Author: Robert Oldham, 12KBW

The High Court’s decision in Mazur & Anor v Charles Russell Speechlys LLP [2025] EWHC 2341 (KB) is a far-reaching regulatory decision with significant costs implications. This will open up new battles over recoverability, shake up staffing models, and create exposure to challenge.

The Decision

The central issue before Sheldon J was whether an unauthorised employee could lawfully conduct litigation under the supervision of an authorised solicitor.

In the litigation subject to appeal, an unauthorised employee of Goldsmith Bowers (who had been instructed by Charles Russell Speechlys in a debt recovery claim) had signed pleadings despite lacking a practising certificate.

The defendants obtained a stay; CRS applied to lift it and were awarded costs of £10,653 at first instance. This decision was then appealed to the High Court.

On appeal, the High Court held:

• The unauthorised employee was not entitled to conduct litigation, even with supervision. Section 21(3) of the Legal Services Act 2007 brings unauthorised employees within regulatory reach, but it does not confer litigation rights.

•  Conduct of litigation is a reserved activity and cannot be delegated to unauthorised persons. The line between support (which is permitted) and conduct (which is prohibited) is one of fact and degree.

• On costs, the first instance order was overturned and fixed costs of £333 and the court fee of £303 were awarded. The application was held to fall within the intermediate track fixed costs regime.

Costs Implications

Escalating Time Costs and Staffing Pressures

The most immediate effect is upward pressure on time costs. Work long delegated to paralegals or litigation executives risks being recategorized as ‘conducting litigation’ and therefore must remain in the hands of authorised solicitors. This affects not only high-volume work subject to fixed costs regimes, but also complex, higher-value litigation where teams often rely on junior staff to manage initial pleadings and applications. Firms will need to revisit file structures, supervision arrangements, and how work is recorded.

Cost Recovery

This case also opens up a hitherto rarely seen line of attack for paying parties: expect challenges at detailed assessment on the basis that parts of a bill were carried out by unauthorised staff and should be disallowed. However, this may prove to be a double-edged sword – firms now have a good reason to push more work to higher-grade solicitors to insulate against this accusation, thereby driving costs higher.

For solicitors in higher-value litigation, where detailed assessment is already a fine-grained exercise, Mazur will increase arguments about delegation, billing narratives, and the exercise of professional judgment. Costs judges may probe not only who performed the work, but whether an authorised solicitor demonstrably retained control.

Future Disputes

Expect a proliferation of costs skirmishes. Paying parties may argue that swathes of time are irrecoverable; receiving parties may counter by insisting that only qualified staff could safely carry out the work post-Mazur. The potential for satellite litigation is clear, especially following detailed assessment.

Fixed Costs — a Reminder

Finally, Sheldon J’s decision to restrict costs to the fixed regime of the intermediate track reminds us that the courts will be reluctant to step outside prescribed costs regimes, however complex the underlying issue. Exceptional circumstances must truly be exceptional.

Some Practical Considerations

As the dust settles from Mazur, practitioners may wish to consider:

• Auditing staffing models and identifying tasks that cross the line into reserved activities.
• Ensuring that an authorised solicitor is the ‘responsible litigator’ on each case and that this is evidenced.
• Revising billing narratives so that delegation and supervision are transparent and defensible.
• Updating retainers and estimates to reflect possible increases in qualified fee-earner involvement.

Conclusion

Mazur will have a huge impact on the economics of litigation across the board. For solicitors, the challenge is twofold: ensuring compliance with the Legal Services Act while preserving costs recoverability and the economic viability of higher-volume litigation.

To note. The SRA issued a statement to the effect that:

• Mazur does not change the position in law. Only regulated individuals can conduct litigation under the  Legal Services Act 2007.
• There is a distinction between conducting litigation and supporting litigation, but the boundary between the two activities will depend on the facts. 
• The onus is on firms to satisfy themselves that they are complying with the LSA, and they should record the decision-making process on this.

Author: Simon Browne KC

Introduction

1. In our Litigation Funding webinar on 21^st May 2025 (Browne and Loomes “Parallel Lines –  the Government consults on Litigation Funding whilst the Court of Appeal forges ahead” we commented on the Court of Appeal hearing collectively a number of appeals from the CAT, where amended litigation funding agreements following PACCAR, were upheld as enforceable.
   
2. As forecast the appeals were heard on June 10^th and 11^th 2025 and judgment was handed down on 4^th July 2025.  These appeals, in six actions in the CAT, were all heard together. They are reported under the name of the first appeal, namely, Sony Interactive Entertainment Europe Limited v Neill [2025] EWCA Civ 841. A full list of the parties is set out at the end of this article, together with a summary of the case brought and reference to the amended funding arrangements deployed.
   
3. The judgment of the Court of Appeal is a prime example of how the courts should, and have, applied the principles of statutory interpretation to resolve issues. As seen below, the Court placed reliance on the comments of Lord Sales JSC in PACCAR that “the Court will not interpret a statute so as to produce an absurd result, unless clearly constrained to do so by the words Parliament has used”. In the present cases, the Court of Appeal decided that it was not so constrained.
   
4. Further, the Court considered that even if the contrary interpretations placed on the wording of the statute by the appellants and respondents were both feasible, then to aid interpretation it is permissible for the Court to look at other aids to the construction of the statute such as Explanatory Notes and Memoranda, which the Court also did.
   
   The Funding Agreements and the Issues in the Appeal
   
5. Each appeal concerned the enforceability of litigation funding agreements (“LFAs”) entered by various class representatives with litigation funders in collective proceedings before the Competition Appeal Tribunal (“the CAT”).
   
6. The LFAs under consideration were amended from the LFAs originally entered which had been rendered unenforceable because of the decision of the Supreme Court in R (PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28; [2023] 1 WLR 2594 (“PACCAR”). In that case, the majority of the Supreme Court (Lady Rose JSC dissenting) held that the LFAs in question were damages-based agreements (“DBAs”) under section 58AA of the Courts and Legal Services Act 1990 (“the CLSA”) since the funder was providing “claims management services” within that section and, in consequence, the LFAs were unenforceable.
   
7. The “funder’s fee” in the original LFAs in PACCAR and in the present cases on appeal was calculated as a percentage of the proceeds which the class representative would recover if the proceedings were successful. In broad terms, the revised LFAs provide that the funder’s fee is to be calculated as a multiple or multiples of the funder’s outlay (or its committed outlay) in the proceedings, although it is still paid out of the proceeds. The revised LFAs also provided, expressly or by implication, that the amount of the funder’s recovery is capped at the level of the proceeds recovered (or some possible subset thereof). As stated above, the Appendix hereto lists the cases on appeal, a summary of the claims, and references in the judgment where the relevant passages of each amended LFA is set out.
   
8. In each of the cases under appeal, the CAT found that the revised LFAs were not DBAs so that the LFAs are enforceable. The unsuccessful defendants appeal in each case with the permission of the CAT.
   
9. The Court of Appeal identified three issues on appeal as follows:
   
   (1) If the amount payable to a funder or insurer under the LFAs is payable from and/or capped by the proceeds of a successful outcome, is the amount of the payment “to be determined by reference to the amount of the financial benefit obtained” for the purposes of s.58AA(3)(a)(ii) of the CLSA? This issue arose in all the appeals.
   
   (2) If the LFAs provide that the funder or insurer is paid a percentage of the proceedings, “only to the extent enforceable and permitted by applicable law” (or similar), is it a DBA, otherwise impermissible, or inappropriate for the purposes of certification? This issue arises in the Neill and CICC appeals.
   
   (3) If the LFA is unenforceable and/or unlawful, can any parts of it be severed? This issue only arises in the Neill appeal.
   
10. The judgments of the CAT in the proceedings below are summarised in paragraphs 29 – 44. The parties’ submissions are set out in detail in paragraphs 45 to 114. Importantly the Court of Appeal’s discussion of the issues commences at paragraph 115. 
    
    Issue 1
    
11. The important starting point for consideration of Issue 1 on the appeal was the acceptance by the appellants that, if the funder’s fee is calculated by reference to a multiple or multiples of its outlay, then the fee is not “determined by reference to the amount of the financial benefit obtained” (i.e. the proceeds or damages recovered) within the meaning of section 58AA(3)(a)(ii) of the CLSA.
    
12. The appellants argued, however, that where there is an express or implied cap on the funder’s return by reference to the amount of the proceeds or the undistributed damages, then the amount of the payment to the funder is “determined by reference to the amount of the financial benefit obtained” within section58AA(3)(a)(ii) of the CLSA, making the LFA a DBA which is unenforceable unless it complies with the DBA Regulations 2013.
    
13. It follows that the logical consequence of the appellants’ submission, that any express or implied cap on the amount of the funder’s fee by reference to the damages recovered or a sub-set of them, converts the LFA into a DBA is that it is difficult to see how any LFA could avoid being a DBA.
    
14. In dealing with these arguments the Court of Appeal placed reliance on the comments of Lord Sales JSC in the passage in PACCAR at [45] that the Court will not interpret a statute to produce an absurd result, unless clearly constrained to do so by the words Parliament has used. In the present cases, the Court of Appeal decided that it was not so constrained, primarily for three reasons.
    
