Sibley and Co. -v- Reachbyte Ltd and Anr. 2008] EWHC 2665 (Ch) - Mr Justice Peter Smith, Master Campbell and Roger Bartlett A Deputy Master, having been presented with all the evidence at first instance, when reducing Counsel’s fees by approximately half, was not outwith his discretion, nor could it be said that the issues were decided wrongly.

It followed therefore the Appellants contention that no reasonable judge could have come to the same conclusion was incorrect.

Appeal from the decision of Deputy Master Hoffman on the assessment of Solicitor/client costs of the Appellant.

The Appellant’s bill to their client was assessed in the sum of £479,380.07. The fees of Michael McClaren QC and Giles Wheeler were reduced substantially on detailed assessment from £151,070.00 and £77,230.00 to £64,835.00 and £31,625.00 respectively.

The Appellant challenged a number of findings of fact of the Deputy Master, as a result, the Appellate court should only interfere with factual findings of a Judge at first instance if it can be shown that no reasonable Judge could have come to the conclusion he did based on the facts that were laid before him. The judgment given should be considered as a whole, and a detailed analysis of each and every reason or argument put forward by an Appellant at first instance and allegedly not dealt with by the Judge at first instance.

Held:- The Deputy Master, reading the judgment as a whole did not fail to address any issues and was justified in coming to his conclusions. The appeal would therefore be dismissed. Nonetheless, in the event that was incorrect, in the judges view the Master’s decisions were correct on each ground of challenge.

The Deputy Master did not err in law in favouring the client’s view of the retainer, this was a well established principle, and contrary to the Appellant’s submissions, he did not say that the client’s view must be preferred.

The Master’s decision to reduce the fees Mr McClaren (MM) to £7,500.00 and Mr Wheeler (GW) to £3,750.00, for a consultation was not wrong for want of a lack of reasons for his decision, he simply did not believe the appellant’s witness, which is a sufficient reason. The Deputy Master was entitled to apply his own experience as to what was a justified level of fees for such a conference.

The Master’s decision to reduce MM’s fees for an expert report from £24,115.00 and GW’s from £12,105.00 to £4,000.00 respectively. The Master was entitled to reach this view on the evidence before him, particularly that there had been approximately 14 drafts of the said evidence. The Master was entitled to prefer the witness evidence of the Respondent and this could not be interfered with.

The Deputy Master’s decision to reduce the fees of MM substantially for a written advice and the fees of GW to nil, could not be criticised. The client had not been advised of a joint opinion and the client had been expecting a fee of £5,000.00 for a preliminary advice. This was a reasonable figure in the Deputy Masters opinion and could not be interfered with. There was no role for Joint Counsel in the exercise and the Master’s decision to disallow his fees was correct.

The Deputy Master’s decision to reduce the brief fees was also correct. MM sought fees of £50,000.00 with daily refreshers of £2,750.00 and £1,250.00 respectively. GW sought fees of £29,000.00 with refreshers in the same amount. The hearing was adjourned, and the Deputy Master allowed £40,000.00 and £20,000.00, again utilising his own experience, which could not be criticised.

The Deputy Master’s decision to disallow all fees from 7th June 2004 was correct. The master’s allowance of a day and refresher and a half day refresher was in fact generous, but not so as to mean it was outside his discretion. Again, the Deputy Masters use of his experience could not be criticised.

Finally, The Deputy Master was correct in disallowing the fees incurred from 30th March 2004 to 15th June 2004. There was no failure by the Deputy Master to give his reasons for disallowance; his judgment is clear that there was no authority from the client to incur these fees. The Deputy Master was entitled to come to that decision based on the evidence before him and it was not an unreasonable decision. although his figure was slightly wrong the logic was not effected.

It was plain from the above that the Deputy master formed the view that Counsel’s enthusiasm to do work on the case had no limited and that arose from the failure on the part of the Appellant solicitor to address it. When his judgment is fully analysed in view of the material he had available, none of the grounds of appeal were made out and the Respondent were entirely justified in challenging Counsel’s fees.

The Compass Annual Charity Golf Day took place this year again at the Huyton & Prescot Golf Club.  Established in 1905, the course itself is laid out on luxurious, luscious parkland and spans 5,893 yards from the first tee to the eighteenth pin.
There are plenty of natural hazards littered around the course so accuracy and good course management is required to score well, particularly on the troublesome par 3s.

The day was oversubscribed, as it was last year and 60 players took part in the tournament, which was based on the Stableford scoring system.  Whilst Compass’s team put up a good showing, the first place Trophy ultimately went to a team put in by one of our clients.
The weather, whilst overcast in the morning, turned much more favourable in the afternoon and the players returned to the clubhouse for a complimentary three-course meal and drinks.
Despite a number of near misses, there were no winners of the Hole in One prizes of £5000.00, a week’s holiday in La Manga and a full matched set of Calloway Golf Clubs.  That did not however, dampen the spirits when the trophies and prizes were awarded for the “Best Individual”, “Nearest the Pin” and “Longest Drive”.
The day raised the not-insignificant sum of over £2500.00 for Christies Cancer Hospital, taking this year’s charitable donations to over £5000.00.

[2008] EWCA Civ 1120
Court of Appeal 21 October 2008
A wasted costs order should not have been made against a firm of solicitors. The firm had not acted unreasonably and its conduct did not involve a breach of duty to the court.


H, a firm of solicitors, appealed against a wasted costs order made against them. H had been instructed to act against S in possession proceedings. There had been several adjournments of the trial. H tried to raise a new issue after being shown the local authority's request for the warrant of possession. As a result the case was adjourned again. S applied for a wasted costs order against H on the basis that H acted unreasonably in raising a new issue late on leading to a further adjournment. The judge ruled that H had acted unreasonably and made the order. This was upheld on appeal. H on second appeal to Court of Appeal argued that there was no factual justification for the wasted costs order as the only charge against it was that it could have asked for production of the request for the warrant earlier than the trial date. H submitted that it had no reason to make such a request and there was no basis to suggest the request was unreasonable.

HELD: No such order should have been made. The judge gave no reasons as to why he had reached his decision. It was obvious and reasonable that H had not thought that a new argument could have been raised until after seeing the request for the warrant. It could not be regarded as unreasonable conduct which involved a breach of duty to the court that justified a wasted costs order.

Jackson J, in the Queens Bench Division held that the Court of Appeal's decision on costs in Carver v BAA Plc (2008) EWCA Civ 412, (2008) 3 All ER 911 was of general application in circumstances where one party had made an offer which was nearly but not quite sufficient and the other party had rejected that offer outright without any attempt to negotiate.


M sued CB (sub contractor to M on the Wembley Stadium Construction project) for breach of contract.
The Court held that the decision in Carver v BAA plc (2008) EWCA Civ 412 was of general application as to how the court ought to approach a case where one party had made an offer which was nearly but not quite sufficient and the other party had rejected that offer outright without any attempt to negotiate.

In this case each party had been advancing claims. There was a set-off of the sums awarded on both sides. Each side had claimed an overall result leading to a payment in its favour. CB had to pay M the sum of £6.154 million. CB had never offered to pay anything to M. Therefore M was the winning party and on the face of it entitled to their costs.

However a distinct part of M’s case was comprehensively defeated and M had failed by a wide margin to beat an offer by CB in relation to that part by the sum of £500,000. CB's success and M's lack of success of that part had to be reflected in the costs order. A reasonable apportionment of the costs which had been incurred in respect of that part was 10 %.

The case did not require an issues-based costs order rather a proportionate costs order which would do justice between the parties. M should have accepted CB's offer of £500,000 in relation to that part and had acted unreasonably in rejecting it.

On another issue M had recovered only nominal damages of £2. That issue had taken up 40% of the costs of the action. On a further issue which was the main issue from which M’s award for damages had been derived after setting off claims made by CB, the Court found that 30% of the costs of the action had been incurred. Common costs were 20%.

On preliminary assessment, CB was awarded 40% of the costs of the action. M was awarded its costs of the main issue (being 30% of the costs of the action) and the common costs (about 20%). The net effect of the preliminary assessment was that M received 10% of the costs of the action.

Held: The entirety of the parties' conduct should be considered when looking at whether any adjustment should be made to the figure that was arrived at. The conduct of both parties was open to criticism. The reason why the litigation had not settled was that CB did not make an offer to settle the entire claim even though it conceded that some overall payment was due to M.  There was a greater duty on a debtor to make a defendant’s offer than there is on a creditor to make a claimant's offer. The initial figure of 10 per cent in favour of M would be increased to 20 per cent.

ANGEL AIRLINES (A Romanian Company in liquidation) v DEAN & DEAN (2008)

[2008] EWHC 1513 (QB)

A clear without prejudice offer by a solicitors firm to settle a bill of costs with its client, made in proper time and in proper form, could be a special circumstance that could reverse the statutory presumption in the Solicitors Act 1974 s.70 that the firm was liable to pay the costs of the detailed assessment proceedings, where the amount of the bill had been reduced on assessment by more than one-fifth.


