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Costs Judgments. Why are we waiting?

The publication of In re Clark [1851] 13 Beav 173 affirmed on appeal (1851) 1 De Gex M & G 43; [2015] 6 Costs LR 917, is a fine illustration of the brevity of Victorian judgments. Not only were they short and to the point, but the Law Reports invariably summarised counsels’ submissions ahead of the actual judgment itself. Those submissions were often punctuated with interventions made by the judge and how learned counsel had dealt with them when “thinking on his feet”. Imagine how lengthy law reports would be today if not only the transcript was published, but also the arguments which had preceded the judgment.

The fact that the judgments were brief is not to deride their quality in any way; the reverse, in fact, is the case. If by today’s standards, the language is a little staid, the contents are often a joy to read; clear, logical and eminently sensible. When today’s judge is preparing a judgment in a case in which Victorian authorities have been heavily cited, it must be a relief to know that even if the words are somewhat dated (the Court of Lunacy, for example, with its “Masters in Lunacy”, has long since become the Court of Protection), the time spent reading them will be commensurately short. Thus, although it might be expected that a judge today would initially view the prospect of trawling through a line of Victorian authorities with trepidation, the task will, in fact, be far from daunting. The law and the result will have been set out with impeccable logic.

Of course, in those days, in most cases, the judgment would have been delivered “on the day” as soon as counsels’ submissions had ended. If that were not the case and judgment was reserved, “handing down” as it is now called, would have been by way of the judge reading out his judgment to a full court on another day. Not for the Victorians, the modern way where cases are often listed for “hand down only” to an empty court where the judgment will earlier have been circulated to the parties by email.

Still within the memory of many practising lawyers will be the pre-skeleton argument days, which had their origins in the Court of Appeal when Sir John Donaldson was Master of the Rolls. His predecessor, Lord Denning, had a reputation for giving the lead judgment as soon as counsels’ submissions had finished. Reserving was not for him unless absolutely necessary, nor did he require skeleton arguments. Even in the twilight of his career, Denning MR expressed difficult concepts with consummate ease. In costs, his last significant judgment was Chamberlain v Boodle & King [1982] 1 WLR 1443, a decision about the validity of a solicitor’s bill under the Solicitors Act 1974, which has stood the test of time and contains some classic Denning-esque language:

"It is those bills which Mr Chamberlain claims should be taxed. But the solicitors say that he has no right to have them taxed: because there had been an agreement in writing.
Before I conclude the story, I may say that Mr Chamberlain was not at all polite to the solicitors about the matter. He wrote a letter saying:


‘the various attorneys and their minions are no doubt wringing their hands in collective disgust now that new fees and costs will not be incurred through their arcane efforts.’
That ends the story. I turn to the question which is at the root of this case: Was this a contentious business agreement in writing? … In this case it seems to me that the judge did exercise his discretion on the facts leading up to the litigation. Mr Chamberlain did not pay the sums on account for which he was asked. Bills were running up. The solicitors had to write to him on the April 4, 1979 telling him of the difficulty, and asking him to deal with the charges for the work to be done from thenceforward. Not only did he not pay them on account the sums for which they reasonably asked: but, in addition, he wrote the disagreeable letter afterwards in regard to solicitors who had undoubtedly done a first-class piece of work on his behalf. As far as I know, the charges for this excellent work in a most complex litigation may be entirely fair and reasonable."

After Lord Denning’s retirement, skeleton arguments became compulsory in the Court of Appeal with the intention of shortening the list of appeals waiting to be heard, which, under Lord Denning, had reached more than twelve months. Now they are ubiquitous in all courts and it is a rare event for the judge to be without a skeleton argument, even in the most straightforward of cases. Although the Practice Direction at 52A para 31 states that the purpose of a skeleton argument is to assist the court by setting out, as concisely as practicable, the arguments upon which a party intends to rely, the practice has built up over the years whereby skeletons can run to scores of paragraphs, driven by concern that if no stone is left unturned, a point critical to the outcome of the case will be overlooked.

