25.02.2011Berry v HMRC  UKUT 81_Costs (TCC)
Key issues: Leading Counsel, Upper Tribunal, work on documents
HMRC won an appeal in the Upper Tribunal and so applied for their costs, which were claimed at £50,555.70.
A total of 50 hours was claimed for preparing documents for the appeal, but the preparation was done by the Appellant, not HMRC and there was very little difference to those served in the First-Tier Tribunal. The time was therefore significantly reduced.
However, the Tribunal held that given the amount at stake; because it was a test-case and because the Appellant instructed two Counsel, it was reasonable for HMRC to instruct Leading Counsel.
In the circumstances, HMRC’s costs were reduced to £44,000.00.
25.02.2011R. v Griffiths  EWHC 90204 (Costs)
Key issues: criminal, Legal Aid, SCCO
The Defendant in this case was convicted of two separate crimes in two sets of criminal proceedings. She was legally-aided and her Solicitors obtained Representation Orders for both sets.
The two proceedings had different Court reference numbers; however, for the sake of convenience, were heard together in Swansea Crown Court.
The Solicitors claimed – and were paid – a fixed fee for each claim. However, the Legal Services Commission subsequently attempted to recoup one fee on the ground that the cases were heard together.
The Solicitors requested a Redetermination, but the LSC maintained their position stating “despite there being multiple Court Reference numbers, there was only one sentencing hearing, so only one fee is payable”.
The Solicitors appealed the LSC’s decision which was granted.
18.02.2011Younan v First Group PLC  EWHC 90214 (Costs)
Key areas: CFA; CFA Regs 2000; “Old-Style” CFA; party’s conduct; success fee; Leading Counsel; RTA; SCCO
This hearing was to determine preliminary issues arising from the Claimant’s Bill of Costs: exaggeration by the Claimant, and extra costs incurred as a result; compliance with the CFA Regulations 2000; success fees.
The main action was a road-traffic accident in which the Defendant disputed liability which led to a two-day trial after which judgment was granted in the Claimant’s favour. Quantum was then agreed by a Consent Order.
Two separate Bills of Costs were served: one for £225,218.61 concerning costs until judgment, and one for £20,608.90 dealing with post-trial costs.
The Claimant’s first solicitors acted under a CFA dated 3rd April 2003. They issued just before limitation expired for a claim worth up to £5,000.00 and had the Defendant’s incorrect address on the service letter. The Defendant did not respond and so a default judgment was requested, but rejected because it did not contain any Particulars of Claim.
The case then transferred to another firm who also acted under a CFA, dated 28th October 2006.
They noted that the proceedings had not been served and gave the Defendant 28 days to respond, else the default judgment would be renewed. The Defendant did not respond and so default judgment was granted.
The Defendant then instructed Solicitors and the case was allocated to the Multi-track.
An updated scheduled of loss was served, quantifying damages at over £1 million, as were witness statements. One statement was obtained from a Witness who had provided evidence to the Claimant’s initial solicitors. The initial statement had caused the Defendant to admit liability. The Defendant saw that his two statements conflicted.
The Defendant obtained and disclosed surveillance footage of the Claimant, which saw him moving freely. It was claimed that the claim was “fraudulent” and issued an application to withdraw an admission of liability. The Application was granted and a liability trial was listed.
At trial, while the Judge accepted that the Claimant was willing to “say whatever he considered necessary”, but that it didn’t mean that he was lying about the circumstances of the accident. As a result, the Defendant was found liable.
The Defendant submitted that the Claimant’s conduct meant that he should be deprived of any costs relating to liability, including those costs relating to the witness who did not appear, and any costs relating to loss of earnings should be held back until quantum had been dealt with.
This was rejected at trial.
The Defendant obtained permission to appeal, but did not go through with it.
In the Points of Dispute, the Defendant stated that costs should be limited to 65% based on the Claimant’s conduct, but this was withdrawn in the hearing.
The Court also stated that it would not limit costs based on conduct, when those arguments were rejected in the main action.
It also held that the Claimant’s exaggeration had some impact on the costs overall, but reductions would only be made where appropriate.
As a result of the exaggeration, the Claimant instructed two Leading Counsel; the first of whom withdrew shortly before trial due to what he considered were low prospects of success. The Defendant submitted that these costs should be disallowed as a result. The Claimant submitted that the Defendant’s allegations of forgery were dismissed; that quantum was concerned with the Claimant’s state of health; Leading Counsel was instructed due to allegations of fraud, which would impact his ATE cover; and the Defendant also instructed a QC. The Court stated that the use of a QC was reasonable in the circumstances.
