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Costs budgets and detailed assessment

Posted by on 22nd June 2017 in Uncategorised | 0 comments

  1. The Court of Appeal has handed down judgment in the important case of Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] EWCA Civ 792 concerning the correct approach to take to detailed assessment where there has been a costs management order made.

The facts of the case are irrelevant. The four points of principle that emerge are:

· Where a costs management order has been made, in relation to future estimated costs, at detailed assessment the court will not depart upwards or downwards from that approved budget without ‘good reason’. The court declined to provide further guidance on what amounted to ‘good reason’ other than to comment: “Costs judges should therefore be expected not to adopt a lax or over-indulgent approach to the need to find ‘good reason’”. This clearly leaves plenty of scope for argument on detailed assessment.

· No such ‘good reason’ is required in relation to incurred costs. Incurred costs are to be the subject of detailed assessment in the usual way, except to the extent to which the court may take into account comments made in relation to incurred costs by the judge when the costs management order was made.

· Importantly, the making of a costs management order does not close-off arguments on assessment as to what global figure would be proportionate for the case. This is because “the costs judge ordinarily will still … ultimately have to look at matters in the round and consider whether the resulting aggregate figure is proportionate”.

· For the purposes of proportionality and the transitional provisions, a claim is “commenced” when the relevant proceedings are issued by the court, not the date they are sent to the court. This is important for those cases issued around 1 April 2013. Unless the court actually issued the claim form before 1 April 2013, the new proportionality test will apply to post-1 April 2013 work.

The truth is out there

Posted by on 19th June 2017 in Uncategorised | 1 comment

It was a funny old General Election.

We witnessed the worst Conservative manifesto in history and watched as the Prime Minister went, in the public eye, from “strong and stable” to “weak and wobbly” in a few short weeks. The Conservative share of the vote duly increased by 5.5% compared to the brilliant and ruthless campaign run by David Cameron at the last election.

A highly efficient Labour campaign saw the all-conquering Jeremy Corbyn fall a mere 55 seats behind the disastrous Conservative campaign and achieve a massive 4 seats more than the terrible Labour campaign of Gordon Brown in 2010.

The Liberal Democrats ran a no-brainer of a campaign to appeal to the 48% of the population who voted Remain, and duly saw their share of the vote decline by 0.5% compared to their train-crash result in 2015.

At a more granular level, Diane Abbott had, what was widely regarded as being, the worst election campaign of an individual British politician in living memory. She was duly returned with a 12.2% increase in support and a massive 75.1% share of the vote in her constituency. (This was before any proper medical explanation was advanced for her shockingly poor media performance.)

In politics, perception may well be all. Nevertheless, one does begin to wonder whether voters were partaking in a parallel election to that being observed by most political commentators.

Meanwhile, back in the world of law and cold hard facts, Access to Justice tweeted: “We definitively prove that #PIReforms are a huge mistake!” on the basis that research they commissioned apparently shows the government’s personal injury reforms will boost insurers’ profits by up to £700m a year. Virtually simultaneously, the Law Society Gazette published an article highlighting that motor insurers suffered combined losses of £3.5bn last year as a consequence of the changes to the Ogden rate change.

In a post-truth world, there is a “fact” out there to satisfy any point of view.

What can law costs draftsmen do?

Posted by on 31st May 2017 in Uncategorised | 1 comment

What steps in costs litigation are (non-Costs Lawyer) law costs draftsmen able to undertake?

Although the issue, inexplicably, still sometimes arises, it should now be clear (post-Kynaston v Carroll [2011] EWHC 2179) that they can appear at (first-instance) detailed assessment hearings so long as they are properly instructed by the legal representative on record.

However, the role of independent (ie not in-house) costs draftsmen extends beyond advocacy at detailed assessment.  It is not uncommon for costs draftsmen/costs firms to:

  1. Serve Notices of Commencement.
  2. Make Part 36 offers in detailed assessment proceedings.

Is this permissible?

