The defendant costs specialists

Legal Costs Blog

Defective costs budgets

Posted by on 29th October 2018 in costs budgeting | 1 comment

The decision of Mr Justice Walker in Page v RGC Restaurants Ltd [2018] EWHC 2688 (QB) provides further important guidance on the costs budgeting process and is essential reading for those involved in costs budgeting.

The underlying case was subject to costs budgeting.  The parties decided between themselves, without consulting the Court, that the budgets could be prepared on the basis that it was too soon to budget for trial preparation and trial costs.  The Claimant’s budget therefore included nothing for these phases.

The main rule in issue was CPR 3.14:

“Unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees.”

At the CCMC, the master concluded that the failure to serve a budget that included trial preparation and trial estimates amounted to a failure to file a budget that complied with the rules.  He decided that the consequence of this was that the CPR 3.14 sanction applied and made a costs management order limiting the Claimant’s budget accordingly (ie court fees only).

On appeal, the master’s decision that there had been a failure to file a compliant budget was upheld.  However, the appeal judge ruled that the master should have gone on to consider whether to disapply the sanction (even in the absence of an application for relief from sanctions) as CPR 3.14 specially provides that the sanction applies “unless the court otherwise orders”.  The judge then applied the Denton principles to the issue of whether the court should have otherwise ordered and did so to the extent that the sanction would not be applied to those phases of the budget that had been properly completed and agreed by the Defendant.  However, the sanction would continue to apply in relation to the trial preparation and trial phases.  Given the matter had been listed for a five day trial, this represents a very serious sanction and is likely to cause a major loss to the Claimant’s solicitors (or possibly professional indemnity insurers) if the matter proceeds to trial.

The obvious lesson from this decision is that it is not for parties to decide not to file complete budgets taking the matter up to trial.  PD 3E para.6(a) provides that: “In substantial cases, the court may direct that budgets be limited initially to part only of the proceedings and subsequently extended to cover the whole proceedings”.  Any party wishing to budget for only part of the case therefore needs to make an application to the court in advance of the deadline for filing budgets.

The judgment itself is lengthy and deals with a large number of different grounds of appeal, not making it entirely easy to extract the key points.  Nevertheless, a number of important principles are dealt with.

The moment at which the sanction bites was dealt with as follows:

“It was submitted on behalf of [the Claimant] that the operation of CPR 3.14 was not automatic. I disagree. CPR 3.8 makes it plain that the operation of a sanction such as that in CPR 3.14 is not dependent upon there being any further order by the court. On the contrary, the sanction applies unless the court otherwise orders. The natural meaning of this provision is that once there has been a relevant failure, then in the absence of any contemporaneous or earlier order to the contrary, CPR 3.14 bites. From that time on, unless and until there is an order by the court to the contrary, the party in question is deemed to have filed a budget comprising only the applicable court fees. Whether that continues to be the case for the purposes of costs budgeting is a matter for the court.”

At the original hearing, the Claimant had not made an application (even if only oral) for relief from sanctions.  Nevertheless, as mentioned above, it was recognised that the wording of CPR 3.14 required the master to consider whether to disapply the sanction:

“in circumstances where CPR 3.14 expressly states that the sanction is to apply unless ‘the court otherwise orders’ it would be entirely appropriate for the court to pause, and canvas with the parties whether there is any reason for the court to make a different order.”

It was recognised that there is a distinction between an application for relief from sanctions and consideration of whether to disapply CPR 3.14:

“The vital difference is that on an application under CPR 3.9 the starting point is that the sanction has been properly imposed and complies with the overriding objective … . By contrast, while the factors calling for consideration when deciding on disapplication under CPR 3.14 are similar to those which arise on an application for relief under CPR 3.9, the context is very different. When considering disapplication there has been no prior judicial decision that the sanction was appropriate and in accordance with the overriding objective. Thus a significant fetter on the court’s ability to grant relief does not apply to consideration by the court of whether the sanction under CPR 3.14 should be disapplied using the express power to do so in CPR 3.14.”

Nevertheless, it was common ground that the Denton approach would apply to consideration of whether to exercise the discretion to disapply the sanction, in the same way as it would in relation to an application for relief from sanctions.  This follows the Court of Appeal’s decision in Mitchell v News Group Newspapers Ltd:

“We should add that in our view the considerations to which the court should have regard when deciding whether it should ‘otherwise order’ are likely to be the same as those which are relevant to a decision whether to grant relief under CPR 3.9.”