The Court of Appeal has now said its bit on this development; see Tchenguiz v Director of the Serious Fraud Office [2014] EWCA Civ 1333, in which Sharp LJ stated that where Eder J’s judgment below had run to eleven pages, an eighty-one page appellant’s skeleton argument amounted to “gross non-compliance with the rules”. To add insult to injury, there had then been a supplemental skeleton and to scupper this prolixity, Jackson LJ limited the reliance that the appellant could place upon 20 paragraphs of it and directed that whatever the outcome of the appeal, no costs would be recoverable for the preparation of any skeleton argument that the appellant had relied on.

Whether or not skeleton arguments truly assist the court, by setting out concisely the arguments upon which a party intends to rely, is a matter for debate. If their purpose is also so that they should make the judgment easier to prepare, what can be said with certainty is that they have led to longer judgments which would be unrecognisable to the judges who honed their skills under Queen Victoria, or even to Lord Denning himself.

That said, judgments are now delivered in many different ways. In costs cases at a detailed assessment, each decision is generally extempore. In other cases, such as at the end of an interim hearing or even a trial, the judge will give judgment there and then. Where that is not possible, owing to complexity or lack of time at the end of the day, the judge will sometimes retire, work out the decision, and return to court a short time later to deliver it orally. On other occasions, the judge will simply “reserve overnight” and read out his or her decision the following morning or a few days later when it is convenient for the parties to attend. In any of these situations, there will be no formal transcript. If one is needed it is for the parties to apply to the court in order that arrangements can be made to obtain a transcript from the tape recording through an approved court transcriber. Before that transcript can be released into the public domain, it must first be approved by the judge.

In view of the complexity of cases today, which are not limited to trials, but also include arguments on preliminary points and issues of principle, a formal “reserved” judgment is often given. There is then is a procedure of its own to follow. The court will send a draft judgment by email to the legal representatives upon which they can take instructions from the parties within strict time limits, but which is otherwise embargoed until the date of formal handing down. Any suggested alterations are limited to typographical errors; the circulation of the judgment in draft is not to provide the parties with an opportunity to make additional submissions.

What happens in the Court of Appeal is rather different as there will be a minimum of two judges hearing the appeal and usually three. In a straightforward case (is there still such a thing in the Court of Appeal?), at judgment time in a three judge court, the junior member will rise from his seat, travel across the court so that he is behind his fellow judges and join a huddle prior to one of the three giving an extempore judgment. Where more elaborate discussions are required, the court will rise and adjourn to the judicial corridor or to a judge’s room in order to deliberate and thereafter return to the court to give judgment. The final alternative is for judgment formally to be reserved. In that eventuality, it is usual for one member of the court to write the judgment to which the other members will contribute, but where, as happened in Bentine (featured in the January bulletin), there is an element of disagreement, it is often the case that each member of the court will write an individual judgment which will be handed down together.

Cases in which there has been a formal hand down create no difficulty for the Editors of Costs Law Reports. Notice is often given by the court in advance of the date on which the judgment will be released into the public domain. More problematic is where there is a reserved judgment which is then read out at a later date, or a judgment that is extempore and no record of it exists, save for a hurried note taken by counsel or solicitors. If the judgment is of sufficient importance to be included as a Costs Law Report, it is then necessary to obtain a transcript which in turn needs to be approved by the judge. That can take time owing to the relentless burden of work with which judges at all levels have to cope. Currently the following are a few of the cases “on hold” awaiting judicial approval of the transcripts – Clutterbuck v HSBC (fraud so indemnity costs), Caliendo v Mischon de Reya (costs budgeting) and Engeham v London & Quadrant Housing Ltd (important CA decision on revoverability of success fees).

So that is why we have been waiting. Once these important decisions have been approved, they will be published in future editions of Costs Law Reports, in most cases being the first occasion on which the transcript will have become available for the legal profession to read in full.

Costs sanctions for failing to mediate. The wait is over.

Now mediation in costs. Much has been written and said about the value of Alternative Dispute Resolution as an alternative means of resolving disputes which otherwise would end up in the courts. We featured mediation in the July 2015 bulletin, in the context of costs sanctions, where there has been an unreasonable refusal to mediate in the litigation itself. Until now, there has been no equivalent in detailed assessment proceedings in which an offer to mediate has been refused in the context of the quantification of the costs of the action.

