EXTRACT FROM COOK ON COSTS 2011 GENERAL RULES ABOUT COSTS (l) Trial Judge or Costs Judge? [11.26]Aaron v Shelton [2004] EWHC 1162 (QB), [2004] 3 All ER 561, held that where a losing party considers that he should not be liable to pay the whole of the costs of the action by reason of the opposing party’s conduct, he should make an application to the Trial Judge when he is considering what Orders as to costs should be made under CPR rule 44.3. However, in Northstar Systems Ltd v Fielding [2006] EWCA Civ 1660, [2007] 2 All ER 983 it was held that the principle stated in Aaron v Shelton was too broadly worded.Where the paying party had not sought an Order from the Judge reflecting the dishonest misconduct of the receiving party, that should not deprive the paying party from referring to it on the assessment of costs, or prevent the assessing Judge from considering whether the costs incurred by the dishonest party were reasonable. Consideration of a party’s conduct should normally take place both when the Trial Judge was considering what Order for costs he should make, and then when the Costs Judge was assessing costs. The Court would want to ensure that dishonesty was penalised, but that the dishonest party was not placed in double

jeopardy. Ultimately, the question was one of the proper construction of the Order made by the Judge.Accordingly, it is important for the Judge who is asked to take dishonesty into account at the end of the trial when considering the Order as to costs, to consider what was likely to occur on the assessment. Where dishonest conduct was being reflected in an order made by the Trial Judge, it must be wise for him to make clear whether he was making the Order on the basis that on the assessment the paying party would still be entitled to raise the dishonesty in arguing that costs incurred in supporting the particular dishonesty were unreasonably incurred. Judges might also want to consider whether to make an Order under the misconduct provisions of CPR 44.14, and it would be wise to do that before considering precisely what Order to make in relation to the cost of a trial generally.If a Judge ordered a reduction by 20% without more, the natural construction of such an Order, unless the contrary was expressly stated, was that the party guilty of dishonesty should not be entitled to say on assessment that his costs incurred in seeking to make a dishonest case could be taken as reasonably incurred because the Judge had made a reduction. If the dishonest party was entitled to succeed on such an argument, he would

hardly suffer any penalty at all. The Judge had not misdirected himself in making a reduction to reflect a finding of dishonesty against the receiving parties, but this did not mean that the Costs Judge must treat the costs incurred in the dishonesty as having been reasonably incurred.In Wright v HSBC Bank plc [2006] EWHC 1473 (QB), 150 Sol Jo LB 887, 23 June the claim failed but the Trial Judge found some aspects of the Defendant’s conduct throughout the litigation had not been commendable, particularly in relation to disclosure. Accordingly, it was appropriate to disallow the Defendant the costs which it had incurred in relation to disclosure of its documents. Furthermore, it was lamentable that the Defendant had allowed the Claimant in person to proceed on an incorrect basis. It was appropriate to disallow £5,000 from the Defendant’s costs on that ground. In Three Rivers District Council v Governor and Company of the Bank of England [2006] EWHC 816 (Comm), [2006] All ER (D) 175 (Apr) the Trial Judge not only awarded indemnity costs to the Defendants but offered to give the Costs Judge such assistance as he reasonably could, including answering his written questions and sitting with him on the assessment if necessary! Cont. p2…

Inside this issue:

Page 3 The pitfalls of costs in an Any Event Order

Page 4 Case LawCorner

Page 6 Your costs questions answered

costs in briefHis Honour Michael Cook is a former Circuit Judge and is now a consultant. He was a member of the Civil Justice Council’s working party on costs and attends its Costs Forums. He is the author of Cook on Costs, general editor of Butterworths Costs Service and the Litigation Letter as well as a contributor to Cordery on Solicitors and Butterworths Personal Injury Litigation Service. Michael is a past Honorary President of the Association of Costs Lawyers. He was also the President of the London Solicitors Litigation Association. He speaks and writes frequently on costs including articles for The Times, the Civil Justice Quarterly and Law Society publications.Michael has very kindly allowed Kain Knight to give its readers a preview of Cook on Costs 2011 on the subject of “General Rules”.

