24.05.2013Gavin & Anor v Community Housing Association Ltd.  EWCA Civ 580
Key areas: party’s conduct; Indemnity Basis; Basis of assessment; Court of Appeal
This was an appeal against costs, amongst other issues.
The Claimants had won the claim over a lease dispute but had only been awarded £100. Due to their conduct in the main action, they had been ordered to pay the Defendant’s costs of the whole claim on the Indemnity Basis.
The Claimants appealed this ruling, and a ruling that they also pay interlocutory costs on the Indemnity Basis.
The Court noted that the claim was at one point for £2 million, but was never clarified, and the Defendant was “fighting in the dark”. It also noted that the initial ruling considered the Defendant’s rejected Part 36 offer of £25,000, and that long before the proceedings started they had offered to keep the lease at the same rent. Based on this conduct, indemnity costs were awarded against them.
On appeal, the Court considered that the claim was “unfounded and exaggerated”, and justified the award against them.
As a result, the appeal was dismissed.
23.05.2013Ali v Ali; Co-operative Insurance Society Ltd.; Lodge; Allianz Insurance PLC  EWHC 1233 (QB)
Key areas: indemnity principle; costs indemnified by a third party; High Court
This was an appeal against a ruling that “The Second Defendant to pay the Third and Fourth Defendants’ costs of the action, it being recorded that it was reasonable for the Third Defendant and Fourth Defendant to be represented separately in the action”.
The Second Defendant appealed this ruling on the basis that it did not represent the relationship between the Third and Fourth Defendants.
The main action was a RTA, and the Second Defendant had already raised the issue of separate representation, given that they were the insurer and insured. The Fourth Defendant disputed this, on the basis that there was a conflict due to non-disclosure which entitle them to avoid the policy.
In the DA proceedings, correspondence was disclosed that showed the Fourth Defendant was to indemnity the Third Defendant against any costs award. As a result, the Second Defendant submitted that there was no conflict between them, and that the indemnity would only not occur if the Third Defendant did not co-operate. As a result, there was no need for separate representation.
The Third and Fourth Defendants submitted that the original policy had been avoided due to non-disclosure of criminal convictions, and their agreement was a separate contract. In any event, the Second Defendant could still raise issues of the indemnity principle.
The Court held that had it been aware of the disclosed correspondence, it would not have made the direction. As a result, it was made due to a “misunderstanding” of their respective positions, and so the direction that it was reasonable to be represented separately was revoked.
21.05.2013Re Wasted Costs Order Made Against Joseph Hill & Co. Solicitors  EWCA Crim 775
Key areas: Wasted Costs Order; party’s conduct; unreasonable conduct; Court of Appeal
This was an appeal by the Solicitors against an order that they pay the Prosecution’s wasted costs in a successful defence.
At a Pre-Case Management Hearing, Counsel stated that the prosecution depended upon the Defendant being identified, not a case of him having an alibi.
The Defendant subsequently gave evidence, which appeared to support an alibi, but this was not provided until the night before the trial.
Based upon the witness evidence, the Police undertook research, which showed that the alibi was incorrect.
In spite of this, the Defendant was still found not guilty, but the solicitors were order to pay the costs wasted due to them not complying with rules relating to service of alibi notices and witness evidence.
On appeal, the Court noted that the Judge had not made any findings against either Counsel or the Solicitors, but considered that the Solicitors still had to serve documents correctly.
It held that Counsel’s view of the situation was wrong, but was “quite widely held”, including by the solicitors, and that it was not improper or unreasonable to act as they did.
In addition, the court was not sure that their conduct did lead to any costs being wasted, given that it was due to the witness’s evidence containing information not previously advised.
As a result, the Order was quashed.
16.05.2013Thames Chambers Solicitors v Miah (Rev 1)  EWHC 1245 (QB)
Key areas: Wasted Costs Order; bankruptcy proceedings; party’s conduct; unreasonable conduct; High Court
This was an appeal against a ruling that the Solicitors pay the Defendant’s wasted costs.
The Solicitors had acted for an individual who had been made bankrupt in June 2010. Prior to this he had issued a claim for £23,000 of outstanding debt.
In February 2011, a default judgment against him was set aside, and shortly after he instructed the Solicitors. He was discharged from his bankruptcy in June 2011.
In February 2012, the Defendant undertook a search which showed that the individual was bankrupt.
On 6th March 2012, the Defendant applied to strike-out the claim given the bankruptcy. A few days later the individual saw his Trustee. The Trustee prepared a witness statement stating that he had not consented to the claim, and was only made aware of the claim the day before he met the individual.
