A Happy Christmas and Prosperous 2018
Once again, it is that time of the season when the rhetorical question is asked: where has the year gone? It is hard to believe that it is almost twelve months since we were about to wish our subscribers “a Happy Christmas and Prosperous 2017”, but it is. In that time, we have had no difficulty in filling our Printed and Online editions with cases in multifarious areas of costs law, from qualified one-way costs shifting (QOCS) to conditional fee agreements (CFAs), from Bullock orders to budgeted costs, from standard costs to indemnity costs, and from a recent trio of Solicitors Act decisions, to a trio of long awaited judgments handed down by the Court of Appeal. Indeed, as we go to press, after a five month wait, the judgment on CFAs and assignments has just been handed down in Budana v the Leeds Teaching Hospitals NHS Trust (see below).
Today we publish the judgment in BNM v MGN: long awaited but what a damp squib. It told us what the majority on the Masters’ corridor had already considered to be the correct state of the law, that the “old” regime proportionality test under CPR 44.4(2) in force until 31 March 2013 applied to a pre-commencement funding arrangement (as defined in CPR 48) and not the “new” test in CPR 44.3(2) and (5) effective from 1 April 2013. Beyond that, the judgment does not give any guidance about how the new test should be applied. Instead, the costs certificate has simply been set aside and the case sent back so that the court can consider the proportionality of the costs again.
We will also publish this week the first case from Costs Law Reports 2017/6, the judgment in McMenemy and Reynolds v Peterborough & Stamford Hospitals NHS Trust  6 Costs LR 973 in which, in conjoined appeals, the court addressed the recovery of after-the-event (ATE) insurance premiums taken out from that date onwards in clinical negligence cases. The issues were to decide whether the “old” regime pre–1 April CPR applied to them as counsel for the claimants contended, and whether it had been reasonable to take out ATE insurance at the same time as the CFAs had been signed in each case, even though that had been before any investigation of the merits and the issue of proceedings.
The answer was “No” and “Yes” according to Lewison LJ with whom Beatson LJ and Hildyard J agreed (see paras 62 and 76 of the judgment), but as the decision makes clear, the court was concerned only with principle not quantum. The reason for this was that:
“premiums payable under block-rated policies are assessed by reference to a basket of cases, and premiums are kept lower than they might otherwise be by requiring all claimants of the relevant class to take out such policies”
and the court had
“not been persuaded that we should depart from the policy decision taken in Callery v Gray and examine the reasonableness of taking out ATE insurance on a case by case basis”
nor that “the new proportionality test requires a case by case approach”.
In these circumstances, the court was not willing to depart from the Callery v Gray approach that entering into a block rated ATE policy at the same time as signing a CFA is a reasonable way to conduct litigation. Thus it was permissible for the ATE insurance to have been taken out as soon as Ms McMenemy and Mr Reynolds had signed their CFAs, and the premiums were proportionate at £6,042 each notwithstanding their respective damages were only £2,500 and £12,500. To learn whether the costs judges now have the expertise to adjust premiums, after Rogers v Merthyr Tydfil  1 Costs LR 77 decided a decade ago that they did not, we will have to wait for two further conjoined appeals to be heard in July in Demouilpied and West v Stockport NHS Foundation Trust, on appeal from Manchester County Court.
Now for the Christmas quiz. There is an “Odd One Out” in the following group of cases which are all transcripts we have published or will publish in Costs LR 2017 and Costs LO 2017.
Group A: McMenemy v Nottingham University Hospitals NHS Trust, Premier Motor Auctions Ltd v PricewaterhouseCoopers, Hussain v Chartis Insurance, Briggs v First Choice Holidays, Pollard v University Hospitals of North Wales NHS Trust, Plevin v Paragon Personal Finance Ltd, Kupeli v Atlasjet, Frade v Radford, Times Newspapers v Flood, Budana v the Leeds Teaching Hospitals NHS Trust
Group B: Bloomberg v Sandberg, Simpkin v the Berkeley Group Holdings Ltd, Agents’ Mutual Ltd v Gascoigne Halman Ltd, Merrix v Heart of England NHS Foundation Trust, Findcharm v Churchill Group, Harrison v University Hospitals Coventry and Warwickshire NHS Trust, JB Bank v Pugachev, Asghar v Bhatti, Napp Pharmaceutical Holdings Ltd v Dr Reddy’s Laboratories
Group C: Optical Express v Associated Newspapers, Jordan v MGN, Houghton v PB Donoghue (Haulage and Plant Hire Ltd), Manna v Central Manchester University Hospitals NHS Foundation Trust, NJ Rickard Ltd v Holloway, Car Giant Ltd v Mayor and Burgesses of The London Borough of Hammersmith, Thakkar v Patel, Marathon Asset Management LLP v Seddon, OMV Petron SA v Glencore International AG.
