Kerry Underwood

Archive for August 2019

PART 36: TWO NEW CASES

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

No Damages Offer Is Valid

In

MR v Commissioner of Police for the Metropolis [2019] EWHC 1970 (QB) (21 August 2019)

the High Court, in overturning the trial judge’s decision, held that an offer to settle for no damages, but with an admission of liability, was a valid Part 36 offer entitling the claimant to the various uplifts when he was awarded £2,750 at trial.

Various Part 36 offers, and counter offers and rejections were made, but the key ones are set out below.

This was a claim for false imprisonment and assault and the defendant made a Part 36 offer of £4,000 which was rejected by the claimant and the defendant then offered a letter of apology, with no admission of liability.

The claimant then made a Part 36 offer on the basis “that the matter be settled in the sum of nil pounds with an admission of liability plus reasonable costs, to be assessed if not agreed”.

The defendant never responded and at trial the claimant was awarded £2,750 but with no order for costs.

On appeal the High Court upheld the order for no costs up to the date of expiry of the claimant’s Part 36 offer as that did justice to the parties given the background of the litigation.

However, the position was different following the claimant’s Part 36 offer.

The court had found that, to “clear his name”, the claimant had to pursue the litigation to trial.

The claimant was never going to obtain the admission he wanted from the defendant by pre-trial negotiation and settlement.

At trial, the claimant’s arrest was found unlawful, albeit on limited grounds, he was vindicated and so the court described him as the “successful party”.

The claimant won financial compensation, though it was less than the offer that had been made by the defendant.

It would be unjust for the defendant to recover costs on the basis of their Part 36 offer, and just because the claimant was entitled to proceed to court, it did not mean that he was “entitled” per se to his costs.

The court considered that the Part 36 consequences should apply to the claimant’s offer.

The court said that giving up any and all claim to a financial remedy is a significant concession and therefore a genuine Part 36 offer.

The claimant’s offer engaged CPR 36.17 and so he was entitled to his costs from the expiry of the relevant period and other consequences.

It was not unjust to apply CPR 36.17 in that way and it would be unjust not to do so.

Bizarrely the Metropolitan Police argued that agreeing to accept no damages was not a “genuine offer” within the meaning of CPR 36.17(5)(e) because it did not make a concession!

 

Unsurprisingly, that argument was given short shrift by the court.

 

“17.  As a matter of principle, the implications of costs should never overwhelm the issue at the centre of litigation. That remains so, notwithstanding the huge impact costs currently has on the conduct of litigation. This Appellant wanted to ‘clear his name’, the Judge found that to achieve that aim he had to pursue the litigation to trial. He was never going to obtain the admission he wanted from the Respondent by pre-trial negotiation and settlement. At trial, his arrest was found to be unlawful, albeit on limited grounds. He was vindicated and the Judge described him as the ‘successful party’. In addition, he won limited financial compensation, even though it was less than a previous offer made by the Respondent.

18. In the protracted course of the litigation the Appellant made an offer to forgo any financial remedy, if he could obtain the admission as to liability he sought, further that he would accept a reasonable order for costs by agreement or assessment, if agreement was not possible. Giving up any and all claim to a financial remedy is, in my judgment a significant concession and therefore is a genuine Part 36offer. The Judge referred to it as such, rightly. That offer did engage the provisions of CPR 36.17 and accordingly does mean that the Appellant is entitled to his costs from the expiry of the relevant period, 14 August 2017. It is not unjust to apply CPR 36.17 in that way and to follow its provisions in the usual way, it would be unjust not to do so. The Appellant failed to respond to the offer of a without prejudice discussion and the criticism of that failure has merit, (not least as matter of courtesy). However remiss that was it does not seem to me to have had, or be capable of having, any direct effect on the course of the litigation. The Respondent was not going to make the admission sought; there was no realistic prospect of such a resolution.

