FOX GREGORY LTD -v- HAMPTONS GROUP LTD

It appears a common argument in cases that would otherwise fall within the predictable costs regime that proceedings have been issued prematurely and as a result it is important to consider the steps that will be deemed reasonable to have taken prior to issue. In short, a solicitor wishing to protect himself against adverse costs implications has to consider when it is right to issue proceedings. This case clarified the position on the above case, heard on 4 October 2006 in the matter of in the Court of Appeal (Civil Division).

The facts of this case were that following investigations the appellant asked the respondent to give undertakings for the delivery up of the property taken by a former employee and subsequently issued proceedings for an injunction when a response was not forthcoming. The action was subsequently dismissed by consent, when the respondent gave the undertakings requested. The judge ordered the appellant to pay the respondents costs, since the application was premature, there was no evidence against the respondent and the appellant had substantially failed in its action. The appellant contended that the judge had erred in principle, it was necessary to issue proceedings due to the inadequate response received from the respondent.

It was held by Tuckey LJ and Arden LJ that the issuing of proceedings for interim relief was a reasonable step to take with time being of the essence. The relevant question was whether interim relief would have been granted if the respondent had not given the undertakings prior to the hearing. The judge had erred in principle to award costs in favour of the respondent as, in the circumstances, it had been reasonable to issue proceedings and as a result the appeal was allowed.

With regard to costs this decision highlights the significance of when proceedings are issued. Issue too early and this may have a considerable impact upon the costs you are able to recover. Consider, have the other side been responsive, is time of the essence and provided that it is deemed a reasonable step to have issued proceedings the court should make an order as to costs.

NIZAMI -v- BUTT

In this case, the Claimant suffered a whiplash injury from a road accident in 2003 and in February 2005 agreed to accept an offer made on damages, together with reasonable costs. The agreement was reached without the need for proceedings to be issued. Upon the issue of costs only proceedings, the defendant sought to challenge the validity of the CFA which had been entered into, on the grounds that his solicitors had not undertaken appropriate inquiries into alternative funding, and that those inquiries had not been sufficient to comply with the regulations.
This case is vital in that it was held that the unenforceability of a CFA was not a bar to the recovery of Fixed Recoverable Costs and an appropriate success fee. The reasoning behind the decision was that the indemnity principle did not apply to Fixed Recoverable Costs under Part 45, and it was the intention that costs recoverable on that basis should be recoverable in a straightforward way without technical challenge and investigation. Accordingly, the issue of whether alternative funding was available or otherwise was not a relevant argument under the fixed costs regime.

ELLISON -v- FAIRCLOUGH

This was a first instance appeal against the decision of a District Judge who ordered that the Defendant do pay the Claimant’s costs as if the predictable costs regime applied.
The Claimant served a medical report and sought an offer.  The following month an offer was made in the sum of £1,100.  The offer was rejected and Section 152 notice sent.  Proceedings were submitted to the Court on the same day.  Following proceedings the matter settled in a little over a month for £1,700.  The Defendant argued that there had been a failure to comply with the protocol.  The District Judge found that the Claimant was not justified in issuing proceedings when they did and thereafter limited his costs to costs under the predictive costs regime.
On Appeal the Circuit Judge found that the District Judge was not entitled to depart from the general rule and apply Fixed Recoverable Costs.  The Circuit Judge found that Court could not undertake an investigation into how negotiations would have gone but for issue and thus cannot say that the matter would have settled if proceedings had not been issued.  He found that there was no breach of the protocol and as the Claimant post proceedings had beaten the pre-proceedings offer, there was no reason to depart from the normal rule.

WOOLLARD -v- FOWLER

In an extremely important case under the predictive fees, the Defendants argued that medical agency fees were not recoverable under the amendments to CPR 45. The said that the Claimant solicitors should not be able to get around the fixed scheme by employing an agent to carry out tasks, and then seeking the agency fee back as a disbursement. Stringer –v- Copley had stated that agency fees were recoverable as long as they were proportionate and reasonable, and did not exceed the costs which might have been incurred had the solicitor performed the task personally. The Court rejected the argument in the first instance, stating that agency fees had always been disbursements, and should remain so. The decision was appealed, and The Court of Appeal upheld the decision. The higher Court stated that it was a matter of custom that these costs are disbursements, highlighting the fact that the fees had customarily been disbursements and it would be unfair to distinguish between what would be a predictive costs fee and what would not, since it would not be known whether a case was within or outside the regime until the case had settled. The appeal was therefore dismissed, allowing recovery of agency fees on predictive fee case. Our understanding is that the decision is itself being appealed.