You wait ages for an interesting legal costs decision from the Court of Appeal and then two come along together.
In the event, this decision was not decisive to the outcome of the detailed assessment and I still managed to comfortably win on the Defendant’s offer. However, I was left with the strong feeling that the judge was wrong but unable to identify quite where he had gone wrong. The best I was able to do was note that the heading to the section listing the documents to be served is worded: “Commencement of detailed assessment proceedings”. Common sense therefore suggests that the timing for service of the documents is at the same time as commencement of the detailed assessment proceedings (ie when the bill and notice of commencement is served, as per CPR 47.6).
Before travelling to the hearing I had put in my briefcase a copy of a judgment I had come across on Lawtel that looked interesting. I didn’t have a chance to read this on the day of the hearing. You can imagine how annoyed I was when, a few days later, I got around to reading the judgment only to discover it was exactly the case I needed.
Where a claimant has picked up one or more costs orders in its favour on the way to a trial, but fails very badly at the trial (for example due to exaggeration), can the costs judge assess those costs at nil on the footing that they were not, as it turned out, reasonably incurred because they had been incurred in an action that sought an exaggerated sum which should never have been claimed? No, according to Business Environment Bow Lane Ltd v Deanwater Estates Ltd  EWHC 2014 (Ch).
The recent case of Ahmed v Aventis Pharma Ltd  EWHC 9052 (Costs) dealt with two small issues but both ones of interest.
Firstly, following the decision in Crane v Canons Leisure Ltd [2007 EWCA Civ 1352, where solicitors outsourced the job of sorting and summarising medical records they could treat this work as forming part of their profit costs rather than being treated as a disbursement, and thereby make a profit on this work.
The second issue considered whether photocopying charges were recoverable. CPD 4.16(5) states: “The cost of making copies of documents will not in general be allowed but the court may exceptionally in its discretion make an allowance for copying in unusual circumstances or where the documents copied are unusually numerous in relation to the nature of the case”.
Master Gordon-Saker dealt with the matter in this way: “Photocopying charges will generally only be allowed where they are exceptional, otherwise they are considered to fall within the solicitor’s overhead. To my mind what is exceptional will have to be measured by the facts of the particular case. In a case where the profit costs are less than £7,000 it would be unusual to see the generation of 2,540 photocopies. Accordingly I would view this as exceptional and allow the sum of £154.80 claimed as a disbursement”. This is no doubt correct. What might be considered exceptional in a low value matter may not be exceptional in a substantial piece of litigation.
Under the, now revoked, CFA Regulations 2000 there was a duty to advise a client whether the legal representative considered that the client was insured under an existing contract of insurance (BTE) before the CFA was entered into (Regulation 4(2)(c)). Failure to do this would render the CFA invalid.
Since the Court of Appeal decision in Sarwar v Alam  EWCA Civ 1401, if not before, it has been common knowledge that motor policies commonly contained BTE cover available for the benefit of passengers, even if the potential claim is against the insured driver. Therefore, failure to consider whether a passenger may have the benefit of BTE cover available through the defendant driver may amount to a breach of the Regulations.
A subtle variation of this issue arises where the claimant was a passenger on a bus and the accident was caused by the negligence of the bus driver. It has been common, for a number of years, for such BTE cover to also be attached to bus companies’ motor insurance.
There have now been a number of decisions covering this issue and exploring whether a failure to make appropriate enquiries of the defendant bus company as to whether such cover was available would invalidate the CFA.
In Cochrane v Chauffeurs of Birmingham (Central London CC) 22/6/07, Donaldson v Four Square Coach Company (Huddersfield CC) 11/6/07 and Robinson v Doselle (Milton Keynes CC) 19/12/05 the courts held on each occasion that there had been a material breach of the Regulations.
The one case that went against the flow was the decision of Master Rogers in Dole v ECT Recycling Ltd  EWHC 90086 (Costs). In that case the Claimant’s solicitors put forward witness evidence that stated: “I confirm that as at the date when the CFA was signed in this case (15/07/2004) it was not common knowledge that the bus companies would have been covered by Before the Event Legal Expenses insurance which would have been available for passengers to sue the bus company for the negligent driving of its own drivers”. The Defendant did not put forward any evidence to counter this claim. Master Rogers held: “I accept the clear conclusion from Mr Bennett’s uncontradicted evidence that the state of knowledge of solicitors specialising in this field in the summer of 2004 was not that the defendants to a claim of this nature might have passenger cover, and in particular that such cover would be dealt with independently of any claim made against them by the passenger.” He therefore concluded that the reasonable enquiries that a solicitor was expected to undertake would not have extended to considering whether BTE cover was available in this situation as they would not have known such cover might be available.
