Stephen Warner v John Merrett

Whilst the Court of Appeal’s decision on the conjoined Appeals involving “Mitchell” interpretation is awaited it is good to see that Judges are able to make sensible decisions without the guidance.

Judge Mackie QC was required to consider whether a failure to serve documents relating to additional costs liabilities for solicitor and counsels’ success fees and the after-the-event insurance premium with the bill of costs should, as contended by the Paying Party, require the disallowance of the items sought – Stephen Warner v John Merrett QBD (Merc) 12/06/2014.

It was “not appropriate to focus intensely and narrowly” on the word “trivial” in the “Mitchell” guidance held the Judge, rather it was necessary to look at the context and the effect of the breach.  In this case the breach was of a general kind and not a total failure. The consequences of the breach caused inconvenience to the Paying Party and not to the Court.  Whilst accepting that there is no requirement for the Paying Party to contact the Receiving Party for the missing information the prejudice claimed to have been caused would have been avoided had the Paying Party sent an e mail or made a telephone call.

The application for relief was made immediately once the omission was realised and in the context of the matter the breach was “trivial or insignificant”. Even if that was wrong went on the Judge, “it was appropriate to grant relief in all circumstances”.

This decision is in stark contrast to the view of Costs Judge Rowley in the matter of Long v Value Properties SCCO 13/01/14 though it should be acknowledged that the Costs Judge gave his decision shortly after “Mitchell” at a time when zero tolerance in relief for sanction applications was being encouraged and that judgment reflects the Costs Judges unease at the striking out of the additional liabilities.

It did appear, to the writer, an unjust and a disproportionate penalty that failure to provide a statement of reasons for setting a success fee at the level sought, not providing definition of “win” and “lose” etc with a bill of costs when served should result in the disallowance of success fees and premiums and thus significant sums, when the Court would not be involved for some significant time let alone having a hearing listed.

Orders, Rules and Directions require compliance without question but the prejudice suffered by the Paying Party when certain information was not provided was far from obvious and the argument was simply an attempt to receive a significant reduction based on a very narrow view of “breach”  a “breach” that could be easily remedied.

Common sense…long may it continue.

Gary Knight, Partner and Costs Lawyer