The defendant costs specialists

Costs of Part 8 proceedings

By on Sep 17, 2014 | 14 comments

Has the Court of Appeal messed up again (Mitchell/Denton style)?

One of the problems with the English legal system is that the higher courts will sometimes try to do justice to the facts of a case but create a precedent in the process with unintended consequences. This is perhaps particularly acute when it comes to legal costs matters where the higher courts often have only limited understanding of the day-to-day issues that arise.

Step forward Tasleem v Beverley [2013] EWCA Civ 1805. This is a decision from the tail end of last year and appears to have received only limited commentary to date.

The issue facing the Court of Appeal was:

“whether the court can award a claimant its costs of what are known as costs-only proceedings brought under CPR Part 8 in accordance with the procedure set out in CPR rule 44.12A where a default costs certificate has been obtained, as the claimants contend; or is a claimant in those circumstances limited to the amount of the costs specified in the default costs certificate, as the respondents contend? Is the default costs certificate the end of the matter, in other words.”

The substantive claims had settled without proceedings being issued. Part 8 costs-only proceedings were issued and notices of commencement served. No points of dispute were served and the claimants obtained default costs certificates. Were the claimants limited (in addition to the amounts set out in the bills) to the fixed costs payable for obtaining a default costs certificate (£80 fixed fee plus court fee) or were additional costs recoverable for the work concerned with issuing the Part 8 proceedings?

The Court of Appeal concluded that the fixed costs for obtaining a default costs certificate did not include the costs of issuing Part 8 proceedings and such costs were in the discretion of the court. So far, so unremarkable.

The difficulty that arises lies in the reasoning behind the Court’s decision. The Court held:

“The bringing of Part 8 costs-only proceedings is not the commencement of, or part of, the detailed assessment proceedings, albeit it is a necessary preliminary to that process if there are no underlying proceedings in existence.”

So, Part 8 proceedings are apparently not “part of” the detailed assessment proceedings.

The clever readers of the Legal Costs Blog will see where this is going and it has nothing to do with default costs certificates.

CPR 47.15(5) states:

“In proceedings which do not go beyond provisional assessment, the maximum amount the court will award to any party as costs of the assessment (other than the costs of drafting the bill of costs) is £1,500 together with any VAT thereon and any court fees paid by that party.”

If Part 8 proceedings are not “part of” the detailed assessment proceedings, are the costs of issuing Part 8 proceedings payable in addition to the provisional assessment cap?

What makes the Court of Appeal’s decision particularly odd is that they were expressly referred to the earlier Court of Appeal decision in Crosbie v Munroe which appeared to treat Part 8 proceedings as part of the assessment process. Here is how they dealt with it and with the relevant quote from Crosbie:

“I do not think that this interpretation of the rules is contrary to the approach of the Court of Appeal in Crosbie v Munroe [2003] EWCA Civ 350, [2003] 1 WLR 2033, as Mr Marven contends. In that case, the court had to consider whether, in a case where detailed assessment was commenced under Part 8, an offer in respect of costs made pursuant to CPR 47.19 offer to settle without prejudice save as to costs of the detailed assessment proceedings, did or did not include the costs of the Part 8 proceedings. The defendants contended that it did. The court, however, held it did not because the costs of the proceedings within CPR 47.19 referred to the costs of the substantive claim up to its disposal by the agreement by the defendant to pay damages and costs. Brooke LJ said this at paragraph 34:

‘By this route it is easy to see that even when Part 8 proceedings have to be commenced in order to obtain a court order for detailed assessment, the ‘costs of the proceedings’ within the meaning of CPR 47.19 still relate only to the costs leading up to the disposal (on this occasion by agreement) of the substantive claim. They are ‘the proceedings which gave rise to the assessment proceedings’, and the assessment proceedings cover the whole period of negotiations about the amount of costs payable through the Part 8 proceedings to the ultimate disposal of those proceedings, whether by agreement or court order.’

That the costs of the Part 8 proceedings did not form part of the substantive costs contained in the bill of costs, which is the issue the court addressed, seems to me, with respect to Mr Marven, to be a point which assists the respondents rather than the appellants. Certainly the court did not consider, still less decide, the costs of the Part 8 proceedings formed part of the ‘costs of the detailed assessment’ for the purposes of CPR 47.11 and the default costs certificate or otherwise.”

Am I alone in considering there to be a significant contradiction between Crosbie’s:

the assessment proceedings cover the whole period of negotiations about the amount of costs payable through the Part 8 proceedings [emphasis added] to the ultimate disposal of those proceedings”

and Tasleem‘s:

“The bringing of Part 8 costs-only proceedings is not … part of, the detailed assessment proceedings”

My experience to date is that the courts, including the Senior Courts Costs Office, have treated the Part 8 proceedings as part of the costs of the detailed assessment and subject to the provisional assessment cap. It is interesting to note that the actual wording of CPR 47.15(5) refers to “any court fees [in the plural] paid by that party”. It is clear that this is therefore meant to go further than just the fee payable for requesting assessment. At the very least this suggests it includes any interim applications and I anticipate those drafting this believed it would include the Part 8 court fee where applicable.

