April 2009

BLOWS v HEREFORDSHIRE DISTRICT COUNICL (2009) DC (Richards LJ, Tugendhat J) 17/03/2009

The appellant (B) appealed by way of case stated against a decision of a magistrates’ court to award the respondent local authority its full prosecution costs following B’s conviction for breaches of the Health Act 2006. B had been prosecuted by the local authority for allegedly failing to prevent smoking in a smoke-free place, namely the public house he managed, and smoking in a smoke-free place contrary to the Act. The local authority’s case relied upon the evidence of witnesses who had allegedly seen the offences occur. The magistrates’ court convicted B, fined him a total of some £1,000 and ordered him to pay “full prosecution costs” in the total of some £10,000. In reaching its decision that B pay those costs the magistrates’ court found that they were reasonable and necessary expenditure; that the manner in which B conducted his defence had resulted in increased costs; that in relation to his means to pay B was not a reliable or credible witness; and that there were exceptional and aggravating factors to the case. B contended that the magistrates’ court’s decision that he pay prosecution costs in the sum ordered was Wednesbury unreasonable. In particular he contended that the costs were disproportionate to the fine; that costs had been unreasonably incurred; and that the magistrates’ court had failed properly to consider his financial circumstances.

HELD: It was clear that the magistrates’ court’s decision that B pay costs in the sum ordered by it was one that it was entitled to reach for the reasons that it had given. It could not be said that those costs were unreasonable or had been improperly calculated, R v Northallerton Magistrates Court Ex p Dove (200) 1 Cr App R (S) 136 QBD and R v Baker (Lynn Carol) (2007) EWCA Crim 834 applied.

Appeals dismissed

Counsel:
For the appellant: John Dyer
For the first respondent: Sailesh Metha

Solicitors:
For the appellant: Coulson Read Lewis
For the respondent: In-house solicitor

CONSUMERS’ ASSOCIATION v JJB SPORTS PLC (2009) [2009] CAT 2 CAT (Lord Carlile of Berriew QC) 30/01/2009

The applicant (C) applied for assessment of its costs following the compromise of its action against the respondent retailer (J). Following a decision by the Office of Fair Trading that J had entered into price-fixing agreements in relation to replica football kits, C had brought a representative action under the Specified Body (Consumer Claims) Order 2005 s.47B seeking damages from J on behalf of some 130 consumers. The claim was substantively settled within some six months and the settlement agreement provided that J would pay C’s reasonable costs, which were either to be agreed or, if not agreed, to be subject to detailed assessment on the standard basis. If the costs were not agreed, the agreement provided that C would apply to the Competition Appeal Tribunal for assessment proceedings to be begun, and J would apply for a detailed assessment to be carried out by the Supreme Court Costs Office (SCCO). Following settlement, the Tribunal made an order permitting C to withdraw its claim and directing J to pay its reasonable costs, to be assessed if not agreed. The parties were unable to agree C’s reasonable costs. C submitted that the Tribunal was the most appropriate forum for the assessment of costs, whereas J argued that the Tribunal had no discretion to assess costs, firstly because of the agreement and secondly because, pursuant to the Competition Appeal Tribunal Rules 2003 r.55(3), all detailed costs assessments had to go to the SCCO.

HELD: (1) The Tribunal did have a discretion to assess costs. While the agreement obliged J to make an application for a detailed assessment of costs to be carried out by the SCCO, it did not create an obligation on the Tribunal so to order. It was doubtful whether it was even possible to reach a contractual agreement requiring the SCCO to carry out a detailed assessment. Nor did r.55(3) of the 2003 Rules mean that all detailed assessments had to be dealt with by the SCCO. The rule contained signposts pointing towards the expected way of dealing with costs, which seemed to indicate that if there was to be a detailed assessment as opposed to a lump sum assessment, then the expectation was that it was to be dealt with by the SCCO. However, the signposts were persuasive but not decisive and, subject to r.55(3), the Tribunal retained its general discretion to carry out a detailed assessment in an appropriate case. (2) The instant case, however, was not an appropriate one for the Tribunal to exercise its discretion to carry out a detailed assessment itself. It was a case of considerable and real complexity, raising issues in respect of which the Tribunal had no particular expertise. They were, however, issues that the SCCO would have considered in its civil jurisdiction. In those circumstances, assessment of C’s reasonable costs was transferred to the SCCO for detailed assessment.