The latest decision on this issue is that of Tranter v Hansons (Wordsley) Ltd  EWHC 90145 (Costs). The Claimant’s solicitors produced a witness statement that stated: “I confirm that as at the date when the CFA was signed in this case (14/04/05) and based on my experience in the personal injury field, it was not common knowledge in the industry that a bus company would have applied Legal Expenses Insurance to the passengers on a bus to sue itself”.
Master Wright nevertheless concluded: “In my judgment the Defendant has raised a genuine issue and I consider that the Claimant’s solicitors in this case have failed to comply with Regulation 4(2)(c) of the CFA Regulations 2000. Whether or not it was common knowledge in the industry at the date the conditional fee agreement was signed that a bus company would have applied legal expenses insurance to the passengers on a bus to sue itself, it certainly was common knowledge that motor insurance policies frequently provide insurance cover for passengers to enable them to sue the driver. This is clear from Sarwar v Alam where the judgment of the Court of Appeal was given in 2001. In my judgment there is no justification for making a distinction between private motor insurance policies and insurance policies taken out by the operators of public vehicles such as buses. … In the present case the Claimant’s solicitors knew (or ought to have known because of the Court of Appeal’s decision in Sarwar) that private motor insurance policies often contained provisions which protect passengers. They ought also to have anticipated that in the case of public vehicles (such as buses) there could be similar provisions in the insurance policies taken out by the operators of such vehicles. They should have taken reasonable steps (a letter or two would have sufficed) to enquire. However they did not do this”.
Many years ago, when I was studying for my law degree, I was told never to simply rely on the headnote of a law report, but to read the judgment in full. This was for two reasons. Firstly, it was often only by reading the full judgment would one properly understand the decision and the reasoning behind it. Secondly, and perhaps more importantly, the headnote was sometimes inaccurate and misleading. Of course, at the time, I ignored that advice.
The modern equivalent to that advice is never trust case summaries you have simply read on the internet (this blog included) but to actually read the full judgment yourself.
A perfect example of the problems that arise from not following this advice is the strange case of Cole v News Group Newspapers Ltd (18/10/06, SCCO, unreported). I say “strange” because of the way this case has been reported. The background to the judgment was a libel claim brought by a certain well known footballer. I don’t need to repeat the salacious details of the original story, but I’m sure Ashley would be intrigued to discover this case has become best known in certain circles as a legal costs law authority rather than for the original allegations.
A quick Google search for “Cole v News Group” produces a number of legal websites offering case summaries of this judgment. They all appear to be inaccurate. I say “appear” because the difficulty with this case is it truly does seem to be unreported and is not available on any of the normal resources such as Bailli or Lawtel. This seems to have encouraged a number of individuals to pass on details of this case on a Chinese whispers basis without actually obtaining and reading a copy. Further, a growing number of claimant costs draftsmen routinely quote this case to resist requests for disclosure of CFAs. It may be that the transcript of the case that I have seen is not the final decision and that a further decision exists. If that is the case, and any reader can produce a more recent decision, I will happily write a further post on the subject.
Of the various case summaries that do exist on the internet, three of them refer to this being a decision of Master Haworth in the SCCO. Two of those give the date of the judgment as being February 2007. The third states it is a decision of the Court of Appeal in February 2007. All the summaries seem to suggest that the Court (whichever Court it was) held that a court would not order disclosure of a CFA unless the paying party had first raised a “genuine issue”. I don’t propose in this post to address what the law actually is on that point.
So what did the judgment actually say? I believe the summary in Cook on Costs 2009 provides a true account of the decision (if not the law): “With the removal of the [CFA] Regulations from 1 November 2005 a CFA needs only to be in writing and signed but that did not stop an application for disclosure in Ashely Cole v News Group (2006) Oct 18 SCCO. That application failed simply because no points of dispute had been served hence CPR 47.14 and CPD 40.14 did not apply. No decision was made as to the applicability of Hollins to post 1 November 2005″.
The transcript I have is dated 18 October 2006 (the same as the one quoted in Cook on Costs) and I am therefore proceeding on the basis that it is indeed the only judgment made in this case on that point. Cook on Costs’ summary is accurate. The application was dismissed simply on the basis that it was premature. There is absolutely no mention of “genuine issue” in the judgment, let alone any finding on this point. Indeed, the judgment concludes that when the matter comes back to the Court for the detailed assessment hearing “it may very well be that at that stage a disclosure of the CFA is appropriate”.
So my advice, particularly to any claimant law costs draftsmen reading this blog, is obtain and read the actual judgment in this case before seeking to rely on a decision that does not actually support your position.
I’ll come back to why Cook on Costs was wrong on the law on another day.