This month’s costs cases summaries: capacity, part 36 and statements of truth

The bar for challenging a costs order is high

Our monthly summary of key costs-related court decisions is provided by CaseCheck

Webb Resolutions Ltd v E-Surv Ltd [2014] EWHC 49 (QB)

Appeal against grant of an out-of-time application to appeal an order for costs.

Appeal allowed. Held: Although the power of the court to revisit a permission decision of a single judge made in the absence of one of the parties following a renewed application should be exercised sparingly (per Jolly v Jay [2002] EWCA Civ 277), under CPR 52.3(5) a defaulting party seeking an extension of time for a renewed application for permission to appeal must satisfy the same tests applied in Mitchell.

In the present case, the judge had granted permission on the mistaken impression that there was a causal connection between the delay in receiving notice that permission had been refused and the applicant’s default of CPR 52.3(5), when the default was in fact blatant and avoidable.

Full ruling here.

Blankley v Central Manchester and Manchester Children’s University Hospitals NHS Trust [2014] EWHC 168 (QB)

Costs appeal raising the issue of whether supervening incapacity automatically terminates a solicitor’s contract of retainer.

Held: Although an agent’s authority terminates automatically upon the mental incapacity of their principal (subject to ostensible authority or liability for breach of warranty), loss of capacity does not, in itself, have the legal effect of frustrating or otherwise terminating an underlying contract of retainer. Findley v Barrington Jones [2009] EWHC 90130 (Costs) based on a misreading of Yonge v Toynbee [1909] 1 KB 215 and without regard to the doctrine of frustration.

Appeal allowed. The loss of capacity did not frustrate the conditional fee agreement. Defendant’s application to strike out the claimant’s bill of costs dismissed.

Full ruling here and Litigation Futures story here.

Taylor v Burton & Anor [2014] EWCA Civ 21

Appeal against, inter alia, an overall costs order, which included amendment costs where the successful party had been granted the amendment and costs of an interim injunction.

Held: The general rule is that those who obtain permission to amend are ordered to pay the other parties’ costs of and occasioned by the amendment.

An order providing that a party will recover the costs of an interim application only if they satisfy a costs condition, such as success on an issue relating to that order, must be drafted with precise care. Where the language of the order is imprecise, it must be interpreted against the context of the particular dispute. Where the condition is not satisfied, the parties should be left to bear their own costs.

The hurdle for challenging a costs order is high. An appellate court will only be justified in interfering if there has been a misdirection in principle, a failure to take into account or disregard a factor, or the judgment falls outside the range of reasonable disagreement.

In the present case, the judge was innocently in error by including the amendment and interim application costs.

Successful party to bear the amendment costs. Parties left to bear their own costs of the interim application on the basis that the costs condition was not satified. With hesitation and relucatance, the court could not re-consider the overall costs order. The trial judge’s decision was not irrational and he correctly addressed himself to the relevant matters.

Full ruling here.

Rehill v Rider Holdings Ltd [2014] EWCA Civ 42

Appeal against refusal to apply the costs consequence of failing to beat part 36 offers in a settled personal injury claim.

Appeal allowed. Held: When deciding whether the costs consequences of failing to beat a part 36 offer should apply, the court must assess whether it was reasonable to reject the offer, having regard to the information available to the parties at the time the offer was made (per CPR 36.14(4)(c)).

In the present case, the Recorder overlooked agreed medical evidence and failed to evaluate whether an uncertain prognosis justified the financial value of the claim. Respondent ordered to pay costs from his rejection of an earlier offer. Appellant ordered to pay costs of any detailed assessment of the appeal due to a failure to file its costs schedule.

Full ruling here.

The Bank of Ireland & Anor v Philip Pank Partnership [2014] EWHC 284 (TCC)

The issue was whether a failure to include a full statement of truth in a costs budget breached CPR 3.13.

Held: There is nothing in the rules or practice directions which requires any and every failure to comply with the formal requirements for budgets as rendering the budget a nullity. Although the absence of a statement of true is not trivial, it is a failure of form rather than substance.

In the present case, the claimant had filed and exchanged a costs budget on time, which was subject to an irregularity subsequently rectified.

Full ruling here and Litigation Futures story here.

Bocacina Ltd v Boca Cafes Ltd & Ors [2014] EWHC 26 (IPEC)

Costs judgment following a finding of passing off in the Intellectual Property Enterprise Court (IPEC).

Held: In the IPEC, litigation only over costs is not to be encouraged. The court must strike a balance between providing a fair level of recovery for meritorious claimants while encouraging early resolution of proceedings without a trial. As such, significant account will be taken of reasonable admissible offers to settle when determining costs.

Where an offer omits an aspect of relief or costs that is insignificant, a claimant who successfully takes that issue to trial should not expect to recover the full costs of doing so.

Equally, if an offer has been made which does not provide for costs, following an indication that the claim is likely to succeed, it is more incumbent on a defendant to make a sensible offer which includes costs if they are to avoid payment of a substantial sum.

In the present case, the majority of costs were incurred after an offer was made. Claimant awarded 100% of costs incurred prior to the offer, 50% thereafter. None of the defendants’ costs were recoverable.

Relevant factors included: that the claim was meritorious; the defendants made a reasonable offer covering substantially all of the relief realistically obtainable at a relatively early stage; following the offer, the case largely became about costs; despite the offer, the defendants continued to deny liability; and that the claimant abandoned a challenge that changes made by the defendants were insufficient to avoid liability.

Full ruling here.


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