Detailed assessment ordered Counsel:
For the claimant: Nicholas Bacon
For the defendant: Paul Lasok QC, Benjamin Williams

Solicitors: For the claimant: Clyde & Co LLP
For the defendant: DLA Piper UK LLP

FITZPATRICK CONTRACTORS LTD v TYCO FIRE & INTEGRATED SOLUTIONS (UK) LTD (FORMERLY WORMALD ANSUL (UK) LTD) (No.3) (20090 [2009] EWHC 274 (TCC) QBC (TCC) Coulson J) 20/02/2009

The court was required to determine costs in litigation between the claimant contractors (F) and the defendant company (T). F had made a CPR Pt 36 offer to settle litigation between the parties. The relevant period for acceptance expired and there was a trial of preliminary issues on which F were substantially successful. On an application by F the trial was adjourned and, in the meantime, T wrote to F accepting the Pt.36 offer. F contended that had there been a trial and damages were recovered in the same amount as the Pt.36 offer it would have been entitled to indemnity costs, unless the court concluded that it was unjust to make such an order, because of the express words of r.36.14. F contended that there was no difference between a claimant who had recovered a sum equivalent to his offer after trial and a claimant who had recovered a sum equivalent to his offer before trial. F submitted that by analogy with r36.14 there was a presumption that a claimant was entitled to indemnity costs pursuant to r36.10. F argued that if there was no indemnity costs presumption by analogy it was entitled to seek indemnity costs which did not depend on the ordinary tests set out in r.44.3.

HELD: (1) As there had been a valid acceptance of a valid Pt.36 offer the starting point was r.36.10. There was no reference in r.36.10(4) and (5) to a presumption that, unless it was unjust to do so, the court would order a late-accepting defendant to pay a claimant’s costs on an indemnity basis. The usual basis for the assessment of costs was the standard basis and if there was an entitlement to seek indemnity costs then that was expressly spelled out in the CPR. A party could seek indemnity costs in one of two ways, either because there was a presumption that such costs would apply, for example under r.36.14 or because it could demonstrate the necessary evidence of conduct under r.44.3. There was no basis under the CPR which would allow the court to order indemnity costs for any other reason or on any other basis. Accordingly, F’s claim for indemnity costs failed as a matter of principle, Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hamer Aspden & Johnson (Costs) (2002) EWCA Civ 879, (2002) CP Rep 67 considered. An indemnity costs presumption should not be imported into r.36.10. There was a right to claim recovery of indemnity costs but no rebuttable presumption that such costs would be recovered. (2) Whilst the case was complex, the parties’ approach to it was generally reasonable on both sides and a settlement three months before trial, at a figure that represented about half of F’s claim, was an unexceptional result. It was impossible to say that there was any basis on which F could be entitled to have its costs assessed on an indemnity basis under r.44.3. (3) F made a reasonable Pt.36 offer and it took T almost a year to conclude that the offer should be taken. During that period F incurred considerable further costs. In all the circumstances the instant case was one where it was appropriate to order interests on costs at one per cent over base rate, ABCI (formerly Arab Business Consortium International Finance & Investment Co) v Banque Franco-Tunisienne (Costs) (2003) EWCA Civ 205, (2003), 2 Lloyd’s Rep 146 and Kidson v Lloyds Underwriters (2007) EWCH 2699 considered. (4) F was entitled to an interim payment of costs. The size of the costs incurred so far, when compared with the estimates previously given, were troubling and should be reflected in the calculation of the interim payment. The discrepancies in the figures were an early indication that the costs figure might not be reasonable.

Costs determined

Counsel:
For the claimant: Bernard Livesey QC, Mark Rowlands
For the defendant: David Thomas QC, Jonathan Lee

Solicitors:
For the claimant: Maxwell Winward LLP
For the defendant: Cobbetts LLP

(1) GERALD LAURENCE ROACH (2) JEAN ROACH v HOME OFFICE : FRANCES MATTHEWS v HOME OFFICE (2009) [2009] EWCH 312 (QB) QBD (Davis, Master Wright, Robert Carter) 25/02/2009

