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Costs Law Reports Conference Review

On September 27, our fifth Costs Law Reports Conference took place at the offices of Eversheds Sutherland, who again kindly hosted the event. If the success of such conferences is to be measured in terms of the number of delegates remaining at the end of the day, this was undoubtedly our best conference to date. However, before congratulating ourselves too much, we need to mention that, immediately after the last presentation, corks were pulled and canapés served by courtesy of our principal sponsors, Temple Garden Chambers: realistically, this leads us to suppose that it was perhaps the thought of a well earned drink that had something to do with the excellent turnout at the end of the day!

Earlier on, all delegates had benefited from a first class keynote speech delivered by Mr Justice Francis in which we were taken away from our normal diet of topics (proportionality, costs budgeting, electronic bill, et cetera) and into the Family Division where the costs regime is very different. Is there in fact a regime at all, is a fair question, given that in the Charlie Gard case in which Mr Justice Francis gave the first instance decision (subsequently to be upheld by the Court of Appeal, Supreme Court and European Court), Charlie’s parents had no legal aid, no public funding and no money of their own to finance their case involving Great Ormond Street Hospital’s wish to withdraw their son’s life support system. At the other end of the spectrum we were made aware of the considerations which apply in so-called “Big Money Divorces”, appropriately named, given the enormous sums involved. We are most grateful to Sir Nicholas Francis for his keynote speech.

There were many other highlights of the day with our speakers all focusing on those matters most relevant for costs practitioners. They included several old chestnuts, but, as Nicholas Bacon QC pointed out, nearly six years after the “new” proportionality test was implemented in CPR 44.3(5) we are no further forward in understanding how it should be applied than we were when the rule came into force on 1 April 2013. As Nick expressed the position: justice requires certainty, not guesswork. At the moment, unfortunately, proportionality is as much guesswork as anything else.

Roger Mallalieu, speaking about the Solicitors Act 1974, also had some strong words. It is his view, from which there appeared to be no dissension, that the Act is not fit for purpose. Indeed, it has remained virtually unchanged for a couple of centuries, does not even define what a bill is, and still less does it explain the differences between interim on account bills, interim “statute” bills and final bills, over which there has been so much recent litigation. Time for an overhaul: with half a dozen Solicitors Act cases going online at Costs Law Reports in the past couple of months, no one could quibble with that.

In terms of making the Conference interactive, we had a riveting presentation by Temple Garden Chambers with Simon Browne QC, Richard Wilkinson and James Laughland undertaking a “live” costs mediation. It did of course “work” in the sense of achieving a settlement, this being due to the best endeavours of the protagonists with Simon as the mediator; they achieved in 30 minutes what had taken about six hours to complete in real life, namely a “done-deal” at £3 million!

After lunch, Master Colum Leonard, as a member of the Hutton Committee, explained the background to the electronic bill and then, using Precedent S, showed an absorbed audience how to make adjustments as if a detailed assessment was being carried out. That task was bravely undertaken by Master Jennifer James, who presided over a mock electronic assessment with advocacy provided by Shaman Kapoor and Matt Wazak, also of Temple Garden Chambers. Needless to say, that assessment also reached a successful conclusion!

During other parts of the Conference, we were treated to a compelling talk by Alexander Hutton QC about conditional fee agreements, a welcome change for him (or so he said) from electronic bills! Next came His Honour Judge Richard Roberts on costs budgeting with some terrific slides and anecdotes and, bringing up the rear, Professor Dominic Regan rounded matters off, dealing in his inimitable style with relief from sanctions: sometimes you get it, sometimes you don’t.

The feedback was almost universally positive. In truth, however, we cannot say that it was 100% favourable. Not quite. But the backs of Costs Law Reports are broad. We try our best and really welcome feedback, good or bad, so that we can improve the Conference for all concerned for next time. For example, we recognise that keeping each speaker’s time to about 30 minutes meant that there was little opportunity for questions at the end.

