Funding for disputes
Before adventuring into funding of a legal dispute with a timeshare company one should first be aware of the court system and what track a case will be allotted. In layman’s terms a track is the court’s way of dealing effectively with simple, difficult and large claims. Therefore you will find when the case is being managed it will either be allotted to small claims, fast track or multi track. The three tracks are designed to dispose of timeshare disputes within a busy court schedule.
Small claims dispute involve matter which do not exceed £10,000 however if those claims involve fairly complex area of law they can be moved up levels so as to give justice to the arguments on both sides.
In small claims the cost recovered by a party are very restricted and therefore pose less risk to consumers. In most cases the timeshare companies will be locked out of an entitlement to claim all their costs from you if your case flounders.
On cases such a timeshare maintenance disputes, this is the likely track your case will take unless the timeshare company seek to move it to the next level which will allow them to claim more costs in the event of a victory.
Fast track is the next level and in short parties may claim the costs from the other, however, the costs are limited in values as set out in practice direction part 45. The writer does not seek to explain all these fixed and variable costs at this stage, as they are complex and may cloud the issues being discussed in funding disputes.
Multi track is where costs are variable as matters dealt with in this track are complicated at times and need more consideration. The court justly accepts that matters referred to multi track must be reasonably compensated in the event a party is victorious.
Those, in short, are the three tracks which (if you are in a legal claim) your case will be dealt in. Each track has its own cost consequences.
The next matter for short discussion is costs awards.
Courts in my opinion do not want to adjudicate in your case; they don’t want to have to deal with litigants, however, it is a necessary evil to settle disputes in a nation such as the UK.
The courts would much prefer you and your opponent to sort out your dispute together. To encourage this, the courts use costs awards to encourage parties to settle.
So if two parties have fought and the court is forced to make an award then the court will award the winner his costs, however, that cost award is discounted by sum 20-30% these are referred to as standard cost awards.
However, if one party has been conciliatory and made offers to the other and they have not accepted those offer which the court thinks they should have, then costs sanctions will come into play to punish the litigant who has not been reasonable.
This explanation is an introduction as to funding a case as your action and that of the actions of the other party will affect any financial outcome penalty at the end of a case. Being reasonable will bring you later rewards or relief from sanction if the other party is unreasonable and bullies you.
Therefore your actions in a dispute and those of your opponent affect funding of the action.
All this aside the next matter is how you run the case. In all matters you are entitled to run your case on your own and/or have a assistant with you at trial. Running the case on your own generally referred to as being a litigant in person and the friend who assists you is a McKenzie friend. That friend can be anyone including a solicitor. This action is available to disputing parties at any stage in the proceeding from commencement to post trial. Being a litigant in person carries risk as you will lack legal knowledge and understanding, however, some people are confident and good at putting across their point well. The litigant in person will be entitled to have his costs paid by the other party however those costs are subject to limits by the court. All in all, it might to be considered if your budget is restricted.
The Timeshare Consumers Association can and will help you at all times by feeding you advice if and when you need it, we can write your pleading fill out your forms assist in such things as statements. Unfortunately, we will have to charge for these services however the charges will hopefully be far less than others.
When ever a litigant commences an action your solicitor is legally bound to tell you his cost estimate to take the matter to trial. So you can make an informed decision on the funding requirement.
Other Funding options
Consider when you apply for a mortgage or have a need to get a loan. You will have to explain what you want the money for how you will spend it and how you will pay it back. Dependant on the information you give the lender they will risk assess your proposal and will either decline your request or offer you the advancement but impose an interest rate to not only make profit but to reflect the risk the lender is taking.
In respect to legal actions you need and I repeat you need to understand your case, you need to be sure the issues you seek to argue are good and sound so that others can evaluate the risk they have is assisting you.
Like with any application for a mortgage you have to do your own initial checks which allow you to make good, just and informed decisions.
Consider the following:
Before the Event Insurance
Some home insurance policies include legal expenses, which may cover both your costs and the costs of the other party. You should check the terms of existing insurance, for example credit cards, home insurance, to ascertain whether any such insurance is both valid and suitable for your particular case. You might be unaware that you are covered and then all the cost worries are gone and you can have your day in court which might relieve you from your timeshare contract.
We would ask that in any event you share the information with us so that we can assist other regardless of the result. Any information will be warmly received.
Funding by a Union or Association
If you belong to certain trade unions or professional Associations, those memberships may include cover for any legal fees – in some cases, for both the client and their opponents. It is not unusual for the terms of the provision to require the use of panel solicitors and if so, you should terminate the paid advice of other and have all your pre action documentation forwarded to them to enable them to assist you.
