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Costs Law Reports Conference: 25 September 2019

At the offices of Eversheds Sutherland at 1 Wood Street, London, EC2V 7WS

We are delighted to announce our team of confirmed speakers for this year's Conference and the topics which they will be covering. Notification of further speakers and the Key Note Speaker will be given in due course together with the allocation of subject matter which the Conference will be covering this year.

This will be our sixth Conference and we are pleased to report that Nicholas Bacon QC and Alexander Hutton QC will be returning, each having spoken at the previous five, together with senior junior, Roger Mallalieu. There will also be a Team from our principal sponsor Temple Garden Chambers headed by Simon Browne QC, which will include Juliet Wells who was a member of the Jackson working group given the task of preparing the Capped Costs Pilot Scheme.

From the judiciary, we shall be welcoming Master Jennifer James with Master Colum Leonard and the Senior Costs Judge, Master Andrew Gordon-Saker. From the world of academia, our resident Costs Guru Professor Dominic Regan will be returning. They and the other Speakers will be giving us the benefit of their views on the following subjects:

  • Costs budgeting after Yirenki and Arcadia Group: are the judgments of Jacobs J and Warby J about hourly rates in conflict? Sanctions: any lifeline for offenders? What is a "significant development" and a "good reason" to depart from the last agreed or approved budget?
  • Proportionality: is it worse than Brexit – when will we stop talking about it?
  • Fixed Costs and the Capped Pilot Scheme in the Business and Property Courts. Will this be the end of costs and detailed assessment as we have known it?
  • The Solicitors Act: still unfit for purpose: what changes are on the way?
  • Protected parties: having your costs paid out of the client's damages: what is the new Practice in the Queen's Bench Division and Senior Courts Costs Office?
  • The Electronic Bill: does it work and if not, can it be avoided? What is the Pilot Scheme for Summary Assessment under PD 51X and will anyone use it?
  • A journey through the latest case law on QOCS, Part 36, third party costs orders and payments on account.
  • Conduct sounding in costs following Bamrah and Murray v Oxford University Hospitals NHS Trust.
  • Conditional fee agreements and After-the-Event insurance premiums: for how long will the CFA tail continue to wag after West v Stockport NHS Foundation Trust and NJL v PTE?

By popular request, we shall be increasing the number of speaker slots this year and once again, by courtesy of Temple Garden Chambers, there will be a Drinks Party to round off the day in the offices of our hosts, Eversheds Sutherland.

Click here for more information.

"Failing" Grayling

When a person who is well liked is down on his or her luck, sympathy abounds. But when such a person is disliked, the opposite is generally the case. No one will come to their aid, a fortiori where that person is a politician upon whom the newspapers have been waiting for a chance to pounce. Last week, that person was the hapless Christopher Grayling MP, Minister for Transport, who, in addition to having had to field the obloquy flying his way, also has the misfortune to possess a surname which rhymes with "failing", hence the Fleet Street soubriquet "Failing Grayling".

The background into how this nickname was acquired has been a feature of press reporting of the matter, almost overshadowing Brexit. Ministerial Departments over which Mr Grayling has presided have been examined in detail for evidence of the trail of havoc he is said to leave behind when he is shunted from one ministerial post to the next.

Take the Spectator for example in its article "A brief history of Chris Grayling's failings":

"Chris Grayling is back in the news – and once again it's for all the wrong reasons. In a report released today, the Transport Secretary has been blamed for the timetable chaos that caused misery for thousands of commuters over the summer. … Of course, this isn't the first time the hapless Grayling has found himself in hot water. In fact, the Transport Secretary has a habit of disasters following him around …
The cyclist mishap
Blundering Chris Grayling sent a cyclist flying after opening his ministerial car door outside Parliament. The Transport Secretary was filmed helping the rider to his feet following the incident in December 2016. But despite Grayling's efforts to rectify things, the cyclist involved said he was angry at Grayling after he accused him of cycling too fast, the Guardian reported."

The recent criticisms, however, have focused on the financial consequences which have befallen the taxpayer on account of decisions made by departments under Mr Grayling's ministerial control. The first of these was the £33m paid as damages to Eurotunnel to settle prospective litigation about extra ferry services in the event of a "No Deal" Brexit. This had followed Mr Grayling's decision to award a £14m ferry contract to Seaborne Freight without first considering Eurotunnel, when the favoured company owned no ships with which to run the service. Rotten luck that, and it also turned out that, according to Labour's Andy Macdonald, Seaborne Freight had "no money, no track record, no employees, no ports, one telephone line and no working website or sailing schedule".

