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Dispute Resolution

High Court clarifies Costs protection from offers – Quit while you are ahead
Thursday 4th August 2016

Brabners litigation cost update 1

Offers made to settle claims during civil proceedings are guaranteed certain costs protections if made in a prescribed way.

If a Claimant makes an offer in the right format inclusive of interest but exclusive of costs then they can be certain to recover a 10% uplift on damages, and higher proportion of costs and interest if the Claimant achieves a more advantageous outcome at trial.  These offers are known as Part 36 offers after the relevant section of the Civil Procedure Rules.

In the case of Purrunsing v A’Court & Co (a firm) [2016] EWHC 1582 (Ch) an offer was made to settle the claim for £516,000.  That offer had to be accepted on or before 10 June 2015 before the implications of Part 36 of the Civil Procedure Rules began to apply.  The offer was not accepted.

At trial the Claimant obtained a judgment on 14 April 2016 for just under £519,000 – a higher amount than the offer.  The difference between the offer and the judgment sum was interest that had accrued on the claim since the expiry of the relevant offer period on 10 June 2015.

When the judgment in the case was handed down the Claimant argued that they were entitled to the benefits of having bettered their offer.  The Defendant disputed this because the approximately £3000 difference between the Claimant’s offer and the judgment was interest that had accrued on the claim since the expiry of the relevant offer period.

In considering this point and finding for the Defendant His Honour Judge Pelling QC confirmed

“It is in the highest degree unlikely that it was intended that the applicability of the enhanced costs regime would depend on an entirely random event such as when judgment would be given following a trial.”

The only reason the Claimant had beaten their own offer was because of the length of time taken to get the Claim to trial and the interest calculated on damages by the trial judge.

As the Claimant had argued at length for the benefits of beating their offer they were ordered to pay part of the Defendant’s cost of that argument.

This clarification of the interpretation of the Court rules is welcome and underlines the importance of carefully considering the levels of offers to settle proceedings.

Read our second update in this 3 part series of blogs where we discuss - "Court warning on proportionate legal costs"

Read our final update in this 3 part series of blogs where we discuss - "What if you only beat an offer on Appeal? Pawar v JSD Haulage [2016] EWCA Civ 551"


I’ve been served with a Claim, what should I do next?
Friday 29th July 2016

A recent High Court case highlights the importance of ensuring that a Defendant takes the appropriate steps when faced with a claim so as to ensure that its position is not prejudiced.  

In Le Guevel-Mouly & Others -v- AIG Europe Limited [2016] EWHC 1794 (QB) the Court dismissed a Defendant’s application to challenge jurisdiction in circumstances where the Defendant failed to respond to a claim form within the appropriate timeframe. Pursuant to Civil Procedure Rule 11 (5) the Defendant’s failure to respond had the effect of meaning that the Defendant accepted that the English Courts have jurisdiction, despite the Defendant’s insistence that the Scottish Courts are a ‘more convenient forum’.

The key steps a Defendant ought to consider when receiving a claim are set out below:

1)Check the Claim Form

In the first instance, a Defendant should review the Claim form to check that it includes all the information as required by the Civil Procedure Rules.

A claim form includes a box where the Claimant should particularise its claim (i.e. set out a detailed explanation of the claim with details as to what it is claiming) - this can also be set out in a separate document.

A Defendant is not obliged to respond to a claim form until it receives fully particularised particulars of claim.

2)Acknowledge Service

Following service of a claim (with particulars of claim), a Defendant has 14 days to file either an acknowledgment of service or a Defence at Court.

Filing an acknowledgement of service extends the deadline for the Defendant to serve the defence to 28 days after service of the particulars of claim, rather than 14 days.

In calculating these deadlines Defendants should note that these time-periods run from the ‘deemed date of service’, which may not be the same date on which the Claim Form was actually received.  The deemed date of service is the date on which the document is treated as having arrived under the Court rules.  It is always worth telephoning the Court to get details of the deemed date of service to ensure that these deadlines are not missed.

The time-periods above apply to Defendants within the jurisdiction of England and Wales.  Defendants outside of the jurisdiction are entitled to longer time-periods to respond, as set out in Practice Direction 6B to the Civil Procedure Rules.

