High Court bids to minimise delay in bitter costs dispute between solicitors

Rolls Building: master grants disclosure

Rolls Building: master grants disclosure

A High Court master has rejected an application from a Leicestershire solicitor for trial of a preliminary issue in a costs claim involving another law firm, citing the “high degree of personal animosity between the parties”.

The dispute between EMW Law, a commercial firm based in Milton Keynes, and Scott Halborg over EMW’s claim for unpaid agency fees had already resulted in two appeals at the Senior Courts Costs Office (SCCO).

In EMW Law LLP v Halborg [2016] EWHC 2526 (Ch), Mr Halborg, through his firm Halborg Limited, entered into a conditional fee agreement (CFA) in 2008 with his parents for litigation against architects for negligent advice in relation to a property development scheme at their home.

Mr Halborg contacted EMW to carry out legal work on his behalf as agents. He entered into a CFA with EMW, under which the firm would be paid provided that its costs had been recovered in full from the defendants in the substantive claim.

EMW’s agreed hourly rate was £300 and the success fee was 95%; it claimed 180 hours for working on the case.

Mr Halborg and his parents accepted a part 36 offer of £350,000 from the architects, which amounted to a ‘win’ under the CFAs. He prepared a bill of costs totalling £1.36m plus interest, including a claim for costs totalling £123,590 for ‘agency charges’.

However, Berrymans, acting for the architects, argued that EMW’s work was “entirely duplicative” of Halborg Limited’s and offered nothing for it.

EMW then wrote directly to Berrymans, withdrawing Mr Halborg’s authority to negotiate costs on its behalf and offering to accept £65,000 plus VAT for its costs.

Mr Halborg claimed this was a repudiatory breach of contract that disentitled EMW from any payment for its costs from the architects.

EMW’s case was that Mr Halborg settled the claim for costs in the substantive claim – which he denies – and in breach of contract had neither provided it with details of that settlement, nor paid it.

In this hearing, EMW applied for specific disclosure of documents relevant to the costs claim, while Mr Halborg sought a preliminary trial to determine whether there were the various implied terms around payment in the CFA that EMW contended.

Mr Halborg opposed the application for disclosure, citing privilege, although the only substantive reason given was that it could potentially release the documents into the public domain.

Master Clark said there was only one way in which the claimants and defendants to the substantive action – whose joint privilege it was – could be prejudiced by the disclosure.

“This could occur if (as the defendant asserts) there has been no settlement of the costs of the substantive claim; and the privileged material was put into the public domain by being referred to in open court. It would then be available for use in any assessment of costs of the substantive claim.

“However, this could be prevented by the court making directions under CPR 31.22 preventing further use of documents referred to in open court; or, if necessary, directing that the public are excluded from the relevant part of the hearing. So far as use by the claimant himself is concerned, he would be subject to the implied undertaking provided for by CPR 31.22(1).

“For this reason, I do not consider that there is any public policy justification for withholding disclosure of these documents from the claimant provided safeguards are put in place to prevent their release into the public domain.”

On Mr Halborg’s application for a preliminary trial, Master Clark noted that the Court of Appeal had “warned on a number of occasions of the risks of delay and increased costs resulting from trial of preliminary issues, particularly in complex cases”.

He went on: “This is a case with a high degree of personal animosity between the parties which, as mentioned above, has already gone to a second appeal in the SCCO proceedings. The parties were unable to agree even case summaries for the case management conference.

“The prospects of their being able to agree a statement of facts or even what facts are relevant to the trial of the preliminary issue are effectively nil…

“This is also a case, where on the basis of past proceedings, the losing side in the issue is likely to appeal, resulting in further delay. A further factor is the relatively low value of the claim, namely £123,590.23.

“It is a claim which should be resolved as quickly and cost effectively as possible and two trials are inevitably more expensive than one. Ordering a preliminary issue in this case is in my judgment likely to cause delay and increase costs.”

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