Michael Cook

www.kain-knight.co.uk

Cook on Costs 2011

Issue No 15

Cook on Costscontinued . . .

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Drew v Whitbread plc [2010] EWCA Civ 53 CA was allocated to the multi-track but the Claimant only recovered damages well within the limits of the fast track. The Judge awarded him his costs to be assessed on the standard basis. At the assessment, the Costs Judge ruled that the Claimant could never have recovered the damages he was claiming, and that the claim should be treated as if it were a fast track in order to ensure that costs were proportionate. The Claimant appealed, contending that the Costs Judge did not have the power to impose fast track costs, as in effect that rescinded the award of standard basis costs by the Trial Judge. The Court of Appeal held that the Costs Judge was not entitled simply to rule that she was going to assess the costs of trial as if the case were on the fast track. That would be to rescind the Trial Judge’s Order. The permissible approach was to assess the costs on the standard basis taking into account that the case should have been allocated to the fast track. A Costs Judge is entitled, as part of the process of assessment, to hold that a case should, if reasonably presented, have been allocated to the fast track, and to assess costs accordingly. The fact this point was not raised at trial did not preclude it. The approach in Aaron v Shelton was too narrow, and was disapproved. There might be some points which could not be raised at an assessment, because it would in effect require the Costs Judge to re-try the case. But that did not mean there was a general rule that a failure to raise a matter at trial for the purposes of CPR 44.3 precluded the raising of the matter at assessment for CPR 44.5

purposes. CPR 44.3 and 44.5 were intended to work in harmony and it was intended that the parties’ conduct might have to be considered under both. It was legitimate for a Costs Judge considering ‘all the circumstances of the case’ to consider whether the case was in reality a fast track. In O’Beirne v Hudson [2010] EWCA Civ 52 the consent order provided: “The Defendant do pay the Claimant’s reasonable costs and disbursements on the standard basis, to be subject to detailed assessment if not agreed.” The Defendants argued that had the matter proceeded to allocation it would have been allocated to the small claims track and therefore only fixed costs under CPR 27 should be allowed. The Court of Appeal held that although a Costs Judge cannot vary a costs Order he, or in this case she, could exercise her discretion in considering whether costs were reasonably incurred, and whether it was reasonable for the paying party to pay more than would have been recoverable in the case that should have been allocated to the small claims track. Therefore a Costs Judge must question whether, for example, it is reasonable that the paying party should pay for the cost of the receiving party having a lawyer? A Costs Judge cannot simply apply small claims track costs, but this would still be a highly material circumstance in considering what by way of assessment should be payable. The Costs Judge is entitled to take into account all of the circumstances of the case under CPR Rule 44.5(1) including the fact that the case

would almost certainly been allocated to the small claims track. In so doing the District Judge would have regard to what could or could not be recovered if the case had been so allocated. Nicholas Bacon QC observed that this case is a warning to anyone settling a low value personal injury claim to agree a figure for costs.(m) Payment on account} [11.27]Rule 44.3(8) is aimed at deterring the paying party from seeking a detailed assessment in order to delay parting with his money. Where a detailed assessment is ordered the Court will usually order a substantial payment on account.CPR Rule 44.3(8) (see para [11.6] contains the important provision that if the Trial Judge does order a detailed assessment he may order a payment on account. The attraction of a detailed assessment to a paying party is the delay before he has to part with his money. An Order for an interim payment removes that attraction. Statements of costs will be available to help the Judge order a realistic amount. A robust example of this was in Mars UK Ltd v Teknowledge Ltd [1999] 2 Costs LR 44, Ch D. It is a judgment of Jacob J, who with Laddie J pioneered summary assessment of costs for some years before their introduction in the Civil Procedure Rules. He confirmed that in general an Interim Order for costs on account should be made. However, in exercising its discretion the Court had to take into account all the circumstances, one of which might be an unsuccessful party’s wish to appeal; other considerations were the relative financial

0810-032 © LexisNexis 2010

Cook on Costs 2011An authority on every aspect of civil costsThe 2011 edition provides comprehensive coverage of all the recent changes in law, practice and procedure up to the 1st November 2010.