The claim was then stayed with the Trustee to confirm that he consented to it by 16th June 2012, else it be struck-out.
The Trustee then assigned the claim to the individual, and he then argued that the assignment meant that consent was no longer required. The Defendant applied for their wasted costs given the lack of authority to issue the proceedings until this point.
The Solicitors served a witness statement with supporting documentation stating that they had been in contact with the Official Receiver and Counsel on this issue, and considered that they were entitled to act for the individual.
However, this was rejected, and the claim was struck-out, with costs on the Indemnity Basis, and the wasted costs application was adjourned.
At the adjourned hearing, the wasted costs were allowed given the Solicitors’ lack of authority to act in the proceedings.
The Solicitors appealed this on 5 grounds: that there was no proper application for wasted costs; that there was no causative link between the conduct and the costs, because the individual would have carried on with the claim in any event; that it did not comply with the Court of Appeal’s guidance; that there was procedural irregularities; and that it did not comply with CPR 48.7(4).
The Court noted that an application does not have to be made under CPR 23, and held that there was a “strong prima facie case” that the Solicitors were unreasonable and negligent from 16th March 2012.
As a result, the appeal was dismissed.
14.05.2013United Marine Aggregates Ltd. v GM Welding & Engineering Ltd.; Novae Syndicates Ltd.  EWCA Civ 516
Key areas: liability for costs; party’s conduct; Court of Appeal
This was an appeal by the Claimant against an unsuccessful claim, and a cross-appeal by the Part 20 Defendant (the Respondent’s insurers) that it should only be awarded 50% of its costs.
The appeal was rejected, and so the Court turned to the cross-appeal.
At first instance, the parties were asked to make written submissions on costs. No party suggested that the Part 20 Defendant’s costs should be reduced, yet they were.
Costs were reduced on the basis of the cross-examination prolonging the trial.
The Part 20 Defendant immediately appealed this ruling, given that no-one had suggested such a reduction, and that they were reduced simply because the Judge considered them to be disproportionate. This initial appeal was rejected.
At the appeal hearing, the Respondent accepted that it was wrong to make the reduction, but submitted that he was correct make reductions given the Part 20 Defendant’s conduct.
The Court sympathised with the trial judge’s position, but stated that the Part 20 Defendant was entitled to defend an action for indemnity brought against it. However, it noted that their cross-examination was not criticised at the time, and the trial judge actually asked his own questions.
The Court therefore held that because the Respondent had been awarded all of its costs, it was only fair to award the Part 20 Defendant all of its costs.
13.05.2013Slick Seating Systems; GL Events SA v Adams; Leamark Ltd.; LA Structures; Jones  EWHC B8 (Mercantile)
Key areas: Indemnity Basis; Basis of assessment; summary assessment; party’s conduct; costs budgets; High Court
This was a hearing to determine costs arising from a successful claim for £4.3 million that had been resolved by a default judgment.
The Defendants had refused to take part in the proceedings, but the Court was satisfied that the Claimants had kept them informed and had done everything possible to conduct the claim.
The Claimants had served a costs budget of just under £360,000, and their costs schedule totalled just over £351,000.
The costs were summarily assessed, but the Claimants asked that it be done on an Indemnity Basis given the Defendants’ conduct.
The Court held that this was the correct idea in the circumstances, and so the budget was not relevant, and so even if the Claimants’ costs had exceeded it, they would have been allowed.
As a result, the Claimants’ costs were assessed as claimed at £351,267.35.
10.05.2013Slocom Trading Ltd.; Derbent Management Ltd.; v Tatik, Inc.; Sibir Energy PLC; Maritime Villa Holdings SCI  EWHC 1201 (Ch)
Key areas: both parties win some issues; party’s conduct; interest on costs; interim payment; High Court
This was a hearing to determine issues arising from a successful claim, including costs.
The Claimants sought costs against all Defendants. The Defendants submitted that they should be reduced due to the Claimants not wining on every issue; the dishonesty of one of the Claimants’ witnesses; and the fact that the case succeeded on a non-pleaded allegation.
The Court held that the unsuccessful issue was only minor, and so did not justify any disallowance of the First Claimant’s costs.
The Court also held that any dishonesty on behalf of the witness was not attributable to the Claimants, and the Defendant had already been awarded their wasted costs of this issue.
The Court also held that the third point was “misconceived”, and did not affect the overall result.
The First Claimant was therefore awarded all of its costs, and an interim payment of £850,000.