19. The Judge formed a view of the offers and counter offers made before 20 July 2017, that was entirely a matter within her discretion and no valid complaint can be made of that view. She was entitled to reach the decision she did as to the position before the making of a good and genuine Part 36offer which was not accepted by the Respondent.

20. Accordingly, the appeal succeeds in respect of that element of the costs incurred after the expiry of the relevant period on 14 August 2017 and the appellant is entitled to his reasonable costs on an indemnity basis, and the other entitlements set out in CPR Pt36.17(4)from that date, to be assessed, if not agreed. The part of the order as to no order for costs before that date remains unaltered. To that extent only, this appeal succeeds.”

 

Minor Breach Does Not Invalidate Part 36 Offer

In

Momonakaya v the Ministry of Defence [2019] EWHC 480 (QB) (05 February 2019)

the High Court held that a minor breach in relation to a Part 36 offer did not necessarily invalidate the offer.

Here, the breach was in relation to CPR 36.22(7) which provides:

 

“(7) If at the time the offeror makes the Part 36 offer the offeror has applied for, but has not received, a certificate, the offeror must clarify the offer by stating the matters referred to in paragraph (6)(b) and (c) not more than 7 days after the receipt of the certificate”.

 

Reference to the certificate is to a Compensation Recovery Unit certificate and the reference to (6)(a) and (b) is in relation to the gross amount of compensation and the name and amount of any deductible amounts by which the gross amount is reduced.

The certificate had not been received and therefore the offeror should have provided that information, but here failed to do so.

However, both parties were aware of the CRU figure from a previous, expired, certificate, and due to the period that had elapsed since the accident there would be no more deductions; this is known as the five-year rule.

The defendants successfully argued that the solicitors instructed by the claimant therefore had as much understanding and knowledge and ability to appreciate the position as the defendant itself in terms of such deductions.

Here the court concluded:

 

“…the failure to comply with that one sub-rule in r.36.22(7) is de minimis. It is not of any lasting consequence; no prejudice has been suffered. There was clarity between all parties as to what was being agreed and therefore I have come to the conclusion that Part 36 does apply so as to stay these proceedings.”

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Written by kerryunderwood

August 30, 2019 at 7:58 am

Posted in Uncategorized

SMALL LOCAL FIRMS PREFERRED BY CLIENTS AND OMBUDSMAN’S ADVICE ON GOOD COSTS SERVICE

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This piece, in slightly different form, first appeared on the Practical Law Dispute Resolution Blog.

The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

Here I look at two recent and helpful publications, and given the source of those publications those are slightly surprising words from me!

The Legal Services Consumer Panel Tracker Survey 2019 makes interesting reading.

This year’s report is more fact focused and its findings stem from YouGov survey of 3,589 users of legal services over the last two years, which is a significant sample.

This strongly anti-lawyer body finally appears to have recognised that “shopping around” is often a bad thing for clients, as price comparison sights are notoriously misleading.

By definition any lawyer trying to get work by being cheap is unlikely to be much good, just as in any other area of life.

This is reflected in the fact 77% of clients find it easy to understand price information from lawyers, but this drops to just 38% amongst those shopping around finding it easy to make a comparison between different providers, sharply down from 58% last year.

These figures need to be treated with a little caution, as, to put it bluntly, those shopping around online for legal services are likely to be less intelligent than those realising the importance of quality and reputation, and therefore less likely to understand.

Another factor is that in the United States and the United Kingdom, but almost nowhere else, it is seen as fashionable to shop around for price, rather than seeking quality, so there may be over-reporting.

French people do not boast about cheap meat full of water from a supermarket.

The proportion of clients receiving a face to face service has remained the same for the last five years, at around 45%.

The increase in services provided online largely reflects a drop in legal services being delivered by post.

In other words, postal delivery of legal service has switched to online delivery, but face to face contact remains as popular as ever.

Client satisfaction is extraordinarily high, with 87% saying they were satisfied with the outcome of their legal matter and 84% being satisfied with the service they received.