Both Notices of Commencement and Part 36 offers are subject to the formalities that go with service (CPR 6).  If a costs draftsman is not on record as acting for a party (and, further, not an authorised litigator), can they properly serve a Notice of Commencement or Part 36 offer?

The answer is possibly now to be found in the recent decision of Coulson J in Ndole Assets Ltd v Designer M&E Services UK Ltd [2017] EWHC 1148 (TCC).

In brief terms, the issue arose as to whether a non-regulated claims firm could properly serve a Claim Form and Particulars of Claim on behalf of a litigant in person.  It was not in issue that the claim firm was not permitted to carry out reserved activities.

The judgment analyses whether service of Claim Form and Particulars of Claim amounted to “prosecution” of the proceedings (a reserved activity).  If I have understood the judgment correctly, it concludes that such service was a reserved legal activity but this was a task that could legitimately be delegated to a third party, it being noted that service by process-servers happens all the time:

“In my view, the (partial) answer to this is that process-servers are engaged by the relevant solicitors to carry out this particular task. They have the solicitors’ delegated authority to serve the documents. In those circumstances, since the solicitors on the record are responsible for the carrying out of all reserved legal activities, the solicitors remain responsible for the service of the documents, even if they have sub-contracted the task to professional process-servers. In that way, there is nothing inconsistent in concluding that the service of proceedings by process-servers is a reserved legal activity, for which the solicitors on the record are and remain responsible.”

To the extent to which a solicitor could delegate such a task, so could a litigant in person.

If this reasoning is correct, it would equally mean solicitors could delegate the service of a Notice of Commencement or the making of a Part 36 offer to external law costs draftsmen.  The extent to which such work needs to be properly supervised and undertaken under express instructions is less straightforward.

Personal Injury Small Claims, Portals and Fixed Costs

Posted by on 18th May 2017 in Uncategorised | 0 comments

Kerry Underwood’s Personal Injury Small Claims, Portals and Fixed Costs has now been published and is available to order here.

Running to over 1,300 pages over three volumes, you certainly get your money’s worth (a steal at £80).

The value of the book falls into three categories:

  • It is an indispensable practical guide for any claimant or defendant lawyer (or insurer) dealing with lower value personal injury claims. It is full of tips and guidance that will not only assist on a day-to-day basis but may make the difference between a happy client and a professional negligence claim.
  • It should be on the shelf of any costs practitioner who deals with fixed fee cases (or who needs to identify when a case should have been fixed fee).
  • It is absolutely essential reading for mangers/owners of claimant solicitor firms who deal with personal injury work. This book spells out how to keep this work profitable (and includes detailed model funding agreements).  Failure to buy this book, and follow the advice, may well make the difference between still having a profitable business in five years’ time and having shut up shop long before then.

Buy.

Interim costs payment

Posted by on 15th May 2017 in Uncategorised | 6 comments

This blog has previously looked at the interrelationship between interim payments on account of costs and interim costs certificates.

Gordon Exall’s Civil Litigation Brief blog recently had a post on this issue that I struggle to describe as being anything other than bizarre (although the post itself is an entirely accurate summary of the decision being reported).

HH Judge Robinson gave permission to appeal in relation to an unsuccessful application for an interim payment on account of costs.  The order granting permission does, to be fair, highlight:

“I appreciate that I have not had the benefit of hearing submissions to the contrary, and the observations set out below must be taken to be subject to receipt of such submissions.”

Nevertheless, the robustness of what follows makes it clear that the judge did not have much of an open mind as to the issue:

“I have read the transcript of the telephone hearing.  It seems to me that the District Judge was completely misled by the Advocate for the Defendant.

The Defence advocate directed the attention of the Judge to chapter 5 of the 2015 edition of Cook on Costs.

That chapter deals with interim payments on account of costs by the client to his own solicitor [Judge’s emphasis]. It has no relevance to a claim for an interim payment on account of costs by the paying party to the receiving party.  That issue is dealt with at chapter 25 of Cook.