That has all changed. So far, the existing authorities have concerned the costs of winning parties who declined invitations to engage in mediation and suffered a reduction in their costs as a result. The situations in two recent detailed assessments were different. In each case, the receiving party had suggested at an early stage that before the expense of detailed assessment was incurred an attempt through mediation should be made to resolve the costs. In both matters the paying party was the same, namely the National Health Service, and in each the NHSLA, which manages the defence of claims against the NHS, had done nothing about the invitations until months later. When the matter of the costs of the detailed assessment came to be decided, each costs judge expressed his disapproval at the failure of the NHS to engage in the mediation process. In Reid v Buckinghamshire Healthcare NHS Trust [2015] EWHC B21 (Costs) Master O’Hare said this…

"I want to end with a brief note of caution about sanctions imposed on parties who unreasonably refuse to mediate. Case law on this topic is largely about penalties imposed on parties who are in other respects the successful party. In Halsey v Milton Keynes NHS Trust [2004] EWCA Civ 576 and in other cases, penalties imposed upon winners. They do not involve the imposition of further penalties upon losers. One can see that throughout the judgment in Halsey. I will read out a sentence from para 28:


‘As we have already stated, the fundamental question is whether it has been shown by the unsuccessful party that the successful party unreasonably refused to agree to mediation.’
There are many other such references to this being a penalty against winning parties, for example, see paras 13 and 34.
If the party unwilling to mediate is the losing party, the normal sanction is an order to pay the winner’s costs on the indemnity basis, and that means that they will have to pay their opponent’s costs even if those costs are not proportionate to what was at stake. This penalty is imposed because a court wants to show its disapproval of their conduct. I do disapprove of this defendant’s conduct but only as from the date they are likely to have received the July offer to mediate."

In the second case, Bristow v The Princess Alexander Hospital NHS Trust [2015] EWHC B22 (Costs) Master Simons followed that lead. He said:

“The parties should be encouraged to enter into mediation and if one party fails to enter into mediation and that failure is unreasonable then there should be a sanction.”
“It took three months for them [the defendants] to reject and they gave no good reason other than the fact that the case had already been set down for a detailed assessment.”

As a reflection of the court’s disapproval in each case, the NHS Hospital Trusts were ordered to pay the costs of the detailed assessment on the indemnity basis, in Reid from the date that the offer should have been addressed, and in Bristow from the start of the costs proceedings themselves.

It will be recalled that when Sir Henry Brooke was Vice-President of the Court of Appeal and guidance was being given about the value of ADR as a means of resolving disputes, he was a strong advocate of mediation. As an arbitrator, his appetite is undiminished and having read the decisions in Reid and Bristow, he has commented as follows about the refusal of the NHS authorities in England to mediate:

"In short, after a long delay the NHSLA’s solicitors refused an invitation to mediate the claimant’s costs bill in each case. In he first case (Reid) they gave no reasons at all. In the other (Bristow) they said only that the case had now been set down for a detailed assessment. In other words, they did not think there was any need for them to justify their refusal.
In each case an experienced costs judge held that their refusal to mediate was unreasonable. In each case the defendants were ordered to pay the claimant’s costs of the costs dispute on an indemnity basis, not the usual standard basis. In the first case Master O’Hare said that this order carried the implication that there would be no inquiry as to whether those costs were proportionate. In each case the defendants also had to pay interest at the rate of 8% p.a. on the unpaid costs until the date of judgment.
They also had to pay their own costs of the detailed assessment: in the first case, where they failed to ‘beat’ a Part 36 offer, they had to pay the claimant a 10% uplift of £13,000 on the award of costs as well.
Since taxpayers’ money was at risk, it would be good if the claimants’ solicitors (who were the same in both these cases) could collaborate with the NHSLA in reporting to the public just how much money was in fact wasted by the stance adopted by the defendants’ representatives in each case.
If, by way of illustration, the taxpayer had to pay £50,000 in each case more than he would have had to pay if those representing the NHSLA had behaved prudently and reasonably, that would mean that £100,000 of public money went down the drain for no real purpose. Oh dear."