Online satisfaction was the lowest, at 78%, compared with 88% for those receiving service face to face or over the phone or through the post.

In 2012, 14% of people received legal services through legal aid, a trade union or their employer, but this is now down to 5%, and just 1% received legal services through their trade union.

Interestingly as many people had their legal services paid for by their employer as by a trade union.

73% of clients said that they had a wide range of choice.

The most important factors when choosing a provider were:

                                                    %

reputation                                   79

price                                           72

specialism                                  69

 

Interestingly reputation is rising in percentage terms as the most important factor for clients.

Overall 51% of clients had a fixed fee arrangement and the highest areas were:

                                                  %

will writing                                69

conveyancing                            63

power of attorney                     59

 

Significantly, of general areas of work, accident and injury claims rate very poorly, both in terms of perception of choice and value for money (43%), even though virtually all such work is conducted on a no win, no fee basis, and the client nearly always wins.

My guess is that that reflects the fact that most such work is done without any face to face contact between the lawyer and the client, and that those injured feel pushed, often illegally by claims management companies, to particular solicitors.

This is a classic case of the illusion of choice – seemingly endless competition facts to work, but in fact poor choice, poor service and poor quality.

It is remarkable that in an area where clients do not pay upfront and virtually always get compensation the evidence is:

“Accident and injury claims is the service area users’ rate as having the lowest choice and value for money.”

The survey covers all providers and not just solicitors, but 64% of those surveyed used a solicitor.

77% of those who used a solicitor chose a small local firm with just 8% choosing a large corporate firm and only 7% a national brand with a local office.

Reputation, price, specialism and the convenience of a local office are all considered more important by clients now than when the surveys started in 2012.

Under half of those surveyed were influenced by a quality mark and less than one third buy the ability to track their matter online.

The results of this survey are excellent news for small local firms with a good reputation.

I believe that they are what used to be known as high street firms.

 

Legal Ombudsman – An Ombudsman’s View of Good Costs Service – Second Edition

Maybe I am softening, or maybe the regulators are waking up, but this too is a welcome and very useful report giving specific examples of good, and bad, service, as well as helpful advice.

 

Pre-Engagement

The Ombudsman advises keeping a record of the information displayed on your website and when and how it changes so that you know what the client saw at the time, rather than what is up now.

Much of my costs and funding litigation work arises from solicitors failing to print and keep key documents, such as the retainer and Conditional Fee Agreement.

Paperless offices are the ultimate madness as far as solicitors are concerned. Maybe one in one hundred can keep a fully accurate online record.

Print it – keep it! Must be the message in relation to any costs, retaining and funding matters.

 

Initial Meeting

“The consumer [client] should know where they stand when they walk through the door and not hear of any charge, if there is one, for the first time at the consultation”.

 

Contingencies

The report gives an example of a fixed fee by a firm instructed at the last minute in relation to a tribunal matter.

It was adjourned due to the other side’s failures. The firm charged a fixed fee plus and an extra fee for the extra hearing.

The Ombudsman halved the extra fee.

Had this been made clear in advance, that is that there would be an extra fee for an extra hearing, then there would have been no problem.

 

Estimates and Fixed Fees

“We know an estimate differs from a fixed fee, but not all customers [the clients] understand this distinction. We therefore look for evidence that this has been explained. An estimate being exceeded would not automatically constitute poor service, but we would normally expect to see reasons for this and look for evidence that the customer had been warned beforehand that this would happen. We would expect lawyers to know the estimate is being reached and warn the customers accordingly, as the customer may want to change instructions on how to proceed, in light of this information.”

 

VAT

The price should always include VAT, and if it is net of VAT then the client must be told how much they will have to pay including VAT.

If not, the Ombudsman is likely to order the client to pay only the lower, VAT exclusive, figure.

 

Disbursements

This term should never be used as it “means almost nothing to anyone other than lawyers.”

 

Overall Costs

When the complaint is that the bill is excessive, it is normally a reflection that the client was not expecting the bill to be so high, and thus is really about costs information rather than the costs themselves.

