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The third Costs Law and Practice Conference

The third Costs Law and Practice Conference took place on 28 September 2016 at the Royal Institute of British Architects in London. Once again the event proved to be very successful. Given the line-up of speakers, no other outcome could realistically have been possible, and we are very grateful to the glittering array of judiciary and senior silks who gave up their time to deliver outstanding speeches on a broad variety of topics. Our thanks go too to our exhibitors, including Costs Alternative Dispute Resolution (“CADR”) at and Victoria Square Chambers at, not to mention our faithful publishers of Costs Law Reports, Class Legal at classlegal.comMay v Wavell Group plc [2016] 3 Costs LO (Lower Courts Supplement) 455 in which the court reduced a bill of £208,000 to £99,000 as being the figure for reasonable and necessary costs, only then to cut down the amount payable to £42,000 upon application of the “new” proportionality test. In Nick’s view, it now has to be recognised that there has been a major rule change and that parties who expect to recover costs that are reasonable and necessary will be disappointed unless they can also demonstrate that those costs are proportionate, having regard to CPR 44.3(2)(a) and (5). Wise words. Moreover, Nick gave us his views on the ground-breaking case in which he had just succeeded involving the recoverability of the costs of securing third-party funding in arbitration proceedings. Such costs were recoverable in principle, the court had held. The case in question, Essar Oilfields v Norscot will be reported in the last print edition of Costs Law Reports 2016.

Breaking with convention, this year we decided not to give costs under the Solicitors Act 1974 a specific slot and instead to invite a Registrar of the Insolvency Court to address the Conference about “Counting the costs in Insolvency and Bankruptcy”. In this respect, the editors were delighted to welcome Registrar Barber, who gave a thorough and detailed overview of the current insolvency regime and went on to explain how the end of the LASPO exemption, whereby additional liabilities will no longer be recoverable from opponents under conditional fee agreements, will affect insolvency litigation. As Sally emphasised, however, the removal of the LASPO exemption does not impose a ban on success fees, but merely means that these and ATE premiums will not be recoverable from the other side for cases from April 2016. Whether or not this will mean that “rogue” directors get away with murder, or, more accurately, will not face the might of the civil courts for misfeasance, remains to be seen. Meanwhile, the clarity of Registrar Barber’s presentation and the detailed notes which she provided were very much appreciated both by the editors and by the delegates.

Without doubt, the most controversial part of the day was Alexander Hutton’s talk about the implementation of the electronic bill under the Pilot Scheme, much trumpeted at our conference twelve months ago, but yet to be used in practice, at least to the completion of a detailed assessment. With uncanny timing, the 86th update to the Practice Direction was unveiled a few days before the conference was due to start, and although the implementation date was 3 October 2016, by that date, the electronic link in order to access the amendments was still not available on the Ministry of Justice website. Nonetheless, as the architect of the simplified electronic bill, Alex was able to take the conference through the changes and to advise delegates in no uncertain terms that, as the current plan is to make the electronic bill mandatory in all courts for all work done on or after 1 October 2017, it is no longer safe to ignore J Codes and the project as a whole. In these circumstances, Alex said:

“Solicitors are strongly recommended to record time under Precedent H phases ASAP. The sooner this is started, the easier the task will be in the future.”

So the die is cast: the traditional paper bill will be for the paper basket and the electronic bill will replace it from 1 October 2017. Will it work? We have already invited Alex back to tell us at our fourth conference next September.

With the keynote speech having taken place at the start of the conference, the Conference Chairman’s opening delivered by your senior editor, in terms of age and infirmity, was given after lunch. As an extra fifteen minutes were now available, once the housekeeping formalities had been completed, the Chairman highlighted the advantages of mediation in costs and the pitfalls of unreasonably refusing an offer of mediation. This was done by reference to a case study involving the well-known matter of Helen Archer v Ambridge & Borsetshire NHS Trust in which the claimant had succeeded to the extent of £1.5 million but her solicitor had no record of any cancellation notice having been given when her CFA (with 100% success fee) had been signed as required under the then regulations. For the Ambridge NHS Trust, it recognised that its offer under Part 36 would give no costs protection, and that if the submission on cancellation failed, the Trust would be saddled with playing not only indemnity costs of the assessment, but also the additional 10% of costs assessed under Cashman v Mid Essex Hospital Services NHS Trust [2015] 3 Costs LO 411 (Slade J). This would be a financial disaster and bad publicity for the hospital. The solution to the conundrum was simple: mediation in which the parties choose when to mediate, where to mediate, how long they wish to mediate for, how much they want to pay for the mediation, and who they want to be the mediator. In that way, they are in control of their own destiny. Since the mediator, in contrast to the court, cannot impose a settlement, on the facts of Archer v Ambridge, Helen was willing to receive and the Trust was willing to pay base costs, so the mediation was a resounding success.