The appellant solicitors (D) appealed against the determinations of a Costs Judge in proceedings between D and the respondent former client (R).  D had issued a bill of costs for £444,705 for some non-contentious work it had carried out for R and was required to provide details of those costs.  Due to D's conduct, there were a number of delays in obtaining those details.  The costs judge set a re-arranged date for the concluding part of the detailed assessment, following D's unavailability for the original date, but on the day of the hearing D applied for a stay of proceedings or an adjournment.  The application for a stay was rejected, but an adjournment was granted.  With just one further day of detailed assessment remaining, D made a without prejudice offer of £100,000 in respect of its detailed bill of costs which did not mention the related costs in the proceedings.  The costs judge determined the final bill to be £99,449 and held that the offer did not amount to a special circumstance under the Solicitors Act 1974 s.70(10), so that the presumption applied that, because the bill had been reduced on assessment by more than one-fifth, D was obliged to pay the costs of the assessment.  In addition, the costs judge concluded that for various periods D was not to be entitled to interest of the money owed.  The judge subsequently made a further order requiring D to pay half the costs of the delayed hearing, with the other half being costs in the assessment.  D submitted that (1) the Costs Judge was wrong to conclude that its without prejudice offer did not amount to special circumstances under s.70(9) and s.70(10) of the 1974 Act; (2) it was entitled to interest on the £99,449 as of right pursuant to the Solicitors' (Non-Contentious Business) Remuneration Order 1994; (3) the order that it should pay half the costs of the detailed assessment hearing was perverse.

On Appeal it was held that: (1) A without prejudice offer could be a special circumstance under s.70(10), but it was clear that the Costs Judge was right to conclude that the instant case was not a special circumstance.  By the time of D's offer, the parties had already been through two rounds of detailed assessment and just one day remained for the conclusion of that assessment, and therefore the offer came too late.  No real weight could therefore be given to such an offer, Wills v Crown Estate Commissioners (2003) EWHC 1718 (Ch), (2003) 4 Costs LR 581 considered.  The offer was not in the proper form. It was unclear and wholly failed to deal with the costs consequences of its acceptance, Tramountana Armadora SA v Atlantic Shipping Co SA (The Vorros) (1978) 2 All ER 870 QBD (Comm) applied.  It would have been commercially unwise for R to have accepted such an unclear and potentially disadvantageous offer.  In addition, the offer was silent as to the time that R had to accept it. The 21-day time limit for acceptance implied by the CPR was after the last projected date of the hearing.  The fact that the offer was not beaten was a further factor justifying the conclusion that the offer was not a special circumstance under s.70(10), Carver v BAA Plc (2008) EWCA Civ 412, (2008) 3 All ER 911 considered.  (2) There was nothing in the order that made the award of interest mandatory, and any such award under art.14 of the 1994 Order was in the discretion of the court.  Accordingly, the costs judge was entitled to conclude that D's unsatisfactory conduct resulting in delays in the process should be reflected in periods in which no interest was awarded to D.  The Costs Judge had embarked on a painstaking analysis of the different periods, and D had failed to show that such an approach was erroneous in principle, G v G (Minors: Custody Appeal) (1985) 1 WLR 647 HL and AEI Rediffusion Music Ltd v Phonographic Performance Ltd (Costs) (1999) 1 WLR 1507 CA (Civ Div) considered.  (3) The Costs Judge had awarded half of the costs of the detailed assessment hearing against D because it had made a formal application for a stay, and that application had been rejected.  Costs followed the event, and there could be no grounds whatsoever for interfering with that order.  As a result, the Appeal was dismissed.

A solicitor was entitled to have the balance of outstanding legal fees paid to him by a Charity, for legal work undertaken on behalf of the members of the Charitys Management Committee. Interim third-party debt orders to enforce the judgment were set aside to allow more time for payment.

The Applicant charity (D) applied to set aside a default judgment and interim third-party debt orders in favour of the Respondent solicitor (H) for legal work undertaken for members of its management committee. D had been established to maintain and manage an educational and training facility. D embarked on a major rebuilding programme in order to attain the status of a "Youth Centre of Excellence". Subsequently, a dispute between the members of D's management committee arose and litigation was commenced to resolve it. The judge ordered the parties to mediate and, consequently, the parties resolved their issues and the proceedings were terminated. The agreement between the parties did not deal with all aspects of the costs involved in those proceedings and H, the representatives of the claimants in the dispute, sued the charity for the legal work undertaken and the relevant disbursements he had met. The amount of costs claimed was just short of £70,000. Following the default judgment, the interim orders were made to enforce it. D submitted that H did not have a proper retainer from it and that charity funds should not be used to pay the costs.

HELD: (1) Although H had not been instructed by all the members of the management committee, who were then ranged on either side of the dispute proceedings, and although H had not been instructed by D's chief executive or by a formal resolution of the management committee, it did have a letter from the chairman and secretary suggesting, amongst other things, that D's resources would be involved in the proceedings. In any event, the costs that had been incurred represented the price of getting D's governance back into order, and the evidence suggested that the parties to those proceedings expected that D would be liable to H for the reasonable cost of the work being done. Accordingly, H's instruction, despite its imperfections or incompleteness, should be treated as having been ratified by D with the result that H would be entitled to the unpaid balance of its fees from D. (2) It transpired that almost £11,000 of the total costs had been paid by the claimants in the dispute proceedings. Accordingly, the existing judgment was set aside and another judgment was granted for the outstanding sums due, being a little less than £60,000. The interim third party debt orders were set aside to allow D time to pay the judgment.

Unsuccessful CFA Regulation 4 (2) (c) challenge to the Claimant’s CFA.


Appeal from Principal Costs Officer Lambert before Master Campbell.

The Defendant’s alleged that the Claimant had breached Regulation 4 (2) (c) of the Conditional Fee Agreement Regulations and as a result no costs were payable to the Claimant.

The Claimant’s CFA stated that “You the client, Mr Dunn, by his mother and litigation friend”. The Claimant’s solicitor gave the oral funding advice only to Mr Dunn and Mrs Dunn signed the CFA.

The CFA was signed by Mrs Dunn and she was said to be his litigation friend because Mr Dunn was under the age of 18 at the time the CFA was completed.

Costs Officer Lambert held that Mrs Dunn was the client and that the Oral Advice was therefore not given to the client prior to entering into the CFA, meaning the agreement was unenforceable for want of compliance with Regulation 4 (2) (c).

Upon the hearing of the appeal it was submitted by Counsel for the Claimant that Mr Dunn was in fact the client and that Mrs Dunn was simply an agent of the client. Mrs Dunn could not have been the litigation friend as there had been no appointment by the court and could not therefore be liable for costs in accordance with CPR 21.9 (6).

The Defendant responded by submitting that either Mrs Dunn was the client within the meaning of CFA Regulation (1) (3) or that both Mrs Dunn and Mr Dunn were parties to the CFA and as one of them hadn’t been given oral advice the CFA must fail. In any event, the advice given to Mr Dunn was insufficient to comply with the Regulation. The Defendant’s withdrew any contention that the CFA was unenforceable for want of compliance with Regulation 5 of the CFA Regulations.

Held:-  The wording of the CFA gave the appearance of being fatal to its validity. Looked at on its face, the document clearly stated that the agreement covered Mr Dunn's claim for damages and personal injury "by his mother and litigation friend" with her signature appearing at the relevant places in the document. When it was explained that no formal appointment under CPR 21 as litigation friend was ever made it was clear that Mrs Dunn was not, and could not, have been the client.

A principal can act through an agent, when entering into a CFA. There was no requirement for a litigation friend to be appointed. The expression "litigation friend" on the face of the CFA had no significance so far as CPR 21 was concerned, since no formal appointment was ever made. Mrs Dunn was not "the client" as defined in Regulation 1(3)(a). Not having been appointed litigation friend under CPR 21, Mrs Dunn did not assume any liability to pay the solicitors fees by reference to Regulation 1(3)(b). The submission that the solicitors breached the Regulations for failing to provide the appropriate information to Mrs Dunn would therefore fail.

The nature of the enquiries that needed to be made would, inevitably, have been short; Mr Dunn was then under 18. He was too young to have a credit card; he could not own the legal estate in a house in his own name and would not have a home insurance policy upon which BTE might have been tacked; he was not a member of a Trade Union; he had an insurance policy for a moped but this did not include any legal expenses insurance, a point confirmed with the solicitors. In establishing these facts the solicitors discharged the tasks which the Regulations required them to undertake in relation to Mr Dunn.

The CFA was therefore valid and enforceable.

Unsuccessful Courts and Legal Services Act 1990, Section 58, challenge to the Claimant’s CFA


Detailed assessment of the Claimant’s bill before Master Gordon-Saker.

The Defendant’s alleged that The CFA breached Section 58 (4) (a) of the Courts and Legal Services Act 1990 as the success fee exceeded 100%.

The Defendant alleged that a clause in the CFA which provided that the Claimant would pay £150.00 plus VAT for administrative work in the event that he was successful made the conditional fee agreement, which also provided for a 100% success fee, unenforceable.

The Defendant submitted that the administration fee of £150.00 plus VAT was an extra fee for success or a success fee and placed reliance on Oyston -v- Royal Bank of Scotland.

The Claimant submitted that the administration fee is not part of the success fee. The Claimant pointed to differences between the present case and Oyston. In this case the administration fee did not form part of the definition of the success fee; in Oyston arguably it did. In this case the administration fee was payable in the event of success. It was not payable only if a certain sum in damages is awarded. In Oyston, what was effectively being provided for was a share of the damages and that was clearly champertous.

Held:- There is no reason to conclude that the administration charge is anything other than what it purports to be. It is described as a charge for administrative work done on the case. If the retainer were not based on a conditional fee agreement, there would be no objection to the solicitor and client agreeing that, in addition to the work charged for at an hourly rate, a lump sum fee should be payable for non-fee-earner work.