From these various passages, I take the following:

  1. The CPR 3.14 sanction bites at the point of the breach.
  2. At a subsequent costs management hearing, the judge must consider whether to disapply the sanction even in the absence of an application for relief from sanctions.
  3. The court will adopt the Denton approach to whether to disapply the sanction but will not take as a starting point a presumption that the sanction was properly applied.

The distinction between whether the sanction bites automatically, but may then be disapplied by the judge at the costs management hearing, or whether it only bites if the judge so orders (as a result of deciding not to “otherwise order”) may seem academic.  However, the distinction may prove crucial.  It is not uncommon for budgets to be filed and exchanged but then, often because of extraordinary delay in the matter coming before the Court for a costs management hearing (because the courts often adjourn this issue until a date after the original CMC), for the matter to settle before a judge would have been in a position to “otherwise order”.  If the filed budget was defective, it would be a brave party who sought to rely on a judge on detailed assessment deciding he had the power, or inclination, to “otherwise order”.

A further issue that was explored was how significant the defect in the budget needed to be before it would be treated as a failure to file any budget.

PD 3E para.6 states:

“(a) Unless the court otherwise orders, a budget must be in the form of Precedent H [emphasis added] annexed to this Practice Direction. It must be in landscape format with an easily legible typeface. In substantial cases, the court may direct that budgets be limited initially to part only of the proceedings and subsequently extended to cover the whole proceedings. A budget must be dated and verified by a statement of truth signed by a senior legal representative of the party.

(b) Parties must follow the Precedent H Guidance Note in all respects [emphasis added]”

Here, the budget filed by the Claimant was held to be clearly defective:

“there can be no doubt that the obligation under CPR 3.13 as amplified in PD 3E is, unless the court otherwise orders, to file a budget ‘in the form of Precedent H’, and which follows the Precedent H Guidance Note in all respects. Paragraph 6 of PD 3E says so …. In the present case it is clear that Mr Page’s interim budget did not meet important requirements of Precedent H. Precedent H required Mr Page to set out his budgeted costs for trial preparation and for trial. Mr Page’s interim budget did not do this.”

This appears to imply that the budget must virtually mirror Precedent H and the Guidance Notes.

On the other hand:

“CPR 3.14 will only apply to [the Claimant] if he ‘failed to file a budget’. [The Claimant’s] first contention is that, on an ordinary use of language, he had filed a ‘budget’. In this context, [the Defendant] accepted that a mere irregularity would not nullify what would otherwise be a costs budget. I agree. It seems to me that [the Defendant’s] approach in this regard is consistent with the decision of Stuart-Smith J in Americhem Europe Ltd v Rakem Ltd [2014] EWHC 1881 (TCC). There a solicitor had served and filed a costs budget in the form of Precedent H in time, but it was signed by a costs draftsman and not by a senior legal representative within the meaning of PD 3E. Stuart-Smith J found that while this was contrary to PD 3E, there was nothing to impede the normal constructive discussions on figures. In those circumstances what went wrong in that case was entirely different in nature from the present case, where what was filed omitted important sections of Precedent H.”

Naturally, it will be fact sensitive as to whether a breach is “a mere irregularity” or a failure to “meet important requirements”.

Expect more litigation on this issue.

 

Timing of payments on account

Posted by on 17th October 2018 in detailed assessment | 0 comments

The Legal Costs Blog keeps being pulled back to the issue of the timing of orders for interim payments of costs between the parties.The current wording of the relevant rules is to be found at CPR 44.2(8):

“Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so.”

and

CPR 47.16(1):

“The court may at any time after the receiving party has filed a request for a detailed assessment hearing –

(a) issue an interim costs certificate for such sum as it considers appropriate; or
(b) amend or cancel an interim certificate.”

This distinction between an order for a payment on account and an interim costs certificate has been around (with only minor variations) since the introduction of the Civil Procedure Rules.  It is therefore surprising that the extent of any tension between the two rules, if such exists, has remained unresolved for so long.

I had always read the two rules to mean there were two stages at which such an order could be made:

1. At the same time an order for costs is being made (usually following a trial).

2. After a request has been filed for a detailed assessment hearing.

If an order for a payment on account had not been made when the costs order was being made, the next opportunity to obtain an order for an interim payment would not arise until after a request for a detailed assessment hearing had been made.  This has been the view shared by the authors of Cook on Costs.

The last time we looked at this issue was in the case of Ashman v Thomas [2016] EWHC 1810 (Ch) (19 July 2016).