Next came the revelation that 8 of 21 companies which had been given contracts within the probation service, following "reforms" implemented when Mr Grayling was Lord Chancellor, were to have them ended two years early. That had involved a £171m part-privatisation of the probation service in which private firms had contracted to supervise 155,000 low level offenders. However, this "Transforming Rehabilitation" programme had been "extremely costly" for taxpayers according to the National Audit Office: this in part was a reference to the £467m which had been paid out under a "payments by results" system introduced by Mr Grayling. Unfortunately the Ministry "had set itself up to fail in how it approached probation reforms" and according to the NAO "its rushed out rollout created significant risks that it was unable to manage".

Result, many millions wasted by a Ministry headed by Mr Grayling at the material time.

In fairness, however, not everything has been down to Mr Grayling, as the Spectator also explained when reciting the tale of "the un-announcement act":

"Admittedly, not all blunders involving Chris Grayling are actually his fault. The Tory MP found himself the butt of jokes when a tweet from Tory HQ named Grayling as the party's new chairman in a reshuffle back in January. Unfortunately for Grayling, the tweet was deleted within seconds and the job handed to Brandon Lewis instead 15 minutes later."

Subsequently, historians have differed about how long Mr Grayling was actually in the job on 8 January 2018. Between 10 and 37 seconds is the consensus. And, as has been pointed out, what a golden era it was: nothing happened, which led political sketch writers such as Patrick Kidd to observe that this appointment had been and remains the greatest period of Mr Grayling's success as a cabinet minister!

That is the light-hearted bit. The Spectator provided a taste of other legal stuff that went on when Mr Grayling was Lord Chancellor. Here are a couple.

"The book ban
A book ban on prisoners, introduced by Grayling in 2013, was one of his most unpopular moves. The former justice secretary's decision to stop friends and families from sending books to inmates was later ruled to be unlawful by the High Court.
The court charge fiasco
Grayling's decision to introduce charges for those pleading guilty in court led to the resignation of more than 100 magistrates. The fees – £150 for those entering a plea in the magistrates' court, or £1200 for those found guilty at a Crown Court – were criticised for apparently encouraging innocent people to plead guilty. Michael Gove binned the charges when he took over from Grayling saying that 'the intent has fallen short'."

Go back a bit further and in January, the Times reminded us of the IT failures which had caused chaos in the courts when thousands of cases had been disrupted, with trials adjourned and delayed, after the main computer system in England and Wales had gone down at hundreds of courts. Under the banner headline "'Destructive' Grayling blamed for computer chaos in courts", questions were raised about how that could have happened after £1 billion had been allocated to modernise the Courts and Tribunal service during the three years that Mr Grayling was Lord Chancellor.

It will be remembered that all of this came about because on 4 September 2012, Mr Grayling became the first non-lawyer to be appointed as Lord Chancellor since 1572. At the time, much ridicule was made of Mr Grayling's lack of legal credentials but he stayed in post until 9 May 2015 when he was succeeded by Michael Gove. His next appointment was Leader of the House until 14 July 2016 when he was transferred to his present post as Secretary of State for Transport.

One Grayling story which the press has studiously avoided, however, is the crisis which the former Lord Chancellor precipitated in the judiciary, leading to two groups of judges suing the government over their pensions. The lack of press coverage is, of course, unsurprising, since judicial pensions are a soft target, with judges being crusty, underworked, overpaid and all with gold-plated pensions, as some corners of the Press are eager to describe them.

The Grayling angle, however, is different. On 1 March 2015, legislation was introduced under his watch altering the Judicial Pension Scheme (JPS). Up to that date, those in judicial post who had been born before 1 April 1957 were permitted to stay in the existing scheme but those with birthdays on or after that date were required to move into a new scheme, the New Judicial Pension Scheme (NJPS), under which the benefits were significantly lower than those payable under the JPS. Quite apart from the random choice of date (1 April 1957), an immediate and obvious difficulty about the change was that a judge born on, say, 1 April 1957, who had been appointed on, say, 1 April 2010 would be cast into the NJPS from 1 March 2015, whereas a judge appointed later but born on 31 March 1957 would join and remain ever afterwards in the better rewarded JPS. Little wonder that some judges voted with their feet by taking early retirement with the knock-on effect, as highlighted by the Senior Salaries Review Body, that problems with judicial recruitment are unprecedented. As the Executive Summary in the Fortieth Annual Report expressed it:

