Date  Headline

  • 27.03.2013
    Henderson v All Around the World Recordings Ltd.; 2NV Records Ltd. [2013] EWPCC 19
    • Key areas: patents; CFA; ATE; success fee; Patents Court

      This was a hearing to determine costs arising from a dispute in the Patents County Court.

      The Claimant had won most of the claim, but the Defendants had succeeded on a copyright claim and an interim application.

      The Claimant submitted that ATE and success fees were not covered by the CPR 45, Section VII cap.  The Defendant submitted that the cap related to all costs; with which the Court agreed.

      The Claimant then submitted the Court has discretion to depart from the cap, and it would be unjust not to do so.  The Defendants submitted there was no such discretion.  The Court agreed with the Claimant based upon the wording of CPR 44.3.

      The Claimant then submitted that while the base costs should be subject to the cap, it should not apply to the ATE or success fees, which instead should be considered separately.  These costs consisted of £88,103.50 in solicitors’ fees + VAT + 60% success fee; Counsel’s fees of £8,285 + VAT + 100% success fee; disbursements of £889.67 + £168.73 VAT and ATE of £42,665.  Overall, £232,676.20 was claimed.  She submitted that after the costs caps were applied, these total £46,000.00 + VAT + ATE + success fee, which would total £162,007 + VAT.

      The Claimant submitted that due to her lack of means and massive difference between her and the Defendants, there was an “imbalance of power” which justified them being outside the cap, because otherwise any damages award would be cancelled out by the costs she would owe her solicitors.  The Defendant submitted that many parties in the PCC lack means, and so it is not a reason not to remove the cap.

      The Court agreed with the Defendant and summarily assessed the base costs at £33,546.25 + VAT, and allowed ATE of £31,920 with 60% success fee for both solicitors and Counsel.  In total the Defendant was ordered to pay costs of £52,484.25.

  • 25.03.2013
    R v Applied Language Solutions Ltd. [2013] EWCA Crim 326
    • Key areas: non-party costs orders; Court of Appeal

      This was an appeal against a ruling that the Appellant should pay the Prosecution’s costs thrown away.

      The Appellant provided translation and interpretation services to the Ministry of Justice in criminal proceedings.  It had arranged for a Slovak-speaker to attend a 10:30 sentencing hearing, but the day before was told that the hearing had been re-arranged to 09:45.  It did not tell the interpreter, who turned up at the time of the initial listing.

      The hearing was adjourned.

      Subsequently the Appellant was ordered to pay the costs under s. 19B Prosecution of Offences Act 1985 on the basis that it had been negligent.  These were calculated at half of the costs of the Prosecution’s Counsel.

      The Court noted that interpretation services was an “integral part of its obligations” for a fair trial, and had been since 1915.  The Appellant had been contracted to provide these and so “assumes the responsibility”.

      At first instance, the Judge had been told that the Appellant was a “go-between”, i.e. little more than a booking facility for interpreters.  However, after considering the terms of the agreement the Court of Appeal held that they were “bound to provide that service on 98% of occasions”, on a 24/7 basis, and has to do so unless there was a force majeure.

      It held that a “single failure” cannot lead to misconduct, but this situation was similar to another case that had occurred in the past, which too was an “isolated failure”.

      Overall, the court allowed the appeal.

  • 22.03.2013
    Royal Devon & Exeter NHS Foundation Trust v Acres [2013] EWHC 652 (QB)
    • Key areas: non-local solicitors; hourly rates; High Court

      This was an appeal against a ruling that the Claimant was entitled to instruct Central London/London 2 solicitors, and the hourly rates they should be allowed to claim.

      The Claimant lived in Devon and had sued the Defendant for repetitive strain injury, which led to her retirement.

      She initially instructed local (Plymouth) solicitors via her union, who considered that the case did not have reasonable prospects.  The Union funded a second opinion through their usual solicitors who are based in central London.  They obtained medical evidence from an Orthopaedic Surgeon, and subsequently issued proceedings against the Defendant.

      The Defendant denied liability, but eventually made a Part 36 offer of £4,000.  The case was valued at £140,000 but after realising that she was in no fit state to continue with the case, it settled for £8,000.

      At first instance the Claimant submitted that the case was complex, and so justified central London solicitors.  The Court held that the costs of £79,203.07 were not disproportionate, but that while the initial solicitors had the experience to deal with it, they rejected the claim because they were not allowed to run it on a CFA.

      The Court also held that it was reasonable to view the claim was being worth six-figures, and so the use of a Grade A was justified.

      In relation to location, the Court held that central London rates were not reasonable, and instead allowed a National 1 rate plus 30%, which equated to £280/hour.

