Andrew Harrison and Another v Black Horse Ltd
| Jurisdiction | England & Wales |
| Judge | Master Gordon-Saker |
| Judgment Date | 20 December 2013 |
| Neutral Citation | [2013] EWHC B28 (Costs) |
| Docket Number | Case No: AGS/1300290 |
| Court | Senior Court Costs Office |
| Date | 20 December 2013 |
[2013] EWHC B28 (Costs)
IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE
Royal Courts of Justice,
London, WC2A 2LL
Master Gordon-Saker
Case No: AGS/1300290
Mr Simon Browne QC (instructed by McHale Muldoon Limited, Altrincham) for the Claimants
Mr Daniel Saoul (instructed by SCM Solicitors, Barnet) for the Defendant
Hearing date: 29th November 2013
This is an application by the Claimants, Mr and Mrs Harrison, for relief from sanctions.
A brief history of the proceedings
The Defendant is part of the Lloyds Banking Group. The Claimants alleged that they had been mis-sold payment protection insurance (PPI) by the Defendant as part of loan agreements made in 2003 and 2006. In 2008 they instructed McHale & Co, a firm of solicitors in Altrincham, and commenced proceedings against the Defendant in the Altrincham County Court in which they claimed the recovery of the premiums that they had paid. The Defendant denied the claim which was then transferred to the Redditch County Court and allocated to the fast track. In October 2009 the Claimants made a Part 36 offer in the sum of £7,020, which was not accepted.
The claim was transferred to the Hereford County Court and thereafter to the
Worcester County Court for trial. Following a one day trial on 11th June 2010 District Judge Marston dismissed the claim and the Claimants were ordered to pay the Defendant's costs.
The Claimants appealed. The appeal was transferred to the Birmingham County Court and was transferred thereafter to the Manchester Mercantile Court. His Honour Judge Waksman QC, sitting as a Judge of the High Court, dismissed the appeal ("the first appeal").
The Claimants appealed to the Court of Appeal. The appeal was dismissed in a
reserved judgment handed down on 12th October 2011: [2011] EWCA Civ 1128 ("the second appeal").
Permission to appeal having been granted by the Supreme Court ("the third appeal") the Defendant offered the Claimants a refund of the premiums paid and interest thereon in the total sum of £33,099.08. The proceedings were compromised by a consent order dated 29th August 2012 under the terms of which the Defendant agreed to pay the Claimants' costs throughout, but not any sums in respect of after the event insurance premiums.
The Claimants claimed costs in excess of £2.5m:
i) £49,877.84 in the County Court;
ii) £37,301.64 in the High Court;
iii) £1,483,384.70 in the Court of Appeal; and
iv) £959,253.20 in the Supreme Court.
On 7th March 2013 I ordered that the Claimants should have a payment on account in respect of their costs in the County Court, High Court and Court of Appeal in the sum of £150,000 and expressed the view that I could not then be certain that the Claimants would recover more than that. By a consent order dated 9th July 2013 the Claimants' costs in the Supreme Court were agreed in the sum of £175,000.
The costs in the County Court, High Court and Court of Appeal remain to be assessed. The detailed assessment has been listed for 5 days commencing on 27 th January 2014.
Funding of the claim
At each stage of the proceedings the Claimants entered into conditional fee
agreements with McHale & Co:
i) dated 13th January 2009 in respect of the proceedings in the County Court;
ii) dated 24th August 2010 in respect of the first appeal;
iii) dated 2nd December 2010 in respect of the second appeal; and
iv) dated 2nd December 2011 in respect of the third appeal.
The first agreement incorporated the standard Law Society terms and covered the claim and an appeal by the Defendant but not an appeal by the Claimants. The subsequent agreements incorporated the solicitors' standard terms and covered the particular appeal identified.
It is not in issue that a notice of funding was served on the Defendant on or about 6 th July 2009 in respect of the agreement dated 13th January 2009 and an after the event insurance policy of the same date. It is also not in issue that no notice of funding was served in respect of the agreement dated 24th August 2010 (for the first appeal). Whether notice of funding was served in respect of the agreement dated 2nd December 2010 (for the second appeal) is in dispute and that issue falls to be decided on this application. It is not in issue that further notices of funding were served on 12th April 2011 (in respect of an insurance policy dated 31st March 2011), on 6th July 2011 (in respect of an insurance policy dated 6th July 2011), and on 2nd December 2011 in respect of the conditional fee agreement made on that date (for the third appeal).