If a Defendant misses these deadlines the Claimant will be able to file a request for default judgment for the full amount of its claim.

3)Consider Jurisdiction

Before filing the acknowledgement of service form a Defendant should also consider whether it wishes to challenge the jurisdiction of the English Courts, as if it does so it should tick the appropriate box in the acknowledgement of service form.  Failure to do so may make it difficult to challenge jurisdiction later.  

4)Consider an admission

Civil Procedure Rule 14 provides that a party may admit the truth of the whole or any part of another party's case and so a Defendant should, as soon as possible, identify whether there are any parts of the claim which need not be disputed.

In the event that a Defendant fails to do so they will waste court time and cause unnecessary costs and expense, which the Defendant may be ordered to bear.

5)File a Defence. Consider a counterclaim.

As set out above, if a Defendant is intending to defend a claim it must file a Defence within 14 days of service of the particulars of claim or (if an acknowledgment of service has been filed) within 28 days of the service of the particulars of claim.

If you need more time a Defendant can agree up to a further 28 days with the Claimant, or can make an Application to Court requesting an extension of time if the Claimant does not consent.

It may also be the case that a Defendant has a claim against the Claimant (known as a counterclaim). The best time to submit a counterclaim against the Claimant is with the defence as particulars of a counterclaim. There is a Court fee to make a counterclaim, the amount of which depends on its value.

6)If in doubt take legal advice.

In circumstances when proceedings have been commenced, it is always best practice for a Defendant to seek legal advice to consider the merits of any defence and to pursue the same in the strongest way possible.

If you have been served with a Claim and are unsure how to proceed, please contact the dispute resolution team on 0151 600 3000.


Are managed invested funds safe from economic turmoil? Know and trust your advisers.
Wednesday 20th July 2016

Recent proceedings in the High Court have considered the extent of the duties of solicitor trustees for administering trust funds.

Jack Daniel left £3.4 million to his 2 sons on trust with the investments to be administered by his solicitors.  Mr Daniel’s business was sold off after his death in 1999. 

The solicitor trustees did not have investment experience and took advice on investment.  The sale proceeds were invested by the trustees in shares in trading businesses that relied heavily on their internet presence. 

The trustees received in the region of £92,000 under the terms of the will for administering Mr Daniel’s estate and investing his funds.

As many will recall there was a financial crisis in 2001 when the bubble created by a boom in dot-com businesses burst.   As a consequence of holding shares in these types of companies the trust funds lost nearly £1.5 million.

Mr Daniel’s sons were understandably far from happy and issued proceedings against the trustees on the grounds that there was no considered investment strategy and that there had been a breach of trust by not investing in a diverse portfolio.  The claimed losses were put at around £1.4 million.

In defence of the claim the trustees argued that they had not breached their duties and, if the Court did not accept this, then they had acted honestly and reasonably.

Giving judgment in Daniel v Tee, 2016 EWHC 1538 Ch the judge agreed with Mr Daniel’s sons that the trustees had not met appropriate standards but concluded that the decisions made at the time were decisions which a hypothetical reasonable trustee could have made if acting prudently.  Fundamentally, the Court was not satisfied that the limited breaches of duty that had been established had caused the losses that were claimed.

The judgment also confirmed that even if the trustees had been shown to have caused the losses to the trust funds by acting in breach of duty then the trustees would have been absolved because they had acted honestly and reasonably.


Lender/Surveyor Professional Negligence Claims
Tuesday 19th July 2016

A recent landmark Court of Appeal Judgment provides good news for mortgage lenders pursuing negligent valuation claims against property surveyors.

The case involved a partially completed residential development in Sunningdale, near Ascot Racecourse, and two valuations provided by the firm De Villiers Surveyors Limited (“De Villiers”) to the lender Tiuta International Limited (now in Liquidation) (“Tiuta International”).

In February 2011 De Villiers provided a valuation of the property of £2,300,000 in its current condition, with a gross development value of £4,465,000 on completion of the development works (“the February valuation”).  Tiuta International advanced to the borrower the sum of £2,221,768 and obtained a charge over the property as security for the loan.