15. First, the effect of the appellants’ argument was to produce the absurd result that funding under LFAs in the CAT would become practically impossible save in those cases where the DBA Regulations could be complied with. Furthermore, given that, as the appellants accepted, an LFA which provided for a funder’s return as a multiple of the outlay without any sort of cap as an outer limit, if that were practically possible, would be an enforceable LFA, the equally absurd result is reached on the appellants’ case, that a cap on the funder’s recovery, which by definition protects the class and the class representative from having to pay excessive amounts to the funder, renders the LFA an unenforceable DBA.
    
16. The fact that the multiple recoverable by the funder may be subject to adjustment depending on the amount of damages recovered or at the discretion of the CAT does not alter the character of that primary contractual entitlement which is to a multiple of outlay.
    
17. Secondly, and following on from the first reason, the Court of Appeal held that the words “determined by reference to the amount of the financial benefit obtained” are focusing on how the payment of the funder’s return is calculated, in other words whether it is calculated as a percentage of the financial benefit obtained, as in PACCAR, or as a multiple of outlay which is not by reference to the financial benefit obtained at all.
    
18. Thirdly, if contrary to the above conclusions, a possible construction of section 58AA of the CLSA is that the cap does make the funder’s return “determined by reference to the amount of the financial benefit obtained”, then one is in the territory where both parties’ constructions are feasible, in which case it is permissible to look at other aids to the construction of the statute such as Explanatory Notes and Memoranda. On examination they supported the case of the respondents and not the appellants.
    
    Issue 2
    
19. Issue 2 only arose in the CICC opt-in LFA and the Neill LFA and then only if Issue 1 is decided in favour of the respondents. Both make clear that the alternative basis for calculating or determining the funder’s fee or return by reference to a percentage of the damages only arises “to the extent enforceable or permissible by law” (“the percentage provision”). The Court of Appeal held that the short and clear answer to this issue is that, unless and until the law is changed either by the legislative reversal of PACCAR or in some other way, the percentage provision in the two LFAs is simply of no contractual effect. In those circumstances, the argument that the percentage provision is an unenforceable DBA, let alone an argument that (if severance were not possible) the presence of the percentage provisions renders the whole LFA an unenforceable DBA, is unsustainable.
    
    Issue 3
    
20. On the basis that the answer to Issue 2 is that the inclusion of the percentage provision in the Neill LFA does not render the LFA an unenforceable DBA, the Court of Appeal held that Issue 3 about severability becomes academic. Given that the issue would give rise to complex and difficult questions about whether the LFA is severable, the Court stated “ it is wiser to leave that issue for decision in a case where it matters”, referring to the salutary observation of Mummery LJ in Housden v The Conservators of Wimbledon and Putney Commons [2008] EWCA Civ 200; [2008] 1 WLR 1172 at [30]:
    
21. “It is unnecessary to decide the issue for the purpose of disposing of the appeal. In general, it is unwise to deliver judgments on points that do not have to be decided. There is no point in cluttering up the law reports with obiter dicta, which could, in some cases, embarrass a court having to decide the issue later on.”
    
22. A copy of the judgment of the Court of Appeal on 4^th July 2025 can be found here.

APPENDIX

The relevant parties in the appeals and the issues involved are listed below together with reference in the judgment setting out the amended funding provisions under scrutiny for each appeal.

BETWEEN:

(1) SONY INTERACTIVE ENTERTAINMENT EUROPE LIMITED
(2) SONY INTERACTIVE ENTERTAINMENT NETWORK EUROPE LIMITED
Appellants / Defendants
-and-
ALEX NEILL CLASS REPRESENTATIVE LIMITED
Respondent / Class Representative

The Neill proceedings involve a standalone claim against Sony concerning alleged restrictive terms and conditions and/or technical restraints in breach of Article 102 of the Treaty on the Functioning of the European Union (“TFEU”) in that it requires sole distribution of digital games for its PlayStation video games console via its PlayStation Store and imposes excessive and unfair prices for distribution via the PlayStation Store, which is said to have caused PlayStation’s users loss and damages valued at between £600 million to £5 billion (excluding interest).

Details of the amended LFA can be found at paragraphs 23 – 25 of the judgment.

BETWEEN:

(1) VISA INC.
(2) VISA INTERNATIONAL SERVICE ASSOCIATION
(3) VISA EUROPE LIMITED
(4) VISA EUROPE SERVICES LLC
(5) VISA UK LIMITED
Appellants / Defendants
-and-
COMMERCIAL AND INTERREGIONAL CARD CLAIMS II LIMITED
Respondent / Class Representative

AND BETWEEN:

(1) VISA INC.
(2) VISA INTERNATIONAL SERVICE ASSOCIATION
(3) VISA EUROPE LIMITED
(4) VISA EUROPE SERVICES LLC
(5) VISA UK LIMITED
Appellants / Defendants
-and-
COMMERCIAL AND INTERREGIONAL CARD CLAIMS I LIMITED
Respondent / Class Representative

AND BETWEEN:

(1) MASTERCARD INCORPORATED
(2) MASTERCARD INTERNATIONAL INCORPORATED
(3) MASTERCARD EUROPE SA
(4) MASTERCARD / EUROPAY UK LIMITED
(5) MASTERCARD UK MANAGEMENT SERVICES LIMITED
(6) MASTERCARD EUROPE SERVICES LIMITED
Appellants / Defendants
-and-
COMMERCIAL AND INTERREGIONAL CARD CLAIMS II LIMITED
Respondent / Class Representative

Known as the “CICC Claims” these three actions concerned standalone claims brought by card merchants for the imposition of inter-regional and commercial card transactions fees in the UK and/or EEA by Mastercard and Visa in alleged breach of Article 101 TFEU in such a manner as to artificially raise prices leading to the class being overcharged.

Details of the amended LFA can be found at paragraphs 15 – 22 of the judgment.

BETWEEN:

(1) APPLE INC
(2) APPLE DISTRIBUTION INTERNATIONAL LIMITED
Appellants /
Defendants
-and-
DR RACHAEL KENT
Respondent /
Class Representative
-and-
THE COMPETITION AND MARKETS AUTHORITY
Intervener

The Kent proceedings brought standalone claims against Apple concerning alleged excessive pricing and/or exclusionary abuses in breach of Article 102 TFEU in relation to the Apple App Store, involving the imposition of restrictive terms and conditions and/or technical restraints on the development and distribution of iOS-compatible applications which had the effect of increasing prices which caused loss and damages to Apple users.

Details of the amended LFA can be found at paragraphs 26 – 27 of the judgment.

BETWEEN:

(1) APPLE INC
(2) APPLE DISTRIBUTION INTERNATIONAL LIMITED
(3) APPLE RETAIL UK LIMITED
Appellants / Defendants
-and-
MR JUSTIN GUTMANN
Respondent / Class Representative

The Gutmann proceedings concern standalone claims against Apple concerning the introduction of a performance management feature to address the increased prevalence of unexpected power offs in iPhones, and the alleged lack of transparency over these issues. It is alleged that the introduction of the additionalfeature and the alleged lack of transparency around this amounted to a breach of Article 102 TFEU.

Details of the amended LFA can be found at paragraph 28 of the judgment.

Author: Farhana Mukith, 12KBW

In this blog Farhana Mukith reviews the SCCO’s decision in St Francis Group 1 Ltd & Ors v Kelly & Anor [2025] EWHC 125 (SCCO) in which Costs Judge Leonard struck out a number of Points in Dispute which did not properly identify the issues in dispute.

Summary

The detailed assessment in this matter came before Cost Judge Leonard in October 2024 following the dismissal of a fraud claim.

It was agreed between the parties on 7 August 2023 that the First Defendant would pay the Claimant’s costs on an indemnity basis and in accordance with CPR 44.5 in relation to the original fraud claim.

The Claimant’s Bill of Costs consisted of 1,103 items and came to a total of £468,687.15. An interim payment of £175,000 was made by the First Defendant towards this.  

The First Defendant’s Points of Dispute raised 12 preliminary points and an objection to all 1,103 items.

The Claimant argued that the First Defendants’ item by item points, by reference to Ainsworth v Stewarts Law LLP [2020] EWCA Civ 178 and O’Sullivan v Holmes and Hills LLP [2023] EWHC 508 (KB), were inadequately particularised and should be dismissed or struck out.

Costs Judge Leonard agreed and struck out several of the preliminary points due to inadequate particularisation. In doing so, the Court emphasised the importance for specific and clear Points of Dispute so as to facilitate a fair and efficient assessment process.

The Ainsworth Principles

The question for Costs Judge Leonard was whether the ‘Ainsworth principles’ in relation to solicitor/client assessments were to be applied in an assessment between parties.

In determining this, he explored the following case law:

(i) Ainsworth v Stewarts Law LLP [2020] EWCA Civ 178
Ainsworth concerned an assessment between solicitor and client under section 70 of the Solicitors Act 1974, which included an itemised schedule of time spent on documents.

