Kerry Underwood

COSTS, FEES AND 2020 CHANGES ROUND-UP

with 6 comments


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.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

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

 

In

Alafco Irish Aircraft Leasing Sixteen Ltd v Hong Kong Airlines Ltd [2019] EWHC 3668 (Comm) (22 November 2019)

the Commercial Court held that a contract specifying that a party was entitled to “all reasonable costs and expenses” of litigation, in connection with preserving its contractual rights, meant that it was entitled to assessment of costs on the indemnity basis.

The parties had been involved in proceedings concerning a lease and the claimant sought costs on the indemnity basis, following a successful summary judgment application.

The High Court Judge saw no reason to depart from

Littlestone v MacLeish [2016] EWCA Civ 127

where tenants had covenanted to, “pay to the Lessor all costs and expenses (including legal costs…) which may be incurred by the Lessor… in or in contemplation of any proceedings under Sections 146 and 147 of the Law of Property Act 1925… or [in] the recovery or attempted recovery of arrears of rent or other sums due from the Lessee”.

It was held that, although that wording did not refer to an indemnity, it corresponded more closely with assessment on the indemnity basis than the standard basis.

Disagreeing with the decision in

Euro-Asian Oil SA v Credit Suisse AG [2017] EWHC B7 (Comm)

The court here considered that the reference to “all reasonable costs” rather than “all costs” in the clause in this case did not alter this position and Littlestone , where the court held that reasonableness did not affect the analysis, could not be distinguished.

Such wording did not exclude indemnity costs as, under CPR 44.3, whether costs were being assessed on the standard or the indemnity basis, a party was only entitled to recover costs that had been reasonably incurred.

The judge rejected an alternative argument that indemnity costs should be ordered because of the defendant’s conduct.

 

Ministry of Justice and HMCTS Launch Court Fee Refund Scheme

The Ministry of Justice and Her Majesty’s Courts and Tribunals Service have launched a court fee refund scheme, following a review in July 2018, in which it was discovered that court fees in certain proceedings had been charged above full cost recovery levels.

The refund scheme identifies court fees that have been overcharged, where the fee was set above cost, or mischarged, where the wrong fee was charged or where no charges should have been made at all.

A list of the overcharged and mischarged fees is set out in

Application for full or partial refund of court fees – Guidance document.

In relation to overcharged fees, a refund can only be claimed if one or more of the fees was paid between 22 April 2014 and 31 March 2018.

The amount that will be refunded depends on when the fee was paid.

A refund on mischarged fees can only be claimed in the circumstances described in the Guidance document.

The affected court fees include:

Specified Magistrates’ court fees, including commencing an appeal under the Licensing Act 2003, and an application for a warrant for commitment made in proceedings under the Child Support Act 1991.

Insolvency proceedings fees, specifically an application by consent or without notice within insolvency proceedings and an application with notice within insolvency proceedings.

Specified civil proceedings fees, including in relation to filing a request for detailed assessment of costs in the Court of Protection, the appointment and daily hearing fees of a judge of the Commercial Court or a judge of the Technology and Construction Court appointed as an arbitrator under section 93 of the Arbitration Act 1996, and an application for the restoration of a company to the register under section 1029 of the Companies Act 2006.

Specified Court of Protection fees relating to applications, appeals and hearings.

A refund can only be claimed where the fee was paid directly to the court, or where a party was ordered to pay their opponent’s court fees.

Applications must be made using the form Application for full or partial refund of court fees.

Guidance on how to fill out the form is set out in Guidance: Claim a court fee refund. Interest on refunds will be paid at a flat rate of 0.5%.

The aim is that applications will be processed within 20 working days of receipt of a completed form.

 

Court Fee Remission and Recoverability

A claimant who could have applied for remission of the court fee does not do so and wins the case.

Is the losing defendant liable for that court fee, or can it successfully argue that it was unreasonably and/or unnecessarily incurred?

No or Yes, depending upon which court you are in.

In

Stoney v Allianz Insurance Plc Case No: E14LV817, Liverpool County Court 7 November 2019

the court said no, holding that the fee was unreasonably incurred as the claimant may have been entitled to fee remission, that is he would not have had to pay the fee.