In relation to the first Solicitors’ CFA, they admitted that they did not advise the Claimant of their interest in recommending a particular ATE policy, which conflicted with reg. 4 (2)(e)(ii) CFA Regulations 2000. The Court held that the Defendant had not raised a prima facie case of a breach of the Regulations, in that they had not shown that it impacted upon the advice given to the Claimant, and so the CFA was enforceable.
The Court noted that the Claimant did not provide a statement as to how the success fees were calculated until Replies were served. However, the application for Relief from Sanction was not made until over a year after the Points of Dispute were served. The Court held that success fees would not be allowed on any costs incurred during this period.
In relation to the success fees claimed, the first Solicitors were awarded 20% because at the time it would have been considered a simple RTA. The second Solicitors’ CFA stated that a success fee of 12.5% would be claimed should the matter settle before trial; 100% should a trial occur, as it did. The Court that in the circumstances, given that there was a possibility of him having to make a negligence case if the claim was struck out for limitation reasons, a 100% success fee was reasonable.
The First Leading Counsel also claimed a success fee. At the time he was instructed, judgment had been granted, albeit was subsequently withdrawn. Given the terms of the CFA meant that his later withdrawal from the case had no impact on his ability to claim a success fee, it was assessed at 18%.
18.02.2011Ellis Building Contractors Ltd. v Goldstein  EWHC 269 (TCC)
Key Areas: enforcement of adjudication; basis of assessment; summary assessment; High Court
This was an Application for Summary Judgment to enforce an Adjudicator’s decision in the Claimant’s favour in the sum of £121,566.86 plus VAT plus the fees of the Adjudicator.
The original adjudication dealt with the costs involved with the demolition and rebuild of commercial property in Brighton.
The main issue in the application was the Claimant’s disclosure to the Adjudicator of the inter partes correspondence which had been labelled “without prejudice”.
The Court stated that in this situation, it needs to determine whether or not the Adjudicator’s decision was based on this sort of material and whether the Adjudicator was impartial. On the facts, the Court noted that the Adjudicator did not make any mention of the “without prejudice” material and so held that neither of the concerns over his decision applied.
The Court therefore, gave summary judgment.
The Claimant then applied for their costs of £13,163 to be assessed on the Indemnity Basis. However, the Court held that it was reasonable for the Defendant to raise the “without prejudice” point and so the costs were summarily assessed on the Standard Basis at £10,000.00.
17.02.2011Amin & Anor v Mullings & Anor  EWHC 278 (QB)
Key issues: High Court, Part 45, RTA, success fee
The main action was a Fast-Track RTA which involved a counter-claim by the Defendant.
Liability was agreed on the day of the trial and the Claimants’ quantum and majority of the counter-claim being agreed by negotiation at Court and so the hearing itself was only over the remainder of the counter-claim. The Parties agreed that there was a 100% success fee on the Defendant’s costs.
The dispute was whether the Claimants were also entitled to 100%.
At first instance, it was held that the definition of “at trial” in CPR 45.16(1)(a) included “settlement being achieved on the day that the trial is due to take place”.
The Defendant submitted that the judge failed to distinguish between the counter-claim – which hadn’t settled before the trial – and Claimant’s claim, which had settled before the trial.
On Appeal it held that a 100% uplift for solicitor’s fees “arises when a claim concludes after the trial … of the relevant claim has commenced by settlement or by judgment. If settlement is achieved before the hearing … there is an entitlement to a 12.5% uplift”.
In relation to Counsel’s fees, it was held that “settlement of a Fast-track claim after the start of a trial period on the date of a fixed for trial would attract a 50% uplift… The end period for such an entitlement is the commencement of the trial after which settlement of the claim would attract a 100% uplift.”
As a result, the Solicitors were only allowed a 12.5% success fee while Counsel was awarded a 50% success fee.
15.02.2011Motto & Others v Trafigura Ltd. & Trafigura Beheer BV  EWHC 90201 (Costs)
The costs in this case arose from a claim for personal injury caused by a toxic waste spillage off the coast of Ivory Coast. There were 29,614 Claimants and damages were agreed at over £30 million in total.
This hearing was a preliminary hearing over 22 “Key Issues”, including hourly rates; proportionality, success fees and ATE premiums. There were also arguments over a variety of categories under which significant amounts of work fell.
The matter was subject to a Group Litigation Order and the Claimants’ served generic and individual bills totalling £104,707,772.72. The Bills contained over 55,000 Items and the costs included base costs of £49 million; 100% success fees for both Solicitors and Counsel, and a £9 million ATE premium.