The client in his Points of Dispute, stated that all the entries in the schedule were disputed and set out broad grounds of dispute, such as duplication and excessive time. However, the Points of Dispute were not itemised, in that they did not identify the entries in the schedule to which those objections were said to apply.

The solicitor complained that the client had left them unable to prepare any meaningful reply, and invited the court to dismiss the Points of Dispute in its entirety.

Senior Costs Judge Gordon-Saker agreed with the solicitor and dismissed the Points of Dispute on the basis that they had not been properly pleaded. His decision was later upheld in the Court of Appeal by Asplin LJ, who confirmed the importance of particularity required from Points of Dispute in order to ensure a fair, just and proportionate hearing [paragraph 38].

(ii) O’Sullivan v Holmes and Hills LLP [2023] EWHC 508 (KB)
Costs Judge Leonard then went on to consider the case of O’Sullivan which also concerned schedules of document time prepared for the purposes of a solicitor/client assessment.

Those schedules were summarised, in the body of the bill itself, under a single item number setting out the total amount of time spent by each of the fee earners.

The client objected to the whole of each schedule on the basis that the time claimed was “either unnecessarily incurred and/or unreasonable in amount”.

HHJ Gosnell held that the assertion that the time was “either unnecessarily incurred or unreasonable in amount” is an assertion of two alternative allegations which are actually completely different. To allow such generic alternative challenge to stand in relation to potentially any and all entries in the schedule is clearly unfair to the receiving party [paragraph 49].

He went on to say that if the paying party chooses to challenge every single item in the schedule, then he is the one adopting a disproportionate course of action which the receiving party has to be able to fairly respond to [paragraph 50].

(iii) Wazen v Kahn [2024] EWHC 1083 (SCCO)
Costs Judge Leonard finally turned to the decision of Deputy Costs Judge Roy KC (of 12 KBW), with whom he agreed, in which he concluded that the guidance of Asplin LJ in Ainsworth must apply to assessments between opposing parties, but that the requirement for particularity must be less demanding in an inter partes than a solicitor-client assessment.

Principles

In light of the above, Costs Judge Leonard summarised three fundamental underlying principles that are common to solicitor/client assessments and assessments between opposing parties:

1. The receiving party (or solicitor) must have an adequate opportunity to understand which of the items in their bill of costs (or breakdown) have been challenged and the grounds of that challenge, so as to be able adequately to prepare a response. Points of Dispute must be prepared in a way which achieves that.
2. It is not acceptable, at a detailed assessment hearing, for the parties or the court to have to spend time identifying the items in the bill of costs that are objected to, or the nature or grounds of the objection. That should be clear from the outset. There must be no element of surprise or “ambush”.
3. Points of Dispute must be prepared in a way that ensures that a detailed assessment hearing can be managed in a fair, just and proportionate way. For example, it is not open to a paying party to insist that the court trawl through every item in a bill of costs to ensure that there is no objection to it. It is for the paying party to raise clear and pertinent points upon which the court can adjudicate.

Comment

This is a welcome decision which underscores the importance of procedural fairness.

It serves as a reminder of the necessity to properly plead Points of Dispute to ensure that challenges to costs are effective so that the receiving party is able to understand the issue and respond to it.

This level of clarity in identifying the issues will also assist the parties in narrowing the issues and may even lead to them settling costs without resorting to an assessment hearing.

Whilst it may at first blush seem an onerous task for the paying party to provide detailed Points of Dispute, it’s certainly more cost effective than that court sifting through each item to identify potential objections.

This decision will not only enable level the playing field but also provides the court with clarity when deciding what share of the court’s resources to allocate to the detailed assessment hearing.

In this blog Megan Griffiths reviews the Defendant’s failed application for wasted costs after securing a finding of fundamental dishonesty in Williams-Henry [2024] EWHC 2415.

Summary

This is a bite-sized analysis of the Defendant’s failed application for wasted costs against the Claimant’s solicitors, essentially pursued on the basis that they had allowed a hopeless case to get to a trial at which the Claimant was found to be fundamentally dishonest. Williams-Henry [2024] EWHC 2415is thought to be the first binding authority on a “hopeless case” wasted costs application against a CFA funded representative.

This short blog is a summary of key points relevant to similar fundamental dishonesty claims, of which there will be many. The judgment itself is still worth reading for a full understanding of the facts, issues, submissions and findings.

Brief background

The Claimant brought an occupier’s liability claim for personal injuries and consequential losses, after falling from a pier. She was legally represented pursuant to a CFA. It was clear “beyond argument” that she had suffered some injury. The Defendant admitted partial liability but put her to proof on causation and positively alleged fundamental dishonesty. Before trial the Defendant made offers to settle the claim which were not accepted. The Defendant also served video surveillance evidence which proved fatal to her claim. At trial, Ritchie J found that the Claimant had been fundamentally dishonest, but for which she would have been awarded around £600,000.

Following trial, the Defendant applied for a stage one wasted costs order against the Claimant’s legal representatives. The application was made pursuant to section 51(6) of the Senior Courts Act and CPR rule 46.8. The application was heard and ultimately dismissed by Ritchie J in September 2024 (who was also the trial judge).

Core findings

Below is a summary of the core findings made by Ritchie J in dismissing the application.

1. The fact that the Respondent did not waive privilege was an effective shield to the application. It meant that doubt as to whether wrongdoing was the Respondent or the Claimant’s responsibility, was resolved in the Respondent’s failure. It was referred to by Ritchie J in relation to several of the specific allegations that were made.
2. The following specific allegations did not amount to clearly inappropriate, unreasonable or negligent conduct on the facts of this case and the available evidence (and as legitimately capped by the Respondent retaining privilege):
   • Failure to provide disclosure of social media accounts prior to the Defendant’s disclosure of video surveillance evidence. That surveillance evidence proved fatal on fundamental dishonesty. The Respondent submitted that social media wasn’t part of standard disclosure in a brain injured claim and wouldn’t be budgeted unless justified by a particular feature of the claim. The court accepted that there was no evidence that this was generally relevant prior to disclosure of surveillance evidence, noting that a “tell tale sign” was that the Defendant hadn’t requested social media disclosure until after they had disclosed the video evidence in any event [38].
   
   
   • Failure to advise the Claimant to accept offers made by the Defendant prior to trial. The court was quick to reject this, even low prospects of defeating fundamental dishonesty at trial were prospects, if this submission were accepted it would place a “large percentage” of personal injury lawyers at risk of wasted costs if they advised against acceptance of any offer which was ultimately beaten. The court also noted the absence of a wasted costs application against counsel, and lack of any evidence of the offers being rejected without instructions or on negligent advice [39].Failure to “dump” the Claimant after fundamental dishonesty was alleged. The court described this as the Applicant’s main submission [49].
   
   
   • On the facts this was a case where liability was admitted, the Claimant had clearly suffered some injury with some consequential loss, and the Defendant was making offers whilst the claim was live. Whilst the fact that fundamental dishonesty was raised enabled A to terminate the CFA it did not require them to: the decision against terminating “was a human and commercial one for the firm, not a matter of professional regulation or a matter for the Court or the Application to comment upon or criticise” [45].
   
   
3. Although the Defendant proved a prima facie case at stage one as a result of inconsistencies between the Claimant’s witness statement and other evidence already in the Applicant’s possession, the Defendant did not prove causation of any wasted costs. Instead, the contradictions armed the Defendant with a “large stick with which to beat the Claimant” which was done effectively in cross examination at trial. Ritchie J found that in any event “such matters are generally better dealt with in a professional negligence claim or in a regulatory disciplinary hearing than in a WCO application” [40]. 
   
4. The application itself failed to adequately particularise the allegations giving rise to the application, including on causation. The Defendant’s case on what wasted costs were caused by the allegedly unreasonable or negligent conduct only crystallised at the hearing. This lack of particularising was taken into account by the court when deciding whether it would be just to accede to the application. Per Richie J: “[t]he Applicant in this case has made the allegations wide ranging and has completely failed to be specific about which costs are claimed as wasted (until the hearing itself) and how much they are. That is an unsatisfactory way of making the application and I take it into account” [41].
   
5. To expose the representatives of a claimant with a good core claim and some (albeit low) prospect of defeating fundamental dishonesty to wasted costs may affect access to justice [56].
   
6. Overall it was not proportionate or just to accede to the application, which failed to adequately particularise the wasted costs including on causation, and which had failed to establish a prima facie case on all of the allegations but one [57].

Comment

There are clearly many points of note from the wasted costs judgment in Williams-Henry. They relate both to the way in which an application is particularised, and the substantive allegations which ultimately were not sufficient for a stage one order to be made.

The witness statement point is an important one and claimants and defendants alike should remember the importance of checking information provided by a witness against other documents. If there is an inconsistency this should be put to the witness to check the reliability of their recall. If they maintain a contradictory account, their reasons for why should be incorporated into their witness statement to protect them from challenge. For example, a proof of payment for a hiking trip may exist which suggests that despite their injuries they were able to go on an active holiday, but the witness may be able to confirm and evidence that they subsequently cancelled the holiday, or transferred the ticket to a friend, because of their injuries. A wasted costs application must be sufficiently and clearly particularised from the outset, both on the allegations and the causation of wasted costs. The application must also be sufficiently evidenced on both of these points. Failure to do so may properly factor into the court’s assessment of whether overall it is just to make a threshold order.

