It is hard to believe that it is December and another 120 costs cases have been reported in the Costs Law Reports over the past twelve months. We know we keep banging on about how over 100 years of costs jurisprudence was contained in the first Core Volume of Costs LR containing just 36 reports, but the remarkable thing is that we have new cases literally queueing up for publication. The next Online edition is already full and we are halfway to filling up the next printed edition too!
Whilst we recognise that with few cases now being heard in Chambers, and with electronic reporting, it is much easier to access cases than it was 20 years ago, the burgeoning costs industry shows no sign of abating. Indeed, practitioners who think they can rely on their own researches to locate the latest case law should think again. We believe at Costs Law Reports that not only do we feature all the important judgments, but we also publish cases that are unreported elsewhere.
Being able to do this is nothing to do with conceit on our part, but, rather, it is due to a very considerable extent to the thoughtfulness of practitioners who send us transcripts of cases in which they have appeared or been instructed and which do not make it into Bailii or other such entities. We remain very grateful to those practitioners who provide us with such cases.
This month we feature two key decisions, the first of which resolves what has been a thorny issue about costs budgeting, and the second is another venture into the arcane world of the Solicitors Act 1974: when is an interim bill not an “on account” bill but a “statute” bill, a question which, according to the Court of appeal, foxed not only the costs judge at first instance, but also a very experienced High Court judge on appeal.
First, costs budgeting. Historically, hourly expense rates have always been a “big ticket” item in dispute on detailed assessment. With regard to budgeting, the problem stems from the wording of the Practice Direction at para 7.10 to CPR PD 3E:
“It is not the role of the court in the cost management hearing to fix or approve the hourly rates claimed in the budget.”
Given that hourly rates for incurred costs cannot be dealt with at the costs management hearing (see PD3E para 7.4) and, if in dispute, must be dealt with at detailed assessment, hitherto that has begged the question: if hourly rates for budgeted costs are not fixed or approved at the cost management hearing, where they are disputed, at what point does the court adjudicate upon them?
The answer according to Jacobs J in Yirenki v Ministry of Defence, reported today at  5 Costs LR 1177, is never. Accordingly, where the parties had obtained an order from the Master under which they were permitted to
“reserve their positions as to incurred costs, and as to hourly rates … subject to the proviso that it remains open to them to dispute those matters (and to that extent the figure for each phase [of the budget]) at a detailed assessment”
that order could not stand. According to the judge, the ultimate aim of the Practice Direction is to arrive at budgeted costs which fall within a range of reasonable and proportionate costs, and for there to be a figure given for each phase of the proceedings. The court should not approve the budget by reference to constituent parts, namely the hours spent and the expense rate used. On the contrary, there should simply be a figure given for each phase of the proceedings. Once given, each party then has the advantage of knowing what the budgeted figure is that that will be allowed on assessment, unless there is good reason for a departure from that figure (see the judgment at paras 18 and 19).
So that’s all been cleared up! No more argument at the costs management hearing about hourly rates and hours to be spent on the work to be done in the future under the costs budget: merely magic up a figure and if that is £10,000 for witness statements, it does not matter if it takes a Grade A fee earner one hour at £10,000 per hour, or 10 Grade D fee earners 10 hours each at £100 per hour to draft the statement: that £10,000 is yours and it is to spend how you like.
Now the Solicitors Act. Until the Court of Appeal’s decision in Slade v Boodia, also reported today at  5 Costs LR 1185, the view on the Masters’ corridor as elucidated by Slade J in her first instance decision in the case (see  6 Costs LO 781), was that an interim “statute” bill was final for the period to which it related and thus could not subsequently be added to or increased. As Master James had put it and as Slade J found:
“You cannot in my view have an interim statute bill and then come back at a later stage and say ‘Here is something else to go into that bill’. It is either a final bill for the period that it covers or it is not.”
In Boodia, the solicitors had delivered 43 bills for profit costs only, contending that they had been “statute” bills. Later, they invoiced Mr and Mrs Boodhia for various disbursements in another 18 bills which covered the same periods. “Foul” shouted the Boodias. “By adding disbursements to the profit costs only bills, they cannot be ‘statute’ bills because you are re-opening them,” they said.
Not so said the Court of Appeal. A solicitor’s bill does not have to include both profit costs and disbursements for the same period to be a “statute” bill. Accordingly, the fact that the bills rendered by the solicitors to Mr and Mrs Boodia had included profit costs, or disbursements, but not both, did not prevent them being interim statute bills. Decision of the court below reversed.
So that’s all been cleared up too! That said, it is hard to disagree with the sentiments expressed by Roger Mallalieu at the Costs Law Reports Conference that the Act is not fit for purpose. Indeed, as the Senior Costs Judge has articulated in a speech to the Civil Justice Council, is it not about time to rid the profession of these confusing species of bill? What other businesses in this day and age would deliver invoices which may or may not be final, depending upon whether they do or do not include disbursements, and if you do not speak up at the right time, you lose your right to challenge them.
In conclusion, we hope it will not be thought in bad taste to end the last Bulletin of the year by mentioning the Grim Reaper. However, we could not let the moment pass without drawing our subscribers’ attentions to two obituaries which have featured recently in the Times.
