Case Alerts

Wickes Building Supplies Limited v William Gerarde Blair [2020] EWCA Civ 17

Case Background

This decision follows the Court of Appeal ruling in regard adducing evidence late in Protocol claims and the correct procedure to be adopted at Stage 3. Following from that decision in favour of the Appellant/Defendant issue was taken in respect of the costs of that Appeal and the first Appeal to the Circuit Judge.

 Issue

The issue was focussed entirely upon costs with the following questions asked of the Court:

1. Do the rules governing fixed costs in CPR r45.17 to 19 apply to the costs of the appeal?
2. If not, does CPR r.52.19 apply?
3. If CPR r52.19 does apply, what order for costs should we make?
4. Does the Qualified One-Way Costs Shifting regime in CPR Part 44 apply to the costs of the appeal so as to limit the extent to which any order may be enforced against the respondent?

Decision

The Court set out that costs of proceedings in the civil division of the Court of Appeal, the High Court and county court were in the general discretion of the court, subject to rules of court, pursuant to S.51 of the Senior Courts Act 1981. The rules governing Appeals are set out at CPR Part 52 with Rule 52.19(1) giving the appeal court a specific discretion to limit the recoverable costs of an appeal in any proceedings where costs recovery is normally limited at first instance. It followed that the Protocol fixed costs do not apply to the costs of an appeal, though the appellate court has discretion in such cases to limit the costs recoverable.

In the present case the Court was not persuaded to exercise discretion to limit the costs on the basis the first appeal (by Claimant/Respondent) was “wholly unmeritorious” and caused the incurring of unnecessary costs. The inequality in the parties’ financial circumstances did not justify any departure from that outcome, nor were wider principles of access to justice relevant.

Enforcement of the costs order was however subject to the QOCS regime. The word “proceedings” in CPR r44.13 was interpreted as including both the first instance proceedings and any subsequent appeal. It was considered that if a claimant’s access to justice was dependant on the availability of QOCS that access would be “significantly reduced” if they were exposed to the risk of costs of an appeal. Therefore any appeal which concerns the outcome of the claim for damages for personal injuries or the procedure by which such a claim is determined is part of the “proceedings”. That interpretation is to apply even where the Court is dealing with a second appeal, the appeal is brought by the Defendant to the original claim and the Court has declined to exercise discretion to limit costs under CPR 52.19.

 Comment

The Court provides helpful guidance that the principle of costs awards in cases subject to Appeal remains at the discretion of the Court and even in fixed costs cases the Court may come to a different outcome where appropriate to reflect a fair outcome to both parties. Though the benefit of that decision to a successful Defendant in fixed costs cases, particularly low value claims, is greatly reduced by the effect of QOCS. The applicability of QOCS to Appeal cases in the circumstances outlined does raise an additional commercial consideration for any Defendant looking to bring or defend an Appeal. The question must be asked whether it is economically worth the fight if success will likely see a Defendant financially worse off by bearing their own substantial Appeal costs then had they simply not had the fight. Claimants will doubtless be alive to this commercial reality and use it as part of any compromise discussion when an Appeal is intimated.

To view/download as a PDF please click here.

If you would like to know more about this matter, please speak to your contacts at Plexus Law:

Chris White, Associate & Technical Director

T: 0113 4681 659   |   M: 07557 430 241   |   E: chris.white@plexuslaw.co.uk

Jonathon Tetley, Partner

T: 0113 4681 642   |   M: 07879 424 806   |   E: jonathon.tetley@plexuslaw.co.uk

Whilst we take care to ensure that the material in this Case Alert is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Case alert do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Case Alert.

Nawaz and Aziz v Birchfields Solicitors [18.12.19]

Alain Orengo, Partner, of Plexus’ London office acted for the solicitors.