Chancery Master Matthews had given judgment and awarded costs to the defendant but not made an order for an interim payment.  Subsequently, when trying to agree the terms of the order, the parties fell out over an attempt by the defendant to include a term for a payment on account of costs, which the claimant objected to.  The matter was referred back to the Master for a decision to be made on written submissions.

The Master held he had the power make an order for an interim payment because the court retains power to alter its judgment or order at any time until it is entered and perfected by sealing, and so ordered an interim payment to be made.

At the time I commented that the “decision rather evades the issue.  The Master did not expressly decide that no general power existed to make an order under CPR 44.2(8) at any stage.  Rather, he decided that he had the power to ‘alter’ his order, prior to it being entered and sealed, to include provision for an interim payment.  Nevertheless, it is clearly implicit in his decision that this route was only open to him because the final order had not been entered and sealed.  Otherwise, the defendant would have had to wait until after filing a request for a detailed assessment hearing”.

It is therefore interesting that this very same issue returned to the same judge, sitting as a High Court judge, in Culliford & Anor v Thorpe [2018] EWHC 2532 (Ch) where he was forced to make a direct decision on whether the Court has the power to order an interim costs payment after the original costs order had been made. He 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 [2016] 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 r 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.”

We now have, over 19 years since these rules were introduced, a binding authority on the power these rules confer.  We will no doubt have to wait a similar period before any meaningful guidance is given on the issue of proportionality.It also means:

1. Cook on Costs‘s traditional interpretation of these provisions has been consistently wrong (although the 2018 edition recognises there have been “conflicting first instance decisions on this point”).

2. CPR 47.16(1) is a redundant provision.

Second fee earner attending conference

Posted by on 4th September 2018 in detailed assessment | 7 comments

Of the various costs building wheezes that some claimant firms engage in, having a second (or third) junior fee earner attend conferences with Counsel, to take notes, is one of the classics.

When this issue arises at detailed assessment, I know at least one costs judge who confirms that, when he was a practising solicitor, he would often have a trainee solicitor attend conferences to take notes but would not dream of charging for this work as it was primarily for the benefit of the trainee as part of their training process.  It was not chargeable work.

The usual justification advanced by claimant solicitors for having the junior fee earner attend to take a note is that this enables the main fee earner to properly engage in the conference itself.  This is predicated on the notion that a Grade A fee earner cannot be expected to both follow what is going on in the conference and also make a note of what is being said.  This, of course, is usually in the context of conferences that are largely Counsel led.  This argument tends to be rather undermined when it is being made to a costs judge at detailed assessment who is managing to keep a detailed contemporaneous note of the submissions being made, asking probing questions of the advocates as the matter progresses and able to make comprehensive ex tempore judgements on complex points of law at the drop of a hat.  But then, you cannot expect fee earners claiming up to £450 an hour to be able to walk and chew gum at the same time.

If only the problem stopped there.

I have had two recent cases where the time claimed by the junior fee earner writing up a note of the conference, in addition to the time claimed in attendance, massively exceeded the length of the conference itself.

In one, a total of 3 hours 30 minutes was claimed drafting the note of a conference that only lasted 1 hour 12 minutes.

In the other, a total of 6 hours was claimed by two fee earners preparing a conference attendance note of a conference that only lasted 3 hours 36 minutes.

Unless the time is being claimed for typing-out verbatim, with two fingers, everything that was said at the conference, how is it possible for more time to be spent on the note than was spent at the conference itself?

At what stage in the evolution of the modern law firm did solicitors first come to believe it was acceptable to advance such claims?

Most Outstanding Legal Costs Litigation Firm 2018 – London

Posted by on 8th August 2018 in Legal Costs | 0 comments

The first problem with the vanity legal awards industry is that they are often ridiculously wide in the nature of the awards they seek to distribute, to the extent to which the awards are meaningless (even if they were distributed on merit).

For example, Wealth & Finance INTL magazine previously awarded Gibbs Wyatt Stone ‘Most Outstanding Law Firm of 2016, the UK’.  I would not argue with the outstanding nature of the work we undertake but modesty does call even me to question whether a niche costs firm can ever seriously be considered the best law firm in the whole country (even if only for 2016).

Alternatively, they give “awards” that are not remotely appropriate to the firm in question (eg we have been offered “Asset Manager of the Year – North America”).  You might think they would take a little more trouble to find out what kind of a firm they are contacting before sending the email out.

