The Practical Lawyer


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 The good news is that the 1930 Act is being repealed from 1 August 2016, when the Third Parties (Rights against Insurers) Act 2010 finally comes into force.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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CFAs – insolvency

Insolvency litigation was exempted from LASPO 2012, but that exemption ended in April 2016. Thus, successful claimants with CFAs entered into after 6 April 2016 will no longer be able to recover success fees or ATE insurance premiums from the losing party. This is something that insolvency lawyers have fought against for some time. The expectation is that CFAs will still be used in higher-value cases (because success fee and ATE premium will be less of an issue), but there are suggestions that lower-value claims will suffer, with litigation purchasers taking assignments of claims from insolvency practitioners and then pursuing them on their own behalf. See note in [2016] NLJ 8 April 5.

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Part 36 – different heads of loss

What happens when an offer relates to more than one head of loss? The answer is that the offer will stand in the terms made; thus, even if it sets out figures for various heads of loss, this does not mean that the offeree has to beat the individual, component, parts.

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Costs budgets – BDRs

Two changes to the Costs Budget Rules came into force in April 2016: (i) the deadline for submitting budgets has been brought forward and is now 21 clear days before the case management conference; (ii) the parties must submit agreed budget discussion reports (BDRs) no later than seven days before the CMC.

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