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Harmans Costs Brief - January 2014
Fresh for 2014 - Costs Brief is back!  2014 promises to be a very busy year for Harmans - we already have a Costs seminar scheduled for April, an exciting new technology development to announce very soon as well as our 20th anniversary celebrations to plan!  As usual, we still aim to bring you all the latest news and developments in Costs along with expert analysis. 
 
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For even more news and comment visit our website www.harmanscosts.com
Legal Costs Update (non-Mitchell) by Gary Knight
 
Mitchell was, with good reason, the headline grabber as far as court decisions go during the later stages of 2013 and the decision and its impact on future matters has been the subject of considered review and comment elsewhere, therefore I will concentrate on other cases where the decisions made may be of interest.

(1) Margaret Kelly (2) Paul Kelly and Black Horse Limited – Senior Costs Judge Hurst – 27/09/13 – BAILII citation Number: [2013] EWHC B17 (Costs)

A case involving the mis-selling of payment protection insurance (PPI) which proceeded to a contested trial before a Deputy District Judge who after a full day’s hearing ordered the balance owed (£5,202.63) to be written off by the Defendant with the Defendant to repay the sum of £6,000.00 previously paid.  The Claimants were awarded 70% of their costs. The assessment was heard by the senior Costs Judge in August 2013 when the majority of issues were resolved however one outstanding issue was that of the level of the ATE premium sought – £15,900.00 inclusive of IPT at 6%.

In points of dispute it was observed that the insurance policy covered (1) adverse costs and (2) the Claimants’ own disbursements; (1) amounted to £5,837.10 with (2) totalling £1,406.20, accordingly the insurer’s total potential liability was £7,243.30 in respect of which the premium of £15,900.00 was sought.  Not surprisingly the Paying Party submitted the premium was disproportionate.

The Senior Costs Judge concluded that there was “no doubt” that the premium sought in this case was “wholly disproportionate” and allowed 25% of the premium sought – £3,975.00 including IPT less 30% as ordered.

PGF II SA and OMFS Company 1 Limited – Court of Appeal – 23/10/13 – Neutral Citation Number: [2013] EWCA Civ 1288

The Court of Appeal was required to consider, as a matter of principle, what should be the response of the court to a party which, when invited by the opponent to take part in the process of ADR, simply declined to respond.  The Court of Appeal acknowledged that Halsey v Milton Keynes General NHS Trust provided for costs sanctions to be imposed where there was unreasonable refusal to participate however in the instant case the request had been met with complete silence.

The claim had been compromised save as to costs, by the last minute acceptance by the Claimant of the Defendant’s Part 36 offer with the trial Judge acceding in part to the Claimant’s application for a costs sanction on the ground that the Defendant had unreasonably refused to mediate, by depriving the Defendant of the costs to which it would otherwise have been entitled under Part 36 however the Judge decided against the awarding of the costs incurred by the Claimant incurred during the same period.

Both parties appealed. The Defendant submitting that the Judge had been wrong to find its silence as amounting to refusal and even if it did, that refusal had been on reasonable grounds; the Claimant submitting that silence in response to an invitation to participate in ADR was itself unreasonable regardless whether it amounted to a refusal, or whether there were reasonable grounds to refuse.

It should be noted that the costs during the relevant period were advised to be £250,000 per party.

As will be seen from consideration of the full judgment weight was placed on the ADR Handbook particularly Chapter 11.56, with Briggs LJ firmly endorsing the advice given therein that silence in the face of an invitation to participate in ADR is, as a general rule, of itself unreasonable.

Briggs LJ added, at paragraph 56:

Finally, as is recognised by the weight placed on the judge’s decision in the passage in the ADR Handbook to which I have referred, this case sends out an important message to civil litigants, requiring them to engage with a serious invitation to participate in ADR, even if they have reasons which might justify a refusal, or the undertaking of some other form of ADR, or ADR at some other time in the litigation. To allow the present appeal would, as it seems to me, blunt that message. The court’s task in encouraging the more proportionate conduct of civil litigation is so important in current economic circumstances that it is appropriate to emphasise that message by a sanction which, even if a little more vigorous than I would have preferred, nonetheless operates pour encourager les autres.

Both the appeal and the cross appeal were dismissed.

To read the rest of Gary's Legal Costs Update just click here.
Relief from Sanctions post-Mitchell appeal (we couldn't just cover non-Mitchell could we?)

Further decisions giving guidance with regard to the Courts’ approach to applications for relief from sanctions have been coming through following the stern conclusions reached by Master Victoria McCloud and the Court of Appeal in the Mitchell case.
 
The importance of ‘Mitchell’ as the starting point in considering conduct and relief from sanction appears to be reinforced by the decisions made below.
 
As ever there do appear to be some mixed messages coming through though. 
 
Durrant v The Chief Constable of Avon and Somerset Constabulary [2013) EWCA Civ 1624
 
The Defendants failed to serve witness statements on time and applied for relief. Subsequently a further application was made and the Defendants sought to serve further witness statements.
 
Relief was granted with the Defendant being allowed to rely on all of the statements.
 
This decision was overturned by the Court of Appeal (Richards LJ) who considered the Mitchell case in detail before reaching a decision. It was concluded that the initial judge had granted relief from sanctions in circumstances which did not justify relief on any proper application of CPR 3.9.
 
Adlington & 133 Others v Els International Lawyers LLP (Based on an article by Legal Futures)
 
A case where relief was sought as a result of eight claimants failing to sign their statements of case within the required timetable.
 
