Recoverability of agent fees… the battle goes on by Andi Barnes

Article taken from the January 2019 issue of the Liverpool Law Magazine. View the complete magazine here.

Andi Barnes of Complete Counsel examines recent costs cases and the recoverability of agent fees

The costs world no doubt hoped, following the Supreme Court decision in Crane v Canons Leisure Centre Limited [2007] EWCA Civ 1352, for a definitive binding precedent on the issue of recoverability of external agents’ fees as a base cost whether with or without a pre-LASPO success fee. Indeed, a plethora of costs case law was cited and the matter carefully considered with May LJ proclaiming his distaste for the unsavoury flavour of “satellite costs of assessing those costs in the Part 8 proceedings begun for that purpose” and Hallett LJ carefully addressing any potential breach of the indemnity principle and finding none.

However, it appears that the battle goes on with paying parties continuing to dispute recoverability of external agents’ fees as a base cost and/or recoverability of a pre-LASPO success fee. The problem appears to have arisen having regard to the starting point cited by May LJ in Crane; the definition of base costs given in the Collective Conditional Fee Agreement (CCFA). The Supreme court held the external agents’ fees of Costings Limited was work that a solicitor would have been retained to undertake and amounted to base costs suitably incorporated within the CCFA as “charges for work done by or on behalf of the solicitor which would have been payable if this agreement did not provide for a success fee”. Furthermore, the Supreme Court allowed a pre-LASPO success fee on such costs.

In Guy v Morpeth Borough Council (2006) Case 4ML01218, 9 December 2006 (cited in Crane) HHJ Hewitt held the issue turned “on the terms of the CFA and its proper construction” and considered not only the wording of the CFA but also any other terms and conditions that were said to be to be incorporated into that agreement on the definition of basic charges. He held that costs draftsman’ work was not recoverable as a base cost as it did not fall within the definition of “solicitor agent” in the CFA and therefore a pre-LASPO success fee was disallowed.

In Ahmed v Aventis Pharma Limited [2009] EWHC 90152 (Costs), Master Gordon- Saker, in the detailed assessment of costs to be paid by the Legal Services Commission, considered whether work done by a medical records agency, Medical Clerical Bureau (MCB), could be recovered as a base cost or disbursement. He was satisfied that, work done by MCB sorting and summarising medical records was solicitor’s work and therefore recoverable at a higher rate than the sum charged to the solicitor on the basis that “the work done by MCB to sort and analyse the medical records was solicitors’ work”. In Ahmed it was accepted that pagination was not fee earner work and photocopying was a disbursement with charges for photocopying recoverable where they held to be exceptional. The issue of whether a success fee was recoverable did not arise.

The matter of recoverability of MCB’s fees was further explored in CM (as
Dependent and Administratrix of the Estate of JM, Deceased) v a NHS Trust (2018) Case SCCO Ref: BRO 1801402, 5 December 2018 where I appeared for the Defendant paying party; a detailed assessment of costs concerning recoverability of MCB’s work as a base cost together with a pre-LASPO success fee. The matter was initially listed for detailed assessment on 12 June 2018 with the success fee having been assessed at 60% but was adjourned, part-heard, by Order of Master Brown for further evidence and skeleton argument “as to recoverability of sums claimed in respect of the work undertaken in respect of medical records by ‘MCB’ as profit costs and in particular as to whether such work may be charged as if undertaken by a fee earner and, further, as to whether a success fee is recoverable in respect of the same work”.

The Defendant put the Claimant to strict proof that MCB’s work was a base cost properly recoverable under Shoosmiths solicitor’s CFA. The Master was asked to consider, in essence, three questions; 1) Was the work undertaken by MCB a base cost or disbursement? 2) If any of the work was held to be a base cost, could a success fee be recovered on such costs? and, in the event that the work was considered to be a base cost, 3) What hourly rate should such work be recoverable if incorporated into the CFA? Such questions were framed against the background of whether there was breach of the indemnity principle and having regard to the new test of proportionality; MCB having been instructed after the implementation of LASPO.

The Master considered the wording of the CFA; in particular the definition given under various sections of that CFA including ‘paying us’, ‘basic charges’, how charges are calculated in particular with the use of the words “and other staff ” and under charges for advocacy. The Master approached the issue effectively in two parts. First, whether the MCB work could be considered as a base cost recoverable within the terms of the CFA and second, whether there was breach of the indemnity principle. In giving an extempore judgment whilst he considered some of the work undertaken by MCB could be considered to be solicitor work that on consideration of the terms of the CFA and its proper construction, having regard to the indemnity principle, he could not be satisfied that the wording of the CFA incorporated MCB’s work as a base cost. He was not therefore satisfied that such work could be recovered as a base cost within the terms of the CFA and therefore a pre-LASPO success fee could not be recovered on such work. The Master did not find pagination and photocopying solicitor’s work but held that sorting and analysing records was solicitor’s work.

