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Archive for August, 2016

Crazy Little Thing called Costs

18/08/2016 | Sajjid Kurmani
A cornerstone of our justice system is the principle that a party, who vindicates his rights through the court process, is entitled to have his legal costs of the action compensated by the losing par

A cornerstone of our justice system is the principle that a party, who vindicates his rights through the court process, is entitled to have his legal costs of the action compensated by the losing party – this is what lawyers refer to as the indemnity principle.

However the winner’s right to have his legal costs paid is not unqualified. The court does not allow a victor to simply pass the losing party their legal bill for payment in full.  It is in this knowledge that the losing party usually challenges the victor’s costs and consequently a whole area of law has developed which governs the amounts and types of costs that a winning party is entitled to have paid by a losing party (referred to as the recoverable costs).

When considering what costs the losing party should pay, the court applies a two stage test considering, in turn, whether the victor’s legal bill is (a) reasonable and (b) proportionate.

This means that the court first reviews the streams of work that the victor’s lawyers undertook in respect of the action and considers whether it was reasonable and/or necessary to undertake that work stream in the amounts claimed. Then, having reduced the bill through this exercise, the court then steps back to consider whether the total sum of theses reduced costs is proportionate when compared to the value of the dispute. This second stage test of proportionality was significantly altered in April 2013 such that judges now have far greater powers to dramatically reduce the costs awarded to the winner if he deems those costs to be disproportionate to the case.

As Brian May (the guitarist in Queen) found out, this new approach can lead to successful parties being awarded a far smaller proportion of their legal costs than they may have anticipated being able to recover.  In the case of Brian May v Wavell Group, Brian May brought a claim against his neighbour under the law of private nuisance in relation to noise occasioned by basement refurbishments. He then accepted an offer made by the Defendants at an early stage in the proceedings (well before trial) to settle the dispute for £25,000 which, on the evidence before the Court, was found to be well within the contemplation of Brian May as an acceptable valuation of the damage caused by the noise nuisance.  By the time this settlement was reached, Brian May had spent £208,236.54 in legal fees.

Applying the first part of the above test the court found that £99,655.74 was a reasonable figure for costs. The Court then looked at this reasonable figure and compared it against the £25,000 that the case settled for and found that a proportionate legal costs figure was £35,000. Consequently the Defendants were ordered to pay Brian May a total of £60,000 (£25,000 for the settlement offer and £35,000 for costs), leaving him with an irrecoverable legal bill of circa £173,000.

As commercial litigators a key part of our advice to clients is undertaking a cost benefit analysis at each relevant stage of a matter to weigh up the merits and costs risks of going through the court process.

The court process can be a roller coaster ride. Before buying your ticket and getting on board, you should receive clear advice on both the substantive merits of the case and the costs implications.  As can be seen from the Brian May case, failure to undertake risk analyses can render Pyrrhic a hard-fought legal victory.

The Ups and Downs of the Litigation Process

17/08/2016 | Nick Leigh
What clients should expect when they get involved with litigation, including seven handy tips The word “Justice” features heavily in the name of England’s High Court, and justice is what it

What clients should expect when they get involved with litigation, including seven handy tips

The word “Justice” features heavily in the name of England’s High Court, and justice is what it intends to provide. But anyone who has tried to navigate the Royal Courts of Justice building on the Strand will find its Escher-like interior an uncomfortable warning as to the challenges that may lie ahead when seeking to right a wrong by way of civil litigation.

The process itself, on paper, is beautifully simple. A dispute arises. You threaten your opponent with litigation unless they make amends. They resist. You “sue” by issuing your claim. Your opponent says why you should not be entitled to the remedies you seek. The parties disclose relevant documents, exchange witness statement evidence, file expert reports for matters needing particular specialist know-how and then, if the dispute has not yet been resolved, a Judge decides who is right and who is wrong at trial.

However, litigation is not, in the main, a game played on paper and, as is often the case, once humans are introduced to the process, things can get a little more complicated.

A client well advised should not be deterred from pursuing their claim – and justice – to a beneficial and satisfying resolution. But that equally well advised client should be left in no doubt that, at times, they will feel as if they are walking up staircases that lead them to a lower floor than the one on which they started; that invisible forces are sanding away their resolve; and when you keep your friends close and your enemies closer, what on earth should you do with your opponents’ lawyers?

Your solicitor must pay as much attention to the client as he or she does to the case and be familiar both with the aspects of litigation for which clients are ready, but also those for which they are not. Here are just a few examples of what, in our considerable experience, clients may not always think about, but which – if they did – may well make them feel a little better.