However, the Court of Appeal appears to have opened the door to argument on the point. It would be regrettable, to say the least, if the costs of issuing Part 8 proceedings were entirely at large, unlike all the other work necessary to deal with provisional assessment, as this is likely to lead to further argument which the cap was presumably designed to avoid.

The facts in the two cases heard under the Tasleem judgment take this into cuckoo land territory. The Deputy District Judge (not a civil litigator I would hesitate to guess) had summarily assessed the claimants’ costs of issuing Part 8 proceedings at £1,614.60 and £1,400.76 respectively. WTF?

It takes 30 minutes to issue Part 8 proceedings (unless the court makes a total mess of the process). Admittedly the Court of Appeal did recognise:

“I take Mr Marven’s point that the costs of bringing such Part 8 proceedings may be, or should be, relatively minimal. … Care should therefore be taken to ensure that matters properly encompassed within the detailed assessment and default regime are not claimed as part of the Part 8 costs-only process. But that is a matter which should be sorted out by the summary assessment process in the event that the parties cannot agree those extra costs.”

The figures allowed in these cases suggest some judges are entirely incapable of dealing with the matter properly by way of summary assessment.

We seem now to be faced with three possibilities:

1. The courts decide the the reasoning in Crosbie is correct so far as the costs of issuing Part 8 proceedings are concerned (ie they are part of the assessment process and subject to the cap).

2. Fixed costs are rapidly introduced for issuing Part 8 proceedings (a possibility suggested by the Court of Appeal: “The problems which this may give rise to (that is, that there is no fixed costs regime for Part 8 costs-only proceedings) is a matter which may merit examination by the Civil Procedure Rules Committee in due course”). Say, £80 plus VAT.

3. The Rules Committee amends Part 47.15(5) (third time lucky?) to make it absolutely clear it includes any costs of issuing Part 8 proceedings.

In the interim…

    14 Comments

  1. CPR 47.6(1) states that ‘detailed assessment proceedings are commenced by the receiving party serving on the paying party (a) notice of commencement in the relevant practice form; and (b) a copy of the bill of costs.’

    It must surely follow that the costs of the detailed assessment proceedings do not begin to be incurred until detailed assessment proceedings have been commenced in this way.

    This rule was in existence in exactly the same form, even with exactly the same number, when Crosbie was decided and was quoted at para 23 of the judgment. I therefore do not understand how Brooke LJ was able to make the leap in logic at paras 33 and 34 by which he was able to declare that ‘the assessment proceedings cover the whole period of negotiations about the amount of costs payable through the Part 8 proceedings to the ultimate disposal of those proceedings, whether by agreement or court order.’ In a way reminiscent of ‘With one bound our hero was free’ he said at para 33 that ‘it is easy to see this’ but I have to say I have never been able to see it.

    Could somebody please explain this in terms that even I can comprehend?

    Peter Burdge

    17th September 2014

  2. The Part 8 orders in my local court provide that the costs of the part 8 shall be costs in the detailed assessment… Perhaps they saw this coming?

    domthedrafty

    17th September 2014

  3. Hmmm, seems to me that the entire problem could be avoided by Defendant CLowns/lowly costs draftsmen simply entering into negotiations prior to Part 8 being served or, if not possible, serving their Points of Dispute on time in the correct format.

    (This of course equally applies to Claimant CLowns/lowly costs draftsmen that ignore deadlines and fail to engage in the process as well)

    Or would we all rather fight over the scraps arising from failure to follow procedure than adhere to the rules in the first place?

    Maybe i’m just a dreamer, but as far as I can see the moral is simple “Do it right or else…… (result to be decided at the whim of whatever judge lays their powdered sugar covered hands on the papers first)”

    I wonder where the fights will come from when the J codes hit? I, for one, can’t wait!

    Happy costing!

    Father Costsmas

    17th September 2014

  4. “CPR 7.2

    (1) Proceedings are started when the court issues a claim form at the request of the claimant.”

    Peter – when preparing a Bill of Costs pursuant to an Order for “costs of the proceedings” do you not claim the costs incurred pre-issue ? Why is this different ?

    Melanie Vickery

    17th September 2014

  5. Father Costmas, from my experience the majority of these types of cases were settled months if not years ago and the Defendant has closed their file due to no response from the Claimant’s representatives. They were all or nothing arguments where Claimant had BTE or another form of funding available and the ATE premium was unecessarily incurred (perhaps the ATE was unreasonable in amount – limited risk in portal claims).

    Then a costs firm instructed by the ATE provider start part 8 proceedings many moons later directly against the Defendant at a residential address with little detail over what the issue is about, no reference and no notice given to the Defendant insurer.

    I have personally had one issued on behalf of a minor with no litigation friend, against the sister company of the solicitors on record (based in Croydon) at a random Halifax address. Of course we got this struck out.

