Summary of Recent Cases – Costs

The Untraced Drivers’ Agreement 2003 Did Not Failed to Adequately Implement Art. 1(4) Of The Second Motor Insurance Directive

Carswell v Secretary of State for Transport and the Motor Insurers Bureau, QBD, 9/12/10

Hickinbottom J, in dismissing the Claimant’s claim for Francovich Damages, held that the Untraced Drivers’ Agreement 2003 did not fail to adequately implement Article 1(4) of the Second Motor Insurance Directive, Council Directive 84/5/EEC, now the Consolidated Motor Insurance Directive 2009) and that her Claim for Damages could not succeed. (1) It was rejected that the inquisitorial nature of the scheme of the 2003 Agreement lacked independence in that the MIB was both the investigator of claims and the body liable to pay any award. To find otherwise would effectively prevent any member state with an adversarial system from setting up a compensation scheme-the principle of equivalence was not offended. The fact that the MIB was ‘commercial’ did not mean as a matter of law it could not properly carry out its function (2) The costs provisions under the Directive payable as a contribution to an applicant’s legal costs were commendably simple, sensible and proportionate (3) It could not be said the scheme provided no methodology for a Claimant to enforce the MIB’s various obligations in light of the Contracts (Rights of Third Parties) Act 1999.

Before Exercising The Power Under CPR r.3.1(3) To Attach Conditions To An Order A Court Should Identify The Purpose Of Imposing Such Conditions

Bryan Hushcroft v P&O Ferries Ltd, CA, 21/12/10

The Court of Appeal held that it was wrong that parties be permitted to use r.3.1(3) rather than Part 25 as a means for obtaining security for costs. An Order should not be made under r.3.1(3) to protect a defendant from being unable to enforce a judgment for costs against a personal claimant, who was resident within the jurisdiction or in one of the other member states of the European Union and was impecunious and whose conduct of the proceedings might be open to criticism, unless one or more additional factors were present which made it appropriate to impose a burden of that kind on one party and a corresponding benefit on the other. Before exercising the power given by r.3.1(3), the court should identify the purpose of imposing a condition and satisfy itself that the condition it had in mind represented a proportionate and effective means of achieving that purpose, having regard to the order to which it was to be attached. The sum of £5,000 in security for costs was relatively modest in the context of this type of personal injury litigation and was the kind of amount that someone who was willing to fund his own case in part could be expected to have at his disposal.

Refusal To Award Interest On Future Losses And Indemnity Costs Under Part 36

James Pankhurst v (1) Lee White (2) Motor Insurers Bureau, CA, 15/12/10

The court saw no reasons to interfere with the first instant Judge’s decision not to award interest: (1) Under Part 36 in respect of damages referable to future losses under r.36.14(3)(a); (2) On indemnity costs under r.36.14(3)(c). Though in accordance with commercial practice, giving leading judgment of the CA, Jackson LJ described the arrangements made by the Claimant’s solicitors as ‘grotesque’, making reference to the fact that in addition to their base costs, they were extracting a “success fee” from the MIB for running a risk which simply did not exist. Despite the fact that (a) they were on a conditional fee agreement and (b) the quantum trial was in any real sense a failure (the claimant lost on the main issues and failed to beat the defendant’s Part 36 offer), the solicitors also required a payment of a further £100,000. The court could only make awards of enhanced interest under Part 36 in respect of items in the judgment that already merited some award of interest. Such ‘grotesque’ arrangements were a factor that was highly relevant when considering the interest on costs. Where the claimant had after-the-event insurance with a recoverable premium, circumstances could distort the normal operation of Part 36.

January 22, 2011 · Editorial Team · Comments Closed
Posted in: Cases