July Costs judgments including Part 36, QOCS, Indemnity costs

July 2018 Costs Round Up – QOCs, Part 36, Fixed Costs

The last month was a pretty hot one, both for the number of important and interesting legal costs judgments that were delivered, as well as in terms of the record outdoor (and in some offices, indoor) temperatures being hit.

Here’s our round-up of the some of the legal costs news and cases of July.

In the joined appeals of Hislop v Perde & Kaur v Ramgharia Board Leicester [2018] EWCA Civ 1726 the Court of Appeal was asked to consider whether a claimant could expect to recover standard or indemnity costs where a Part 36 offer was accepted out of time by the Defendant. Both cases were matters that fell under the fixed costs regime under CPR pt 45 IIIA. The CA held that fixed costs continued up to the date of acceptance of the Part 36 offers, even if that acceptance was out of time. The claimants were therefore entitled to neither standard or indemnity costs. Broadhurst v Tan was distinguished.

The subsequent reactions of the opposing camps have predictably been the polar opposite of each other. From the claimant camp, suggestions that the decision will encourage defendants to ‘play the long game’ and hang out for as long as possible to see if the claimant blinks first. The defendant’s side of the fence, has pointed to the fact that ‘fixed costs mean fixed costs’ (to slightly paraphrase the Brexit camp’s slogan). A more reasoned defendant-side argument came from one of the defendants’ solicitor advocate’s, Matthew Hoe who suggested that bringing in costs penalties for a party that settle before trial, even if that be by accepting a Part 36 out of time, might mean that instead they decide that they might as well carry on to trial and take their chance. On the other side, many on the claimant side are starting to ask whether Part 36 is still fit for purpose.

This is an important decision that deserves looking at in greater detail and therefore we will consider it in more depth in our next blog.

The case of Hugh Cartwright & Amin v Devoy Williams and anor (2018) EWHC 1692 QB (4 July 2018) Davies J concerned a highly charged piece of litigation between a solicitors practice and former clients. Allegations of fraud, misrepresentation and deceit had been made. The claimant firm instituted proceedings to recover it’s legal bill by way of assessment proceedings whilst the clients made a separate claim for negligence against the claimant. The bill proceedings eventually settled as a result of mediation being undertaken, on the day before trial.

From a cost perspective the interesting point surrounded a reduction in counsels fee, made by the costs judge at detailed assessment.

The brief fee claimed was £6,500. The Master allowed £3,000 to include £500 for jurisdictional issues. The Master’s reasoning on this point was that the barrister had previously been instructed at a rather lower fee. The mediation time claimed by the solicitors suggested that the mediation concluded earlier than expected (late afternoon) because only seven hours’ time had been claimed for it. That is the point at which counsel should have been informed that the case had settled, not at 10:30pm as it would appear was actually the case. So, as far as costs between the parties were concerned, the Master did not seem it to be reasonable for all of counsel’s brief fee to be paid by the defendant. If Counsel had been notified in the afternoon that the matter had settled, reasoned the Master, some of Counsel’s preparation could have been avoided and ‘counsel could have done something else the next day.’

On appeal Davies J disagreed on the basis that;

“No counsel properly observing his or her duty would stop working on this case until he or she had been informed of a final settlement. All the preparation work had been done. The barrister was entitled to be paid his or her fee. The Master erred in finding that the brief could have been cancelled on the previous afternoon and that some of the preparation could have been avoided. The Master originally accepted that the fee per se was reasonable but reduced it for reasons which do not stand up to scrutiny…. there were no good grounds to reduce the brief fee. There is no evidence before this Court to support an argument that the lower fee was appropriate. Accordingly, this Ground of Appeal succeeds both as to the exercise of discretion and to the sum claimed.”

In the Commissioner of Police of the Metropolis v Brown 2018 EWHC 2046, the court held that full QOCS protection does not extend to ‘mixed claims.’ Mrs Justice Whipple, held that the exception in CPRr44 16 (2)b, to the protection of the qualified one-way costs shifting regime applied to proceedings in which the claimant had claimed damages for things other than just for personal injuries. In such “mixed” cases the she held that the judge had a complete discretion to determine whether it would be just to allow a defendant to enforce a costs order against the claimant. To apply QOCS protection to any proceedings which included a personal injury claim would thereby give mixed claims automatic protection, and make r.44.16(2) redundant. It would permit claims to be dressed up as personal injury claims as a vehicle for obtaining the benefit of protection.

PJSC Aeroflot – Russian Airlines v Leeds & Anor (Trustees of the estate of Boris Berezovsky) & Ors (2018) EWHC 1735 (CH)  saw the Russian state airline, Aeroflot, being ordered to pay indemnity costs after the dropping of a fraud claim that had been running for 8 years, only on the eve of opening submissions in the trial.

The claim was issued in January 2010 and the subsequent proceedings were described by Mr Justice Rose as ‘complex and acrimonious.’ The claimants had alleged that Nikolay Glushkov and Boris Berezovsky (both now deceased) had misappropriated large sums of money from Aeroflot between 1996 and 1998.

The matter was set down for a 28-day trial but at 5pm on the 13th April, the solicitors for the claimants sought permission to discontinue proceedings against the defendants. An application to discontinue had to be made to the court because the claimants had the benefit of freezing orders against the assets of the defendants. They offered to pay the costs defendants (but not of Glushkov) on the standard basis. Rose J found that, given that the claimant had made serious and consistent allegations of fraud against the defendants and that those allegations had been entirely abandoned without explanation and the proceedings discontinued, the defendants were entitled to costs on the indemnity basis. The judge also found that the claimant had been ‘guilty of conduct out of the norm.’ This reason, he held, also justified making an award for costs on the indemnity basis.

If you would like to discuss in more depth, the points raised in any of the cases that we have looked at in this article, or indeed if you have any other query of a costs nature that you would like answering, our costs experts here at R Costings, will be only too pleased to help. Feel free to call any of the team on 01480 463499 or send an email to Paul Reason paul@rcostings.co.uk  and we’ll get straight back to you.