Planned huge increases to court fees expected to come into effect next Monday

Following approval of the relevant draft legislation by the House of Lords this evening, it is expected that the government’s planned increases to civil court fees will take effect on Monday 9 March. As reported in our previous post, the new fees to issue money claims over £10,000 will be calculated as 5% of the claim value, subject to a cap of £10,000 – roughly a fivefold increase over current fee levels for claims over £300,000.

Because the new 5% issue fee is an “enhanced fee”, aimed at recovering more than the cost of the services to which it relates, it could not take effect until the relevant statutory instrument was approved by both Houses, as it now has been. Assuming the Civil Proceedings and Family Proceedings Fees (Amendment) Order 2015 is made this week, it will take effect from next Monday.

The planned increases have been widely criticised, with concerns expressed as to their potential impact on access to justice, particularly for individuals and small and medium-sized enterprises, as well as potential damage to London’s position as a centre for international dispute resolution. Such criticism was reflected in a number of speeches in the House of Lords debate this evening, and in a proposed “motion of regret” stating that the House “regrets that the draft Order unfairly and inappropriately increases fees for civil proceedings above costs and so damages access to justice”. Ultimately, however, the motion of regret was withdrawn and the draft Order approved.

The Law Society and other bodies have issued a pre-action protocol letter for judicial review to challenge the fee increases – for more information see this article on the Law Society website.

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Article published: Mediation for in-house lawyers

Alexander Oddy and Jan O’Neill of Herbert Smith Freehills’ London office have published an article in PLC Magazine: Mediation for In-house Lawyers – Preparing for Success.

In-house counsel can play a critical role in the preparation for a mediation – both in working with any external lawyers to shape the mediation process and in briefing and counselling the business representatives who will be attending as decision makers or to facilitate the negotiation.  The article highlights the key issues that in-house lawyers should consider when preparing to mediate a dispute, to remove potential obstacles to settlement and maximise the prospects of it achieving a satisfactory result aligned with the business’s legal and commercial strategy.

This article was first published in the March 2015 edition of PLC Magazine – click here for the PLC Magazine home page.

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Filed under ADR, Announcements

Settlement held to release further phone hacking claims that were not known about at the time

The High Court has struck out claims for phone hacking on the basis that they were compromised by settlement agreements previously agreed between the claimants and the defendant newspaper group: Brazier v News Group Newspapers Limited & Leslie v News Group Newspapers Limited [2015] EWHC 125 (Ch)

Although the settlement agreements were drafted narrowly, by reference to specific claim numbers and with no mention of future claims, the fresh claims fell within their scope. The original pleadings had been drafted sufficiently broadly to cover the new allegations, even though those allegations were based on evidence that emerged only after the settlement.

The decision is a useful reminder that the construction of a settlement agreement, like any other agreement, will turn on the words used in the relevant context and against the relevant background facts. Even if a settlement agreement appears on its face to be drafted narrowly, by reference to a specific claim number, it may be found to have a broader effect, depending on the extent of the claims made in the original statements of case.

The judgment also illustrates the limits of the often cited “cautionary principle” that a court will be slow to find that a party intended to settle claims of which it was ignorant at the time of the settlement, in particular drawing an interesting distinction between “known unknowns” and “unknown unknowns”. The decision suggests that where at the time of settlement a claimant is aware that there may be further claims, but is ignorant of the detail, a court may be more likely to conclude that the settlement was intended to cover such claims than if the possibility of further claims was completely unknown. Sam Waudby considers the decision further below. Continue reading

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Filed under Contract, Settlement

Herbert Smith Freehills fraud bulletin published

Our trusts, fraud and asset tracing group has published its bi-annual fraud update, which includes the following articles:

  • Freezing injunctions: whose assets are covered?
  • A view from Hong Kong: top court looks at attribution of knowledge of fraudulent acts by directors to a company
  • Supreme Court corrects “wrong turn” in English law, holding that bribes received by an agent are held on trust for the principal
  • Freezing injunctions: the cross-undertaking in damages
  • A new freezing injunction in the UK? The European Account Preservation Order
  • Court of Appeal confirms an account of profits is available as a remedy for dishonest assistance
  • High Court rules that an order for disclosure should include the interests of the Respondent under a discretionary trust

Click here to download a copy.

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Filed under Announcements, Fraud

Jackson reforms will not be extended to insolvency proceedings from this April as planned

The government has today announced that it is scrapping its plans to end the insolvency exception to the Jackson reforms from April this year (as we had reported here). This means that CFA success fees and ATE insurance premiums will continue to be recoverable in proceedings brought by liquidators, administrators, trustees in bankruptcy, and companies in liquidation or administration. Recoverability in most other claims was, of course, abolished from April 2013.