The decision in Henry was of course reached on its’ facts but many of those facts are common to fundamental dishonesty claims irrespective of their value. In cases where liability and some measure of injury are accepted, meaning the fundamental dishonesty case is based on exaggeration, Henry suggests that there will not generally be grounds for wasted costs. Given the effectiveness of privilege as a shield, a defendant considering an application should think carefully about what they are likely to be able to prove if privilege is not waived. For example, in Henry there was no particular reference to interim or trial judgments in support of the application. But there will be many cases where interim and/or trial judgments refer to conduct that is or is likely to meet the wasted costs threshold. In those cases, a defendant is more likely to be able to avoid the problems associated with privilege being retained.

The judgment can be found here.

Megan Griffiths is a barrister at 12KBW specialising in personal injury law including costs.

This blog post was written by Mary Newnham of 12 King’s Bench Walk.

Introduction

In this case Master Brown ordered that a case involving a child claimant should be subject to costs management, despite falling within an exception to automatic costs budgeting, and despite the medical prognosis not yet being finalised.

Background

The Claimant was a child (aged 10 at date of accident and 12 at the date of the hearing) who had suffered a brain injury after being struck by the Defendant’s vehicle. Liability had been settled at 85/15 in the Claimant’s favour. Quantum directions were subsequently given in June 2023, providing for disclosure, exchange of witness statements and experts evidence through to a further CMC after May 2025.

According to the Claimant’s paediatric neurology expert, although she was already displaying severe neurodisability it was too early to give an accurate prognosis as to the full effects of her TBI. He intended to reassess her in 2026 (five years after the accident), when he would be better placed to comment on her long-term prognosis. The other experts (including psychiatry, educational psychology and care) were similarly guarded. There was no statement of value on the claim form but it was indicated that the claim was likely to be pleaded in excess of £10 million.

As part of the quantum directions, the court had ordered that the Claimant should serve an estimate of her costs from the date of the order to the next CMC and, if the Defendant wished to apply for a costs management order, it should make any such application no less than 14 days in advance of that CMC. In fact, the Defendant made its application much earlier than that.

The Claimant had already provided a costs estimate up to February 2023 amounting to around £253,000 (inclusive of VAT and disbursements). In accordance with the order of June 2023, the Claimant provided a further estimate of costs amounting to around £185,000. In December 2023, in support of a request for a further payment on account, the Claimant’s solicitors provided a breakdown of costs and disbursements to November 2023, at which point the incurred profit costs came to £411,000 (excluding VAT). A ‘short form’ bill and revised costs estimate had been served by the date of hearing, with costs to date at £850,000 (including profit costs of £633,000 excluding VAT). The estimated costs up to the next CMC were now £262,000 (inclusive).

The Claimant’s solicitors provided a detailed witness statement in which they sought to explain this increase in costs. The work was said to have been significantly more than anticipated for various reasons, including significant emotional and behavioural difficulties on the part of the Claimant, difficulties associated with the move to alternative rental accommodation and with the Claimant’s education. Witness evidence had turned out to be more extensive than anticipated, and the earlier estimate mistakenly only included one round of disclosure.

The decision

It was common ground that the case fell outside the costs management provisions within CPR3.12(1), but the Court retained a power to order costs budgeting in cases where it would not otherwise apply, pursuant to CPR3.12(1A) and 3.13(3). The Court had a general discretion to be exercised having regard to the overriding objective.

The Defendant’s arguments centred around their concerns (which appear to have been longstanding) about the extent of the Claimant’s costs and the degree to which they had exceeded the previous estimates.

The Claimant’s primary point was that this was a case where the prognosis was not yet known and would not be known until (at the earliest) 2026. There were significant uncertainties around her schooling, accommodation, care and rehabilitation. This was the underlying rationale for the exclusion of child claims from costs budgeting.

Master Brown considered in some detail the earlier case of CXS v Maidstone and Tunbridge Wells NHS Trust [2023] EWHC 14 (KB), in which a Defendant’s application for costs budgeting was dismissed in a complex clinical negligence case where the Claimant had cerebral palsy at birth. There were, as held in CXS, sound policy reasons behind the decision to exempt children’s claims from automatic costs management as it was plainly not sensible to budget over a period of five to ten years, with the potential for multiple applications to vary.

The Master emphasised that CXS did not form a precedent. There were some differences on the facts. In CXS the court was being asked to budget over a period of around 5 years during which period the claim was stayed and it was likely that the claim would not be resolved for many years after that. As said in CXS, this was typical of the kind of case the CPRC costs sub-committee had in mind when approving the exception from automatic costs budgeting.

In this case, the timescales were significantly different. While it could not be stated with certainty that a final prognosis would be available in 2026, he did not see that this would provide any substantial difficulties with costs budgeting. There was at least some reasonable expectation that there can be some assessment of damages within a period that was reasonable for costs budgeting purposes, and substantial directions had already been given with that in mind.

Perhaps optimistically, Master Brown considered that budgeting of a claim such as this should not be an expensive or time-consuming exercise and could usually be disposed of within an hour. Parties should be providing costs information to their clients in any event. If necessary, the matter could be costs budgeted in parts, as in longer-running cases involving adult protected parties.

The Master’s decision appears to have been driven primarily by concerns raised by the Defendant over the Claimant’s costs:

“The concerns which the Defendant has raised in this case in my judgment substantially outweigh any of the concerns about costs budgeting. In short, I am persuaded that the Defendant’s concerns provide a clear and compelling justification amounting to a good reason for taking the steps which the Defendant has asked me to take.”

“Costs of over £1 million are in my judgment, at the very least, concerning… In any event in my judgment, sitting both as a costs judge and as KB master, there are real apprehension that such costs would go substantially beyond what is reasonable or proportionate.”

Overall, therefore, while the Master recognised that this was a case with significant complexities and unknowns, he did not see them as presenting any hurdles to costs budgeting. Reasonable and safe assumptions could be made, and it was always open to parties to apply for variations.

Moreover, he considered that there were positive reasons to costs manage this case.  It would reduce the risk that costs would become excessive and disproportionate and the prospect that detailed assessment would be required. It could be expected to provide transparency and enhance settlement. In some cases, costs estimates could be expected to provide reassurance that costs would be in a reasonable and proportionate range, but that had not worked in this claim and the Master lacked the necessary confidence that it would work in future.

In a point of more general application, the Master considered that there was at least some basis to thinking that costs budgeting may be beneficial for children and protected parties in an assessment under CPR46.4, because of the presumption that costs in excess of a budget are unreasonable. Thus costs budgeting may provide some protection to a child or protected party from a claim by the their solicitors in costs (although in this particular case, the court was told that the funding arrangement was such that there would be no liability of the Claimant to pay costs in excess of those recovered inter partes).

Takeaways

While there are solid policy reasons (as set out in this case and CXS) why claims involving children are not automatically case managed, there are some cases where costs management can and should be ordered.

As to whether costs management can be ordered, some child cases are more “budgetable” than others. Lack of final prognosis is clearly not a total bar, but budgeting is more likely to be ordered when it can reasonably be anticipated that a prognosis will be forthcoming in the near future. As a rule of thumb, if the Court feels able to make substantive case management directions (rather than e.g. simply ordering a stay), it is more likely to feel able to costs manage the case, at least in part. There will still, however, be cases where this simply cannot be done – where claims are “bristling with complexity and unknowns”, per CXS.As ever, this point is highly fact specific and previously decided cases will be of limited value as precedent.

As to whether costs management should be ordered, the increasing costs on the Claimant’s side were clearly a major factor here. The Claimant’s solicitors provided reasons for the increase, in what was by any measure a complex case.[1] But I would suggest that it was the unpredictability of the repeated increases (rather than the reasonableness of the post-hoc explanation) which led the Master to want more oversight. It is therefore important to make sure that any costs estimates are realistic from the start. In some cases, the provision of costs estimates will be used as a light touch alternative to full costs management. In this claim, the failure of that process to provide sufficient transparency and predictability is what led to the imposition of budgeting.

Master Brown was, however, keen not to frame the imposition of budgeting as a punishment. In his analysis, there were net benefits for both parties in having costs managed by the Court. It would therefore be open to Defendants to argue that budgeting should be considered in many child claims that fall outside automatic costs management, without necessarily having to demonstrate any particular concerns about costs incurred so far.

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[1] A further point to take away for Claimants is that, despite the decision in Hadley v Przbylo [2024] EWCA Civ 250 that the costs of attendance at case management meetings are recoverable inter partes, some judges will be casting a critical eye over the level of involvement of the litigation team in treatment and rehabilitation.

In this article, Henry King considers the decision in Challis v Bradpiece [2024] EWHC 1124 (SCCO)

Facts

The fact pattern is routine. 

The Claimant brought a personal injury claim against the Defendant which successfully settled by way of a Tomlin order which provided for the Claimant’s costs to be assessed if not agreed. The costs were not agreed. 

