Published September 4, 2014 by Cost Lawyer
Ultimate Products Ltd v Wooley  EWHC 2706 (Ch)
I read with interest Gordon Exall’s recent blog in relation to the above (a link is provided below) my summary of the Judgment is as follows :-
The above was a trade mark and passing off action brought by the Claimant against the Defendant and was funded by way of a Conditional Fee Agreement. The Defendant was notified of the existence of the first CFA and a Notice of Funding in the form of an N251 was served. Later in the action, however, the Claimant entered into new CFAs – these CFAs increasing the success fee from the original 32% and 30% to 100%. Other amendments to the document were also made, both in respect of hourly rates and fees generally.
The Defendant was notified of the existence of the new CFAs, however the Claimant failed to serve the required N251 and it was therefore the Defendant’s case at assessment of the Claimant’s costs that the Claimant, following success at Trial, should not be able to recover any success fee. The Claimant, whilst accepting that the N251 should have been served, argued that they should be allowed to recover the success fee throughout since the Defendant was aware of the existence of the CFA.
At assessment Master Rowley allowed the success fee under the first CFA and then went on to consider the Mitchell criteria in deciding whether or not to allow the success fee under the later CFAs. In applying those criteria he held that the Claimant’s failure to comply with the Rules and Practice Directions was simply an oversight and that, had the Defendant been provided with the required N251, this would have resulted in them receiving no additional material information. He also held that there was no evidence that the Defendant would have acted differently had they received the N251 and that common sense should be applied. Consequently, full relief from sanctions was granted and the Claimant was allowed to recover the success fee throughout. The Defendant appealed.
At appeal, Mr Christopher Pymont QC applied the new principles as set out in the three stage test resulting from Denton which post-dated the original assessment of the Claimant’s costs and which were therefore not available to Master Rowley in reaching his decision. In applying the three stage test, Christopher Pymont QC rejected the Defendant’s argument that the Claimant’s failure to serve an N251 represented a serious or significant breach of Rule 44.3B (CPR 1998) and that, because the Rule specifically set out the sanction for non compliance, failure to apply that sanction would undermine the Rule. As a consequence, he upheld Master Rowley’s decision in granting relief and gave the following reasons:
- The breach was neither serious nor significant;
- No future hearing dates were imperilled and the conduct of litigation was not affected;
- The breach made no difference to the Defendant’s conduct;
- The Defendant was aware that the case was being conducted under a CFA and, in any case, was not entitled to be informed as to the level of success fee to be applied;
- The Defendant’s position was unchanged as a result of the Claimant’s breach.
Having applied the first stage of the test in Denton and found the breach to have been neither serious nor significant, there was no need to spend much time on the second or third stages of the test.
It is clear, from the above case and from the Denton case itself, that the Courts are now taking a more “common sense” position and expecting the parties themselves to take a less adversarial approach. The Courts are also now looking less favourably on litigation for litigation’s sake – long may it continue!
Link to Gordon Exall’s Blog