We are pleased to be able to announce that Simon Gibbs of GWS will be a speaker at this year’s prestigious CLT’s 14th Annual Solicitors Costs Conference. He will be speaking on the subject of “Costs and the Paying Party”. The event will be held on 29th January 2008 in London.

We are able to arrange a 20% discount on the normal delegate fees to any of our clients. Please contact us if you would like to take advantage of this discount.

Gibbs Wyatt Stone recently secured a costs saving of approximately £160,000 in the case of Morgan v Llandow Metals (Newport County Court).

The Claimant’s solicitors presented a Bill of Costs for approximately £160,000. An offer of £100,000 was made on behalf of the Defendant supported by an interim payment in the same sum. The offer was rejected and at this stage GWS were instructed to assist. It became apparent that there were serious problems relating to the claim for costs. These centred around myriad potential breaches of the Conditional Fee Agreement Regulations 2000 as well as serious concerns over the authenticity of the CFA document itself. The Defendant’s offer was withdrawn on the advice of GWS. Detailed assessment proceedings were commenced and the matter was referred to a Regional Costs Judge.

There followed four preliminary hearings to deal with the directions of the assessment proceedings, given the complex issues that arose, prior to the matter even being listed for a detailed assessment hearing. Specialist costs counsel acted for the Claimant and GWS for the Defendant. The matter was eventually listed for a preliminary two-day hearing to deal with some of the allegations concerning the authenticity of the CFA. However, shortly before the hearing, the Claimant’s solicitors agreed to drop their claim for costs in its entirety, repay the £100,000 and make a substantial contribution to the Defendant’s costs of assessment.

Although the facts of this case were unique, the outcome reflects the technical expertise that GWS can help bring to high value, complex costs litigation.
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 £20,000. Of wider significance, he accepted the Defendant’s arguments over those of the Claimant in that the Regulations required a claimant to be informed as to what the actual interest was. It was not sufficient to simply inform a claimant whether or not there was an interest. This was the effect of reading Regulation 4(2)(e)(ii) together with 4(2)(e)(i). The requirement to explain why a policy is being recommended (Regulation 4(2)(e)(i)) must therefore include the details of what that interest is under Regulation 4(2)(ii). DJ Lethem accepted that this was the effect of the Court of Appeal’s decision at paragraph 101 of Garrett with the reference to the failure by the solicitors there to “disclose the real financial interest”.

It seems probable that the defective wording used in this case was also used in other CFA cases run by this firm during this period.

These two cases show that successful challenges continue to be available for claims where the old CFA Regulations apply. Although the volume of these claims is reducing over time, the outstanding cases are by their nature likely to be those where the level of costs is relatively high. Such claims are those where a careful consideration of the merits of a technical challenge is most justified. Gibbs Wyatt Stone remains committed to providing its clients with the best possible advice and advocacy in this area of the law.

The 2007 edition of His Honour Michael Cook’s leading text on legal costs Cook on Costs has now been published. In his preface he comments that he has been “rigorously selective” in the decisions that he included in the book. Nevertheless, three decisions where the advocates at Gibbs Wyatt Stone acted have been included (Pirie v Ayling, Brierley v Prescott and Gaynor v Central London Buses Ltd).

This book remains the Bible for many costs draftsmen, costs consultants and costs counsel.

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