3+9=Costs April 2020

3+9=Costs April 2020 INTRODUCTION non-party costs order against a medical expert. EDITOR: Shaman Kapoor We also consider the recent battles of Funders Welcome to the 1st Edition with the possible demise of the Arkin cap, and of 39 Essex Chambers’ Costs solicitors’ own duties to funders with respect Newsletter! I am thrilled to to disclosure of counsel’s opinion with adverse re-introduce a formidable and prospects. Turning to the assessment of costs active costs team headed up by stage, we consider the requisite threshold for Peter Hurst, retired Senior Costs Judge, and driven compliant PoDs, and we also look at a case where by silks, senior juniors, and juniors together holding the solicitors terminated a CFA in circumstances 11 separate directory rankings and each with a where the client did not take their advice on a significant practice in costs. We are supported potential offer. And just before you think you may by an incredible team of staff who remain ready, have “good reason to depart” now, we update willing and able to assist our clients. you on the meaning of that phrase vis-à-vis an approved budget and round up with a report from The team is energised, and Covid-19 cannot hold the first case in the Capped Costs Pilot. us back! You will see a number of initiatives roll out this year, including the launch of our in-house full Plenty to read. I am confident you will appreciate Costs Mediation Service offering mediators, costs the forensic analysis and commentary that you barristers and premises in one! have come to expect from this team. We look forward to being in touch very soon. For now, as you sweep up what’s left of the Easter Bunny’s delights, enjoy this first edition which Importantly, in these strange and difficult times the includes much thought pre-final order: a review of entire team and I wish all our readers, their families when, following a successful Defendant’s Part 36 and colleagues the very best of health. offer, indemnity costs might be ordered, whether adverse costs can be set-off in a QOCS case, how much thought should be given to interest provisions in a Part 36 offer, whether it is possible to contract out of fixed costs and a highly unusual April 2020 3+9=Costs Page 2 INDEMNITY COSTS, BUDGETING AND THE Contents REVERSE PART 36 ISSUE 1. INTRODUCTION Peter Hurst EDITOR: Shaman Kapoor On 6th February 2020 the Court of Appeal handed down 2. INDEMNITY COSTS, BUDGETING AND the judgment in Lejonvarn THE REVERSE PART 36 ISSUE 1 Peter Hurst v Burgess & Anor . The case concerned the Claimants’ failure to beat the Defendant’s Part 36 5. SET OFF AND QOCS: AN UNFAIR offer; the circumstances in which the Defendant ADVANTAGE TO DEFENDANTS? might obtain an award of costs on the indemnity Nicola Greaney basis; and the effect on such an award of an approved budget. 7. PART 36 AND INTEREST Simon Edwards Under CPR r. 36.17, where judgment against 8. UNFIXING FIXED COSTS the defendant is at least as advantageous to Michael Standing the claimant as the proposals contained in a claimant’s Part 36 offer, the court must, unless it 10. NON-PARTY COSTS ORDERS: considers it unjust to do so, order that the claimant EXPERTS BEWARE is entitled to – Marion Smith QC a) interest on the whole or part of any sum of 11. CHAPELGATE CREDIT OPPORTUNITY money (excluding interest) awarded, at a rate MASTER FUND LTD V MONEY: THE not exceeding 10% above base rate for some or DEMISE OF THE “ARKIN CAP”? all of the period starting with the date on which Judith Ayling and Philippe Kuhn the relevant period expired; 14. ARE THERE DIRECT OBLIGATIONS FOR b) costs (including any recoverable pre-action A LAW FIRM TO DISCLOSE THE ADVERSE costs) on the indemnity basis from the date on OPINION OF COUNSEL ON PROSPECTS which the relevant period expired; OF SUCCESS TO A FUNDER? Shaman Kapoor c) interest on those costs at a rate not exceeding 10% above base rate; and 17. POINTS OF DISPUTE: THE DEVIL’S IN THE d) provided that the case has been decided and ABSENCE OF DETAIL there has not been a previous order under this Caroline Allen sub-paragraph, an additional amount, which 19. CAN A SOLICITOR TERMINATE A CFA IS shall not exceed £75,000. THE CLIENT DOES NOT ACCEPT ADVICE ABOUT SETTLEMENT? On the other hand, where a claimant fails to obtain Katharine Scott a judgment more advantageous than a defendant’s Part 36 offer, the court must, unless it considers it 21. DEPARTING FROM A COST BUDGET? unjust to do so, order that the defendant is entitled THE HURDLE REMAINS HIGH Samantha Jones to – a) costs (including any recoverable pre-action 23. CAPPED COSTS PILOT SCHEME: costs) from the date on which the relevant THE FIRST EXAMPLE period expired; and Rachel Sullivan b) interest on those costs. 