Tip 1 – Always ask what is on your mind (but don’t discuss the football)

For many clients, litigation is wholly new territory. There is much to take in, to process, all against the backdrop of the dispute itself, which may be causing financial problems and emotional strain. Even if you have been involved in litigation in the past, the circumstances of the new case, or the claims you are bringing, may be very different from what you have experienced previously. So if there is something on your mind, ask your solicitor. You may think it’s a silly question (and perhaps it is) but ask it all the same. The advice law firms provide should be catered to the specific needs of each client. Your questions will enable that advice to be more precisely tailored to you. But also bear in mind that, when speaking to your solicitor during office hours, you may wish to avoid talking about the football (or other favourite past time) or risk being charged for the pleasure.

Tip 2 – Fuel your case

Evidence is the fuel that powers cases to success. Your legal team may prepare a fine statement of your claim – it may catch the unfairness of what has occurred, and express the depth of emotion you feel – but unless you can justify your arguments, the Court has no jurisdiction to give you the remedy you seek. Sooner or later, you will need to prove your case with evidence. The more you can provide, and the sooner you can provide it, the better and quicker your outcome is likely to be. Clients are often not the best arbiters of what counts as a valuable document (or indeed an unhelpful one), so your best bet is to provide your legal team with anything that may be relevant, and let them decide. At the start of the process, the more documents your legal team have, the better they can assess whether or not you have a viable claim.

Tip 3 – Expect some turbulence

Never forget that you are in a dispute. When you have issued a claim, the Defendant wants you to go away. Your opponent and their accursed legal team therefore have every interest in making your life as hard – and as expensive – as possible. They will resist when it seems crazy to resist. They will oppose when opposing is the act of a fool. And they will enjoy the moments that leave you most feeling enraged and disheartened.

Expect this. It will happen. And in expecting it to happen, its impact on you will be much diminished. You will see your opponent’s behaviour for what it is: mere tactics. You will be able to laugh when the aeroplane is shaking, for you know that turbulence is nothing to worry about, that it really is nothing more than a load of hot air.

Tip 4 – Always be on your best behaviour

In the depths of a dispute, there can be a tendency to play nasty, or to instruct your solicitors to do so on your behalf. The exchange of a certain amount of firm words is to be expected. But the Court hates – that is, hates – those who behave badly. You get no points for petulance, or rudeness, or the rejection of what appears logical. Litigation is an attempt to establish what took place, and who should shoulder the blame and the cost of putting things right. Count to ten if need be, but always make your opponent look like the thug who earns the slight curl of the Judge’s lip – that is, a scathing rebuke in judicial terms.

Tip 5 – 70% justice

You are hurt. You have been left worse off by the brazen acts of another. You want this unacceptable position rectified. You want justice.

But a Defendant will usually have arguments and evidence of their own. The Court therefore has to carry out a balancing exercise between what it is being told by all of the parties to the case, and may find that, in certain instances, your opponent has a point.

So justice may not necessarily mean 100% justice. When all of the real world factors are taken into account, it may in fact mean 70% justice. If so, your glass is not half full – it is 70% full.

Tip 6 – The end may not be the end

So you have won – or else you failed to obtain the judgment you wanted. Either way, it may have taken a year or two from the day you issued your claim to reach this point. But that is not the end of the road. The process of starting an appeal is a low cost option. It is therefore common for the unsuccessful party to set the appeal ball rolling after judgment, by seeking permission to appeal. Often a tactical move designed to put psychological pressure on the victor, the sooner clients ready themselves for the possibility of an appeal, the less likely such a move will have the desired effect. Therefore, the prospect of an appeal is one all clients should keep in mind as early as possible, even though it may seem a long way away at the start of the case.

Tip 7 – Yes, it’s expensive – but …

When meeting your solicitors for the first time, they will provide you with the best estimate they can as to the likely cost of your case. This will be a sizeable number – a client can easily incur north of £250,000 taking a case to a High Court trial. Which is why, above all, clients must consider not just whether or not they seek justice, but if it is in their commercial interests so to do. When the bills come, clients can often be surprised that the figure given to them by their solicitors at the initial meeting on costs was not the mutterings of a lunatic who does not know how to use a decimal point, but accurate. So it is always advisable to take those initial costs figures seriously.

You also have a number of funding options available, should the law firm you choose adopt a flexible approach. Some do not. Some, like us here at Rosenblatt, certainly do, striving to structure fees in the most appropriate way, so as to cater to the particular circumstances of each client, rather than the traditional method of charging by the hour.