In November 2011 De Villiers provided a second valuation of the property, of £3,250,000 in its current condition, with a gross development value of £4,900,000 on completion (“the November valuation”).  Tiuta International granted the borrower a new facility.  The sum of £2,840,000 was drawn down and the original loan was repaid from funds lent in the new loan.  The original charge was released and a new charge was registered.

The new loan was not repaid and Tiuta International appointed receivers to sell the property.  The property was sold for £2,141,280 and Tiuta International sued the surveyors for professional negligence claiming that the November 2011 valuation was an over-valuation and was negligent.  No allegation was made that the February 2011 valuation was negligent.  The Claimant calculated its loss at £890,558, which included the cost of funding interest on the facility.

The Defendant valuers denied the claim and made an Application to Court for summary judgment.  A summary judgment Application is a procedure by which a party to a claim (or the Court itself) can dispose of all or part of a claim before trial.  The applicant must prove that the claim (or defence, a Claimant can make a summary judgment Application too) has no real prospect of success and that there is no other compelling reason for a trial.  The relevant rules are in Part 24 of the Civil Procedure Rules.

The basis for the summary judgment Application in this case was that at the time of the new facility the borrower was already indebted to the lender in the sum of £2,560,168.45.  Therefore the valuers argued that the lender was already exposed to that amount and that if the November valuation was negligent then the quantum of the claim should be limited to the “top up” advance which was calculated at £272,700.

The lender defended the Application and argued that its entire loss was attributable to the November valuation as the new facility was a completely new loan and the new advance fully discharged the existing indebtedness.

A High Court Judge considered the Application and granted summary judgment in favour of the valuer.

However that decision has now been reversed on appeal.  By a majority of two to one the Court of Appeal held that the valuer is liable for the adverse consequences flowing from the lender entering into the transaction in so far as they are attributable to a negligent valuation.  The Judgment noted that the valuation was in respect of the property as a whole and was given without any limitation on the valuer’s potential exposure.  On that basis it was held that if the November 2011 valuation is found to be negligent then the valuer would be liable for the entirety of the loss flowing from the loan based on that valuation.

This decision is a landmark win for lenders and a warning to surveyors to agree terms to limit their liability where their valuation will be used for a loan structured in this way.

The dispute resolution team at Brabners have wide experience of dealing with negligent valuation claims both through court proceedings and achieving settlement through alternative dispute resolution before court proceedings are commenced.


Negligent Wills: the Golden Rule.
Friday 15th July 2016

In the 2016 authority of Burns v Burns [2016] EWCA Civ 37 the Court of Appeal has considered the so-called Golden Rule.

If the person making a will has been ill or is very old it is best practice for a solicitor or other professional dealing with the making of a will to have the signature of the will witnessed or approved by a medical practitioner who should record their satisfaction with the mental capacity of the testator and confirm th testator’s understanding of the will’s terms.

In this particular case, the testator, Mrs Burns, had made 2 wills in 2003 and 2005 respectively.  Mrs Burns had 2 sons and the terms of the later will improved the position of one of her sons at the expense of the other. 

Mrs Burns died aged 89 in 2010.  Following her death a challenge was brought by her son who would stand to benefit if the later will was invalid.

At the time of the later will it was apparent that she suffered from dementia and there was clear evidence of the decline in her mental capacity.  She had undergone a mental examination approximately 2 years before making the later will and it was apparent from the test results that she could not recall the date or remember 3 objects mentioned to her by a nurse a few minutes later.

Mrs Burns’ later will was prepared by a solicitor who did not ask her questions to establish her mental capacity when taking her instructions on the terms of the new will.

Perhaps surprisingly, the trial judge determined that the later will was valid although he was critical of the solicitor who had prepared the later will.  It was a factor in the judge’s reasoning that the solicitor was experienced and he concluded that the solicitor would probably have noticed any signs of a lack of capacity. 

The judgment was appealed and upheld.  The judge had made findings that he was entitled to make and, as the later will appeared to be rational, on the balance of probabilities it was more likely that not that Mrs Burns had mental capacity to execute a new will even though she had been suffering from dementia for a number of years.