Again you might be unaware that you are covered and then all the cost worries are gone and you can have you day in court which might release you from your timeshare contract.
We again would ask that in any event you share the information with us so that we can assist others regardless of the result. Any information will be warmly received.
The Legal Services Commission (LSC) administers the civil legal aid fund through the Community Legal Service. Only those organisations, including solicitors’ offices, which have a contract with the LSC can, undertake publicly funded work. In addition to using a contracted firm, to be eligible for public funding you the client must pass both a means and merit test. You may be required to make a contribution to the cost of your case. More information regarding the relevant criteria for these tests is available on the LSC website at www.legalservices.gov.uk.
There are certain types of cases that are excluded from LSC funding. These include personal injury, probate, commercial and property trust cases. As such, a client wishing to pursue a case should be advised from the outset that public funding may not be available.
Conditional Fee Agreements
Conditional Fee Agreements or CFAs, came into use in England and Wales in 1995 and are used as a method of funding, most commonly in personal injury cases. Sometimes referred to as ‘No Win – No Fee’, under these type of agreements, legal fees are only payable in certain situations. Both claimants and defendants are able to use CFAs.
There are a number of different types of CFAs. The most common form includes a success fee, whereby, at the end of the case, you will pay their legal fees plus an extra ‘success fee’ or percentage uplift. Should you lose, no fees are payable, although it should be noted that you will usually be required to pay the costs of any disbursements – e.g. experts’ reports or court fees and may be liable for the costs of the other side.
Under the Courts and Legal Services Act 1990, there are various requirements in relation to CFAs. Firstly, the agreement must be made in writing. Next, CFAs must not be used for funding either criminal or family law cases. In addition, the maximum amount of the success fee cannot exceed 100% of the base costs. Further, under Rule 2.03 of the Solicitor’s Code of Conduct 2007, a solicitor must explain to their client when they will be liable for costs – this includes both their own costs and those of the other side. A solicitor must also inform their client of any interest that they have in the policy.
Under the Access to Justice Act 1999, success fees under CFAs can be recovered from the losing side.
After the Event Insurance
This type of insurance is often employed as a supplement to a CFA. This provides you with insurance in the event that you lose the case and face an order requiring you to pay the costs of the other side. It may also cover the costs of your own disbursements. As its title suggests, this type of insurance can only be obtained once the ‘event’ – or dispute has occurred. This method of funding is often used as a last resort and you should be advised to investigate all other options since the insurance does not cover an award of damages or payment of a court order.
At all times and as explained in this website we are a not for profit company limited by guarantee. We are concerned with consumers and assisting consumers wherever we can. Please do not ever think we will be offended if you take or get assistance from others (we encourage you too), as we are only too will to assist you. We would hope (however there is no obligation) you will share information with us so that we can assist others in your position. If you believe that we have something wrong in respect to the advice we have given or your council has stumbled across issues that would assist others please tell us.
Notes Regarding McKenzie Friends and Litigants in Persons
A McKenzie friend assists a litigant in person in a common law court. This person does not need to be legally qualified. The crucial point is that litigants in person are entitled to have assistance, lay or professional, unless there are exceptional circumstances.
Their role was set out most clearly in the eponymous 1970 case McKenzie v. McKenzie. Although this role applies in the jurisdiction of England and Wales. He or she may be liable for any misleading advice given to the litigant in person but are not covered by professional discretionary benefits scheme insurance.
The role is distinct from that of a McKenzie friend.
In English courts, where a case is being heard in private, the use of a McKenzie friend has sometimes been contentious. This is a particular problem in family court hearings, where it has been held that the nature of the case is so confidential that no one other than the litigants and their professional legal representatives should be admitted to the court.
A 2005 Court of Appeal case, In the matter of the children of Mr O’Connell, Mr Whelan and Mr Watson, clarified the law in this area. The result of the appeal has legitimised the use of McKenzie friends in the family court and allowed the litigant to disclose confidential court papers to the McKenzie friend.
Litigants in person (LiP)
What is a litigant in person?
There is no typical profile of a litigant in person. The term commonly encompasses individuals who wish to represent themselves in legal proceedings, which may progress to court or tribunal. However, unrepresented parties may be encountered at any stage of the process, including prior to the start and after the issue of proceedings, as well as during proceedings. Any relevant professional obligations in this context will apply whether or not proceedings have been issued.