It’s all in the mind

You may have at stake hundreds of millions of pounds; you may have a stake five thousand. But at each end of the spectrum and at every point in between, someone is at risk at paying out a sum of money that they do not want to pay. Each case is as important to the client as any other, regardless of the amount in dispute.

At Rosenblatt, we know that our clients are human (just as we know that our client’s opponents are also only human). And we know that a fight can sometimes be rather ugly. The better you are mentally prepared for what may lie ahead, the easier the experience will be. As with all things, victory follows strength of mind. At Rosenblatt, we place as high a value on this as we do on all other parts of a matter. We make sure that we look after our client as well as we look after their case.

Where law and politics collide: the curious case of Jeremy Corbyn

11/08/2016 | Tom Spiller
On 12 July 2016, the ruling body of the Labour Party, the National Executive Committee (the “NEC”) decided that Jeremy Corbyn, the current leader, need not obtain nominations from his colleagues

On 12 July 2016, the ruling body of the Labour Party, the National Executive Committee (the “NEC”) decided that Jeremy Corbyn, the current leader, need not obtain nominations from his colleagues in order to be nominated as a candidate in the leadership competition that arose in the wake of the EU referendum result.

There then followed two weeks in which one of the more bizarre legal cases of recent times took place at a breath-taking speed, ending on 28 July 2016 when Mr Justice Foskett gave judgment in the matter. Those who have been involved in litigation will know that proceedings lasting only 16 days are rare indeed. Not that this unlikely speed reduced the costs involved: it still took one High Court judge, six barristers (two of which were Queen’s Counsel), three Court hearings, several hundred thousand pounds and a substantial number of hours of Oxbridge-educated time to reach the “bold” legal conclusions that the contents of the Labour Party Rule Book are not absurd, and that an “incumbent” is not a “challenger”. Don’t feel silly if you are scratching your head as to why all of this was necessary to reach such an obvious conclusion. As many already know (and many more have only recently learned and expressed on social media) politics is not always a logical or rational process, so this case should probably not surprise us.

You may question why the Courts had the jurisdiction to hear the unorthodox claim that the unusual and colourful Mr Michael Foster brought in the first place. Surely this was a political matter, and had nothing to do with the law? Unlike most of the other mainstream, British political organisations, the Labour party’s constitution is contained in its rule book, which is in turn a contract between the party and its members. This is a well-established legal point. Mr Foster, as a member of the Labour party, therefore had the legal right to bring a claim seeking to overturn the decision of the NEC on the basis that he thought they had breached this contract by not following the rules.

The key issue in this case – almost unbelievably – was whether or not the NEC had interpreted the meaning of “potential challenger” correctly. This point arises because the Labour Party Rule Book only recognises two scenarios in which a leadership election can occur:

1.            there is no incumbent, or

2.            there is an incumbent.

Unsurprisingly, if there is no incumbent, all candidates must seek nominations from Labour MPs and MEPs (so there will at least be one reason to update the wording of the rules in the near future). In a scenario where there is an incumbent leader, the “potential challenger(s)” must obtain the support of 20% of the party’s MPs and MEPs in order to become nominated as a candidate in the ensuing leadership election. But crucially the rules are silent as to whether the incumbent also needs to obtain nominations. Logically it follows then that the incumbent need do nothing if he or she is to appear on the ballot paper, for how can there be a challenger without anyone (i.e. the incumbent) to challenge? This is my view, and the view of the illustrious Michael Mansfield QC who advised Jeremy Corbyn in the build up to the fateful meeting of the NEC whose decision Mr Foster wished to appeal. And, most important of all, it was also the Court’s view. Whilst at pains to say that it was in no way influenced by political factors, the Judge reached the decision that the NEC had correctly decided that Mr Corbyn should automatically qualify as a candidate in the Labour leadership election as an incumbent leader is not a “challenger” for the purposes of the rules and so does not require nominations. People across the British political spectrum will be pleased with this decision – although for very different reasons.

No, you haven’t missed anything. The basis of the claim (and the reason for hundreds of thousands of pounds being spent) really was as simple as that.

So where does that leave us, and what is the moral of the story? Well, other than the realisation that we continue to live in interesting times, regardless of whether or not it is a good idea for a membership organisation to give its members such legal rights, it may well be that Mr Foster’s action has set a precedent of litigious political activism that will be a headache for the NEC and the leadership of the party for many years to come. That will also please many different groups of people for very different reasons.