There is no real distinction to be drawn between the administration charge and the basic charges that are payable in the event of success. The success fee is defined as 100 per cent of the basic charges, or 25 per cent in the event of an admission. Prima facie, the administrative charge does not fall within that definition. Nor does it fall within the definition given at the Law Society conditions; the definition that was given there was that the success fee is a percentage of the basic charges.

The CFA did not fail to comply with section 58(4)(b) or (c), because the administration charge is not part of the success fee as defined in section 58(2)(b). It was not an amount of other fees which are increased in specified circumstances; it is a stand-alone fee payable in the event of success in the same way that basic charges are payable only in the event of success.

Unsuccessful Garrett style challenge to the Claimant’s AAH CFA.

Detailed assessment of the Claimant’s bill before Master Rogers.

The Defendant’s alleged that the CFA was unenforceable for want of compliance with Regulation 4 (2) (e) (ii) (The Garrett argument) of the CFA Regulations.

The matter was referred to the Claimant’s Solicitors via AAH (Accident Advice Helpline) and the Claimant purchased an insurance premium of £987.00 from AAH.

The Defendant alleged that a prima facie breach of Regulation 4 (2) (e) (ii) had occurred as a result of the Claimant’s failure to fully explain the requirement to recommend the insurance premium being purchased and the failure to comply with that requirement would result in the solicitor being removal from the AAH Panel.

The CFA simply stated that “we do not have an interest in recommending this particular insurance agreement, save that we are a member of the AAH panel”.

The AAH operating manual was in evidence before the court, however there was no witness evidence filed in support of the Claimant.

The Claimant submitted that the Defendant’s submissions were erroneous in that the Claimant’s Solicitors had an interest in referrals only, but not insurance and any interest in the insurance was the declaration the regulation required.

The Claimant maintained that there was no requirement to recommend this insurance or else be removed from the panel as per Garrett. The Claimant submitted that membership of a panel does not mean there is an interest per se as this would mean that even panels which don’t require a premium would be caught by the Regulation.

Held:-

There was no breach of Regulation 4 (2) (e) (ii). There was no evidence that the Claimant’s solicitor would have lost panel membership had they not recommended this insurance premium, nor was it obligatory that they had to recommend the insurance premium when the manual was considered.

Garrett was general guidance only and each case must turn on its own facts. Panel membership alone did not constitute a declarable interest, it must be shown that it would affect panel membership if the premium wasn’t purchased for the CFA to fall foul of CFA Regulation 4 (2) (e) (ii).

The fact that the insurance was taken out before the CFA was irrelevant.

Successful CFA Regulation 3 (1) (a) challenge to the Defendant’s CFA.

Detailed assessment of the Defendant’s bill before Master Simons, specifically to deal with the enforceability of the CFA, following the setting aside of a decision from a Deputy Costs Judge in which he held the CFA was unenforceable.

The Claimant’s alleged that the CFA was unenforceable for want of compliance with Regulation 3 (1) of the conditional fee agreement Regulations. The Claimant alleged that the CFA failed to specify the amount of the success fee because, as far as is relevant, the CFA stated “The success fee is set at 14.5%...the matters set out at paragraphs (a) and (b) (the postponement element) make up 60% of the increase in charges. The matter set out at paragraphs (c) and (d) make up 40% of the increase in basic charges”

The Claimant alleged that the CFA did not specify the amount of the success fee which was payable for postponement and it was therefore unenforceable.

The Defendant responded by referring to the contents of the CFA and the letter which enclosed it.

The letter stated that the solicitor would deliver regular bill to his client and that 2% interest would be charged if they were not paid within 14 days. The Defendant submitted that this therefore made it clear that there was in fact no postponement element.

The Defendant also referred to the instances where the solicitor waved any irrecoverable element of the success fee, or any element of the success fee not recovered. The Defendant submitted that this demonstrates that there cannot have been a material breach.

Held:- The CFA did breach Regulation 3 (1) (b). The agreement did not specify the amount of the success fee which related to the costs of the postponement element, contrary to the Regulation.

The purpose of the Regulation is that the client is aware of his financial obligations and requirements. The fact that the CFA states elsewhere that the amount is nil, only adds to the confusion.

The breach was material for the reasons given in Spencer -v- Wood.

Without Prejudice estimates of costs are not admissible in costs proceedings.


Preliminary issue at a Detailed assessment of the Claimant’s costs before Master Rogers, to deal with whether the Claimant's solicitors are entitled to exclude, from consideration by a Costs Judge, a document in relation to negotiations for settlement when the underlying litigation was compromised on the basis of that document, where the document in question is marked without prejudice.

At a settlement meeting, the Defendant’s and Claimant reached an agreement as to the settlement of the claim. At the said meeting, the Claimant provided a written note that the costs up to 1st May 2007 were £38,250.00.

The figure was contained within a document handed to the Defendant at the meeting which stated “Without Prejudice - Rough Estimate”

The Claimant argued that the same could not be considered because the same was without prejudice, but the Defendant argued it was vital to the construction of the consent order.

The Defendant submitted that the same amounted to an estimate and they proceeded to settle the claim at that meeting based on that estimate provided.

The Defendant contended that the Claimant should be limited to the costs within his estimate.

The Claimant submitted that the same did not amount to an estimate in accordance with Paragraph 6 of the Costs Practice Direction. The figure was merely a rough estimate provided at the Defendant’s insistence.

The Claimant also submitted that had the parties intended that the figure, reluctantly provided, without the file of papers, was to be binding, then this would have been reflected in the Tomlin Order which arose as a result of the settlement hearing.

Held:- From the authorities referred to, its quite clear that documents which are marked without prejudice should not be referred to subsequently. There are exceptions to the rule, as per Unilever -v- Proctor & Gamble, but costs is not one of them. There may be scope for creating an exception,  not at costs judge level, but probably the House of Lords or Court of Appeal level only.

The reference to the without prejudice estimate of costs must be removed completely from the Points of Dispute and not referred to at the detailed assessment.

Successful Part 8 application for an order to compel the Defendant’s firm to deliver non-statute bills upon their client.


Hearing of the Claimant’s Part 8 application for an order to compel the Defendant’s to deliver up a bill and cash account, a certificate for special circumstances to be issued and an order in the standard form for detailed assessment of 20 bills rendered by the Defendant to the Claimants.

The Defendant opposed the application on the basis that the bills where statute bills and that the Claimant’s were out of time in seeking an assessment.

The Claimant submitted that all bills were non-statute bills, by virtue of the principle in Winchester Commodities Group Limited v R.D. Black & Co. In the alternative, there were special circumstances as to why there should be a detailed assessment of the Claimant’s bills, namely that the first Claimant had no capacity to apply for a detailed assessment within the relevant period and that it would have been impractical to apply for assessment prior to the conclusion of the case.

The Defendant contended that the second and third Claimants had no standing in the proceedings and were not valid parties to the action.

The Defendant submitted that there was an express agreement that each bill would be treated as final. The Defendant produced letters in which the Claimant stated explicitly that he was seeking advice from a law costs draftsman given the extent of the bills of costs.

The Defendant denied the Claimant was a patient within the conduct period, pointing out that the general order was not made until after the final bill had been delivered.

Held:- The Second and Third Claimants, whilst they may have an interest in the property of the First, are not proper parties to the claim. All the bills delivered were interim non-statute bills. The standard terms of the Defendant were clear that interim bills would be delivered. The fact that the bills stated that they were “interim bills on account”, only served to reinforce the position. Furthermore, the bills delivered did not comply with Section 74 of the Solicitors Act 1974. The order would therefore be granted.

Further and in any event, there were special circumstances why there should be a detailed assessment. The fact that the Claimant did not have the mental capacity to instruct a solicitor must be a special circumstance requiring a detailed assessment.

Challenge on 5 routine preliminary issues. The costs were proportionate, the estimates of costs were not relied upon, Success fees are recoverable where an N251 is mis dated, the success fees were reduced from 100% to 65% and 75% to 33% and costs of funding are not recoverable inter partes.


Detailed assessment of the Claimant's bill of costs, before Master Rogers,  dealing with the remaining preliminary issues following a detailed assessment of the first preliminary issue in February 2008. in which it was determined that the CFA was enforceable as the solicitor had complied with their obligations under CFA Regulation 4 (2).

The remaining preliminary issues were:-

1. Proportionality and costs estimates
2. Hourly rates
3. Recoverability of success fees on the two CFAs
4. Level of Solicitors' success fee
5. Level of Counsel's success fee
6. Recoverability of the costs of funding

(1)

The Defendant argued that they placed reliance on a costs estimate in the allocation questionnaire in which it was estimated that the base costs of the Claimant to trial would be about £38,000.00. The base costs in the bill however  totalled £106,453.88.

The Defendant’s produced evidence by way of witness statements demonstrating their reliance on the estimates when considering settlement of the claim.

The first witness statement produced by the Defendant referred to a “co-ordinators note” which referred to the contents of the same. The court stated that the note must be produced if it was to be relied upon.

The Claimant submitted that the reason for the difference between the estimate and the costs claimed was due to the complex nature of the evidence which was acquired after the estimate and the unanticipated claims of care and assistance.

The Defendant also submitted that the costs of £120,000.00 were disproportionate to the issues of the claim, despite the damages being £250,000.00.

Held (1):- The difference in the costs claimed could be explained, however not all of the difference. The note which the court ordered to be produced was of particular importance. The court did not accept that the Defendant's relied on the estimate as much as they contended they did and therefore, there was no reasonable reliance on the estimate. The costs would not therefore, be limited to those identified within the estimate.