It appears therefore that the battle goes on, however, against the backdrop of the Supreme Court having already expressed a marked distaste for such satellite costs on costs.

View the full issue here

Charles Feeny to speak at two major events this summer

Charles Feeny will be speaking at two major events in London in the coming weeks.

Charles Feeny

On 26 June, Charles has been invited to speak at a seminar organised by leading insurance firm BLM at their London office. The seminar will focus on industrial disease and Charles has been asked to address the issue of date of knowledge in mesothelioma claims.

Charles has appeared in a number of the leading cases in this area of law, most recently Bussey v Anglia Heating. The implications of the Court of Appeal Judgment in Bussey are still being assessed and further litigation in this difficult and emotive area can be anticipated.

On 5 July, Charles will speak at and moderate a session on lesson-learning in self-harm and suicide claims in the context of mental illness. This follows his instruction in a number of cases against NHS Trusts in this area.

The event is a national conference at the Institute of Child Health in London organised by NHS Resolution under the title of “Mental Health Matters – Leaning from the Frontline”. The conference represents part of NHSR’s ongoing commitment to improve standards of patient safety, including by reference to lessons learnt from litigation.

Speaking at these events is consistent with Charles’ commitment to education, training and debate in relation to legal issues. He focuses his activities in this area on the website Pro‑VIDE-Law.

>>> Download flyer for ‘Mental health matters – Learning from the frontline

>>> View information for the Occupational Disease Seminar

Complete Counsel featured in latest edition of Liverpool Law

The latest edition of Liverpool Law is now available to access and Complete Counsel make an appearance on page 29.

View the complete issue or or by clicking on the image below.

“Honesty is for the most part less profitable than dishonesty.”

James Byrne, Barrister

Article by James Byrne

Though this truism was scribed by Plato around 380 BC in his seminal work on justice, ‘The Republic’, little has changed.  Fraudulent personal injury claims are a booming business.  You only have to open the tabloid press on any given day and you are likely to see the photograph of a smiling sun-tanned holidaymaker posing by a large plate of seafood with a headline above it informing that that ne’er-do-well will be spending 18 months at Her Majesty’s Pleasure for fraudulently claiming gastroenteritis whilst in Corfu.

Legal background

Prior to the coming into force of section 57 of Criminal Justice and Courts Act 2015, if a Defendant suspected that the claim they were defending was fraudulent they had to rely on CPR r3.4(2) (b) or the court’s inherent jurisdiction to have the claim struck out as an abuse of process.  Where the claim was founded on an obvious falsity such as an RTA where CCTV showed it did not actually happen this was relatively straight forward, but what about cases involving exaggeration?  Convincing a Judge that an exaggeration claim should be struck out for fraud was a herculean task.

The reason for this was outlined in Summers v Fairclough Homes Ltd [2012] 1 WLR 2004 where the Supreme Court commented; first, that such an application should only be granted as a last resort because it was a draconian step that would deprive a claimant of a substantive right to a fair trial; second, if fraud was found then Judges could account for it in their assessment on liability and quantum in the ordinary way; and third, there were other ways to punish and/or deter claimants for making fraudulent claims such as: orders for costs, reduced interest, proceedings for contempt and criminal charges.

Section 57:

(1) This section applies where, in proceedings on a claim for damages in respect of personal injury (“the primary claim”)

(a) the court finds that the claimant is entitled to damages in respect of the claim, but

(b) on an application by the defendant for the dismissal of the claim under this section, the court is satisfied on the balance of probabilities that the claimant has been fundamentally dishonest in relation to the primary claim or a related claim.

(2) The court must dismiss the primary claim, unless it is satisfied that the claimant would suffer substantial injustice if the claim were dismissed.

(3) The duty under subsection (2) includes the dismissal of any element of the primary claim in respect of which the claimant has not been dishonest.

(4) The court’s order dismissing the claim must record the amount of damages that the court would have awarded to the claimant in respect of the primary claim but for the dismissal of the claim.

(5) When assessing costs in the proceedings, a court which dismisses a claim under this section must deduct the amount recorded in accordance with subsection (4) from the amount which it would otherwise order the claimant to pay in respect of costs incurred by the defendant.

The section came into force on 13 April 2015, and was the Parliamentary response to the fear that lying, through seriously false claims, undermined the administration of justice in the eyes of the public.  In drafting the legislation in the way that it did, Parliament specifically rejected the former line of jurisprudence, that it is in principle more appropriate to penalise a fraudulent claimant as a contemnor than relieve the defendant of what the court has held to be a substantive liability (Lord Clarke in Summers at §61).