The Judge was directed to a passage from Cook (2015) at page 85, paragraph 5.24 in these terms:

‘there is no scope to seek an interim payment of costs until a detailed assessment hearing is requested (via an interim costs certificate). …’ and

If you do not get an order as discussed here, you will have to wait until you have requested a detailed assessment hearing before being able to apply for an interim costs certificate.’

Those passages persuaded the Judge to conclude that the court had no jurisdiction ‘to entertain an application for payment on account of costs until [CPR] 47.16 kicks in, once you’ve lodged your request for detailed assessment’.

Those observations apply only to payment by the client to his own solicitor [Judge’s emphasis].

Chapter 25 of Cook (2015) is entitled ‘payment on account of costs’.  It is to this chapter that the Judge should have been directed.  The commentary is unchanged in the 2016 and 2017 editions.  I leave it to the parties to the parties to read it themselves.

Thus, unless I have fundamentally misunderstood something, this appeal is bound to succeed.  If it proceeds to a hearing, and this analysis prevails, I shall be asking why the Judge’s attention was drawn to an irrelevant chapter of Cook and why it was not drawn to Chapter 25.”

For the purposes of this post, I am not overly concerned with whether Cook on Costs 2015 was correct, but rather whether the advocate for the Defendant misled (deliberately or not) the Judge as to what Cook on Costs said.

Paragraph 5.24 of the 2015 edition reads in full:

“Where agreement has been reached by acceptance of a Part 36 offer, there is no scope to seek an interim payment of costs until a detailed assessment hearing is requested (via an interim costs certificate). Consequently, these circumstances should prove a powerful incentive for you to get your breakdown or bill drafted and submitted to the other side as soon as possible.

Where there has been a mediation or other form of negotiation which requires a consent order to be prepared for the court’s approval, there is scope for you to include an order for an interim payment. Given the wording of CPR 44.2(8) it will be difficult for your opponent to justify any outright opposition to an interim payment.

Don’t forget, cash (flow) is king. If you do not get an order as discussed here, you will have to wait until you have requested a detailed assessment hearing before being able to apply for an interim costs certificate. The laudable aim of provisional assessments is that they will be completed within six weeks of the request for detailed assessment. It is unlikely that courts will entertain interim costs certificate applications if the delay in getting a provisionally assessed bill is well under two months. If the courts do not manage to hold the six week target, they are likely to be sufficiently overwhelmed with work that they are not necessarily going to be dealing with interim costs applications speedily in any event. So if your costs are under £75,000 in total you definitely need to make sure that you seek an interim payment when the case concludes and do not leave it until later.”

The following issues arise:

  • Chapter 5 is headed “Running cases with conditional fee agreements”. Some sections of this chapter are clearly aimed at the solicitor/client relationship but other parts are clearly concerned with the position between opposing parties (eg paragraph 5.3 concerns notification to the other side of recoverable additional liabilities.  Paragraph 5.32 concerns interest on costs between the parties.)  There is nothing to suggest that chapter 5 is intended to deal simply with solicitor/own client matters.
  • There is clearly nothing in the wording of CPR 47.16 to support the idea that this is a provision that only applies to solicitor/own client detailed assessment.
  • Paragraph 5.24, which HH Judge Robinson selectively quotes from, expressly states: “these circumstances should prove a powerful incentive for you to get your breakdown or bill drafted and submitted to the other side [emphasis added] as soon as possible”. Why would it be necessary to submit details of costs to the other side if these “observations apply only to payment by the client to his own solicitor”?
  • Again, paragraph 5.24 discusses it being “difficult for your opponent [emphasis added] to justify any outright opposition to an interim payment”. How is this consistent with this short section of Cook being confined to interim payments by the client to his own solicitor?