The answer is Group A because there are nine cases concerned with ATE and CFAs, whereas Group B and Group C only have eight each concerning, respectively, costs budgeting and CPR Part 36, so Group A wins “the how-many-cases-have-we-published this year-by subject-matter” competition at High Court level and above.
As Andrew Post QC pointed out at the Costs Lawyers Conference, the Core Edition of Costs Law Reports “was published 20 years ago, in 1997, [and] it covered all the significant costs cases decided between 1910 and 1995 in 512 pages, 100 of which were devoted to criminal law”. Given that, these are remarkable statistics, arising as they do for the most part out of Sir Rupert Jackson’s reforms and nearly five years after they were implemented at that! The reforms are clearly keeping the lawyers in business. Long may they last!
And finally a quick word about Budana, which will be online soon and in the next printed edition of Costs Law Reports. The facts are straightforward. Before 1 April 2013, the claimant signed a CFA with her solicitor to pursue a personal injury claim. After 1 April 2013, the solicitor informed the client that the firm had ceased to handle PI litigation so she would need to instruct another firm, which she did, on the first solicitor’s case, by assigning the CFA to the new firm. In that way, the entitlement to a 100% success fee would be preserved as the CFA had been made before the rule change on 1 April 2013, removing that entitlement. Not so said the judge. The CFA had been terminated, so there could be no assignment because there was no CFA in existence any more which could be assigned. Not only that, but the solicitor had not been entitled to terminate the CFA, so he would lose all his fees even though the client had gone on to win her case.
The Court of Appeal handed down judgment yesterday, a 119-paragraph decision, and the explanation for the time that it has taken for it to be delivered may be explained by the fact that there was by no means agreement on all points between Gloster LJ and Davis LJ, a matter which Beatson LJ referred to as a “disagreement” on the issue of assignment or novation of the CFA.
Happily for claimant lawyers acting on CFAs, the court has adopted a sensible, pragmatic, non-legalistic and just approach. Gloster LJ held that:
“There is no reason why the rights and benefits under a firm of solicitors’ contracts with its clients, or its books of business, should not be capable of assignment in today’s business environment.”
As to merits, it was Davis LJ’s view, sensible again, that an overall conclusion in favour of the paying defendant:
“Would mean that the claimant will be deprived of costs which she might ordinarily expect to have been entitled. It would mean that the defendant is absolved from paying those costs by virtue of adventitious technicality.”
So the claimant’s appeal was allowed.
The case will receive more detailed analysis in the next edition of Costs Law Reports, when it is a little cooler off the press. Meanwhile, we wish all our subscribers a very happy Christmas and look forward to meeting as many of you as possible at the 2018 conference if not before.
The headnotes and full texts of the cases below are available to online subscribers at www.costslawreports.co.uk. Follow Costs Law Reports on Twitter to be notified of new cases as soon as they are published.
New cases this month
Two Right Feet Ltd v National Westminster Bank plc and Others  6 Costs LO 735: Varying a costs order following discontinuance under CPR 38.6(1): factors to apply in deciding whether costs should be payable on the standard or indemnity basis.
Hutson and Others v Tata Steel UK Ltd  6 Costs LO 753: CPR Part 19, group litigation: application to add an additional lead firm; whether the firm’s addition would further the overriding objective and/or would increase costs and the risk of delay.
Howlett and Howlett v Davies and Another  6 Costs LO 761: One-way qualified costs shifting (QOCS) under CPR 44.13–CPR 44.17: “fundamentally dishonest” claim permitting the defendant’s insurer to invoke CPR 44.16(1) and to enforce its costs order against the claimant.
Richard Slade and Company Solicitors v Boodia and Another  6 Costs LO 781: Solicitors Act 1974: whether a series of bills delivered monthly for profit costs alone, with invoices for disbursements incurred in the same period rendered separately, were interim “statute” bills under the Act.
Optical Express Ltd and Others v Associated Newspapers Ltd  6 Costs LO 803: CPR Part 36; late acceptance of offer by claimants; costs consequences.
BNM v MGN Ltd  6 Costs LO 829: Proportionality; whether additional liabilities payable under pre-commencement funding arrangements are subject to the “old” CPR 44.4(2) proportionality test or to the “new” test under CPR 44.43(2) and (5).
Bates and Others v Post Office Ltd; The Post Office Group Litigation  6 Costs LO 855: Case management powers under CPR 1.1(2) and CPR 1.4; litigation to be conducted in a costs effective way through case management.
Premier Motorauctions Ltd and Another v PricewaterhouseCoopers LLP and Another  6 Costs LO 865: Security for costs under CPR 25.13: extent to which an ATE premium is relevant when the court considers an application for security in a claim brought by an insolvent company.
Costs and Fees Encyclopaedia updating
The Legal Officers (Annual Fees) Order 2017 (SI 2017/797) replaces the Legal Officers (Annual Fees) Order 2016, with effect from 1 January 2018. Updated pages are now available for printing out and adding to your Costs and Fees Encyclopaedia: Pages 383–389