In the words of the Judge “I do not know to what extent [the Labour Party Rule Book] was drafted with legal assistance … what is certain is that it has been altered by various amendments over the years … it was not the product of one drafting exercise.” Whilst a determined and well-financed litigant can, if so motivated, bring a claim regardless of its merit, had those drafting the Labour Party Rule Book taken more care, much litigation, consternation (on the part of Mr Foster), embarrassment (per Mr Corbyn) and money could have been saved. The true moral of this story may then be that a comparatively small investment in instructing solicitors so as to ensure the integrity of your documents can save you fortunes further down the line, and perhaps even alter the course of history …

Janus-faced judgments in Greenland Bank Ltd.

10/08/2016 | Judith Ratcliffe
Judgments of the higher courts can raise important issues and the rare smile.  They can be striking, persuasive or simply memorable because of the manner in which a particular judge has expressed an

Judgments of the higher courts can raise important issues and the rare smile.  They can be striking, persuasive or simply memorable because of the manner in which a particular judge has expressed an opinion.  In this series of articles, I will look briefly at three such cases: Greenland Bank Limited (in Liquidation) (Neutral Citation Number: [2009] EWCA Civ 14 – Case No: A3/2008/0662), Sirius International Insurance [2004] UKHL 54, and Floe Telecomm Limited (in Liquidation) (Neutral Citation Number: [2009] EWCA Civ 47 – Case No: 1024/2/3/04).

In this first article, on Greenland Bank Limited (in Liquidation), I will look at and briefly summarise the difficulties encountered by counsel when they are instructed to present opposing arguments for the same client and based on the same set of facts before courts in different jurisdictions.

Greenland Bank Ltd (Greenland Bank) was in dispute with one of its customers, Westmont Power (Bangladesh) Ltd (Westmont).

Until it went into liquidation, Greenland Bank maintained a banking business in Africa.

In June 1998, Westmont entered into a “power purchase agreement” in respect of a supply of electricity to the Bangladesh Power Development Board. The contract was for a period of 15 years.  Westmont agreed to provide a performance bond as continuing security in the sum of USD$1.5m to cover its obligations.

Greenland Bank arranged for American Express Bank Ltd (“Amex”) to issue the bond, and Amex agreed subject to receipt of a deposit of USD$1.5 million. Both parties agreed that, in order for it to remain valid, the performance bond would need to be renewed annually from June 2000. Under the terms of the bond, it was the responsibility of the Bangladesh Power Development Board to request renewals.

Westmont claimed that it had sent a fax, dated 9 May 2000, on behalf of the Bangladesh Power Development Board, to renew the bond for another year, up to 10 June 2001.

Amex denied receiving the fax and responded that it had, on two separate occasions (11 June 2000 and 27 June 2000), faxed the Bangladesh Power Development Board and the Bank of Uganda advising that the performance bond had expired on 11 June 2000.

In July 2000 the UK liquidators of Greenland Bank wrote to Amex requesting the return of the USD$1.5 million deposit.  They argued that, as the bond had expired, the deposit should be returned. Amex initially agreed.  However, Westmont issued proceedings against Amex in the High Court of Bangladesh on 20 July 2000, claiming that the performance bond should not be cancelled.  As a result, Amex advised the liquidators that, unless or until the case was resolved in Bangladesh, Amex remained potentially liable under the performance bond and, accordingly, was entitled to retain the deposit.

The High Court of Bangladesh ruled against Amex in May 2004.

The district judge in Dhaka took the view that the fax of 9th May 2000 “was not a forgery”, that it was sent to Amex by Westmont and received by Amex and that it amounted to a formal written request for an extension of the performance bond for a further year.

According to the Court in Dhaka, Amex’s consent to the extension was implied from its apparently having charged a fee of US$15,000 for the year 2000 – 2001 on 21 July 2000, which was after the date on which Amex claimed the bond had already expired.

Amex appealed the Bangladesh Court’s decision, but the appeal had not been heard by the time the liquidators’ claims came before the High Court of England and Wales for the return of the deposit.

In the UK High Court, where Mr Justice Evans-Lombe heard the case, in an interesting volte-face, Counsel for Amex successfully argued in the claim brought against it by Greenland Bank that they (Amex) “could have been wrong” in their defence of the claim in Bangladesh and that, in fact, the bond was still active and therefore that Amex continued to be ‘liable under the performance bond’ and therefore it had a right to ‘retain the deposit’ given for the bond.

At the same time, Amex was nevertheless continuing its litigation in Bangladesh, where it was in the process of appealing against the very judgment on which it sought to rely in the UK proceedings.

