Newsletter – April 2009 (2)

Further to our previous Newsletter, we would like to clarify the position relating to CFAs and the Cancellation of Contracts made in Consumers Home or Place of Work Regulations 2008

Where we indicated in our previous newsletter that ‘Practitioners may be able to avoid these potential arguments by simply ensuring that retainers are signed at the Solicitors’ Offices’, this of course does not apply if a home visit or excursion has taken place before the CFA was entered into. In any circumstance where there has been a home visit or excursion prior to the signing of the CFA it is advisable to provide the necessary Notice of the Right to Cancel, to avoid issues being raised at a later stage during costs negotiations.

WATCH THIS SPACE!

We understand that announcements are imminent on reduction of discount rate and measures to address those with pleural plaques. This will be interesting news for Claimant Solicitors dealing with Industrial Disease work!

COSTS ESTIMATES

Mastercigars Direct Ltd v Withers LLP [2009] EWHC 651 (Ch)

This relates to an appeal of a decision relating to reliance on costs estimates as between Solicitor and Own Client. The Client had sought to argue that it had relied on its Solicitor’s estimate of 6 May 2005 and that the fact of reliance should have an important bearing on the sum ultimately recovered. There have been lengthy and protracted assessment proceedings, resulting in a number of previous appeals. In brief: -

Master Rogers originally made a decision adverse to the Defendant in April 2007. This was appealed and it was held that Master Rogers had not made findings in relation to the issue of reliance and directions were therefore given on 23 November 2007 as to the way in which the issue as to reliance should be dealt with, which included service of evidence and disclosure by the Claimant.

The Claimant served a witness statement of Mr Kenyon (Managing Director of Mastercigars) and list of documents relating to the issue of reliance in December 2007.

In April 2008 the Defendant served a statement of reasons for the differences between the figures in the estimate dated 6 May 2005 and the figures included in a number of the bills ultimately rendered to the Claimant.

The Court directed that Mr Kenyon attend the detailed assessment for cross-examination, restricted to the issue of reliance on the estimate. Following the detailed assessment hearing, Judgment was given on 11 July 2008, stating that the estimate should be reflected in the assessment of the relevant bills for the period covered by the estimate, liming the profit costs chargeable by the Defendant to the amount of profit costs in the estimate plus a ‘margin’ of 20%.

The Defendant again sought to appeal the decision and on Appeal Mr Justice Morgan held that ‘the figure of 20% has all the appearance of being arbitrary rather than calculated’. It was noted that in order to give proper reasons for the conclusion, the Costs Judge should ‘identify which factors could be taken into account and which should be left out of account, and should also give brief reasons why a factor was taken into account, or left out, as the case may be’.

It was held that it was ‘simply not possible to tell from the Costs Judge’s reasons how he arrived at the figure of 20% and what contribution to that 20% was made by which of the matters in question’.

The decision to limit profit costs to the amount of the estimate plus a 20% margin was therefore set aside.

In terms of dealing with the outstanding question of the effect of the estimate on the detailed assessment of the relevant bills, it was decided that Master Hurst would prepare a report, to be based on agreed questions to be put to the assessor by the parties.

Our Comments: -

Whilst this decision relates to a Solicitor/Own Client assessment, it highlights the increasing importance of costs estimates. It also provides insight as to the approach Courts are taking in relation to estimates and the effect of these on the assessment of costs.

To avoid potential costly satellite litigation, we would always recommend that estimates are as accurate as possible. If for any reason the final bill does exceed a costs estimate by more than 20%, reasons should be provided in an assessment note to the bill of costs to justify the discrepancy (CPR CPD 6.5A(1)).

If any unexpected issues arising during the claim itself which are likely to lead to any substantial increase in costs, it is a good idea to provide the Defendant with an updated estimate or at the very least notify the Defendant that costs are likely to exceed those in the estimate. It is then open to the Defendant to request an updated estimate if they wish.

Predictable Costs

Blackburn v First West Yorkshire and Leslie Graham Whittle v First West Yorkshire, Leeds County Court, 27 February 2009, HHJ Grenfell.

The claims arose from injuries sustained by bus drivers, whilst driving their vehicles on a public road during the course of their employment. The claims were pursued against the employer for failure to maintain the vehicles.

The Defendant dealt with both claims as employer liability claims.

The Appeal related to costs of the successful claims, both of which were subject to a fixed success fee. The question was whether the appropriate success fee was that which relates to RTA cases, or that which relates to employer liability cases.

The DJ had originally held that the employer liability success fee should apply given that the claims had been pursued as employer liability claims.

However, on appeal HHJ Glenfell unfortunately allowed the Defendant’s appeal and held that a success fee of 12.5% should be substituted in each case, on the basis that on a strict interpretation of CPR 45.7(4)(a) the matters were RTAs i.e. the accidents were caused by, or arose out of, the use of a motor vehicle on a road or other public place.

Our Comments:

Whilst not necessarily good news, this case does provide useful guidance as to the approach the Courts are taking in relation to cases which fall into this grey area. It should be borne in mind that if the accident occurred during the course of employment, but on private land rather than a public road, there may be arguments to recover the higher success fee relating to employer liability claims.

COSTS SEMINARS

Our seminar on 3rd June is now Sold Out – however, due to demand there will be a further seminar - same place same time to be held on 8th July on costs tactics –

BOOK EARLY!! 8TH JULY IS NOW FULLY BOOKED – HOWEVER WE ARE RUNNING THE SAME SEMINAR ON THE 9TH JULY, TO BOOK PLEASE EMAIL Teresa.aitken@picosting.co.uk

OUR CLIENTS

As we approach many of our existing clients’ financial year ends we are currently not taking on any instructions from potential new clients for the forthcoming three month period to enable us to prioritise our existing firms and offer the best service possible in terms of costs recovery.