The Defendant's contention that the costs were disproportionate must also fail, the Claimant was a dying man and would have been prepared to spend the amount spent on costs in order to ensure financial stability after his death.

(2)

The Claimant sought hourly rates of between £115.00 for a costs draftsman to £365.00 for the Grade A fee earner dealing with the case.

The Defendant submitted that the rates where unreasonable and that there was no need to engage a Central London firm. The Defendant contended that an outer-London firm was reasonable utilising the guideline rates.

In the alternative, the Defendant further submitted that the appropriate approach was to “de-construct” the hourly rates into A and B factors.

The Claimant contended the opposite, contending the use of a Central London firm was reasonable and that the rates claimed were the norm for this type of work at the time the solicitors were engaged

Held (2):- The hourly rates would not be de-constructed into A and B factors; that test no longer applied.

There were firms in outer-London who could have competently handled this claim and the starting point was therefore the guideline rates for that area, however a generous uplift would be applied given the nature of the work undertaken. Rates between £115.00 per hour and £250.00 would be allowed.

(3)

The Defendant contended that the success fee was not recoverable as the Claimant had inserted the wrong date on the N251 Notice of Funding.

The Claimant contended the date was an error and the Defendant was aware of this. The Claimant made an application for relief.

Held (3):- Relief would be granted. There was no prejudice suffered by the Defendant from a minor mis-dating error, which actually reduced their liability for a success fee.

(4)

The Defendant contended that the success fee of 100% throughout was excessive and offered 40%.

The Claimant submitted that the success fee was entirely reasonable given the lack of evidence in this case and the particular situation of the Claimant.

Held (4):- The quantum of each success fee is very particular to each case. CFAs that provide for a risk in respect of quantum, place a considerable further burden on the solicitor and are not an illusory risk. The prospects of success were adjudged to have been 65% and applying the ready reckoner in Cook on Costs a 54% success fee would be allowed.

(5)

The Defendant contended that the success fee of 67% sought by Counsel was excessive and offered 27.5%.

The Claimant contended that Counsel was experienced in these matters and judged the prospects of success accurately.

Held (5):- The prospects of success by the time Counsel had entered into his CFA had significantly increased. The prospects of success would be placed at 75% and accordingly a 33% success fee would be allowed.

(6)

The Defendant submitted that the costs of funding were not recoverable as a matter of principle, based on the fact that the costs of legal aid have never been recoverable. There was nothing in the change from RSC to CPR which could bring about any change.

The Defendant pointed out that if the intention of parliament was that the costs of complying with the CFA Regulations were to be recoverable, it could have provided so, given that the Regulations were in force until 2005, but they did not do so.

Lastly the Defendant submitted that where funding costs are incurred, no funding is in place and as a result there could be no liability on behalf of the Claimant, and by virtue of the indemnity principle, no liability on behalf of the Defendant.

The Claimant responded by referring to the divergence of opinion in the County Courts and SCCO on the subject and that it would be beneficial if a higher authority gave its verdict on the costs. (There were no real submissions recorded as to why these costs should be recoverable)

Held:- The costs of funding have never been recoverable and the change from RSC to CPR did not effect this change.  The element of the bill relating to funding must therefore be struck out.

The costs of a loss adjuster instructed by an insurer prior to the instructions of a solicitor are not recoverable as costs.


Appeal from the detailed assessment of the Defendant's costs by Costs Officer Martin, before Master Haworth.

The Defendant sought costs following a successful defence of an action. A disbursement was sought of the bills rendered by Questgates.

Questgates where the loss adjusters who acted for the Defendant prior to the issue of proceedings.

Costs Officer Martin had allowed the costs of Questgates  on the basis that the costs were of an incidental to the proceedings.

The Claimant submitted that the costs, claimed as a disbursement, were incorrectly claimed. No solicitor had been instructed at the time these costs were incurred. The limit on recovering disbursements required a legal representative to have been instructed at the time or that they would have been unnecessary had a legal representative been instructed because they would have carried out this work.

The fee was neither a payment to a legal representative nor an authorised litigator within the meaning provided by the Courts and Legal Services act, nor was a disbursement paid by such a person nor does it fall within one of the rare recognised exceptions.

The Claimant also contended that the claim for costs was the claim for costs of the Defendant, not the Defendant's insurer. The insurer merely provides the Defendant with an indemnity for costs.

Until the point that solicitors are instructed, the insurer imposes no liability on their insured to pay their costs, which is why insurers are usually unable to recover their costs. The Claimant pointed out that insurers do have retainers with their insured and this was a simple case of an insurer contracting out part of the work it would normally do.

The Defendant contended that the doctrine of subrogation applied; insurers merely step into the shoes of the insured. The costs of Questgates were an expense incurred by the insurers and these costs must be treated in the context of costs recovery by the insured.

The Defendant pointed out that there would be no question of recoverability had Questgates been instructed by a solicitor.

Alternatively, it was submitted that the Defendant should be treated as a litigant in person  and that costs of Questgates were an out of pocket expense recoverable inter-partes.

Held:- Had the Defendant's solicitors sought this assistance in the litigation on an agency basis, the costs would have been recoverable. However, no true agency existed between the Defendant's Solicitor and Questgate. There were no letters of instruction, no terms of business and the only documents were invoices, which were addressed to the insurer.

Given that, there is no basis that the Defendant has a direct liability for these fees so the claim must fail. The Defendant's alternative argument must fail, they were not an out of pocket expense incurred by a litigant in person.

In any event, the work carried out was not “expert assistance”. This was a simple case of an insurer contracting out part of their work and was nothing that they could not have done themselves.

Request for disclosure of the Claimant’s CFA and Counsel’s advice rejected as privilege had not been waived.


Detailed assessment of the Claimant's bill before Master Campbell.

The issue was whether the Defendant was entitled to disclosure of the CFA and Counsel advice.

The Defendant submitted that the request for disclosure of the CFA was not a fishing expedition.

The Claimant had waived privilege in respect of both documents because the risk assessment had been disclosed and the advice was an annexure to that document which the Defendant was entitled to see.

The CFA fell within the same series of privileged documents as the risk assessment and references to the contents of the CFA had been made in open correspondence.

Fairness demanded these documents to be disclosed as a party cannot “cherry pick” what to disclose from a document.

Finally, CPD 32.5 and CPR 44.3B required disclosure of the risk assessment in order for the success fee to be recoverable.

The Claimant submitted that the application was misconceived in that the court had no power to order the disclosure being sought. The practice direction merely provided that the costs judge may put the receiving party to their election.

Furthermore, the information disclosed did not amount to a waiver. Information had been disclosed, for example Counsel's opinion on the prospects of success, but it did not require the whole advice to be disclosed for a fair hearing to take place. Nor had their been waiver by conduct as would make a fair adjudication impossible.

Held:- The starting point is to look at the documents already disclosed. The “risk assessment” disclosed was not actually the document prepared at the time the CFA was entered into. It followed that privilege related not to the Claimant, but to the Claimant's Solicitor.

The Claimant's solicitor could not have been waiving privilege in respect of the CFA when this document came into force 12 days after the CFA.

The reference to a CFA in open correspondence did not amount to a waiver of privilege. It is akin to a solicitor advising the opposing legal representative that they have written a letter to their client seeking instructions; would that letter be disclosable? The answer must be no.

In respect of Counsel's advice, privilege was  not waived and the same was not disclosable, despite an unintentional waiver given, as natural justice can still be achieved via the election procudure provided for by the rules.

As the CFA was dated after the revocation of the CFA Regulations, CPD 32.5 does not require the statement of reasons for setting the success fee to be disclosed. This requirement applies only where CFA Regulation 3 (1) or CCFA Regulation 5 (1) are engaged.

In line with our continued and measured growth plans for 2008, compass have further strengthened their Drafting teams at both Prescot and Manchester, taking staffing levels towards 70. 


Ramzi Djemai joins us at Prescot as a Senior Draftsman, bringing 3 years of solid bill drafting experience to the team.

Hayley Gelhardt joins our Litigation Department at Prescot as a Costs Draftsperson, bringing 2 years of bill drafting experience with her.

Neil Newton joins our Manchester team from Horwich Farrelly as a Senior Costs Draftsman, bringing 17 years costs drafting experience to the team.

Further October appointments will be announced in due course.

Due to further unprecedented client acquisitions across the UK, we have made 6 further appointments to our growing teams at Prescot and Manchester


Andrew Daintith has joined our Manchester office as a Costs Draftsman as has Jenny Macardy in the same role.

At Prescot we welcome to our Drafting teams Vivienne Sharpe, Lee Doore, Helen Ambrose and Ramzi Djemai.

In October we will welcome 2 Draftsmen, 2 Negotiators, 1 Advocate, 1 Secretary and a new member to our Sales and Marketing department, their details will be confirmed in October.

All of the above appointments are due solely to our continuing reputation as the market leaders for costs drafting, negotiation and litigation in the UK, resulting in massive genuine demand from existing and new clients to undertake further volume work in all areas.

We are currently undertaking further recruitment in all areas, to enable us to fulfil genuine requests to handle higher volumes of work from some of the most respected law firms in the UK.

Compass continue to show that when it comes to costs recovery and litigation, there really is no competition.

Compass have teamed up in partnership with Charterhouse Global Communications to set up a panel of solicitors in preparation to handle over 1000 cost bearing PPI mis-selling cases per month, from September 2008

The Court of Appeal gave its approval to costs orders in housing disrepair claims where repairs are completed prior to allocation.