Order your copy today!Email orders@lexisnexis.co.uk or go to www.lexisnexis.co.uk/cook2011 Publication Date: December 2010

The pitfalls of costs in an Any Event Order

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position of each party and the Court’s overriding objective to deal with cases justly. Jacob J ordered the Defendants to make an interim payment of £80,000 but he allowed the money to be paid in instalments of £30,000 within the first month and five monthly sums of £10,000 each thereafter so as not to preclude the Defendants from being able to afford an appeal against his decision. In estimating the amount at which the costs might eventually be assessed the Court took into account the Claimant’s pre-action heavy- handedness and misconduct during the proceedings as a result of which the Judge thought it unlikely that on a detailed assessment the Claimant would recover more than 40% of their solicitor and client costs.In Days Healthcare UK Ltd v Pihsiang Machinery Manufacturing Co Ltd [2006] EWHC 1444 (QB), [2006] 4 All ER 233 16 June the Defendant had failed to comply with an Order to make an interim costs payment of £2 million plus interest and the Claimant applied for an Order that unless the payment was made, a final costs certificate should be issued in the amount it had claimed. Quite apart from any specific rule, the Court has an inherent jurisdiction to control its own processes sufficiently enough to enable it to make the order sought. CPR rule 3.1(1) expressly preserves the inherent powers of the Court, while rule 3.1(3)(a) provides that where the Court makes an order in the course of its general powers of management, it can do so subject to conditions, including a condition to pay a sum of money into Court. However, points of dispute having been properly served, the Order should provide for there to be an assessment but the Defendants should not be permitted to participate further unless they made the interim payment.Conditional Orders will never be made if the effect would be to stifle the litigant’s access to the Court and will usually only be made against a litigant without assets in England and against whom enforcement is likely to be difficult or impossible. This paragraph in previous editions was considered in Hextalls (a firm) v Al-Sami [2009] EWHC 3678 (QB) in which the Costs Judge described it as ‘an unwarranted gloss’, but on appeal the High Court judge expressly endorsed it. The Costs Judge had observed there was no authority for this proposition. There is now!Michael Cook Cook on Costs 2011 is published December 2010

Picture this! You have just been through a 13 day hearing of a Strike Out Application and have won. Your client’s action is allowed to continue with no restrictions and the issue of the costs has been adjourned for further submissions. Now you have to put on your thinking cap to make sure you get the right Order.

You will have to ask yourself the following questions?• Is there any reason why you should not be

entitled to a full costs Order? • On what basis should I be seeking a costs Award? • Can I get and do I want to get my costs

assessed immediately? • Can I get an interim costs award and for

how much? • What is the position with regard to interest?

Is there any reason why you should not be entitled to a full costs Award? The normal rule is that costs follow the event. If you have won then you are entitled to your costs unless something you have done might reduce that entitlement. For example; failure to mediate see Dunnett v Railtrack PLC (in railway administration) (2002) EWCA Civ 303 (2002) 2 All ER 850 or pre- action heavy-handedness see Mars UK Ltd v Teknowledge Ltd (1999) 2 costs LR 44, Ch D. However, if your opponent is worth his salt then he will be reading the transcript very carefully looking for any criticism of your work to make the Judge disallow any element of costs. So try to second guess where he is coming from, it may even be best to concede a point to avoid highlighting it further.

