Newsletter – August 2022

“A solicitor, no matter how experienced or inexperienced, must be taken to know the Civil Procedure Rules” – HHJ Bird in Holterman v Electrium Sales Limited (2020) EWHC 3915 (TCC).

I speak about civil litigation for a living. It is therefore no surprise that I am a fervent advocate of continuing legal education, but my belief is genuine. There are other speakers out there anyway.

Each day I trawl through the latest decisions and I keep a close eye on Rule changes. The trial witness statement rules introduced into the Business and Property Courts last year generated immense introduction, such that on one exhausting Friday I did three talks back to back. Rather than talk in generalities, let me give you some real cases where knowledge (or lack of it) has made a significant difference.

• After the Jackson reforms of 2013 were implemented I gave a talk in Devon. During the tea break one delegate told me that he was running a defamation claim. He appeared confused when I told him how fortunate he was. He had not appreciated that one could still recover a success fee in reputation litigation and off he went to adjust his retainer. That meant in theory at least that his costs recovery was substantially enhanced.
• Solicitor Mark Griffin has loyally attended my talks for 20 years. In an employment talk I mentioned an unreported decision that held one could recover compensation for distress and hurt feelings caused by an unfair dismissal. A fortnight later he won such a claim. As he told me in a letter subsequently, he read out to the Tribunal my note and description of the decision. The Tribunal generously gave the claimant an extra £15,000. Mark was acting on a contingency fee and so received £5,000 with the client obviously getting the balance. He sent me a fabulous bottle of champagne but it was his letter of thanks that really thrilled me.
• The claimant pocketed a useful extra £1 million of costs in National Bank Of Kazakhstan v Bank of New York Mellon (2021) EWHC B7 (Costs). Having secured a costs order the claimant served a bill with notice of commencement stipulating that points of dispute had to be served by 5th January. None appeared and on the 6th the claimant applied for and obtained a default costs certificate. An apoplectic defendant demanded that it be set aside. Since the certificate was regular the only question for Master Rowley was to decide if there was ‘good reason’ for a detailed assessment to take place pursuant to CPR 47.12(2). He followed the threefold structure of the Denton test to determine the point. The failure to honour a time limit was serious, ‘oversight’ was not a good excuse and the assertion that the paying party expected to reduce the bill by $1.2m did not impress. If every default costs certificate could be overturned by an assertion that assessment would likely cut costs then the certificate would be rendered futile and would always be set aside. Master Leonard took an identical approach in Masten v London Britannia Hotel (2020) EWHC B31 where I understand that the claimant arguably recovered between £50,000 and £100,000 more than realistically might have been allowed had the bill been subject to detailed assessment.

Part 36 of the CPR, in particular, rightly generates much law. Last November I told the Master of the Rolls that this was a healthy sign. It demonstrated that lots of offers are being made.

A receiving party can expect to enjoy ‘a raft of enhancements’, as it was so eloquently put by the Court of Appeal in Calonne Construction v Dawnus (2019) Costs LR 309. This decision was codified by CPR reform last year. In that case, the offeror stipulated that interest on their Part 36 offer was to accrue from the end of the relevant period: ”The Settlement Sum is inclusive of interest until the relevant period has expired. Thereafter, interest at a rate of 8% per annum will be added.” The 2022 White Book (at page 1286) recommends the use of such a clause so as to provide protection against late acceptance of an offer which could be very late indeed. Here is an example of how this could make a significant difference in practice.

• In Telefonica v Office For Communications (2020) EWCA Civ 1374, the claimant had bettered its offer by £4.5m or 9%, yet received no more interest than would have been payable had it made no offer at all! It would be highly unusual for the Court to grant some benefits but to withhold others. Indemnity costs and an additional £75,000 was said to be “an almost trivial uplift and any significant enhancement in overall relief would only have been achieved by the award of additional interest on the principal sum”, which was £54m (paragraph 42). The Judge was found to be in error by regarding the award of two trivial enhancements as justification for not awarding the major enhancement: uplifted interest. The Appeal Court corrected the omission and so Telefonica gained a useful extra £900,000. Interest at up to a maximum of 10% above base is the most lucrative reward in high value litigation. Incidentally, the White Book commentary at paragraph 36.5.2 strongly recommends use of the court form to make offers.

The CPR are long, far too long says Sir Geoffrey Vos MR. It is a tall order, but you need to keep abreast of developments, of which there are so many.

Professor Dominic Regan