Background

Property developers brought a professional negligence claim against their former solicitors in respect of alleged negligence relating to the purchase of properties in 2006, which, it was alleged, they intended to sell on for residential development. The allegations were that (1) in respect of one of the properties, the intended assignment of an agreement for a lease could not proceed due to a prohibition on assignment, and (2) that the site, or part of it, was zoned for industrial use so it could not be developed for residential purposes. The claimants alleged that they would not have purchased the properties if correctly advised.

The claimants entered into a standstill agreement in 2011 with the solicitors, some five years after purchasing the properties, to preserve their right to bring a claim. However, between completion of the transaction and the date of the standstill agreement, the solicitors’ partnership had converted to a limited company. The claimants served a letter purporting to be a letter of claim in November 2015. However, the claimants then failed to progress the claim or to properly engage in the pre-action process. Plexus served notice in July 2018 to terminate the standstill agreement, forcing the claimants to either abandon or prosecute the claim. The claimants hastily issued proceedings on the cusp of limitation and, erroneously, against the limited company, contending that it, as the successor practice, was liable. Plexus rejected the claimants’ position on the basis that the limited company did not exist at the time of the alleged negligent advice and could not be liable. The claimants eventually applied to add the former partnership to the proceedings, although they (correctly) amended their application to substitute on the morning of the hearing. Plexus cross-applied to strike out the claim against the limited company, and were successful on the basis that it could not be liable for the alleged negligence, as the legal services were provided by the former partnership. However, the court, in exercising fairness between the parties, permitted the claimants to substitute the limited company for the former partnership.

The claimants amended their claim asserting inter alia that as a result of the alleged negligence they lost (1) the ‘diminution in value’ of the properties, as between the price paid and their value without the lease agreement; (2) the anticipated profit of £1.2 million on the re-sale; (3) the costs of finance (the bridging loan), which together with accrued interest amounted to circa £6.8 million; and (4) various costs incurred in connection with the intended development, including clean up works and demolition, stamp duty, legal costs on purchase, and fees for borrowing. The solicitors denied that they had failed to notify the claimants of the existence of a prohibition on assignment in the lease agreement or that the site was zoned. Surprisingly, the claimants failed to adduce any expert evidence to support their allegation of diminution in value, as one would have expected, nor were they ultimately permitted to rely upon any expert evidence, notwithstanding an ill-fated eleventh hour application for permission to do so.

The trial was listed for three days in the High Court in Manchester and was heard before His Honour Judge Hodge QC sitting as a High Court Judge.

Decision

The court found that there had been no breach of duty on the part of the solicitors. The court took care to judiciously consider the claimants factual evidence, which was brought to the fore on cross-examination. The court also accepted the solicitor’s evidence that he had properly advised the claimants on all aspects of the transaction, in accordance with his usual practice, and therefore rejected the claimants’ claim. The Judge concluded that the claimants had embarked upon a “speculative gamble” and further held that even if the solicitors had been found to be in breach of duty, so that the question of causation had arisen, correctly advised the claimants would still have proceeded with the purchase in any event, as they were set to make a substantial profit. They had been prepared to take the risk.

Comment

The illuminating aspect of this case is that a party should firstly carefully consider the identity of the correct party before embarking upon litigation. Whilst this might seem obvious, it is clearly an issue that still arises, as demonstrated by this case, where parties to a transaction change over time. One must not be side-tracked by the existence of a successor practice, as it is purely a matter of policy coverage and has no bearing on the identity of the correct party. Advancing a claim against the wrong party will not only expose a claimant to an adverse costs order, but may also ultimately lead to limitation difficulties in relation to a claim against the correct party.

The case also serves as a useful reminder of the importance of complying with the pre-action protocols, particularly in circumstances where (as in this case) solicitors’ firms have either ceased or have merged with other firms, and claims are brought many years after the negligent act.

The obiter dicta raised in this case (albeit this must be considered on a case-by-case basis) suggests that the courts will not be afraid to be persuaded to exercise their judicial crystal ball in favour of a defendant in determining hypothetically how a claimant would have acted having received non-negligent advice.

