Costs Conference curtain-raiser
The Conference is sold out with a waiting list and we are looking forward to hosting a full house at Eversheds Sutherland on September 27. For delegates, both old and new, this will be another occasion on which the day’s events will be heavily influenced by the reforms recommended by Sir Rupert Jackson almost a decade ago, the majority of which were implemented by rule change on 1 April 2013.
Five years and a half years since implementation? Why are we still discussing Jackson? Our speakers will provide answers, but without wishing to steal their thunder, here are a few thoughts about what they may say.
The electronic bill. This is now mandatory for all work done in the courts of England and Wales from 6 April 2018 (one or two exceptions, such as litigants in person) even though not one bill was ever assessed under the various Pilot Schemes which had operated for several years in the Senior Courts Costs Office. Even now, only a handful of provisional assessments have been completed using the electronic bill and none by detailed assessment. Master Leonard, who was a member of the Hutton Committee in charge of drafting the electronic bill, will explain the background and bring delegates up to date with the 98th update to the Practice Direction which includes Precedent S, by which is meant “a model electronic bill”, replacing its predecessor, Precedent Q.
Why has the electronic bill been studiously and deliberately avoided by practitioners? To enable delegates to make up their minds, we shall attempt an electronic assessment during the afternoon session in a fictional clinical negligence case, presided over by Master James. In order to provide a fair comparison, we will also be placing a paper bill in the delegates’ pack for the same case which will enable those present to choose which they prefer and to see for themselves the practical differences between the old and new formats.
Whilst it would be presumptuous of your co-editors to predict which bill will win the popularity contest, and without giving the game away, the electronic bill is 36 pages long including an Excel spreadsheet too large to print, whereas its predecessor runs to just 13 pages. An unexpected problem was the drafting of points of dispute: textbook simplicity for the paper bill but much harder for the electronic bill. How on earth do you object to 172 separately numbered items in the former as opposed to 37 in the latter?
One theoretical silver lining, however, is the end of prolix points of dispute. The new format simply does not have room for them in the spreadsheet, so paying parties will need to keep their objections short in accordance with the requirements of the Practice Direction, unless, that is, they are served on paper which appears to be what the PD still expects!
Proportionality. Five years on and profession is still all at sea in understanding how the “new” proportionality rule in CPR 44.3(5) is to be applied. There were high hopes that the Court of Appeal would accept a second appeal in May v Wavell Group, but Lord Justice Lewison scuppered that one on 9 July 2018 when he refused permission. His reasons:
“On the question of what sums were in issue, the judge was entitled to find that the Master had undervalued the claim … The judge was also entitled to compare the complexity of the claim in this case with the general run of county court litigation … Whether the judge was entitled to substitute his own judgment for that of the Master does not raise an important point of principle, sufficient to satisfy the second appeals test.”
With no oral application for permission now possible, May v Wavell is now dead and buried, leaving HHJ Dight’s judgment intact.
That said, a striking example of the vagaries of CPR 44.3(5) in operation has just been heard on appeal in a personal injury claim in the Norwich County Court. At first instance in the Great Yarmouth County Court, the bill had been assessed at just under £116,000 following a full day’s item by item detailed assessment in a matter that had been subject to costs budgeting. Time for the judge to put on his proportionality wig and apply CPR 44.3(5): damages recovered £50,000 following a “door of the court” settlement when the defendant had increased his offer by £15,000: proportionate costs for the incurred and budgeted costs applying a test giving the appearance more of flipping a coin than of applying any legally based judgment – £75,000, a reduction for CPR 44.3(5) purposes of £40,000, almost 35%, meaning that the claimant had now failed to beat the defendant’s Part 36 offer with the automatic costs adverse consequences that follow under the rule.
In circumstances such as these, the claimant might be asking herself rhetorically, I might as well have taken my chances in court. I could hardly be in a worse position had I done that, than the proportionality rule has put me in now, a fortiori, as the case had been budgeted, and she could not be faulted in her expectation that as a minimum, recovery of the budgeted costs, all falling within budget at £65,000, was a reasonable expectation.
Judgment has been reserved, but as it is a county court case, it will have the same level of authority as May v Wavell and will not bind anybody hearing a High Court assessment. It is in these uncertain and unsatisfactory circumstances that Nicholas Bacon QC, who continues to be involved in virtually all the important costs cases at High Court level and above, will give us the benefit of his experience on how to deal with proportionality while the wait for authoritative guidance on how the test should be applied, goes on.
Costs budgeting: our featured case going online today, Saab Seaeye v Atlas Elektronics GMBH, highlights another difficulty. What happens about hourly rates in a budgeted case on detailed assessment? In Seaeye, Birss J was asked to reduce the hourly expense rate for the partner in a high-value Intellectual Property action from £550 per hour as advanced in Precedent H to £317. That submission went down like a lead balloon, Birss J deciding that £550 was in line with the sort of rates to be expected for specialist solicitors working on an important case in the Competition Court.
That begs the question: is that the rate which the costs judge must apply to both the budgeted and incurred costs or can his or her own discretion still be exercised? His Honour Judge Richard Roberts, who budgeted numerous cases as a Queen’s Bench Master and continues to do so as a circuit judge, will give delegates the benefit of his views.