      The Defendant applied for permission to appeal the rulings that the costs were proportionate; that £280/hour was reasonable.  The proportionality issue was refused twice, but the rate appeal was allowed to go forward.  The Claimant was allowed to cross-appeal the rate on the basis that the initial solicitors turned down the case.  The Court noted that this was the same issue.

      On appeal, the Defendant submitted that the Claimant could have instructed other local solicitors, and not simply go to ones based in central London.  They also submitted that they turned it down simply because of the lack of a CFA.

      The Claimant submitted that there were two issues: was it reasonable to instruct central London solicitors, and what rate should be allowed.  She submitted that it was important given its value; that there were complex issues; and that she was dissatisfied with the initial solicitors, so was reasonable to use someone her union recommended.

      The High Court noted that the matter had significant input from specialised Counsel, and the experts would deal with causation and complexity issues.

      It held that it was “not a relevant consideration” for the Judge to base his view on the refusal of a CFA.  It noted that the initial solicitors had considered the case not to have reasonable prospects, and so a second opinion was required.  Therefore, it was reasonable to use the central London solicitors, given the Union’s trust in them.

      As a result, the Court also allowed central London rates, but emphasised that “the outcome … is no carte blanche” for central London solicitors to be used.

  • 22.03.2013
    HMRC v Eclipse Film Partners No. 35 LLP [2013] UKUT 1041 (TCC)
    • Key areas: complex case; taxpayer opt-out; Upper Tribunal

      The main action had been allocated as a “Complex case”, but the taxpayer had opted-out of the costs rules.

      This was an appeal over whether the First-Tier Tribunal (Tax) had the power to order the costs of preparing trial bundles to be split between the parties in this situation.

      In June 2011, the FTT had ordered the costs to be split.  HMRC had opposed this at the hearing, but did not appeal it.  The bundles comprised 736 lever arch files, and led to costs of £108,395.48, including time spent in preparing them.

      The parties agreed that there was a substantial amount of documentation.

      After receiving the taxpayer’s invoice, HMRC applied to set-aside the FTT’s decision, or to limit it to the copying costs.  The taxpayer issued its own application for wasted costs on the basis of unreasonable conduct.

      At the hearing the FTT considered that it had jurisdiction to make the original order, and ruled that it covered both copying and preparation costs, but did not consider the taxpayer’s application.  HMRC appealed.

      HMRC submitted that because the taxpayer had already opted-out of the costs provisions, the FTT could not make the original order.  The taxpayer submitted that the FTT was entitled to make its initial ruling as part of its general case management powers, and that r. 5(3)(i) Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 gave a specific power in relation to trial bundles.

      The Tribunal held that there was no distinction between the costs of general proceedings, and those of case management.  As a result, given that the taxpayer had opted-out of the costs provisions, the FTT “has no power to direct the sharing of costs”, unless they are due to conduct or are wasted costs.

      As a result, the appeal was allowed, and remitted the taxpayer’s own appeal back to the FTT.

  • 21.03.2013
    Nelson’s Yard Management Co.; Leverick; Leverick; Munroe v Eziefula [2013] EWCA Civ 235
    • Key areas: discontinuance; party’s conduct; Court of Appeal

      This was an appeal regarding costs issues arising from a discontinued claim.

      The Claimants issued proceedings in January 2008 over to a boundary dispute, and discontinued them on 7th March 2012.  On 29th March 2012 they applied for costs on the grounds of the Defendant’s “obstructive and truculent behaviour” during the claim.

      The application was refused at first instance, on the basis that the general rule was that Defendants get costs where proceedings are discontinued.  The Claimants appealed against this ruling.

      The Defendant’s building works started in January 2007, and the Claimants wrote to her on four occasions over the damage that was being caused.  However, she ignored this correspondence, and only responded once proceedings had been served.

      On appeal, the Claimants submitted that it was wrong to find the Defendant’s conduct as not being unreasonable.  They also submitted that there was a “change in circumstances” in that the Defendant only engaged with them, including by instructing a surveyor, after service.

      The Defendant submitted that their conduct was justified in the circumstances, and that while it was “regrettable” not to respond pre-issue, they were not valid Pre-Action letters because they did not refer to potential proceedings.  As for the “change of circumstances”, the Defendant submitted that this was simply part of normal litigation.

      The Court held that the first instance court was incorrect to consider that the Defendant’s refusal to deal with the pre-action correspondence would involve considering the merits of the case.  Therefore, given that the Claimants were entitled to be concerned about potential damage to their property, it was “unreasonable conduct” to ignore their correspondence, and so were entitled to issue proceedings.