Some LiPs will take legal advice up to the point of going to a court or tribunal, where they will represent themselves; others may have chosen to litigate or defend claims brought against them without having obtained any legal advice. Establishing why a LiP is unrepresented or has chosen not to be represented may help you to understand their position and thereby inform the process. For example, if a LiP has no legal knowledge or a negative perception about legal professionals generally, this will impact upon the way in which you engage with them.
You should not make assumptions about the merit of a LiP’s case on the basis that they have not obtained representation. Some LiPs are court-literate and able to navigate the process because they have a legal background or other expertise which equips them for managing the case.
Such LiPs should be distinguished from those who feel that they have no other option but to represent themselves because they cannot afford to instruct a solicitor and have not been able to obtain free legal advice. Those in this situation may not have any comprehension of the legal process, nor are they able to form an objective assessment of their own case. The SRA Code discussed at section 3 of this Note, and your duties to the court at section 4, may be helpful in framing your approach to such LiPs.
The costs of an LiP are as a result of statute. No right existed under common law. The Litigants in Person (Costs and Expenses) Act 1975 (as amended) (the act) gives the LiP the right to recover ‘… sums in respect of any work done, and any expenses and losses incurred, by the litigant in or in connection with the proceedings to which the order relates’. The act does not apply in all instances, but it does apply to most cost-bearing tribunals, including all civil and family courts, the Lands Tribunal and both the first-tier and the upper tribunals. Where it does not apply, only out-of-pocket disbursements are recoverable (section 1(1) of the act).
While neither the act nor the Civil Procedure Rules (CPR) define what an LiP is, CPR 46.5(6) clarifies that an LiP can include a Company or other corporation, a barrister, a solicitor, a solicitor’s employee, a manager of a body recognised under section 9 of the Administration of Justice Act 1985 (incorporated practices) and a person who, for the purposes of the Legal Services Act 2007, is authorised to conduct litigation. In brief, a person who acts on his own behalf for either all or part of the claim is likely to be an LiP, unless represented. However, the fact that representation may be for only part of the proceedings does not preclude a successful LiP from recovering costs for the aspect of work he conducted while not represented (Agassi v Robinson (HM Inspector of Taxes)  EWCA Civ 1507,  1 All ER 900 at para 25).
A LiP seeking to claim costs may present a claim calculated in one of two ways:
- (a) An hourly rate to reflect actual financial loss, or
- (b) where unable or unwilling to establish actual loss, on a fixed hourly charge.
The hourly charge is currently £18 per hour, increased from £9.25 per hour on 1 October 2011. In respect of either category, the maximum the LiP can recover for time is two-thirds of the amount that would have been allowed if legally represented. This limit does not apply to disbursements.
In respect of financial loss, it is for the LiP to establish by evidence and on the balance of probability that a financial loss has been suffered. Furthermore, the LiP must go on to show what that loss actually is. As Mr Justice Robert Walker commented in Mainwaring v Goldtech Investments Ltd  1 All ER 467:
‘… a self-employed tradesman in a small but profitable way of business who has more customers than he can cope with and can fill every working hour to advantage; at the other extreme, a retired civil servant with an index-linked pension who finds the conduct of litigation a more interesting pastime than bowls or crossword puzzles.’
Between these two extremes, the court’s job becomes far more difficult.If the LiP can show that the work was undertaken during hours when he was available to earn, is that sufficient or must the LiP go further? In Joseph v Boyd & Hutchinson  EWHC 413, Mr Justice Patten considered that the court should adopt a ‘broad brush’ approach and not enquire to any great extent whether the LiP would have been engaged on other business. If he was available during working hours, one can assume he was available to work. However, even if one adopts such an approach, the LiP must nevertheless go on to show that he would have been gainfully employed and, more importantly, how much he would have earned. It is the amount lost that gives rise to the claim for financial loss. In practice, it is often on this last limb that LiPs fail.
Where a loss is shown, the LiP may recover that loss, even if the loss is less than the flat rate of £18 per hour. The LiP would be wise to look at the mathematics to ensure the actual hourly loss is greater than £18 per hour prior to making the election.
If the LiP has not suffered a financial loss, or is unable to show a financial loss, then the flat rate applies. While some commentators describe such a rate as low, when compared with legal aid rates, a ‘profit’ of £18 per hour is not unattractive.
Whether the LiP shows a financial loss, claims at the flat rate, or a mixture of the two, the figure allowed in total (excluding disbursements) cannot exceed two-thirds of the amount that would have been allowed if legally represented.
