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Haydon v Strudwick, Senior Courts Costs Office, 9 April 2010

8 June 2010
The issues

Relief from sanctions – additional liabilities – costs – no Notice of Funding served.

The facts

The action concerned a claim for personal injuries following a road traffic accident when the Claimant was seriously injured. At the time of the accident the Claimant was a minor. In the letter of claim, the Claimant’s solicitors referred to their client as having the benefit of a Conditional Fee Agreement “and that additional liabilities will be claimed for legal costs at the conclusion of the matter”. The Claimant entered into a CFA on the 14th November 2003, providing for a success fee. Proceedings were issued on the 8th March 2005. The Particulars of Claim referred to the claim being funded “by way of a Conditional Fee Agreement which includes additional liabilities”. A second CFA was entered into, also providing for a success fee, on the 1st February 2006. An ATE policy with Access Law was taken out on the 18th September 2006 at a cost of £1,050.00.

In July 2009 settlement was reached in the sum of £1.4million. A Bill of Costs was brought in at £890,048.54, of which £300,000.00 amounted to the additional liability for the success fee in addition to the cost of the ATE policy. The Points of Dispute raised the absence of the Notice of Funding.

The decision

The relevant Notices of Funding in form N251 were not served by the Claimant in relation to either the first or the second CFA. The Defendant was provided with information at an early stage of the proceedings that the matter was being funded by a Conditional Fee Agreement. The Defendants were not provided with any information with regard to the ATE policy. Relief from sanction should not be granted lightly. The test was either that a good reason had to be shown, or that there had to be prejudice to the Defendant, but not both. In granting relief the factors set out in CPR Rule 3.9 had to be considered.

a) The administration of justice.
The Claimant’s solicitor made a mistake with an open admission of fault in failing to provide the appropriate Notice.

b) Promptness of the Application.
The Application had been made promptly.

c) Whether the failure was intentional.
On the evidence of the Claimant’s solicitor, which was accepted, it was not.

d) Whether there was a good explanation for the failure.
The Claimant’s solicitor’s explanation amounted to good reason in respect of the CFA, but not in respect of the ATE policy. The Defendant had been provided with the substance of the information required by the Rules and the breaches therefore were more of a technical nature. In relation to the ATE policy the breach was more serious and simple reference to additional liabilities was insufficient to infer whether an ATE policy had been or would be incepted.

e) The extent to which the party in default has complied with other Rules, Practice Directions, etc.
To the extent to which the other Rules had been complied with, there had been no failure to comply with any other Rules relevant to the issues in the case.

f) Whether the failure was caused by the party or the legal representative.
In this case the failure was caused by the legal representative.

g) Whether the Trial date would be disturbed.

h) The effect which the failure to comply had on each party.

i) The effect which the granting of relief would have on each party.

Were the Court not to grant relief, the Claimant would suffer real prejudice and be deprived of the opportunity to recover a success fee. The Defendant on the other hand would sustain a windfall. The purpose of the provisions of the CPR in the relevant Practice Direction were to inform the parties to the litigation of the manner in which the proceedings were being funded and to provide information to assist the disposal of the case in an efficient way. The Defendant could have been in no doubt from the outset of this litigation, on the basis of the letter of the 6th March as to the basis of the Claimant’s funding. The reference to the existence of a CFA was something the Defendant simply could not ignore. They could have, if they had wished, sought a Part 18 Request for Information in relation to the pleaded reference to the CFA, but they had chosen not to do so. However, the situation was different with regard to the ATE policy for the reason given.

Relief would be granted in respect of the success fee, but not in respect of the ATE premium.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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