Long v Value Properties Ltd.; Ocean Trade Ltd. [2014] EWHC 2981 (Ch)

Key areas: relief from sanction; success fee; CFA; High Court

This was appeal over whether a Party was in breach of the CPR; whether there was a sanction; and whether relief from sanction should be granted.

The Claimant’s solicitors acted under a CFA with a success fee, and Notice of Funding was served.

The Claimant did not serve a Statement of Reasons for the success fee with the Bill of Costs, but was served a few weeks later. The parties agreed to extend the time for service of Points of Dispute, and when served the alleged non-compliance with the CPR.

The Claimant responded stating that the Defendant could have asked them for a copy; offered to give the Defendants time to update its Points based upon the Statement; and that if the Defendants maintained their position, relief from sanction would be sought.

At first-instance, non-compliance was found, and relief was denied, albeit the Judge considered the breach to be “trivial” under, and there was no prejudice to the Defendant. However, he felt he was bound by the Mitchell case to reject the Claimant’s application.

On appeal the Claimant argued that there was no breach at all; that if there was a breach, sanction only applied under CPR 44.3B(1)(c), not CPR 44.3B(1)(d); and that any breach was trivial, or relief should be granted.

The Defendants said that Costs Practice Direction 32 implied that the Statement of Reasons had to be served at the same time as the Notice of Commencement. The Claimant submitted that the CPR and Practice Direction did not specify such a requirement, and so it was simply good practice. The Court agreed with the Defendant on this point, so as to comply with CPR 1.2.

In relation to the sanction, the Claimant referred to the Judge’s concern about the impact and noted that CPR 44.3B(1)(c) gave a “graduated” sanction, not an all-or-nothing one. The Defendant admitted that CPR 44.3B(1)(d) was harsh, but that was the intended effect, and if CPR 44.3B(1)(c) applied, then there would be no real sanction. The Court agreed with the Claimant, noting that a graded sanction was still a sanction.

On the relief point, the Defendants submitted that the breach was serious, not trivial, and prejudiced the Defendant because they had to prepare further Points of Dispute; and that there was no “good reason” for non-compliance. The Court rejected this, noting that the parties’ agreed extension enabled Points to be prepared. It also stated that the Defendant’s attempted to take advantage of the situation, but not informing the Claimant of the issue, and refusing to co-operate. As a result, extra costs were caused by the Defendants’ own actions.

As a result, the Court considered the breach to be “insignificant”, and so relief was granted. It also considered the Defendants’ actions to be “opportunistic”, which was condemned in the Denton case.


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