Overall, the co-editors believe that the Conference delivered what it promised to do and we look forward to receiving another 125 delegates in 2019: same time, same place, but on a different date: Wednesday, 25 September 2019.

Case law update: getting your hands on the former solicitor’s files

Going online today, and currently being printed in Costs Law Reports 2018/4, we have another dozen costs cases. What we can say about them is that they are an eclectic mix in the sense that we have three concerning Part 36, another trio about discontinuance under Part 38, another case on QOCS under Part 44.16, more on costs budgeting under Part 3.13, a brace on security for costs under Part 25, and that is without mentioning conditional fee agreements and, of course, the Solicitors Act, Mr Justice Soole having handed down his judgment in Hanley v J C & A Solicitors; Green v SGI Legal LLP [2018] 4 Costs LR 693 just before we went to press. It is compelling evidence of the importance of being up to date with costs cases, in whichever branch of Civil Law litigators practise.

What of Hanley? It is an important and long awaited case and as Soole J himself expressed it:

“I understand there are numerous applications which give rise to this point.”

The point? It can be stated shortly. Can ex-clients demand their files (or at least copies of them) from their former solicitors which include documents over which they have no proprietary rights?

On the Masters’ corridor, the answer to that had been “Yes, you can” (see Swain v J C & A Ltd [2018] EWHC B3 (Costs) (Master Brown)), as it had been in Northern Ireland (see The Mortgage Business plc v Taggart [2018] NICh 14 (Deeny J)), whereas in the conjoined appeals of Hanley and Green, the answer had been “No, you can’t.”

Before letting slip who won, we need to ask: why would clients want to see files and documents over which they cannot assert any ownership or other entitlement, save that, once upon a time, they had been clients and on the same side as the solicitors now on the receiving end of their requests?

Suppose a prospective client with a small personal injury claim timorously attends Shady Dealings & Co Solicitors for the first time. That client is unsophisticated and un-learned in the law, and relies to a considerable extent on the solicitor’s advice about how the case will be financed.

“Not a problem,” purrs Mr Shady. “We have this wonderful arrangement called a conditional fee agreement. Win your case, and we collect all our costs from the other side. Lose your case, and it won’t cost you a penny because I can arrange an insurance policy for you to cover that remote, improbable and unlikely eventuality.”

Cheered up, the prospective client signs up to both. With even more cheer, the client later learns that the case has been successful and Mr Shady has recovered £10,000 damages plus costs.

So far, so good? Not a bit of it, because instead of receiving a nice fat cheque for £10,000, the client is surprised to find that the damages in his pocket only amount to £7,500. What has happened to the rest, the client asks, the timorousness returning?

“Easily explained,” reassuringly Mr Shady oozes. “You will recall that when you signed the CFA, I told you that there would be a success fee on our basic charges. We put 100% in the agreement but we are prepared to limit the fee to just 25%. I also explained that you would need to take out an insurance policy in case you lost the case and that I would receive a token commission for the introduction. Those matters account for £500 and with the success fee of £2,000, the balance to you is £7,500. Delighted to have acted for you. Good afternoon.”

Anything wrong with that?

A freshly instructed firm takes a look, with the threat of a detailed assessment under s 70 of the Act lurking in the background at which the court will be asked to decide whether Shady Dealings & Co’s bill was reasonable.

The investigation by the freshly instructed firm gets underway: for starters, the client cannot recall being asked about trade union membership. As it happens, subs have been paid on the nail for 20 years and the union would have covered the case, win or lose, at no cost. For seconds, the client has heard from a colleague who suffered a similar personal injury, that some bonkers legal stuff called QOCS would have meant that there would have been no costs to pay on a loss, unless the claim had been “fundamentally dishonest”.

“I was jolly honest!” The client sounds almost apologetic.

“In that case, why did you need insurance to protect you if you lost?” replies the freshly instructed solicitor rhetorically. “You didn’t because the union would have paid,” he continues in answer to his own question.

And what about that success fee? If the union was willing to back the case, what need was there for a no-win-no-fee agreement?

