Harford v Music Store Professional UK/DV247 Ltd [2021] EWHC B17 (Costs) 18 August 2021

 

The issue for determination was whether or not the Claimant acted reasonably in not utilising the pre-action protocol for low value PI claims (EL/PL Protocol); and if they did act unreasonably – whether or not costs should be limited in accordance with CPR 45.24(2)(b)(ii).

 

The claim was initiated on 26 May 2017 stating that the claim was not suitable for the portal and liability was denied on 13 September 2017; evidence was gathered and the claim issued with a valuation between £10,000-£50,000 (EL/PL protocol applies to claims where damages will be less than £25,000). The Claimant maintained that they had reasonably considered the value of the claim and were right to value it in excess of the portal upper limit. The Claimant argued that the Defendant must show the Claimant’s assessment was unreasonable to a point that costs sanction should apply (CPR 45.25(2)).The Claimant further argued that the sanction of CPR 45.25 should only apply where “judgment is given”.

 

It was determined that;

  • Given the time and collation of evidence, and proceedings were hurried due to approaching limitation – it was unreasonable to proceed with the claim outside the EL/PL protocol.
  • CJ Howarth was also satisfied that acceptance of the Part 36 offer ‘constitutes a “judgment”’
  • The protocol should have been used and it’s non-use was therefore deemed unreasonable and discretion could therefore be applied to costs.

 

Costs pursuant to CPR 45.18 Table 6A applied.

 

 

Discovery Land Company LLC & Ors v Axis Specialty Europe SE [2021] EWHC 2146 (Comm) – Costs Budgeting issues

 

This matter concerned a CCMC (adjourned due to decisions made altering the assumptions); the hearing resumed on 28 May 2021 with complex issues being raised requiring further revision of the costs budgets. Parties were therefore asked to provide further submissions post hearing to be dealt with on paper – the ruling followed on 16 June 2021. The Claimant’s took issue with the level of the Defendant’s proposed budget overall; some phases were disputed by the Defendant as to the Claimant’s budget (theses were agreed between the parties). The case assists in determining that cost budgets needn’t be reduced to the lowest possible sums.

 

With regard to making an order for costs budgeting; CPR 3.15 requires consideration of;

  • The extent to which (and whether) the parties are agreed on costs up to case management (incurred)
  • Extend (whether) costs are agreed with regard to budgeted costs (estimated); and
  • The Court’s approval as to budgeted costs where parties are not in agreement (subject to appropriate revisions).

In consideration; the purpose is to further the overriding objective. In this matter that required consideration of “particular emphasis on the desirability of saving expense, adopting a proportionate response having regard to the value of the claim, the financial resources of each party, and the complexity of the issues, and with an eye on ensuring the fair conduct of the action.

 

The Claimant thereafter referred to the 2015 decision in Kazakhstan Kagazy plc v Zhunus [2015] EWHC 404 (Comm) (para 13). A small section of this paragraphs says; “The touchstone is not the amount of costs which it was in a party’s best interests to incur but the lowest amount which it could reasonably have been expected to spend in order to have its case conducted and presented proficiently, having regard to all the relevant circumstances. Expenditure over and above this level should be for a party’s own account and not recoverable from the other party.”. Mr Eggers QC was unclear why the touchstone “must be the lowest amount which a party could reasonably have been expected to spend”. The thought was that there must be some flexibility to ensure that a parties case is not jeopardised by an “unrealistically low assessment…reasonably and proportionate range is still reasonable and proportionate even if it is not at the lower end.”

 

It is recommended that this case is reviewed as a helpful guidance on ‘reasonable’ costs when considering costs budgeting.

 

 

 

Raydens Ltd v Cole [2021] EWCH B14 (Costs) (July2021) Special Circumstances under the Solicitors Act 1974

 

The Claimant solicitors acted in matrimonial proceedings between November 2013 and September 2018; substantive proceedings concluded with an agreed terms of settlement in May 2017; with an order for the Respondent (ex-husband) to pay lump sum of £800,000. £290,000 was to be paid by 19 July 2017 to clear the Defendant’s incurred costs (including loan liabilities to litigation funder) and meet the Claimant’s fees and dibs. As not already paid through the loan. Payment was not made until 28 September 2018.

 

From November 2013 – September 2018, the Claimant raises bills totaling £263,426.11 (£44,298.02 remained outstanding). Due to the period of delay, and accrued interest, a shortfall resulted. In respect of the fees, whilst payment was awaited the Defendant sent a lengthy email to the Claimant asking for their fees to be capped at £170,000. The Claimant responded highlighting the difficulties in the case. Part of the correspondence highlighted that the Defendant had, for only the second time in his career, continued to act for the Defendant without payment whilst settlement was awaited. The settlement was entered into freely and the Defendant encouraged to take steps to seek losses for the period of delay in the Respondents payment.

 

The Claimant initiating a claim for outstanding fees to the Defendant to which the Defendant filed a defence simply stating she would like a full assessment of costs. A formal complaint was received on 2 December 2019 – this raised issue with the increase in hourly rate jumping from £245 from 2013 to £384 by May 2017.

 

At CCMC on 26 October 2020; DJ Ayres determined that the Defendant was out of time (1 month following delivery of the bill) to request a detailed assessment (Solicitors Act 1974 s.70(3)) unless special circumstances could be established.  Section 70(2) allows the court to apply discretion, and s. 70(3)(a) limits this discretion when made 12 months post delivery of the bill unless in special circumstances. This was therefore to be determined as a preliminary issue. In determining special circumstance;

  • There is no ‘hard and fast’ rule and is a “value judgment” Falmouth House Freehold Co Ltd v Morgan Walker LLP
  • Do not need to be exceptional circumstances and can be “ordinary course sufficient to justify a departure from the general provisions under section 70”
  • “Degree and discretion are to be exercised”

In this matter, the question fell to the increase in rates and whether there was a question to be asked as to the increase. Did this issue raised, “call for an explanation”? In his ruling, Mater Leonard said that there appeared to be an “exceptional increase” in the rates between 2014 and 2017. At the time of entering a retainer, the Defendant was agreeing to specific rates for the estimated duration of the claim at that time (18 months). It was considered that the chances of the Defendant at the time anticipating more than one reasonable increase before conclusion of the case was highly unlikely. The increase was therefore set without consideration by the Defendant client. Coupled with the deterioration of mental health of the Defendant at the time, Master Leonard was accepting of the likelihood that the Defendant felt unable to challenge the hourly rate increases. On that basis; a finding of special circumstance was made to allow directions for assessment of costs.

 

 

 

 

Court fee increases

 

The Government response to the consultation on ‘Increasing selected court fees and Help with Fees income thresholds by inflation’ was published 31 August 2021. Court fees have remained stagnant since October 2016 when court users found themselves footing the bill for huge rises in the fees. Now, 5 years’ later Court Fees have been reviewed again with increases across the board impacting;

  • Family Proceedings Fees Order 2008 No 1054 (43 impacted fees);
  • Civil Proceedings Fees Order 2008 No 1053 (67 impacted fees);
  • Court of Protection Fees Order 2007 No 1745 (3 impacted fees); and
  • Magistrates’ Courts Fees Order 2008 No 1052 (20 impacted fees).

 

The fee increases are set to be implemented “Autumn 2021” and the increases are established as an inflationary increases from the last increase in 2016 to financial year 2021/22. Pleasingly, there is also going to be an inflationary increase to the fee remission income thresholds thereby ensuring continued access to justice with retrospective effect.

 

 

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