I recently looked at the case of Beardmore v Lancashire County Council where the court allowed recovery of medical agency fees (limited to £30 in addition to the direct costs) for obtaining medical records in an EL/PL Portal claim.
These records were presumably obtained by the medial agency from the GP/hospital under the Data Protection (Subject Access) (Fees and Miscellaneous Provisions) Regulations 2000 which prescribe a maximum fee by the holder of the medical records of £50 to include photocopying and postage for access to medical records.
The judgment in that case made no reference to the General Data Protection Regulation (GDPR), presumably because the records were obtained before this regulation came into force (on 25 May 2018).
Less than two weeks ago the Information Commissioner’s Office (ICO) posted a blog advising that it was reasonable for solicitors to use GDPR to obtain clients’ medical records. The GDPR provides that the holder of medical records must process a request for such records free of charge and within one month.
If solicitors can obtain medical records free of charge relying on GDPR, it is difficult to see how a decision could be justified to instead make the request under the Data Protection (Subject Access) (Fees and Miscellaneous Provisions) Regulations 2000 and incur a fee in the process.
If that is correct, there should, in future, be no claims by claimants for the direct costs of obtaining medical records in personal injury claims.
This, in turn, raises the question of whether the continued use of medical agencies for this task is justified. It might be argued that in non-fixed fee cases a medical agency can obtain the records more cheaply (at, say, £30) than if the fee earner undertook the task. It is less easy to see how this would continue to be justified in fixed fee cases where the medical agency work is clearly undertaking work that is of a fee earner nature.
Put another way, in Beardmore the judge concluded that the “appropriate measure for the disbursement recovery is the reasonable and proportionate cost of obtaining the medical records”. If the records can be obtained free of charge by the solicitors using GDPR, what justification is there for incurring any fee in a fixed costs matter? Expect pressure for CPR 45.29I (2) to be amended.
In Beardmore v Lancashire County Council (County Court at Liverpool, 1/2/19), His Honour Judge Graham Wood QC allowed the claimant to recover medical agency fees incurred in obtaining medical records in an EL/PL Portal claim despite the fact there is no express allowance for this in the CPR, unlike the RTA Portal rules.
A medical agency had been instructed to obtain the claimant’s medical records. The direct costs were £50 for the hospital notes and £10 for the GP notes. With a profit element on top, the claimant sought £96 including VAT in relation to each.
The defendant had argued that only the direct costs were recoverable.
The RTA Portal rules makes specific provision for the recovery of the medical agency fee as a disbursement of up to £30 on top of the direct costs (CPR 45.29I (2A)(c)).
HHJ Wood concluded:
“CPR 45.29I (2) allows for the recovery of a medical agency fee in this public liability case as a disbursement, and it is not excluded by the specific reference to the maximum recovery for the medical agency fee in RTA claims. In a public liability case, in my judgment, the appropriate measure for the disbursement recovery is the reasonable and proportionate cost of obtaining the medical records”.
In the absence of any evidence as to how the £96 figure had been arrived at, HHJ Wood allowed the same amounts as would have been recovered in an RTA Portal matter (ie the direct cost of obtaining the records plus £30 per set plus VAT).
A new Precedent R costs budget discussion report form had been produced that will come into force from 25 April 2019 (last page here).
In terms of changes to the current version:
- The form now includes incurred costs. This may, in part, have been to avoid confusion as to what figures were meant to be inserted into the “Claimed” column. I suspect the main reason was to emphasis that the court is meant to take into account incurred costs when considering the reasonableness and proportionality of all budgeted costs (as per PD 3E para.7.4).
- I am somewhat struggling to understand the final thee columns on the form. Column K is presumably for the judge to insert the total that is being allowed for future budgeted costs. Columns L and M appear to be designed, in part, for the judge to insert comments on the costs claimed/allowed. This certainly makes sense in relation to commenting on incurred costs and is precisely what PD3E para.7.4 envisages. It can also be very helpful if a judge makes comments on the reasoning behind the estimated costs allowed. At detailed assessment, comments on the reasoning behind the figures allowed can greatly assist when determining whether there is a good reason for departing upwards or downwards from the budget. However, columns L and K are split between “Time (hours)” and “Disbursements”. This appears to run the risk of encouraging judges to focus on the “constituent elements” of the budget rather than, as per PD3E para.7.3, the “total figures for budgeted costs of each phase of the proceedings”.