Similar sentiments came from Hannah Rawlins, the Registrar of Costs ADR, who commented:

“It is clear that mediation is becoming increasingly important in costs proceedings and parties should seriously consider if they refuse to mediate, whether that is conduct that is reasonable. To date, we have not seen a ‘reasonable refusal’ in the courts in costs proceedings and it is in the interests of all parties to consider carefully how the courts will react should a reasonable offer to mediate be refused. The judgement from Master O’Hare previously and now Master Simons provides a clear direction that mediation is being endorsed and that if invitations to mediate are addressed late, ignored, or refused altogether, sanctions will be imposed by the court on the offending party.”

A point not to be overlooked is that invitations to mediate costs can be made by any party, whether paying or receiving. The two cases mentioned above relate to sanctions against the paying party but there is no reason why a receiving party should not be subject to sanctions in the event of an unreasonable refusal to take up a paying party’s offer to mediate. In such a case, the consequences have the potential to be worse as the weapons at the court’s disposal will include not only the award of costs on the indemnity basis, but also a reduction in the assessed costs themselves. Much for both sides to mull over when considering offers to mediate, whether making or receiving them.

The headnotes and full texts of the cases below are available to online subscribers at www.costslawreports.co.uk.

NEW! Costs Law Reports Online 2016/1

Van Oord UK Ltd and Another v Allseas UK Ltd [2016] 1 Costs LO 1: Part 36 offers; whether Part 36 offer made by defendant in counterclaim is to be treated as a claimant or defendant offer in terms of costs consequences; indemnity costs.

Ghising v Secretary of State for the Home Department [2016] 1 Costs LO 17: Conditional fee agreements; recovery of a retrospective success fee for work undertaken where the claimant’s application for legal aid to cover an appeal was still to be decided by the Legal Services Commission.

R (Davies) v Royal College of Veterinary Surgeons [2016] 1 Costs LO 31: CPR 44.2, court’s discretion as to costs.

R (Baxter) v Lincolnshire County Council [2016] 1 Costs LO 37: Liability for costs in the Administrative Court where parties have settled their differences in an agreed order excluding the costs: determination of costs by the single judge on the papers.

Lewis and Others v Ward Hadaway (a Firm) [2016] 1 Costs LO 49: Striking out under CPR 3.4(2): whether payment of incorrect court fees amounted to an abuse of the process of the court and if not, whether summary judgment should be granted in favour of the defendant where striking out would be a disproportionate sanction.

IG Index Ltd v Cloete [2016] 1 Costs LO 79: CPR 3.4(2)(b) application to strike out claim.

Crooks v Hendricks Lovell Ltd [2016] 1 Costs LO 103: Costs consequences of Part 36 offer; CRU.

R v Jagelo [2016] 1 Costs LO 133: Remuneration under the Litigator Graduated Fee Scheme: whether in relation to the appellant’s claim for payment for considering pages of prosecution evidence, the court was bound by the decision in R v Furniss [2015] 1 Costs LR 151 and if not whether it should follow Furniss in any event.

Costs and Fees Encyclopaedia updating

The Family Proceedings Fees (Amendment No. 2) Order 2015, SI 2015/1419, made changes to article 3A of and Schedule 1 to the Family Proceedings Fees Order 2008 with effect from 17 July 2015. Updated pages are now available for printing out and adding to your Costs and Fees Encyclopaedia: Pages 254 and 260

The Immigration and Nationality (Fees) (Amendment) Regulations 2015, SI 2015/1424, have made two small changes to Schedule 2 to the Immigration and Nationality (Fees) Regulations 2015, as of 27 June 2015. Updated pages are now available for printing out and adding to your Costs and Fees Encyclopaedia: Page 310

The Civil Procedure (Amendment No. 4) Rules 2015, SI 2015/1569, have added a new sub-paragraph (c) to CPR 47.6(1), with effect from 1 October 2015. An updated page is now available: Page 47

