The defendant costs specialists

Proportionality and additional liabilities

By on Sep 4, 2015 | 5 comments

An interesting aside from Senior Costs Judge Master Gordon-Saker in BP v Cardiff & Vale University Local Health Board [2015] EWHC B13 when considering a case with a pre-1st April 2013 CFA where the new proportionality test applied to work done after 1st April 2013:

“On behalf of the Defendant Mr Kiernan told me that it would not be fair to include any additional liabilities when considering the proportionality of the costs allowed for work done after 1st April 2013. He relied only on the figure of £138,202.97. As the point was not argued, I reach no conclusion as to whether when considering under the new rule the proportionality of costs incurred after 1st April 2013 additional liabilities should be taken into account.”

This suggests the point is open for argument.

The rules certainly do not appear to expressly address this point.

CPR 48.1(1) states:

“The provisions of CPR Parts 43 to 48 relating to funding arrangements, and the attendant provisions of the Costs Practice Direction, will apply in relation to a pre-commencement funding arrangement as they were in force immediately before 1 April 2013, with such modifications (if any) as may be made by a practice direction on or after that date.”

The old Costs Practice Direction at 11.5 read:

“In deciding whether the costs claimed are reasonable and (on a standard basis assessment) proportionate, the court will consider the amount of any additional liability separately from the base costs.”

If this survives, so far as pre-1st April 2013 CFA’s are concerned, it would seem to suggest under the new proportionality rule additional liabilities should not be taken into account. Master Gordon-Saker’s comments perhaps imply the matter is not quite so straightforward. Or, perhaps, he takes the judicial line that there is nothing to be gained from expressing any opinion where it is not entirely necessary.

    5 Comments

  1. It appears to me that part of the on-going problems are that the rules that came into effect on 1 April 2013 are drafted from the perspective that additional liabilities, in the main, are no longer recoverable inter partes. Therefore, such issues as whether the costs limit on the preparing of a costs budget and proportionality do not take into account that additional liabilities, such as the success fee, are still recoverable. It is a shame that this wasn’t clarified in the transitional arrangements section.

    Paul Walton

    4th September 2015

  2. The requirements under CPR 48.1 to have regard to the “old” CPD where funding with additional liabilities was taken out pre 04.13 are very clear. The “old” CPD of course contains section 11 (please do correct me on the section if its wrong), which excludes certain aspects of costs when assessing proportionality, the success fee being one such.

    Please please please can people stop trying to look for or imply problems in the new rules where they do not actually exist?

    Anonymous

    4th September 2015

  3. Off-topic, I’m afraid, but have you seen the new Precedent Q – ‘Model form of breakdown of the costs claimed for each phase of the proceedings’ – which may be found on page 9 of the 81st update PD-making document on the CPR home page?

    If you thought that Precedent H was a fine example of the MoJ’s handiwork, you will be delighted by this, which excels in ways too numerous to mention. Do have a look; it will make your afternoon!

    Peter

    9th September 2015

  4. So let me get this straight, we need to split bills pre/post April so that experienced Costs Judges can apply an old test that never achieved it’s goal for 15 years to the Pre LASPO work, then a new test can be applied to the post LASPO work that would have achieved it’s goal had the CPRC drafted coherent PD’s in the crucial areas and if the Mitchell type approach to compliance had been endorsed by the Supreme Court instead of becoming a politically motivated slap across the wrists against a left wing M.P.

    Costs Budgeting could achieve something long term but only if we focus less on formalities and more on reality of profit driven litigation (and recognise the difference between profit driven and principle driven litigation as was Mitchell), avoiding the issue of incurred costs defeats the object! Surely everybody knows that in medium to large scale litigation what you have done in the past has a knock on effect to the extent of the work required to be done in the future?

    “Oh Sir, yes we have already incurred a trillion zillion pounds and even though you are managing this case you don’t have the power to do anything but make orbiter comments about the extent of my costs to date” An absolute waste of Judges time.

    A Judge should be empowered/encouraged to make a costs capping orders at a CCMC if any feature of incurred or estimated costs seems unreasonable or disturbing. This alongside “Show Cause” Orders and other sanctions would certainly change the current approach of creative budget/bill drafting and would no doubt free up Judicial resources.

    Then again, is this just a carefully constructed, sign posted and heavily monitored road towards a complete and utter fixed costs profession?

    proposterousnality

    10th September 2015

  5. Peter – Thank you very much for pointing that out. It makes an interesting read!

    Richard

    11th September 2015

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