Afan Valley Limited v Lupton Fawcett (a firm) & Ors

Recent case law emphasises the significant cost consequences of having a claim struck out.

A law firm, Lupton Fawcett LLP, successfully defended a professional negligence claim brought against them by 43 liquidating companies. These companies alleged that Lupton Fawcett, along with another firm, Metis Law, had provided negligent advice that led to their financial downfall.

The High Court dismissed the claims against Lupton Fawcett, striking out their case. The court then awarded Lupton Fawcett 75% of their legal costs incurred in defending the claim. This means that the firm was reimbursed for a significant portion of the expenses they incurred in fighting the accusations.

The court did find that some of Lupton Fawcett’s arguments in the defence were weak, which affected the cost recovery. Specifically, the judge indicated that the firm could not fully justify certain claims regarding its conduct (which caused the Claimants to incur significant unnecessary costs), leading to a determination that they should not recover all their costs. The overall ruling allowed for a recovery of 75% instead of 100%.

This ruling made by the court emphasises that even winning a case does not guarantee full cost recovery if some arguments fail.

What does it mean for a claim to be struck out?

For a claim to be ‘struck out’ means that the court, whether in the high court, county court or court of appeal, has dismissed the claim. This can happen at various points during the legal process and is at the court’s discretion.

Grounds for striking out a claim can include situations where the statement of case discloses no reasonable grounds for bringing the claim, procedural failures, or instances of abuse of the court.

Striking out a claim in pre-trial stages means that the case will not go to trial, and the details of the claim will not be heard in court.

The court can also order the party that brought the struck-out claim on the claimant’s behalf to pay the legal costs incurred by the other party.

Courts have discretion in deciding whether to strike out a claim, often considering the interests of justice, the nature of the claim, and the potential impact on the parties involved. Depending on the circumstances, a party may have the right to appeal the decision to strike out the claim.

If you require costs assistance following an application to strike out claim, please do not hesitate to get in touch with our team of experienced costs lawyers and costs draftsmen at ARC Costs.

Reasons for a claim being struck out

Claims can be struck out for various reasons, typically related to procedural or substantive issues that prevent the case from proceeding.

Lack of Merit

A claim is said to lack merit when it fails to have sufficient legal foundation or factual basis to support the relief or damages sought. Courts typically assess whether the facts presented, if proven true, would entitle the claimant to any legal remedy. If not, the claim may be struck out to avoid wasting court resources.

Procedural Irregularities

Failure to comply with specific practice directions or court rules can result in a claim being struck out. This includes not serving the opposing party properly or failing to file documents within 14 days, for example.

Abuse of Process

This occurs when a party misuses the legal process for ulterior motives, such as pursuing claims already decided or seeking to intimidate the opposing party.

Failure to Disclose a Reasonable Cause of Action

A reasonable cause of action must be established by outlining sufficient facts that, if proven, would constitute a legal claim. Courts evaluate whether the pleadings indicate a recognisable legal theory and factual basis. If they do not, the claim may be struck out.

Inadequate Evidence

A claim may be struck out if it is based solely on speculation or lacks credible evidence to support the assertions made. Without evidence, the court cannot reasonably conclude that the claimant has a valid case, leading to the dismissal of the claim.

Non-Compliance with Court Orders

If a claimant has failed to comply with previous court orders, such as directives to provide documentation or participate in discovery, the court may strike out their current claim.

Settlement or Resolution

If the parties have reached a settlement or resolution outside of court, there may be no need for the claim to proceed. The court may strike out the claim, acknowledging that the dispute has been resolved amicably.

Expiration of Limitation Period

Legal claims must be brought within specific time limits, known as limitation periods, which vary depending on the type of claim. If a claimant files a lawsuit after the limitation period has expired, the court may strike out the claim as time-barred, meaning it cannot be pursued any further.

Costs consequences of a claim being struck out

When the court strikes out a claim during legal proceedings, there can be significant cost consequences affecting the parties involved.

Costs orders can be made by the court, which generally requires the losing party (the party whose claim was struck out) to pay the legal costs incurred by the successful party (the party that defended the claim).

The court may order the costs to be paid on a standard basis, based on the actual costs of the proceedings, or on an indemnity basis, which can cover broader expenses and allows the successful party to recover more.

After a claim is struck out, the successful party usually submits a detailed breakdown of their costs to the court. The court assesses whether these costs are reasonable and proportionate. The court will consider the complexity of the case, the time spent on the claim, the rates charged by legal professionals and everyone’s conduct during proceedings.

The party who initially brought the claim will likely face significant financial consequences if the claim is struck out. They will not only have to cover their own legal fees but will likely have to cover the costs of the defending party, too.

The financial repercussions of being ordered to pay costs after a claim is struck out can serve as a deterrent for future claims, particularly if the party has a history of unsuccessful claims. Repeatedly having claims struck out can impact a party’s reputation in legal circles, making it more difficult to present credible claims in the future.

How can ARC Costs assist?

ARC Costs are a team of specialist Costs Draftsmen and Costs Lawyers who can assist in all costs-related disputes. We regularly provide advocacy-related services to professional and Litigant in Person clients, and as independent costs experts, we can act for either the Paying or Receiving Party.

If you require costs assistance following an application to strike out claim, please do not hesitate to get in touch. 

If you are awarded costs, we can assist in preparing a Bill of Costs on your behalf, and negotiating with the Paying Party to achieve the best outcome on your behalf. As regulated Costs Lawyers, we can conduct the processes and procedures in relation to legal costs, known as detailed assessment proceedings, on your behalf. Therefore if it becomes necessary, we can take disputed costs matters throughout the Court process to a detailed/provisional assessment hearing to obtain the best result. 

If a costs order is made against you or your client, we can also assist in preparing Points of Dispute and ensuring significant reductions are applied to the costs claim. We also seek to bring matters to an expeditious and cost-efficient close, so as to avoid the accrual of interest and detailed assessment costs. 

To discuss your potential costs claim further, please do not hesitate to contact us on 01204 397302 or email one of the team at info@arccosts.co.uk.

Alternatively, you may complete our online enquiry form and we will be in touch as soon as possible to discuss your query.

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