The Defendants submitted that the Solicitors’ hourly rates exceeded the SCCO Guideline rates for the City of London, and, in any event, should be reduced to Central London rates.
For the Hearing the Defendants served Skeleton Arguments which were over 1,000 pages long, including supporting schedules, and a Witness Statement which was over 3,000 pages long including Exhibits. The Claimants served a 73-page Skeleton Argument and their Witness Statements and Exhibits were 923 pages long.
The Grade A Solicitor rate was allowed in full, with the rates for the Grade B, C and D fee earners being reduced to more than Central London but less than the City of London Guideline rate.
The success fees were reduced to 58% each; a ruling over the ATE premium was deferred until a future date and the Base Costs were held to appear – as a whole – to be disproportionate.
13.02.201119 Nower Close West – Mole Valley: Midland: Birmingham (Service Charges)  EWLVT CHI_LV_SVC_43UE_0140
Key areas: unreasonable actions; landlord and tenant; Leasehold Valuation Tribunal
The Appellants in this matter won an appeal over costs of building works to the property.
The Appellants applied for an Order under s. 20C Landlord & Tenant Act 1985 that the Respondents’ costs of the proceedings were not to form part of their rental charges, which was granted.
They also made an Application for their costs of £200.00. The Tribunal granted this after considering the inter partes correspondence which clearly showed that the Appellant had attempted to resolve the matter without the need for proceedings.
11.02.2011Atlantic Electronics Ltd. v HM Revenue & Customs  UKFTT 276 (TC)
Key areas: Tribunal transitional arrangements; First-tier Tribunal (Tax)
This was a case over costs in cases which started in the VAT & Duties Tribunal and transferred to the First Tier Tribunal.
HMRC applied for an Order that the Value Added Tax Tribunals Rules 1986 should apply, under sch. 3, para. 7 Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009. The Appellant had already issued an application that r. 10 Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 should apply instead.
The main action was concerning MTIC-fraud in relation to VAT on sales of mobile phones in 2006.
The proceedings were issued in 2008. In their Statement of Case, HMRC stated that they would seek costs should the appeal be dismissed.
By the time the case was transferred to the FTT, 8 witness statements and 16 lever arch files of documents had been served by the parties. An interim costs order had also already been made against HMRC.
Since the case was transferred, HMRC served a further 20 witness statements and 23 files of documents.
HMRC submitted that both parties had expected costs to follow the event.
HMRC also submitted that it should be assumed that the new costs rules apply due to the transitional arrangements; the Appellant’s own Application for costs and existing caselaw.
HMRC further submitted that they had issued an Application for costs in the case on the basis of the old rules and the Appellant had not disputed this.
The Appellant submitted that the new rules applied unless explicitly disapplied by the Tribunal. It also referred to HMRC delaying before making their own Application as a reason for the Appellant to assume that the new rules applied, but it had not been issued until after the Appellant’s Application.
The Tribunal held that the rules cannot be disapplied by implication and they did apply from 1st April 2009. It also stated that the closer to 1st April 2009, the stronger the case for the old rules to apply; while the greater the costs incurred after 1st April 2009, the stronger any opposition to the old rules would be.
The Tribunal held that the lengthy period since 1st April 2009 before HMRC issued their Application was “decisive” when the other party objects to it, in determining whether the old or new rules apply.
The Tribunal, therefore, dismissed HMRC’s Application.
09.02.2011Rolf v De Guerin  EWCA Civ 78
Key issues: Court of Appeal, mediation, Part 36 offer
The Claimant in this case – after amending her Particulars of Claim twice – claimed just over £70,000.00 for outstanding building works.
She made a Part 36 offer for £18,000.00 and offered to mediate. Both offers were rejected by the Defendant. The Claimant was awarded £2,500.00 at trial. No order for costs was made until the Part 36 expired, after which the Defendant was awarded his costs.
The Claimant appealed this ruling. The appeal was upheld – with no order for costs being made throughout – because Defendant’s refusal of mediation was considered to be unreasonable.
07.02.2011Minkin v Cawdery Kaye Fireman & Taylor  EWHC 177 (QB)
Key issues: costs estimates, High Court, Solicitor/Own client
This was a Solicitor/Own client dispute over the non-payment of fees.
At the outset, the firm estimated that the costs would be £3,500.00 + VAT. However, the invoices exceeded this. The client pays part of the invoices but complains about the amount being charged and refuses to pay any more. Eventually the firm stopped acting for him due to this non-payment.
Based on the facts, the Court decided that the firm was in breach of contract by refusing to act for the client due to his dispute.
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