Costs appeals

LEGAL UPDATE

Recent decisions of the Supreme Court Taxing Office in costs appeals numbers 16 to 25 of 2002

16 of 2002: Halloran v Delaney

This appeal concerned two questions: whether the Law Society model conditional fee agreement (CFA) covered part 8 costs-only proceedings; and whether a success fee should be allowed on the costs of the costs-only proceedings and, in the alternative, whether 20% was too high and should be set at a nominal 5%.

It was held that:

l The CFA did cover costs-only proceedings;

l It was appropriate for a success fee to be awarded on the costs of the part 8 claim and subsequent costs of assessment;

l That in view of the uncertainty in the law about costs recovery, which preceded the judgments in Callery v Gray, 20% was reasonable;

The judgment continued to state that 'judges concerned with questions relating to recoverability of a success fee in claims as simple as this which are settled before proceedings are commenced should now ordinarily decide to allow an uplift of 5% on the claimant's lawyer's costs (including the costs of any costs- only proceedings which are awarded to them) pursuant to their powers contained in CPD [costs practice direction] 11.8 (2) unless persuaded that a higher uplift is appropriate in the particular circumstances of the case.

This policy should be adopted in relation to all CFAs, however they are structured, which are entered into on or after 1 August 2001 when both Callery judgments had been published and the main uncertainties about costs recovery had been removed'.

17 of 2002: Booth v Britannia Hotels Ltd: Court of Appeal

This was a personal injury claim made following an accident at work in which the claimant alleged that she had suffered reflex sympathetic dystrophy (RSD) following the accident.

The defendant conceded liability and paid 1,000 into court, subsequently increasing this payment to 2,500.

The claimant served a schedule of loss of 617,000.

The defendants obtained video evidence, which suggested that the claim of RSD was unfounded and disclosed this five weeks prior to the trial on quantum.

As a result the claimant accepted the payment into court and Compensation Recovery Unit payments.

The defendants agreed to pay the claimant's costs on the standard basis.

The claimant's bill was for 82,839.86 plus VAT and the defendant argued that this was unreasonable in a claim which settled for 2,500.

The district judge who assessed the costs ordered the defendant to pay all of the liability costs and 60% of the costs in relation to quantum.

The Court of Appeal held that the district judge was wrong to order the defendant to pay 60% of the quantum costs.

The medical evidence was only disclosed at a relatively late stage as it was not conclusive until then.

The costs were remitted back to the district judge for reassessment in the light of this judgment if they could not be agreed.

18 of 2002: Fox v Graham Group Plc

This case includes a dicta from the judge as to the proper approach where a litigant in person fails to attend on his application but seeks an adjournment.

The judge said that a careful balancing act had to be carried out, but unless the application or appeal is on its face hopeless, the judge should grant one adjournment, providing good reasons have been provided.

19 of 2002: Alliss v Legal Services Commission

This case concerns civil proceedings for damages following the injury of the claimant and the death of his father in an incident arising out of a neighbour dispute.

Criminal proceedings had followed but no convictions were made.

The claimant then pursued his civil claim with the benefit of legal aid.

Eight weeks before the trial date, the Legal Services Commission (LSC) issued a notice to show cause why the certificate should not be discharged.

This was based on the prospects of success and likely level of damages in relation to the level of costs, as well as the ability of the defendant to meet any judgment.

The first defendant also had the benefit of a legal aid certificate in these proceedings.

An appeal against the discharge of the certificate was successful and subsequently an application to increase the cost limitation on the certificate was made.

This was refused, and the LSC took counsel's opinion as to the merits of the continuing legal aid.

This was not favourable to the certificate continuing.

The trial was adjourned on the claimants' application, and subsequently a further notice to show cause why the legal aid should not be discharged was issued, and on this occasion the legal aid certificate was discharged in spite of representations.

The claimant brought judicial review proceedings against this decision and it was held that the LSC had breached article 6 of the European Convention on Human Rights by making the decision to withdraw the legal aid so late in the day.

The LSC was held to be irrational in concluding that there were significant changes in the circumstances since the date the earlier appeal had been allowed.

20 of 2002: Mary Hall v Rover Financial Services Limited (GB) Trading as Land Rover: Financial Services Court of Appeal

The claimant had acquired a Range Rover from a hire purchaser, but established that he had obtained good title to the vehicle and so was ordered damages of 38,000 against the defendant finance company who had seized the car.

However, the trial judge made no order for costs in favour of the claimant, on the basis that the circumstances in which the purchase of the vehicle occurred should have excited suspicion and that the behaviour amounted to misconduct.

This decision was reversed on appeal as the alleged misconduct was extraneous to the proceedings and therefore irrelevant.

21 of 2002: Ralph Hulme Gary (a firm) v Gwillim: Court of Appeal

The defendant had been involved in a solicitors' partnership dispute and had instructed the claimants.

The claimants had rendered him bills which were brief.

The claimant then applied to have the bills declared unenforceable on the grounds that they contained insufficient information for him to judge whether he should seek to test their reasonableness by the assessment procedure.