It has been noted that we have been somewhat remiss in keeping our clients abreast of our new staffing additions, we are taking this opportunity to give brief details of the 16 new members of staff who have joined the largest Claimant Costs Consultancy in the UK since March 2008, their pictures and profiles will be added to our website shortly


Following the appointment to the Board of Stewart McCulloch, we have welcomed Helen Thompson and Hayley Merrick to our Administration departments at Prescot and Manchester respectively, Lana Bradley and James Sharples have joined Manchester as Costs Negotiation Supervisor and Senior Costs Negotiator, Charles Day and WIlliam Chambers have joined Manchester as Senior Costs Draftsmen, and Brian Dempsey has recently joined our Manchester team as as Advocate, we have a new member joining our Drafting team in Manchester on 27th July also, with 2 further appointments to follow in August, Ruth Ferris has also joined our Manchester team as an Audio Typist.

At Prescot, Julia Hall joins our Accounts Department as a Credit Controller, Simon Sharpe has joined as a Senior Costs Draftsman, and Nicola Stuart has joined our Litigation Team along with Natalie Pye as Costs Draftsperson and Litigation Assistant, respectively.

Pamela Ellis has recently joined our Prescot team as Receptionist/Administrator and Jennifer Ross has joined our Sales and Marketing Department as a Marketing Assistant.

We are currently looking to fill a further 5 Costs Drafting and Negotiation roles at both offices to meet record breaking numbers of files received from our loyal client base across the UK, which will push our staffing levels towards 70.

We are sure you will agree that these numbers confirm Compass, as the only choice for your Costs Drafting and Negotiation needs in the UK.

Where the costs claimed between a solicitor and client exceeded an estimate, a solicitor would not necessarily be restricted to recovering the sum in the estimate. The estimate would be a useful yardstick with which to measure the reasonableness of the final bill and a factor in considering what sum it was reasonable to expect the client to pay.


The appellant solicitors (W) appealed against a decision of a costs judge on a preliminary issue that W was bound by a costs estimate, and the respondent (M) sought permission to appeal against a charging order made in favour of W. In a trade mark dispute the Court of Appeal had allowed an appeal by M holding that its importation of cigars had been with the implied consent of the trade mark owner. The Court of Appeal had ordered the losing parties to pay M £83,000 on account of the appeal costs and £300,000 on account of the costs of the proceedings at first instance. W had been retained by M and had given an estimate of costs. W had been replaced by new solicitors before the Court of Appeal hearing. W sent M 24 invoices for its work and the last 14 were ordered to be the subject of detailed assessment under the Solicitors Act 1974 s.70. The costs judge directed the trial of a preliminary issue to determine what W's estimate of costs was intended to cover. He held that W was bound by the estimate with certain exceptions. W appealed. After the Court of Appeal judgment W obtained a charging order pursuant to s.73 of the 1974 Act over the sums of £83,000 and £300,000 that the losing parties had been ordered to pay on account. M sought permission to appeal against that order. W submitted that a margin of 20 to 25 per cent should be allowed over the estimate and that a reasonable amount should also be allowed in respect of matters not reasonably anticipated at the date of the estimate. M submitted that a term was to be implied into the retainer that W would abide by the terms of the Solicitors' Costs Information and Client Care Code, and that costs which exceeded an estimate were necessarily unreasonable unless authorised by the client. M further submitted that an order under s.73 could not be made by a costs judge but only by a High Court judge and that the terms of the order for detailed assessment prevented W commencing any proceedings against M in respect of the bills including the application for a charging order.

HELD: (1) W's estimate of costs was not a fixed quotation, nor was it an upper limit on costs, nor did it define the work to be done. The retainer was subject to the Supply of Goods and Services Act 1982 s.15 and it was therefore an implied term that W would be paid reasonable remuneration for its services. W had given a contractual promise to update the costs estimate but that was not a condition precedent to W recovering any sum in addition to the sums set out in the estimate. Where a costs estimate was given but the costs subsequently claimed exceeded the estimate, it would not follow that the solicitor would be restricted to recovering the sum in the estimate. The court could have regard to the estimate and it was a factor in assessing reasonableness, Leigh v Michelin Tyre Plc (2003) EWCA Civ 1766, (2004) 1 WLR 846 and Garbutt v Edwards (2005) EWCA Civ 1206, (2006) 1 WLR 2907 considered. For the purposes of assessing reasonable remuneration payable to the solicitor, it was relevant as a matter of law to ask what in all the circumstances it was reasonable for the client to be expected to pay, Wong v Vizards (1997) 2 Costs LR 46 considered. Leigh v Michelin and Garbutt v Edwards were not authority that a solicitor had any kind of automatic entitlement to add a margin to the estimate nor were they authority for allowing the client to cap his liability at the estimate plus a margin. It was not necessary to imply into the contract of retainer a term that W had to comply with the Solicitors' Costs Information and Client Care Code in respect of updating costs information. (2) The passage in Cook on Costs (2007) which stated that unless the client was notified of the further sums payable, preferably before they were incurred, then the solicitor would be unable to recover costs in excess of the estimated amount, did not correctly state the law. In so far as the costs judge relied on that passage, he was led into error in making his finding as to the contractual position. W's appeal against the decision that it was bound by the estimate was allowed. (3) An order under s.73 could be made by a costs judge by virtue of the provisions of CPR Pt 67. The standard form of order which prevented W taking "any proceedings" pending detailed assessment of the bills was intended to prevent proceedings on the bills in accordance with s.70(2)(b) of the 1974 Act and not to impose a wider restriction. Precedent L to CPR PD 48 should reflect the statutory wording. Therefore the order did not prevent the application for a charging order. M's appeal was dismissed.

This recent decision deals with apparent breaches of Regulation 4(2)(e) of the CFA Regulations 2000 in relation to an ALP policy, enquiries into alternative methods of funding, hourly rates being increased in excess of the RPI contrary to a declaration in the CFA, and the level of success fees.

The Claimant sustained severe head injuries on 07/05/01 when he was knocked down by a car driven by the Defendant.  A CFA was subsequently entered into by his mother, who was acting as his Litigation Friend, in April 2002 and proceedings were issued in October 2003.  Judgment was thereafter entered for the Claimant for 50% of the damages to be assessed. In October 2006, the Defendant agreed to pay the Claimant damages of £900,000 with the Claimant’s costs to be assessed in default of agreement.  Those costs were not agreed and the Claimant submitted a Bill a little in excess of £250,000, excluding VAT.

The Defendant filed the Points of Dispute and raised the following preliminary issues:

• Whether there had been a material breach of Regulation 4(2)(e) of the CFA Regulations 2000 by the Claimant’s solicitors failure to inform the Claimant of his interest in recommending the Accident Line Protect insurance policy;
• Whether there had been a material breach of the CFA Regulations 2000 by the Claimant’s solicitor in not making adequate enquiries as to whether the Claimant had BTE cover;
• Whether the Claimant was liable only to pay hourly rates increased by the retail price index or liable to pay the increased hourly rates claimed in the Bill;
• Whether the Success Fee of 90% claimed was reasonable.

With regards to first preliminary issue, it was found that in light of the solicitor’s letter to Mrs Puksis dated March 2002, where he told her that under the firm’s membership of the Accident Line scheme, it was obliged to recommend the ALP policy and in light of the solicitor going through this letter with the client in his meeting with her 7 days later, the solicitor had given the oral explanation required and fulfilled the obligation to provide the information required by regulation 4(2)(e) in writing.

Following a further meeting with the client in October 2002 and upon examination of the documents she brought with her, it was discovered that she did not have household contents insurance, nor did she drive or have credit cards.  Therefore, it was found that with regards to the second preliminary issue, there was no breach of regulations 4(2)(c) or (d) of the 2000 regulations, as the solicitor had made enquiries that were sufficient as to the existence of other insurance and as to the possibility of alternative methods of funding the claim.

As to the third preliminary issue, the CFA stated the hourly rates that would be charged and stated that these rates would be reviewed but would not increase by more than the rise in the Retail Prices Index and that the Claimant would be notified in writing of the increased rate.  The client was informed of the increases in the rates in writing; however, these increases exceeded the RPI. The Costs Judge found that few clients would check whether the increases in the rates exceeded the RPI and that a unilateral increase which was greater than that allowed by the CFA could not amount to a mutual variation of the agreement.  In addition, the lack of complaint by the Claimant could not be taken to be consent.  Therefore, it was found that Mrs. Puksis was not liable for any more than the rates set out in the CFA, as increased by the RPI.

With regards to the final preliminary issue, it was the Costs Judge’s judgment that the case carried considerable risk for the Claimant’s solicitors, as at the time of the accident the Claimant had been drinking and was in the middle of the road. There was evidence that the Defendant may not have had time to avoid the Claimant but also evidence that the Defendant had been driving too fast. It was not likely that the Claimant would be able to give evidence himself.  Therefore, it was found that it was not unreasonable for the prospects of success to be assessed at 50% at the time the CFA was entered into and so the Claimant was entitled to recover from the Defendant a success fee of 90%.

In thes recent case of Palmer v Palmer and others, the Court of Appeal has held that, as the Appellant Insurance Company had funded, controlled and directed the defence of a personal injury claim in its own interest, where that interest did not necessarily coincide with the interest of its insured, it was appropriate to order it to personally pay the costs of the claim, pursuant to section 51 of the Supreme Court Act 1981.
The Insurance Company had rejected an offer of settlement, which it subsequently transpired would have been advantageous to accept, without even taking instructions from its insured.