- The “summary” box at the bottom of the form refers to “Post CCMC costs summary”. This appears to predicated on the basis that the costs of the actual CCMC will be included under “Incurred costs”. This may help solve the problem of where to include the CMC/CCMC work within Precedent H. At the time the budget is completed this work (or at least the majority) will be estimated but by the time the budgets are actually approved will have been work that has been completed (and thus incurred). Hopefully, the Guidance Notes to Precedent H will be updated to clarify this.
The front page of the Precedent H form for costs budgets has a section at the bottom for completion of the costs of the costs budgeting process:
1% of approved budget or £1,000
I routinely see budgets served where this part of the form has been completed, calculated by reference to 1% or 2% of the total of the budget as drafted (incurred plus estimated costs). This is plainly incorrect.
PD 3E para.7.2 states:
“Save in exceptional circumstances-
(a) the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% of the total of the incurred costs (as agreed or allowed on assessment) and the budgeted costs (agreed or approved); and
(b) all other recoverable costs of the budgeting and costs management process shall not exceed 2% of the total of the incurred costs (as agreed or allowed on assessment) and the budgeted (agreed or approved) costs.”
The first point to note is that the 1% and 2% figures are caps. There is no automatic entitlement to these amounts. To get the full amount of the cap, it must be shown that reasonable work on the relevant task was undertaken that equals or exceeds the cap.
Secondly, the fact that the part of the % that relates to incurred costs is calculated by reference to the amount eventually “agreed or allowed on assessment” means that at the time the budget is drafted (and at the time of the costs management hearing) it is completely unknown what figure will eventually be agreed or assessed in respect of incurred costs. This will only be discovered at the conclusion of the claim once the other costs have actually been agreed/assessed. It is therefore not possible to calculate the 1% or 2% figure at that stage as the amount used to calculate the figure has not yet crystallised.
Thirdly, even in respect of the estimated future costs, at best it is simply wishful thinking to believe that because the estimated future costs are £x that this amount will be approved in full. Any reduction by the court in respect of estimated costs will lead to a corresponding reduction in the amount allowed for the “budget drafting” and “budget process” caps.
Matters are not helped by the Precedent H Guidance Notes which state:
“Budget preparation: the time spent in preparing the budget and associated material must not be claimed in the draft budget under any phase. The permitted figure will be inserted once the final budget figure has been approved by the court.”
The reference to “inserted” is clearly intended to mean the amounts that will be inserted on the front page of Precedent H.
This is also simply wrong, because at the point the future estimated costs are approved by the court, the amount that may be agreed/assessed for the incurred costs will, again, remain unknown.
Precedent H itself is clearly defectively drafted. The 1% and 2% figures can never be inserted at the costs management stage and these elements should not be on Precedent H.
There exists something of a disconnect between how busy costs practitioners tend to tell you they are and what the market would suggest.
Certainly, most costs lawyers and costs draftsmen would have you believe they are very busy and business is booming. Sadly, the visible evidence suggests everything is not quite so rosy.
Just Costs has just gone into administration (effectively for the second time). This is reported to have led to 26 redundancies. But to put this into context:
- Back in December 2016, it was explained that Just Costs had “consolidated” from four to two offices and reduced its headcount from 110 to 70.
- In October 2017, when they emerged from their previous administration, via a CVA, it was announced that this would save 46 jobs.
- A few weeks ago it was reported they had 33 staff.
Legal Futures reported Nick McDonnell, a director at costs firm Kain Knight – and a director of the original Just Costs for two years to April 2017 – as commenting:
“The changes to the legal costs industry continue to hit some costs firms very hard. The issue isn’t so much attracting work but, particularly in the personal injury sector, there is an expectation to offer deferred payment terms. This can mean deferring payment on costs management and budgeting work, for example, for up to 12 months. This significantly affects a firm’s cash flow and the administration of Just Costs Solicitors is the latest example of this.”