Following a detailed assessment, the Defendant bettered a Part 36 offer made in respect of costs. Accordingly, it was entitled to its costs of the detailed assessment process. 

However, this was a QOCS case. 

Arguments

Very briefly, the Claimant argued that those costs could not be enforced against him (pursuant to the authorities of Cartwright and Ho). 

The Defendant argued that QOCS did not apply to detailed assessments (pursuant to its distinct jurisdictional basis, a strict and grammatical reading of the civil procedure rules, and indeed Parsa v Smith). This latter argument is one which the present author has deployed in argument previously but the point had never been resolved. 

Judgment 

In a careful judgment in which he acknowledged that he had “wavered several times”, the judge sided with the Claimant’s interpretation i.e., the Defendant was barred from enforcing its costs. 

But, understanding the fact that it very much is an either way decision, he also gave the Defendant permission to appeal. 

Comment 

The outcome of this matter is largely if not wholly in line with the trend developing in QOCS cases pre-April 2023 (Cartwright, Ho, Chappell, Harrison, PME) which is, in essence, QOCS prevents any enforcement absent a judgment. 

The judgment is accordingly not entirely surprising and is a feature that has been reversed by the civil procedure rules committee in respect of cases that are issued post April 2023. 

Whilst one can have a measure of sympathy for the successful Defendant here not being able to offset any of its costs of defending the detailed assessment, it is to be remembered that:

      1.    Defendant insurers argued very much in favour of QOCS during the time of the Jackson Report.  

      2.    The Defendant did not pay the Claimant’s costs of the assessment process and they clearly made a considerable saving as against the Bill. 

That being said, there are powerful reasons as to why the Defendant’s interpretation is to be preferred which are very fairly set out in the judgment. 

One reservation I have is that it encourages both parties to litigate rather than settle given that:

      1.    Claimants have little if any penalty for running 50/50 points; and

      2.    Defendants can only enforce their costs orders against a judgment meaning they must fight a trial to do so. 

This is directly contrary to the very purpose of the Civil Procedure Rules per the Court of Appeal in Diriye v Bojaj at paragraph 61 “the aim of much civil litigation is to bring about a cost effective settlement.”

Whilst it was hoped that the MPS would carry forward this appeal, despite the author’s reservations above, as it will provide much needed binding authority on the same (SCCO decisions not being binding, only persuasive), it has subsequently been confirmed that the appeal has been withdrawn. This is unlikely to be the last word on the matter.

12KBW’s Charles Robertshaw looks at the Court of Appeal judgment in Thakkar & Ors v Mican & Anor [2024] EWCA Civ 552 which considers whether a claimant has a default entitlement to indemnity costs where a defendant has unsuccessfully alleged that the claim is fundamentally dishonest (“FD”).

Background facts

The claim arose out of an RTA in 2017. The Claimants were the driver and passengers of a car. They alleged that the First Defendant drove his van into their vehicle. The First Defendant denied liability, alleging that the Claimant pulled out of a parked position into the side of his van. The Second Defendant was the First Defendant’s insurer.

The Claimants relied on the evidence of a witness to the accident, Mr Patel. The Defendants appear to have had doubts as to the legitimacy of Mr Patel’s evidence and instructed an investigator to visit his home to obtain a statement. Mr Patel was not at home when the investigator called, but the investigator did speak to Mr Patel’s uncle, telling him that Mr Patel may be accused of fraud.

Later the same day, the investigator contacted Mr Patel by phone and Mr Patel agreed to provide mandates for the Defendants to obtain his telephone records. The investigator did not tell Mr Patel about the possibility of fraud.

When the investigator telephoned again the next day, Mr Patel had been told about the potential fraud allegation by his uncle and withdrew his cooperation. This appears to have strengthened the Defendants’ suspicions that Mr Patel was not a bona fides witness to the index accident.

A claim was eventually served and the defence denied liability and pleaded that the Claimant’s credibility and honesty would be challenged at trial. At the subsequent CCMC, the Defendants applied for permission to plead FD. However, the judge (HHJ Backhouse) was unimpressed by the application and dismissed it. In her view the matters put forward by the Defendants as evidence of FD at that stage were “nowhere near what is required to be able to plead fraud and/or fundamental dishonesty”. However, the Judge made clear that the Defendants could make any submissions as to FD at trial if there are grounds to do so after cross-examination of the witnesses.

The matter eventually came before HHJ Backhouse for trial. The judge found liability in favour of the Claimants, largely on the basis of Mr Patel’s evidence which demonstrated that the First Defendant’s negligent driving caused the accident. The judge made no finding that any party lied, she simply found that the recollections of the Claimants and Mr Patel were more reliable than that of the First Defendant.

The Claimants sought indemnity costs for the period starting from the date when the allegations of FD were first raised by the Defendants. The Judge refused and awarded costs on the standard basis for this period.

The Claimants appealed.

The Court of Appeal decision

The lead judgement in the Court of Appeal was given by Coulson LJ who started his analysis with a summary of the legal principles as follows:

• The discretion to award indemnity costs is a wide one and must be exercised taking into account all the circumstances of the case, including but not limited to the conduct of the paying party.

• In order to obtain an order for indemnity costs, the receiving party must surmount a high hurdle; to be able to demonstrate “some conduct or some circumstance which takes the case out of the norm. That is the critical requirement”.

• To the extent that the application is based on the paying party’s conduct, it is necessary to show such conduct was “unreasonable to a high degree” in order to recover indemnity costs.

• But it is not necessary to go so far as to demonstrate “a moral lack of probity or conduct deserving of moral condemnation” on the part of the paying party.

• Merely because the conduct in question may happen regularly in litigation does not mean that such conduct cannot also be ‘out of the norm’. The word ‘norm’ was not intended to reflect whether what occurred was something that happened often, so that in one sense it might be seen as ‘normal’ but was intended to reflect something “outside the ordinary and reasonable conduct of proceedings”.

• Since the judge has such a wide discretion when it comes to costs, the courts have repeatedly made it clear that the court should avoid going beyond the CPR to identify rules, default positions, presumptions, starting points and the like, when addressing costs disputes.

Coulson LJ then stated the key question posed by the appeal: where allegations of dishonesty are pursued and fail, is there a default position, or a presumption, that the party who relied on those allegations is liable to pay the entirety of the others side’s costs on an indemnity basis?

Having considered the relevant case law, he concluded:

• There is no such presumption or reversal of the ordinary burden of proof. It will always depend on the circumstances of the particular case, and the judge retains a complete and unfettered discretion.

• The default position is always that standard costs will be assessed and paid, unless the party seeking indemnity costs can demonstrate why they are appropriate in all the circumstances.

• Any other conclusion would fetter the court’s broad discretion in respect of costs in any given case and would give rise to the very danger which the case law has warned against: the court must avoid the temptation to create rules which cannot be found in the CPR.

However, and importantly, Coulson LJ also stated (at paragraph 28 of the judgment):

“But nothing that I say there is intended to detract in any way from this statement of the obvious: that, because the making of a dishonest claim will very often attract an indemnity costs order against a claimant, a failed allegation of dishonesty will very often lead to the making of an indemnity costs order against the defendant, on the simple basis that “what is sauce for the goose is sauce for the gander”…A defendant who makes allegations of this kind therefore runs a very significant risk that, if the allegations fail, indemnity costs will be awarded against them.”

Accordingly, the appeal failed.

Comment

At the risk of stating the obvious, it is almost inevitable that allegations of FD will cause increased litigation costs. For example, such allegations are likely to increase:

• The risk of a case being re-allocated to the multi-track or a higher complexity band in the fast/intermediate track;
• The amount of disclosure required;
• The length and number of witness statements served; and
• The length of trial.

As a consequence, the increased costs caused by alleging dishonesty should always be considered before committing to making such allegations.

Whilst the Court of Appeal has confirmed that there is no presumption of indemnity costs awarded against defendants who have failed to prove allegations of dishonesty, this case is still a clear warning to such defendants: “what is sauce for the goose is sauce for the gander”.

Consequently, successful claimants will surely feel emboldened to seek (and first instances judges will be more likely to make) indemnity costs orders in such circumstances following this Court of Appeal judgment.

What can parties wishing to allege dishonesty do to minimise the risk of being ordered to pay indemnity costs if they don’t make it home on those allegations at trial?

Firstly, an obvious starting point is provided by the defendant’s legal representatives’ professional duties. For example, counsel are bound to follow the Code of Conduct set out in the BSB Handbook, rC9.2(c) of which states:

• you must not draft any statement of case, witness statement, affidavit or other document containing any allegation of fraud, unless you have clear instructions to allege fraud and you have reasonably credible material which establishes an arguable case of fraud.

Accordingly, a defendant must be satisfied that there is reasonably credible material on which a finding of fraud/dishonesty can be based before any express allegation of dishonesty is made.

Secondly, it must be borne in mind that, although the standard of proof for allegations of FD is the usual ‘balance of probabilities’ test, judges usually will consider FD to be a serious allegation and require clear and cogent evidence before finding that the balance of probabilities threshold has been met.