The judge accepted that this meant that a necessarily incurred court fee, caused by the negligence of the insured, would be borne by the state and not the insurance company, but said that that was a matter for Parliament or the Rules Committee.

In

Cook v Malcolm Nicholls Limited Case No: B57YP191, Coventry County Court 11 April 2019

the court said yes:

 

“I take the view that the court fee is the court fee. That has got to be paid.”

 

The latest addition to case law, again at County Court level, is

 

Ivanoy v Lubble (Central London County Court 17th January 2020)

 

where the court said:

 

“…. I am satisfied that it is not unreasonable for the Claimant to pass on the hearing fee to the Defendant”.

 

Comment

It would be a very simple matter indeed for the Civil Procedure Rules to say either:

 

“A successful claimant shall recover any court fee paid, whether or not that party could have sought remission of that fee” 

or

“A defendant shall not be liable for a court fee incurred by a party who could have successfully claimed remission of that fee.”

Don’t hold your breath.

 

In Practice

In practice solicitors should always check to see if their client qualifies for court fee remission. This avoids the problem, and also assists with cash-flow if it is the practice of the firm to pay the fee.

It is also a useful lever for solicitors to get the fee out of the client upfront; if the client does not qualify for remission, then that is a powerful argument that the client could, and should, pay upfront.

It follows, as night follows day, that a solicitor who fails to advise a client about fee remission, and then fails to recover the fee from the other side in the event of a win, will have to fund the fee themselves, rather than the client taking the hit for the solicitor’s negligence.

It is also inadequate professional service.

 

New Personal Injury Small Claims Portal Goes Live

On 6 April 2020 the personal injury small claims limit will be increased from £1,000 to £5,000 for road traffic accident matters, and £2,000 for all other personal injury matters.

This means that the vast majority of the personal injury claims – probably about 90%, will now not involve recovery of costs from the defendant, virtually always an insurance company.

The website is here .

The new portal will allow litigants in person to access it and the small claims limit increase is the first part of the government’s radical proposals to overhaul the costs system generally.

No date has been announced for the introduction of fixed recoverable costs for all civil claims of £100,000 or less, but it is clear that the new government is indeed implementing the proposals, and April 2021 is the likeliest implementation date.

No date has been announced for the whiplash tariff.

 

Solicitors’ Liens

Ryanair Liens Case Goes to Supreme Court

Bott & Co Solicitors Ltd have been granted permission to appeal to the Supreme Court by the Supreme Court itself in relation to the issue of solicitors’ liens where a third party – Ryanair here – deliberately sends damages to the client, and not the solicitor acting for the client.

The Supreme Court will hear this matter on Tuesday 27 October 2020.

Very obviously that acts as a major disincentive to solicitors to take the risk of working on a no-win, no-fee basis where there will be no fund from which to take the costs.

It was thought that this issue had been put to bed by the Supreme Court itself in

Gavin Edmondson Solicitors Ltd v Haven Insurance Company Ltd [2018] UKSC 21     

where it held that Haven Insurance must pay to the solicitors the costs that were due to the solicitors from their own client in circumstances where the insurance company had paid damages direct to the solicitor’s client.

Any other decision would effectively render the Courts and Legal Services Act 1990, with its introduction of Conditional Fee Agreements, useless and remove the major current method of providing access to justice, following the removal of legal aid.

Here, in

Bott & Co Solicitors Ltd v Ryanair DAC [2019] EWCA Civ 143

the Court of Appeal, in a decision bizarre even by its own recent anti-access to justice stance –

(see Herbert v HH Law [2019] EWCA Civ 527 )

declined to follow the Supreme Court’s decision in Edmondson, technically distinguishing it on grounds that would cause a first day trainee at my firm to get a rollicking.

Had Ryanair’s conduct been that of a solicitor it would be in clear, repeated and serious breach of the Solicitors Code of Conduct specifically indicative behaviour 11.4 which provides that you must ensure that you do not communicate with another party when you are aware that the other party has retained a lawyer in a  matter, except:

 

(a) to request the name and address of the other party’s lawyer; or

(b) the other party’s lawyer consents to you communicating with the client; or

(c) where there are exceptional circumstances.