Failure to keep clients up to date with costs information is common and can be avoided by having a monthly review system on every file, with costs information being a mandatory matter to be dealt with.

 

Billing

The Ombudsman states that a common reason for a complaint is poor billing and states, reasonably, that if the Ombudsman has difficulty understanding the basis and meaning of the eventual bill, then that is likely to amount to poor service.

Again, in my experience, very poor, short barely comprehensible bills are very common.

The Ombudsman states:

“If a lawyer produces a bill which says “work done between 24 July and 18 August” and does not provide any further detail, we would consider this vague. We would want to know what the nature of the work was and will ask the lawyer to produce his or her ledgers as evidence that it had been done.”

I am not sure how ledgers would show what work was done, but the general point is clear.

 

Enforcement

“The Ombudsman cannot, and will not, interfere in a lawyer’s decision to enforce a bill while a complaint is ongoing. However, where we consider that any action was unreasonable, it will be reflected in the decision we make and any remedy we order.”

 

The Ombudsman has a range of further guidance on its website:

www.legalombudsman.org.uk/publications which might be useful to refer to:

Guide to Good Complaint Handling, provides an overview of how to respond to complaints.

– Signposting pack, sets out the signposting requirements and provides suggested text for you to use.

Approach to determining complaints, looks at the factors we take into account when we investigate and the questions we ask to determine if the service has been reasonable.

Our approach to putting things right, if we decide the service was unreasonable this guidance looks at the things we can do to resolve the situation.

Scheme Rules FAQ, common questions about our scheme rules.

 

If you would like to keep in touch with new guidance, research and courses that we run subscribe to our quarterly newsletter, LeO News.

Written by kerryunderwood

August 29, 2019 at 1:00 pm

Posted in Uncategorized

£2.6 MILLION CLAIM SHOULD NOT GO ON THE PORTAL: CLAIM STRUCK OUT

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Cable v Liverpool Victoria Insurance Company Limited, Liverpool County Court – Case number D34BI037

the Circuit Judge, hearing an appeal from a District Judge, upheld the District Judge’s decision to refuse to lift a stay on Part 8 proceedings, and the consequent striking out of the claim, in a case placed on the portal and “parked” there.

Here, the claimant issued Part 8 proceedings in a case which the claimant himself maintained at a value of £2.6 million as compared with the portal limit at £25,000.

The judge said that this was a case that “never, ever at the time they issued the claim form could it be said would have a value of £25,000 or less. That to me is an abuse of process and the abuse comes from using the procedure that is available to portal claims in a case that could not be said, on any stretch of the imagination, to be a portal claim….”.

Here, the claimant was injured in a road traffic accident in September 2014 and the solicitors placed the matter on the portal, and initially the claim was said to be low value but a medical report indicated that the claimant was still absent from work.

The defendant sought further information but got little response and the claimant engaged in what the District Judge called “radio silence”.

In July 2017 the claimant’s solicitors issued a Part 8 Claim Form and a stay was granted until August 2018, with the court ordering that a copy of the order be sent to the defendant by August 2017, although it was not in fact sent until February 2018.

In August 2018 the claimant’s solicitors told the defendant that the case was substantial with the claimant losing £130,000 a year through being unable to work.

The claimant applied to lift the stay and for the matter to proceed on a Part 7 basis and that application was granted without notice to the defendant, who then applied, and succeeded, in having that order set aside.

The District Judge refused to allow the matter to proceed by way of Part 7, and struck the claim out, and that decision was upheld by the Circuit Judge.

Written by kerryunderwood

August 14, 2019 at 8:07 am

Posted in Uncategorized

NO WASTED COSTS AGAINST LAWYERS ACTING ON CONDITIONAL FEE AGREEMENT

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Willers v Joyce & Ors [2019] EWHC 2183 (Ch) (08 August 2019)

the Chancery Division of the High Court dismissed an application under section 51 of the Senior Courts Act 1981 for a costs order against solicitors and counsel who had represented an unsuccessful claimant on a conditional fee basis.

