Costs News

10 December 2015
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News in brief 10th December 2015

Alpha Rocks appeal rejected
The Supreme Court has refused permission to appeal the ruling in Alpha Rocks Solicitors v Alade [2015] EWCA Civ 685, in which the Court of Appeal ruled that a High Court judge was wrong to conduct a “mini fraud trial” without witnesses in deciding to strike out a claim over unpaid fees brought by a firm of solicitors. See our report of the ruling here.

A panel made up of the president and vice-president of the court, Lord Neuberger and Lady Hale, along with Lord Mance, decided that “permission to appeal be refused because the application does not raise an arguable point of law”. 

Third-party capture insurer ordered to pay costs
An insurance company that settled personal injury claims directly with the clients of a law firm still has to pay the solicitors the costs they would have earned, the Court of Appeal ruled last week.

The court said Cheshire firm Gavin Edmondson Solicitors had an interest which equity could protect and which was “deserving of protection”. This meant Haven Insurance had to pay the RTA protocol fees that would have been due.

In doing so, it overturned the decision of HHJ Jarman QC in Wrexham, who had rejected the firm’s objections to the actions of Haven in settling six low-value road traffic claims so as to avoid paying legal fees. In each case, the firm had signed up the client to a conditional fee agreement based on the Law Society model and entered the matter on the RTA electronic portal before Haven contacted them – a practice known as third-party capture that is deprecated by claimant lawyers.

There was also argument around the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008, which meant the claimants had the right to cancel his contract with the firm within seven days. The CFA included a waiver of this right if the client wanted the firm to start work immediately, which each signed. This appeared to be in breach of the regulations and, though not argued, the judge proceeded on the assumption that the waiver was ineffective.

Lord Justice Lloyd Jones did potentially give insurance companies a way out in future, however, by saying: “It would have been open to Haven to make the offer conditional on cancellation of Edmondson’s retainer within the permitted period but it did not do so.”

High Court rules against defendant with counterclaim
Mr Justice Coulson has ruled that a part 36 offer made by a defendant with a counterclaim is not “automatically to be regarded as a claimant’s offer”.

Ruling in the Technology and Construction Court on a dispute over a gas pipeline on the Shetland Islands, Coulson J said the matter was a “question of construction” for the court and the answer “must always depend on” the terms of the offer.

A successful claimant was entitled to a “raft of enhancements” under CPR 36.17(4), including interest on the sum awarded at up to 10% above the base rate, indemnity costs and interest at an increased rate, and an uplift on the sum awarded of up to £75,000.

In contrast, a defendant who beat its part 36 offer had a more “limited entitlement” under CPR 36.17(3), to costs and interest.

Coulson J distinguished the offer letter in the case with the one at issue in the leading Court of Appeal authority of AF v BG, which described itself as a claimant’s offer and “spelt out” the claimant’s enhancements if it was rejected.

Delivering judgment in Van Oord UK v Allseas UK [2015] EWHC 3385 (TCC), Coulson J said: “As a matter of construction, I am entirely satisfied that the offer letter in this case was not a claimant’s part 36 offer.”

Coulson J ruled that the letter should be treated, as a matter of construction, as a defendant’s part 36 offer. However, he decided to award indemnity costs to AUK on the grounds that OSR had made a “hopeless claim, which it should have known was hopeless from the outset”.

Noting that there were no costs management orders in the case because the claim was for over £10m, Coulson J said he hoped that, even in cases of this size, the parties would use the costs management regime to avoid disputes and uncertainties.

He ordered an interim payment of £1.3m to be made by OSR on account of AUK’s costs.

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