 

see my blog –

SOLICITORS DENIED LIEN; THE RYANAIR CASE

 

After the Unison decision, where again the Supreme Court had to overturn an anti-access to justice Court of Appeal decision, this is the most important access to justice matter to go to the Supreme Court in recent years.

I understand that the Law Society declined to intervene in relation to the Permission to Appeal stage.

It is to be hoped that the Law Society now takes a different view and intervenes in this matter of great importance to all solicitors – and most importantly their clients – whatever type of work is involved.

Here is my comment on the Court of Appeal decision in this case.

 

The Senior Judiciary need to think through rather more carefully the whole issue of access to justice and litigation and how it may be delivered.

At one level, lawyers are being encouraged to use portals and follow protocols and do everything to avoid litigation, and yet Bott & Co Solicitors Limited appear to be being punished for using such a scheme, and for making significant profits from it.

What on earth is the relevance to the legal principles of the fact that Bott’s income from claims against Ryanair was over £100,000 a month? (see Paragraph 16 of the judgment).

What is the relevance of the number of claims that Bott were handling, except to show the success of the scheme and the attraction to members of the public?

So, at one level, we are consistently urged to be efficient and be a business, with the provision of legal services opened up to every Tom Dick and Harry, but when a firm does exactly that they are punished by the courts by being refused a lien.

I can see no logical difference between the pre-action road traffic portal, where 99% of cases are settled, and the scheme operated by Bott & Co Solicitors Limited.

This decision should be overturned by the Supreme Court.

 

I deal with the decision of the High Court and the Supreme Court in my blogs –

COURT REFUSES TO GRANT SOLICITOR LIEN FOR COSTS ; and

SOLICITORS’ LIENS, RETAINERS, CFA LITE AND UNCONSCIONABLE CONDUCT – THE HAVEN INSURANCE COMPANY CASE

 

Avoiding Waiving a Lien

In

Candey Ltd v Crumpler & Anor [2020] EWCA Civ 26 (23 January 2020)

the Court of Appeal has clarified what a solicitor must do when they enter into a new security arrangement with a client, the terms of which are inconsistent with the terms of their equitable lien, to minimise the risk of having waived their lien.

The appellant, acted as solicitors for a company incorporated in the British Virgin Islands in extensive litigation conducted in England and several other jurisdictions.

The company incorporated was now being wound up in insolvency proceedings in the British Virgin Islands court and the respondent liquidators were appointed by that court as the company incorporated’s liquidators.

In a dispute between the appellant and the respondent liquidators about the appellant’s claim to unpaid fees owed to it by the company incorporated, the respondent liquidators was ordered to pay some of the appellant’s legal costs, and the High Court determined two issues in relation to the costs order.

The court held that a success fee was not recoverable from the respondent liquidators and that the appellant had waived its equitable lien over settlement monies that had been paid to by the company incorporated,  during the litigation when it entered into a deed of charge with the company , which was inconsistent in some respects with its rights under the lien.

The Court of Appeal dismissed the appellant’s appeal on both issues, upholding the judge’s findings.

In so doing, it confirmed that waiver of a solicitor’s equitable lien will arise when a solicitor enters into a new security arrangement with the client, the terms of which are inconsistent with the equitable lien, unless both parties agree that the solicitor’s existing rights will be unaffected.

Such agreement will not be found unless the solicitor fully explains the position to the client.

To satisfy this requirement, the solicitor must explain the combined effect of the new security and the pre-existing lien on the prospects of the client recovering anything of value from success in the litigation in which the solicitor is instructed.

It will not be sufficient for the solicitor to advise only on the effect of the new security.

The judgment also clarifies that a foreign representative is not entitled to benefit from the exemption in article 4(c)(i) of Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Commencement No.5 and Saving Provision) Order (SI 2013/77) in the same way as English liquidators.

 

QOCS Continues to Apply in Court of Appeal

In

Wickes Building Supplies Ltd v Blair (No.2 : Costs) [2020] EWCA Civ 17

the Court of Appeal held that QOCS protection continues to apply to any appeal at any level which concerns the outcome of the claim for damages for personal injuries, or the procedure by which such claim is to be determined.