Long established costs drafting firm Neat Legal Services went into administration in 2018.
Cost Advocates was another casualty, ceasing to exist in 2017.
There have been numerous other job losses, redundancies, department closures, office closures and (probably) forced mergers over the last few years.
One of the online comments posted below the Law Society Gazette news report on this stated:
“What you are basically seeing is the larger, badly run firms falling by the way side. Big is not beautiful any more and Just Costs was always a bad business model anyway. They will not be the last multi-office firm to go under this year. I am in the game and I hear rumours all of the time about other firms. This all started as a cottage industry 30/40 years ago and that is where it will end up – i.e., bespoke one man band experts rather than big firms with high overheads that they cannot sustain in this declining market.”
The White Paper Conference Company has lined up another excellent costs conference on Costs Litigation: Shaping New Law into Solution-Focused Answers for Your Clients on 13 March 2019. The speakers include: Regional Costs Judge Ian Besford, Alexander Hutton QC, Judith Ayling (39 Essex Street), Roger Mallalieu (4 New Square), David Marshall (Anthony Gold Solicitors), Alice Nash (Hailsham Chambers), Master Jason Rowley, and PJ Kirby QC.
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In Ndole Assets Ltd v Designer M&E Services UK Ltd  EWCA Civ 2865 the Court of Appeal was faced with the issue:
“Is service of a claim form a reserved legal activity for the purposes of the Legal Services Act 2007 (the 2007 Act)? And if it is, does service of a claim form where carried out by a person who is not an authorised or exempt person for the purposes of the 2007 Act have the consequence that service is invalid and that the claim should be struck out?”
On the facts of the case, CSD, referred to as “claims consultants”, purported to serve a claim form on behalf of a litigant in person. It was not in dispute that CSD were not solicitors and were not authorised for the purposes of the 2007 Act to conduct litigation.
Schedule 2 of the 2007 Act defines “conduct of litigation” as:
“(a) the issuing of proceedings before any court in England and Wales,
(b) the commencement, prosecution and defence of such proceedings, and
(c) the performance of any ancillary functions in relation to such proceedings (such as entering appearances to actions).”
The Court concluded that:
“that service of the claim form was within the ambit of ‘conduct of litigation’. … I consider that service of the claim form is indeed an aspect of ‘prosecution… of such proceedings’ and at all events that service of the claim form is ‘an ancillary function in relation to such proceedings’. As stated by the Court of Appeal in paragraph 56 of Agassi, it must have been intended that ‘ancillary functions’ would be formal steps required in the conduct of litigation. Service of the claim form is unquestionably, in my opinion, of such a kind. There are rules of court relating to it. A legal action cannot be progressed, cannot be prosecuted, unless and until the claim form is properly served, as the judge had noted. Service is the essential means by which a defendant is notified of the content of the court process which has been initiated against him and in respect of which he is ordinarily required to acknowledge service. Thus service of the claim form falls within the ambit of the statutory language, naturally read.”
The Court therefore decided that service of the claim form had been unlawfully effected by CSD.
Nevertheless, the Court rejected the argument that service was therefore invalid. The 2007 Act contains no such consequence and such a draconian outcome would not be justified.
“It follows that service in this present case is to be taken as valid unless the court were to decide to set it aside. I can see no reason whatsoever for so ordering.”
This decision has important implications for much costs litigation.
It remains common practice for firms of costs draftsmen and costs lawyers to purport to serve Notices of Commencement, Replies, etc.
Costs draftsmen are clearly not authorised for the purposes of the 2007 Act.
Practising costs lawyers are authorised, but only as individuals. The Costs Lawyer Standards Board does not regulate entities. There is no such thing as an authorised firm of costs lawyers. Any step taken in relation to costs litigation by a costs firm (other than a firm that is an actual firm of solicitors) must be taken by, and in the name of, the individual costs lawyer. A costs firm cannot go on record as acting for a party to litigation; it must be an individual costs lawyer and any further steps taken must be by the same costs lawyer (unless and until a Notice of Change is filed)
In this case, the Court concluded that:
“even if CSD had … simply sent a letter to the defendant saying they acted for the claimant and enclosing the claim form by way of service under the rules … that would , in my view, have been prohibited.”
