Funding arrangements – Additional liability – Conditional fee agreement – Respondent failing to give adequate notice of additional funding – Costs judge granting relief from sanction – Whether costs judge having sufficient material on which to grant relief – Appeal dismissed
The appellant was the wife of a solicitor who, following unsuccessful partnership litigation, had a bankruptcy order made against him. The respondent was subsequently appointed as his trustee in bankruptcy. The appellant owned her home jointly with her husband and, in December 2004, an order was made for its sale. The appellant was ordered to pay 95% of the respondent’s costs of obtaining that order.
Her appeal against the order for the sale of the matrimonial home was dismissed, but the judge varied the order of the bankruptcy registrar, ordering her to pay 85% of the registrar’s costs.
In the ensuing assessment of those costs, the respondent presented a bill that included a claim for a success fee of 30% that was said to be due under the terms of a conditional fee agreement (CFA) and for an after-the-event (ATE) policy of costs insurance. The costs officer considered that the appellant had had adequate notice of the additional funding arrangements pursuant to CPR 44.15(1) and para 19 of the Costs Practice Direction but that, had it been necessary to do so, he would have granted the respondent relief from sanction, pursuant to CPR 3.9.
On the appellant’s appeal against that decision, the master acknowledged that the respondent’s notice had been inadequate in various respects, namely: (i) service by e-mail was unacceptable under the rules (CPR 6 PD 3.1(2)(b)); (ii) the notice of funding had not been signed, as required by para 19.4(3) of the practice direction, although the notice subsequently filed at court was signed; and (iii) the notice of funding did not contain the address of the insurer and the policy holder as required by para 19.4(3) of the practice direction. However, the master concluded that he should nevertheless grant relief from sanction. The appellant appealed.
Held: The appeal was dismissed.
The master had been justified in concluding that the respondent had put forward a sufficient explanation for the deficiencies in and late service of the notice and that she had not been prejudiced by the delay and the grant of relief from sanction under CPR 3.9. Although the material fell short of what would be desirable in a perfect world, the court should not interfere with the master’s exercise of his discretion unless he had erred in principle, had taken into account irrelevant matters or left out of account relevant matters.
Relief from sanction should not be granted lightly and a party that failed to comply with the CPR risked beeing refused relief. Thus, if a party did not have a good explanation, or the other side was prejudiced by that party’s failure, relief from sanctions would usually be refused. It was vital to the administration of justice that the rules of procedure were observed.
It was nevertheless inescapable that the rules gave the courts the power to grant relief from sanction. Provided that this power was exercised in accordance with the rules and the exercise of discretion in granting or refusing relief was not flawed, then it was not open to challenge the grant of relief by way of appeal.
The appellant appeared in person; Mark James (instructed by Taylor Wessing) appeared for the respondent.
Eileen O’Grady, barrister