For anyone considering challenging a will on the grounds of mental capacity this decision illustrates just how difficult that can be even where there is evidence of a mental impairment and declining faculties.  The costs of that process and the risk of having to pay an opponent’s costs if the claim fails can be significant and it is important to get sound advice on the merits of a claim as soon as possible.

For anyone considering making a new will the case is reminder that all prudent steps should be taken to ensure that the will is unlikely to be challenged to save your intended beneficiaries from the costs and trauma of court proceedings at what will be a difficult time for them.


Civil Court Fees and Alternative Dispute Resolution
Wednesday 13th July 2016

Recent Surveys of members conducted by the New Law Journal and London Solicitors Litigation Association suggest that the recent increases to the civil courts issue fees are causing fewer claims to be issued.

From April 2015 the Civil Court issue fees increased dramatically to 5% of the value of the claim capped at a maximum of £10,000.  Understandably this is having a bearing on whether claims are issued or not.  Where the merits of a claim are less sure or where a claimant may struggle to fund the Court issue fee litigants are being deterred.

In addition to the Court fee increases parties are increasingly under pressure from the Courts to engage in disclosure of documents and to explore settlement before commencing proceedings to try to resolve the dispute or to narrow the issues in dispute.  The search for and disclosure of documents has the potential to be the most costly aspect of any dispute.

For individuals the Court fee increases may not be problematic as many people will qualify for fee remission of some or all of the fee dependent on their income and wealth and we routinely pursue remission applications for our individual clients. For limited companies and limited liability partnerships this is not available. 

It is likely that small to medium sized businesses will be hardest hit by the changes in the legal landscape. Nevertheless, there are a number of ways in which these trends can be combated. 

We adopt a holisitic approach to any dispute and the most appropriate solution tailored to the issues in a given matter should be pursued.  In many cases the viability of an ongoing business relationship with a customer or supplier can be at stake and the introduction of aggressive solicitors can be counterproductive to the wider commercial considerations.

There are alternative methods of dispute resolution other than litigation such as a binding arbitration of the dispute by an agreed third party based upon agreed levels of disclosure of documents or an early mediation of the issues in dispute with a neutral third party mediator.  A significant advantage of the latter approach is that any terms of settlement can reflect matters which a Court could not decide upon in the narrow context of a particular dispute. 

For many disputes an adversarial approach is counterproductive irrespective of the costs of proceedings.  Of course, alternative methods of dispute resolution are not always successful and in a small number of cases will not be appropriate.  If so the option of litigation is always there and can be pursued vigorously if necessary.


Costs in Insolvency Proceedings brought in line.
Monday 11th July 2016

It has been a few years now since the Legal Aid, Sentencing and Punishment of Offenders Act 2012 prohibited the recovery of success fees and the costs of insurance policies against opponents costs in civil proceedings.  Until very recently, that prohibition excluded insolvency proceedings.

As from 6 April 2016 the exemption for insolvency proceedings has been brought to an end and there is now a level playing field across all civil proceedings.

Practically speaking, this means that defendants to new insolvency proceedings are at risk of a significantly smaller costs burden if they are unsuccessful in their defences. 

Insolvency practitioners will no longer have the ability to hold the threat of costs plus an additional success fee and plus insurance premium over the heads of Defendants and apply pressure unfairly in settlement talks.

For Insolvency practitioners it will be increasingly important to get the right advice on the merits of claims at the earliest opportunity and to explore alternative means of dispute resolution.  They are now going to have to apply some subtlety and strategy to negotiations for settlement of claims and to consider much more carefully whether to issue claims at all if robust defences appear to be raised from the outset.   

Increasingly, it is important for insolvency practitioners to get the right advice on the merits of claims at the earliest opportunity and to explore alternative means of dispute resolution.


Is Your Glass Half Full or Half Empty?
Monday 11th July 2016

Everyone knows the common expression about a glass being half full or half empty to indicate a person’s general optimism or pessimism.  The phrase has been extended in recent years to include engineers seeing the glass as twice as big as it needs to be, and some people wondering who drank the other half.  However the expression has taken on a new meaning for certain Starbucks customers in America who have filed a class action against the corporation claiming that their lattes have been under-filled.