The appellant Home Office appealed against decisions of costs judges in joined proceedings against the respondents (R and M) that R and M’s costs of attending an inquest could be recovered by way of costs in subsequent civil proceedings. R appealed against the decision to award them only half their inquest costs. R and M both had children who had died in police custody. They both obtained exceptional funding from the Legal Services Commission for solicitors and counsel to attend the subsequent inquests. R and M both issued civil proceedings for damages, asserting negligence, as a result of the inquest findings. Offers were made and accepted in both cases, it being agreed by consent that the Home Office would pay reasonable costs to be assessed if not agreed. However, the Home Office objected to the significant proportion f the costs that related to the attendance of counsel and solicitors at the inquests. In the case of M, the costs judge held that M was not precluded from recovering costs of her representation at the inquest as costs of and incidental to her subsequent civil claim, and the fact that M had been publicly funded, by way of exceptional funding, for the inquest did not alter that. In the case of R, the costs judge found that R was entitled to recover one-half of their inquest costs. The judge further held that the role of legal representatives at an inquest fell into two equal parts, namely assisting the coroner and obtaining evidence necessary to pursue any civil claim. The Home Office submitted that the costs of one set of proceedings were never recoverable as costs of and incidental to another set of proceedings. It submitted that was the rule and there was no exception and accordingly there was no jurisdiction to award such costs. It also argued that there were no costs in coroners’ proceedings, and therefore such costs were not subsequently recoverable.

HELD: (1) It was common ground that the courts were entitled, at their discretion, to award costs that were of and incidental to civil proceedings, pursuant to the Supreme Court Act 1981 s.51. There was also no doubt that costs incurred prior to proceedings were capable in principle of being recoverable as costs in the proceedings, Pecheries Ostendaises SA v Merchants Marine Insurance Co (1928) 1 KB 750 CA and Frankenburg v Famous Lasky Film Service td (1931) 1 Ch 428 CA applied. From the wording of s.51 it was impossible to extract a rule as asserted by the Home Office. On the contrary the wide wording of the section was inimical to there being such a rule or fetter on the court’s powers. Where a solicitor did not attend an inquest, he might well be able to claim as costs incidental to civil proceedings the costs he incurred prior to the commencement of proceedings in relation to the collection of evidence from witnesses who had given evidence at the inquest. There therefore seemed no reason why costs of instead attending the inquest to note the evidence should be incapable of being allowed as incidental costs. Indeed one could envisage that in many cases such a course may be cheaper and more useful than the cost of proofing such witnesses afterwards, Ross v Owners of the Bowbelle (Review of Taxation under Ord 62 r35) (1997) 2 Lloyd’s Rep 196 (Note) Admlty) applied, and Aiden Shipping Co Ltd v Interbulk Ltd (The Vimeira) (No 2) (1986) AC 965 HL, Department of Health and Social Security v Envoy Farmers Ltd (1976) 1 WLR 1018 QBD, Contractreal Ltd v Davies (2001) EWCA Civ 928 and Wright v Bennett (No 1) (1948) 1 KB 601 CA distinguished. Nor did that give rise to any unprincipled approach, because the relevant principles as set out in Gibson’s Settlement Trusts, Re (1981) Ch 179 Ch D were available to be applied by costs judges in a way appropriate to the circumstances of the case, Gibson considered. It was also incorrect to say that Parliament had decided that there were no costs in coroners’ proceedings. A coroner himself had no power to award costs of and incidental to an inquest, but it was clear from s.51 that all costs that were of and incidental to civil proceedings could be recovered. (2) The court in M had adopted the right approach and was entirely justified in concluding that the public funding certificate had no bearing on the recoverability of the costs relating to the inquest as costs of and incidental to the civil claim. The existence of such funding for attendance at the inquest gave no rise to any different outcome as compared to attendance at the inquest being privately funded. (3) It was not appropriate to divide the costs of an inquest by the dual role or purpose of the legal representative at the hearing. Purpose would no doubt be a relevant consideration but it could not be decisive. It was also necessary to have regard to considerations of relevance where the costs of attendance at an inquest were claim, in whole or in part as costs incidental to the subsequent civil proceedings. The appeal of R must be allowed and the matter remitted to the costs judged for further consideration.