25. CONTRIBUTORS 1 [2020] EWCA Civ 114 April 2020 3+9=Costs Page 3 The extraordinary difference between the be “speculative, weak, opportunistic or thin treatment of Claimant and Defendant is a result claims” could properly be described as out of Sir Rupert Jackson’s reforms and his desire to of the norm such as to warrant an order for encourage Claimants to make timely and sensible indemnity costs. Part 36 offers. b) Whether the respondents’ failures to accept and subsequently to beat the appellant’s Part Turning to the particular facts of the case: The 36 offer, made at a very early stage in the Defendant was an American-qualified architect, proceedings, also meant (either separately or who was a friend and former neighbour of the taken cumulatively with the pursuit of these Claimants. Gratuitously, she provided assistance particular claims) that an order for indemnity to the Claimants when they wanted to undertake costs was warranted. major landscaping works in their garden. There was a falling-out which led the Claimants to c) The relevance, if any, of the fact that the commence proceedings against the Defendant appellant’s approved costs budget was said for breach of contract and/or negligence. The to be £415,000, but that any assessment Defendant denied there was any duty of care. on the indemnity basis would start at the At a preliminary issue hearing the existence of appellant’s actual costs figure of not less any contract was rejected, although it was found than £724, 265.” that the Defendant owed the Claimants a duty of care, a finding subsequently upheld by the With regard to points a) and b) the Court reviewed Court of Appeal. That court made plain that, in the relevant authorities2 and concluded: the particular circumstances, the duty of care “43. In short, therefore, taking the CPR and related to only such professional services as the these authorities together, the position is that, Defendant in fact provided; in other words, she in contrast to the position of a claimant, a could have no liability in respect of any alleged defendant (such as the appellant in the present omissions. In the proceedings, the Defendant case) who beats his or her own Part 36 offer, made a Part 36 offer in the sum of £25,000 three is not automatically entitled to indemnity weeks after the start of proceedings, which was costs. But a defendant can seek an order for not accepted. indemnity costs if he or she can show that, in all the circumstances of the case, the claimant’s After a 5-day trial, the judge concluded that the refusal to accept that offer was unreasonable Defendant had in fact provided very few services such as to be “out of the norm”. Moreover, if the and had not been negligent in providing any of claimant’s refusal to accept the offer comes them. The claim failed in its entirety. The trial against the background of a speculative, weak, Judge refused to award the Defendant costs opportunistic or thin claim, then an order for on the indemnity basis on the basis that the indemnity costs may very well be made. That is Claimants’ conduct had not been such as to justify what happened in Excelsior.” indemnity costs. The defendant appealed. The Court added in respect of Speculative, Weak, The Court of Appeal described the Defendant’s/ Opportunistic or Thin Claims, that there were a Appellant’s claim for costs of £724,265 as “eye number of cases where costs have been awarded watering”. The Appellant’s appeal together with the on an indemnity basis because of the weakness respondents’ notice, raised three distinct issues: of the claimant’s underlying claims3. The Court “a) Whether this was a case in which the allowed the appeal in relation to the conduct of respondents’ pursuit of what were said to the respondents, who, having established a duty, 2 Reid Minty (A Firm) v Taylor [2001] EWCA Civ 1723 ; Kiam II v MGN (No 2) [2002] EWCA Civ 66 ; and Excelsior Commercial and Industrial Holdings Limited v Salisbury Hammer Aspden and Johnson (A Firm) [2002] EWCA Civ 879. (see paragraphs 37 – 43 of the judgment). 3 See by way of example: Wates Construction Limited v HGP Greentree Alchurch Evans Limited [2006] BLR 45. In my summary of these principles in Elvanite Full Circle Limited v AMEC Earth and Environmental (UK) Limited [2012] EWHC 1643 (TCC). April 2020 3+9=Costs Page 4 should not have gone on, on the facts. The Court “If the offending party ultimately loses, then its considered that the pursuit of the claims from 7 conduct may be a good reason to order it to May 2017 (see below) onwards was out of the pay indemnity costs.

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