The Supreme Court Costs Office
No.24 of 2004
Montlake and Ors (Trustees of 'WASPS' RFC) v Lambert Smith
Hampton Group Ltd
8 July 2004
Mr Justice Langley (Sitting Alone)
The claimants proceedings which proved successful against the defendant under cover of a CFA which provided for a success fee of 100% on basic costs. Shortly before the hearing on costs the defendants discovered that they had not been served with all the relevant information about the CFA as required by the Rules, and accordingly submitted that, in the circumstances, the claimant should not be entitled to a success fee in addition to their basic costs.
In addition the claimants had made a Part 36 offer, whereas the defendants did not, although there were offers and counter offers made without prejudice as to costs. Ultimately the claimants recovered more than their Part 36 offer.
On the first point the Judge found a clear breach of the Rules as to service of relevant information in relation to the funding arrangements, but nevertheless found that the defendant had suffered no prejudice as a result of that failure, and accordingly considered it appropriate to grant relief from sanctions to the claimants under CPR 3.9.
On the second point the Judge considered all the facts and concluded that:
'In the overall context of this claim and the issues to which it gave rise I think the circumstances surrounding the Part 36 offers and without prejudice save as to costs offers are of the greatest importance. WASPS put a value on their claim in that context not much different from the sum that they have recovered. LSH put a much lower valuation on it. It would be wholly unrealistic to suppose that LSH would have placed a greater value on the claim or acted differently in any other relevant way if the claim had been conducted by WASPS in any other manner. The claim was fought with conviction on scope of duty, valuation and damages issues. The second Part 36 offer had produced no response when there could be no doubt at all as to the nature of WASPS' case. To my mind the nature of this claim from the outset has been one in respect of which protection by way of a Part 36 or other offer was plainly available to LSH and nothing material has occurred which affected the judgment made by LSC about whether to seek that protection or at what level to do so.'
Accordingly the Judge awarded the claimants their costs of the proceedings without any deduction.
The Judge went on to award the claimants enhanced interest at the rate of 6% from 13 January 2004 (the date of their effective Part 36 offer) to 28 May 2004, when judgment was given. The Judge also awarded the claimants indemnity costs from 13 January but not interest on those costs, saying, in paragraph 30 of his judgment:
'Whilst I can see no injustice in awarded WASPS costs on an indemnity basis from 13 January 2004, especially so where the Part 36 offer was made when the substantial costs of a trial were largely only in prospect, I do not think in a case in which the success fee is set at 100% and is properly recoverable in principle, an award of interest on the costs would be appropriate or just. By definition those costs have not yet been paid. Whilst neither the fees of counsel nor the experts were subject to the CFA the only information before me is that those fees have been paid to the extent of £250,000 but I do not know when those payments were made. I think the rule is primarily intended to compensate the party entitled to costs for payments already made by way of costs at the time judgment is obtained: McPhilemy v Times Newspapers Ltd (No.2) [2002] 1 WLR 934 at paragraph 23. Whilst I note that the terms of the order referred to in that paragraph, perhaps in contrast the principle stated, was for interest to run from 'the date upon which the work was done or the liability for disbursements incurred' I think the Rule is intended to compensate the client not his advisers for sums paid or for an obligation to pay which might itself carry an exposure to interest. I will therefore order that the costs be assessed on the indemnity basis from 13 January 2004 but I will make no order as regards interest on those costs.'