Appeals for Home Office dismissed;

Appeal for Roach allowed

Counsel:
For the respondent Roach: Andrew Post
For the respondent Matthews: Martin Wetsgate
For the appellant: Jeremy Morgan QC, Benjamin Williams

Solicitors:
For the respondents Roach Hodge Jones & Allen
For the respondent Matthews: Bhatt Murphy
For the appellant: Treasury Solicitor

LINDSEY FINDLEY (BY HIS SISTER & LITIGATION FRIEND, JOY FINDLEY CLARKE) AND BARRINGTON JONES (1) MIB (2) [2009] EWHC 9030 (COSTS) SCCO (SENIOR COSTS JUDGE MASTER PETER HURST) 13.01.09

On 22 April 2001 the Claimant, an unemployed drug addict of no fixed abode, who had previously served a prison sentence for robbery, was the front seat passenger in a car which collided with a stationery van. The Claimant sustained severe head injuries in the collision. The driver of the vehicle, the First Defendant, was uninsured and accordingly the MIB became involved in the claim.

The claim was ultimately settled by consent for the sum of £1 million on 25 June 2007. The Defendants were ordered to pay the Claimant’s reasonable costs, to be assessed if not agreed.

The litigation was funded under the Accident Group (TAG) Scheme. The Claimant entered into a CFA with his Solicitors on 20 July 2001; thereafter following the Judgment in English v Clipson the Claimant signed a second CFA.

The Claimant’s Solicitor first met the Claimant and his Sister, who later became the Litigation Friend, on 28 January 2003, all previous contact had been by telephone and letter. Thereafter, a conference was arranged with Counsel, Counsel advised that the Claimant needed to have a Litigation Friend. Shortly thereafter, the Claimant’s General Practitioner certified that he was incapable of managing his own affairs because of a permanent mental disability and his Sister was subsequently appointed the Claimant’s Litigation Friend.

It was this sequence of events that led the Second Defendant to raise a number of issues as to the validity of the two CFA’s, the capacity of the Claimant and sundry subsidiary issues.

The issues before the Senior Costs Judge fell into five main headings, namely:

(i) The Conditional Fee Agreement dated 20 July 2001;

(ii) Capacity;

(iii) Letter of 4 May 2006;

(iv) The second CFA;

(v) The Indemnity Principle and the legal expenses insurance (LEI) policy.

The Defendant submitted that the CFA dated 20 July 2001 was unenforceable because of material breaches of the Regulations of the CFA Regulations 2000 in that the Solicitor failed to provide the Claimant any adequate or an explanation of the matters required and failed to consider other methods of financing the matter or considering any particular insurance product as being appropriate because the Solicitor wrongly considered himself unable to do so and had concluded that the Claimant was “contractually bound” to effect an insurance policy with TAG. Further, the Defendant enquired as to whether the Claimant’s Solicitor had any disclosable interest in the TAG policy thus rendering the CFA unenforceable.

In respect of capacity, the Defendant enquired as to whether the CFA with the Claimant came to an end as a result of a lack of capacity on the part of the Claimant and if so, was there any alternative basis on which the Claimant or his Litigation Friend could seek to recover costs claimed in the Bill after the date on which the CFA came to an end? Further, the Defendant contend that in any event, if the original CFA was terminated at any stage prior to the case being “one” the Claimant was not liable for any costs under the CFA and accordingly the Claimant was unable to recover any such costs inter-partes.

The Defendant requested the Senior Costs Judge to consider the status and effect of a letter dated 4 May 2006 enquiring whether the same amounted to a reasonable variation of the Retainer (if any) between the Claimant and his Solicitor to allow the Solicitor to vary the hourly rates unilaterally and without apparent limit in circumstances where the original CFA provided for any increase to be by no more than the increase in the Retail Price Index.

The Defendant challenged the validity of the second CFA entered into in autumn 2002. Finally, the Defendant enquired whether the Claimant’s liability for own disbursements was limited by reference to the extent of his legal expenses insurance cover and his potential liability for adverse costs?

Further, did the failure to explain to the Client any potential liability for own and/or adverse costs in excess of the limits of the legal expenses insurance policy amount to a “further” breach of Regulations such as to render the CFRA unenforceable?

Detailed consideration was given to the issues by the Senior Costs Judge and the thirty six page Judgment is available on Bailii.