It therefore seems inevitable that a court would conclude that service of a Notice of Commencement, etc by a costs draftsman or a costs firm would be an unlawful act.
If it does not invalidate service, does it matter? Rather.
As the Court observed, the fact that service was not invalid did not mean that no sanction was available:
“On the contrary there are sanctions available in the form, in an appropriate case, of criminal process and sentence and a contempt application. And those sanctions are directed at the right target – that is to say, the person who has actually engaged in the unlawful conduct of litigation.”
The relevant section of the 2007 Act reads:
“Any person who contravenes the provisions of subsection (1) –
(a) shall be guilty of an offence and liable on conviction on indictment to imprisonment for not more than two years or to a fine or to both; and
(b) shall be guilty of contempt of the court in which the action, suit, cause, matter or proceeding in relation to which he so acts is brought or taken and may be punished accordingly; and
(c) in addition to any other penalty or forfeiture and any disability to which he may be subject, shall be liable to a penalty of £50 to be recovered, with the full costs of the action, by an action brought by the Society with consent of the Attorney General in the High Court or in any county court, and to be applied to the use of Her Majesty.”
Something to think about.
Shortly before Christmas the new edition of Friston on Costs landed on my doormat. Obviously, I do not mean that literally. They have yet to design a letterbox large enough for a book this size and, if you order online, the description has a two-person delivery symbol beside it to indicate the number needed to carry it.
The first edition of this book, still less than 10 years old, ran to 1,245 pages ignoring the preface and contents pages. This third edition comes in at 2,138 pages and now comes in a heavy cloth binding.
Fortunately, this is not a case of “never mind the quality, feel the width”.
Since the second edition was published (in 2012), the costs world has seen a continuous stream of new case law. This is all seamlessly introduced into the new edition. However, more importantly, the intervening period has also seen the introduction of the Jackson reforms. This led to major changes to the cost rules, the introduction of entirely new areas of costs procedure (such as costs budgeting) and the inevitable explosion of further case law on the new procedures. This new edition is therefore not simply a general update but is, in large part, a comprehensive rewrite.
The overall scope of the book is an encyclopaedic as ever. This will be the first port of call for research by all costs practitioners and costs judges. (I have already found it indispensable to securing a win on a point of principle.) No topic – however obscure – appears to have been overlooked.
This latest addition includes more general commentary on costs law – from both the author and other legal commentators – than previous editions. This is welcome. The fact that there is generally only a finite amount of case law from the higher courts on costs law, combined with the fact that much of the Jackson reforms are still settling in, means that any guidance or thoughts from respected costs experts is to be warmly embraced.
Unfortunately, advocates are unlikely to want to carry a copy of this book to court in addition to a copy of the White Book. (Did I mention the size of Friston on Costs?) Fortunately, the book also comes in electronic form. The iOS compatible version comes with its own app. On a standard iPad this works at lightning speed and makes searching for topics a breeze. I have not tried this on other platforms, although expect the Windows and Android versions to be similar. Amazon is also selling a Kindle version of the book, but suspect this is may not be as fast. (Personally, I now have the White Book, Friston on Costs and Cook on Costs all in ebook form on an iPad and just take that to court.)
Remarkably, the book is being sold at barely cost price. The full price for the hard copy is just £175. To get both the hard copy and ebook costs just an extra £25. (Amazon currently have the Kindle edition for just £148.79.)
For a limited period, readers of the Legal Costs Blog can obtain a 20% discount off the full price by entering the code “ALFLY5F” when ordering on the publisher’s website.
The author deserves the undying gratitude of the rest of the costs profession. The latest edition alone must have taken hundreds of hours to write (not to mention eyewatering amounts of lost fee earning time). On the back of this book, lesser lawyers will save immeasurable amounts of research time and give the impression they are considerably more knowledgeable than the facts would justify. Standing on the shoulders of giants…
The bible of the legal costs world is back, bigger and better than ever.
PD 47 para.5.1 requires an electronic bill of costs for any work undertaken after 6 April 2018 where the claim is a Part 7 multi-track claim.