Finally, it is imperative, in cases such as these to adduce expert evidence to substantiate any quantifiable loss where the measure of loss is diminution in value. If not, proceed at your peril!!

To view/download this Case Alert as a PDF please click here. For any further information regarding this matter please speak to your contact at Plexus Law:

Alain Orengo, Partner

T: 020 7220 5861   |   M: 07816 073 864   |   E: alain.orengo@plexuslaw.co.uk

Whilst we take care to ensure that the material in this Case Alert is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Case alert do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Case Alert.

Mr Francis King v City of London Corporation [2019] EWCA Civ 2266

Case Background

The substantive litigation was concluded by a consent order providing that the Defendant would pay to the Claimant £250,000 plus costs to be assessed if not agreed on the standard basis. The Claimant duly commenced assessment proceedings by serving a Bill of Costs. Within the assessment proceedings the Claimant made an offer by letter headed “Part 36 offer” wherein they offered to accept £50,000 “in full and final settlement of the costs detailed within the Bill only.” The letter went on to state “The offer relates to the whole of the claim for costs within the Bill and takes into account any counterclaim, but excludes interest.” The matter was not capable of settlement and proceeded to a detailed assessment hearing where the Bill was assessed at £52,470 excluding interest. The Claimant argued he had beaten his Part 36 offer and thus sought the consequences set out at CPR36.17(4). The Deputy Master however concluded that the offer was not a valid Part 36 offer so that CPR 36.17 was not applicable. The Claimant appealed that decision with the Appeal subsequently dismissed. A second Appeal was therefore brought to the Court of Appeal.

Dispute before the Court of Appeal

There were three issues to be determined by the Court of Appeal:

• Can a Part 36 offer generally exclude interest?
• If not, can a Part 36 offer nevertheless exclude interest in the context of detailed assessment proceedings?
• Is the offer made on Mr King’s behalf on 12 December 2017 to be treated as inclusive of interest as a result of CPR 36.5(4)?

Decision

On the first issue it was held that a Part 36 offer, generally, could not exclude interest if it were to be a valid Part 36 offer. It was determined that any tension that existed between the Rule and the Practice Direction must be resolved in favour of the Rule, as the Practice Direction “has no legislative force”. The Court repeated that Part 36 is a “self-contained procedural code” that is “carefully structured and highly prescriptive”. An offer exclusive of interest is not an offer in respect of part of a claim. “Part 36 proceeds on the basis that interest is ancillary to a claim not a severable part of it.” The comparison was made that with Part 36 a party could not make a valid offer providing for different costs consequences than those set out in Part 36, so too a party could not make a valid Part 36 offer without including interest.

On the second issue the Court held it was no more possible to make a valid interest exclusive Part 36 offer in assessment proceedings than it was in the substantive claim. The basis being CPR 47.20(4) provides for Part 36 to apply to assessment proceedings save for some modifications, none of which bear upon the issue.

The third issue was similarly resolved in favour of the Defendant. The offer was explicit in not including interest the Claimant could not therefore rely on the Rules to argue it should be treated as inclusive of interest as such would “grossly distort the offeror’s intentions”. The correct position is that the offer excluded interest and therefore by reference to CPR 36.5(4) it is not a compliant Part 36 offer.

Comment

The Court of Appeal has once again taken the view that Part 36 is a self contained code that is “designedly, relatively inflexible” and repeated the view of Moore-Bick LJ in Gibbon that Part 36 is “a carefully structured and highly prescriptive set of rules”. If a party wishes to make an offer which does not meet the requirements they are free to do so outside of the regime, i.e. with a Calderbank offer. However, any party wishing to obtain the benefits of a Part 36 offer must also accept any detriment of such an offer (such as on interest or costs consequences). It is essential therefore that when making a Part 36 offer proper regard is had to the regime to ensure the offer is valid. A beaten Part 36 offer for a Claimant provides a real benefit such that a successful challenge to the offer validity may present a get out of jail free card to a Defendant. Likewise for a Claimant, as in this case, an invalid Part 36 offer will diminish what was otherwise an excellent result.

