The defendant costs specialists

Posts made in May, 2007

Suinner v FBN Bank (UK) Limited

By on May 23, 2007 | 0 comments

In the case of Suinner v FBN Bank (UK) Ltd [SCCO] 22/2/07 the Claimant instructed Sherringtons solicitors to act for him in relation to an EL matter under a Conditional Fee Agreement (CFA). The CFA recommended that the Claimant take out an after-the-event (ATE) insurance policy with Costsupport. The CFA stated that: “This is because” but was then blank where the reasons for the recommendation should have appeared. This prima facie amounted to a breach of Regulation 4(2)(e)(i) which requires the legal representative to inform the client before a CFA is entered into: “(e) whether the legal representative considers that any particular method or methods of financing any or all of those costs is appropriate and, if he considers that a contract of insurance is appropriate or recommends a particular such contract – (i) his reasons for doing so, and(ii) whether he has an interest in doing so.” Whether the breach was material became obvious from the nature of the ATE policy that had been recommended. The policy premium was calculated as being a percentage (20%) of the damages recovered. This is an unusual method of calculation and had been the subject of previous judicial consideration by the Senior Costs Judge, Master Hurst, in Pirie v Ayling [2003] EWHC 9006 (Costs). He concluded that although such a method was lawful, it was inherently flawed and substantially reduced the amount claimed. What was significant about this decision, which was made prior to Mr Suinner instructing Sherringtons in his claim, was that the Claimant’s solicitors in Pirie were also Sherringtons. (Coincidentally, Simon Gibbs who appeared for the Defendant here also acted for the Defendant in that case.) Therefore at the time that they were recommending that Mr Suinner obtained a policy with Costsupport they were already aware that the premium calculation was inherently flawed and was unlikely to be recovered in full at detailed assessment. Mr Suinner’s claim was pitched at one stage as being in the region of £150,000. If damages had been recovered at that level the premium would have been £30,000. A premium that high would have been grossly excessive for an EL claim of this nature and well in excess of equivalent policies available at the time....

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Brady v Rec-Tech Leisure Ltd

By on May 23, 2007 | 0 comments

In the case of Brady v Rec-Tech Leisure Ltd (Tunbridge Wells County Court, 24/4/07), the Claimant, through her litigation friend, instructed Branton Edwards solicitors (now Branton Bridge) to act under a CFA. The case had been referred to Branton Edwards through Result Management Ltd (Result), a claims management company. The CFA recommended that the Claimant obtain an ATE policy with NIG or IOMA. The CFA stated that Branton Edwards had no interest in recommending the policy. In fact, the policy that was being recommended was issued by Result with the insurers being either NIG or IOMA. In a covering letter sent to the Claimant’s litigation friend the following information was provided: “Result Please note that Tim Branton and David Edwards who are Partners in the firm of Branton Edwards have a financial interest in Result Management Limited. We confirm that Branton Edwards receives no financial benefit from the arrangements for the funding and insurance of you case.” During the detailed assessment proceedings it emerged that the two partners, at the relevant time, each owned 50% of Result and that for each policy issued Result received a commission of £300 out of a premium of £900. Branton Edwards was the only firm who received referrals from Result. There were no other “panel” members. It was argued for the Defendant that in truth the solicitors did have a financial interest by virtue of the commission payments received by Result, which in turn was owned by the partners, and by virtue of the fact that the firm had a financial interest in the success of Result to ensure the continued stream of referrals. It was further argued that the information given to the Claimant’s litigation friend failed to properly advise of these interests as required by Regulation 4(2)(e)(ii) (see above). The litigation friend was not properly informed of the relationship between NIG/IOMA and Result or of what that interest actually was – the payment of a £300 commission. As such, she was unable to make an informed decision as per paragraph 101 of Garrett. District Judge Lethem, sitting as Regional Costs Judge, accepted the Defendant’s submissions and ruled the CFA to be invalid resulting in a saving to the Defendant of approximately...

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Lamont v Burton

By on May 16, 2007 | 0 comments

The Court of Appeal’s decision last week in Lamont v Burton [2007] EWCA Civ 429 is likely to have serious costs implications for defendants and impact on the way personal injury claims are conducted. The case concerned the application of the fixed success fee regime under Part 45. Although the case itself concerned an RTA the Court recognised that it had equal relevance to EL and EL disease claims that are also subject to fixed success fees. The claim related to an accident on 10th September 2004 being conducted under a CFA and was therefore subject to the fixed success fees allowed for under CPR 45.15: “…the percentage increase which is to be allowed in relation to solicitors’ fees is: (a) 100% where the claim concludes at trial; or (b) 12.5% where – (i) the claim concludes before a trial has commenced; or (ii) the dispute is settled before a claim is issued.” The Defendant admitted liability early and subsequently made a Part 36 payment in the sum of £1,800 which was not accepted. The matter proceeded to a disposal hearing where the Court awarded damages of £1,774.32. The Claimant was therefore awarded his costs only up to the last date he could have accepted the Part 36 payment without needing the Court’s permission and was ordered to pay the Defendant’s costs from that date onwards. As the matter had concluded at “trial” the Claimant sought a 100% success fee on his costs. The Defendant argued before the trial judge, and on appeal, that the Claimant should have accepted the Part 36 payment within the time for acceptance; and that had he done so, the claim would have concluded before trial, so that the percentage increase for solicitors’ fees prescribed by CPR 45.16(b)(i) would have been 12.5%. Accordingly, it was argued that the trial judge should have exercised his discretion to allow the Claimant an uplift of 12.5% rather than the 100% claimed. This argument was rejected by the trial judge and by the Court of Appeal on the grounds that the wording of CPR 45 is mandatory as to what success fee should be allowed and the Court has no discretion, either directly or indirectly, to award a...

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