“None at all,” the solicitor advises. “Looks like you have been overcharged!”

Where to look for answers?

“Mr Shady’s files, of course. He is bound to have records of what he told you when he took on your case and why you agreed to sign up to a CFA with an ATE insurance policy, neither of which you needed,” continues the new solicitor, so a request is made to have a look through Shady Dealings & Co’s files, documents and records.

“Would be glad to help and to send you anything to which you are entitled such as documents you have paid for,” Mr Shady tells the client loftily, “but anything which belongs to the firm, stays with the firm and you can’t see them – see Hanley.” By now, his tone is almost dismissive.

Correct standpoint ? Indeed. That is the upshot of Soole J’s decision in Hanley.

“If the document and its contents are the solicitor’s property which he is entitled to retain, there is no basis for circumvention of that proprietary right by some other form of order [67] … The critical requirement of ownership cannot be overcome by reference to the language of s 68 [of the Act] … The inherent jurisdiction does not provide a form of pre-action disclosure [71].”

Oh dear. It plainly follows that anything that might help the client and damage Mr Shady’s case (remember the maxim “What goes on, on tour, stays on tour”) applies here, at least for Shady Dealings & Co’s purposes. Anything that Mr Shady does not want anyone else to see, stays in the file, and on the basis of Hanley there is not one thing that the (ex) client can do about it.

On the somewhat extreme facts we have recited, in reality, the client will not need anything from Mr Shady or his files, beyond what is already in the client’s possession, in order to mount a successful s 70 challenge to Shady Dealing & Co’s charges. With Union backing available, Mr Shady clearly failed to make the make the appropriate enquiries about funding when instructions were first taken, added to which there was a double reason for not needing ATE insurance: the union was providing an indemnity for costs and the case qualified for QOCS protection. In these circumstances, plainly such consent to the arrangement which the client gave, could not have been given with “informed approval” (see Herbert v HH Law Ltd [2018] 2 Costs LR 261, also Soole J), and so the client could not be held to it on any subsequent dispute about the terms of the retainer.

As for the CFA, that would be the final nail in Mr Shady’s coffin. Not needed given the union’s indemnity, so goodbye success fee and goodbye ATE premium: the client would be due back the entire £2,500 deducted from the damages plus interest at 8% and the costs of the detailed assessment under s 70(9) of the Act.

With regard to Soole J’s comments about the hundreds of cases in the pipeline, this Bulletin makes no comment about the degree of altruism which is involved on the part of entities such as Checkmylegalfees, a major player in this type of litigation. What can be said, however, is that Soole J’s judgment appears to have stacked the cards against former clients who want to know whether they received the right amount of damages, or whether sums were deducted such as commissions, success fees and ATE premiums, which should not have been. Whether or not Hanley, like Herbert, will go to the Court of Appeal, it is too early to tell.

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

Hanley v J C & A Solicitors; Green and Others v SGI Legal LLP [2018] 4 Costs LR 693: Solicitors Act 1974 and disclosure: whether the court either under s 68 or under its inherent jurisdiction over its officers has power to order a solicitor to give disclosure to a former client of documents belonging to the solicitor. FREE THIS MONTH!

Accident Exchange Ltd and Another v McLean and Others [2018] 4 Costs LR 713: Security for costs under CPR Part 25: factors to apply on a late application, taking into account whether the making of an order for security would stifle the claim.

Tuson v Murphy [2018] 4 Costs LR 733: Part 36 offers; costs consequences where a party is guilty of dishonest and misleading conduct, but the offer is made in the full knowledge of the non-disclosure.

R (Adath Yisroel Burial Society and Another) v HM Senior Coroner for Inner North London [2018] 4 Costs LR 749: Coroner’s costs: appropriate costs order where coroner had ceased to act neutrally in the proceedings.

Holmes v West London Mental Health NHS Trust [2018] 4 Costs LR 763: Claimants’ offers made under Part 36 where the defendant has been responsible for “bimbling” viz. inexcusable delay: order for costs on the indemnity basis, the “bimbling” being out of the norm.

