The defendant costs specialists

Posts made in September, 2007

Willoughby v Sempra Energy Trading (UK) Ltd

By on Sep 1, 2007 | 0 comments

The same issue as in Bevan and McFayden, although this time with the case being referred by Accident Assurance Limited, was considered in Willoughby v Sepra Energy Trading (UK) Ltd (Liverpool County Court, 5/4/07). District Judge Smedley, sitting as a Regional Costs Judge, found that there had been a breach of Regulation 4(2)(e)(ii) in that the solicitors had incorrectly stated that they did not have an interest in recommending the policy. The Claimant here did seek to run the de minimis argument on the basis that the referrals the solicitors received from this claims management company amounted to about 40 cases compared to the 300 cases they were receiving from another scheme. In addition the firm undertook private client work. Although the judge accepted that the referrals represented only a small proportion of the firm’s work, and that half a dozen cases in a year would be insignificant, he calculated that the income generated by the 40 odd cases must have been in excess of £50,000 which could not be considered insignificant. On that basis the breach was material and the CFA was invalid. The number of cases where this type of challenge continues to be available (claims where the old CFA Regulations apply) is reducing over time. However, the individual value of these cases is correspondingly increasing and the success that defendants have been achieving is likely to justify such challenges continuing for the foreseeable...

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McFayden v Liverpool CC

By on Sep 1, 2007 | 0 comments

In our last Costs Law Update we reported the decision of Myers v Bonnington (Cavendish Hotel) Ltd [2007] EWHC 90077 (Costs), where a costs judge had held there to be breach of Regulation 4(2)(e)(ii) where the Claimant’s solicitors had recommended an ATE policy but had failed to notify the client that they had an interest in recommending the policy because they were obliged to recommend the policy as part of their membership of the Accident Line scheme. However, he held that the breach was not material because the number of referrals received from the Scheme represented only a small proportion of the firm’s income and that the interest they had not notified of was therefore de minimis. The Court was faced with an identical challenge, also concerning the Accident Line scheme in the case of McFayden v Liverpool CC (Liverpool County Court, 9/5/07). District Judge Heyworth also found there to have been a breach of the Regulations. However, unlike in Myers, he found the breach to be material as it adversely affected the client’s protection. The client “was placed in a no choice situation” because this was the only policy that could be recommended to him. The Claimant here does not appear to have tried to argue the de minimis point. Combined with the Myers decision, there are now strong grounds for believing that similar challenges to claims conducted under this scheme will also succeed in showing that there has been a breach of the Regulations. There must also be good grounds for believing that some, if not all, such breaches will also be found to be...

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Bevan v Power Panels Electricals Systems Ltd

By on Sep 1, 2007 | 0 comments

The case of Bevan v Power Panels Electricals Systems Ltd [2007] EWHC 90073 (Costs) concerned a claim conducted under a CFA where the case was referred to the solicitors by the claims management company Accident Advice Helpline (AAH). The defendant challenged the validity of the CFA on the grounds that there had been a breach of the now revoked CFA Regulations 2000 and, in particular, the duty on the solicitors to advise whether they had an interest in recommending a particular insurance policy (Regulation 4(2)(e)(ii)) and whether they considered that the client had the benefit of an existing contract of insurance that would cover his potential liability in respect of legal costs (Regulation 4(2)(c)). It was further argued that in failing to state in writing that the solicitors had an interest in recommending the insurance policy there had also been a breach of Regulation 4(5), which required the information under Regulation 4(2)(e)(ii) to be given both orally and in writing. The CFA, which was a standardised document that all AAH solicitors were obliged to use, stated that “save in so far as we are approved solicitors on the Panel of Accident Advice Helpline with whom you have entered into an agreement which provides for the insurance to be arranged we confirm that we do not have an interest in recommending this particular insurance policy or funding arrangement”. The solicitors believed that in truth there was such an interest, because they were obliged to recommend the policy under the arrangement with AAH, and therefore prepared a separate Oral Explanation sheet to address this issue. That read: “We do have an interest in recommending this particular insurance because we are tied by our membership of AAH to offer all clients who enter into a CFA with us this insurance. We are not insurance brokers and there may be cheaper different insurance available. In all the circumstances we believe this is a reasonable insurance policy to fund this claim.” In relation to the appropriate enquiries to make concerning pre-existing insurance, this had been the subject of detailed guidance by the Court of Appeal in Myatt v National Coal Board [2006] EWCA Civ 1017. That Court recognised that the appropriate enquiries to make...

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