Part 76 of the Criminal Procedure Rules 2011 has been replaced by Part 45 of the Criminal Procedure Rules 2015, SI 2015/1490, with effect from 5 October 2015. Replacement pages are now available for printing out and adding to your Costs and Fees Encyclopaedia: Pages 189 to 203

Costs Law Reports 2015/6

In re Clark [2015] 6 Costs LR 917: Calculation of costs disallowed on an assessment of a solicitor’s bill under the Attornies and Solicitors Act 1843 (a forerunner to the Solicitors Act 1974) for the purpose of deciding who was the successful party under the one sixth rule then in force: both costs taxed off and costs struck out of the bill for want of a retainer were to be included in the calculation, no distinction to be drawn any longer following the passing of the Act, between costs struck out of a bill and costs taxed off.

Harlequin Property (SVG) Ltd and Another v Wilkins Kennedy (a Firm) [2015] 6 Costs LR 925: CPR 25.12 and 25.13; security for costs; provision of security by After the Event insurance policy; application to reduce the level of security to provide for increase in disbursement funding.

R (Bedford Land Investments Ltd) v Secretary of State for Transport and Another [2015] 6 Costs LR 937: Costs against an interested party on objection to a compulsory purchase order; correct interpretation of s 250 Local Government Act 1972.

Rayner v The Lord Chancellor [2015] 6 Costs LR 957: Costs protection of a funded party against whom an order for costs has been made: liability of the funding authority to pay costs of a non-funded party; reg 5 Community Legal Service (Costs Protection) Regulations 2000.

Ong and Others v Ping [2015] 6 Costs LR 997: Costs of separate representation by claimants in disputes concerning trusts; whether claimants who have been separately represented are restricted to one set of costs or are entitled to claim the costs of two firms of solicitors.

Minkin v Landsberg [2015] 6 Costs LR 1025: Whether solicitors instructed on a limited retainer in matrimonial proceedings for which legal aid is no longer available have a broader duty of care to their clients to give broader advice or warnings on aspects of the case beyond those on which they believe they have been retained.

Dutton and Others v Minards and Others [2015] 6 Costs LR 1047: CPR 36.10; late acceptance of Part 36 Offer; whether the court should decline to make the costs order envisaged by CPR 36.10(5) on the grounds that to do so would be unjust.

Capital for Enterprise Fund ALP and Another v Bibby Financial Services Ltd [2015] 6 Costs LR 1059: Court’s jurisdiction to give indication after trial as to whether an increase in the costs budget would have been allowed had an earlier application been made; if so whether it should be exercised so that an interim payment on account of costs would include a sum in respect of that increase.

French v Carter Lemon Camerons LLP [2015] 6 Costs LR 1065: Application for permission to appeal out of time against an unless order striking out an action for negligence upon failure to pay a costs order; whether conduct and the failure to meet costs orders in other proceedings involving the same parties should be taken to account.

French v Carter Lemon Camerons [2015] 6 Costs LR 1075: Application for an extended civil restraint order under CPR 3C where the costs expended on litigation far exceed reasonable proportions with no realistic prospect of the defendant ever being paid by the claimant any significant amount in respect of costs owing under court orders.

Various Claimants v Sir Robert McAlpine and Others [2015] 6 Costs LR 1085: Costs budgeting under CPR 3.15 in group litigation: whether costs which have not been challenged are agreed costs for the purposes of CPR 3.15(2)(a); proportionality of costs budget applying the two-stage approach in Lownds.

Yentob v MGN Ltd [2015] 6 Costs LR 1103: Costs where a party has failed to beat an offer made under CPR Part 36: whether the normal costs consequences of not accepting the offer should apply, or whether that would create an outcome that was unjust under CPR 36.21(3)(a).

Breslin v Bromley and Others [2015] 6 Costs LR 1115: Costs in probate proceedings; where the testator or principal beneficiary is to be viewed as “really the cause of the litigation”, the appropriateness of making an order for costs to be paid out of the estate or to leave the parties to bear their own costs.

Thevarajah v Riordan and Others [2015] 6 Costs LR 1119: Relief from sanctions under CPR 3.9 following breach of an unless order to provide full disclosure: whether a material change in circumstances was needed and if so whether such a change had been established: application of Denton principles.

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