The claim alleges that Starbucks are “short-changing” their customers by underfilling their tall, grande and venti lattes, by approximately a quarter of the sizes on the menu.  Apparently a new latte recipe was introduced in 2009 to save on the cost of milk and it is alleged that the pitchers used for heating milk have resulted in under-filling.  The Complainants claim damages for fraud and false advertising.

The class action recently came before a US district judge who has allowed the claims to continue.

Starbucks deny the claims and say that they are without merit.

This comes on the back of another claim recently filed against Starbucks in America where the complainant seeks damages of US$5 million because of the amount of ice used in their iced drinks.

Sale of goods laws in England protect consumers in the form of a term implied into contracts for the sale of goods that the goods must “match” the description (under new Consumer Rights Act 2015), or that they must “correspond” with the description (if sold before 1st October 2015, in which case the Sale of Goods Act 1979 still applies).  The description must be incorporated as a term of the contract.  Pub-goers in England also have some certainty as to the measure of their chosen beverage from the Weights and Measures Act 1985.  Cheers!


Who can challenge the validity of a will?
Thursday 7th July 2016

It has been established for quite some time that someone who has an interest in an estate has standing to challenge a will.  The question is what will count as an interest in the estate.

In the recent Court of Appeal case of Randall v Randall [2014] EWHC 3134 (Ch) the Court has broadened the scope of who is entitled to challenge a Will.

In this particular case Mr Randall brought a claim against his ex-wife relating to the estate of his mother-in-law.    Mr Randall claimed that the Court order which concluded the divorce proceedings with his ex-wife provided that she would pay to him 50% of the value of her mother’s estate over £100,000 after her death.

The estate was valued at in the region of £250,000.  By the terms of her will Mr Randall’s wife’s mother capped her daughter’s inheritance at £100,000.

On a strict interpretation Mr Randall did not have an interest in the estate and, to the extent his ex-wife might receive more than 50% of the value of her mother’s estate he was her creditor.  The Court of Appeal led by the Master of the Rolls took a broader view than this confirming that having an interest in the estate is only a procedural requirement to bring proceedings to challenge a will.

Specifically the Court of Appeal held that to bring proceedings to challenge a will a claimant need only show a "clear and accepted financial interest in the outcome" or a "real interest in challenging the validity of the will".

This judgment is also likely to mean that any person intending to bring a claim against an estate for provision for maintenance or for a reasonable financial provision under the Inheritance (Provision for Family and Dependants) Act 1975 will also have sufficient interest to bring proceedings to challenge a will.  


‘Wolf of Wall Street’ Defamation Claim
Monday 4th July 2016

A Judge has ordered the actor Leonardo DiCaprio to attend witness questioning in a US defamation case where the Claimant alleges that the portrayal of a character in the film ‘Wolf of Wall Street’ has defamed him.

The Claimant was on the board of directors at the stockbroker firm Stratton Oakmont that is portrayed in the film and he claims that the film’s character Nicky Koskoff (nicknamed “Rugrat”) bore a resemblance to himself.  In the film Koskoff wears a wig and he is one of the cohorts of the main character Jordan Belfort (played by DiCaprio).  The Claimant was a childhood friend of Belfort, was head of corporate finance at Stratton Oakmont and wore a hairpiece.

The Claimant alleges that Koskoff is portrayed as a “criminal, drug user, degenerate, depraved and devoid of any morals or ethics” and that this portrayal has damaged his professional reputation as an investment banker.  He has sued Paramount Pictures for defamation, claiming US$50 million.

The filmmakers say that the film was based on a book by Belfort and that Koskoff is a fictional amalgamation of several people in the book.  They submit several other defences, including that statements alleged to be defamatory are factually accurate.

Late last year a Judge gave permission for the claim to continue and it has now been reported that DiCaprio has been ordered to attend witness testimony on the basis that the film’s director and screenwriter regularly met with him to discuss the script.

In English law a Claimant in a defamation claim must prove that the allegedly defamatory statements were published about him or her.  This is straightforward where the Claimant is named in the statements.  Where they are not, English law applies an objective test of whether reasonable people would understand the words to refer to the Claimant.