      Given that the Claimants did not consider the Defendant to be “spurious” and so did not issue an application for summary judgment, the Court that in the circumstances, they should be awarded their costs up to the date of its service, i.e. to 3rd May 2008, with no order for costs from that point.

  • 20.03.2013
    Magical Marking Ltd.; Phillips v Ware & Kay LLP & Others [2013] EWHC 636 (Ch)
    • Key areas: both parties win some issues; Basis of assessment; High Court

      This was a hearing to determine costs arising from a main action.

      The Claimants had made a successful claim for negligence against the Defendants, but after a 3-week trial had only been awarded £28,000.00 against a claim of £10 million.

      The Claimant submitted that although there was a massive difference between the amount claimed and awarded, the award “was by no means a modest sum”, and the Defendants had not made any Part 36 offers.

      However, the Court considered that the Defendant had succeeded overall, because the Claimants had failed on one ground they sought to raise; that on the second ground the Court held that the negligence was not the cause of the losses; that they were awarded less than 1% of the claimed sum; and given the likely outlay for the Claimant’s costs it was reasonable not to make an offer.

      Overall the Defendants were awarded 85% of their costs, given their refusal to concede some issues, on the Standard Basis.

  • 19.03.2013
    Challinor & 20 Ors v Juliet Bellis & Co.; Egan [2013] EWHC 620 (Ch)
    • Key areas: both parties win some issues; party’s conduct; High Court

      This was a hearing to determine costs issues, amongst others, that arose from a claim against the Defendants for £2.2 million.  It was successful against the First Defendant/Part 20 Claimant, but failed against the Second Defendant/Part 20 Defendant.

      The Second Defendant that because the claims failed he was entitled to his costs.  He submitted that the First Defendant should pay all of his costs until the date he was added as a Second Defendant (14th May 2012), at which point they should pay 90% of them.

      The First Defendant submitted that they should not pay his costs because he brought the case upon himself, due to his conduct throughout the proceedings.  The Claimants agreed.

      In the main claim, the Court held that there should be no order as to costs between the Claimants and Second Defendant; and between the Defendants.

      The Court held that the First Defendant should pay the costs of the Part 20 claim.

      The First Defendant accepted that they were liable for the Claimants’ costs, but given “the grossly inefficient/incompetent way the case was handled”; the issues that were abandoned; and those which they won; they should only have to pay 50-60% of them.

      The Claimants submitted that the First Defendant’s allegation was “unwarranted” and not particularised; and that all sides had issues with disclosure.

      The Court agreed that the First Defendant’s allegations could not be sustained, but that it was right to take into account the issues that they won.

      Overall, the Court awarded the Claimants 90% of their costs, and were not liable for any of the First Defendant’s costs.

  • 18.03.2013
    Sycamore Bidco Ltd. v Breslin; Dawson [2013] EWHC 583 (Ch)
    • Key areas: Part 36 offer; party’s conduct; Basis of assessment; interest on costs; Indemnity Basis; High Court

      This hearing was to determine costs, amongst other issues, resulting from a successful claim for £5.25 million plus interest of approximately £1 million.

      The Claimant sought all of its costs, which it estimated at £3.9 million plus success fees of around £1 million.

      The Defendants made an early offer of £75,000, which the Claimant easily beat at trial.  The Claimant made a Part 36 offer of £5.5 million including interest up to 8th March 2012, on 16th February 2012; and one for £4 million including interest, on 19th April 2012 (less than 21 days before trial).  No offer was accepted.

      The Defendants submitted that the Claimant’s costs should be reduced by 60% to reflect its losses on arguments of misrepresentation; breach of warranty; and other specific issues, which as a whole took up a “significant” amount of time and work.  They also submitted that on the issue that the Claimant won, it lost sub-issues, which also led to a larger number of time and work.  they also submitted that the Claimant had run a “dishonesty” claim, which the Court considered to be “less than frank”.

      The Claimant submitted that the extra work required for these unsuccessful issues was “vastly over-stated”, and that any extra work was caused by the Defendants, who also acted unreasonably.

      The Court considered that the unsuccessful issues were “significant” and “severable”, and ordered that the Claimant only receive 60% of its costs.

      In relation to an application for specific disclosure against a third party, the Court that because the Defendants were relying on them, the Claimant was entitled to issue the application, and so costs were in the case.  It made the same order for an application by the Defendant.

      The Court rejected a submission that the Defendants’ costs liability be separated out on proportionality grounds, because they were joint Defendants, and had not previously raised this point during the main proceedings.

      The Court then turned to the Claimant’s Part 36 offers, noting that the later one could be ignored due to it being for a smaller amount.

      The Second Defendant submitted that the offer was not beaten in relation to him because damages should be apportioned, which results in an award against him of £300,000, including interest.