Thirdly, does FD need to be pleaded at all? If the evidence raises suspicion but is not sufficiently clear to make a reasonably arguable case of FD against a claimant, the guidance of Newey LJ in Howlett v Davies [2017] EWCA Civ 1696 (which was seemingly endorsed by Coulson LJ) should be remembered:

• The mere fact that the opposing party has not alleged dishonesty in his pleadings will not necessarily bar a judge from finding a witness to have been lying: in fact, judges must regularly characterise witnesses as having been deliberately untruthful even where there has been no plea of fraud.

• The key question in such a case would be whether the claimant had been given adequate warning of, and a proper opportunity to deal with, the possibility of such a conclusion and the matters leading the judge to it rather than whether the insurer had positively alleged fraud in its defence.

Accordingly, a defendant can plead a positive case as to the facts which might give rise to a finding of FD without then expressly pleading FD. So, for example, in the case of a suspicious ‘independent’ witness, the defendant might expressly plead that:

• It understands that the claimant will rely on the witness evidence of Mr X as to the circumstances of the accident.
• The defendant denies that Mr X was present at the scene of the accident at any material time.

The issue can then be investigated further and if no supportive further evidence comes to light prior to trial:

• The allegation can be dropped entirely (and the same notified to the claimant in correspondence); or
• The allegation can be explored in cross-examination and expressly made once the appropriate evidence has been elicited from the witnesses.

Of course, if further supportive evidence comes to light (e.g. social media evidence, surveillance etc. etc.) an application to amend to expressly plead fraud based on that evidence can be made.

The final takeaway from this case is that it serves as a warning to any litigants who have slipped into a habit of aggressively raising allegations of dishonesty where the evidence is too weak to reasonably do so. This is made clear in the coda to the judgment, where the Lady Chief Justice states:

“This litigation has been characterised by parties on both sides far too ready to throw unnecessary and serious allegations against each other…

… As the courts have made clear repeatedly, an unnecessarily aggressive approach to litigation is unacceptable… … The unfortunate effect of the parties’ conduct was to increase not only aggravation to an independent witness but also costs on both sides”

In this article Rebecca Henshaw-Keene looks at wasted costs orders following the judgment in Rainer Hughes Solicitors v Liverpool Victoria Insurance Company Ltd & Ors (Rev1) [2024] EWHC 585 (KB).The judgment contains significant guidance on preparing for wasted costs hearings and is an important addition to the line of cases on the requirements in respect of witness statements for non-English speakers. With thanks to Andrew Roy KC for his comments on the article.

Background

This matter arose from an RTA in May 2019 following which the Claimant brought a claim for injury and hire charges totalling almost £50,000. Her daughter-in-law was her passenger at the time. The Defendant had successfully applied to resile from an admission of liability, to plead fraud and to bring a counterclaim in the tort of deceit against the Claimant and her daughter-in-law.

The Claimant’s first language was Turkish. She had previously been represented by a different firm who had prepared a witness statement in Turkish with a certified translation.

The following steps had been taken by the Claimant’s solicitors, Rainer Hughes (“RH”), in preparation for trial:

• A Part 20 Defence for the Claimant was drafted in English and a Statement of Truth was signed by her in English.
• The Claimant’s witness statement had been prepared in English. In that statement, the Claimant said that her daughter-in-law spoke to the third-party driver after the collision. She had further taken delivery of a credit hire vehicle and signed their documentation “not realising that what I was actually signing was an expensive hire agreement”. Further, that she had never heard of the term impecuniosity and did now not want to advance a case on this basis. There was no Turkish version of this statement.
• The Claimant’s pre-trial checklist indicated she needed an interpreter at trial.

At a pre-trial review, RH was ordered to clarify in writing that the Claimant’s witness statements were compliant with CPR Part 32 and that the Statements of Truth complied with CPR Part 22.

RH’s position was that, whilst the Claimant’s English was “proficient”, an interpreter was needed to assist with the stresses of the trial: the Claimant was elderly and suffering from medical issues.  The Claimant’s daughter-in-law had “confirmed in numerous telephone calls that [the Claimant] fully understood the contents of her witness evidence.”

The trial came before HHJ Monty KC in December 2022.

At the outset, Claimant’s Counsel told the Judge that the Claimant was: “unable to read properly her witness statement or the pleadings, which were in English, as she was only proficient in Turkish.”

The Claimant had also not paid the trial fee. Relief from sanction was refused and the claim was struck out. Judgment was entered for the Part 20 claim at £25,000, with costs to be assessed pursuant to CPR r.44.15(c) on the basis that the Claimant and/or her solicitor’s conduct was deemed likely to obstruct the just disposal of the proceedings.

Wasted costs

RH was ordered to “show cause why they should not be jointly and severally liable” for some or all of these costs. They filed a statement saying:

• At an in person meeting it was clear that the Claimant had a “good grasp of English” despite her daughter-in-law assisting her;
• The file handler had said the statement would be translated into Turkish but that was “as further assistance”;
• The Claimant did not request for her statement of pleadings to be translated.

The Defendant took issue with a number of matters:

• It had raised the translation issue in December 2020, noting that the reply to defence of the Claimant was in English despite the assertion she was Turkish and her statement required translation. RH had responded at the time saying that, due to: “time constraints, we were unable to source our client’s statement in Turkish in the first instance. We are aiming to obtain such and will have better opportunity to do this if a stay is agreed”.
• The Claimant’s statement was then served in November 2021 (approximately 11 months post the correspondence above, 12 months prior to the pre-trial review hearing and 13 months prior to the trial).

The wasted costs hearing came before HHJ Monty KC on 25 July 2023. The Judge allowed the application for a Wasted Costs Order and ordered that RH pay:

• Wasted costs arising from the failures relating to the Claimant’s first language being Turkish which he summarily assessed in the sum of £3,000;
• The Defendant’s costs of the wasted costs application which he summarily assessed on the indemnity basis in the sum of £9,500;
• The costs of the Claimant and her daughter-in-law on the wasted costs application summarily assessed in the sum of £4,000.

RH’s statement filed for the application hearing was found to be unsatisfactory, not containing all relevant correspondence and having been written by someone not seemingly involved with the case. There had been four fee-earners on the file at various times, none of whom had given evidence.

The judge found there had been “a proliferation of red flags” and that “without properly translated statements, this was a disaster waiting to happen”

Turning to the wasted costs jurisdiction, the conduct had been negligent in the Ridehalgh v Horsefield [1994] Ch 205 sense: a failure to act with the competence reasonably to be expected of ordinary members of the profession. It was a breach of the firm’s duty to the Court: Persaud v Persaud [2003] EWCA Civ 394 at [27] and Gillian Radford & Co v Charles [2003] EWHC 3180 (Ch) at [20]. Finally, these failures led to costs being wasted.

Turning to proportionality, the Judge found:

“This was a straightforward case where the costs had been increased by Rainer Hughes not accepting the inevitable, and conceding that they were wrong, and instead having argued – without justification – that there was never anything to suggest that Mrs Karadag was other than proficient in English … Rainer Hughes negligently failed to deal with the language issue, have defended this application without calling evidence from those actually involved at the truly material times such as the drafting of the statement, have failed to produce all relevant documents, and have ignored what is in my view clear from the documents. That is why the costs are greater than they should have been”.

RH made the following points on appeal:

The Judge erred procedurally in failing to consider proportionality as a preliminary issue before going on to consider the merits of the application for wasted costs

RH relied on the case of Harrison v Harrison [2009] EWHC 428 (QB), that the wasted costs jurisdiction will only be exercised in cases which are “plain and obvious” and that it is a summary remedy which should be capable of being dealt with in “hours rather than days”.

This was a matter for the Court’s discretion, and not to be lightly interfered with by an Appeal Court. On the basis of the facts as they appeared to HHJ Monty KC in December 2022 when he refused relief from sanction, it appeared to be a clear case. No application was made by RH at the directions hearing that the matter should not proceed on grounds of proportionality, neither was one made in front of Judge Monty at the final hearing. The costs had been by then, obviously, incurred.

The Judge erred substantively in failing to exercise his discretion to dismiss the application on grounds of proportionality

Again, it was said that the discretion of the Judge was a wide one. He was entitled to take into account the fact that, on his assessment, the costs were greater than they should have been because of the unreasonable approach taken by Rainer Hughes to the application. That the final sum awarded was reduced from that put forward by the Defendant was immaterial.

It was agreed between the parties, as stated in Harrison v Harrison, that the jurisdiction was confined to cases which are “plain and obvious”. RH had sought to suggest that this matter was not capable of such an assessment. The discussion on this point centred on RH’s statement written in defence of the application. It had been put forward by a senior partner in the firm. It was not clear, held the Court, whether the partner had ever personally heard the Claimant speak or had been present in any meeting with her, leading the Judge to comment that “the absence of such evidence is in the nature of a deafening silence.”

HHJ Monty KC had been right to see what support, if any, there was for the position adopted by the senior partner, and what the evidence showed about the Claimant’s fluency in the English language.