On what basis should I be seeking a Costs Award? The normal Order is costs on a Standard Basis. If however you can show that the other side have acted unreasonably then it is possible to get an indemnity based costs Order. In Three Rivers District Council v Governor and Company of the Bank of England (2006) EWHC 816 (comm.), (2006) All ER (D) 175 (Apr) the Trial Judge not only awarded indemnity costs but also gave some useful guidelines. It is surprising how wide this can be interpreted. For example if your opponent courts the press and loses this may be sufficient to obtain an Indemnity award. Too many Solicitors just accept Standard Basis costs without actually asking themselves “Is there something else here”?

Can I get and do I want to get my costs assessed now? You will only be able to have your costs assessed if your Oder provides for the costs to be assessed immediately or forthwith. If you have “Costs in Any Event” that means that you will have to wait until the “Event” i.e. the matter has been concluded. Remember that your opponent will see from the bill all the work you will have done in connection with the Application. I was involved in one matter where the Defendant’s Solicitors decided not to proceed forthwith as the other side would see who they had been talking to.Personally I would always seek to have my costs now. It puts pressure on my opponent and there is nothing quite like having to write a large cheque half way through an action for getting your opponent focused.

Can I get an Interim Costs Award & how much? It is up to you to seek an interim payment you will not get it automatically. You will need to produce a breakdown of your costs but remember that costs that are generic are regarded as “learning curve “ costs and would not be recovered in total. For example if you take a Statement from a Witness that is used both for the Application and then in the main action you will not be able to recover all of the work in the Application. See Equitable Life Assurance Society v Ernst and Young (2003) EWCA Civ 1721.It is normal for the Judge to award only 50% of the costs by way of an Interim Certificate but it may be possible to get more if for example you had an indemnity based costs award.

What is the position on interest? Interest runs from the date of Judgment at Judgment rate of 8%. However CPR 44.3 provides that the Orders which the Court may make may include an Order that a party must pay interest on costs from or until a certain date, including a date before Judgment. At a recent case that I have been involved in the successful party was awarded interest on paid disbursements at the commercial rate of base costs plus 1% from the date on which they had been paid.In conclusion getting a costs Order in an Interim Application may be fairly straight forward but one must think of the “add on’s” as these can make a big difference!

Michael Kain, Costs Lawyer

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Case Law Corner

Case Law Re Conditional Fee AgreementsSilvera v (1) Bray Walker Solicitors (2) Bevans Bray Walker Limited (t/a Bevans) [2010] EWCA Civ 332

FACTS: Mr Silvera was the Defendant to a claim brought by the 1st and 2nd Respondents for outstanding professional fees. Mr Justice Blake in the High Court gave judgment for the Respondents in the sum of £351,000 plus interest and costs. Mr Silvera appealed on the basis that the Conditional Fee Agreements (4 in total and all entered into before November 2005) were all unenforceable on the basis that they had failed to comply with Regulation 3 of the Conditional Fee Agreements Regulations 2000. He claimed that every CFA failed to “briefly specify the reasons for setting the percentage increase at the level stated in the agreement”. Each CFA was based upon the Law Society’s model form and employed the standard terms for explaining the percentage increase, referring to “the fact that if you lose, we will not earn anything” and “our assessment of the risks of your case”.

ISSUES: Had the CFA’s sufficiently explained the basis for the percentage increase and if not were the CFA’s then unenforceable?

HELD: Wilson LK held that the requirement of Regulation 3 to “briefly specify” reasons was just that and no more. He noted that the agreements had been explained to Mr Silvera in some considerable detail before he signed them. This, combined with the contents of the CFA’s meant that the reasons provided, albeit extremely brief, were sufficient. Thus there was no breach of Regulation 3. Even if there was found to be a breach of the Regulations, the Judge felt it did not amount to a material breach “in the sense of having a materially adverse effect either upon the protection afforded to the client or upon the proper administration of justice”. Wilson LJ applied the test from Hollins v Russell (2003) EWCA Civ 718 as to the enforceability of a CFA upon there being a breach of the Regulations.