The claimant brought, and lost, an action for malicious prosecution and abuse of process and, after the case had ended, the defendant joined in as costs defendants under CPR 46.2(1)(a)  the solicitors, leading counsel and junior counsel who had acted for the claimant, alleging that the main reason for the claim was the claimant’s lawyers’ wish to recover unpaid fees from previous cases.

The amount disallowed on detailed assessment in the previous case was a specific head of damages in the current action.

Although the claim was lost on the facts here, it is possible to claim costs as a head of damages

 – see my post – COSTS PERMITTED TO BE CLAIMED AS DAMAGES

reporting the case of

Playboy Club London Ltd v Banca Nazionale Del Lavora SPA [2019] EWHC 303 (Comm) (21 February 2019).

The decision contains no new law, but reviews the case law at length, including the key decision in

Sibthorpe v Southwark London Borough Council (Law Society intervening) [2011] EWCA Civ 25 .

The court reiterated the point that there is a strong public interest in ensuring that impecunious claimants can have access to justice, even if that means successful defendants are left out of pocket.

“54.In my judgment the principle that emerges clearly from the decisions of this Court in Tolstoy, Floods and Hamilton v Al Fayed is that there is a strong public interest in ensuring that impecunious claimants can have access to justice even if that means that successful defendants are left substantially out of pocket. Because of this, legal representatives should not be at risk of a third party costs order unless they are acting in some way outside the role of legal representative. The nature of the role of the legal representative means that the indicators useful in considering the liability of, for example, a pure funder, such as whether he has been closely involved in making decisions about the conduct of litigation or whether he has a substantial financial interest in the success of the litigation do not work. The legal representative will always be closely involved in taking decisions about the conduct of the litigation and will always have a financial interest in the outcome, particularly where he is working under a conditional fee agreement or because although he is invoicing the client regularly for work done, he knows that in practice he will never be paid unless the client wins the case.”

 

See my post – CONDITIONAL FEE AGREEMENTS, DAMAGES-BASED AGREEMENTS AND CONTINGENCY FEES

Written by kerryunderwood

August 13, 2019 at 7:33 am

Posted in Uncategorized

FIXED COSTS APPLY TO DEFENDANTS AS WELL AS CLAIMANTS

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Woodward v Hyder A2/2017/1929

the Court of Appeal, by consent, allowed the claimant’s appeal against the order of Nottingham County Court that he pay the costs of an interlocutory application on an open basis, rather than paying fixed costs in accordance with CPR 45.29H.

This is a reminder that fixed costs apply to defendants as well as to claimants.

The rule is crystal clear.

Not all judges get it.

The claimant here not only lost originally, but also lost at the first appeal stage.

See –  FIXED COSTS, ALL THE PORTALS AND FIXED RECOVERABLE COSTS

Written by kerryunderwood

August 12, 2019 at 3:35 pm

Posted in Uncategorized

PROVISIONAL ASSESSMENTS: JURISDICTION OF COSTS OFFICERS AND APPEALS

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

PME v The Scout Association (30 July 2019), SCCO

the Senior Courts Costs Office has given guidance as to the jurisdiction of costs officers to undertake provisional assessments, and the scope of appeals from provisional assessments.

The Master referred to “costs officer” in his judgment as an “authorised court officer”, and held that costs officers had jurisdiction to conduct provisional assessments.

Under CPR 44.1 an “authorised court officer” means any officer of the County Court, a district registry of the High Court, the Principal Registry of the Family Division, the High Court or of the Senior Courts Costs Office, who is authorised by the Lord Chancellor to assess costs.

He interpreted CPR 47.3 (jurisdiction of authorised costs officer), supplemented by Practice Direction 47.3, and CPR 47.15 (provisional assessment), supplemented by Practice Direction 47.14, to mean that they should and CPR 47.15 did not alter that jurisdiction.