This application was unsuccessful as it was held that he was well aware of the work being done on his instructions.

However, it was suggested in the judgment that problems of this nature might be avoided if solicitors annexed copies of their computerised time print-outs to their bills to clients.

22 of 2002: Powell v Herefordshire Health Authority: Court of Appeal

This appeal to the Court of Appeal from a decision of a costs judge concerned the date from which interest on costs should run when judgment had been given for damages to be assessed, but there was a significant delay in the assessment of those damages.

In this case, the delay had arisen from uncertainty about the medical prognosis rather than any sloth on the part of the claimant or his lawyers.

The costs judge ordered interest from the date of the judgment in favour of the claimant rather than the date of the actual assessment of the quantum of damages, these being the only alternatives put before him.

This judgment was overturned on appeal when the Court of Appeal noted that neither party had referred the cost judge to CPR 44.3(6)(g), which gave the judge jurisdiction to award interest from a different date to those contended by the parties.

23 of 2002: Haworth v Green

This appeal related to a legal aid assessment of costs in a claim for damages after a public hypnosis.

On provisional assessment, the cost judge disallowed all costs in connection with the considerable work done in response to two show-cause letters from the Legal Aid Board/Legal Services Commission.

In each case, the certificate was discharged and restored following an appeal to the area committee.

The solicitors applied for detailed assessment of the bills and produced counsel's opinion from specialist counsel in support of their contention that the disallowance of these costs was wrong.

The cost judge confirmed his original decision but granted permission to appeal on this point.

He provided a written judgment, relying on the wording of regulation 111 of the Civil Legal Aid (General) Regulations 1989; addressed the failure to reproduce paragraph 3 of a practice direction of the Supreme Court Costs Office (SCCO) of 1986 which suggested that these costs were recoverable; and addressed the so-called expressio unius principle.

However, he did not grant permission to appeal on the solicitor's request that an enhancement 50% on the prescribed legal aid rate should be increased to 100% for work done following the transfer of the claim to the High Court.

The judge held that the costs judge had been in the wrong regarding the work done in relation to the show-cause letters.

She held that the 1986 practice direction, not withstanding that it had been repealed and not

re-enacted, accurately expressed the practice then in force and informed the expectations of the profession.

So far as regulation 111 was concerned, the judge held that the regulation was not exhaustive and did not decide definitely what should and should not be paid for and referred to other regulations in the Legal Aid general regulations which, while not expressly covered by regulation 111, provided for work to be done and solicitors to be paid in complying with them.

On the expressio unius point, the judge's attention was drawn to criticism of the principle in various cases, including first-instance cases and the Court of Appeal in Colquhon v Brooks (1889) WR 657.

She acceded to counsel's submission that it should not be applied to facts of this case as to do so would work injustice.

This was because it was in the interest of all concerned that solicitors should be encouraged to preserve certificates of public funding, and in a case like this it was not practical to expect a lay person to answer the show-cause letter or attend an appeal.

The costs judge had disallowed the fees for counsel's opinion on the grounds that he had not been persuaded by it.

This decision was held to be wrong as the test to be applied was whether the work was reasonably done and the expense reasonably incurred.

And this could not depend on whether the opinion was successful in persuading the costs judge to change his provisional view.

On the question of enhancement, the judge had the benefit of the transcript of the trial judge's judgment and noted that the judge expressed concern that what was paraded as a test case in fact decided only a narrow issue of fact and expressed doubt as to whether the case should have been transferred to the High Court at all.

The judge relied on this dicta and also held that the trial judge had not materially misdirected himself in confirming the decision to not increase the enhancement to 100% for work done following the transfer to the High Court.

24 of 2002: Burstein v Times Newspapers: Court of Appeal

This was an appeal from the SCCO to the Court of Appeal.

The deputy district judge had refused the defendant permission to cross-examine the claimant and his solicitor on his ability or otherwise to pay costs if he lost a libel action in which he had signed a CFA.

The defendant contended that the evidence put before the judge, including the report of a private investigator, showed at the very least that the claimant solicitors must have appreciated that there was no prospect of obtaining their costs from the claimant and therefore the agreement was sham.

The Court of Appeal refused to interfere with the decision of the costs judge, stating 'the deputy is to commended for ensuring that the detailed assessment did not become an excuse for further expensive litigation at the behest of a disappointed but persistent litigant.

Satellite litigation about costs has become a growth industry, and one that is a blot on the civil justice system.

Costs judges should be astute to prevent such proceedings from being protracted by allegations with or without substance'.

25 of 2002: Giambrone v JMC Holidays Limited (no2)

The claimant's bill was held to be disproportionate following a two-and-a-half day hearing with leading counsel.

The judge said there was not need for such exercise again nor was it necessary to do so to follow the advice set out by the Court of Appeal in Lowndes v The Home Office [2002] EWCA Civ 365 [2002] All ER (D) 329 (Mar), [2002] 1 WLR 2450.

The Supreme Courts Costs Office prepares summaries of recent costs appeals.

Copies are available from the Law Society library, tel: 0870 6062511