If the LiP seeks costs, either of an interlocutory application, or trial, the LiP should file and serve written evidence to show actual loss at least 24 hours prior to any hearing. It is assumed that this requirement will apply where the costs are likely to be summarily assessed. If the costs are to be assessed by way of detailed assessment, written evidence should be filed with the notice of commencement.
What can be recovered?
A successful LiP who obtains an order for costs may recover
- Costs for the same categories of:
- Work; and
- Disbursements, which would have been allowed if the work had been done or the disbursements had been made by a legal representative on the LiP’s behalf;
- The payments reasonably made by the LiP for legal services relating to the conduct of the proceedings; and
- The costs of obtaining expert assistance in assessing the costs claimed. CPR 46.5(3).
In respect of rule 46.5(3)(c) ‘expert assistance’ is defined in PD 46 para 3.1 as assistance from a barrister, solicitor, fellow of the Chartered Institute of Legal Executives, fellow of the Association of Costs Lawyers, or a law costs draftsman who is a member of the Academy of Experts or the Expert Witness Institute.
For ‘work done’, it has to be work that a legal representative would have undertaken, or a disbursement that would have been paid on the LiP’s behalf. Presumably, as in Law Society v Persaud (1990) Times, 10 May, QBD, the LiP, who lived in South Africa, would no longer be able to recover the costs of travel to London, as the notional solicitor would have been in London. The fact that the cost would have been recoverable had the LiP been treated as a witness is irrelevant.
The LiP must elect whether the claim is as a witness or as a notional solicitor. The LiP is not entitled to recover both (rule 46.5(5)). In Agassi the costs of employing a tax expert to undertake litigation work were not recoverable as a disbursement since a legal representative would not have employed a third party to undertake such work.
The same could also be said of the costs of routine postage, telephone calls, stationery and copying. Such costs are treated as part of office overheads and not normally recoverable by a legal representative. However, in Mealing-McLeod v The Common Professional Examination Board  EWHC 185 (QB), Mr Justice Buckley commented at (13): ‘A solicitor’s charging rate includes or takes account of the fact that he has support staff, secretaries, messengers, and so forth. A Litigant in Person, for example, must himself post letters, take files to court and photocopy documents. “The time spent reasonably doing the work…” mentioned in CPR 48.6(4) permits a reasonable assessment of time spent by the Litigant in Person and should reflect those matters.’
So while the direct cost of postage, calls and copying may not be recoverable, can the time spent undertaking such tasks be recoverable? Mealing-McLeod refers to CPR 48.6(4) and ‘… time reasonably spent…’. However, this definition no longer appears in either the rule or practice direction. It may now be questionable whether such costs can be recovered. It could equally be argued that these expenses are reflected as part of the legal representative’s hourly rate, and are not reflected in LiP rates. The LiP should therefore be able to recover such cost. This may be an argument for the future.
Can the LiP recover ‘additional’ time for research? This was considered briefly by Lord Justice Rimer in Grand v Gill  EWCA Civ 902, at (14). In principle he agreed with Lord Justice Schiemann (R v Legal Services Commission, Ex p Wulfsohn  EWCA Civ 250) that a reasonable sum for time expended in research in principle is recoverable. However, in Grand the £15,000 claim was allowed at £707.77 to reflect the two short issues upon which the claim succeeded. It would appear that on a robust summary assessment, the LiP is not immune from the effect of costs being reasonable/necessary/proportionate and, presumably post-April 2013, above all subject to being proportionate.
It is not permissible for the LiP to recover ‘notional’ disbursements, such as counsel’s fees where counsel was not instructed (Hart v Aga Khan Foundation (UK)  2 All ER 439). On a fast-track trial where the LiP can establish a financial loss, they are entitled to recover two-thirds of the amount that would have been allowed for the trial advocate. It would appear that such amount is irrespective of the actual financial loss. Furthermore, while the trial costs are fixed, if an advocate would have been entitled to additional costs under rule 45.39, so is the LiP.
If no loss can be shown, then the figure is an amount in respect of time reasonably spent. See rule 45.39(5).
So, in conclusion, when making an award in favour of an LiP, the court needs to:
- identify a rate, being either the actual loss, or the prescribed rate of £18/£9.25;
- assess the time reasonably/necessarily/proportionately spent (perhaps with an element of understanding for additional time on research, etc);
- Assess the figure a hypothetical legal adviser of an appropriate grade would have charged for the same work;
- Allow either the LiP’s assessed claim in full, or, if necessary, discount the figure to two-thirds of the amount that would have been charged by the legal representative; and
- Assess the disbursements.
Last modified: November 5, 2018