In summary, the Judge was justified in finding that there had been a clear breach of CPR Part 32 and PD 22, as well as a breach of the overriding objective imposing an obligation on the court to deal with cases justly and at proportionate cost by, among other things, enforcing compliance with rules, practice directions and orders. The identified negligence of the solicitors was a breach of the duty on a legal representative to assist the court in promoting the overriding objective.

Finally, the decision to award costs on the indemnity basis was upheld, again because of the conduct of RH.

Take away points: witness statements

Practitioners will be familiar with the relevant legal provisions. This article contains an overview of them as stated in the leading case of Correia v. Williams [2022] EWHC 2824 (KB)

• The proficiency of a witness in English is key. It matters not, in some cases, what a witness’ “own language” or “mother tongue” is. Witnesses who are bi-lingual or otherwise sufficiently fluent in English can give evidence in English. For further commentary on this, see the decision of Freedman J in Afzal -v- UK Insurance Ltd [2023] EWHC 1730.

• The ability to be cross-examined in English appears to be the obvious litmus test. HHJ Monty KC said: “any witness who required a translator at trial would in my view be deemed to be insufficiently proficient to give evidence at trial in English”

• Also in Afzal, the then current Business and Property Court Guide was considered to be instructive, which read: a witness’s own language includes any language in which the witness is sufficiently fluent to give oral evidence (including under cross-examination).

The ability of the witness to be cross-examined in English is paramount and should be considered at the earliest opportunity. Is the witness’ English good enough to allow them to give their best evidence, in a situation which the witness may find stressful? There is a useful passage in the first instance judgment of HHJ Evans in Afzal (included in the appeal judgment):

“One of the fundamental principles of civil litigation is that parties are entitled to know before they come to trial what it is that a witness is going to say and are entitled to assume that that which the witness says in his statement is expressed in a manner which he will choose to express himself with all the vocabulary and nuance and everything else available to him; and a witness statement that is drafted in a language which is not the witness’s own language invariably will not convey the witness’s evidence in the same manner that it would if it were drafted in his own language.”

As above, a witness who professes the ability to read and understand an English statement, but who has an interpreter to assist at trial, is vulnerable to challenge.

What should be avoided, taking guidance from this case, is an over-reliance on the witness’ family and friends to assist them in preparing for trial.

Take away points: wasted costs

Mr Justice Martin Spencer made clear that a Judge’s discretion in considering proportionality and whether, on the information available, they should exercise their discretion to decline allowing a wasted costs application to proceed, remained a wide one. “No hard and fast rule can be laid down because the circumstances in which a wasted costs application may be made are infinitely varied.”

The judgment does however make clear that respondent solicitors who unreasonably throw up obstacles to a wasted costs application (for example by seeking to defend the indefensible) might not be allowed to rely upon the extra costs thereby generated in support of an argument that the application should be dismissed on proportionality grounds, This is consistent with CPR 44.5(3) which provides that one of the metrics by which proportionality is to be judged is “any additional work generated by the conduct of the paying party”.

It also makes clear that any point that the application should be dismissed on grounds of proportionality needs to be taken at the earliest possible stage.  In practical terms, doing so at the full hearing of the application itself will almost be by definition be too late.  The costs will have already been incurred.  The toothpaste cannot be put back in the tube.  The only options would either be to consign the work generated by those costs to redundancy or to use it to determine the application.  The latter is unlikely to be an attractive option.

Mr Justice Martin Spencer provided guidance for the Court on show cause orders, which practitioners can also follow. Where a Judge decides to make a “show cause” order, they should consider giving a direction that the applicant identify matters referred to in PD 46, paragraph 5.9 being a) what the legal representative is alleged to have done or failed to do and b) the costs that the legal representative may be ordered to pay or which are sought against the legal representative, as early as possible.

This will give the court a basis upon which to make an early assessment of the issue of proportionality because there will then be information on how straightforward or complicated the “negligence” issues are likely to be. The order of HHJ Monty KC had instead read: Rainer Hughes Solicitors do show cause why they should not be jointly and severally liable for some or all of the costs referred to in paragraph 5 above pursuant to CPR 46.8.

Finally, on deadlines, the Defendant was penalised for the fact that their Statement of Costs had been served late and assessed their costs at £9,500 inclusive of VAT. Costs had been claimed in the sum of approximately £15,000.

Ready reckoner: relevant CPR provisions

CPR Part 22 and Practice Direction (PD) 22 deals with statements of truth –

• R.22.1(1): The following documents must be verified by a statement of truth … (c) a witness statement.

• R.22.3: If the maker of a witness statement fails to verify the witness statement by a statement of truth the court may direct that it shall not be admissible as evidence.

• PD 22, 2.4. The statement of truth verifying a witness statement must be in the witness’s own language.

CPR Part 32 deals with witness statements –

• R.32.4(1): A witness statement is a written statement signed by a person which contains the evidence which that person would be allowed to give orally.

• R.32.8: A witness statement must comply with the requirements set out in Practice Direction 32.

The Practice Direction to part 32 (“PD32”) sets out the requirements for the preparation of witness statements:

• PD32: 18.1. The witness statement must, if practicable, be in the intended witness’s own words and must in any event be drafted in their own language.

• PD32: 19.1. A witness statement should – (8) be drafted in the witness’s own language

• PD32: 20.1. A witness statement is the equivalent of the oral evidence which that witness would, if called, give in evidence it must include a statement by the intended witness in their own language that they believe the facts in it are true.

• PD32: 23.2. Where a witness statement is in a foreign language

(a) The party wishing to rely on it must –

(i) have it translated; and

(ii) file the foreign language witness statement with the court; […]

• PD32: 25.1. Where:

(1) an affidavit,

(2) a witness statement, or

(3) an exhibit to either an affidavit or a witness statement does not comply with Part 32 or this practice direction in relation to its form, the court may refuse to admit it as evidence and may refuse to allow the costs arising from its preparation.

There are also provisions in the King’s Bench Guide, Chancery Guide and the Business and Property Courts Guide.

This blog post is written by Angela Frost of 12 King’s Bench Walk.

Hadley v Przybylo [2024] EWCA Civ 250

A Court of Appeal judgment starting with “the first issue for us to decide is whether there is an issue for us to decide” at first blush may not appear to be a case worth your time reading, however this judgment clarifies an important point that comes up regularly at costs budgeting hearings in personal injury claims involving catastrophically injured Claimants. Master McCloud clearly thought it was an important point as ‘leapfrog’ permission to appeal was granted.

The key issue was whether Master McCloud had decided a point of principle, namely whether the costs of a fee earner’s attendance at rehabilitation case management meetings are irrecoverable in law as costs of the litigation.

Only if the Master had decided a point of principle could the Court of Appeal interfere.

At the budgeting hearing Master McCloud disallowed some £52,000 of future costs because she concluded that these were not “incurred in the progression of litigation.”

This was a case involving significant traumatic brain injury and subsequent to the costs budgeting hearing had settled for an agreed lump sum of £5.6 million with an annual sum of £170,000 for care and case management.

The costs budget put forward by the Claimant totalled £1.8 million and ‘on any view’ the incurred costs of over £500,000 were high. Following court-ordered ADR on costs, the only phase in dispute was ‘Issue and Statements of Case.’

The Master’s decision

The issue was identified by Master McCloud as:

Whether “the inclusion of solicitor attendance time in the budget, for attending case management meetings with medical and other professionals in the course of management of the claimant’s rehabilitation needs, and for meetings with financial and court of protection deputies said to be part of inputting into a Schedule of Loss, are in principle costs which may be included in a budget and whether, if so, it is appropriate to include those in the ‘Issues Statements of Case’ phase of the budget on Form H”

Master McCloud looked at the ‘concept of costs’ and asked herself whether the proposed costs in relation to attendance at rehabilitation case management meetings were, in principle, “progressive of the litigation.” The Master concluded that they were not.

Importantly at the Master said at para 16 – “Thus, the (numerous) attendances of the sorts proposed here do not in my judgment progress litigation in this case. Note that I am not here saying that these costs are ‘unreasonable’ or ‘disproportionate’: those would be the tests I would apply if I were accepting that in principle they were ‘costs’ for the purposes of a budget in the first place.”

The Court of Appeal decision

There were a number of matters raised in the Court of Appeal that were given relatively short shrift as ‘obscuring’ the primary issue before them. Of relevance to practitioners is perhaps the confirmation that costs such as those of attending rehabilitation case management meetings are properly to be included in the ‘issue statement of case’ phase. Furthermore, the Court took the view that practice direction 3D10 was a wide provision to cover the whole of civil litigation and the assumptions set out there do not have statutory force, thus the absence of mention of such categories of costs within a section is not determinative of their recoverability.

Did the Master Decide a Point of Principle?

The Defendants position was that she did not. They relied on the fact that the Master had allowed something in the phase, which can only have been for the attendance at case management meetings, and the fact that various comments in her judgment suggested her primary concern was the proportionality of such costs.

In finding that the Master did decide a point of principle the Court referred to various parts of the judgment which supported the view that this is what the Master thought she was doing. The Court of Appeal were cognisant of the fact that the Master’s decision would be capable of citation as support for the principle that such costs are not recoverable costs.