The Second Claimant had originally been a Part 20 Defendant until the first day of trial. Therefore, it was awarded its Part 20 costs up to trial and all of its costs thereafter.
Interest on costs was awarded at 1% above base rate.
In relation to post-hearing costs, the Claimants were awarded 70% of these costs.
08.05.2013Khans Solicitors (A Firm) v Chifuntwe; Secretary of State for the Home Office  EWCA Civ 481
Key areas: Solicitor/Own client; solicitors’ lien; Court of Appeal
This was a second appeal by the solicitors over costs resulting from a successful application for Judicial Review.
The solicitors claimed costs of £9,500, and were offered £6,000.
Shortly after, the solicitors were sacked and the client said that he would accept the offer, and the money should be paid direct to him.
The solicitors then wrote to the client asking him not to get involved with the costs issues. They also wrote to the Home Office advising them of the issue, and that they should not pay to the client; and that they would be seeking Counsel’s advice.
Three months later, the Home Office paid the £6,000 to the client, who has subsequently disappeared.
The solicitors then issued Part 8 proceedings for a declaration that the agreement was void, and that they are entitled to either a charge or lien.
At first instance, and on the first appeal, the Home Office obtained rulings that they were not liable for further costs, given the lack of evidence that they colluded with the client.
On appeal, the solicitors submitted that the fact they gave notice to the Home Office was sufficient to create a trust in their favour, or would mean that payment direct to the client would be ineffective. The Home Office submitted that they had done nothing wrong in the circumstances, to which the solicitors responded that their notice, even ignoring the Judicial Review proceedings, meant that the Home Office was aware.
The Court held that once a party is on notice, that they pay sums “at his own risk”, and that the solicitors had not attempted to resile from their notice, but had not attempted to secure payment. It suggested that as part of the original claim, either party should have made an application to pay the costs into court.
It then turned to who should be held responsible.
The Court held that when the agreement for £6,000 was reached, the client was acting in person, and so there was a valid agreement. However, given that all but £1,500 of the costs were unpaid by the client, the Home Office had to pay £4,500 to the solicitors, given that there was not a “good discharge”.
Therefore, the appeal was allowed in part.
07.05.2013X v Y  EWHC 1104 (Comm)
Key areas: security for costs; party’s conduct; High Court
This was an application for security for costs in a set of arbitration proceedings.
The parties had entered into a contract, and Y had become insolvent in Singapore. However, X had been in breach of contract, and Y was awarded damages of US$7.8 million.
X had issued proceedings in India; Y obtained a freezing order and an anti-suit injunction against X in Australia. Y then obtained an anti-anti-suit injunction in relation to a further breach of contract, and was awarded a further (fourth) sum US$6 million in damages and costs. All of the awards are unsatisfied.
Y sought security of £120,000 for their costs for a further challenge to the arbitration, and for X to pay over £3.8 million into court for the fourth award.
X submitted that it had assets in Australia worth over A$42 million, and so there was no reason to order security.
However, the Court stated that X “has plainly set its mind against” complying with the orders, and so their conduct justified an order for security.
It also held that X’s challenge to the payment of £3.8 million was “flimsy and lacking in substance”, but their conduct on its own did not justify them being ordered to pay into court, especially given the Australian proceedings.
As a result, X was ordered to pay security for costs, but not to make a payment into court.
03.05.2013Jones & Ors v Secretary of State for Energy and Climate Change; Coal Products Ltd.  EWHC 1023 (QB)
Key areas: interest on costs; funding; disbursements; High Court
This was a hearing to determine costs issues arising from a successful claim.
The Claimants had already been awarded 80% of their costs, and the parties had agreed that interest would be paid as usual. However, the Claimants then issued an application for interest on disbursements to be paid from the date that the disbursement was paid, not from the date of judgment.
The Claimants’ solicitors acted under CFAs that stated that the client was liable for disbursements in any event, as was the standard case in a CFA. These totalled over £787,500.
Disbursements were funded by the solicitors under a credit agreement that charged interest of 4% above base rate. The CFAs and the credit agreements were disclosed, the Defendants agreed that interest was payable on disbursements from when they were incurred. However, they disputed the rate to be charged.
The Claimants submitted that the rate charged was “modest” given commercial rates. The Defendants submitted that usually CFA solicitors fund disbursements out of their overheads, and that the claim for interest was to help the solicitors, not the clients.
The Court held that it was likely that commercial loans would have charged a higher rate of interest than 4% above base rate, and that the solicitors were acting as a bank.
As a result, the 4% rate was allowed.
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