Case Law Re Conditional Fee AgreementsMorris and Sibthorpe v London Borough of Southwark [2010] EWHC B1 (QB)FACTS: The Claimants were pursuing housing disrepair claims against the London Borough of Southwark and were being funded by way of separate but virtually identical CFAs. The CFAs, which provided for success fees of 10%, stated that the solicitors’ costs would be limited to sums recovered on assessment and that the solicitors would indemnify the Claimants against any claims for costs made by the Defendant in the event the claims were unsuccessful. Both cases settled by way of Tomlin Orders with Mr. Morris receiving £10,000 in damages and Mr. Sibthorpe receiving £1,300 in damages.

ISSUES: 1. Was the indemnity against liability to pay

the opponent’s costs tainted by champerty or maintenance and if so did the whole CFA become unenforceable?

2. Was the indemnity against liability to pay the opponent’s costs insurance provided as an activity by way of a business within the Financial Services and Markets Act 2000?

HELD: 1. a. Such cases had to be decided on a

case-by- case basis taking account of the nature of the case, the potential size of the indemnity, the nature of the indemnity, the circumstances of the indemnity and the purpose of the indemnity. This list of factors is not exhaustive.

b. In this case, a separate ATE policy was virtually unavailable and definitely unavailable at a proportionate cost. The risk of the solicitors firm having to pay out on the indemnity was low and this was reflected in the modest success fee. The Defendant also benefited from the work being done on a CFA as they could pursue a claim for costs as opposed to a situation where the Defendants may have been on legal aid. The Defendant was also not at risk of having to pay an insurance premium upon it losing the case. In this case the obligation created by the indemnity clause did not place an unacceptable burden on the Claimant’s solicitor which may have caused him to override the interests of the client and put forward somewhat different interests. The indemnity and thus the CFA were deemed valid.

2. Insurance is defined as “the purchase of an indemnity against the risk of loss caused by a fortuity” in Callery v Gray [2001] EWCA Civ. Accordingly the Court decided that the indemnity was not a contract of insurance. The Court also had reference to McGillivray on Insurance Law which states that “where a contract…for services contains elements of insurance it will be regarded as a contract of insurance only if, taking the contract as a whole it can be said to have as its principal object the provision of insurance”. The indemnity was a subsidiary clause and the CFA was quite clearly a contract for the provision of legal services. Thus the CFA was again enforceable.

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Case Law Re Non Party Costs OrdersAdris & Ors v Royal Bank of Scotland [2010] EWHC 941 (QB)FACTS: The Claimant’s brought consumer credit claim proceedings against the Defendant. They brought their claims through the claims management company Client Cartel Review Ltd (CCR) and were represented in the litigation by Richard Burley trading as Consumer Credit Litigation Solicitors (CCLS). Claims were undertaken by CCR and CCLS on the basis that if a client did not win he would not have to pay anything. This meant that when CCLS took over a file from CCR it required funding for its administrative costs and disbursements (i.e. Court and Counsel’s fees). It also meant that ATE insurance would be required. Funding was provided to CCLS in the form of loans from CCR. However, ATE insurance was never obtained. This was not discussed with Mr Wright or the Claimant’s. When the claims proved unsuccessful, the Defendant applied for CCR, CCLS and Carl Wright (the sole shareholder and managing director of CCR) to be added as interested

parties for the purpose of a Non-Party Costs Order (NPCO) to be made against them.

LAW: The power to make an NPCO is contained in s. 51(3) Supreme Court Act 1981.The leading case is Dymocks Franchise Systems v Todd [2004] 1 WLR 2807. Lord Brown said: “Although costs Orders against non-parties are to be regarded as “exceptional”, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such “exceptional” case is whether in all the circumstances it is just to make the Order”. The discretion will not be exercised against pure funders but where the funder controls or is to benefit from the proceedings justice will ordinarily require that if the proceedings fail he will pay the successful party’s costs

ISSUE: Should an NPCO be made against Mr Burley, CCR and/or Carl Wright?