In his conclusion the Senior Costs Judge found that the possibility of the Claimant losing this action was never anything other than remote. The high point of the risk was after an offer of £850,000.00. Experienced Leading Counsel has been instructed and a good settlement was achieved for the Claimant. Although there was a theoretical possibility that the Claimant might be left with a personal liability for his own disbursements and/or adverse costs, the Senior Costs Judge did not regard the failure by the Solicitors to go into that level of detail as a breach of the Regulations.

In any event, the Senior Costs Judge was not persuaded that the breach had any materially adverse affect even on the protection afforded to the Client on the protection afforded to the client or on the administration of justice, nor did the Senior Costs Judge view that the Claimant’s liability for disbursements was in some way capped because the Solicitor did not spell out to him the theoretical possibility that he might have an open ended liability.

On considering the CFA dated 20 July 2001 the Senior Costs Judge found that the Agreement was unenforceable as the Solicitor failed to provide any adequate oral explanation as to the matters required by Regulation 4; further, the CFA was unenforceable by reason of the fact that the Claimant’s Solicitor failed to provide the Claimant with the information required with regard to other methods of financing the cots and further, the Senior Costs Judge found that the Solicitor did have a disclosable interest in the TAG policy and the failure to disclose that interest resulted in the CFA being unenforceable.

Dealing with the issue of capacity the Senior Costs Judge found that the CFA had come to an end as a result of the Claimant’s lack of capacity on 4 February 2004 but that the Litigation Friend by her conduct instructed the Claimant’s Solicitors on the same terms as the second CFA and that the oral and written explanation given to the Claimant on 28 January 2003 was also given to and understood by the Litigation Friend. The question of whether the Retainer between the Litigation Friend and the Solicitors was one which complied with Section 58 of the Court and Legal Services Act 1990 depended on the outcome of issues arising from the second CFA (refer to issues 10 and 11 below). Subject to the second CFA proving to be enforceable, the Senior Costs Judge found that the Claimant had a liability to his Solicitor for the period up to 4 February 2004 for reasonable costs pursuant to Section 1(3) of the Law Reform (Frustrated Contracts) Act 1943.

Having considered the issue of the Letter of 4 May 2006 the Senior Costs Judge held that the same could only be relied on to increase the hourly rates recoverable by reference to the Retail Price Index from 4 May 2006 but that the letter did no amount to any wider variation of the terms of the Retainer set out in Conditional Fee Agreement 2.

On consideration of the second CFA the Senior Costs Judge was satisfied that the Claimant did enter into a second CFA in the Autumn of 2002; however, the same did not comply with the Regulations in that no adequate explanation was given to the Claimant in respect of the TAG ATE insurance, or the Solicitor’s interest in recommending it.

The Senior Costs Judge rule, however, that those breaches did not have a materially adverse effect on the protection afforded to the Client or on the administration of justice. The Litigation Friend had instructed the Solicitors on the same terms as those in the second CFA. There was a breach of the Regulations in that the second CFA was not signed by the Litigation Friend. For the reasons given that breach had not had a materially adverse effect on the protection afforded to the Client, or on the administration of justice. The Senior Costs Judge was satisfied that the first CFA was not terminated when the second CFA was entered into, the Claimant accepting that if the second CFA was effective the first CFA was unenforceable with no costs to be paid under the first CFA.

Consideration was given to the Indemnity Principle and the LEI policy; the Senior Costs Judge finding that Claimant’s liability for his own disbursements was not limited by reference to the extent of his legal expenses insurance, the Claimant being able to recover the full amount of the disbursements deemed reasonable and proportionate and the Senior Costs Judge held that if the Solicitor’s failure to explain to the Client any potential liability for his own and/or adverse costs in excess of the limits of the legal expenses insurance policy amounts to a breach of Regulation 2(1)(b) and/or Regulation 4(2)(a) (which the Senior Costs Judge did not find), that breach does not have any material adverse effect on the protection afforded to the Claimant, or on the administration of justice.

DONALD BURGESS AND J BREHENEY CONTRACTS LTD [2009] EWHC 90131 (COSTS) SCCO (MASTER HAYWORTH) 16.01.09

Following a dispute between the parties the majority of the Claimant’s costs were agreed by the Defendant, the only outstanding items being:

(i) An after-the-event insurance premium claimed in the sum of £2,730.00;

(ii) The costs of preparing the Bill of Costs which is claimed in the sum of £104.90; and

(iii) The success fee applicable to the costs of preparing the Bill claimed in the sum of £65.56.