The lawfulness of a percentage increase in a Conditional Fee Agreement was measured not by reference to the costs at risk but by reference to the fees that would have been payable if the agreement in question was not a CFA. The concept of costs at risk formed no part of the definition of a CFA that provided for a success fee.

The Appellants appealed against a decision that a CCFA between the Respondent local authority and its solicitors complied with the requirements of the Courts and Legal Services Act 1990 s.58. The solicitors had been instructed by the local authority pursuant to the agreement to act in proceedings against Evans. The agreement provided for a success fee of 100 per cent on the basic charges of £145 per hour and discounted charges of £95 per hour if the local authority lost. The local authority won its case, but Evans maintained that the agreement was unenforceable. According to Evans, the agreement provided for an hourly rate of £95 per hour whether the local authority won or lost, and an additional £50 per hour, in the event of a win, making a total of £145 per hour; the solicitors were at risk to the extent of no more than £50 per hour and for that risk the solicitors were rewarded on success with the sum of £145 per hour in addition to their basic charges; on a proper interpretation of the Act, it was to the costs at risk that the success fee should be applied; and the agreement effectively provided for a success fee of 290 per cent that did not satisfy the requirement under s.58(4)(c). The costs judge held that there was no breach of the provision because the success fee, which applied to the basic charge of £145 per hour, did not exceed the prescribed maximum of 100 per cent under s.58(4)(c). Evans' main submissions were that the decision reached by the judge produced absurd results, that the court should adopt a purposive interpretation of s.58(2)(b) and s.58(4)(b) of the Act, and that such an interpretation required that the maximum success fee was to be applied to the costs at risk under the agreement and not to the costs not at risk.

It was held that the correct interpretation of s.58(2)(b) was that a CFA provided for a success fee if it provided for the amount of any fees to which it applied to be increased, in specified circumstances, above the amount that would be payable if it (the amount of fees to which the success fee was applied) were not payable only in specified circumstances. The concept of "costs at risk" did not find expression in s.58(2)(b) and it formed no part of the definition of a CFA that provided for a success fee. It was clear that the lawfulness of the percentage increase was measured not by reference to the costs at risk, but by reference to the fees that would have been payable if the agreement was not a CFA. In the instant case, the agreement was a CFA that provided for a success fee within the meaning of s.58(2)(b) because it provided for the basic charges of £145 per hour to be increased in the event of a win. The basic charges of £145 per hour (the amount of any fee) was a fee to which the agreement applied and it provided for that fee to be increased in the event of a win (the specified circumstances) above the amount that would be payable (the basic charges of £145 per hour) if that amount were not payable only in the event of a win. The agreement did not say that the amount of £95 per hour was to be increased in the specified circumstances of a win and there was no basis for saying that the amount of the fee that would be payable if the agreement was not a CFA was £50. Applying the language of s.58(4)(b) to the instant case, the agreement stated 100 per cent as the percentage by which the amount of the fees that would be payable if it were not a CFA was to be increased. The agreement provided for basic charges of £145 per hour, which was the amount of the fees that would be payable if the agreement were not a CFA. What made the agreement a CFA that provided for a success fee was the provision that, if the client won, the amount payable would be £145 plus the success fee. That interpretation of s.58(4)(b) as applied to the agreement was consistent with the interpretation of s.58(2)(b). The possibility that fixed success fees might lead to unreasonable results in some discounted fee CFAs was not a reason for giving the statute an impossible interpretation. Accordingly, the agreement, which provided for a success fee of 100 per cent on the basic charges of £145 per hour, was not in breach of s.58(4)(c).

The Costs Judge had been entitled to find that a firm of solicitors was bound by the original estimate given to its client and that the client's liability for costs was limited to that amount.


The appellant firm of solicitors appealed against a decision of a costs judge that it was bound by an estimate given to the respondent.  A dispute had arisen between R and a building contractor. R consulted S who informed her that the estimated cost of taking the matter forward and through to trial would be in the region of £10,000 to £18,000 plus VAT.  The building contractor subsequently issued proceedings against R, and she instructed S to act for her in conducting her counterclaim. Throughout the course of the litigation, S sent R a number of invoices, and then sent a letter stating that S's estimate as to the likely overall cost of the case had to be revised to around £30,000 plus VAT.  R had previously paid S around £15,000 in line with the original estimate, but further bills were sent to her. R did not pay them, and S informed her that, as the sum of £25,000 remained outstanding, it would not act further.  R instructed new solicitors and was ultimately successful on all elements of her counterclaim and was awarded damages. The question of costs payable by R to S was referred to the costs judge.  He went through all the Points of Dispute and concluded that S should be bound by its original estimate of £18,000, to which the 15 per cent margin available under Wong v Vizards (1997) 2 Costs LR 46 QBD would be added, thereby limiting R's liability for costs to £20,700. S contended that the judge had erred in failing to take into account that the whole point of the revised estimate had been to advise R in advance of the costs being incurred that the original limit of £18,000 was going to be exceeded, and that she had treated the original estimate wrongly as a fixed quotation.

It was held that there had been no error of law on the part of the judge of which S could complain. He had been entitled to have held that S should be bound by the estimates. The revised estimate had been an attempt to correct an earlier under-estimate and was not attributable to any change in the facts. There had been no significantly unusual developments before the revised estimate such as to explain the difference between the £18,000 estimate and the £30,000 revised estimate.

The Appeal was thus dismissed.

The change in the language of Part 36 effected by the Civil Procedure (Amendment No.3) Rules 2006 resulted in a change of approach by permitting a wider review of all the circumstances of a case in deciding whether the judgment was worth the fight. The purpose of the change was to replace the old system of payment in with offers to settle and to apply the same costs consequences irrespective of whether the offer was for the payment of a sum of money in a money claim or an offer of terms and conditions on which to settle non-money claims.

The appellant (C) appealed against a decision ordering her to pay the respondent's (B) costs of a personal injury claim after the time for accepting the payment in had expired. C had suffered a soft tissue injury to her ankle when she fell into a defective lift on premises for which B was responsible. B conceded liability. After seeing C's initial medical reports B made a global settlement offer of £3,486 on a CPR Pt 36 basis. C instructed a further medical expert and brought her claim for damages in excess of £5,000. B then made a further Part 36 payment into court so that the total offer came to £4,520. C did not make any counter offer to B's Part 36 offer. C rejected the offer and filed a claim in excess of £19,000. A further medical opinion then reduced C's claim back to a sum in excess of £2,700. No agreement was reached and the matter went to trial. Judgment was entered for C for £4,686.26 inclusive of interest. The judge found that in relation to costs, the claim was one in which C had not succeeded in obtaining a judgment more advantageous than B's Part 36 offer. It was common ground that the new rule relating to Part 36 offers, effected by the Civil Procedure (Amendment No.3) Rules 2006 r.7, applied to the instant facts. C submitted that, giving the language of CPR r.36.14 its ordinary meaning, a claimant did not fail to obtain a judgment more advantageous than the defendant's Part 36 offer if the judgment was for a penny more than the offer, albeit that the advantage was a slim one. B submitted that the change in the wording of the rules involved a change in approach to the issue of costs and that the new rule expanded the judge's area of discretion beyond a strictly financial comparison of payment in and judgment debt.

It was held that the primary question for the instant court was whether the change in the language of Part 36 resulted in a change of approach. Under the old rule C would have recovered her costs. The purpose of the change was to replace the old system of payment in with offers to settle and to apply the same costs consequences irrespective of whether the offer was for the payment of a sum of money in a money claim or an offer of terms and conditions on which to settle non-money claims. In the context of the new Part 36, where money claims and non-money claims were to be treated in the same way, "more advantageous" was "an open-textured phrase" which permitted a more wide-ranging review of all the facts and circumstances of the case in deciding whether the judgment, which was the fruit of all the litigation, was worth the fight. The answer must take account of the modern approach to litigation. The CPR, and Part 36 in particular, encouraged both sides to make offers to settle. Money was not the sole governing criterion.   It followed therefore, that the judge was right to look at the instant case broadly and was entitled to take into account that the small amount extra gained was more than offset by the irrecoverable cost incurred by C in continuing to contest the case for as long as she did. He was entitled to take into account the added stress caused to C as she waited for the trial and the stress of the trial process itself. No reasonable litigant would have embarked on that campaign for such a small gain. The judge had not misdirected himself when he found that C had failed to obtain a judgment more advantageous and was entitled to order C to pay B's costs after the time to accept the payment in had expired.  The judge was fully justified in marking his displeasure by making no order for costs. The manner in which the litigation was pursued struck the judge as worthy of condemnation. The Part 36 offer was relevant and was a reasonable and not a derisory one. The claim was an exaggerated one and C must bear ultimate responsibility for the manner in which her claim was conducted on her behalf.

The Appeal was dismissed.

It would be imprudent and unfair to require a Defendant to pay the Claimant's costs incurred in a costs negotiation when those additional costs had not been declared until after the conclusion of the negotiation process.

The appellant company (F) appealed against the decision of a costs judge on the assessment of costs in personal injury litigation in which F were ordered to pay the non-agreed costs of the Respondent (L). L had been injured in a work related accident and claimed damages against his employer, F. After agreeing quantum and liability the parties entered into costs negotiations. At the conclusion of those negotiations L and F agreed the costs of the substantive claim. However, L later demanded the further costs incurred during the negotiations. F refused to pay but was subsequently ordered to do so by a costs judge. L submitted that once an order for costs was made in favour of one party that party would be entitled, as of right, to the costs of the assessment proceedings and that the same principle had to apply in the instant case. L argued that viewed objectively it was the intention of the parties that F, having agreed to pay the costs up to the date of settlement, also agreed to pay the further costs incurred in agreeing or assessing those amounts.

