increase in success fee attributable to postponement of fees and expenses. A deed of rectification was entered into following the commencement of detailed assessment proceedings in an attempt to rectify the position. It was held that it was a breach of Regulation 3(1) but, as per the guidance in Hollins -v- Russell [2003] 1 WLR 2487, it was not a material breach as no adverse effect on the client or on justice occurred and hence base costs were recovered. It was unnecessary to express a concluded view on the effect of the deed of rectification. One further case of note is David James Brierley -v- Jeffrey Prescott (SCCO 31/03/06). This case involved a solicitor entering into a CFA with the Claimant naming the hire car company as Defendant, from which the Defendant had hired the car. Proceedings were initially issued naming the hire company as the Defendant but following issue, the name of the driver was substituted. Following commencement of assessment proceedings, the Defendant contended that the CFA was defective as the claim against the hire company was ‘lost’ and so it was held that no costs were payable by the Claimant to his solicitors. A new CFA was entered into in an attempt to correct the position. Master Gordon Saker held on assessment that based on the conduct of the parties and information available, the intention of the parties was clear and that there was no material breach caused by incorrectly naming the Defendant in this case. It was not necessary to rule on the 2nd CFA. However, in an obiter statement, Master Gordon Saker stated that he thought it likely that a CFA can have retrospective effect, but for the reasons suggested by Colman J in Arkin v Borchard Lines Ltd[2001] NLJR 970, an agreement made after the conclusion of proceedings to vary a CFA relating to those proceedings would be unenforceable as contrary to public policy. Disclaimer: Whilst every effort has been made to ensure the accuracy of the information contained in these news items, reliance should not be placed on the content without properly consulting the appropriate legal authorities.
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The CFA is dead, long live the CFA In accordance with 'The Conditional Fee Agreements (Revocation) Regulations 2005' Act, from the 1st November 2005, the Conditional Fee Agreements Regulations 2000 (the CFA Regs), the Collective Conditional Fee Agreements Regulations 2000 (the CCFA Regs) and the Conditional Fee Agreements (Miscellaneous Amendments) Regulations 2003 are to be revoked. What does this mean? All CFAs and CCFAs entered into prior to this date will still have to abide by the relevant regulations which are becoming ever more difficult to comply with as case law evolves. However, all CFAs entered into from this date will be governed by The Solicitors' Practice (Client Care) Amendment Rule [2005] which appear much simpler to abide by and are less likely to result in technical challenges as a result of breaches of the CFA Regulations. What is in the new rules? Although section 58 of the Courts and Legal Services Act 1999 still applies, which states that a CFA must comply with such requirements (if any) as may be prescribed by the Lord Chancellor, at present, there are no such requirements and hence a CFA under the new guidelines appears, with hopeful optimism, to not be capable of being deemed unenforceable by virtue of a breach of the regulations. The proposed Law Society Guidelines are much simpler with less formality. A solicitor entering a new CFA should explain:
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Much has happened since Callery v Gray, a lot of which is undesirable for claimants. Technical Challenges: To reverse the trend of technical challenges being found in favour of the Defendant, the outcome of Butt v Nizami was that the indemnity principle did not apply to cases where costs were calculated pursuant to the predictable costs regime (CPR 45 II) and hence it was not necessary to determine whether the CFA was defective. Success Fees On the issue of success fees, Hennessey v Burger King resulted in a 65% success fee being recovered where the Claimant slipped on a wet floor and liability was an issue. In Campbell v MGN Ltd, the House of Lords upheld 100% in a libel case and stated that the client should not be means tested before entering into a CFA. The Defendant had contended that the Claimant was so wealthy and that she could have afforded to fund the matter privately. General Guidance Also of note is King v Telegraph Group, where guidance was given on a number of points. 1) It was deemed allowable to backdate CFA’s to enable base costs to be recovered during the period when investigations into alternative funding were being investigated, although it was not to be encouraged; 2) We were reminded that when assessing the proportionality of costs, we must look at base costs and additional liabilities separately; 3) the success fee of this defamation case was assessed at 96.5% for the solicitor and 67% for Counsel; 4) hourly rates were reduced as it was unreasonable to instruct a City of London firm, when defamation was not ‘city work’ and the principles of Wraith v Sheffield Forgemasters were to apply.
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Predictable Costs - where are we now? CPR 45 II has now been with us for a while and things appear to be settling down into the bad old ways with insurers delaying releasing payment of costs, despite the original assurances of prompt payment and trying to wriggle out of paying the correct fee. Cases to note are Butt v Nizami (mentioned above) where it was confirmed that the indemnity principle did not apply to predictable costs cases and Woollard v Fowler where it was deemed on appeal to Master Hurst that the fees paid to medical agencies for obtaining medical reports were recoverable as a disbursement and should not be taken from the profit costs, although it appears that this decision is to be appealed. Previously, it had been judged in Cook v Graham and Swatton v Smithurst that uninsured losses such as the insurer's outlay, car hire etc are recoverable IF the solicitor is correctly instructed and retained to do so. It is a big 'IF' and solicitors should check their initial instructions and authority before attempting to claim predictable costs on the same. However, if all is in order, a windfall is possible. Despite the contents of Butt v Nizami, I would not encourage anyone to ignore good practice regarding retainers as the balance may swing back in favour of the Defendant at the next judgement.
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General Issues
This case related to the consequences of not giving the client an estimate of the likely costs to be incurred on a between the parties assessment. The paying party contended that the receiving party should be penalised as no estimate had been given to the client. The court decided that each case must be decided on its merits and in this case they were against imposing any penalty, but emphasised the importance of providing an accurate estimate and the consequences of not revising the same.
Sowerby v Charlton Whilst not being a costs case, it must have implications when assessing risks and success fees. The Defendant admitted liability prior to issue in a multi-track case, but the Court of Appeal allowed the Defendant to withdraw the admission based on a number of grounds, to include a party’s case will not have been formulated until the claim form or particulars of claimed are prepared. From the Claimant’s point of view, one clearly must put as much detail into the letter of claim and following receipt of any admission of liability, the Claimant must put the Defendant on notice that the Claimant will no longer be investigating liability, but any withdrawal of the admission will result in significant costs being incurred and the same will be sought from the Defendant.
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