The matter was described as an unusual personal injury case not falling into any of the standard categories of claim. The claim arose from an allegation that sand and ballast blown into the Claimant’s house and garden during construction work undertaken by the Defendant had caused the Claimant to suffer breathing problems owing to dust inhalation. The matter was compromised in the sum of £1,500.00 damages with costs to be assessed if not agreed. The Claimant took out after the event insurance with UIA on 13 July 2007.

The policy had a two-stage premium. The base premium was £2,6000.00 plus IPT of £130.00. An additional sum would have been payable on allocation but this stage was not reached.

A Statement was provided by a Partner in the Claimant’s firm of Solicitors dealing with the assessment of insurance premiums.

The Court was provided with a success fee assessment together with details of enquiries made into alternative funding available.

The Defendant’s evidence consisted of a Witness statement from Matthew David Hoe, employed as a Legal Assistant with the Defendant’s Solicitors supporting the second limb of the Defendant’s argument, namely that if the Court found that the premium was recoverable, a reduced amount should be allowed; Mr Hoe referred to his experience in dealing with personal injury claims and his own investigations as to possible availability of ATE insurance in respect of matters where liability had been admitted and the dispute related solely to quantum.

Mr Hoe submitted that he had been unable to identify ATE policies tailored to cases in which liability had been admitted already and suggested, therefore, the lack of availability implies lack of demand. If, which was not accepted by the Defendant, the Claimant was entitled to recover an insurance premium, Mr Hoe suggested an allowance of “£650.00 plus IPT would be the maximum reasonable amount to allow”.

The Costs Judge was required to consider:

(i) Whether it was reasonable to take out ATE insurance;

(ii) If reasonable, could the level of premium be sustained;

(iii) That it had been unreasonable to prepared a Bill of Costs for assessment where there was only one item in dispute, namely the ATE premium; should an allowance be made for the preparation of the Bill of Costs, the success fee for drawing the Bill should be limited to 20%.

In his Judgment the Costs Judge found that it was reasonable for the Claimant to take out after-the-event insurance, the Costs Judge having to have regard to Section 11.7 CPD which required the Costs Judge to have:

“Regard to the facts and circumstances as they reasonably appeared to the Solicitor when the insurance was entered into”.

The Costs Judge was unable to look at the inception of the ATE policy with the benefit of hindsight.

At the time the ATE policy was taken out the Defendant Insurer had admitted primary liability although causation was in issue. The Claimant had already entered into a Conditional Fee Agreement and in the Judgment of the Costs Judge at the time the policy was entered into there were a number of risks against which it was proper to ensure.

The Costs Judge admitted that “at first blush a premium of £2,600.000 plus IPT when set against damages of £1,500.00 appears disproportionate. The premium alone is almost twice the damages recovered and appears to fly in the face of Rule 44.4(2) and the test that I am required to apply following the Judgment of Woolf MR in the case of Lowndes”.

The Costs Judge referred to the evidence produced by the Partner in the Claimant’s Solicitors who set out in clear terms his reasons for recommending the UIA Scheme in the context of this type of litigation.

The evidence was accepted by the Costs Judge who stated: “Conversely, the evidence of Mr Hoe for the Defendant failed to produce any evidence of the level of premiums in disease cases. Furthermore, his Witness Statement failed to demonstrate that any reduction in premium resulting from an unqualified admission of liability is anymore than slight. Whilst the premium claimed is high in my view, I have concluded in the words of Brook LJ at paragraph 117 of the Rogers case that I do not have the expertise to Judge the reasonableness of a premium except in very broad brush terms. I bear in mind his comments that the very viability of the ATE market will be imperilled if I were to regard myself (without the assistance of Expert evidence) as better qualified than the Underwriter to rate the financial risk the Insurer faces”.

The premium was allowed in full.

With regard to the Bill of Costs, the Costs Judge held that there was no need for the Claimant to prepare a Bill of Costs dealing with just one item finding that the preparation of the Bill and the consequent success fee element were disproportionate to the only issue at stake.

CAROLINE HELVADJIAN AND AMBROSE APPLEBE SOLICITORS [2009] EWHC 90133 (COSTS) SCCO CHIEF MASTER HURST, SENIOR COSTS JUDGE 30.01.09

An Order has been made for Detailed Assessment of twelve Bills delivered by the Defendant to the Claimant in respect of legal services rendered.