It was subsequently held that the effect of allowing L to recover the costs of the negotiations would be to open the floodgates to a circle of continuous costs recovery. If such a claim were allowed F would, undoubtedly, proceed to negotiate a reduction in the costs of those negotiations. Thereafter, L would claim the costs incurred in those subsequent negotiations and so on. A reasonable solicitor would never knowingly put himself in such a position, Crosbie v Munroe (2003) EWCA Civ 350, (2003) 1 WLR 2033 distinguished on the facts and Ross v Owners of the Bowbelle (1997) 1 WLR 1159 CA (Civ Div) considered.   It was further held that a consequence of the suggestion that L was entitled to the costs of the negotiations would be that all subsequent costs incurred as a result of further negotiations could be recovered by L. This would be a decidedly unfair proposition if, for example, L had overstated its costs and had, by such action, provoked further costs negotiation by F. In those circumstances fairness would dictate that L should pay F's costs.  Such a default position would encourage wasteful litigation. L could have protected its position by declaring, at any point during the costs negotiations, that any settlement would be subject to F paying the costs of the costs negotiations. It would be wrong, without more, to imply into an offer or agreement to pay the costs of the substantive claim an agreement to pay, in addition, the costs of the negotiations which may be apparent from or implied by prior correspondence.

The Appeal was thus allowed.

Compass is pleased to announce that both Steve Hartley and Tony Armstrong have recently attended the Inns of Court School of Law course in order to gain their Higher Rights of Audience and the Rights to Conduct Litigation.  Steve and Tony are now known as FALCD (Costs Lawyers) and are able to represent Litigants in Person.  There are currently less than 200 Costs Draftsmen in the Country who can boast such a qualification.

Our unique Kilby v Gawith Costs Conference dates have now been announced and published in this weeks Law Society Gazette


The London Conference  takes place on 7th July 2008 at the IOD Hub in Pall Mall, starting at 12pm.

The Manchester Conference takes place on 16th July 2008 at the IOD Hub in Oxford Street, starting at 12pm.

The costs of attendance is £185 + VAT.

The price includes, lunch, refreshments along with all notes and documents both written and electronically.

Each course provides 3 hours of CPD.

Speakers are Mr Nicholas Bacon and Ms Amanda Ashton, who were the Advocates in this landmark case.

Each course has only 100 places, and they are filling up very quickly for obvious reasons, do not miss out on this unique opportunity to fully appreciate the benefits of this case to your practice, from the people who handled the matter throughout.

To book your place, contact Dawn Hillier on 0151 481 4469.

As a result of our continued expansion we have added no less than 15 new members of staff to our Prescot and Manchester offices since February, with 6 further appointments due to be made in July and August, taking our staffing levels across the 2 offices towards the 70 mark.


2008 has seen continued and sustained expansion, we have signed long term contracts to cover the next 3 years with some of the largest Solicitors Firms in the UK, securing high volumes of quality work into the future.

We continue to seek high quality Draftsmen, Negotiators, Advocates and Administration staff, to meet the demands of our expanding client base.

It is clear from recent feedback that we are the prominent number one choice in the UK, providing the highest quality, fastest and most professional Costs Drafting and Negotiating service to be had, cementing our place as the market leaders for Costs Recovery anywhere in the UK, bar none.

Our growth continues as we deal with our waiting list of new clients, whilst we still maintain market leading turnaround, quality and customer care, proving that we really are:

THE BEST IN THE BUSINESS

Compass Costs Consultants, the UK's largest claimant only costs recovery practice has today won the landmark case Kilby -v- Gawith (HHJ Stewart QC Liverpool CC, 14th August 2007 unreported).

A claim brought under the Occupiers Liability Act 1957 arising out of a tripping accident occurring in a Church Car Park, fell within the definition of an RTA and predictive costs were applied, pursuant to CPR 45.7.
An elderly lady slipped on a step placed on the ground by a coach driver to assist her in alighting from a private coach that had brought her to a wedding. She sustained personal injuries and compensation was subsequently agreed in the amount of £2650.00 without recourse to legal proceedings. The letter of claim had intimated a claim under Section 2 of the Occupiers Liability Act 1957.

Costs were dealt with under CPR Part 8, the Defendant did not oppose the use of Part 8 and an order for Detailed Assessment on the Standard Basis was made by District Judge Moon. The Claimants Bill totalled something in the region of £7100.00 plus VAT.

In Points of Dispute, the Defendant raised the novel argument that the matter fell within the provisions of CPR 45.7 as the same arose from an accident resulting in bodily injury by, or arising out of the use of a motor vehicle on a road or other public place in England or Wales.

It was accepted on assessment that the car park was a public place. The issue to be decided however, was whether the accident arose as a result of the use of a motor vehicle. The Court decided that it was the case that the accident arose out of such a use, following the dicta in Dunthorne -v- Bentley & Anor and Cornhill Insurance PLC. As a consequence, the accident fell within CPR 45.7(4) (a) and no mechanism existed to remove the case from the Part 11 CPR 45 regime simply because the Letter of Claim referred to the Occupiers Liability Act. In short, it was not possible to evade the restricted costs regime by basing a claim on other grounds.

It followed therefore that District Judge Moon did not have the jurisdiction to order a Detailed Assessment and to disapply the Section 11 CPR 45 regime. On Detailed Assessment this matter was determined as a preliminary issue and the Claimant was awarded only the fixed recoverable costs.

Practitioners must be aware of the latest changes to Civil Court Fees.
  The latest Statutory Instrument has been issued by parliament.  S.I 2008 No. 1053 (L.5) comes into effect on the 1st May 2008.  For full details click here.

Whilst not yet finalised, our year end figures are in and they show another massive increase in turnover and profit, making Compass Costs not only the largest Claimant Only Costs Consultancy in the UK, but also the fastest growing.

Our new Manchester office will take staffing over the 60 mark, and 2008/09 is due to be our biggest year ever for the 8th year in a row.


Our current recruitment drive in both Prescot and Manchester will increase overall staffing by 20 percent, and by the end of 2008 we anticipate employing over 75 staff.

Client acquisition increases on a weekly basis with, on average, 10 firms of Solicitors throughout the UK moving to Compass every month, from other costs firms due to our superior quality, service and costs recovery rates.

Our bill drafting turnaround is second to none within the industry, as is the quality of the bills we produce.

Personal Injury star Stewart McCulloch has left Mace and Jones Solicitors after almost 30 years, to join the board of Directors at Compass Costs Consultants Limited, the largest and fastest growing Claimant only costs consultancy in the UK.
McCulloch had worked at Mace and Jones since 1979, becoming head of the PI department in 1997. He assisted Liverpool Law Society in the formation of the Hillsborough Football Stadium Disaster Solicitors Steering Committee, later acting as Press Officer for the association, and in 2003 was cited as authoritative guidance on the development of personal injury firms by the Court of Appeal in Hollins v Russell.

From 1990 to 1999, he was the Law Societys regional public relations officer for Merseyside and has been a regular speaker at Law Society conferences, including the 1998 conference when he was voted best speaker of the day.

McCulloch will join the board of Directors at Compass Costs, which has now become the largest Claimant only costs consultancy in the UK following the recent opening of our new Manchester office.

Phil Hodgkinson, Managing Director of Compass Costs Consultants: It is a real coup to be able to attract a lawyer of Stewarts calibre to the firm. His professional and managerial experience is second to none and I am very much looking forward to working closely with him going forward.

Compass Costs Consultants Limited recently had yet another success in the Court Of Appeal in the case of Elisha Jones-v-Wrexham Borough Council, a synopsis of yet another ground breaking win can be found through this link.

A Beacon of “Lite” in the Darkness

Firms which faced or are facing challenges and losing costs because of challenges to the enforceability of their CFAs based upon the case of Garret –v-  Halton Borough Council EWCA [2006] Civ 1017 should take another look at their CFA and surrounding paperwork  before conceding their entitlement to costs.      

On the 19^th December 2007 the Court of Appeal handed down the long awaited judgement in the case of Elisha Jones –v- Wrexham Borough Council EWCA [2007] Civ 1356.

This is a case where the Defendant had alleged that the Claimant’s CFA entered into on the 2^nd June 2003 was unenforceable for breach of Regulation 4 of the Conditional Fee Agreements Regulations 2000 SI2000/692 (the 2000 Regs). The Defendant relied upon the appeal court’s earlier judgment in the case of Garret to support their allegation of breach.

The claimant had entered into an ATE insurance policy prior to the solicitor’s introduction to the Client, but the solicitor was on the ATE insurers approved panel.

The Claimant maintained that the CFA was, subject to the provisions of Regulation 3A of the Conditional Fee Agreements (Miscellaneous Amendments) Regulations 2003 SI2003/1240 (the 2003 Regs) exempt from Regulations 2, 3 and 4 of the 2000 Regs. Agreements falling under the 2003 are often referred to colloquially as CFA “Lite”.

Regulation 3A of the 2003 Regs provides;

“3A – (1)  This regulation applies to a conditional fee agreement under which, except in the circumstances set out in paragraph (5), the client is liable to pay his legal representative’s fees and expenses only to the extent that the sums are recovered in respect of the relevant proceedings, whether by way of costs or otherwise.