PJSC Aeroflot – Russian Airlines v Leeds and Others [2018] 4 Costs LR 775: Costs on discontinuance under CPR 38; conduct “out of the norm” justifying an order for costs on the indemnity basis: effect in costs of a failure to mediate where allegations of fraud and wrongdoing pleaded.

Catalyst Management Services v Libya Africa Investment Portfolio [2018] 4 Costs LR 807: Security for costs under CPR Part 25: factors to consider in order to decide if a material change in circumstances justifies its discharge.

FPH Law (a Firm) v Brown (t/a Integrum Law) [2018] 4 Costs LR 823: Conditional fee agreements: consequences flowing from a CFA found to be unenforceable on a damages claim for loss of chance.

R (Faulkner) v Director of Legal Aid Casework [2018] 4 Costs LR 841: Legal Aid statutory charge: whether waiver of the charge pursuant to s 10(7) Access to Justice Act 1999 had to occur at the beginning of or during a case as opposed to at the end.

Chernukhin and Others v Danilina [2018] 4 Costs LR 859: Security for costs under CPR 25.13(2)(a): principles to apply to the quantum of security where a real risk exists of non-enforcement of a judgment against a claimant resident in a non-Convention jurisdiction.

Hertel and Another v Saunders and Another [2018] 4 Costs LR 879: Part 36 offers: whether an offer to settle made before there had been any claim or action can be effective and have the costs consequences under the rule.

The Commissioner of Police of the Metropolis v Brown; The Chief Constable of Greater Manchester Police v Brown and Another [2018] 4 Costs LR 897: Qualified one-way costs shifting; the extent to which QOCS protection under CPR 44.16 applies in proceedings in which the claimant has advanced mixed claims rather than only those relating to personal injuries.

Other recent cases

Saab Seaeye Ltd v Atlas Elektronik GMBH and Others [2018] 4 Costs LO 419: Costs budgeting under Part II of CPR Part 3: hourly rates for budgeted work; allowances and approval of budgets for experts; trial preparation and trial.

Red and White Services Ltd v Phil Anslow Ltd and Another [2018] 4 Costs LO 425: Costs budgeting under Part II of CPR Part 3 in the Competition list: factors to apply where the costs claimed in the budget were high and disproportionate; reduction in incurred costs.

Hugh Cartwright & Amin v Devoy-Williams and Another [2018] 4 Costs LO 437: Hourly rates in “high temperature” litigation; late settlement and the factors to apply when assessing counsel’s brief fee on trial; costs of assessment under CPR 47.20; adequacy of a Calderbank offer to displace the default rule.

Commissioners for HM Revenue & Customs v Gardiner and Others [2018] 4 Costs LO 451: Indemnity principle; principles applying in order to decide whether there had been an agreement that the solicitor would not charge the client; counsel’s fees; brief fee payable when no evidence to be called.

JXA (by His Mother and Litigation Friend VLA) v Kettering General Hospital NHS Foundation Trust [2018] 4 Costs LO 469: Choice of solicitor; reasonableness of the instruction of a City of London firm in high value clinical negligence litigation; hourly rates.

Robinson v EMW Law LLP [2018] 4 Costs LO 477: The indemnity principle: whether costs incurred in litigation involving a solicitor acting on his own behalf can be recovered between the parties; application of the rule in Chorley.

Cartwright v Venduct Engineering Ltd [2018] 4 Costs LO 495: QOCS under CPR 44.14; enforceability of an order for costs made in favour of one defendant against an award of damages paid to a claimant by another defendant; effect of a Tomlin order under which the entitlement to damages arises not by reason of an order of the court but only via a schedule to the order.

Hislop v Perde; Kaur v Committee (for the Time Being) of Ramgarhia Board Leicester [2018] 4 Costs LO 515: Fixed costs in Section IIIA of CPR Part 45; late acceptance of Part 36 offer; whether CPR 36.13 (costs consequences on acceptance of Part 36 offer) applies to cases falling within the fixed costs regime.

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