The Detailed Assessment was originally heard by Master O’Hare; his decision was the subject of an Appeal heard by Mr Justice Evans-Lombe who set aside the Master’s Order but imposed a cap on the amount recoverable by the Solicitors, namely that in no circumstances “Shall the amount payable by the Respondent to the Applicant exceed £30,000.00 in light of the price indication of 21 April 2006 given by the Applicant to the respondent but that this cap shall not apply to any costs found in the course of such Detailed Assessment not to have been contemplated by the Applicant in giving the said price indication”.

The matter was referred to the Senior Costs Judge to deal with the Detailed Assessment of the Solicitor’s Bills. An initial Hearing took place in October 2008 when the Senior Costs Judge gave a finding as to the extent of the Solicitor’s Retainer, and the estimate which the Solicitors had given in respect of it, namely an Appeal brought by the Claimant’s former Husband against the same Order, together with the potential Appeal against the Order of His Honour Judge Compston of 24 March 2006 (the Compston Order). The matter was adjourned part heard to 19 November 2008 and it became apparent that there was a conflict as to the exact instructions provided by the Claimant to her then Solicitors and further Directions were given including provision for the Solicitor to provide a typed version of the Fee-Earner’s handwritten attendance note of a conference which took place with Counsel on 19 May 2006.

In accordance with a further direction the Claimant, acting as a Litigant in Person, provided a Witness Statement setting out her position with regard to her proposed Appeal against the Compston Order.

Two conflicts had arisen as to the extent of the Retainer, i.e. as to what the Solicitors were requested to do on behalf of the Client. The first was the extent of the initial Retainer; did it relate both to the Appeal and Cross-Appeal against the Green Order as argued by the Solicitor? Or did it relate in addition to the Appeal against the Compston Order of 24 March 2006?

The second conflict, which arose only if the original Retainer covered the Appeal of the Compston Order, was whether or not the Claimant had instructed her Solicitors to proceed with that Appeal, or to do nothing about it.

The Claimant was, as acknowledged by the Senior Costs Judge, “unwavering” throughout the proceedings, stated that her instructions were to pursue the Appeal against the Compston Order.

The Senior Costs Judge was unable to accept the Defendant’s Solicitor’s submissions stating it was “difficult to see what more Ms Helvadjian could have done to confirm her instructions that she wished the Appeal against the Compston Order to proceed”. The Solicitor provided comprehensive advice that the Appeal had no merit whereas the Claimant maintained that the Solicitors had misunderstood what she was saying about the Compston Order, and that accordingly their advice in respect of it was bad advice. The issue before the Senior Costs Judge was not whether the advice given was good or bad, the question was what instructions did the Claimant provide to her Solicitors and did the Solicitors carry out those instructions?

A careful review of the documentation and issues was undertaken including detailed consideration of the advice given at a conference with Counsel.

The Senior Costs Judge, in paragraph 90 of the Judgment, stated:

“In the light of the evidence both oral and documentary I find that what Ms Helvadjien agreed to do was to accept Counsel’s advice in relation to the Cross-Appeal. There is no indication that any conclusion was reached relating to the Appeal against the Compston Order.

Paragraph 91 I further find that Ms Helvadjian gave Ambrose Appleby clear and distinct instructions from which she never wavered, in spite of the contrary advice which she received, that she wished them to proceed with the preparation of her Skeleton Argument in respect of the Appeal against the Compston Order, so that her Appeal would not be struck out. I am forced to the conclusion that, having advised Ms Helvadjien in strong terms that her Appeal was bound to fail, Ambrose Appleby quite simply ignored her instructions.”

The Senior Costs Judge went on to consider the effect of failure to carry out the Client’s instruction and having found that the Retainer was an entire contract to deal with the Appeals, including the Appeal against the Compston Order, the Costs Judge found that the Solicitors having failed to carry out the Client’s instructions, were not in a position to require her to pay their costs and found, therefore, that nothing was payable in respect of the Solicitor’s profit costs.