In all the circumstances the Judge concluded that the breach was ‘trivial’, that the application for relief had been made in good time and that the nature of the non compliance could not be divorced from the consequences of the non compliance. He also concluded that the breach was one of ‘form rather than substance’.
 
Relief was granted and some pertinent comments were made with regard to Sir Rupert Jackson’s thinking during the preparation of his final report and conclusions reached regarding relief from sanction.


SG DR Petrol SRL V VITOL SA [EWHC) 3920
 
The Claimant failed to comply with an order for security for costs. Its subsequent application for relief from sanction was refused, the Judge having reviewed Mitchell and reiterated the points made in the Court of Appeal’s judgment.
 
The Judge went on to make some general observations.


To read of two further decisions in this update just click here.

Matt Harman kicks off his 2014 speaker bookings on Thursday 30 January at 6pm in Chelmsford for the Mid Essex Law Society.  The focus is Costs in a post-Jackson landscape. It's proving popular already so if you would like to book a seat please email vikki.knight@harmanscosts.com
as soon as possible.

Jim Knight examines the Court's power to restrict expert evidence 

A recent amendment to CPR 35.4(2) requires any party seeking permission to rely upon expert evidence to provide an estimate of the costs of the proposed expert evidence, the discipline of the expert and wherever possible the name of the expert.

These requirements apply to all cases whether they were issued before or after 1 April 2013. However, in cases issued after 1 April 2013 this information should in any event be included in costs budgets when and where required.

With regard to cases issued before 1 April 2013 that are not subject to costs budgeting per se the amendment still allows the Court to consider the potential expert(s) costs to be incurred before granting permission to rely on same.

The Court also has the power to limit the amount of the expert fees that can be recovered interpartes. Although this power has been around for some time it was not widely used as there was previously no requirement in the rules for the provision of estimates for experts’ costs. Following the recent amendment, this power is more likely to be exercised, particularly where the Court is called upon to do so by a potential paying party.

The Rule now reads as follows (the underlining is mine):
CPR 35.4
(1) No party may call an expert or put in evidence an expert’s report without the court’s permission.
(2) When parties apply for permission they must provide an estimate of the costs of the proposed expert evidence and identify –
(a) the field in which expert evidence is required and the issues which the expert evidence will address; and
(b) where practicable, the name of the proposed expert.
(3) If permission is granted it shall be in relation only to the expert named or the field identified under paragraph (2). The order granting permission may specify the issues which the expert evidence should address.
(3A) Where a claim has been allocated to the small claims track or the fast track, if permission is given for expert evidence, it will normally be given for evidence from only one expert on a particular issue.
(Paragraph 7 of Practice Direction 35 sets out some of the circumstances the court will consider when deciding whether expert evidence should be given by a single joint expert.)
(4) The court may limit the amount of a party’s expert’s fees and expenses that may be recovered from any other party.

Just what the “estimate of the costs of the proposed expert evidence” is intended to cover is unclear but it would be safe to assume that the estimate (or estimates in cases involving one or more experts) should cover the preparation of initial reports, responses to queries, amendments to reports, updated reports (where considered appropriate), the joint statement process and attending Trial.

In the present climate solicitors would be well advised to be fully prepared for all upcoming case management conferences by knowing the name and potential cost of the expert(s) to be instructed to avoid the prospect of being refused permission to rely on same.

Due to popular demand we have already put our next costs seminar in the diary for 4 April 2014 at The Law Society in London, focusing on developments 12 months post Jackson.

Our seminars are free and open to all clients but are limited to 30 attendees per session.  To register your interest for this and future Harmans costs seminars please email vikki.knight@harmanscosts.com.

ATE Insurance - where BTE cover unsuitable or discovered late

It is accepted practice that where a Before-the-Event (BTE) policy is in place it should be used in preference to an After- the-Event (ATE) policy. If not, the ATE premium (even pre-LASPO) is non-recoverable; at least in theory.
 
However, the case of Giles –v- Veolia changed the rules for certain situations. Yet it appears many solicitors remain unaware of its implications with the result that defendant insurers’ attempts to decline paying the ATE premium can go unchallenged.

A number of such cases went to appeal at various levels of the legal process. Christie –v- Wiles was important because in that case the ATE premium was deemed recoverable when enquiries were made and no suitable BTE cover was discovered.
 
Giles -v- Veolia became more pertinent because it underscored the fact that even if no enquiries were made, the ATE premium could be recovered should any BTE cover be unsuitable. In the Giles case, no enquiries were made as the client was a bus passenger and was suing the bus company. It was held that even where no enquiries were made, as the policy held by the bus company was not suitable, and it was unreasonable to use the tortfeasor’s policy, the ATE was recoverable.
 
Originally, the ATE policy premium was assessed as being unrecoverable as the Claimant had the opportunity to utilise the Defendant’s BTE policy. It was this decision which, supported by the ATE insurer (ARAG), the Claimant appealed, with a District Judge finding in the ATE insured client’s favour. A subsequent appeal by the Defendant was withdrawn at the last moment.
 
It was also held in the Giles case that even if BTE cover should be discovered at a later date, once the ATE cover is entered into, it does not have to be unpicked.  Giles -v- Veolia remains the authority in such situations and Claimant’s solicitors need to be aware of this.

Latest decision following Mitchell – relief from sanctions refused but permission to Appeal granted...
Click here for judgment.

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