In a written statement to Parliament, the government said that the initial two-year delay for insolvency proceedings was to give insolvency practitioners and other interested parties time to prepare for and adapt to the changes. However, the government now agrees that more time is needed. The existing exception will therefore continue “for the time being”. The statement adds that the government will consider the appropriate way forward for insolvency proceedings and set out further details later in the year.


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Filed under Funding

Company ordered to disclose documents in the control of its controllers

The Commercial Court has ordered a company to disclose documents in the hands of third parties (an individual and another company in the same group) on the basis that those parties exercised control over the company for the purpose of all matters relating to the litigation: Suez Fortune Investments Ltd v Talbot Underwriting Ltd [2014] EWHC 2848.

The decision arguably continues the recent judicial trend towards a broad interpretation of control for disclosure purposes, in appropriate circumstances, as for example in North Shore Ventures Ltd v Anstead Holdings Inc & Ors [2012] EWCA Civ 11 (considered here). Although the Suez judgment dates from August last year, the transcript has only recently become available. Gareth Keillor considers the case below. Continue reading

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Filed under Disclosure

Establishing “good reason” for breach of order following change of solicitors may require waiver of privilege

The High Court has extended a witness statement deadline, where a party was in breach of the previous timetable, but refused to vacate the trial date to allow more time for statements to be prepared and served: Devon & Cornwall Autistic Community Trust v Cornwall Council [2015] EWHC 129 (QB).

The case is of interest both for its application of the Mitchell / Denton principles (as outlined in this post) and the court’s comments on the role of privilege where a party seeks to rely on the conduct of its lawyers to justify a failure to comply with court rules or orders. Although the decision is not binding (as a first instance decision) and is based on rather unusual facts, it suggests that:

  • a party will not generally be able to rely on the mere fact of a change of legal representation to justify a breach – even where it is the legal team that has terminated the retainer;
  • where a party wishes to rely on the conduct of its previous lawyers as good reason for a breach, the court may expect a full explanation with a waiver of privilege for that purpose.

Continue reading

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Filed under Evidence, Interim applications, Privilege

Contractual entitlement to “reasonable access” to documents was not subject to requirement to justify request for access

The High Court has granted a seller’s application to inspect certain documents of its former subsidiaries pursuant to a contractual term requiring the buyer to grant “reasonable access” to the relevant companies’ books, records and documents: Alfa Finance Holding AD v Quarzwerke GmbH [2015] EWHC 243 (Ch).

The court rejected an argument that it should look at the seller’s reasons for seeking access in order to determine whether access was reasonable. In the court’s judgment, the reference to reasonable access extended only to the method and timing of access, not its purpose. It did not matter if that purpose was to conduct a “fishing expedition” for information that may not have been disclosed by the buyer in an ongoing arbitration between the parties.

The meaning of a term allowing access to documents will depend, like any other contractual term, on the words used in the context of the contract as a whole and the relevant background. However, the practical message for those negotiating contracts is that, if the intention is to permit access to documents only for a particular purpose, that should be stated expressly.

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Filed under Contract, Disclosure

US Supreme Court weighing proposals to curtail scope, burden and uncertainty of discovery in US Federal Court

Joe Falcone has published an article in Financier Worldwide addressing proposed amendments to the US Federal Rules of Civil Procedure, which govern civil cases in US federal court. If adopted, these amendments should narrow significantly the historically broad scope of discovery in federal court and reduce the spectre of court-imposed sanctions for a party’s unintentional loss of electronic information (including e-mails) sought during the discovery process.

As examined in the article, by expressly requiring that civil discovery be proportional to what’s at stake in the action and by making discovery sanctions (which have been draconian in some US cases) a last-resort option only where a party intentionally destroys information for litigation advantage, the proposed changes would help restore a modicum of reasonableness to the US discovery process, and help return discovery in federal cases to its proper place in litigation: a means for investigating the underlying merits of a case and not the focus of the case itself.

Continue reading here for further information and analysis regarding these important potential changes to the US federal court rules.

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Filed under Announcements, Disclosure, Miscellaneous

Insurance Act receives royal assent

The Insurance Act yesterday received royal assent, paving the way for the most significant change to English insurance contract law in over 100 years. The Act will come into force in August 2016 following an 18-month lead in period.

The Act aims to address the perceived current imbalance in the law in favour of insurers which is said to put the English market at a competitive disadvantage. In particular, it updates the statutory framework for insurance contracts in the following areas:

  • disclosure and misrepresentation in business and other non-consumer insurance contracts;
  • insurance warranties; and
  • insurers’ remedies for fraudulent acts.

The Act also amends the Third Parties (Rights Against Insurers) Act 2010 so that the 2010 Act can finally be brought into force.

Insurance and reinsurance disputes partners David Reston, Paul Lewis and Alex Oddy give a summary of the Act and its implications below. Continue reading

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