Court of Appeal examines rules relating to the assessment of fees charged by solicitors - Nancy Kelehar, Temple Garden Chambers

24/01/24. Kenig v Thomson Snell & Passmore LLP [2024] EWCA Civ 15. Date of Judgment: 18/01/2024.

The Claimant/Respondent is the beneficiary of his mother’s estate. He sought to challenge the fees charged by the solicitors and applied to the Court for an assessment under section 71(3) of the Solicitors Act 1974 (“the 1974 Act”). He issued proceedings 8 months after the last invoice was delivered to the executor. The solicitors argued that it is not open to a beneficiary to challenge legal fees that have been paid from the proceeds of the estate.

At first instance, the Costs Judge addressed the questions of whether the bills called for an explanation and whether there were ‘special circumstances’, answering both questions in the affirmative. He referred to the scale of the “very substantial” discrepancy between the original estimate and the costs claimed; the speed with which the initial estimate was exceeded; the absence of information that either justified the discrepancy or came close to doing so; and specific matters in the bills that gave rise to possible concern.

The Costs Judge held that the restrictions set out in paragraph 95 of Tim Martin Interiors Ltd v Akin Gump LLP [2011] EWCA Civ 1574 did not apply to a section 71(3) assessment. Those restrictions are set out at paragraph 49 of Kenig. On appeal, the solicitors argued that: (a) the Tim Martin principles should be applied on any such assessment; and (b) application of those principles means that any assessment of their bills on the application of the beneficiaries would be fruitless and therefore should not be allowed.

The Court of Appeal conducted a detailed examination and comparison of the relevant provisions of sections 70 and 71 of the 1974 Act (set out at [7]). After considering the legislation and caselaw in detail the Court of Appeal held that:

• There is no statutory definition or description of what may amount to “special circumstances” such that the court can exercise its discretion. The circumstances need not be exceptional and the question whether special circumstances exist is essentially a value judgment.
• There are material differences between applications under section 71(3) and those under section 71(1) because of the different nature of the interests of the third party that the different sub-sections are intended to reflect.
• There is no rational basis for transposing the principles that apply to a section 71(1) assessment, as identified in [95] of Tim Martin, to the different circumstances of an assessment pursuant to section 71(3).
• The Costs Judge was correct to find that Tim Martin should be distinguished and that the relevant principles to be applied are derived from In re Brown.

Therefore, the appeal by the solicitors was dismissed and the Court of Appeal upheld the order that there should be an assessment of the bills under section 71(3).

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Another cautionary tale about service: Chehaib v King's College Hospital NHS Foundation Trust [2024] EWHC 2 (KB) - Amy Lanham Coles, Temple Garden Chambers

22/01/24. This case started life as a clinical negligence claim brought against three Defendants. The claim was issued just within time on 2 August 2021. The Second Defendant consented to an extension of time for service of proceedings, but simultaneously stipulated that they would not accept service via email. However, this was overlooked and service attempted on the Second Defendant via email on the final day that the Claim Form was valid – 30 March 2023. Note four extensions of time had been granted since December 2021.

The Claimant solicitors’ error was brought to their attention within two weeks by the Second Defendant and the Claimant attempted to send the proceedings via post the following day. However, the Second Defendant refuted that the court had jurisdiction to deal with the claim as the Claim Form was no longer valid.

ISSUES

The Claimant’s relief from sanctions application was the subject of these proceedings. This application was made under CPR r 3.9; but also r 3.10 and r 6.15(2) in the alternative. Reliance on r 7.6(3) was not open to the Claimant on these facts and was not pursued. The Claimant was challenged on the appropriateness of relying on either r 3.9 or r 3.10 to circumvent established rules specifically dealing with service of the Claim Form (i.e. r 7.6(3) and r 6.15). The Claimant contended that this particular scenario was not strictly covered by the rules, because the Claim Form had been sent via an acceptable method of service under CPR r 6.3(1)(d), although it was not in accordance with Practice Direction 6A (i.e. with the consent of the Second Defendant). This approach was described as “semantic” by the Second Defendant and “novel” by the judge (paragraphs 78-79).