To view/download as a PDF please click here.

If you would like to know more about this matter, please speak to your contacts at Plexus Law:

Chris White, Associate & Technical Director

T: 0113 4681 659   |   M: 07557 430 241   |   E: chris.white@plexuslaw.co.uk

Jonathon Tetley, Partner

T: 0113 4681 642   |   M: 07879 424 806   |   E: jonathon.tetley@plexuslaw.co.uk

 

Whilst we take care to ensure that the material in this Case Alert is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Case alert do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Case Alert.

 

 

 

 

Background

Plexus Law were instructed to defend a Fast Track credit hire claim, which was not subject to RTA fixed costs.

Pre-litigation the Claimant’s insurers, Aviva admitted liability and settled the Defendant’s subrogated loss claim in full. Aviva’s correspondence specifically stated “…our insured has accepted liability for this incident.”

When the Claimant issued proceedings the defence drew this admission to the court’s attention and both parties issued an application. The Claimant sought permission to resile/a determination that they would not be bound by their insurers admission and the Defendant sought the claim was struck out as an abuse of process.

Facts

The index accident occurred on 8 August 2017. On 22 December 2017 Aviva wrote to the Defendant stating “I can confirm that our insured has accepted liability for this incident.” Aviva settled the Defendant’s outlay shortly afterwards.

The Claimant however, instructed their solicitors Bond Turner to issue proceedings which they did on 9 November 2018.

The Claimant pursued various heads of loss which the Claimant pleaded as being valued between £10,000 – £25,000. In reality, the claim was valued at £10,900. There was no Personal Injury involved.

The Claimant pleaded that they were simply proceeding along the road when the Defendant pulled out from a parked position into a collision with the Claimant’s motor cycle. The Defendant and an independent witness however stated the Claimant was weaving in and out of traffic and drove into a collision with the Defendant’s correctly proceeding vehicle.

The difficulty the Defendant had was that due to the admission they ceased all further liability investigations and by the time the Claimant issued proceedings they had lost contact with the independent witness.

Nevertheless, the Defendant firmly denied liability.

Shortly after service of the defence, the Claimant issued an application for permission to resile/a determination that they would not be bound by their insurers admission. The Defendant cross applied to the claim struck out as an abuse of process.

The court handed down directions for the claim to proceed whilst listing the applications for a hearing. On account of both parties filing witness statements in opposition to each other’s applications, the complex arguments and the hearing being listed for only 30 minutes, the hearing was adjourned and re-listed for an hour and a half with 30 minutes reading time.

The second/re-listed application hearing was heard on 22 November 2019.

The Claimant raised arguments to the effect that his insurer did not have actual or ostensible authority to bind the Claimant with this admission and as such the Claimant should be granted permission to resile.

The Defendant’s submissions were that Aviva’s admission is crystal clear and unambiguous. They had spoken with their insured who admitted liability. The Defendant’s defence would be prejudiced if the Claimant was granted permission to resile as such the claim should stand as being struck out. The Defendant relied upon Chimel v Chibwana & Williams (2016) in support of this argument.

Outcome

At the hearing, the Claimant effectively abandoned his application. They accepted that the insurer had a power to bind and that the admission would be a pre-commencement admission, which does not fall within CPR 14 and which does not therefore require permission to be withdrawn. The correct analysis is that the question is whether or not the claim should be struck out because of the admission that was made.

The first issue was whether or not it was an admission at all. The Judge accepted the Defendant’s submissions that it had to be, as it was a clear admission of liability.

The second issue was whether the claim should be struck out. The Judge went back and forth on this for a while but eventually found in the Defendant’s favour. One of the examples in the authorities cited by the Defendant was prejudice where a witness was no longer contactable, which of course the Defendant had here.

The claim was therefore struck out pursuant to CPR 3.4(2)(b).

To view/download as a PDF please click here.