Conditional fee agreements. Of course, recovery of any costs at all presupposes that the receiving party’s solicitors have a valid retainer with their client. As we reported in our featured case last month, it is by no means rare that solicitors fail to get their tackle in order and end up recovering nothing. Worse still, they can also find themselves having to pay adverse costs orders as Fancourt J ordered in Griffith v Gourgey (our featured case last month), where:
“Improbably (though it happened in fact, as the judge held), three successive law firms wrongly believed that they had the authority of the directors of the company to represent it the proceedings.”
On other occasions, solicitors take little care when they draft conditional fee agreements, yet sometimes, improbably, they get away with it. In Malone v Birmingham Community NHS Trust, a case which went online last month, naming “Home Office” as a defendant in the CFA, when the department had had nothing to do with the case, did not matter so far as recovery of costs in principle was concerned. Alexander Hutton QC, who appeared a decade ago in Jenkins v Young Brothers, the trailblazing case on assignments of CFAs, and also in the Court of Appeal earlier this year in Surrey v Barnet & Chase Farm Hospitals NHS Trust, will tell us why.
Solicitors' Costs. We have dropped the Solicitors Act from the Conference for the past couple of years. In spite of Master Haworth's sterling efforts three years ago at preventing delegates grasping for the matchsticks by jollying along the subject matter with some fine anecdotes, in all honesty, solicitors' costs is not the one that has the audience on the edge of their seats. Nonetheless, this year we are going to give it another go in the experienced hands of Roger Mallalieu. This is because a further consequence of the Jackson implementations has been an explosion in the number of applications being issued under s 70 of the Act by angry ex-clients, disturbed at the level of the bills they have received from their former solicitors.
The principal reason for the challenges stems from the acceptance by the government of the Jackson recommendation that success fees and after-the-event insurance premiums should cease to be recoverable from losing opponents in most types of litigation. Instead, they must be borne by the client out of damages and that, in turn, has led to the development of entities such as "Checkmylegalfees", which offer advice about whether the bill rendered at the end of the case was fair and reasonable. If it is not, because, for example, there was a deduction out of the damages to cover an ATE insurance premium when there was no need for any insurance against losing because the client was a member of a Trade Union, the likes of Checkmylegalfees will ask the court to do just that under s 70. This is a new aspect of life under the Act and will be fully covered by Roger, together with the old favourites: "when is an interim bill not a statute bill; answer; when it is an interim on account bill and you cannot sue on it".
Mediation. Want to avoid the Jackson reforms altogether? No proportionality test, no costs budgeting, no electronic bill, no Part 36 nasties and don’t settle unless you want to and achieve certainty in the result?
Why not give cost mediation a go?
At the Conference there will be a Costs Alternative Dispute Resolution (CADR) presence to explain how to go about choosing a mediator, the venue for a mediation, the likely cost and the fact that the parties, not the court or the Civil Procedure Rules run the show. Experienced costs mediator Simon Browne QC will conduct a “live” mediation, so that delegates can see how it is done.
The case has gone wrong – sanctions! Notwithstanding all the emphasis on Jackson legacies at the Conference, we have reported 120 costs cases since last September and judgments continue to flow relentlessly from the High Court Bench and above without your co-editors ever having to struggle for cases to publish. In fact, the contrary is the case. For next month, we already have 17 cases to fit into a 12 case printed edition.
One recurring theme in our reporting has been the application of court sanctions when things go wrong which they sometimes do, Griffiths v Gourgey being one such case. What punishment can you expect even if you are just one day late with your budget and is there any escape from the condemnation of being limited to applicable court fees under CPR 3.14 going forward? Maybe, if you make an effective Part 36 offer as Channel 5 did against Mr Ali earlier this year. Part 36 guru Professor Dominic Regan will tell all!
Last and certainly not least, we are, of course, delighted to be able to welcome Sir Nicholas Francis as our keynote speaker. As this bulletin goes online, there is much talk in the press about the lack of legal aid to assist parties in the Coroner’s Court with Hillsborough being a glaring example. Sir Nicholas was the judge at first instance in the Charlie Gard case. Charlie’s parents had no money to pay for representation and no public funding to help them, even though it was effectively the state which had initiated the litigation. Sir Nicholas’s views on the difficulties in the case and how lack of legal aid impacts in family law cases, will provide delegates with a fascinating insight into a different aspect of costs law, outside our routine diet of proportionality and hourly rates.
And when it’s all over – for delegates who last the full day, there are 5 CPD points available, and for anyone who is good and thirsty by the end of the afternoon, there will be wine and canapés, kindly provided by our principal sponsor, Temple Garden Chambers. It promises to be an excellent day. Both co-editors together with Dick and Sophie Warner, our long standing publishers of Costs Law Reports at Class Legal, look forward to welcoming all delegates on the 27th.
