St Francis Group Ltd & Ors v Kelly & Anor [2025] EWHC 125 (SCCO) and the strike out of elements of the Points of Dispute
Background
The underlying claim concerns the sale of two properties to buyers represented by the Claimants. During this transaction, the First Defendant signed a Claim Waiver. This waiver unconditionally assured the Claimants that neither the First Defendant nor anyone associated with him had any claim against them. It also included an indemnity clause, promising to compensate the Claimants for any losses related to such a claim.
Subsequently, the First Defendant filed a claim against the Claimant, accusing him of breaching fiduciary duties by failing to clarify that the sale was a Management Buyout (MBO) and by not securing the best possible price for the First Defendant. The Claimant countered with a claim for indemnity under the terms of the Claim Waiver.
The First Defendant’s claim was completely unsuccessful, and the Claimant’s counterclaim succeeded. As a result, an Order was made, entitling the Claimants to recover their costs on an indemnity basis.
The Detailed Assessment Process
On November 8, 2023, the Claimant initiated the Notice of Commencement, claiming £468,687.15 from the Defendants. The Defendants responded with Points of Dispute in two parts: 12 preliminary points and objections to all 1,103 items listed in the bill.
One of the preliminary points raised by the Defendants argued that the Detailed Assessment process should not proceed until the Court addresses Points 1-4 of the Preliminary Points.
In their Replies, the Claimant consented to a preliminary hearing, on the condition that the Court also considers the argument that the Defendants’ Points of Dispute were insufficiently detailed.
Issues with the Points of Dispute
Out of the 1,103 disputed items, 20 concerned disbursements and 3 related to bill preparation. These issues would be addressed at the full Detailed Assessment hearing. For the remaining 1,080 items, each dispute was described in the same manner, with the wording:
"See PP1, 6,7,8,9,11. Unreasonable time claimed, reduction sought as per Ds offer and grade."
Each disputed item was followed by an offer column, showing 22% of the time claimed, rounded to the nearest unit. However, no offer was made for items involving 6 or 12 minutes of time. Additionally, the Defendants presented a “cumulative” offer at 22% of the time claimed, while also indicating the grade they argued for in a separate column.
Costs Judge Leonard reviewed the principles established in the cases of Ainsworth and O’Sullivan and found that Ainsworth provided key guidelines for assessments between solicitors and clients, or between opposing parties.
The judge determined that Points of Dispute must clearly specify which items are being challenged and the nature of the challenge. This ensures that the Receiving Party has enough information to prepare a response. It was considered unreasonable to expect time to be spent during the Detailed Assessment hearing identifying the disputed items, as this should be clearly outlined from the beginning to avoid any surprises. Furthermore, Points of Dispute should be structured in a way that allows for a fair and proportionate Detailed Assessment hearing. It is unreasonable to expect the Court to go through each item line by line to ensure it hasn’t been objected to.
Preliminary Points
Counsel for the Defendants argued that the guidance in Sullivan set a satisfactory standard for Points of Dispute and that the standard had been met in this case. However, Costs Judge Leonard disagreed, highlighting several issues. For example, every item in the Points of Dispute was challenged as being outside the scope of the Order, and 41 items at Grade D were contested because they should have been delegated to a Grade D fee earner. Identical objections were raised regarding disbursements in the bill.
The judge then considered each preliminary point individually. Except for the few examples provided by the Defendants, preliminary points 1, 6, 7, 8, 9, and 11 were struck out for failing to provide sufficient detail.
Analysis
This case underscores the importance of procedural fairness during assessments. The Receiving Party must be able to clearly identify the disputed issues to prepare a full response and potentially narrow the scope of the disagreement. While the Paying Party may have believed that submitting minimal replies and raising objections during the assessment would save costs, they may now face higher costs than if they had provided more detailed and comprehensive Points of Dispute initially.
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