The Defendant cross applied to strike out the claim under r 3.4(2)(c) and sought a declaration that the court did not have jurisdiction to hear the application at all.

JUGDMENT

Master Stevens gave short shrift to the notion that the court did...

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'Good Discharge': The Importance of Obtaining Court Approval for Child Settlements - Amy Lanham Coles, Temple Garden Chambers

14/12/23. Bayless v Norfolk and Norwich University Hospitals NHS Foundation Trust [2023] EWHC 2986 (KB)

This dispute arose following the death of a 42-year old father of two whose wife and children had witnessed his death on 24 April 2016. The NHS, who had treated Mr Bayless just days prior to his death, admitted they had negligently failed to diagnose and treat an acute type A aortic dissection.

His widow first sought to resolve a Fatal Accidents claim, particularised as follows:

• Claims on behalf of the estate under Law Reform (Miscellaneous Provisions) Act 1934 for funeral expenses and Mr Bayless' pain, suffering and loss of amenity and care before his death.
• His widow’s statutory claim under the Fatal Accidents Act 1976 for a bereavement award.
• Claims for loss of dependency under the 1976 Act for both his widow and children.

By a Part 36 offer made on 29 August 2019, the Trust offered to settle the claim for £340,000. This offer was accepted on 2 September 2019 but there was a failure to obtain court approval before this was paid by the Defendant, or indeed at all. This was an oversight, being required under Part 21 of the Civil Procedure Rules because the offer comprised a dependency claim for the children who were both under 18 years old.

On 8 December 2022, the Claimant and her children then issued further proceedings arising out of the death, as secondary victims for psychiatric injury. The Claimant pleaded that she had not been aware that she had suffered psychiatric injury until April 2020 when she was diagnosed with PTSD.

In response to this second claim, the Trust sought an order striking out Mrs Bayless's claim as an abuse of process on two grounds. Firstly, they argued Mrs Bayless's claim had been settled by virtue of the 2019 settlement. Secondly, they argued her second claim constituted an abuse of process under the rule in Henderson v Henderson.

However, shortly before the application was to be heard, the Defendant discovered that the 2019 settlement had not received court approval and was therefore not binding. It was common ground that the 2019 lump sum settlement could not be severed such that Mrs Bayless’ claim had in fact been validly settled (paragraph 10). Accordingly, the Defendant sought to withdraw the application, as it was bound to fail. The question for the court was whether the Claimants ought to recover their costs of the application or there should be no order as to costs.

The Defendant argued they had acted reasonably in bringing the strike out application – maintaining that the absence of court approval had only been discovered by the Defendants just prior to the application hearing and that this was an omission by the Claimants’ solicitors rather than the Defendants (paragraph 11). The Claimants refuted this and noted that Mrs Bayless had acted in good faith in bringing a later personal injury claim where her psychiatric injury was not known to her at the time of the 2019 settlement.

JUDGMENT

Pepperall J gave short shrift to the idea that the Defendant had latterly discovered there had been a failure to obtain court approval. They should not have assumed it had been done and indeed would have been notified by Part 8 proceedings had it been done (paragraph 15). The Defendant had therefore paid out the 2019 settlement sum “without obtaining good discharge” and this oversight put them at risk (paragraph 15). Their strike out application was bound to fail on this basis.

Secondly, Pepperall J refuted that Mrs Bayless’ further claim for psychiatric injury was an abuse of process. He noted that no personal injury claim was asserted by her in correspondence leading up to the 2019 settlement and accepted that she was not aware at the time of that settlement of the basis for any claim for psychiatric harm (paragraph 17). Accordingly, the Defendant’s strike out application was equally bound to fail on this basis.

In light of this, he ordered that the Defendant pay the Claimants the costs of the application on the standard basis (paragraph 18).

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