"It has recently not been possible to fill all the vacancies for the High Court, difficult to fill all the vacancies on the Circuit Bench and problems are starting to emerge at District Bench level … Recruitment problems are principally occurring because conditions of service for a judge have become much less attractive to potential applicants. Changes to tax and pensions mean that the total net remuneration for a new High Court judge is worth £80,000 less than it was ten years ago, a 36% decrease."

As a direct consequence of the pension changes described in the SSRB Report, the two groups of the judiciary brought their proceedings against the Lord Chancellor (not in fact against Mr Grayling, as by the time the action got underway he had become Leader of the House). The first group of judges were those other than judges of the High Court. The second group were judges of the High Court and the Court of Appeal. Their claims were first heard in the Employment Tribunal in January 2017, which ruled that the Lord Chancellor and Ministry of Justice had discriminated against younger judges without justification contrary to ss 13(2) and 61 of the Equality Act 2010.

The government appealed the ruling to the Employment Appeal Tribunal, which was dismissed by Sir Alan Wilkie in January 2018. Dissatisfied, a further appeal was mounted to the Court of Appeal, which unanimously rejected the government's argument and confirmed the findings of the ET and EAT that the Ministry's actions in requiring young judges to leave the JPS were unlawfully discriminatory (see McCloud and Mostyn v The Lord Chancellor [2018] EWCA Civ 2844; Longmore LJ, Sir Colin Rimer and Sir Patrick Elias). The manner in which transitionary provisions in the legislation had been implemented had given rise to unlawful direct age discrimination and in relation to equal pay and race discrimination the judges had made out their claims. It follows that, as things stand at the moment, it's Judiciary 3, Grayling and his successors nil.

Next stop the Supreme Court? So far the case has seen off four Lord Chancellors: Michael Gove lasted until 13 July 2016 when he failed to be re-appointed to the Cabinet by Theresa May after the general election. He was replaced by Liz Truss, who remained in post only until 11 June 2017 when she was shuffled sideways following her lack of support for the judiciary in the "Enemies of the People" furore. David Lidington took over but only until 8 January 2018, to be succeeded by David Gauke, a lawyer again at last, but who may not stay much longer, due to his views about a no-deal Brexit. With such a tally of scalps, it would appear that the post of Lord Chancellor is not the safest of ministerial positions!

It would appear from the recent press coverage that Mr Grayling has been called lots of names and not just "failing", but how should a judge be addressed in court? The letters page in the Times has been giving some useful tips.

Writing on 12 December 2018, District Judge Peter Devlin recalled:

"I have been addressed by litigants as Your Excellency, Your Honour, My Lord and Mate…!"

Circuit judges clearly deserve better as befits their rank, His Honour Judge Richard Scarratt recollecting that:

"Once I was addressed as 'Your Majesty' in court. Rather than putting the litigant right, I rather enjoyed the moment."

Due deference is also given to recorders who sit as part-time judges, John Bate-Williams of Temple Garden Chambers remembering:

"Sitting as a recorder in Oxford some years ago, I was walking towards a sandwich shop wearing my wing collar and bands when I was approached by a lady who pleaded 'Oh your Holiness, would you give me a blessing?' I obliged!"

Sadly for him it is unlikely that any of these titles will catch on so far as Mr Grayling is concerned. Unless he does something remarkable in his remaining years as a politician, his epitaph will be plain "Failing Grayling".

The headnotes and full texts of the cases below are available to online subscribers at Follow Costs Law Reports on Twitter to be notified of new cases as soon as they are published.

New cases this month

Andrews and Others v Messer Beg Ltd; Messer Beg Ltd v Lowe [2019] 1 Costs LO 1: The extent of the duty on instructed counsel to advise on methods of funding litigation: whether actionable at law; duty, if any, on instructed leading counsel to delegate work to junior counsel.

ABX v SBX and Another [2019] 1 Costs LO 7: Costs in the Family Division: financial remedy order: appropriate order for costs where the costs of both parties had been out of proportion to the size of the matrimonial assets and both husband and wife had taken unreasonable positions during the litigation.