By the time the UK proceedings reached the Court of Appeal, the issue had become whether Amex had a chance (“real as opposed to fanciful”) to persuade the Bangladesh court on appeal, in that jurisdiction, that the bond had lapsed.  That argument was dependent on whether the Court in Bangladesh would admit the “fresh evidence” of correspondence sent by Amex in June, July and August 2000.

The Court of Appeal held that Amex would have difficulty in this respect but, on the question whether the bond was able to be construed under Bangladesh law to be irrevocable until 2013, with “considerable reluctance”, the appeal judge concluded that despite prospects of success not being high, they were not purely fanciful. The Court therefore imposed a stay of the action pending the outcome of the Bangladesh litigation.

It is not, of course, an ideal situation for a lawyer to be instructed to argue one thing in one jurisdiction, and to argue the exact opposite in a different jurisdiction.

The UK Court of Appeal drew its own conclusions:

 Lord Justice Ward commented that this is the kind of litigation that could feed the public’s worst perception of lawyers and the law and quoted Jonathan Swift ( author of Gulliver’s Travels)’s, description of lawyers as:

“… a society of men … bred up from their youth in the art of proving, by words multiplied for the purpose, that white is black, and black is white …according as they are paid” and that a ‘cynical observer’ of Amex/Amex Counsel’s position within the litigation could easily be persuaded to believe this statement to be true.

However, Lord Justice Ward was suitably impressed with Counsel’s efforts to go on to say:

“Riding two horses at the same time is always difficult enough: riding them when they are charging in opposite directions is an altogether remarkable feat, so let me begin by praising the skills of counsel for Amex, Mr David Wolfson, who with customary courtesy, cogency, and not a little charm, managed to stay in the saddle.”

Amex’s barrister had persuaded the Court that, in this exceptional case it was reasonable to advance opposing arguments, for the same side, in different countries.

Lord Justice Ward concluded:

“Mr Wolfson has persuaded me that even though the prospects of successfully arguing that are not high, the prospects of success cannot be said to be fanciful. To return to Jonathan Swift’s view of lawyers, while Mr Wolfson has not shown that black is white nor that white is black, he has managed to paint the problem in a shade of grey.”

Of course, had Amex conceded in the UK before the outcome of the litigation in Bangladesh, it could have faced the prospect of repaying the amount of the bond, but still being liable for the amount guaranteed – a very real situation of double liability which can confront lawyers and their clients in a range of situations from taxation matters to what appear at first sight to be straightforward land and property issues.

In the next article I will look at the issue of literalism, as dealt with in Sirius International Insurance [2004] UKHL 54.

 

Rosenblatt Solicitors Appoints Nicola Foulston as CEO

01/08/2016
Rosenblatt Solicitors are delighted to announce the appointment of Nicola (‘Nicky’) Foulston as CEO of the City law firm; her appointment to the newly created role of CEO is effective from 1 Sep

Rosenblatt Solicitors are delighted to announce the appointment of Nicola (‘Nicky’) Foulston as CEO of the City law firm; her appointment to the newly created role of CEO is effective from 1 September 2016.

Nicky, 49, was named Veuve Cliquot Business Woman of the Year in 1997 when she was Chief Executive of Brands Hatch Leisure plc – she was, and remains, the award’s youngest ever recipient.  Nicky became Chief Executive of Brands Hatch in early 1990 when the business was valued at £6 million and built it into the largest organiser and promoter of motor sport in Europe; in 1996, she floated the business on the London Stock Exchange; and in 1999, she sold the business for over $195 million to Interpublic, the US marketing giant.

Nicky has since run a private family office with private equity investments in the USA and Europe.  In 2014, she was appointed as a Board Member of the Government’s Industrial Development Advisory Board (IDAB), an advisory non-departmental public body, sponsored by the Department for Business, Energy & Industrial Strategy, to help government boost growth in business.

Commenting on her appointment, Ian Rosenblatt OBE, Senior Partner of Rosenblatt Solicitors, said:

“Rosenblatt Solicitors has gone from strength to strength, entirely through organic growth, since 1986 when I founded the Firm.  Nicky is a formidable businesswoman and we have highly ambitious plans for the Firm – I am confident that this will be a winning combination.” 

Nicky Foulston, Rosenblatt Solicitors’ CEO Designate, added:

 “I am delighted to be making my return to City life as the CEO of Rosenblatt Solicitors.  It is a remarkable firm that I have known and admired for over 25 years.  I look forward to working with its team of over 100 people in the months and years ahead, to drive growth and build on its unique reputation for unparalleled service and the outstanding results it achieves for its clients.”

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