HELD: 1. As against Mr Burley and CCLS, the Judge

held that the failure to tell the clients they had no ATE insurance was a “gross breach of duty” which meant that “when cases were taken

forward by CCLS on behalf of those clients, Mr Burley was effectively acting without instructions since the clients were prevented from giving instructions on anything like an informed view”. This justified the making of an NPCO against Mr Burley because if the client’s had been informed there was no ATE insurance “they are likely to have instructed CCLS not to have progressed the claims” and therefore have avoided the costs incurred by the Defendants. The Judge found that “Mr Burley through CCLS was in a very real sense controlling the litigation since decisions were being taken without proper instructions from the clients and I do not accept that anyone else was controlling it.

2. As against Mr Wright, although CCR funded the litigation, without which the claims could not have continued, and would benefit in the event of success, the “real parties” were the Claimants themselves. Mr Wright did not control the litigation, the cases were progressed by solicitors and Counsel and the Claimants in this case were “genuine claimants”. Mr Wright was neither “the” real party nor even “a” real party and it would not be appropriate to make a NPCO against him.

3. CCR accepted its liability to an NPCO.

Case Law Re Pre Action DisclosureConnaughton v Imperial College Healthcare NHS Trust [2010] EWHC 90173 (Costs) – Judgment by Master Howarth

FACTS: The Claimant was walking through a hospital when she slipped, fell and fractured her ankle whilst crossing a wet patch of floor which had just been mopped. The matter proceeded by way of a standard Law Society model CFA which had been modified (a CFA-lite) and provided that the Claimant’s liability for costs was limited to sums recovered by way of costs from the opponent. It further described the claim as “your claim against your opponent for damages for personal injury suffered on 2nd September 2008”. The CFA did not further define “opponent”. A pre-action disclosure application was made against the NHS Trust who eventually complied with the request for certain information. A Consent Order was filed however the issue of the costs of the application was still in dispute. The Defendant raised issues as to the interpretation of the CFA, whether the costs of the PAD could come within the scope of the CFA and thus whether the Claimant had any liability as to costs. The District Judge awarded the Claimant its costs and summarily assessed them however this was subject to the issues in dispute being determined by the SCCO. The matter was duly transferred to the SCCO for determination. Prior to the hearing in the SCCO the Claimant confirmed that it was no longer pursuing the NHS Trust but instead pursuing the cleaning contractors.

ISSUES: 1. Did the terms of the CFA cover an

application for pre-action disclosure?2. Did the absence of a “win” mean there was

no liability for costs?3. As there was no claim against the Trust did

this mean that the PAD costs did not come within the meaning of “claim” in the CFA?

HELD: 1. Following the guidance provided by Lord

Hoffman in Investors Compensation Scheme Limited v West Bromwich Building Society [1998] 1 WLR 896 as to the interpretation of contractual documents, it was appropriate to take a broad interpretation of the scope of the CFA. Although the CFA did not specifically refer to PAD applications it did not specifically exclude them. With reference to the Law Society standard definitions which define a claim as “a demand for damages for personal injury whether or not Court proceedings are issued”, The application was “part and parcel” of the claim for damages arising out of the accident which occurred on 2nd September 2008. Furthermore, PAD applications are applications for an interim remedy within CPR 25 and the CFA covers appeals from interim orders, thus the application for the interim order must also be covered.

2. The CFA provided that “if on the way to winning or losing you are awarded any costs by agreement or Court Order, then we are entitled to payment of those costs together with a success fee on those charges if you win overall”. On this basis there was no requirement for a “win” for the costs liability to be triggered.