Griffith v Gourgey and Others [2019] 1 Costs LO 43: Indemnity basis costs: whether to order indemnity not standard basis costs on failure to comply with the Practice Direction Pre-Action Conduct and Protocols, para 6. FREE THIS MONTH!

Griffith v Gourgey and Others; Mewslade Holdings Ltd v Gourgey and Others; Griffith v Gourgey and Others [2019] 1 Costs LO 53: Interest on costs under CPR 40.8(1): date from which interest should run on costs to be paid by one party to the other.

Various Claimants v Giambrone & Law (a Firm) and Others [2019] 1 Costs LO 63: Non-party costs orders: factors to apply when making a non-party costs order under s 51 Senior Courts Act 1981 against a professional indemnity insurer.

Airways Pension Scheme Trustee Ltd v Fielder and Another [2019] 1 Costs LO 121: Indemnity for costs from trust assets; factors to consider on a Beddoe application by trustees of a pension fund for an indemnity for costs of an appeal and for any adverse costs.

JSC VTB Bank v Skurikhin and Others [2019] 1 Costs LO 161: Staying execution of a judgment or order under CPR 83.7(4)(a): whether to stay until further order payment of costs awarded following a failed application for security for costs.

Arcadia Group Ltd and Others v Telegraph Media Group Ltd [2019] 1 Costs LO 169: Costs budgeting in privacy action where the proportionality of costs cannot be assessed by reference to damages or other financial yardstick: hourly expense rates for budgeted work. FREE THIS MONTH!

Other recent cases

Retailers v Visa (Application in Private) [2018] 6 Costs LR 1203: Part 36; permission to accept a Part 36 offer after the trial period has commenced: refusal of an application to withdraw a Part 36 offer.

Parker Lloyd Capital Ltd v Edwardian Group Ltd [2018] 6 Costs LR 1235: Costs consequences where a receiving party had refused to enter into mediation, having considered the case to be hopeless and the request to mediate to be a tactic designed to extract a nuisance payment.

WG v HG [2018] 6 Costs LR 1247: Costs in the Family Division in high value divorces: appropriate order to make following presentation of an unreasonable case in financial remedy proceedings.

Link Up Mitaka Ltd t/a THEBIGWORD v Language Empire Ltd and Another [2018] 6 Costs LR 1279: Intellectual Property list: factors to take into account in deciding whether a party's conduct amounted to an abuse of the court's process, justifying a departure from IPEC's scale costs and an order that the costs be paid on an indemnity basis.

Kent v Paterson-Brown and Another [2018] 6 Costs LR 1289: Costs order following judgment: whether costs should be paid on the standard or indemnity basis; interest and level of any further interim payments on account of costs.

Bank St Petersburg PJSC and Another v Arkhangelsky and Others [2018] 6 Costs LR 1303: Determination of costs relating to claim and counterclaim in high value complex litigation; interim payment; stay of costs orders pending application to the Court of Appeal for permission to appeal.

R (Kay) v Scan-Thors (UK) Ltd and Others [2018] 6 Costs LR 1317: Costs of private prosecution brought in the magistrates' court: award on the indemnity basis following failure to comply with the duty of candour and engaging in unreasonable conduct in prosecuting the litigation.

Ogiehor v Belinfantie [2018] 6 Costs LR 1329: Wasted costs order: whether justified to make an unless order for payment where litigant-in-person has disclosed to the court details of a settlement offer made under Part 36.

RJ and Another v HB [2018] 6 Costs LR 1347: Appropriate order to make on setting aside in part an arbitration award made under s 68 of the Arbitration Act 1996: whether summary or detailed assessment: interim payment.

Rotam Agrochemical Company Ltd and Another v GAT Microencapsulation GMBH [2018] 6 Costs LR 1365: Trial costs: factors to apply in deciding which party had been successful at trial where the damages awarded amounted to 2% of the value of the claim: percentage reduction to take into account conduct and those matters which had been lost.

Warren v Hill Dickinson LLP [2018] 6 Costs LR 1377: Conditional fee agreements: whether capable of being assigned and enforceable; whether "success" achieved; permission to appeal.

NJL v PTE [2018] 6 Costs LR 1389: Conditional fee agreements: success fees to be allowed where an admission of liability has been made before CFA entered into, to take into account the Part 36 risks.

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