Instead, though severe, the language of s.57 provided “[95]…that in a case where such a claim has been exaggerated by a “fundamentally dishonest” claimant, the court is to dismiss the claim altogether, including any unexaggerated part, unless satisfied that substantial injustice would thereby de done to him… [96]  Severe as the rule is, these considerations demonstrate that there is  no occasion to depart from its very long-established status in relation to fraudulent claims, properly so called… Nor can there be any room for the rule being in some way limited by consideration of how dishonest the fraud was, if it was material in the sense explained above, that would leave the rule hopelessly vague” (Versloot Dredging BV v HDI Gerling Industrie Versicherung AG [2017] AC 1 §95-95).

‘Fundamental Dishonesty’

The key words in the section are “fundamental dishonesty”.  Unhelpfully, nowhere in the section, nor the statute for that matter, did Parliament seek to define what fundamental dishonesty actually means in respect of this Act.  It was not an unfamiliar term however.  With the introduction of qualified one-way cost shifting (QOCS), CPR r44.14 had introduced the phrase as part of an effort to deny the fraudulent claimant protection from defendant costs.  Within the body of case law dealing with this subject matter, the case of Howlett v Davies [2017[ EWCA Civ 1696 cited with approval the County Court judgement of His Honour Judge Moloney QC in Gosling v Hailo (29 April 2014) stating that the phrase had to be interpreted purposively and contextually so that it distinguished between two level of dishonest: dishonesty which was not fundamental (QOCS would still apply), as opposed to dishonesty which was fundamental (QOCS dis-applied).  In particular, at §45, HHJ Moloney QC stated “The corollary term to ‘fundamental’ would be a word with some such meaning as ‘incidental’ or ‘collateral’.  Thus, a claimant should not be exposed to costs liability merely because he is shown to have been dishonest as to some collateral matter or perhaps as to some minor, self-contained head of damage.  If, on the other hand, the dishonesty went to the root of either the whole of his claim or a substantial part of his claim, then it appears to me that it would be a fundamentally dishonest claim: a claim which depended as to a substantial or important part of itself upon dishonesty.”

There is, however, a clear distinction between the wording of s57 and CPR r44.16 (aside from the amount of costs to be recovered).  This rule states that the court must be satisfied that the ‘claim’ is fundamentally dishonest, whilst in s57 it is the claimant. In practical terms whether this makes a difference remains to be seen, only in the most limited of circumstances would a situation arise where a claim would be found to be fundamentally dishonest without the same finding being made against the claimant.

Developing a model for s57

It was only in December 2017 (judgment released in January 2018) that the High Court gave guidance on the provisions of s57 ‘fundamental dishonesty’.  In London Organising Committee for the Olympic and Paralympic Games (in Liquidation) v Sinfield [2018] EWHC 51 (QB), Mr Justice Knowles ruled that a volunteer injured whilst working at the London Olympics had exaggerated his special damages by creating a fictitious £14,000 claim for gardening assistance that represented 28% of the whole of his claim (42% of his special damages claim), and that the exaggeration was one which was fundamentally dishonest.  Giving general guidance Mr Justice Knowles set out the following principles:

  • Dishonesty is to be judged according to the test set out by the Supreme Court in Ivey v Genting Casinos Limited (t/a Crockfords Club) [2017] UKSC 67).
  • It was for the defendant to prove on the balance of probabilities that the claimant has acted dishonestly in relation to the primary claim and/or a related claim, and that he had thus substantially affected the presentation of his case, either in respect of liability or quantum, in a way, judged in the context of the particular facts and circumstances of the litigation.
  • By using the formulation ‘substantially affects’ he intended to convey the same idea as the expressions ‘going to the root/heart’ of the claim.
  • An argument that the greater part of the claim was honest would be irrelevant for the purposes of fundamental dishonesty; as long as the dishonest head of loss was not peripheral, the entire claim would be struck out.
  • In potentially affecting the defendant’s liability in a significant way, by ‘in the context of the particular facts and circumstances of the litigation’ he meant that the dishonesty should be judged against the value of the claim, not the wealth of the defendant.
  • In respect of the approach of the court to hearing such an application it was suggested:
  • First, the court would need to consider whether the claimant was entitled to damages.  If not, that would end the matter subject to CPR r44.16 arguments.
  • Second, if the answer was yes, the court would need to determine whether the defendant had proved, to the civil standard, fundamental dishonesty.
  • Third, if yes, then the court must dismiss the claim unless the claimant would suffer substantial injustice if the claim were dismissed.
  • Substantial injustice must mean more than the fact the claimant would lose his damages for those heads of loss that were not tainted by dishonesty, and if it arises it will normally be as a consequence of the loss of those damages.