The first is that of Mr Justice Michael Turner, who did not decide any costs appeals so far as we are aware, but gave decisions which led to numerous detailed assessments, including the Vibration White Finger claims, and also those arising following the capsizing of the Herald of Free Enterprise. That vessel, it will be recalled, left Zeebrugge on 6 March 1987 with its bow doors open. Sir Michael subsequently acquitted the operator, P&O, of corporate manslaughter (193 passengers died), as there had been “no obvious and serious risk of injury” since there had been no less than 60,000 similar sailings with the bow doors open in which no mishap had occurred.
The second is the death of Baroness Trumpington. She was not a lawyer, but in her capacity as a life peer, she came across the Law Lords in the Upper House. She was also a terrific character, as can be seen from the following extract from her obituary:
“Former colleagues will miss such ‘Trump’-like interventions, such as the interruption of a boring speech by a Lord of Appeal when she declared that if anyone ‘wanted a pee, you should go now’. On another occasion she was invited by a magazine editor to a lunch where Nicholas Soames praised Virginia Bottomley as ‘one of the chaps’. The editor found this offensive and said that a woman cannot be a chap. Trumpington took the cigarette out of her mouth, put down her gin and simply said ‘Balls’.”
On that humorous note, we wish all our subscribers and readers a Very Happy Christmas and an even more prosperous New Year.
The headnotes and full texts of the cases below are available to online subscribers at www.costslawreports.co.uk. Follow Costs Law Reports on Twitter to be notified of new cases as soon as they are published.
New cases this month
Ayton v RSM Bentley Jennison and Others  5 Costs LR 915: Pre-action costs: whether recoverable where the full amount of the claim has been tendered pre-issue but without costs: costs consequences under CPR 36.17(4) where own offer beaten: whether just to disapply the rule.
R (The Law Society) v The Lord Chancellor  5 Costs LR 937: Judicial review: legality of the Lord Chancellor’s decision to reduce the amount payable in fees to litigators under the Litigators’ Graduated Fee Scheme implemented under the Criminal Legal Aid (Remuneration) (Amendment) Regulations 2017.
Welsh v Walsall Healthcare NHS Trust  5 Costs LR 1025: CPR Part 44, issue-based costs orders.
Culliford and Another v Thorpe  5 Costs LR 1039: Jurisdiction to order a payment on account of costs under CPR 44.2(8) after an order for costs has been made, drawn up and sealed.
Conversant Wireless Licensing SARL v Huawei Technologies Co Ltd and Others  5 Costs LR 1049: Principles to apply on making a costs order where the parties have agreed the terms of an application but not the liability for costs: appropriate level of interim payment under CPR 44.2(8).
Devoy-Williams and Another v Hugh Cartwright & Amin  5 Costs LR 1105: Part 36 offers: whether an offer, in which the time for acceptance had yet to expire, could be accepted after the action had been struck out for failure to comply with an unless order.
Gill v Heer Manak Solicitors  5 Costs LR 1165: Solicitors’ retainers: period of notice to be given to be given to the client in order for termination of the retainer to be valid.
Yirenki v Ministry of Defence  5 Costs LR 1177: Costs budgeting under Part II of CPR 3: principles to apply when fixing budgets and making costs management orders under CPR 3.15(2). FREE THIS MONTH
Slade (t/a Richard Slade and Company) v Boodia and Another  5 Costs LR 1185: Status of solicitors’ bills under the Solicitors Act 1974: whether bills containing only profit costs or disbursements, but not both, can nonetheless be interim “statute” bills.
Costs and Fees Encyclopaedia updating
The Legal Officers (Annual Fees) Order 2018 (SI 2018/899) replaces the 2017 Order with effect from 1 January 2019, prescribing the fees payable to diocesan and provincial registrars in respect of professional services. New pages are now available for printing out and adding to your Costs and Fees Encyclopaedia: Pages 381-386
Other recent cases
Page v RGC Restaurants Ltd  5 Costs LO 545: Costs budgets under Section II of CPR Part 3; failure to comply with CPR 3.13 and relief from sanctions under CPR 3.9 following failure to file a complete costs budget.
Francois v Barclays Bank plc  5 Costs LO 603: Allocation and re-allocation of cases to a track under CPR 26; notification to parties being required lest a party’s exposure to costs be unfairly increased.
BAE Systems Pension Funds Trustees Ltd v Bowmer & Kirkland Ltd and Others  5 Costs LO 613: Discontinuance under CPR 38.6; whether there should be a departure from the default rule where the claimant has discontinued against one defendant but succeeded against another.
Old Street Homes and Another v Chelsea Bridge Apartments Ltd and Another  5 Costs LO 625: Jurisdiction to make orders for costs: whether costs judge has power to determine who should pay costs of interim applications in the proceedings as opposed to during the detailed assessment.
KL Law Ltd v Wincanton Group Ltd and Another  5 Costs LO 639: Rule 80 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013; wasted costs orders.
LKH v TQA AL Z (Interim Maintenance and Pound for Pound Costs Funding)  5 Costs LO 653: Family proceedings: interim maintenance and “pound for pound” costs funding compelling payment of equal sums by the respondent to his solicitors as to the applicant for arrears of maintenance.
London Borough of Lambeth v MCS (By Her Litigation Friend the Official Solicitor) and Another  5 Costs LO 661: Costs in the Court of Protection; departure from the general rule where the proceedings should have never been commenced and on account of conduct after commencement.
Sony/ATV Music Publishing LLC and Another v WPMC Ltd (in Liquidation) and Others  5 Costs LO 665: Non-party costs orders under CPR 46.2: whether notice of an intention to seek an order is a requirement before a party can be ordered to pay costs of the action under the rule.