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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Andrews & Anor v Messer Beg Ltd [2018] EWHC 2692 (Ch) (12 April 2018) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2018/2692.html Cite as: [2018] EWHC 2692 (Ch) |
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CHANCERY DIVISION
Rolls Building Fetter Lane London EC4A 1 NL |
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B e f o r e :
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(1) COLIN FRANK ANDREWS (2) IRENE ANDREWS (and all those individuals listed in Schedule C annexed to the Particulars of Claim) |
Claimants | |
- and - | ||
MESSER BEG LIMITED (Formerly known as RWP SOLICITORS LIMITED) |
Defendant | |
A N D B E T W E E N : MESSER BEG LIMITED (Formerly known as RWP SOLICITORS LIMITED) |
Part 20 Claimant | |
- and - | ||
DAVID LOWE QC | Part 20 Defendant |
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THE CLAIMANTS were not present and were not represented.
MR F. BACON appeared on behalf of the Defendant/Part 20 Claimant.
MR R. STEWART QC appeared on behalf of the Part 20 Defendant.
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(Incorporating Beverley F. Nunnery & Co.)
Official Court Reporters and Audio Transcribers
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This transcript has been approved by the Judge
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Crown Copyright ©
MR JUSTICE FANCOURT:
"Further, any reasonably competent litigation solicitors with experience of conducting litigation of the kind proposed should, in 2008, have known that it was possible to structure litigation funding in a way that gave such claimants an enormous tactical advantage. The structure of such litigation funding involved (1) the provision of legal services by way of conditional fee agreements ("CFAs") in respect of which an uplift of up to 100 per cent on base fees could be charged in the event of the claim succeeding; (2) the recoverability of those base and uplifted fees from an unsuccessful defendant; (3) the taking out of after-the-event insurance ("ATE Insurance") which provided cover against any costs liability to a successful defendant; (4) the availability of self-insured ATE Insurance which meant that the premium would only be payable in the event of a successful claim; and (5) the recoverability of the premium in respect of ATE Insurance from an unsuccessful defendant. Such a funding structure (1) was extremely favourable to claimants since it enabled them to litigate at almost no personal risk; and (2) exerted very considerable pressure on defendants (particularly those with deep pockets such as banks or insurers) to settle claims rather than take them to trial, since, if the claim succeeded, they faced paying the normal base fees, uplifted fees and ATE Insurance premium."
"In the circumstances, the Defendant was also under a contractual and common law duty:-
38.1 to take all reasonable steps to investigate such alternative funding arrangements at the outset (in other words after 11 August 2008 and by no later than early 2009);
38.2 to advise the Claimants of the possibility of and potential availability of such alternative funding arrangements;
38.3 to advise the Claimants, if such alternative funding arrangements could not be offered by the Defendant, that it was in their interests to consider whether other lawyers could offer such alternative funding arrangements;
38.4 to advise the Claimants that it was most unwise to commence legal proceedings without having such alternative funding arrangements in place, given that in the absence of such arrangements there was an obvious and very substantial risk (at the outset and by no later than February 2009) of a funding shortfall and the prospect of having to discontinue;
38.5 having (in the premises, negligently) allowed the Claimants to litigate without such alternative funding arrangements in place, to monitor closely the costs being incurred and to limit expenditure on disbursements."
"The Defendant was in breach of its contractual and common law duties to the Claimants.
Particulars
(1) The Defendant failed to give any sufficient consideration to, or advise on, the funding of the proposed litigation and the obtaining of insurance in relation to potential liabilities for the opposing parties' costs.
(2) The Defendant failed to recognise, or advise on, the fact that the funding arrangement which was used was very likely to lead to expensive failure for the reasons set out in paragraph 43 above.
(3) The Defendant failed to recognise, or advise on, the enormous advantages which would flow from the adoption of a CFA/ATE funding regime of the type described in paragraph 36 above, and, in particular, on the fact that such an arrangement would enable its clients to litigate against the Lenders at minimal personal risk in circumstances in which the Lenders would be exposed to liabilities for uplifts and ATE premiums on top of the normal costs liabilities if unsuccessful in their defences.
(4) The Defendant failed to monitor and limit the actual expenditure on disbursements, in particular counsel's fees, but, on the contrary, encouraged counsel to charge £100,000 per month for their work on the early stages of the litigation.
(5) If the Defendants and/or instructed counsel were unable or unwilling to contemplate accepting instructions on the basis of a CFA or partial CFA, then the Defendant should have advised its clients to seek advice from lawyers who were prepared to contemplate such instructions, but failed to do so.
(6) The Defendant failed to take any or any sufficient steps to investigate the terms on which a CFA/ATE funding arrangement might be available.
(7) The Defendant failed to give any or any sufficient advice on its clients' possible exposure to adverse costs orders, and as to the steps which might be taken to obtain insurance in relation to such exposure.
(8) The Defendant accepted instructions to act in substantial multi-claimant litigation when its ignorance of the funding arrangements which were then available to claimants made it unable to carry out its instructions competently."
"In about May 2008, Mr Lowe was instructed by RWP to advise SAFE and SAMAG in accordance with his written instructions dated 7 May 2008. Mr Lowe subsequently accepted instructions to act for the prospective Claimants (as and when they provided or secured, in full or in part, their contribution to the fighting fund) in the prospective and actual proceedings brought against the Lenders.
"By accepting his instructions and agreeing to act for the Claimants, Mr Lowe accepted a duty at common law to exercise the reasonable care and skill to be expected of a reasonably competent senior barrister with experience of acting on behalf of a very large number of claimants in complex litigation of the kind proposed in the High Court."
"Please identify precisely what work it is said should have been delegated to Mr Henderson and how, if at all, such delegation would have avoided the loss or damage in respect of which the Claimants claim and a contribution is sought by RWP."
"This is an unreasonable request. RWP faces a claim pleaded in Paragraph 44(4) of the Particulars of Claim that it failed to monitor and limit the actual expenditure on disbursements and, in particular, counsel's fees. As Mr Lowe is well aware it is RWP's case that it did not breach this duty for the reasons explained in RWP's Defence. The plea at Paragraph 25(8) is entirely contingent on a finding that RWP breached its own duty. It is for the Claimants to make good their own case in this regard."