The Practice Direction contains no sanction for failing to comply with this requirement.
CPR 44.11 provides:
“(1) The court may make an order under this rule where –
(a) a party or that party’s legal representative, in connection with a summary or detailed assessment, fails to comply with a rule, practice direction or court order;
(2) Where paragraph (1) applies, the court may –
(a) disallow all or part of the costs which are being assessed”
There appear to be a number options open to the Court where there is a failure to comply with PD 47 para.5.1, including:
- Tutting and proceeding with the assessment regardless.
- Refusing to proceed with the assessment until a compliant electronic bill (and amended paper bill) is served/filed.
- Making an unless order requiring a compliant electronic bill (and amended paper bill) to be served/filed by a certain date failing which all costs will be disallowed.
- Disallowing any post-6 April 2018 work (which may not be straightforward where the bill does not clearly identity all such work).
- Making a percentage reduction to the bill (perhaps roughly reflecting the proportion of post-6 April 2018 work claimed).
- Disallowing all costs.
I had anticipated that the case of Culliford & Anor v Thorpe  EWHC 2532 (Ch) would be the last word we would hear on the subject of interim payments for costs. In that case the court had to decide whether it had the power to order an interim costs payment after the original costs order had been made. The judge concluded:
“In my judgment, it is not the law that, once an order for costs has been made, drawn up and sealed, no further application can be made to the court for an order for a payment of a sum on account of those costs. There is nothing in the rules which so requires, and there may be good reason why payment of the sum on account is not considered at the time the order was made. My decision in Ashman v Thomas  EWHC 1810 (Ch) does not decide to the contrary. It was a case where the court was asked to revisit its order before it had been drawn up and entered. So it turned on the so-called Barrell jurisdiction. There was no need to decide what would have happened if the order had already been entered. Although CPR 44.2(8) contemplates that the court will decide this question at the time of making the order for costs, to my mind this does not exclude the possibility that the court should decide it later. I see no justification in the rules or authorities for the Claimants’ view that, if an application is not made at the time, the next opportunity arises only after detailed assessment proceedings have been commenced.”
However, barely had the ink dried on that judgment before another decision on this topic has been reported (although the case was actually heard several months before Culliford).
In Finnegan v Frank Spiers  EWHC 3064 (Ch) the High Court ruled that the court has no power to order a payment of costs on account after a Part 36 offer has been accepted. This is because Part 36 is a self-contained code and it makes no provision for payments on account following acceptance of a Part 36 offer.
We now have two different principles governing interim payments on account:
- Where the court makes an order for costs it may at the same time, or at any point subsequently, order a payment on account of those costs (pursuant to Culliford).
- Where the order for costs is a deemed costs order following acceptance of a Part 36 offer, the court has no power to order a payment on account (pursuant to Finnegan).
The judgment in Finnegan reveals a strange route by which the matter came to appeal, which is not commented upon (and I have seen no subsequent comment on this point elsewhere).
The case concerned a Part 36 offer accepted on 23 March 2017.
In early June 2017 the Claimant issued the application for an interim payment on account.
It was not until 8 August 2017 that the Claimant finally commenced detailed assessment proceedings (out of time).
The application came before a District Judge, on a date not given within the judgment, where the judge concluded there was no jurisdiction to order an interim payment on account. The judge commented that by this stage: “the claimant has requested a provisional assessment”.
Permission to appeal that decision was given on 13 March 2018 and was heard on 27 June 2018.
All of this was unnecessary and misconceived. By the time of the hearing before the District Judge, a request had been made for a provisional assessment. There was therefore a clear right to request an interim costs certificate under CPR 47.16 (as opposed to an interim payment on account under CPR 44.2(8)). Having said that, Cook on Costs 2018 notes: “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”. But, by the same logic, one must wonder why the courts would have entertained an application for an interim payment on account for a provisional assessment matter. Again, as per Cook on Costs 2018: “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”.
Then again, we are presumably taking about a Bill of Costs valued at under £75,000. In this case, the Defendant had apparently already made a voluntary interim payment of £30,000. The application that was issued sought a (presumably further) £19,000. This was a lot of satellite litigation over not very much.