23.07.2015Michael Wilson & Partners Ltd. v Sinclair; Sokol Holdings Inc.; Eagle Point Investments Ltd.; Butterfield Bank (Bahamas) Ltd.  EWCA Civ 774
Key areas: Application to strike-out; relief from sanction; Court of Appeal
This was a ruling on an appeal against an order for strike-out.
In the main proceedings, the Appellant had been ordered to make a payment on account of costs, failing which proceedings should be stayed, but had failed to do so until well after the time-limit expired. The Appellant applied to lift the stay, but due to repeated breaches, it was struck-out, on the basis that it was an application for relief from sanction, applying Mitchell v News Group Newspapers Ltd..
In light of the Denton ruling, the Appellant applied to get the order for strike-out overturned.
On appeal, the Court held that the breach was “significant” due to the delays to the appeal; that there was no good reason for the breaches, but because the original order only provided for a stay, and no further order was made, the appeal was allowed and relief from sanction was granted.
22.07.2015Coventry v Lawrence  UKSC 50
Key areas: ATE; CFA; success fee; human rights; Supreme Court
This was a hearing to determine whether statutes in relation to ATE premiums and CFA success fees were in breach of the Human Rights Act 1998.
The Appellants won their appeal to the Supreme Court and were awarded 60% of their costs of the proceedings, including success fees and ATE premiums.
The Respondents submitted that the claims for success fees and ATE were in breach of art. 6 and art. 1 First Protocol of the European Convention on Human Rights.
After considering the background that led to Parliament authorising claims for these items, via the Access to Justice Act 1999, as well as CPR 43-44 and the Costs Practice Direction (“CPD”), the Court turned to the human rights issues themselves.
The Respondents submitted that the CPD breach the art. 6 rights of “non-rich” losing parties, and that the ECtHR cases of MGN v UK (2011) 53 EHRR 5 – which ruled that it breached it in relation to art. 10 (freedom of expression) – meant that it must also be held to breach of art. 6. The Court rejected this on the basis that they were two different things, and that there is nothing to suggest the ECtHR would also make such a ruling.
The Court noted that the issue was not whether the claims were “unfair”, but whether it was a proportionate way of achieving a legitimate aim, and that the effect as a whole needs to be taken into account, not simply the odd case in which the result may be “unfortunate”.
The Supreme Court noted that ECtHR caselaw had held that schemes can be compatible even if they may be harsh on certain individuals, and that the AJA 1999 was intended to replace a general withdrawal of legal aid in civil claim; that there had been a widespread consultation before it was adopted; and that it was within the “wide area” that Parliament had to use its discretion.
The Supreme Court also held that CPD 11 stated that the Court must consider ATE premiums and success fees separately, and they must not be reduced simply because it makes the total costs seem disproportionate, which was intended to encourage solicitors to take clients on under CFAs.
As a result, the Supreme Court held that ATE premiums and CFA success fees did comply with the UK’s human rights obligations. There was, however, a dissenting judgment, which stated that the AJA 1999 did breach human rights, due to the flaws highlighted in the Jackson Report, and comments in MGN v UK that the public consultation on the Act itself showed that the “depth and nature” of flaws showed that the AJA was outside a country’s discretion.
17.07.2015R (on the application of British Academy of Songwriters, Composers and Authors Musicians’ Union; UK Music 2009 Ltd.) v Secretary of State for Business, Innovation and Skills; The Incorporated Society of Musicians  EWHC 2041 (Admin)
Key areas: issue-based costs orders; both parties win some issues; High Court
This was a ruling on issues arising from a main action, including costs.
The Claimants succeeded in their application for Judicial Review, and so various regulations were quashed, on the basis that they conflicted with EU law.
As to costs, the parties accepted that the Claimants won and so in principle were entitled to their costs.
The Court noted that the proceedings were split into numerous separate areas, namely Issues I – VI. After considering the facts, it held that the Claimants won Issues I and IV, while Defendant succeeded on Issues II, III, V and VI.
Given that they were separate issues, and that the Claimants would overall receive a net amount of costs, the Court ordered that there be an issue-based costs order, with each party to only receive costs for the Issues that they won. The Claimants were also awarded costs for the post-judgment period.
10.07.2015Pentecost v John  EWHC 1970 (QB)
Key areas: CCFA; CFA; indemnity principle; High Court
This was an appeal against a ruling on costs.
The main action was a clinical negligence claim that settled for £525,000 plus costs.
The Claimant’s Bill of Costs totalled £350,000, including a 100% success fee. During the proceedings, the solicitors entered into two separate CCFAs, one of which covered work from 2nd July 2009. The Claimant’s original CCFA stated a percentage, but the subsequent one did not.
On assessment, it was held that the second CCFA overtook the original one for the later work, and because did not state a percentage uplift for work from 2nd July 2009, it was not enforceable. As a result, the Defendant was not liable for costs from this date due to the Indemnity Principle.
The Claimant appealed, submitting that the second CCFA was a variation of the first; that the second CCFA it did not affect the basic retainer with the Claimant; that the original calculation of the CCFA was sufficient for the second CCFA; and that alternatively, the lack of a percentage meant that no success fee was payable.
After considering the terms of the CCFA, the Court held that the second CCFA was retrospective, and so complied with statute, so there the indemnity principle was not breached. It did hold however, that the second CCFA was a separate agreement, not a variation, and that the solicitors were bound to it; and that there was “no merit” in the fourth argument.
09.07.2015Alpha Rocks Solicitors v Alade  EWCA Civ 685
Key areas: exaggeration; Solicitor/Own client; Court of Appeal
This was an appeal against an Order that the claim be struck-out on the basis of an abuse of process.
The claim was a solicitor/client dispute over costs incurred in two separate pieces of litigation (“Rufus” and “Catherine”). Both Bills were struck-out on the grounds of fraudulent exaggeration. The Rufus claim was for £131,514.56, with £43,732.50 claimed in relation to the Catherine work.
At first instance, the Judge rejected the submission that the strike-out action was itself an abuse of process and a separate one that the Bills had not been served correctly. He considered various pieces of documentation, and held that some work had been backdated. He held that the Rufus Bill was “deliberate exaggerated”, while the solicitors knew that Catherine Bill was inaccurate. As a result, both Bills were struck-out with the solicitors to pay 75% of the client’s costs on the Indemnity Basis.
The solicitors appealed on the basis that the application was itself an abuse of process; that the Judge should not have conducted a “mini-trial”; that the Judge was wrong to hold that they had not prepared trial bundles; that the Catherine Bill was struck-out in spite of his own findings; and had misunderstood the description “paid Counsel”.
On appeal it was held that the Judge had ignored his own warnings not to conduct a “mini-trial”, and made findings that witnesses were untruthful without a cross-examination. It also held that the Judge did not consider whether striking out was disproportionate, given the parties’ conflicting position.
As a result, the appeal was allowed, with the Bills to be re-assessed.
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