The Claimants' applications for relief
The points of dispute served by the Defendant on or about 21st February 2013 in respect of the first and second appeal bills each pointed out that:
Despite what is said within the narrative to the bill, the Respondent has received no Notice of Funding from the Appellants in relation to the High Court or the Court of Appeal CFAs. And that Accordingly by operation of CPR 44.3B(1) the Appellants are not entitled to recover any success fee on any base costs, or counsel's fees, incurred under those CFAs which are held to be recoverable.
On 7th March 2013, when I heard the Claimants' application for a payment on account of costs, I mentioned that if notices of funding had not been served the Claimants may well wish to pursue an application for relief from sanctions.
The question of whether the appropriate notices of funding had been given was not specifically addressed in the Claimants' reply in respect of the first appeal bill but in the reply in respect of the second appeal bill it was asserted that notice of funding was sent to the Defendant via the document exchange on 24th December 2010. The replies were served on or about 30th April 2013.
On 10th July 2013 the Claimants issued an application for an order that service of the notice of funding in respect of the conditional fee agreement for the second appeal was valid and in the alternative for relief from sanctions. At a directions hearing by telephone on 31st July 2013 it was pointed out that no application had been made for relief in respect of the agreement for the first appeal. I directed that any such application should be made by 30th August 2013 so that the two applications could be heard together.
The Court received an application for relief from sanctions in respect of the first appeal on 30th August 2013. The application was issued on 18th September 2013.
At the outset of the hearing of these applications (as had been indicated in his skeleton argument), Mr Browne QC, on behalf of the Claimants, withdrew the application for relief from sanctions in respect of the first appeal. It follows that the Claimants will not be entitled to recover from the Defendant any success fee payable to their solicitors in respect of that appeal. The Defendant will be entitled to its costs of the application to be assessed summarily at the conclusion of the detailed assessment.
That leaves the application in respect of the second appeal in respect of which 2 issues arise:
i) Did the Claimants serve notice of funding in respect of the conditional fee agreement dated 2nd December 2010?
ii) If not, should the Court grant relief from sanctions?
Was notice of funding given to the Defendant?
It is not in issue that McHale & Co's file contains a copy of a letter to the Defendant's solicitors dated 24th December 2010 which purports to enclose "an updated notice of funding". It is also not in issue that McHale & Co prepared a notice of funding which is dated 24th October 2010 and which gave notice that a conditional fee agreement dated 2nd December 2010 had been entered into. It is also not in issue that a copy of that notice of funding was faxed by McHale & Co to the Civil Appeals Office on 24 th December 2010. The transmission verification report on
The evidence of Mr Bowden, the solicitor with conduct of the matter on behalf of the Defendant, which has not been challenged, is that the Defendant's solicitors have no record of receiving notices of funding in respect of conditional fee agreements for either the first or second appeals (p.419 paras 11, 27).
The evidence of Miss Taylor, the paralegal at McHale & Co who dealt with the matter, was that she must have misdated the notice and that it should have been dated 24th December 2010, the day that it was faxed to the Civil Appeals Office. Her practice was to print off two copies of the letters that she wrote, one on headed paper which was sent to the addressee and one on plain paper which was put in the file (p.404 para 8).
Miss Taylor was cross-examined at some length. She had qualified as a solicitor (having previously been called to the Bar) in February 2011 and now works for Birmingham City Council. She recalled being in McHale & Co's offices on 24 th December 2010 with Susan, who was employed as a secretary. She had typed the letters to the Civil Appeals Office and to the Defendant's solicitors herself, as they bore her reference. She remembered that she sent a fax and assumes that it was the letter and notice of funding that were sent to the Civil Appeals Office. She did not recall putting the letter to the Defendant's solicitors in the post tray. She thought that the receptionist would have left by then. Based on her standard practice, but not her specific recollection, she would have folded the letter and put it in an envelope. Buton this occasion it may have been Susan who did that. She definitely did not take anything to the DX box.
Miss Taylor struck me as a completely truthful witness. Where she did not specifically remember what had happened, she said so. I have no reason to do anything other than...
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