This opened the door for the Court of Appeal to intervene.

Was the Master right?

The court identified the starting point for recoverability of costs in s.51(1) of the Senior Court Act 1981 “costs of and incidental to the proceedings” and the case of In re Gibson’s Settlement Trusts [1981] Ch 179 at 184F-G which set out three criteria summarised as: Utility, Relevance and Attributability.

The Court took the view that use by the Master of the term ‘progressive of litigation’ although possibly meant as shorthand for the utility criterion, was not helpful as there may be costs that cannot be said to ‘materially progress’ the litigation that are nonetheless recoverable under the wide words of section 51 (the Court citing for example the costs of attendance at an inquest).

So whilst the Master may have applied the wrong test, the real issue was whether the Master was right to say that “having a fee earner attending rehabilitation case management meetings…does not fall within the notion of ‘costs’.”

In reality, given the Claimant’s acceptance that challenge as to reasonableness and proportionality was open to the Defendant on assessment and the Defendant’s concession that the role of a legal representative can reasonably include costs for the purpose of furthering the claimant’s rehabilitation, the Court found that there was little between the parties.

These costs were found to be recoverable in principle for three reasons:

1. The Defendant had conceded that these costs could be recoverable subject to challenges on reasonableness and proportionality
2. The Guide to the Conduct of Case Involving Serious Injury and the Rehabilitation Code envisage the involvement of a solicitor in rehabilitation meetings and therefore indicate that as a matter of principle, this was a recoverable category of costs.
3. On the evidence, the Claimant’s solicitors’ involvement in rehabilitation has been beneficial to both parties and the Defendant has engaged in such meetings, thus suggesting that in principle this cost is recoverable.

“It would be wrong to decide that the costs of the solicitors’ attendance at rehabilitation case management meetings are always irrecoverable. Equally, it would be wrong for the claimant’s solicitor to assume that routine attendance at such meetings will always be recoverable. It will always depend on the facts [59]”

However the Claimant’s victory came with a large caveat. The Court of Appeal made it clear that the amounts claimed went well beyond the usual costs of reasonable liaison and warned that if the Claimant’s solicitor operated on the assumption that he was entitled to attend every routine rehabilitation case management meeting then he was wrong to do so.

The Court noted that a solicitor needs to keep an appropriate eye on the rehabilitation plans but that does not justify a default or blanket entitlement.

The Upshot

Although the appeal was allowed, the only real consequence was that the Defendant could take all the reasonableness and proportionality points it wanted to at the assessment stage, points with which the Court had sympathy.

The overall budget was ‘fair and reasonable’ and as such there was no need to send back for budgeting.

The judgment will be useful for Defendants in seeking to reduce budgeted costs for attendance at rehabilitation meetings, but it puts to bed any argument that such costs are not recoverable in law. Claimant solicitors can spend time progressing rehabilitation safe in the knowledge that such costs are recoverable as matter of principle, but they will need to be careful to ensure that such time can be justified on the facts of each case.

This blog was written by Andrew Roy, Deputy Costs Judge & Head of 12KBW’s Costs Team

Introduction 

CFA Lites are very common form of funding operation.  They are sometimes colloquially described as “eat what you kill” agreements.  They generally operate by capping the solicitors’ costs at those recovered from the opposing party.

However, the cap does not always apply.  Nearly all CFAs have clauses protecting the solicitor if the agreement ends before the litigation concludes.  The need for such protection arises because the solicitor’s fees are potentially at risk in litigation over which they no longer any control and into which they no longer have any input.

One of the most common such provisions is what in this case was called a “stick or twist” clause.  Such a clause entitles a solicitor, upon early termination, to elect either to claim their basic charges immediately (“stick”) or wait until the conclusion of the litigation and claim their basic charges and success fee if the client wins (“twist”).

Sellers v Simpkins [2023] EWHC 3296 (SCCO) (Sellers v Simpkins [2023] EWHC 3296 (SCCO) (20 December 2023) (bailii.org)) is salutary illustration as to how such a clause affects a CFA Lite cap. 

The facts

The claimant was injured in a road accident on 4 November 2014.  She instructed Simpkins & Co (“the solicitors”) under a CFA Lite.  The CFA adopted standard Law Society wording.  The relevant provision for present purposes were that:

• It contained a CFA Lite cap.
• The success fee was 0%.
• It contained a “stick or twist” clause in the following terms:

You can end the agreement at any time … you must:

• pay our basic charges and our expenses and disbursements including barristers fees but not the success fee when we ask for them; or
• pay our basic charges and our expenses and disbursements including barristers fees and success fees if you go on to win your claim for damages.

In March 2021, the Claimant terminated the retainer and instructed new solicitors, Fieldfisher.

The claim was settled at a joint settlement meeting in August 2021. The settlement was on a global basis inclusive of costs.

In November 2022 the solicitors delivered their bill to the Claimant.  It totalled £496,983.96, of which £48,000 had been paid on account, leaving a balance of £448,983.96.

In December 2022 the Claimant commenced proceedings for an order for the detailed assessment of the bill under s.70(2) Solicitors Act 1974.

The matter came before Senior Costs Judge Gordon-Saker for a preliminary issue hearing.  The main issue was whether the CFA Lite cap applied in light of the Claimant’s termination of the agreement.

The judgment

The judge referred to Higgins & Co Lawyers Ltd v Evans [2019] EWHC 2809 (QB); [2020] 1 WLR 141.  In that case it was held that a cap limiting the client’s liability to the solicitors (net of any costs paid by the opponent) to a maximum of 25 per cent of the damages received did not operate when the CFA was automatically terminated by the client’s death. 

Interpreting the ratio of Higgins, the Senior Costs Judge held that there was a distinction between the situation where the solicitor is entitled to payment before the claim had been concluded (when the overall cap would make no sense) and the situation where the solicitor waits to see the outcome. In the latter case, the overall cap would make sense.

He rejected the solicitors’ broad argument that the cap cannot apply where the client terminates the agreement before the case is won.  If the solicitor elects to wait for the outcome of the case and the claim succeeds (i.e. “twists”) when the agreement has been terminated before the case is won, there is no difficulty applying the overall cap.

However, the question remained as to whether in this case the solicitors had elected to “stick” or “twist”.

The solicitors did not make a clear and explicit election.  The fee earner stated “I shall seek payment of the costs and disbursements due as per the agreement term indicated above.” He later added “There is real risk my firm faces concerning the costs it has incurred. It is therefore entirely reasonable that now my firm is no longer instructed and risks apparent, the issue of costs owed to the firm must be resolved prior to the file transfer”.  They accordingly refused to hand over the Claimant’s files to Fieldfisher.

The Claimant contended that this was not sufficient to trigger the first bullet point in clause (a) (i.e. an election to “stick”). She argued that there had to be a demand for payment in the form of a bill which complied with s.69 Solicitors Act 1974.

The judge rejected this argument in the following terms:

36. I think that ignores the factual matrix. There was no advantage to elect to await the outcome of the case, or in Ms Bedford’s words to “twist”, because no success fee would be payable in the event of a win. It seems to me that while the [solicitor] did not “ask” for payment until he delivered a bill, in March 2021 he had exercised his right to decide that the Claimant must pay his basic charges, expenses etc without waiting for the conclusion of the claim. Effectively, he had said “I’ll stick”.

37. Had a success fee been payable under the agreement, in view of the emails, the [solicitor] would have had no prospect of arguing that he had exercised his election to await the outcome.

38. Following Higgins, the overall cap did not apply because the [solicitor] had elected to claim his basic charges before the case was won.

Takeaway Practice Points

Several important takeaway points emerge from this case:

• Clients need to aware of the potential consequences of early termination of a CFA, especially a CFA Lite.  They need to be aware that CFA Lite cap will not operate in all certain circumstances.
• It is vital to take into account the full extent of potential costs liabilities when considering an all inclusive settlement.  Whilst this point applies generally, it is particularly important where there is a CFA, as CFAs are generally not tailored to such settlements.  Various points arise here:
• Where there have been previous solicitors (or, for that matter, counsel), unless they have confirmed the extent of the costs they will be seeking, it may not be possible for the client to know how much damages they will ultimately retain. 
• Even where a CFA cap would otherwise be engaged, it is unclear whether and how it would work following an all inclusive settlement.  The solicitor in Sellers argued that the cap could not apply where there is no express costs recovery or ascertainable sum recovered in respect of costs.  In the event, the court did not have decide this argument.
• It is therefore highly advisable before offering or accepting any all inclusive settlement to agree with the client (and clearly record) a notional division of the damages and costs elements.  This at the very least reduces the risk of future disputes, complaints and the like.
• A solicitor should make it crystal clear whether they are electing to “stick” or “twist”.  Whilst the solicitors here won the point, it was an argument which they would have been better to have avoided entirely. They could easily have done so.
• When as here, there is a 0% uplift, there will never be any benefit in “twisting”.  The solicitor should always “stick”.  They may for practical reasons wish to await the conclusion of the claim before actively pursuing payment, but it should be made clear that this is without prejudice to their electing that the costs liability crystallises immediately.

Andrew Roy KC

5 March 2024