The Practical Lawyer


Costs security – secretive defendant


It is possible to get a security for costs order against a claimant company if ‘there is reason to believe that it will be unable to pay the defendant’s costs’ (CPR r25.13.(2)(c)). But, what if the defendant simply cannot get information about a claimant’s finances – in that situation, how can the defendant go to the court and say it has ‘reason to believe’ that the company will be unable to pay the costs?

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Litigation tactics – court resources

Joshua Rozenberg has estimated that we are due to experience an extraordinarily large number of High Court vacancies – about 15. The implications of this, as a note from Mills & Reeve points out, is that the courts can only hope to handle their caseloads if they adopt an aggressive attitude to discourage technical point-taking once proceedings have been started. Likewise, the courts must do everything they can to encourage ADR and early settlement. So we should not be surprised if we see the senior courts adopting a stricter approach to time-keeping, procedural rules and technical arguments that cause delay.
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Fixed costs – advocacy fee?

What happens if a fixed costs RTA (protocol) claim is settled by negotiation at the door of the court; can it be argued that, because the ‘trial’ has not started, then no advocacy fee can be claimed?
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Third party – insurance liability

The problem is well known: you have a claim against a third-party company or individual who has liability insurance. But, that third party has become insolvent. In that situation you cannot make the claim direct against the insurer but have to sue the third party (probably having to get the company restored to the register) and obtain a judgment before you can then go to the insurers. And, at that stage, you may not even know if the insurance cover will be sufficient to meet the judgment. All of that is a result of the Third Parties (Rights against Insurers) Act 1930. The good news is that the 1930 Act is being repealed from 1 August 2016, when the Third Parties (Rights against Insurers) Act 2010 finally comes into force.
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Abuse of process – what is it?

There are two types of abuse of process:
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Pre-action costs – when recoverable?

A useful summary, from Mills & Reeve, of the court’s attitude to allowing defendants to recover their front-loaded costs incurred pre-action:
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CFA – assignable

Can a conditional fee agreement (CFA) be assigned from one law firm to another? This might happen because the old firm decides to close down, goes bust or chooses to abandon that line of work. Or perhaps the solicitor dealing with the case transfers to another firm and the client wants to go with that solicitor. The end result is that files often change hands, and substantial sums of money have been paid for existing CFAs.
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Damages – Wrotham Park

The normal rule for calculating contractual damages involves quantifying how much the claimant has lost, or how much the defendant has gained. But, there is an exception that can apply when it is difficult for the claimant to calculate the financial losses, and this is done by awarding Wrotham Park [1974] damages – based upon a ‘hypothetical bargain’ of what the defendant would have paid the claimant to buy out the claimant’s rights. Thus, it is an estimated ‘negotiating’ damages figure. As such, Wrotham Park damages are an exception to the normal rule on calculating damages.
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Issuing proceedings – costs implications

Do not issue proceedings merely as a tactical move designed to bring pressure on the other side. If you do, then your client may be liable for the other side’s costs – in a way that would not have been the case had proceedings not been issued.
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CFA – assignable?

The dispute about whether or not a CFA can be validly assigned to a different firm rages on. As noted in our April 2016 issue (p28) we have previously had county court decisions saying it is not possible to assign a CFA, and that an agreement to do so will amount to a novationof the existing CFA contract (ie it is not an assignment, but an entirely new contract). The importance of this is that the new CFA contract will obviously come into effect at that later date, whereas if there had been an assignment then the CFA would date from the earlier, original, date of signing.
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