NICOLA IBBERTSON AND PETER SAMPSON AND MFI AND HOWDENS JOINERY [2009] EWHCA 90132 (COSTS) SCCO (MASTER SIMONS) 30.01.09

The Claimant suffered serious personal injuries whilst she was a passenger in a car that was being driven by the First Defendant. The claim was settled without issue of proceedings with the Claimant accepting the Defendant’s Insurer’s offer of £100,000.00 inclusive of interest and benefits together with costs to be assessed if not agreed.

The Claimant was represented by Pattinson & Brewer who acted for the Claimant pursuant to a CFA.

The Defendant challenged the enforceability of the CFA.

The CFA including an advice that a contract of insurance with Freeclaim IDC was appropriate. The CFA included:

(iii) We confirm that we do not have an interest in recommending this particular Insurance Agreement.

The Costs Judge was requested to consider whether the Claimant’s Solicitors had acted in sufficient compliance with Regulation 4 of the Conditional Fee Agreement Regulations 2000 to enable the CFA to be enforceable between Solicitor and Client and therefore as between the paying and receiving parties.

A very short Statement was provide on behalf of the Claimant which included an admission that an error had been made by not removing the offending word “not” from the sentence “We confirm that we do not have an interest in recommending this particular Insurance Agreement”. The Statement confirmed that the correct position had been made known to the Claimant’s Stepfather to whom the Claimant had asked the Solicitor to speak on her behalf “so both he and my Client were both well aware of our interest”.

The Defendant referred to the recent Accident Line Protect Cases now cited as Tankard v John Fredericks Plastics Limited in particular the obiter dicta of the Court of Appeal under the heading “Disclosure of Interest” and to the guidance set out in the Judgment.

The submission on behalf of the Claimant was that the Regulations were there for consumer protection and there was never any suggestion that the Claimant was not fully protected. Further the Claimant submitted that any breach of the Regulations had no material effect on the protection afforded to the Claimant.

Referring to Tankard the Costs Judge considered the Judgment “makes clear that the Solicitor must disclose to the Client the true nature of his interests in recommending the insurance so that the Client can make the necessary informed decision”.

The Costs Judge expressed some surprise that the Witness Statement provided on behalf f the Claimant did not set out in detail “the nature of the relationship between her firm and Freeclaim IDC”. The Statement simply explained that the CFA would always be checked and “there was simply an error in not removing the offending word “not”. Having considered the correspondence sent to the Client, the Costs Judge found the Statement “difficult to reconcile”.

The submission on behalf of the Claimant at the breach of the Regulations had no material effect and the protection afforded to the Claimant was rejected, again Tankard considered.

The Costs Judge accepted the Defendant’s submission on the authority of Tankard that where there is a conflict between the wording of the CFA and what the Client had previously been informed, the wording in the CFA must prevail. The CFA dated 21 January 2005 was found to be unenforceable.

There was one other matter that the Costs Judge was requested to make a ruling in respect of, namely whether it was reasonable for the Claimant to have instructed Pattinson & Brewer who were based in the West End of London and who charged London rates in circumstances where the Claimant lived on the Isle of Wight.

The Defendant submitted it was unreasonable to have instructed London Solicitors there being many Solicitors in an area such as Southampton that could have dealt with the personal injury matter.

The Claimant relied on the fact that the injuries suffered by the Claimant were catastrophic; there was a major issue of contributory negligence which made the case complex. This in the circumstances it was reasonable for the Claimant to have instructed Solicitors.

The Costs Judge was unable to identify any evidence as to the reasonableness as to why a London Solicitor was instructed in this case, the only information the Costs Judge was able to glean from the limited information within the file was that it appeared that the Claim

ant had instructed Solicitors originally through BTE Insurers notwithstanding the fact that it transpired that the BT insurance cover was not in place.

The Costs Judge stated that all of the relevant authorities indicated that the relevant test is to ascertain as to whether or not the Claimant act reasonably in not instructing Solicitors local to the Claimant’s home. The Costs Judge accepted the submission on behalf of the Defendant that notwithstanding the seriousness of the injuries there were many Solicitors in the Southampton area and in the sough of England who deal with high value personal injury claims and, in the absence of any evidence to support the Claimant’s submission that she acted reasonably in instructing London Solicitors, the Costs Judge found it was unreasonable for the Claimant to instruct London Solicitors and if, notwithstanding the decision regarding the unenforceability of the CFA, the assessment were to proceed, the hourly rates to be allowed would reflect those for Solicitors based in the Southampton area of England.