Fair play then to Acquisition International magazine for awarding Gibbs Wyatt Stone ‘Most Outstanding Legal Costs Litigation Firm 2018 – London’.  This at least shows they have the sense to consider the nature of the work undertaken by the firm before sending out a targeted email.  I am not sure it is sufficient to persuade me to sign up to one of their packages to promote winning this “prestigious” award, such as:

The Exclusive Package – 1,450 GBP – (Limited spaces available)

– Supporting image and headline on the front cover of the magazine

– A 4-page editorial inclusion in the first 20 pages

– 3 hard copies of the edition your inclusion appears in

– Your inclusion replicated on the homepage of our website

– Your inclusion in the monthly newsletter, for 3 months

– A 3-month web banner

– 3 bespoke crystal trophies

– A personalized digital logo for use in your own marketing

– High-resolution PDF copies of your inclusion

These online only magazines are clearly not read by anybody (other than other reward recipients wanting to read their own self-written glowing testimonials).      

It is clear from the contents of this magazine, by way of example only, that there are legal and financial firms across the globe prepared to part with good money for these meaningless vanity awards whose sole purpose, presumably, is to persuade potential clients that these are a mark of quality.  How depressing.

Court of Appeal guidance on proportionality

Posted by on 1st August 2018 in proportionality | 0 comments

In a speech given earlier in the year, Lord Justice Jackson recognised that the profession was becoming “impatient” for guidance on the proportionality test from the Court of Appeal.  He concluded:

“The remedy lies in their own hands. The Court of Appeal can only decide the cases which come before it.”

In May v Wavell Group Plc, an appeal at County Court level, a judge reached the questionable conclusion that the wording of the rule that reads:

“Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred”

should be interpreted to mean (I paraphrase here):

“Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred but not by a very substantial amount”

Unsurprisingly, permission was sought to appeal this to the Court of Appeal.

The Court of Appeal refused permission.

You couldn’t make it up.

Late acceptance by defendant of Part 36 offer

Posted by on 24th July 2018 in fixed fees | 0 comments

Hailsham Chambers has reported on the Court of Appeal decision in the appeal of Hislop v Perde [2018] EWCA Civ 1726.

This concerns the correct approach where a defendant accepts a claimant’s Part 36 offer after expiry of the 21 day period.  Many claimants have argued that the claimant should be entitled to recover indemnity costs from the expiry of the relevant period, just as they would if the case had gone to trial and the same result had been achieved.   This argument has been particularly attractive to claimants where fixed costs apply, as an order for indemnity costs will allow the claimant to recover more than fixed costs.

The Court of Appeal has now decided in that there is no presumption in favour of indemnity costs on late acceptance of a claimant’s Part 36 offer; and (b) that where this occurs in fixed costs cases the recoverable costs are those defined by section IIIA of Part 45, and the general jurisdiction as to costs in CPR36.13 has no role to play, meaning there is no place for assessed costs.

The only way out of the fixed costs regime in such a case is to argue under Part 45.29J that there are exceptional circumstances making it appropriate for the Claimant to recover more than fixed costs. The judge was, however clear that late acceptance of a Part 36 offer should not create a presumption that exceptional circumstances were present: A long delay with no explanation may well be sufficient to trigger r.45.29J; a short delay with a reasonable explanation will not.

 

Additional work and proportionality

Posted by on 20th July 2018 in Uncategorised | 0 comments

The Senior Costs Judge Master Gordon-Saker prefaced his recent decision on proportionality, in Various Claimants (In Wave 1 of the Mirror Newspapers Hacking Litigation) v MGN Ltd [2018] EWHC B13 (Costs), with the warning:

“this judgment should not be taken as any attempt at providing guidance. I say that because I know that anything said about proportionality, at whatever judicial level, is subjected to anxious scrutiny. First this is not a judgment of the Court of Appeal. Secondly the circumstances which give rise to this judgment are very unusual.”

That said, the decision does highlight one aspect of the proportionality test that merits consideration.

Of the various factors the Court must take into account when considering proportionality is:

“any additional work generated by the conduct of the paying party”

The Master summarised his conclusions as follows:

“62. Contrary to the Claimants’ submission, it seems to me that the conduct relied on must be conduct in the litigation rather than the conduct which gave rise to the cause of action. The conduct which caused the wrong will be compensated in damages or other relief. In my view the purpose of r.44.3(5)(d) is to enable the court to take into account that the costs may have been increased because work which would not ordinarily have been required has been required by the way in which the opponent has fought the claim.