If you would like to know more about this matter, please speak to your contact at Plexus Law:

Richard Greenhough, Solicitor

T: 0113 4681 881   |  E: richard.greenhough@plexuslaw.co.uk

Whilst we take care to ensure that the material in this Case Alert is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Case alert do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Case Alert.

 

 

 

Introduction

Consumers of products are not able to circumvent the limitation longstop restricting claims for damages being brought under the Consumer Protection Act 1987 (“the CPA”) more than 10 years after the product is first put into circulation.

The Claimant had attempted to use s.41 of the CPA to circumvent the longstop however, the High Court has ruled against this approach.

The ruling will have a significant effect on product manufacturers and their insurers who feared the elimination of the longstop could have opened the floodgates to new and historic claims.

Background

The Claimants argued that they could bring their claim for a breach of statutory duty under section 41(1) of the CPA (Part II) despite the 10-year longstop imposed by Part I of the CPA which had expired.

The Defendant argued that the use of s.41 would be contrary and inconsistent with the Product Liability Directive and CJEU case law.

Judgment

Mr Justice Julian Knowles ruled that an action under s.41 could not be used to circumvent the 10 year longstop imposed under Part I of the CPA.

 Appeal

The Judgment was released on 10 December 2019. We will need to see whether the Solicitors representing the Claimants will appeal this important and far reaching decision.

The verdict in this case is important for all practitioners who work in the field of Product Liability. Had the High Court ruled in favour of the Claimants the case could have had far reaching effects for manufacturers.

The limitation longstop under the CPA has always provided manufacturers and producers of products with certainty. However, had the longstop been removed in its entirety by s.41 this could have led to historic cases, which had been presumed to be statute barred, being reignited as well as imposing a significantly more onerous and potentially open-ended obligation for the entire life of a product.

Comments

The verdict in this case is important for all practitioners who work in the field of Product Liability. Had the High Court ruled in favour of the Claimants the case could have had far reaching effects for manufacturers.

The limitation longstop under the CPA has always provided manufacturers and producers of products with certainty. However, had the longstop been removed in its entirety by s.41 this could have led to historic cases, which had been presumed to be statute barred, being reignited as well as imposing a significantly more onerous and potentially open-ended obligation for the entire life of a product.

Conclusion

Whilst this will come as a blow for property insurers pursuing subrogated claims, product manufacturers and their insurers will be relieved by the High Court’s ruling. However, this contentious and important decision may be appealed by the Claimants and therefore celebrations should be put on ice for the time being!

To view/download this Case Alert as a PDF please click here.

Contacts:

Chris Foulkes, Partner

T: 0113 468 1825   |   M: 07557 391 631   |   E: chris.foulkes@plexuslaw.co.uk

Michael Samaan, Associate 

T: 0113 468 1665   |   M: 07867 452 984   |   E: michael.samaan@plexuslaw.co.uk

Whilst we take care to ensure that the material in this Case Alert is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Case Alert do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Case Alert.

 

 

 

Summary

When an error is made and discovered by a solicitor, then the instinct is to try and rectify the position; especially, where there is an ongoing commercial relationship with the client. However, should solicitors be reticent about attempting to rectify mistakes, errors or omissions made which disadvantage their clients?

The position following the Solicitors Disciplinary Tribunal (SDT) decision in the case of Howell Jones LLP (11846-2018) suggests that they should be. This recent decision has firstly posed problems for solicitors trying to protect their reputation and maintain client relationships and secondly for professional indemnity insurers, as costs inevitably increase when independent solicitors get involved and a professional negligence claim is inevitably pursued.

The SRA Standards and Regulations (STaRs) came into effect on 25 November 2019, replacing the SRA Handbook. It was hoped that these updated regulations may provide comfort to solicitors who would prefer or like to assist their clients in circumstances where an error or omission has been made, rather than immediately flagging a conflict of interest and ceasing to act, but do the STaRs achieve this?