The decision becomes even stranger when one turns to chapter 25 of Cook.  Having invited the parties to read this for themselves, one wonders what HH Judge Robinson made of this section:

“The amended CPR maintains the distinction between a payment on account (CPR 44.2(8)) and an interim costs certificate (CPR 47.16).  The former, as we have seen, obliges a court that has made a costs award to order a payment on account.  The latter may only be made requested after the receiving party has requested a detailed assessment.”

One is left with the suspicion that any fault did not rest with the Defendant’s Advocate at the original hearing, but rather with a misleading Appellant’s Notice and skeleton argument (although I have seen neither).

For completeness, paragraph 5.26 (corresponding to 5.24 in the 2015 edition) of the 2017 edition of Cook on Costs (excellent as always), now reads:

“Where agreement has been reached by acceptance of a Part 36 offer, there is no opportunity to seek an interim payment of costs until a detailed assessment hearing is requested and an interim costs certificate under CPR 47.16 can be sought. This is simply because there is no court making an order for costs subject to detailed assessment under CPR 44.2. Instead a deemed order has been made by virtue of Part 36. Some courts have considered that this line of reasoning is an attempt to oust the court’s jurisdiction. But, as we discuss in Chapter 25, we consider the rationale for this position to be set out clearly in Dyson Ltd v Hoover Ltd. There are good policy reasons for requiring parties to get on with the detailed assessment proceedings in accordance with Part 47 rather than making interim applications to the court. Once a request for a detailed assessment hearing has been made there can be no argument regarding jurisdiction. Consequently, these circumstances should prove a powerful incentive for you to get your breakdown or bill drafted and submitted to the other side as soon as possible.

Where there has been a mediation or other form of negotiation which requires a consent order to be prepared for the court’s approval, there is scope for you to include an order for an interim payment. Given the wording of CPR 44.2(8) it will be difficult for your opponent to justify any outright opposition to an interim payment.

Don’t forget, cash (flow) is king. If you do not get an order as discussed here, you will have to wait until you have requested a detailed assessment hearing before being able to apply for an interim costs certificate. The laudable aim of provisional assessments is that they will be completed within six weeks of the request for detailed assessment. It is unlikely that courts will entertain interim costs certificate applications if the delay in getting a provisionally assessed bill is well under two months. If the courts do not manage to hold the six week target, they are likely to be sufficiently overwhelmed with work that they are not necessarily going to be dealing with interim costs applications speedily in any event. So if your costs are under 75,000 in total you definitely need to make sure that you seek an interim payment when the case concludes and do not leave it until later.”

Chapter 25 reinforces this view, although recognises there have been conflicting decisions:

“If anything, this position has been strengthened by the April 2013 amendments. Under the previous provision, where the court had ordered a party to pay costs it had the power to order an amount on account before the costs were assessed. CPR 44.2(8) seems less flexible, suggesting that the time for an order for payment on account is when the costs order between the parties is made, although we are aware of conflicting first instance decisions on this point. This interpretation creates problems when there are deemed costs orders under CPR 44.9(1) as, inevitably, an application for payment on account will be after the date of the deemed order.”

Whiplash injuries to increase in severity

Posted by on 3rd May 2017 in Uncategorised | 1 comment

Over the weekend, the Guardian published an article titled: “Whiplash: the myth that funds a £20bn gravy train”, challenging the medical basis for such claims and highlighting the fact that in Greece and Lithuania, where there is no expectation of financial gain from whiplash, chronic neck pain following a car crash appears simply not to exist.  (Strangely, @ccesstojustice, who are usually so keen to promote whiplash related stories, did not consider this worthy of a retweet.)