63. It also seems to me that the conduct relied on does not need to be misconduct. Had that been intended misconduct could easily have been substituted in the rule for conduct.

64. In the event in my judgment there was no additional work caused by the conduct of the Defendant. That the Defendant chose to deny liability until 6 months before trial did not cause additional work. It caused the claim and the work involved in the claim. If a failure to concede by the party who eventually loses is considered of itself to cause additional work, this factor would apply in every case which did not settle within the relevant pre-action protocol period.

65. The Defendant fought these claims vigorously and did not concede liability at the earliest opportunity. As a consequence it will have to pay a greater sum in costs than if it had not fought the claims so vigorously or had conceded liability earlier. However I am not persuaded that this stance or the matters listed in the Claimant’s written submissions caused additional work in relation to the individual claims.”

(This decision appears to be broadly consistent with the approach taken by Master Rowley in May & Anor v Wavell Group Plc & Anor [2016] EWHC B16 (Costs) at paragraphs 20-24.)

This is an important issue and one where the wording of the rule is not very helpful.  The Master is correct that the rule does not use the word “misconduct” and it would be wrong to place so high a test on the provision.  On the other hand, “conduct” is, on the face of it, broad enough to cover anything the paying party does; which would include, for example, disputing liability.  (It is not, for example, worded as “unreasonable or improper conduct” as per CPR 44.11(1)(b)).  However, the Master here treated that as being too low a test.

The Master appears to have interpreted the rule as being designed to catch matters that fall somewhere between the inevitable costs that need to be incurred in light of the fact an opponent has brought/defended the claim and actual misconduct (although additional work caused by misconduct would also clearly be caught by the rule).  Presumably this “additional work” would cover such issues as work generated by delay in a party complying with orders, unnecessarily long or irrelevant witness statements being served by the other side or the wasted costs of experts due to a failure to attend medical appointments.

It will be interesting to see if this approach is followed by the higher courts.

 

Hourly rates for personal injury work

Posted by on 16th July 2018 in hourly rates | 3 comments

Although those working in legal costs tend to get very excited about the latest obscure technical challenge, it is the routine areas of dispute that have the greatest impact on the largest number of cases.  A costs judge allowing an hourly rate of 20% more or less than anticipated will usually completely throw any offers made.

One of the particular problem areas surrounding costs law has always been the issue of what hourly rates are appropriate for solicitors undertaking personal injury work who are based in the geographical location which is termed “City of London” (ie postcodes beginning EC1, EC2, EC3 and EC4).

The starting point (despite what some maintain) is always to look at the Guideline Hourly Rates for summary assessment.  The last published rates (2010) for Grade A fee earners gave the following for different bands:

City of London                                   £409

Central London                                 £317

Outer London                                    £229-267

Band 1 (eg Manchester Central)    £217

Band 2/3 (eg Luton)                        £198

(The explanation given for the range of figures for Outer London is that “these ranges go some way towards reflecting the wide range of work types transacted in these areas”.)

It can immediately be seen that there is a vast difference between the Guideline Rates for City and Band 2.  Some of this difference will be due to the average differences in overheads (principally dictated by property prices/rent and wages), but this clearly does not begin to explain the full difference.

The answer was to be found as far back as Senior Costs Judge Master Hurst’s decision in King v Telegraph Group Ltd [2005] EWHC 90015 (Costs):

“City rates for City solicitors are recoverable where the City solicitor is undertaking City work, which is normally heavy commercial or corporate work.”

Although this answers the question as to whether City rates should automatically be applied to personal injury work undertaken by firms based in the City, it does take the matter much further as to what rate should instead be allowed.

The recent decision of Mr Justice Goss, on appeal from a costs judge, in JXA v Kettering General Hospital NHS Foundation Trust [2018] EWHC 1747 (QB) provides some further guidance.

The case itself concerned a cerebral palsy clinical negligence claim.  Liability was agreed on a 90/10 split in favour of the Claimant.  Damages are not capable of being resolved for many years.  The claimant’s mother and litigation friend “selected a senior partner in Fieldfisher LLP, based in the City of London, as a result of a search on the internet and by reason of [the partner’s] highly regarded expertise in clinical negligence claims”.  Although it was not in issue that the partner “was and is an acknowledged leader in the field”, there is nothing in the judgment to suggest the claimant’s mother’s views were arrived at by anything other than an internet search.