(2)  In determining for the purposes of paragraph (1) the circumstances in which a client is liable to pay his legal representative’s fees and expenses, no account is to be taken of any obligation to pay costs in respect of the premium of a policy taken out to insure against the risk of incurring a liability in the relevant proceedings.

(3)  Regulations 2, 3 and 4 do not apply to a conditional fee agreement to which this regulation applies.

In the instant case as well as waiving costs if the case was lost the CFA provided that where the case was won the Claimant’s solicitor would waive any portion of costs not recovered from the Defendant. It did however provide that where the case was lost the Claimant was liable to pay her solicitors disbursements. The Claimant argued that in such circumstances she had taken out a policy of insurance which would pay the disbursements and so they would be “recovered” from the underwriter. The Claimant submitted that the “or otherwise” in Regulation 3A (1) of the 2003 Regs was broad enough to encompass the benefits of a policy of indemnity.

The Claimant argued that even if the above was not accepted, the Rule 15 letter which accompanied and enclosed the CFA could be considered in conjunction with the CFA because it contained an assurance or promise, that provided she cooperated with the solicitor and did not withdraw her instructions, that the solicitor would recover their costs from the Defendant and the client would not have a bill to pay. The Claimant argued that this amounted to a warranty which would act as an estoppel, preventing the solicitor from visiting unrecovered sums from the claimant, this rendering the CFA compliant with regulation 3A.

In the first instance District Judge Fairclough found that the “or otherwise” in regulation 3A (1) was sufficiently broad to encompass the benefits of a policy of indemnity but expressed concern that there may be circumstances where the limit of indemnity was exceeded. He found however that when considering the Rule 15 letter this did amount to a promise by the solicitor, which would prevent the solicitor from pursuing the Claimant for unrecovered sums save where she failed to cooperate or withdrew instructions. As such he found that the CFA was a CFA Lite. The Defendant appealed.

On appeal to HHJ Holman in Manchester the court did not accept that the insurance could be considered when looking for compliance with regulation 3A (1) nor that the Rule 15 letter could rectify any deficiency in a CFA and so allowed the appeal overturning the decision of District Judge Fairclough. Having decided that the CFA was subject to the 2000 Regs HHJ Holman went onto consider if there was a breach of CFA regulation 4 (2) (e) (ii).

The Claimant argued that as the Policy was pre-existing at the time the client was introduced to the solicitor, the policy fell to be considered under regulation 4 (2) (c) of the 2000 Regs and 4 (2) (e) (ii) did not therefore apply. HHJ Holman found that because one of the terms of indemnity under the policy was that a solicitor be retained under a CFA, the policy was not pre-existing and so as the CFA was silent as to whether the solicitor had an interest in recommending the use of the policy, there was a breach of regulation 4 (2) (e) (ii) and the CFA was unenforceable.

The Claimant appealed both decisions of HHJ Holman the second being leapfrogged to the Court of Appeal to be heard concurrently with the first.

The Court of Appeal constituted of Lord Justices Waller, Longmore and Hughes sitting with Senior Costs Judge Hurst as assessor, handed down a unanimous decision allowing the appeal on the first point.  They found that the CFA was a CFA Lite and as such regulation 4 of the 2000 Regs did not apply to it and so it was enforceable. The court pointed out that when considering the effect of a CFA on the Client and so which set of regulations applied to it, the court could have regard to a policy of insurance and any Rule 15 letter.  At paragraph 57 Waller LJ summed up as follows;

57.              In my view, the question whether a CFA is a CFA Lite within Regulation 3A depends on the construction of the arrangement made between the solicitor and client, including such arrangement as may have been made by a Rule 15 letter and by insurance.  Since the agreement in this case was that so far as the client was concerned there would be waiver, except to the extent that there was recovery, either from a losing defendant or under an insurance policy so that the client, unless she withdrew instructions, had no liability for costs, the CFA in this case was a CFA Lite.

As such any CFA which contains a waiver of fees not recovered or where the solicitor, using a standard Law Society model CFA pre November 2005 has give the client a written assurance that the client will not have to pay any unrecovered costs so long as he does not withdraw instructions, will not be faced with challenges to the validity of there CFA based upon Garrett –v- Halton Borough Council.

Amanda Ashton

Compass Costs Consultants

Senior Costs Judge Hurst has announced an interim increase to hourly charging rates of 4% for 2008.(
)

The rates will be reviewed again in mid 2008, and a new set published at that time.

In the meantime we have published the new hourly rates tables on our website, within our information section, under Hourly Rates.

Following months of negotiation with numerous UK based, A rated insurers, the new market leading ATE products are ready for launch into the legal market.

Compass ATE will provide fully underwritten, self-insured ATE policies to cover RTA, Employers Liability, Public Liability, Industrial Disease, Catastrophic Injury and Clinical Negligence products.

Having conducted substantial research, our premiums will be amongst the cheapest in the market place, and will be available with Disbursment Funding or on a deferred basis.

The underwriting procedure is straightforward and slick, in line with all of our other products, and several existing client’s have already signed up to the various products.

For further information or to apply to join the scheme, please contact Phil Hodgkinson on 0151 481 4444, or see www.compasscosts.com.

Please note that Detailed Assessment fees have increased as a result of S.I 2007 No. 2176 (L.16), The Civil Proceedings Fees (Amendment) (No.2) Order 2007.  This order came into force on 1st October 2007.


As a result, assessment fees in inter partes cases are no longer fixed and are now dependent upon the level of total costs claimed within the Bill of Costs.

On the filing of a request for detailed assessment in any case where the amount of costs to be assessed (excluding VAT and disbursements):

Please also note that in cases where the Bill to be assessed is Legal Aid only, the fee in the County Court is £105.00 and is £120.00 in the Supreme Court.

The common argument from a paying party’s perspective is that; costs of mediation fall outside of the litigation process and ought not to be recoverable.  The receiving party’s position is usually that the mediation was progressive, of assistance in drawing the issues to a conclusion and/or the principle factor in bringing the litigation to a conclusion at that stage.  In essence it was of the same value as a Joint Settlement Meeting and ought to be recoverable on the standard basis, as costs reasonably and proportionately incurred.

The difficulty in practice is not the reasonableness or otherwise of the nature of the work, but the mediation contract agreed between the parties.

Nat West Bank v Feeney (SCCO No 9 of 2007) 14th May 2007, adjudicated by Eady J, offers a salutary judgment, which ought to be in the mind of all practitioners who agree, or are indeed “advised” by the court mediate.

This was a case that concluded by way of Tomlin order following mediation.  The Mediation Agreement included standard terms which stated that the fees of the mediator and other expenses of the mediation would be borne equally by the parties: and that each party would bear its own costs and expenses of its participation in the mediation.

Whilst the Tomlin order following the mediation made provision for the unsuccessful party to pay the successful parties costs, it did not deal explicitly with the costs of the mediation.

The successful party took the position that the costs were, by their very nature, reasonable on the standard basis and were therefore recoverable. It was also argued that the terms of the Tomlin order were sufficiently wide to encompass those costs as part of the costs of the action.  Indeed it was agreed that the mediation was “negotiations:  work done in connection with negotiations with a view to settlement” as provided for by Section 4.6(8) of the Costs Practice Direction.

The Defendant however, argued that the terms of the Mediation Agreement prevailed over the Tomlin order, as the parties had never agreed to vary the terms of the standard Mediation Agreement.  This being analogous with an interlocutory order that provides for “no order for costs”, which the winning party would be unable to recover at the conclusion of the litigation.

This is a powerful proposition, the parties had in fact agreed to mediation on the basis that they each knew that they would never have to meet their opponents costs on an inter partes basis.

On Appeal the judge held that in principle that the costs incurred in mediation would form part of the costs of the action, just as any reasonable costs of negotiation would.  However, the Mediation Agreement itself was binding, indicating that the intention of the parties was that such costs would not be recoverable, unless expressly made so as a result of the mediation.

There are many and varied reasons why one or more of the parties to litigation may be for or against the costs of mediation following the event of the substantive litigation.  It is the writer’s opinion that this is a thorny issue not likely to be resolved by ignoring it.  Clearly, as mediation is recommended (if not imposed) in more and more complex cases it is clear that the parties should be aware of the true position.  Indeed it is imperative that the standard Mediation Agreements are considered and if necessary revised.  Indeed it is foreseeable that clients of solicitors may take issue on a solicitor/client assessment, if they were not adequately informed that the costs of mediation would not be recoverable from their opponent.

It is hoped that it will become routine for those who are party to mediation, in a genuine effort to avoid a much more expensive trial, to agree to the costs of mediation following the event. 

The difficulty is that in refusing to go to mediation one opens themselves up to the strong possibility that they may not recover all of the costs of the litigation.  Although the courts have often shown leniency where the refusing party has demonstrated that there were few prospects of the mediation achieving settlement. 

In Hurst v Leeming, 9 May 2002, Mr Justice Lightman held that the critical factor was whether objectively viewed, the mediation had any real prospect of success, and, on the facts of this particular case, the Judge had no hesitation in holding that it did not, and that therefore the Defendant was justified in refusing to go to mediation.
In Halsey v Milton Keynes General NHS Trust & Steel v Joy & Halliday, 11 May 2004, Court of Appeal, the court used two "test" cases to found some general and very significant dicta as to the extent to which mediation could be ordered in the course of ongoing litigation, and the consequences of the failure by one party to comply with an order for such mediation in terms of costs at the end of the cas