CPR 47.3 was not specifically mentioned in Practice Direction 47.14, where that set out the provisions of CPR and Practice Direction 47 applying to cases falling within CPR 47.15 (provisional assessment), because it did not need to be.

CPR 47.3 had to do with the jurisdiction of a costs officer, not with procedure.

Most bills under £75,000 were provisionally assessed and, in the Senior Courts Costs Office, mostly by costs officers.

The rules committee could not have intended that CPR 47.3 and Practice Direction 47.3 should confer upon costs officers jurisdiction to assess bills, and at the same time exclude them from assessing the vast majority of bills, that is those dealt with by way of provisional assessment.

There is no appeal from a provisional assessment, only from an oral hearing requested after such assessment under CPR 47.15(7).

While appeals from decisions of costs officers involve re-hearings rather than review – see CPR 47.24, the appeal of an oral hearing after provisional assessment is confined to a re-hearing of the matters decided at the oral hearing.

There should not be a fresh assessment.

This was consistent with the aim of the provisional assessment process, which was to save time and costs, and it could not be right that a party should have two rights to challenge the provisional assessment.

 

Please see –

COSTS ROUND-UP

LEGAL OMBUDSMAN: AN OMBUDSMAN’S VIEW OF GOOD COSTS SERVICE SECOND EDITION

COURTS MUST NOT CONSIDER JACKSON REFORMS ETC. SAYS COURT OF APPEAL

Written by kerryunderwood

August 9, 2019 at 8:20 am

Posted in Uncategorized

SUCCESS FEE AND INSURANCE PREMIUM RECOVERABLE ON SWITCH FROM LEGAL AID TO CONDITIONAL FEE AGREEMENT

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

AB v Mid Cheshire Hospitals NHS Foundation Trust [2019] EWHC 1889 (QB) (16 July 2019)

the High Court dismissed an appeal against a Regional Costs Judge’s order that additional liabilities of a success fee and an ATE insurance premium were recoverable by the claimant, a protected party acting by his mother and litigation friend, from the defendant.

The claimant claimed damages for medical negligence relating to catastrophic brain injuries and the litigation friend instructed solicitors in 2010 and legal aid was granted but the litigation friend discharged the legal aid certificate and entered into a Conditional Fee Agreement in February 2013.

The claim was settled for a £3.8 million lump sum and annual periodic payments, by which time, the claimant had instructed 12 experts in various fields.

The litigation friend’s bill of costs amounted to just over £1 million, including a success fee of £388,173.40 and an ATE insurance premium of £29,256.

The court held that the Regional Costs Judge had been entitled to find that the additional liabilities were reasonably incurred.

The litigation friend’s decision to change to Conditional Fee Agreement funding was reasonable because a serious dispute had arisen between three experts about causation, which was critical to the claim’s success.

Experts had already been instructed and hourly rates had already been an issue for one of them although he had reduced his rate.

The Legal Services Commission’s approach to hourly rates also caused problems with other experts.

The Regional Costs Judge had been entitled to find that the failure of the litigation friend’s solicitors to provide Simmons v Castle advice that the claimant would lose the 10% uplift on damages did not make the decision to change funding unreasonable because advice on that point would not have affected her decision.

The court held that failure to advise on the potential liabilities for a higher hourly rate and success fee did not undermine the reasonableness of the change.

There was a very real risk of no recovery because of the causation issue, meaning that the requirement to have the freedom of a Conditional Fee Agreement to attempt to secure some recovery became the decisive feature.

 

Please see –

COSTS ROUND-UP

LEGAL OMBUDSMAN: AN OMBUDSMAN’S VIEW OF GOOD COSTS SERVICE SECOND EDITION

COURTS MUST NOT CONSIDER JACKSON REFORMS ETC. SAYS COURT OF APPEAL

Written by kerryunderwood

August 9, 2019 at 8:00 am

Posted in Uncategorized

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