The Position for solicitors following Howell Jones

The facts of Howell Jones LLP are well known. In summary, Howell Jones (HJ) considered that they had made a mistake advising their client to settle divorce proceedings. With agreement from their professional indemnity insurers, HJ admitted the mistake to the client, explained the entitlement to seek independent advice, but proposed that HJ would continue to act and would seek to overturn the settlement at no cost to the client.

HJ was not successful in having the settlement overturned.

The SRA brought the case to the SDT on the grounds that HJ acted in breach of Outcome 3.4 of the SRA Code of Conduct, which imposes an absolute bar on solicitors continuing to act in circumstances where there is a potential conflict between a solicitors’ interest and the duty to their client.

In its judgment, the SDT concluded that HJ “…had not ceased acting when it should have done and this was fairly described as an error of judgment.”

As a consequence of the decision in Howell Jones LLP a solicitor may no longer feel that they can attempt to resolve mistakes, errors or omissions, even in situations where their client agrees to the proposed rectification strategy, and consequently that solicitor is forced to stop acting. As a result, there is likely to be increased legal cost (due to the involvement of independent solicitors) and an increase in the volume of professional negligence claims.

Certainly, as a result of Howell Jones LLP, the logical and cautious advice to a solicitor in such circumstances should be that the client/s must be advised to obtain independent legal advice and the solicitor should cease to act.

 SRA Standards and Regulations 2019

So, have the STaRs changed the position? The STaRs are shorter and less prescriptive than the rules in the SRA Handbook they replaced, and the SRA believes that this will offer solicitors greater flexibility in this area.

Under Paragraph 6.1 of the STaRs there remains an absolute bar on solicitors acting where there is an own-interest conflict.

“6.1   You do not act if there is an own interest conflict or a significant risk of such a conflict.”

However, paragraph 7.11 of the STaRs potentially offer a more flexible approach:

“7.11   You are honest and open with clients if things go wrong, and if a client suffers loss or harm as a result you put matters right (if possible) and explain fully and promptly what has happened and the likely impact. If requested to do so by the SRA you investigate whether anyone may have a claim against you, provide the SRA with a report on the outcome of your investigation, and notify relevant persons that they may have such a claim, accordingly.”

The two provisions are not easy to reconcile. Whilst the STaRs are clear that a solicitor should not act in the face of a conflict, there is also a positive obligation on a solicitor to attempt to put matters right where no such conflict exists. However, in the context of professional negligence, it is difficult to contemplate circumstances where such a conflict does not exist. After all, when a mistake has been made, it is arguable that a conflict will always exist as the solicitor attempts to avoid any potential negligence claim.

 Where does a solicitor stand now?

Whilst the STaRs appear to show a dilution of the inflexible position set out in the decision in Howell Jones LLP, encouraging a positive obligation on solicitors to try to rectify mistakes, errors or omissions, significant care should be taken by any solicitor who wishes to do this.

It is clear that further clarification from the SRA or, indeed, by the SDT is needed to provide some guidance on what a solicitor is permitted to do to “put matters right”. The safest approach that a solicitor can take remains the restrictive and cautious approach that has been adopted following the decision in Howell Jones LLP – advise the client to obtain independent advice and cease to act.

In an effort to try and maintain any commercial relationship and/or keep costs down for all parties involved when a mistake, error or omission occurs, a solicitor may identify a potential strategy for putting things right. Although, following the position set out above, the solicitor will probably not be able to implement the strategy, this will certainly assist the client in mitigating any loss and could help to preserve any future relationship. For now at least this appears to be as far as a solicitor can go and unfortunately a claim in professional negligence appears a likely outcome.

To view/download this Legal Update as a PDF please click here.

Contacts:

Paul Metham, Partner

T: 0161 244 6930   |   M: 07790 341 720   |   E: paul.metham@plexuslaw.co.uk

Richard FitzGerald, Associate Solicitor

T: 0113 223 8345   |   M: 07500 781 169   |   E: richard.fitzgerald@plexuslaw.co.uk

Whilst we take care to ensure that the material in this Case Alert is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Case Alert do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Case Alert.