3. The suggestion that the PAD application did not fall within the CFA on the basis that the NHS Trust was not the “opponent” was misconceived. The Claimant was originally pursuing the NHS Trust according to the original Letter of Claim. Master Howarth states that “the fact that proceedings have not been issued against the Defendant does not mean that the Claimant was not claiming against the Defendant in accordance with the definition of “claim” within the CFA.

4. Each party referred to contrasting decisions of District Judges. The Claimant relied upon District Judge Culletton’s decision in Liverpool County Court in Billy Mae Smith v MacDonalds (1st October 2009) which considered that a similarly worded CFA covered such work as it was undertaken in “preparation for and in contemplation or in anticipation of proceedings”. The Defendant relied upon Deputy District Judge Smith’s decision in Manchester County Court in Roche v Newbury Homes Limited (10th February 2009) which concluded that the PAD application could not relate to the action as it pre-dated the substantive claim. Needless to say Master Howarth preferred the approach taken by District Judge Culleton and “respectfully” disagreed with Deputy District Judge Smith’s interpretation.

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Your costs questions answered

Our Costs Helpline is proving to be very useful to solicitors up and down the country so we have decided to share some of the questions and answers with you.

Question re Predictive Costs We have a personal injury claim that involved a fault on an VW car that caused it to be set on fire and injure our clients. Liability was admitted and the claim issued but not served. The Defendant is refusing to pay more than predictive costs on the basis that it is an RTA matter.

Can you confirm whether this is correct or whether we have an argument that the matter should not be treated as an RTA for predictive costs and would issuing take it out of predicative costs in any event?

Answer As you will be aware predictive costs apply when the dispute arises from an RTA post 6 October 2003 and damages do not exceed £10,000 and is resolved without the need to issue proceedings.

We have to refer to CPR which defines a road traffic accident as “an accident resulting in bodily injury to any person or damage to property caused by, or arising out of, the use of a motor vehicle on a road or other public place in England and Wales.

Further a motor vehicle is defined as a mechanically propelled vehicle intended for use on roads.

In your matter a claim form was issued but not served. The claim form will therefore lapse in the usual way and so I would suggest, regrettably, that in this instance the

Defendant’s contention is correct provided however damages are less than £10,000.

Providing you have issued reasonably the predictive costs would not apply although clearly if this is the reason proceedings were issued this may lead to severe criticism on detailed assessment. Reliance is often placed on the following guidance in Practice Direction - Pre Action Conduct paragraph 2.4 which states - “The Court will exercise its powers…with the object of placing the innocent party in no worse a position than he would have been if the protocol had been complied with”.

Question re Typing CostsI am in the middle of a claim against neighbours who are causing noise nuisance. The client lives in a ground floor flat and the neighbours live above him. The noise goes on all day and into the small hours of the morning.

He keeps a log. The log now covers over a year and fills one of our lever-arch files. The Defendants have asked to see it and we have copied it to them.

But our client, who has to employ a part-time secretary for his business as a yacht surveyor had to get his secretary to do some 80 extra hours to type up his log.

The client has asked, if we win the case and are awarded costs, can we claim the cost of typing the log?

Answer If your client wins the claim and he is awarded costs, I believe that in principle your client may be able to recover an element (if not all) of the costs of typing the log. This is work which would have had to be undertaken by your firm had the client’s own part-time secretary not undertaken such a task.

The document in question seems very important to your claim & has already been served upon the other side which also helps us with reasons why such a cost should be recoverable from the other side.

Having said this, If the matter proceeds to a detailed assessment hearing, it will be down to the courts own discretion whether this type of cost is recoverable on a between the parties basis.

In any event, your client must prove the costs incurred.

Have you given consideration to whether this type of cost/expense could be claimed under your client’s claim for special damages?

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Question re Grant of ProbateI have been presented with a bill in a PI case where the claimant was acting as executrix of her deceased husband’s estate. There is a claim for costs of around £750 in the bill which relate to the work undertaken in relation to obtaining the Grant of Probate.