In future (subject to something of a surprise at the next election), damages for “whiplash” injuries will be based on injury duration and costs recovery will end.  Damages will be:

0–3 months  – £225
4–6 months – £450
7–9 months  – £765
10–12 months – £1,190
13–15 months – £1,820
16–18 months – £2,660
19–24 months – £3,725

I previously commented:

“However, I am struggling to envisage any business model which would allow for a reasonable profit to be made (even by CMCs) where damages for whiplash claims with symptoms of under 12 months are £1,190 or less and the claims are not costs bearing. What % of damages could be taken that would enable a profit to be made but leave enough damages for the claimant to bother with a claim? (The one exception to this is if an AI system could be put together that would fully automate the claims process for claimants, without the need for any human intervention, in exchange for a small cut of the damages.)  Either way, massive jobs cuts will follow.”

Having given the matter further thought, I was perhaps being overly pessimistic.

A potential client walks through the door of a solicitor and explains he was recently injured in a road traffic accident.  The solicitor explains how the claims process works and informs the client that because damages are calculated based on the actual duration of the injury there is no point in undertaking a medical examination until the symptoms have resolved themselves and the duration can be accurately determined.

The solicitor goes on to explain that damages are now based on a fixed tariff and shows the client the figures:

“For example, if your injuries last 3 months then you will be entitled to £225.  But if your injuries last 18 months then you could win … I mean become entitled to recover …  £2,660.  Let me know when you are feeling better and we can then arrange a medical examination.”

Based on the figures for injuries with a duration in excess of 12 months, it should be possible for a firm of solicitors to make a reasonable profit charging on a straight contingency fee basis.

Whiplash may not be a myth but I rather suspect that minor (ie less than 12 month) injuries will become a thing of the past once these reforms come into force.  (We may be leaving the EU but we will become a little bit more like our European neighbours in some ways.)  Medical science will recognise all injuries as having a duration of at least 12 months.

Costs budgeting – The value of the claim

Posted by on 26th April 2017 in Uncategorised | 0 comments

Costs budgeting is designed to ensure proportionate costs are incurred by setting budgets at an early stage in the proceedings.

Costs are proportionate if they bear a reasonable relationship to the sums in issue in the proceedings and the other relevant factors set out in CPR 44.3(5).

That being the case, how often do judges, when setting budgets, record in the relevant order the sum they considered to be reasonably in issue?  How often are they asked to do so?

If a claim subsequently settles for significantly less than the recorded sum, would this not represent a “good reason” to depart downwards from the budget?

Costs Lawyer qualification – history repeats itself

Posted by on 24th April 2017 in Uncategorised | 2 comments

The Costs Lawyer Standards Board has just finished a consultation process on a proposal to allow a new route to qualification as a Costs Lawyer.  The CLSB is proposing to introduce a new test which would lead to Costs Lawyer status. The test would be open to anyone who can evidence that they have achieved 10 years of experience in costs law and practice.  There would be no requirement for candidates to undertake learning/study as part of the preparation for the new test.

The new test would cover the current Costs Lawyer training syllabus.  It is proposed that the test would be via multiple-choice questions (“MCQs”).

The current three-year training course would continue to operate as the entry route for those without 10 years’ experience.

The thinking behind this proposal is entirely sensible.  I became a Fellow of the old Association of Law Costs Draftsmen (as it then was) via a one-off examination, rather than through the then existing training course.  I was one of the last to take this route as a decision had been taken to remove that option to qualification.  I believed that decision was wrong then and the proposal to reintroduce a fast-track route to qualification – so long as sufficiently robust – should be uncontroversial (although no doubt very frustrating for those experienced costs draftsmen who committed to the time and cost of the full training course in recent years in the absence of a fast-track route).

Nevertheless, there are some obvious issues that arise:

  1. Is a multiple-choice test appropriately robust? When I did the Bar Vocational Course, a number of subjects (such as Civil Procedure) were tested by way of MCQs.  These required significant study (or at least a photographic memory) to have any realistic chance of passing.  Guesswork was of only limited assistance.  For this new test, I can envisage questions such as:

What is the deadline for service of Replies to Points of Dispute?