It was also common ground “that this was high value complex litigation of considerable importance to the claimant” and that the value of the claim will run into millions of pounds, potentially £20 million.

The hourly rates had been claimed at:

£380 to 31 March 2013 then rising at the rate of £10 pa every 31 March up to £420 to 16 November for a Grade A partner.

£270 for a Grade C solicitor from 1 January 2017.

£150 rising at £10 pa to £190 over the same period for a Grade D trainee/paralegal.

The original costs judge had referred to the claim as being one of “substantial value, clearly at the very highest end of importance to the claimant and as being an exceptionally complicated case”.  He concluded:

“Taking all of those factors into account, and with regards to the guidance in the White Book with respect to consideration of comparable firms doing comparable work, I don’t find that I need to make any ruling as to what location is appropriate. The ruling must be in relation to what rates are appropriate, based on comparable firms doing comparable work, and in relation to the submissions that have been helpfully made by both advocates today.”

He allowed rates as follows:

£350 for a Grade A partner.

£200 for a Grade C assistant solicitor.

£150 for a Grade D trainee/paralegal.

Upon being pressed for his reasons he added:

“I take into account the location of the claimant as a starting point, and I look at comparable firms doing comparable work. In terms of the theoretical locality as a starting point I would consider firms within the Outer London area to be a reasonable point at which the claimant could have looked at firms well outside of their area, but, of course, I am aware myself of firms, for example, in Nottingham or Manchester or other legal centres which the claimant, I think, could have reasonably gone to as well. I accept that there will be a consequent effect on travel time as a result of that, but in terms of a locality, I take a theoretical locality as Outer London, but as I am guided by the White Book I can take into account comparable firms doing comparable work, and that will account for firms around the country, including within the location of your instructing solicitors’ firm.”

The focus of the Claimant’s appeal was that the Master did not answer the question as to whether it was reasonable to instruct the particular solicitor instructed and so his decision as to whether the charging rate was reasonable was flawed.  It was also argued that he failed to properly consider the effect of inflation on the claimed hourly rates between year ending 31 March 2013 and 16 November 2017.

The appeal court accepted the main criticism and concluded:

“I am satisfied that the Master did not directly address the first question as he should and decided whether the choice of [solicitor] was objectively reasonable in the circumstances. When pressed, he implied it was (or may have been) an unreasonable choice, indicating that he took a theoretical locality of Outer London but, guided as he was by the White Book, he then went on to say that he could ‘take into account comparable firms doing comparable work, and that will account for firms around the country, including within the location of Fieldfisher LLP.’”

However, the legitimacy of that challenge did not undermine the conclusion reached as to the appropriate rates to allow.  The appeal judge was clearly influenced by the views of another costs judge who was sitting with him as an assessor.  He concluded:

“In the event of allowing the appeal, I was invited to determine what cost rates would be reasonable for firms practising in the same area. In this regard I have been greatly assisted by the knowledge and experience of the Costs Judge sitting with me. Her expertise and experience as to the firms engaged in this type of case both in London and nationally has guided me in the conclusion to which I have come. The Master had a broad discretion in this regard, applying CPR44.4. I am satisfied on all relevant facts and applying appropriate considerations that the rates determined by the Master fell within the reasonable band of decisions open to him, notwithstanding his failure to answer clearly the first question in the required two stage process.”

Although there is always a danger of trying to clinically dissect a decision of this nature, which was arrived at on broad-brush principles based primarily on the experience of the original costs judge and the costs judge on appeal, I would suggest that what was ultimately allowed, in reality, for a firm in the City undertaking personal injury (here the most complex type of clinical negligence) does broadly mirror Outer London Guideline Hourly Rates (as last published in 2010) with the equivalent of approximately a 100% “B” Factor profit element.

The Outer London Guideline Hourly Rates for Grade A fee earners are £229-267.  These figures are based on a notional 50% “B” Factor profit element.  Taking the top of the range (£267) as being reasonable, given the complexities of the case and expertise of the solicitor, would give an “a” Factor of £178.  Allowing a 100% “B” Factor as representing something towards the very top of what might be allowed for this type of litigation (being recognised as being exceptionally complex and clearly being potentially at the very top end of value for PI claims) would give a figure of £356 (approximately the £350 allowed).  (On this crude cross-check, the uplifts for the Grade C and D were somewhat lower.)

