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First, a happy new year to all our subscribers. This is the last edition of Costs Law Reports for the year just gone and we include some important judgments handed down in December. Second, we apologise for the relative brevity of this bulletin, although to some that may come as a relief! The reason is that the co-editors have been enjoying a Christmas break, with the editor of youth taking to the hills (or to be exact, to the French Alps), to be followed shortly by the senior editor by reference to years and senility, also to the hills (or to be exact, the Austrian Alps). Normal service will be resumed in February.

Hot off the press last month was the decision of the Court of Appeal in Budana v The Leeds Teaching Hospitals NHS Trust and Another [2017] 6 Costs LR 1135. We gave a brief resume in last month’s bulletin. It is not difficult now to see why the judgment took five months to be handed down. All three Lord Justices wrote a judgment which revealed that, along the red-carpeted corridors of the Law Courts, there had been what was referred to by Beatson LJ as a “disagreement” between Gloster LJ and Davis LJ about whether Ms Budana’s CFA had been assigned or novated, which had remained unresolved. In the end, Gloster and Beatson LJJ plumped for novation and Davis LJ for assignment, but all three agreed that the CFA had not been terminated, contrary to the finding of the judge below. Notably, they were as one that there was no reason in principle why benefits and rights 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.

Good news for receiving parties and credit should be given to the constitution of the court who got to grips with the law, whilst recognising, as Beatson LJ did at [80], that if the NHS Trusts were to win:

“an overall conclusion in favour of the defendant would appeal to no sense of the merits. It would mean that the claimant will be deprived of costs to 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.”

How did the court reach its conclusion that, notwithstanding s 44 of the Legal Aid (Sentencing and Punishment of Offenders) Act 2013, Ms Budana’s pre-April 1 CFA could be validly transferred from her original solicitors who were giving up personal injury work, to a successor firm willing to handle the case on the same terms, without, in doing so, losing the entitlement to claim a success fee and ATE premium from the NHS Trust? The following are the principal findings:

  • The new retainer with the successor firm was not affected by s 44(4) LASPO since the purpose of the transitional provisions of the Act had been to preserve vested rights and expectations arising from the previous law.

  • It would be an over-technical application of the doctrine of novation to prevent a claimant who had begun a claim under a pre–1 April CFA from recovering costs in respect of a success fee simply because it had been transferred to a new firm.

  • The CFA was not a contract for personal services: what the client wanted was representation by a competent practice, not necessarily by a specific individual.

  • The three parties (the two firms and Ms Budana) had agreed that the CFA was to remain in force as an operative contractual instrument as between her and the successor firm with the result that, in the event of a win, the lawyers would be paid their success fees (and insurers their ATE premiums) by the loser and not by the client out of damages.

In the result, the appeal was allowed, so both firms of solicitors could recover their costs and success fees, together with the ATE premium, but in doing so the court was clearly impressed by the quality of the paperwork evidencing the arrangements and signed by both firms and Ms Budana. Herein, however, lay a word of caution, per Gloster LJ at [74]:

“obviously, whether or not any relevant CFA under which the success fee was payable to a new firm, could be characterised, as in the present case, as ‘payable under a conditional fee agreement entered into before 1 April 2013’, would depend on the precise terms of the relevant contractual arrangement entered into between the parties, and whether the new firm was indeed prepared to operate ‘under’ the terms of the previous CFA.”

The inference to be drawn from that is that the court will uphold properly drafted transfers of pre–1 April 2013 CFAs, but it is plain from the judgment that the consent of the client must be obtained. If the solicitors take a shortcut and leave the client out of the loop, it is doubtful if there can be a valid transfer of the original retainer to the successor firm of solicitors. It follows that those who may be throwing their hats in the air at the outcome in Budana should pause for thought since, if the client is not given the opportunity to consent to the new arrangements, the costs may still prove to be irrecoverable from the defendant as the judge at first instance had found in Budana.

Hot on the heels of Budana we have W Portsmouth & Company Ltd v Lowin [2018] 1 Costs LO 1, another long-awaited decision of the Court of Appeal handed down just before Christmas, and the very first case of our 2018 series. This was an appeal from Laing J – [2016] 5 Costs LO 719 – about the relationship between CPR 36.17(4)(a)–(d) and CPR 47.15(5).

The issue? Where a receiving party beats their own Part 36 offer in detailed assessment proceedings, it is trite law that the multiple benefits under CPR 36.17(4) are available. Thus, in Cashman v Mid Essex Hospital Services NHS Trust [2015] 3 Costs LO 411, Mrs Cashman, who had done that, was entitled to an additional sum being 10% of the assessed costs (an extra £17,000), plus enhanced interest up to 10% over base rate, together with indemnity basis costs. In her judgment, Slade J made it clear that the effect of the rule was to act as a penalty against parties who unreasonably refuse to accept realistic offers under Part 36.