This is on the basis that these were all part of the “proceedings” under CPR 44.13 dealing with QOCS and this interpretation applied on a second appeal, as here and where the appeal was brought by the defendant to the original claim and where the court had declined to exercise its discretionary powers under CPR 52.19 to limit recoverable costs.

Thus, although here the court found that the first appeal by the claimant was unmeritorious and justified awarding the defendant the costs of their subsequent further appeal to the Court of Appeal, it would nevertheless not order those costs to be enforced, as QOCS continue to apply.

 

Comment

A correct and sensible decision for the very reasons set out by the Court of Appeal here:

 

“The purpose of the QOCS regime is to facilitate access to justice for those of limited means…if a claimant’s access to justice is dependent on the availability of the QOCS regime, that access will be significantly reduced if he is exposed to a risk as to the costs of any unsuccessful appeal which he may bring or any successful appeal a defendant may bring against him.”

 

Fixed Recoverable Costs

The Wickes case also held that fixed recoverable costs do not apply to appeal proceedings.

This aspect of the decision has significant potential ramifications for all civil work once the fixed recoverable costs scheme is extended to all civil claims of £100,000 or less, probably in 2021.

I am not sure that the Court of Appeal has thought this through.

Here, the QOCS system protected the losing claimant against open, unfixed costs as this was a personal injury claim.

However, QOCS does not apply outside the field of personal injury.

If costs are to be unfixed on appeal, then that causes the very access to justice problem identified here by the Court of Appeal in relation to QOCS.

The answer is to have a separate fixed costs regime for all appeals of all kinds, whatever the value, and whether or not covered by fixed costs at first instance.

I am grateful to Sarah Robson of counsel for sending me details of this case.

 

Part 36

In

King v City of London Corporation [2019] EWCA Civ 2266

the Court of Appeal held that a Part 36 offer that excludes interest is not a valid Part 36 offer.

 

Legal Services and The UK Economy

On 23 January 2020, the Law Society published its 2019 report:

Contribution of the UK legal services sector to the UK economy

and found that dispute resolution services generated 32% of the turnover of law firms in England and Wales.

The report shows that UK legal services are now worth over £60bn a year.

 

Lugano Convention

The 2007 Lugano Convention governs jurisdiction and the enforcement of judgments between members of the European Union and the non-EU countries of Norway, Iceland and Switzerland and due to the United Kingdom’s exit from the European Union will cease to apply to the UK at the end of the transition period on 31 December 2020.

Norway and Iceland have said that if matters cannot be resolved with the European Union then they will withdraw from the Lugano Convention as they regard their relationship with the United Kingdom is more important than their relationship with the 26 countries of the European Union.

Written by kerryunderwood

February 5, 2020 at 9:36 am

Posted in Uncategorized

6 Responses

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  1. Hi Kerry

    I purchased the 1300 page books last year from you direct but unfortunately an ex colleague has appeared to have taken volume 3!

    How much would it be to re-purchase the third book?

    Kind Regards

    Paul

    Paul Carroll

    February 5, 2020 at 9:43 am

    • Hi Paul

      £50 – for which you get the whole set – as not a lot of demand for individual volumes. Having said that I might one day have someone who wants just Vol 1 or Vol 2 – maybe your ex-colleague :-), and we save a bit of postage – so £40 for just Volume 3 – £50 for the lot.

      Just email me on kerry.underwood@lawabroad.co.uk

      Kerry

      kerryunderwood

      February 6, 2020 at 4:42 pm

  2. Maybe the answer to fee remission in addition to your suggestions is to make it a ‘recoverable benefit’ that the defendant pays back to the government if fee remission applies.

    They would have no need to raise the issue if they will be responsible for it no matter what.

    Darren Fletcher

    February 5, 2020 at 9:52 am

    • Excellent idea!

      Kerry

      kerryunderwood

      February 6, 2020 at 4:39 pm

    • The only problem would be that it would be a bit unfair on the a successful Defendant who had to go after the Claimant to either recover the fee or prove the Claimant was entitled to remission.

      Anonymous

      February 8, 2020 at 8:53 am

      • A successful defendant would not have to pay, just as it does not have to pay CRU, or any other recoverable benefit.
        Kerry

        kerryunderwood

        February 8, 2020 at 1:53 pm


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