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Legal Costs Update
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Legal Costs Update
Here, in Kain Knight Costs Lawyers regular, monthly legal costs update, we focus on those cases which we believe are likely to have a practical relevance for its members. We welcome feedback and if there is an area, topic or case you would like us to address, please let us know.
Conditional Fee Agreements (“CFAs”)
The tail of "old" pre 1st April 2013 CFAs is long indeed. In July alone, the Court of Appeal handed down three judgments and in a further appeal about CFAs and assignments, judg- ment has been reserved - Budana v Leeds Teaching Hos- pital NHS Trust.
In Radford v Frade, permission to appeal from the decision of Warby J ((2016)4 CLO 653) had already been given in re- spect of his decision on "scope" : the extent to which , if at all, the costs of work done outside the scope of the CFA, can be recovered from a paying opponent. Upon a further ap- plication, Hickinbottom LJ gave permission on an interest- ing point about rectification : is there a cut-off point after which it is no longer possible to rectify a CFA which has a de- fect? In Frade & Ors v Radford & Anor [2017] EWCA Civ 1010 (14 July 2017), an attempt to carry out a retrospective rectification after Warby J had made his costs order, was held to be too late, so counsel lost out on his fees. Whether he was right about that will be decided with the rest of the ap- peal on 5 December 2017.
Catalano v Epsley-Tyas Development Group Ltd (2017) EWCA Civ 1132 has resolved for the time being the uncer- tainty about the circumstances in which a claimant who has a pre 1st April 2013 CFA, can rely on QOCS protection in a failed claim –(Qualified One Way Costs Shifting under CPR 44.13 - 16 : the limitation on enforcement of costs orders in lost personal injury claims).
The short answer is that a losing claimant who has entered into a " pre-commencement funding arrangement" (CPR- speak for a pre 1 April 2013 CFA with or without ATE insur- ance), cannot rely on QOCS protection. That is the effect of CPR 44.17 : were it to be otherwise, the Court of Appeal said, it would enable a claimant with a strong claim to continue the claim and recover the success fee and ATE premium, but if prospects became low, to discontinue the action and es- cape the costs consequences via QOCS.
In Ms Catalano's case, she had signed an "old " CFA in June 2012 but without ATE insurance as this had been turned down. After the introduction of QOCS, she traded it in for a new CFA in the belief that she could shelter under the QOCS veil if she lost, or as happened, she discontinued her claim .. That was a mistake. CPR 44. 17 meant that there was no QOCS protection so the deemed costs order made on dis- continuance was enforceable against her.
Stevensdrake v Hunt (2017) 3 Costs LO 517 is another salutary reminder about the basic principles of contract law! The solicitor and Insolvency Practitioner client went back a long way in business . The deal (according to the IP) was that the solicitor would work under CFAs and his fees would be met out of realisations. So far so good until a losing defen- dant went bust after he had been ordered to pay £1.9m so there was nothing in the kitty to meet the solicitor's fees.
The IP contended that he had no personal liability because payment out of realisations was a term of the retainer . That argument succeeded before the judge but was reversed on appeal. There was no contractual justification for going out-
side the terms of the CFA , nor was there an implied term as to payment required to give the agreement business effi- cacy. So the IP had to pay up!
Kupeli v Atlasjet (2017) 3 Costs LO 517 concerns cancella- tion notices. None were given by the solicitors when 669 claimants signed CFAs in a community centre in a prospec- tive group action against an airline. Held : the meeting had not been “an excursion organised by [a] trader away from his business premises” so none were necessary under the Can- cellation of Contracts made in a Consumer’s Home Place of Work etc Regulations 2008.
Part 36
Jordan v MGN (2017) EWHC 1937 (Ch) . The “‘phone hack- ing” litigation is well known. It is being handled by Mann J. This is one such case, but unlike the others went disastrously wrong for the claimant because he got in a complete tan- gle about Part 36 and its consequences. The judgment is long and the facts complicated, but in short, on the day be- fore the trial was due to start on 4 July this year , Mr Jordan sought permission to accept a very old Part 36 offer of £15,000 made in September 2014, having rejected £100,000 in June 2016 which was then withdrawn. The action was thus compromised but without hesitation, Mann J ordered him to pay MGN’s costs on the indemnity basis.
Costs Budgeting
In paragraphs 33 to 43 of his judgment in Napp Pharma- ceutical Holdings v . Dr Reddy ‘s Laboratories (UK) Ltd [2017] EWHC 1433 (Pat), Birss J was asked to make an order for costs budgeting in an action with a value of over £10 million. Whilst accepting the proposition that the court could do so, he considered that costs budgeting was not yet required and that the matter should be revisited after plead- ings had closed, when the parties would need to produce and exchange statements setting out how much they had spent and estimating what their future costs would be. The fact that the rules indicate that budgeting is appropriate in cases of up to £10 million, did not deter him from indicating that he might impose budgeting at a later stage.
Please feel free to contact us for more information, guid- ance or discussion about any of these cases or indeed any other costs issues.
Please contact Nick McDonnell: nick.mcdonnell@kain- knight.co.uk or Colin Campbell: colin.campbell@kain- knight.co.uk if there are any points you wish to discuss.
Nick McDonnell
Colin Campbell