This analysis does not allow for any inflationary uplift since the last published rates of 2010.  The appeal judgment simply records the arguments:

“[the costs judge had] a claim for an incremental year on year raising of the rates charged. He took account of the guideline rates for the summary assessment of costs. On behalf of the claimant it is emphasised that these rates are for significantly less complex cases and no more than guidelines, and are rates set in 2010 and take no account of subsequent inflation. The defendant answers by referring to the absence of any evidence justifying the incremental annual increase or the impact of inflation on this market over the period in question, the refusal by the Master of the Rolls in July 2014 to adjust the hourly rates following the proposals of the CJC Cost Committee’s Report of May 2014 (which proposed a reduction in City rates) and submits that it would be wholly wrong for the Master to have transposed a back-calculated approach or adopted a general inflationary approach.”

There was certainly no criticism in the judgment of the costs judge for taking into account Guideline Hourly Rates.

Ultimately, it is not surprising that (working backwards) the starting point for the hourly rates was in line with Outer London rates rather than City rates.  The overheads of undertaking such work are unlikely to be materially different for a firm operating in the City compared to one in Outer London.  A few years ago, on the subject of whether PI work should attract City rates, Jacques Hughes, one of the readers of this blog, commented:

“The argument is just silly. PI and commercial work inhabit fundamentally different markets, and PI lawyers delude themselves if they think otherwise. Compare a top-notch PI practice like Irwin Mitchell to a real City firm and ask: does the PI firm have a 24 hr secretarial service? Does it have a 24/7/365 reprographics department capable of handling, say, 20 million pages a year? Do staff have to be paid to work all hours in order to liaise with NYC and Hong Kong? Does it have a library of 10,000 volumes plus, with subscriptions to all major Commonwealth and American law reports and journals? Does the PI firm have to run a recruitment drive targeted at the best candidates at Oxbridge and equivalents in the US & Australia, paying trainees 50K plus packages? Do middling assistants expect salaries in the 150K + bracket? Are international travel and worldwide offices a major PI overhead? The answer to all of these questions is consistent, obvious, and negative. City rates for PI work is a nothing more than a mirthless joke.”

Costs & Fees Encyclopaedia 2018-19

Posted by on 27th June 2018 in Uncategorised | 0 comments

The Costs & Fees Encyclopaedia continues to expand year-by-year and the 2018-19 Edition runs to 551 pages.  (It rather optimistically describes itself as “portable” and suitable for a briefcase.  It is plainly a desktop reference guide.)

Pages 1-96 consist of the relevant costs provisions of the CPR and Practice Directions.

Pages 97-102 provides J-Code “cheat sheets”.

Pages 103-104 deals with fixed costs for solicitors and public authority deputies in Court of Protection work.

Pages 105-106 contain the Guideline Hourly Rates for Summary Assessment.

Pages 107-121 consist of the Civil Legal Aid (Remuneration) Rates: Extracts from the Civil Legal Aid (Remuneration) Regulations 2013.

Pages 125-223 deals with Costs in Criminal Proceedings and includes:

  • Extract from National Taxing Team Guidelines
  • Extracts from the Criminal Legal Aid (Remuneration) Regulations 2013
  • Criminal Defence Service (Very High Cost Cases) (Funding)
  • Witness Allowances in Criminal Proceedings
  • Criminal Procedure Rules 2015, Part 45: Costs
  • Costs Out of Central Funds
  • Inter Partes Costs in Criminal Proceedings
  • Practice Direction (Costs in Criminal Proceedings) 2015

Pages 225-226 includes Motor Mileage rates, VAT rates and IPT rates.

Pages 229-436 covers an electric mix including:

  • Civil Proceedings Fees Order 2008
  • Conditional Fee Agreements Order 2013
  • Consular Fees Order 2012
  • Coroners Allowances, Fees and Expenses Regulations 2013
  • Court of Protection Fees Order 2007
  • Crown Office Fees Order 2013
  • Damages-Based Agreement Regulations 2013
  • Ecclesiastical Judges, Legal Officers and Others (Fees) Order 2017
  • Family Proceedings Fees Order 2008
  • First-tier Tribunal (Immigration and Asylum Chamber) Fees Order 2011
  • First-tier Tribunal (Property Chamber) Fees Order 2013
  • Gender Recognition (Application Fees) Order 2006
  • Immigration and Nationality (Cost Recovery Fees) Regulations 2014
  • Immigration and Nationality (Fees) Order 2016
  • Immigration and Nationality (Fees) Regulations 2018
  • Insolvency Proceedings (Fees) Order 2016
  • Insolvency Practitioners and Insolvency Services Account (Fees) Order 2003
  • Land Charges Fees Rules 1990
  • Land Registration Fee Order 2013
  • Legal Officers (Annual Fees) Order 2017
  • Legal Services Act 2007 (Claims Management Complaints) (Fees) Regulations 2014
  • Magistrates Courts Fees Order 2008
  • Non-Contentious Probate Fees Order 2004
  • Oath Fees Order
  • Offers to Settle in Civil Proceedings Order 2013
  • Public Guardian (Fees etc) Regulations 2007
  • Public Record Office (Fees) Regulations 2017
  • Supreme Court Fees Order 2009
  • Upper Tribunal (Lands Chamber) Fees Order 2009

