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Webb Resolutions Ltd v Waller, Needham & Green

8 January 2013
The issues

Professional negligence – protocol – non-compliance – costs.

The facts

The claimant company was a mortgage lender and brought a claim against the defendant solicitors alleging negligence and in particular that a loan would not have been made had the defendant not been negligent.

The letter of claim was sent on the 26 July 2010 purportedly in accordance with the protocol, valuing the claim at £165,000. It made a Part 36 offer on the same day in the sum of £140,000. In October 2010 the defendant asked the claimant to re-submit its letter of claim and offer, taking into account contributory negligence. In December 2010, the defendant wrote stating the claimant had given insufficient disclosure in accordance with the protocol and making a Part 36 offer in the sum of £10,000.

The aim of the protocol was to establish a framework in which there was early exchange of information so that the claim could be fully investigated and resolved without the need for litigation

In January 2011 the defendant expanded its disclosure point, making a request for 12 classes of documents which it said it needed to prepare its letter of response. Although some further documents were disclosed, the claimant largely refused further disclosure. The claimant noted that it was now in a position to commence proceedings. The defendant took the view that the protocol period had not yet commenced because of the absent further disclosure. The defendant threatened to stay any proceedings commenced.

In May 2011 the claimant made a further Part 36 offer in the sum of £30,000. In July 2011 the defendant again reminded the claimant that it was unable to make a proper response in the absence of documents which it had sought. There was no reply to this letter and in September 2011 proceedings were served, together with a further and higher Part 36 offer.

In March 2012 the claimant provided standard disclosure and inspection was in early May 2012. On the 23rd May 2012, the defendant accepted the claimant’s second Part 36 offer which had been made in May 2011. It stated however that it should not pay the claimant’s costs because of the failure to provide disclosure. The issue came before the court in respect of costs.

The decision

The normal order in this case would be that the claimant would get its costs up and until acceptance by the defendant of the 17 May 2011 offer. If that normal order was to be departed from, the defendant had to satisfy the court that it would be unjust not to do so. In considering that issue, the court had to take into account all the circumstances of the case, including those expressly set out in CPR 36.14(4). Relevant in the assessment would be the issue as to whether or not there had been substantial compliance with the protocol. The aim of the protocol was to establish a framework in which there was early exchange of information so that the claim could be fully investigated and resolved without the need for litigation. Parties were expected to act reasonably and sanctions would be imposed only if there was substantial non-compliance. The parties were urged to disregard minor departures – and it was plain why – because the protocol urged a common sense approach to potential litigation – one that was practical and expedient and directed to an early resolution of the dispute at a proportionate cost. Here there had been numerous requests for disclosure. In particular, the defendant had been seeking two important files and had explained why disclosure of those files was necessary. A claimant acting reasonably would have supplied copies of those files at an early stage and not merely extracts. Instead, the claimant either refused without giving good reason or failed to respond at all. Such conduct was not helpful to an early disposal of the case. The claimant’s non-compliance made it unjust for the normal order under Part 36 to flow. A fair order was that the claimant should have its costs up to the 17 June 2011, but should pay the defendant’s costs thereafter.

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