It strikes me that obtaining a grant of probate is not really a valid part of the claim as it was needed in any event - not just for the claim. Is there case law which says whether it can be recovered either way?

Answer Further to your query below, there appears to be no specific case law on the matter as it is quite a case specific point. Having discussed the matter with a senior colleague it would appear that it is not uncommon for Receiving Parties in such matters to attempt to recover such costs and on occasion it is not uncommon for judges to allow these costs, even in part.

Much will probably depend on when and why the probate costs were incurred. If they were only incurred for the purpose of the executrix instigating these proceedings then I suspect that a judge might consider them to have been a necessary step to be taken in order for the litigation to be pursued. However, if it is clear that the probate costs would have been occurred in any event for the executrix to deal with her deceased husband’s estate, then it is more likely that a judge would decide the matter in your favour.

Effectively, the argument may come down to the fundamental point of whether the costs actually arose from the litigation and a useful quote can be found in the case of London Scottish Benefit Society v Chorley (1884) 13 QBD 872 where Bowen J states:

“Only legal costs which the court can measure are to be allowed, and that such legal costs are to be treated as expenses necessarily arising from the litigation and necessarily caused by the course which it takes”

Given the size of the amount in dispute and that this is a point which could potentially go either way it may be appropriate to suggest a compromise figure on the costs to avoid this becoming a sticking point which prevents discussions between the parties from progressing.

Question re Notice of FundingI have a claim where Notice of Funding was served on the Defendant with the Claim form. I have now noticed that the policy no. for ATE policy was not entered on the form. Obviously if we send an amended form now it will alert them to our mistake. What would you recommend as the best course of action in these circumstances.

Answer We consider that your oversight is relatively trivial and it would be very unlikely that there would be any sanction for this oversight whether you ‘come clean’ and alert the

Defendant now, or whether you remain silent on the point and let them raise it at a later stage. In reality and on balance, we would be surprised if a Defendant raised an issue on this point but the chance remains that they could.

We would suggest that providing them with the further details at this point may be sensible and simply state that you are enclosing the full details of the policy for the sake of completeness. We cannot see what sanction the Defendant could seek at this stage if you notified them of the oversight now.

If you decided to let sleeping dogs lie and the matter was subsequently raised by the Defendant at the costs assessment stage,

you could consider an Application for relief from sanctions. The main problem with this though would be that any Application for relief should be made in a timely fashion and if the Court becomes aware that you knew of this oversight a long time ago, they would be less likely to grant relief. That said, in order to try and successfully oppose your Application for relief, the Defendant would need to show that the omission prejudiced their position and in reality think this would be very difficult for them to show. What would they have done differently if they knew the policy number at an earlier stage – presumably nothing!

All of us at Kain Knight join in wishing you the

compliments of the season and a prosperous new year.

VAT is to be increased by 21/2% in January 2011

For all of those Claimants who are negotiating remember that VAT will be increased to 20%. Now is the time to remind your opponent that if they want to save 21/2% they should be settling now.

For all the Defendants they should be trying to settle before January and if not they should be making a payment on account to include Vat at 171/2% now.

It is interesting to note that with all of the Jackson business going on and the so called Government drive to reduce legal spend they have increased all costs by another 21/2%.

Funny that!!!!

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Costs Helpline. Your cost questions answered

Jackson Update

Contained within this document are some 56 questions, the response date for which is 14th February 2011 and it is therefore very important that all of us put forward our comments in good time.

If you would like to have a look at the proposals please copy and paste the following link into your web browser,

or, visit our website www.kain-knight.co.uk and go to our industry news page.

http://www.justice.gov.uk/consultations/docs/jackson-consultation-paper.pdf

Michael Kain, Costs Lawyer

The Ministry of Justice of has issued its proposals for the Reform of Civil Litigation Funding and Costs in England and Wales. This is basically the implementation of Lord Justice Jackson’s recommendations.