Hopefully, now armed with Mr Justice Knowles’ guidance, defendants can have confidence that where they have evidence of a fundamentally dishonest claimant they will more likely than not be spared the upfront cost, time and effort of having to settle matters at trial.

2018 Social History of Medicine Conference

Charles Feeny has been invited to speak at the 2018 Social History of Medicine Conference
“Conformity, Resistance Dialogue and Deviance in Health and Medicine” at the University of Liverpool in July 2018. Charles Feeny will be participating in a round table discussion on Primodos chaired by Jesse Olszynko-Gryn of the University of Cambridge. Primodos was a hormone based pregnancy testing drug used in the 1960’s and 1970’s .

A Group of parents whose children suffered birth defects after the use of Primodos have resolutely campaigned for the manufacturers Bayer Schering and the Government to accept the damage caused by Primodos and the failures in transparency and regulation that led to the drug not been withdrawn sooner. Charles has been retained to advise the parent group.

The Primodos case is attracting considerable publicity and widespread support from members of parliament. Recently the Health Minister, Jeremy Hunt, announced that there would be a review of the regulatory issues raised by history of Primodos.

Other participants at the round table discussion include Jason Farrell of Sky News who has campaigned for transparency in relation to Primodos, Maria Lyon, leader of the victims group, and Dr Neil Vargesson of the University of Aberdeen who is undertaking ground breaking research which it is hoped, with appropriate financing, will finally prove the link between Primodos and birth defects.

The conference is to be held in July and further details of the conference and workshop will follow in due course.

Contribution and Apportionment: Unruly Horses? An article by Charles Feeny and Sam Irving for PI Brief Update Law Journal

25/01/18. “Public policy is a very unruly horse, and when once you get astride, you never know where it will carry you.” These oft repeated words were those of Borough J in Richardson v. Mellish in 1824 and are the first reference to the much repeated maxim, that resorting to public policy is equivalent to mounting an unruly horse. The expression has been used in the law of tort in other contexts too, most recently in Lumba v. Secretary of State for the Home Department…”

To read the full article visit the PI Brief Update Law Journal

Andrea Barnes finds Complete solution to costs practice

Leading costs lawyer and former head of costs at Clerksroom has decided to use Complete Counsel to manage part of her costs practice.

Complete Counsel is a business offering targeted support for barristers on a contractual basis. Barristers can use its services as a sole Practitioner or whilst remaining a tenant at existing chambers.

Andrea said ‘I was recommended CC by Michelle Fanneran, another cost specialist and was curious to see if such a business would work for me. After a short trial period I found the service swift, appropriate and value for money. I am happy to have found such a good home for some of my specialised costs work, particularly in the Midlands and North West of England.’

Claire Labio, Practice Director Of Complete Counsel commented, “Andrea is very much in the mould of a barrister who will benefit from using our service. She is a specialist with a resourceful approach. She is clear in her expectations and we believe we can meet those.”

Andrea will continue to practise from 218 Strand Chambers in London.

Complete Counsel sponsor the Women Lawyers Merseyside Annual Charity Quiz

Complete Counsel are proud to sponsor the Women Lawyers Merseyside Annual Charity Quiz.

All proceeds from the evening will be donated to Marie Curie.

See below for full details.

Here’s to 2018

So, as another year passes I thought I’d look back on the achievements of 2017 and think ahead to 2018 with all the promise it could bring.

We started out in 2015 with the sole purpose of creating a lean model, one with collaboration, co-working and non-conformity at its heart.

Sure there were naysayers, those who thought there was no room in the market for a niche company providing all the support a barrister needed at a fraction of the cost and no building noose around their necks. Fast forward almost 3 years and I’m pleased to say those sceptics were quite obviously wrong. Our starting team of 3 Barristers became 8, all with established and flourishing practices.

We have no overdraft and no need for one, consultancy contracts in place of full time employees allowing me to buy in what I need from whom whenever I need it. Our IT, social media sites and para legal support all provided by energetic, idea fuelled individuals with a thirst to shake things up a bit, heck perhaps even a lot with their brilliant but cost effective ideas. 2018 I hope will continue in the same vein. Excited to see who the 9th Barrister to join us will be. Happy New Year everyone.

Thank you to all those who continue to support me on the best journey of my life. Your friendship is invaluable.

Band 1 again in Chambers & Partners…

2nd November 2017

Band 1 again in Chambers & Partners and spotlight table for Charles Feeny in Clin Neg and Industrial Disease. ‘Widely recognised as leading clin neg specialist. Popular choice for firms looking to fight intricate cases on causation and quantum’.  ‘Highly esteemed by peers for his exceptional expertise in Industrial Disease matters, approachable, authoritative and excellent’.