      The Court noted that the offer was not worded in a way to distinguish between the Defendants, and so was an offer that either could have accepted.  Therefore, it was not beaten, and so Indemnity Basis costs were not awarded against the Second Defendant.

      The First Defendant submitted that it would be unfair to penalise him under Part 36 due to the Claimant’s conduct.  The Court held that the Defendants’ unwillingness to make a Part 36 offer goes against them, because it suggests they were happy with the damages but not the costs.

      Therefore, the Court held that the Part 36 rules would apply against the First Defendant, but interest on costs was limited to 8% because that was what the Claimant wanted.  The Parties also agreed that interest on costs would only apply to base costs, not success fees, and would only apply from when disbursements were paid.

      The Court also ordered to Defendants to make an interim payment of £1.5 million.

      The Parties then dealt with a separate, but related claim, which the Defendants won.  The Claimant agreed that it was liable for the Defendants’ costs, and the Parties agreed that these costs should be off-set against the Claimant’s costs, and that the same interest rate should apply as in the main action.

  • 15.03.2013
    The Manchester College v Hazel & Anor [2013] EWCA Civ 281
    • Key areas: Protective Costs Orders; Court of Appeal

      This was an Application to set aside a Protective Costs Order in favour of the other side.

      The main action was an employment dispute which the Claimants had won at both the Employment Tribunal (ET) and Employment Appeal Tribunal (EAT), but the College had received permission to appeal to the Court of Appeal.

      Both the ET and EAT proceedings were costs-free, and when the Court of Appeal granted permission they applied for and obtained costs protection.

      The Claimants’ application referred to correspondence that costs would not be claimed should the College succeed, and made an undertaking that they would not seek costs should they win.

      Permission to appeal was granted on condition that the College would not seek costs.

      The Claimants submitted that they had won in two previous hearings; are of “modest means”; that the Court of Appeal had made this sort of order in other cases; that they had agreed not to claim costs; and the new CPR 52.9A agrees with the Court of Appeal’s previous rulings.

      The College submitted that all ET litigants run the risk of ending up in the Court of Appeal; that CPR 52.9 requires a “compelling reason” for protection, which does not apply; that the appeal is to defeat “wholly unmeritorious” claims; that prior caselaw has “special circumstances”; that costs should be dealt with after the hearing; that they could not afford to spend “£15,000 to £20,000”; and CPR 52.9A is not in force until 1st April 2013.

      The court held that there was a “compelling reason” given the Claimants’ previous wins; their undertaking should they win in the Court of Appeal; that they cannot continue should an Order not be granted; and given the forthcoming changes, should the Order be set- aside, the Claimant would be entitled to make a new application for protection within “two weeks”.

      Overall, the Court rejected the College’s application and so kept the order for costs protection.

  • 14.03.2013
    Webb Resolutions Ltd. v JV Ltd. (t/a Shepherd Chartered Surveyors) [2013] EWHC 509 (TCC)
    • Key areas: party’s conduct; High Court

      The Defendants in this case applied for their costs in dealing with an Order made as a result of a CMC.

      The Judge gave directions at a CMC and left it to the Parties to agree an order.

      Three days after the CMC the Claimant’s Counsel sent a draft order to the Defendant “that bore almost no relation” to the Judge’s Directions, in that it provided for disclosure for all issues, not simply the “limited” ones allowed.  A week later the Defendants responded stating that they didn’t agree it reflected the CMC, and sent an amended Order.

      The Claimant’s Solicitors then attempted to re-draft the Defendant’s Order, and the Defendant responded stating that they did not agree.

      The Claimant’s Solicitors also wrote to the Court saying that they were “experiencing great difficulty” in agreeing an order.  At the hearing, the Court stated that this was “disingenuous” and were “trying to persuade” the other side to an order that was different to the Directions.

      The Defendant also contacted the Court and sent their draft Order.  The Court responded stating that the Defendant’s Order was correct, and subsequently ordered a CMC to be listed to deal with the issue.

      At the CMC the Judge ordered that his earlier Order be amended so that the costs of preparing the Order be left to him, not the trial judge.

      At the hearing the Claimant submitted that the Defendant should have claimed their costs at an earlier point; that their own conduct was not unreasonable; and that it was “disproportionate” for the Defendants to request a CMC.

      The Court held that the Claimant’s Counsel was “seeking to defend the indefensible”, in that they sought to obtain an order “that reflected the directions that they or their clients would like to have”, not what was in fact made; and that the Defendants were entitled to wait to see what would result.

      Overall the Defendants’ costs of dealing with this were summarily assessed at £6,925, with the remainder to be costs in the case.

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