    I had another where they issued, obtained a DCC and threatened enforcement proceedings at a policyholder’s address at an address that did not exist.

    Perhaps if the Claimant’s legal representative actually held valid instructions, adhered to CPR part 47.7, put the insurance company on notice of their intention to issue under the relevent act etc. and asked where to serve proceedings then this type of situation could be avoided.

    Domthedrafty is right, some courts do order part 8 costs be in the proceedings, however some costs firms try to circumvent this by drafting their own order with the part 8 proceedings to circumvent this.

    The cost crusader

    17th September 2014

  6. My experience of courts allowing part 8 costs in addition to the fixed assessment costs in provisional assessment has been a mixed bag. Some have allowed these costs in addition, some say they are inclusive. It does seem odd that a receiving party could be penalised for their case settling pre-issue.

    It’s a little like the position on full replies, some courts want them, some don’t. There is also a firm out there who states on their website that a court returned the request for PA as full replies were requested.

    CLown

    17th September 2014

  7. the only costs items permitted in the Bill are the Bill / checking?

    abcde

    17th September 2014

  8. Melanie at 10:53 am – You may have a point. I do indeed claim pre-issue costs in such circumstances, relying on Société Anonyme Pécheries Ostendaises v Merchants Marine Insurance Co Ltd [1928] 1 KB 750 and Frankenberg v Famous Lasky Film Service Ltd (1931) 144 LT 534. I think the former case provided the rationale that the costs of pre-issue work would be allowed if that work was ultimately proved of use in the action. While you could perhaps argue by analogy that the Part 8 proceedings were ultimately of use in the detailed assessment proceedings, in that without them there would have been no such proceedings, can you really assert that the costs of abortive negotiations should also be recoverable as part of the costs of the detailed assessment proceedings on the same principle?

    Peter Burdge

    17th September 2014

  9. surely the point about the costs of Part 8, is that they are still open to be determined as to whom is liable for such, dependent on a variety of factors, including offers made, and conduct?

    Anonymous

    17th September 2014

  10. Paragraph 5 of the judgement of the Court of Appeal in _Tasleem_ is, in my humble opinion, seriously deficient in that, although it says that “the court duly made orders for the detailed assessment of the claimed costs”, it does not specify what order, if any, the court made about the costs of the Part 8 costs-only claim.

    TimothyP

    18th September 2014

  11. Re Timothy P’s comment:

    Although the CA does not refer to it in that reference, it was part of the established facts before the CA that a DJ had made specific orders awarding C the costs of the Part 8 proceedings, so whatever else might be wrong with the reasoning (as to which I make no comment), that isn’t it;

    Anon

    18th September 2014

  12. I raised this point with the SCCO last year in a case where Master Gordon-Saker had made the usual order that the costs of the Part 8 proceedings were to be “costs in the assessment”.I received a written response from him(which I still have)stating:-
    “Unless I am missing something I do not think that there will be any difficulty here. Sticking my neck out a little, I cannot see any argument that the costs of the Part 8 proceedings would be costs of the provisional assessment and so caught by the £1,500 cap. Paragraph 5 of the Order [i.e. the part of his order I was questioning] deals only with the incidence of costs – the party getting the costs of the assessment gets the costs of the Part 8 proceedings. The costs of the Part 8 proceedings can be assessed summarily at the same time as the costs of the provisional assessment”.
    In fact that case settled without the need for me to apply for a provisional assessment so the point was never tested and I have had no other case subsequently to test it.
    I agree that like so many of the recent rule changes it has not been properly thought through and is a shambles.

    Roger Wicks

    18th September 2014

  13. To add to and expand on my comment of 10.48am today:

    Paragraph 5 of the judgement of the Court of Appeal in _Crosbie v Munroe_ is, in my humble opinion, also seriously deficient in that, although it says that “an order was made in the Part 8 proceedings for detailed assessment”, it does not specify what order, if any, the court made about the costs of the Part 8 costs-only claim.

    I believe the omission of such information from the judgments is relevant in that it means that, in the future, no hypothetical judge facing an application similar to the ones that led to the appeals in _Crosbie_ and _Tasleem_ would be bound by these decisions of the Court of Appeal – because it would be impossible to determine whether the salient facts were the same.

    TimothyP

    18th September 2014

  14. Still not sure about Timothy P’s point. In Tasleem, for example, you are correct that paragraph 5 does not specify what order for costs was made in the Part 8 claim.

    But what about paragraph 1;
    “D…appeals against the orders of Deputy District Judge Starke of 4 July 2012,
    by which he awarded the claimants the costs of their Part 8 claims…”

    or paragraph 8:
    “The [DDJ] decided the claimants were entitled to their costs of bringing the Part 8 costs-only proceedings, which he summarily assessed in the sum of…”

    Good luck arguing that you can distinguish Tasleem because it isn’t clear what order th judge below made.

    Anon

    19th September 2014

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