2018 – A year in Costs

Stephen Innes, Shail Patel, Pippa Manby and Ben Smiley |

In 2017, four members of our 4 New Square Costs Team set themselves a challenge to come up with a calendar of key costs decisions in the last year. 1 per month, 100 words max per case. So here, back by popular demand, is our calendar of 2018 in costs.

January

Dial Partners LLP v Eastern Airways International Ltd Lawtel 18.01.18.

The Claimant’s solicitors had been acting under a DBA, notified to the Defendant, entitling them to costs of £250,000. 2 weeks before trial they switched to a CFA without notifying the Defendant, thus claiming costs of over £500,000. Master James held that the Claimants were not limited to the costs pursuant to the DBA, as settlement had not been a near certainty at the time of the switch, per Kellar v Williams [2004] UKPC 30, and the switch was not unreasonable in itself, per Kai Surrey [2016] EWHC 1598.

Shail Patel of 4 New Square appeared for the Defendant.

February

Herbert v HH Law Ltd [2018] 2 Costs LR 261.

In a solicitor client assessment the District Judge had reduced a success fee from 100% to 15%. Soole J rejected the solicitors’ argument that the client had approved the 100% success fee by agreeing the CFA: there had been no informed approval because the client had not been advised that the solicitors applied a 100% success fee on all post-LASPO CFAs irrespective of risk level. The judge also upheld the District Judge’s finding that the ATE premium wasinn a solicitor’s disbursement which should have been included in the bill, and was therefore correctly excluded from the cash account.

March

Nash v MOD Lawtel 16.03.2018.

A costs management order had been made. In a detailed assessment Master Nagalingam reduced the hourly rates for the incurred costs in the budget. However he declined to reduce the rates in respect of estimated costs, as that would risk double jeopardy after the court had already set a budget for each phase. Similarly the court had already determined what estimated costs were proportionate for each phase. However, it remained open to the paying party to argue that the sum of the overall assessed incurred costs, plus the budgeted costs, was disproportionate.

April

Williams v SS for Business, Energy & Industrial Strategy [2018] EWCA Civ 852.

A claimant unreasonably failed to follow a Pre-Action Protocol which allowed for the recovery of fixed costs and disbursements only. The Court of Appeal held that the conditions in CPR 45.24 which allows a court to limit a claimant to fixed costs were not met. However, a court has power under the general discretion in CPR 44 to limit a claimant in such circumstances to the fixed costs and disbursements allowed under the Protocol and it was appropriate that the claimant be so limited.

May

Atlasjet v Ozlem Kupeli [2018] EWCA Civ 1264.

Air passengers claimed against an airline which had failed to fly them with most claims being dismissed. The Court of Appeal set aside the judge’s order in relation to costs noting that the direction that money travels in a group claim may not always reflect success and that any costs awarded must reflect the extent to which a party is successful in the context of the group litigation as a whole. The Court of Appeal ordered no order as to costs.

Matthew Bradley of 4 New Square appeared for some of the Respondents.

June

Gempride v Bamrah [2018] EWCA Civ 1367.

Solicitors remain responsible for the actions for anyone to whom they subcontract work especially where that person is not a legal representative. The solicitor was responsible for the actions of her costs draftsmen in preparing a bill of costs and replies to PODs. The solicitor was guilty of misconduct in various respects (including her action in certifying a bill of costs containing an inflated hourly rate). Misconduct under CPR 44.11 did not require dishonesty to be established. The penalty for any misconduct had to be proportionate.

Nick Bacon QC of 4 New Square appeared for the Appellant. Patrick Lawrence QC and Pippa Manby appeared for the costs draftsmen at the first appeal.

July

Hislop v Perde [2018] EWCA Civ 1726.

A case determining the appropriate approach to costs in the fixed costs regime of CPR Part 45 Section IIIA, where a defendant accepts a Pt 36 offer after they could or should have done. A claimant is entitled only to fixed costs, even when the Pt 36 offer was accepted late. The Court of Appeal held (a) that the applicable provisions – (old) CPR r.36.10A / (new) CPR r.36.20 – did not permit an addition claim for standard/indemnity basis costs, and (b) that late acceptance did not constitute an “exceptional circumstance” pursuant to CPR r.45.29J.

Roger Mallalieu appeared for the Defendant/Appellant and Nick Bacon QC appeared for the Claimant/Respondent.

August

Lewis Thermal Ltd v Cleveland Cable Company Ltd [2018] EWHC 2654 (TCC).

O’Farrell J granted an application for security for costs, holding that the ATE policy relied on by the claimant did not provide adequate security, as there were real risks of insurers’ liability being excluded or the policy being avoided or terminated, and it excluded the Contracts (Rights of Third Parties) Act 1999. The claimant’s stifling point was rejected: (a) due to the inadequacy of the claimant’s evidence, the claim was held to be speculative and lacking a real prospect of success; and (b) in any event, there was some evidence that the claimant’s shareholders could make funds available.

September

Sony/ATV Music Publishing LLC v Bailey [2018] EWCA Civ 2005.

The director and majority shareholder of an unsuccessful defendant to a copyright claim appealed against a non-party costs order (“NPCO”) against him. In allowing the appeal, the Court of Appeal held inter alia: (a) it is not necessary to identify a divergence of interest in order for an NPCO to be made against a company director; (b) the so-called “Arkin Cap” should not be extended to cases where a company director is the “real party” to claim; but (c) the absence of any warning of a potential NPCO application until over a year after judgment was handed down was fatal.

Benjamin Williams QC of 4 New Square appeared for the Appellant.

October

Gill v Heer Manak [2018] EWHC 2881.

The solicitor’s terms of business entitled them to terminate their retainer “on reasonable notice”. On 27.12.13 they terminated the retainer, four months before a complex trial, on the grounds that the firm was closing due to absence of insurance. Three years later the firm sued for is unpaid fees. Master Simons held that the firm had no choice in its timing, and not could reasonably have told all its clients it might fold at an earlier date. Walker J disagreed; reasonable notice had to be looked at from the Client’s perspective too, and he was left in the lurch.

November

Finnegan v Spiers [2018] EWHC 3064 (Ch).

The High Court concluded that it had no power to order a payment of account in a case which had settled by acceptance of a Part 36 offer within the relevant period. The costs consequences were automatic and contained in Part 36, which did not referred to payments on account. The position with discontinuance (per Barnsley v Noble [2012] EWHC 1810) was different). The decision is controversial, not least because the Court’s powers to award a payment on account does not derive from CPR 44.2(8), but rather s.51 of Senior Courts Act 1981.

December

Monafred v Spire Health Care (EAT, 16.11.18, Laing J).

The ET made an unreasonable conduct costs order against the employee. The employer’s costs were assessed by an employment judge in accordance with the tribunal rules. He ordered the employee to pay a proportion of the employer’s costs of assessment. On appeal the Judge held that where the ET makes a costs order of the proceedings, that includes the costs of any detailed assessment. That was on the assumption that a receiving party would otherwise be prejudiced by having to demonstrate unreasonable conduct.

Happy New Year from Stephen Innes, Shail Patel, Pippa Manby, Ben Smiley and all of the 4 New Square costs team.