Contract providing For “all reasonable costs” meant assessment on the indemnity basis
In Alafco Irish Aircraft Leasing Sixteen Ltd v Hong Kong Airlines Ltd, the Commercial Court held that a contract specifying that a party was entitled to “all reasonable costs and expenses” of litigation, in connection with preserving its contractual rights, meant that it was entitled to assessment of costs on the indemnity basis.
The parties had been involved in proceedings concerning a lease and the claimant sought costs on the indemnity basis, following a successful summary judgment application.
The High Court Judge saw no reason to depart from Littlestone v MacLeish, where tenants had covenanted to “pay to the Lessor all costs and expenses (including legal costs…) which may be incurred by the Lessor… in or in contemplation of any proceedings under Sections 146 and 147 of the Law of Property Act 1925… or [in] the recovery or attempted recovery of arrears of rent or other sums due from the Lessee”.
It was held that, although that wording did not refer to an indemnity, it corresponded more closely with assessment on the indemnity basis than the standard basis.
Disagreeing with the decision in Euro-Asian Oil SA v Credit Suisse AG, the court considered that the reference to “all reasonable costs”, rather than “all costs” in the clause in this case, did not alter this position and Littlestone, where the court held that reasonableness did not affect the analysis, could not be distinguished. Such wording did not exclude indemnity costs because, under CPR 44.3, whether costs were being assessed on the standard or the indemnity basis, a party was only entitled to recover costs that had been reasonably incurred.
The judge rejected an alternative argument that indemnity costs should be ordered because of the defendant’s conduct.
Ministry of Justice and HMCTS launch court fee refund scheme
The Ministry of Justice and Her Majesty’s Courts and Tribunals Service have launched a court fee refund scheme, following a review in July 2018, in which it was discovered that court fees in certain proceedings had been charged above full cost recovery levels. The refund scheme identifies court fees that have been overcharged, where the fee was set above cost, or mischarged, where the wrong fee was charged or where no charges should have been made at all.
A list of the overcharged and mischarged fees is set out in Application for full or partial refund of court fees – Guidance document. In relation to overcharged fees, a refund can only be claimed if one or more of the fees was paid between 22 April 2014 and 31 March 2018.
The amount that will be refunded depends on when the fee was paid. A refund on mischarged fees can only be claimed in the circumstances described in the guidance document.
The affected court fees include:
- Specified Magistrates’ court fees, including commencing an appeal under the Licensing Act 2003, and an application for a warrant for commitment made in proceedings under the Child Support Act 1991.
- Insolvency proceedings fees, specifically an application by consent or without notice within insolvency proceedings and an application with notice within insolvency proceedings.
- Specified civil proceedings fees, including in relation to filing a request for detailed assessment of costs in the Court of Protection, the appointment and daily hearing fees of a judge of the Commercial Court or a judge of the Technology and Construction Court appointed as an arbitrator under section 93 of the Arbitration Act 1996, and an application for the restoration of a company to the register under section 1029 of the Companies Act 2006.
- Specified Court of Protection fees relating to applications, appeals and hearings.
A refund can only be claimed where the fee was paid directly to the court, or where a party was ordered to pay their opponent’s court fees. Applications must be made using the form Application for full or partial refund of court fees.
Guidance on how to fill out the form is set out in Guidance: Claim a court fee refund. Interest on refunds will be paid at a flat rate of 0.5%. The aim is that applications will be processed within 20 working days of receipt of a completed form.
Court fee remission and recoverability
A claimant who could have applied for remission of the court fee does not do so and wins the case. Is the losing defendant liable for that court fee, or can it successfully argue that it was unreasonably or unnecessarily incurred? No or yes, depending upon which court you are in.
In Stoney v Allianz Insurance Plc, the court said no, holding that the fee was unreasonably incurred as the claimant may have been entitled to fee remission, that is, he would not have had to pay the fee. The judge accepted that this meant that a necessarily incurred court fee, caused by the negligence of the insured, would be borne by the state and not the insurance company, but said that that was a matter for Parliament or the Civil Procedure Rules Committee.
In Cook v Malcolm Nicholls Limited, the court said yes:
“I take the view that the court fee is the court fee. That has got to be paid.”
The latest addition to case law, again at County Court level, is Ivanov v Lubbe (Central London County Court) (17 January 2020), where the court said:
“… I am satisfied that it is not unreasonable for the Claimant to pass on the hearing fee to the Defendant”.
Comment
It would be a very simple matter indeed for the Civil Procedure Rules to say either,“A successful claimant shall recover any court fee paid, whether or not that party could have sought remission of that fee”, or “A defendant shall not be liable for a court fee incurred by a party who could have successfully claimed remission of that fee.”
Don’t hold your breath.
In practice
In practice, solicitors should always check to see if their client qualifies for court fee remission. This avoids the problem, and also assists with cash flow if it is the practice of the firm to pay the fee. It is also a useful lever for solicitors to get the fee out of the client upfront; if the client does not qualify for remission, then that is a powerful argument that the client could, and should, pay upfront. It follows, as night follows day, that a solicitor who fails to advise a client about fee remission, and then fails to recover the fee from the other side in the event of a win, will have to fund the fee themselves, rather than the client taking the hit for the solicitor’s negligence. It is also inadequate professional service.
New personal injury small claims portal goes live
On 6 April 2020, the personal injury small claims limit will be increased from £1,000 to £5,000 for road traffic accident matters, and £2,000 for all other personal injury matters.
This means that the vast majority of the personal injury claims (probably about 90%) will now not involve recovery of costs from the defendant, virtually always an insurance company.
The website is here. The new portal will allow litigants in person to access it, and the small claims limit increase is the first part of the government’s radical proposals to overhaul the costs system generally.
No date has been announced for the introduction of fixed recoverable costs for all civil claims of £100,000 or less, but it is clear that the new government is indeed implementing the proposals, and April 2021 is the likeliest implementation date.
No date has been announced for the whiplash tariff.