                A             within 21 days after being served with the Points of Dispute

B             within 21 days of receipt of the Points of Dispute

C             no deadline as Replies are optional

D             at least 14 days before the date listed for detailed assessment

E              at least 21 days before the date listed for detailed assessment

Nevertheless, one would have to recognise that the laws of probability must allow for the occasional possibility of a pass being achieved through nothing but chance, however unlikely.

  1. Although well designed MCQs should be able to test knowledge of costs law and practice, it does nothing to test the ability to construct an argument or articulate this in writing. A Costs Lawyer’s work can encompass drafting narratives to bills to summarise complex litigation, the (brief) formulation of costs arguments in Points of Dispute and Replies, drafting written advices for clients on complex issues of costs law and drafting Skeleton Arguments.  Over the years, I have lost count of the number of apparently well qualified job candidates who have completed law degrees, CPE, BVC/BPTC, LPC, etc but who turn out to be semi-literate and/or innumerate.  This is a scandal for other academic institutions but it is not obvious that it needs to be exacerbated by the CLSB conferring Costs Lawyer status on those lacking basic skills in English and arithmetic, let alone lacking the high standards that should be expected.  In the absence of an essay based examination (or equivalent), there is no way to judge whether such high standards in English and reasoning are met.  Naturally, I leave it to others to decide whether a costs draftsman would survive 10 years in practice without reasonable literacy or numeracy skills.
  2. Costs Lawyers have rights of audience on costs matters up to, and including, the High Court. How is advocacy competency to be judged by MCQs?  I would be tempted to suggest the complete failure in the consultation to even mention advocacy suggests the CLSB does not properly understand the role of Costs Lawyers but for the fact that this appears to be almost exactly the same approach the ALCD (as it was) took to advocacy.  When the decision was made to “automatically” upgrade all Associates and Fellows of the ALCD to Costs Lawyer, all that was required was attendance at a two-day (subsequently shortened to one-day) course with no advocacy exercises or assessment.  It was plainly wrong then and the CLSB is wrong now if it considers competency in advocacy to be an issue of no relevance when conferring Costs Lawyer status.

New Precedent R budget discussion report

Posted by on 18th April 2017 in Uncategorised | 3 comments

I have previously commented on the problems caused by the Precedent R budget discussion report failing to distinguish between incurred and future estimated costs.

This has, in part, now been addressed by the amended Precedent R (available here).

This follows on from the new rules, that came into force on 6 April 2017, making it clear that costs management orders relate to future costs only.  The amended form expressly states:

“Note: include only budgeted costs”

Nevertheless, there remain two problems with the amended form:

  • It contains a “Pre action costs” phase. Why?  Such costs, by their very nature, can never be future budgeted costs.
  • CPR 3.15(2)(c) expressly states that when making a costs management order the court will: “record the extent (if any) to which incurred costs are agreed”. That being so, where in the form can one agree incurred costs?

Third time lucky Rules Committee?

Supreme Court comments on proportionality test

Posted by on 13th April 2017 in Uncategorised | 0 comments

One of the ongoing areas of uncertainty post-Jackson is whether additional liabilities should be included (where still recoverable) when considering proportionality.

I am grateful to Andy Ellis for pointing out the comments of the Supreme Court in Times Newspapers Ltd & Ors v Flood & Ors [2017] UKSC 33:

“However, certain changes introduced following Sir Rupert Jackson’s “Review” do apply to defamation and privacy cases. They include more muscular case management by the courts to deal with cases proportionately, costs budgeting and costs management, which involve the parties and the court controlling the level of recoverable costs at the start of the proceedings (see CPR 3.12(1)), costs-capping (by virtue of PD 3F para 1), and new provisions which limit the level of overall recoverable costs to what is proportionate [emphasis added] (pursuant to CPR 44.3(2)(a)).”

This in in the context of the fact that success fees and ATE premiums remain recoverable in defamation cases.

The Supreme Court appears to have proceeded on the basis that proportionality applies to both.  It is not clear from the judgment as to what extent argument was heard on this issue and the relevant transitional provisions.