Lowin concerned not detailed but provisional assessment, where bills up to £75,000 are dealt with on paper, with the receiving party’s costs of doing so limited to £1,500 plus VAT and the relevant court fee (see CPR 47.15(5)). In that case, Ms Lowin had also beaten her own Part 36 offer and the judge had overruled the Master by allowing her to exceed the £1,500 cap. That decision had been wrong, said the Court of Appeal. If it had been intended that rule 47.15(5) was not to apply in the case of an assessment of costs on the indemnity basis under rule 36.17(4), there would have been an express reference to it in either or both of the provisions, or in rule 47.20(4). Absent any such reference, there was nothing to suggest that rule 47.15(5) should be disapplied or modified. Accordingly, Ms Lowin would have her costs on the indemnity basis, but limited to £1,500 plus VAT.

Of course, as the court was at pains to point out, that did not undermine the intention to encourage the quick and cheap resolution of costs in provisional assessments. Nor did it deprive the receiving party of what it referred to as the “not inconsiderable benefits of CPR 36.17(4)”. Indeed, whilst it is recognised that fixed costs are nowhere near an indemnity, particularly now that almost five years have elapsed since the rules were introduced without there having been any upwards revision, the other benefits of enhanced interest and the additional amount will provide useful sums to bridge the gap.

The constitution of the Court of Appeal in Lowin was Vos C, McCombe and Asplin LJJ. A day later, the same bench heard the appeal in Radford v Frade and again reserved judgment on the issues of the scope of a CFA and the extent to which, if at all, a CFA can be rectified after a costs order has been made. That judgment is still awaited.

Below, we set out the baker’s dozen of cases for this printed edition of Costs Law Reports.

Why a baker’s dozen? Subscribers may remember D v A [2017] EWCA Crim 1604, which was handed down as a judgment in the public domain, where it remained for precisely 24 hours, at which point it was removed by order of the court, never to be heard of again! For that reason, Costs Law Reports 2017/5 was one case short. We make up the difference today by publishing a thirteenth case, hoping that no one is superstitious!

The headnotes and full texts of the cases below are available to online subscribers at Follow Costs Law Reports on Twitter to be notified of new cases as soon as they are published.

New cases this month

Peterborough & Stamford Hospitals NHS Trust v McMenemy; Reynolds v Nottingham University Hospitals NHS Foundation Trust [2017] 6 Costs LR 973

Deutsche Bank AG v Sebastian Holdings Inc and Vik [2017] 6 Costs LR 1003

Percy v Anderson-Young [2017] 6 Costs LR 1013

Bloomsbury Law Solicitors v Macpherson [2017] 6 Costs LR 1049

R (Director of Public Prosecutions) v Aylesbury Crown Court and Another [2017] 6 Costs LR 1073

Mohammed v The Home Office [2017] 6 Costs LR 1089

Freeborn and Goldie v Marcal [2017] 6 Costs LR 1103

Oldham v QBE Insurance (Europe) Ltd [2017] 6 Costs LR 1109

Budana v The Leeds Teaching Hospitals NHS Trust and Another [2017] 6 Costs LR 1135

Lokhova v Longmuir [2017] 6 Costs LR 1189

Bailey and Others v GlaxoSmithkline UK Ltd and Another [2017] 6 Costs LR 1209

Whaleys (Bradford) Ltd v Bennett and Cubitt [2017] 6 Costs LR 1241

GSD Law Ltd v Craig Wardman of St Gobain Building Distribution and Others [2017] 6 Costs LR 1253

W Portsmouth & Company Ltd v Lowin [2018] 1 Costs LO 1

Costs and Fees Encyclopaedia updating

The Civil Procedure (Amendment No. 2) Rules 2017 (SI 2017/889) amended (inter alia) rule 47.6 of the Civil Procedure Rules 1998, with effect from 1 October 2017. An updated page is now available for printing out and adding to your Costs and Fees Encyclopaedia: Page 75

The Immigration and Nationality (Fees) (Amendment) Regulations 2017 (SI 2017/885) amended regulations 3, 4 and 15, and Schedules 1, 2, 3, 8 and 9, of the Immigration and Nationality (Fees) Regulations 2017, with effect from 2 October 2017. Updated pages are now available for printing out and adding to your Costs and Fees Encyclopaedia: Pages 329-364

The Criminal Legal Aid (Remuneration) (Amendment) Regulations 2017 (SI 2017/1019) have made changes to Schedule 2 of the Criminal Legal Aid (Remuneration) Regulations 2013, with effect from 1 December 2017. Updated pages are now available for printing out and adding to your Costs and Fees Encyclopaedia: Pages 148-170

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