Pages 451-520 contain various case summaries from Costs Law Reports divided by topic.  This is the one section I continue to struggle to see the value of (see previous review),

Pages 523-549 contain the SRA Code of Conduct 2011.

Pages 550-551 contain a list of relevant court forms.

The price, a modest £75.

Naming wrong defendant in CFA

Posted by on 25th June 2018 in Uncategorised | 0 comments

One of the long running battle grounds in costs litigation concerns the consequences of naming the wrong opponent in a conditional fee agreement.  Because this is ultimately a contractual issue, it remains just as relevant today as under the now revoked Conditional Fee Agreement Regulations.  Paying parties argue that no costs are recoverable where the incorrect opponent is named in the CFA.  I have argued the point both successfully (Hailey v Assurance Mutuelle des Motards) and unsuccessfully (Brierley v Prescott).

In Engeham v London and Quadrant Housing Trust & Another [2015] EWCA Civ 1530 the Court of Appeal, without hearing argument on the issue, accepted that costs could not be recovered from a party different to the one named in the CFA.

The Court of Appeal has now revisited the issue in Malone v Birmingham Community NHS Trust [2018] EWCA Civ 1376.  Here, the CFA stated, under the heading “What is covered by this agreement”:

“All work conducted on your behalf following your instructions provided on [sic] regarding your claim against Home Office for damages for personal injury suffered in 2010.”

In the event, the claim succeeded against Birmingham Community NHS Trust, rather than the Home Office.  At first instance and on the initial appeal, the Defendant successfully argued no costs were payable.  On the facts of the case, the Court of Appeal allowed the appeal.  The Court accepted that the reference to “Home Office” was descriptive of the instructions received rather than of the work to be done. It related to past instructions rather than future work.

Although the Claimant was successful on the particular facts of the case, the decision does little to stop challenges in very similar situations.  The Court of Appeal’s commentary on HHJ Stewart QC’s decision in Law v Liverpool City Council [2005] EWHC 90020 (Costs) is as important as the Malone decision itself:

“In that case the CFA was stated to cover: ‘Your claim against Liverpool City Council for damages for personal injury suffered on 26th March 2003’. Proceedings were brought against the Council as the occupier of the property where the injury was suffered and a defence was served. Subsequently the Council stated that the property had been transferred shortly prior to the accident to a housing association, which was then added as a second defendant. The claim continued against both defendants and was settled by them, with both defendants acknowledging liability in principle for costs, subject to any points about the CFA. The housing association contended that as the CFA had never been varied to include it, there was no CFA in relation to the claim against it.

HHJ Stewart QC held that the claim against the housing association was not covered by the CFA. His stated starting point was that a CFA which covers a claim against one defendant cannot be construed to encompass a claim against another defendant. He said that the fact that parties are often added to claims should be dealt with by careful drafting of the CFA or by appropriate amendments.

There are a number of obvious differences between that case and the present one. In particular: (i) the wording used was more specific and restrictive – ‘Your claim against Liverpool City Council…’; (ii) there was no apparent careless drafting; (iii) the Council was an appropriate defendant; (iv) the Council remained a defendant up to and including settlement. It is also to be noted that the argument that the wording used was meant to be merely descriptive rather than prescriptive does not appear to have been raised. HHJ Stewart QC’s starting point bypassed that issue. In any event, little assistance is to be derived on issues of construction such as this from different cases, on different facts, involving materially different wording.”

The impact of this decision is likely to increase, rather than decrease, the level of satellite litigation generated where the incorrect opponent is named in a CFA.  The decision gives significant encouragement to paying parties that such a challenge may fall into the Law v Liverpool City Council category whilst offering a glimmer of hope to receiving parties that the full factual matrix will be found to be favourable to them.