In the second departure of the day to the conventional Conference formula, this year we included a new topic – Costs in the Court of Protection, presented by Master Jennifer James, Costs Judge. Prior to giving her talk, delegates were able to take account of a significant amount of detail in the Notes in the delegate pack which Jennifer had carefully put together. In addition, links to relevant cases or legislation were provided, thereby enabling those who practice in this developing field to have access to the core materials, many of which are not easy to find. In the talk itself, Jennifer updated delegates on best procedure in the Senior Courts Costs Office and reminded the Conference about important changes that have taken place in COP work. Whilst it is a few years since the basis of assessment changed from indemnity to standard, recent developments will have a significant bearing on recoveries, in particular the “new” proportionality test and, as the Notes expressed it, “what does this mean to you?” Having dealt with the law, Jennifer drew attention to the body of law reports in COP matters which is almost exclusively to be found in decisions of the costs judges and are not easy to find, but which she had helpfully set out in detail in the Notes. Overall, this was a talk which those practising in COP work could only benefit from in spades.

Our last speaker of the day was the Senior Costs Judge who entertained us in lively style with anecdotes about the past year in costs develpoments and, in a more serious tone, to emphasise that the electronic bill is (emphasis added) coming in on 1 October 2017 and woe betide those who are not ready. In a self-deprecating way, Master Gordon-Saker pointed out that judges who make decisions, by convention, do not talk about them, but then informed delegates that his own judgment on proportionality in BNM v MGN [2016] 3 Costs LO (Lower Courts Supplement) 441 is to be appealed to a judge of the High Court on 5 December 2016. Watch this space! He went on in less self-deprecating terms to bring the conference to a close with news that was music to the ears of the delegates, namely that there are currently no plans to bring fixed fees into force in cases up to £250,000. However, those up to £25,000 will have fixed fees before long, but as this was a proposal of Lord Woolf in his own report getting on for 20 years ago with regard to small cases, such an announcement will not come as any surprise. Indeed, any such surprise that there is, is that it has taken so long for fixed costs to come in. The Senior Costs Judge also brought the Conference up to date with developments in the Senior Courts Costs Office: Master Brown is to be sworn in as the next costs judge on 6 October 2016. Our congratulations go to him on his appointment.

That concludes our resume of the Costs Law and Practice Conference 2016. Our thanks go again to the speakers for speaking and also to the delegates for attending. However, the last word must go to Lord Chancellor Liz. As we explained in the Introduction to the Conference, the last year has had something of a “phoney war” feel about it, with the new bill piloted from 1 October 2015, never having taken off (a handful of bills brought into the SCCO so far, none assessed), but that changed dramatically just before the Conference with publication of the 86th Update. Now we know exactly where we are with the electronic bill. A voluntary pilot only in the SCCO for the next year: mandatory in all courts from 1 October 2017. We are already planning the fourth Costs Law and Practice Conference. How will all this unfold over the following twelve months? We look forward to discussing these and all other topical matters in costs with all our subscribers and delegates in a year’s time.

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.

This month's new cases

Milanese v Leyton Orient Football Club Ltd [2016] 4 Costs LR 725: CPR 44.2, court’s discretion as to costs. The court considered the appropriate order for costs where a claimant had succeeded on only a small part of his claim, and where the counterclaim had been dismissed.

PM Project Services Ltd v Dairy Crest Ltd [2016] 4 Costs LR 735: Costs thrown away; inconsistent exhibits references in witness statement as compared to court bundle, resulting in adjournment of application due to insufficient reading time.

Socrates Training Ltd v The Law Society of England and Wales [2016] 4 Costs LR 739: Rule 58 of the Competition Appeal Tribunal Rules 2015; appropriate costs cap where defendant had instructed City of London solicitors and leading counsel.

Kupeli and Others v Kibris Turk Hava Yollari Sirketi (t/a Cyprus Turkish Airlines) and Another [2016] 4 Costs LR 747: CPR 44.2, court’s discretion as to costs. The court considered the appropriate order for costs in a multi-party action involving over 800 individuals, where the claimants had not litigated under a group litigation order, but rather by way of joined claims.

Ejiofor t/a Mitchell and Co Solicitors v Legal Ombudsman and Another [2016] 4 Costs LR 759: Contingency fee agreement; complaint by interested party regarding circumstances surrounding the making of the contingency fee agreement and/or adequate advice as to its terms and consequences.

Cooke v Dunbar Assets plc [2016] 4 Costs LR 781: Rule 6.224(1) of the Insolvency Rules 1986, cost and expense of bankruptcy; unsuccessful appeal against bankruptcy order; whether unsuccessful appellant should be personally ordered to pay costs of appeal as a liability outside of the bankruptcy.

Wright v Rowland [2016] 5 Costs LO 713: Costs budgeting: correct course to follow where the budget of one party could be agreed but not the other: some phases of the budget would be approved with those unapproved phases being for the costs judge to assess by detailed assessment were that party to be successful in the action.

Lowin v W Portsmouth & Co [2016] 5 Costs LO 719: Costs proceedings for provisional assessment under CPR 47.15: whether a successful offer made under CPR 36 permits the court to award costs on the indemnity basis outside the fixed costs regime.

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