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
Saab Seaeye Ltd v Atlas Elektronik GMBH and Others  4 Costs LO 419: Costs budgeting under Part II of CPR Part 3: hourly rates for budgeted work; allowances and approval of budgets for experts; trial preparation and trial. FREE THIS MONTH
Red and White Services Ltd v Phil Anslow Ltd and Another  4 Costs LO 425: Costs budgeting under Part II of CPR Part 3 in the Competition list: factors to apply where the costs claimed in the budget were high and disproportionate; reduction in incurred costs.
Hugh Cartwright & Amin v Devoy-Williams and Another  4 Costs LO 437: Hourly rates in “high temperature” litigation; late settlement and the factors to apply when assessing counsel’s brief fee on trial; costs of assessment under CPR 47.20; adequacy of a Calderbank offer to displace the default rule.
Commissioners for HM Revenue & Customs v Gardiner and Others  4 Costs LO 451: Indemnity principle; principles applying in order to decide whether there had been an agreement that the solicitor would not charge the client; counsel’s fees; brief fee payable when no evidence to be called.
JXA (by His Mother and Litigation Friend VLA) v Kettering General Hospital NHS Foundation Trust  4 Costs LO 469: Choice of solicitor; reasonableness of the instruction of a City of London firm in high value clinical negligence litigation; hourly rates.
Robinson v EMW Law LLP  4 Costs LO 477: The indemnity principle: whether costs incurred in litigation involving a solicitor acting on his own behalf can be recovered between the parties; application of the rule in Chorley.
Cartwright v Venduct Engineering Ltd  4 Costs LO 495: QOCS under CPR 44.14; enforceability of an order for costs made in favour of one defendant against an award of damages paid to a claimant by another defendant; effect of a Tomlin order under which the entitlement to damages arises not by reason of an order of the court but only via a schedule to the order.
Hislop v Perde; Kaur v Committee (for the Time Being) of Ramgarhia Board Leicester  4 Costs LO 515: Fixed costs in Section IIIA of CPR Part 45; late acceptance of Part 36 offer; whether CPR 36.13 (costs consequences on acceptance of Part 36 offer) applies to cases falling within the fixed costs regime. FREE THIS MONTH
Costs and Fees Encyclopaedia updating
The Court of Protection, Civil Proceedings and Magistrates’ Courts Fees (Amendment) Order 2018 (SI 2018/812) amended several fees in the Court of Protection Fees Order 2007, the Civil Proceedings Fees Order 2008, and the Magistrates’ Courts Fees Order 2008, with effect from 25 July 2018. Updated pages are now available for printing out and adding to your Costs and Fees Encyclopaedia: Pages 234, 238, 257, 390–392
Other recent cases
Crown Bidco Ltd v Vertu Holdings Oy and Another  3 Costs LR 455: Order for costs on application to adjourn the trial in order to amend defence to plead fraud: principles to apply.
Woodland v Swimming Teachers Association and Others  3 Costs LR 469: Bullock orders: appropriate costs order to make where a claimant has succeeded against some defendants and discontinued against others under CPR 38: apportionment of costs as between those defendants ordered to pay costs.
Al Baho v BGP Global Services Ltd  3 Costs LR 503: Factors applying on applications to stay detailed assessment of costs pending appeal and payment of costs ordered to be paid on account at the end of trial.
Hincks v Sense Network Ltd  3 Costs LR 511: Factors applying on applications to stay the costs order pending appeal under CPR 52.16 and the level of any payment on account pending that appeal.
LKH v TQA AL Z (Interim Maintenance and Costs Funding)  3 Costs LR 519: Legal funding provision by way of maintenance in matrimonial proceedings: whether provision should provide for incurred costs for work undertaken on credit advanced by the applicant’s solicitors.
Various Claimants v Wm Morrison Supermarkets plc  3 Costs LR 531: Appropriate costs order in group litigation where the claimants had been successful overall but had pursued claims that had been tenuous and had overstated the extent of the issues common to both the direct and the vicarious claims.
Alpha Insurance A/S v Roche and Another  3 Costs LR 545: Notice of discontinuance under CPR 38; whether order refusing application to plead fundamental dishonesty in order to disapply the QOCS regime should be set aside.
Atlasjet Havacilik Anonim Sirketi v Kupeli and Others  3 Costs LR 555: Costs order in a group claim where the claims were modest and found to be out of all proportion to the practicalities and honours as between the parties were even.
Shalaby v London North West Healthcare NHS Trust  3 Costs LR 585: Basis of award of costs under CPR 36.17(4)(b) where judgment entered against the claimant: defendant’s costs payable on the standard not indemnity basis under the rule.
Griffith v Gourgey and Others  3 Costs LR 605: Breach of warranty of authority; liability of solicitors for costs in a s 994 petition where successive firms had wrongly believed that they had the authority of the directors to go on the court record on behalf of a defendant company.
Malone v Birmingham Community NHS Trust  3 Costs LR 627: Conditional fee agreements: omission of name of defendant from the CFA: whether the wording of the CFA limited its scope to the claim only against the named defendant.
Gempride Ltd v Bamrah and Another  3 Costs LR 637: Agency between solicitors and costs draftsmen: whether costs charged by a solicitor could be reduced for unreasonable or improper conduct under CPR 44.11 where a bill containing errors had been prepared by a firm of costs draftsmen.