Legal Costs Update 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.

(1) Simon Davies (2) Kathleen Ollin (3) Cheryl Ollin and Roger Greenway – Master Simons Costs Judge – 30/10/13 – JMS 1205590

The Defendant Greenway appealed against a decision of a Costs Officer at a detailed assessment that the consent order that provided for assessment of the Claimants’ costs on the standard basis prevented him from even considering whether to restrict the Claimants’ costs to RTA Protocol amounts and proceeding to assess the Claimants’ bill on an “hourly rate” basis.

The Defendant submitted that “nothing in an order for assessment on the standard basis ousts the power of the court”; the Claimants’ submitted that the order was a contract binding the parties.

The Costs Judge agreed that the order was a contract which a Costs Judge did not have the power to vary however that was not the end of the matter; in light of the order made the Costs Judge, at the detailed assessment, was obliged to have regard to all of the circumstances when deciding whether the costs sought were proportionality and reasonably incurred or were proportionate and reasonable in amount; the Costs Judge was also obliged to have regard to the conduct of the parties.

In the circumstances of this case the Costs Judge found that the Costs Officer was correct in deciding that the Consent Order required a detailed assessment however the Costs Officer was not precluded from considering whether the costs should be limited to those costs recoverable under Stages 1 and 2 of the RTA protocol.

To read the rest of Gary’s useful legal costs update just click the link below.

140103 Legal Costs update GK