17 September, 2014 at 6:02 am
Has the Court of Appeal messed up again (Mitchell/Denton style)?
One of the problems with the English legal system is that the higher courts will sometimes try to do justice to the facts of a case but create a precedent in the process with unintended consequences. This is perhaps particularly acute when it comes to legal costs matters where the higher courts often have only limited understanding of the day-to-day issues that arise.
Step forward Tasleem v Beverley  EWCA Civ 1805. This is a decision from the tail end of last year and appears to have received only limited commentary to date.
The issue facing the Court of Appeal was:
"whether the court can award a claimant its costs of what are known as costs-only proceedings brought under CPR Part 8 in accordance with the procedure set out in CPR rule 44.12A where a default costs certificate has been obtained, as the claimants contend; or is a claimant in those circumstances limited to the amount of the costs specified in the default costs certificate, as the respondents contend? Is the default costs certificate the end of the matter, in other words."
The substantive claims had settled without proceedings being issued. Part 8 costs-only proceedings were issued and notices of commencement served. No points of dispute were served and the claimants obtained default costs certificates. Were the claimants limited (in addition to the amounts set out in the bills) to the fixed costs payable for obtaining a default costs certificate (£80 fixed fee plus court fee) or were additional costs recoverable for the work concerned with issuing the Part 8 proceedings?
The Court of Appeal concluded that the fixed costs for obtaining a default costs certificate did not include the costs of issuing Part 8 proceedings and such costs were in the discretion of the court. So far, so unremarkable.
The difficulty that arises lies in the reasoning behind the Court's decision. The Court held:
"The bringing of Part 8 costs-only proceedings is not the commencement of, or part of, the detailed assessment proceedings, albeit it is a necessary preliminary to that process if there are no underlying proceedings in existence."
So, Part 8 proceedings are apparently not "part of" the detailed assessment proceedings.
The clever readers of the Legal Costs Blog will see where this is going and it has nothing to do with default costs certificates.
CPR 47.15(5) states:
"In proceedings which do not go beyond provisional assessment, the maximum amount the court will award to any party as costs of the assessment (other than the costs of drafting the bill of costs) is £1,500 together with any VAT thereon and any court fees paid by that party."
If Part 8 proceedings are not "part of" the detailed assessment proceedings, are the costs of issuing Part 8 proceedings payable in addition to the provisional assessment cap?
What makes the Court of Appeal's decision particularly odd is that they were expressly referred to the earlier Court of Appeal decision in Crosbie v Munroe which appeared to treat Part 8 proceedings as part of the assessment process. Here is how they dealt with it and with the relevant quote from Crosbie:
"I do not think that this interpretation of the rules is contrary to the approach of the Court of Appeal in Crosbie v Munroe  EWCA Civ 350,  1 WLR 2033, as Mr Marven contends. In that case, the court had to consider whether, in a case where detailed assessment was commenced under Part 8, an offer in respect of costs made pursuant to CPR 47.19 offer to settle without prejudice save as to costs of the detailed assessment proceedings, did or did not include the costs of the Part 8 proceedings. The defendants contended that it did. The court, however, held it did not because the costs of the proceedings within CPR 47.19 referred to the costs of the substantive claim up to its disposal by the agreement by the defendant to pay damages and costs. Brooke LJ said this at paragraph 34:
'By this route it is easy to see that even when Part 8 proceedings have to be commenced in order to obtain a court order for detailed assessment, the 'costs of the proceedings' within the meaning of CPR 47.19 still relate only to the costs leading up to the disposal (on this occasion by agreement) of the substantive claim. They are 'the proceedings which gave rise to the assessment proceedings', and the assessment proceedings cover the whole period of negotiations about the amount of costs payable through the Part 8 proceedings to the ultimate disposal of those proceedings, whether by agreement or court order.'
That the costs of the Part 8 proceedings did not form part of the substantive costs contained in the bill of costs, which is the issue the court addressed, seems to me, with respect to Mr Marven, to be a point which assists the respondents rather than the appellants. Certainly the court did not consider, still less decide, the costs of the Part 8 proceedings formed part of the 'costs of the detailed assessment' for the purposes of CPR 47.11 and the default costs certificate or otherwise."
Am I alone in considering there to be a significant contradiction between Crosbie's:
"the assessment proceedings cover the whole period of negotiations about the amount of costs payable through the Part 8 proceedings [emphasis added] to the ultimate disposal of those proceedings"
"The bringing of Part 8 costs-only proceedings is not ... part of, the detailed assessment proceedings"
My experience to date is that the courts, including the Senior Courts Costs Office, have treated the Part 8 proceedings as part of the costs of the detailed assessment and subject to the provisional assessment cap. It is interesting to note that the actual wording of CPR 47.15(5) refers to "any court fees [in the plural] paid by that party". It is clear that this is therefore meant to go further than just the fee payable for requesting assessment. At the very least this suggests it includes any interim applications and I anticipate those drafting this believed it would include the Part 8 court fee where applicable.
However, the Court of Appeal appears to have opened the door to argument on the point. It would be regrettable, to say the least, if the costs of issuing Part 8 proceedings were entirely at large, unlike all the other work necessary to deal with provisional assessment, as this is likely to lead to further argument which the cap was presumably designed to avoid.
The facts in the two cases heard under the Tasleem judgment take this into cuckoo land territory. The Deputy District Judge (not a civil litigator I would hesitate to guess) had summarily assessed the claimants' costs of issuing Part 8 proceedings at £1,614.60 and £1,400.76 respectively. WTF?
It takes 30 minutes to issue Part 8 proceedings (unless the court makes a total mess of the process). Admittedly the Court of Appeal did recognise:
"I take Mr Marven's point that the costs of bringing such Part 8 proceedings may be, or should be, relatively minimal. ... Care should therefore be taken to ensure that matters properly encompassed within the detailed assessment and default regime are not claimed as part of the Part 8 costs-only process. But that is a matter which should be sorted out by the summary assessment process in the event that the parties cannot agree those extra costs."
The figures allowed in these cases suggest some judges are entirely incapable of dealing with the matter properly by way of summary assessment.
We seem now to be faced with three possibilities:
1. The courts decide the the reasoning in Crosbie is correct so far as the costs of issuing Part 8 proceedings are concerned (ie they are part of the assessment process and subject to the cap).
2. Fixed costs are rapidly introduced for issuing Part 8 proceedings (a possibility suggested by the Court of Appeal: "The problems which this may give rise to (that is, that there is no fixed costs regime for Part 8 costs-only proceedings) is a matter which may merit examination by the Civil Procedure Rules Committee in due course"). Say, £80 plus VAT.
3. The Rules Committee amends Part 47.15(5) (third time lucky?) to make it absolutely clear it includes any costs of issuing Part 8 proceedings.
In the interim...
12 September, 2014 at 7:11 am
Approval has recently been given to the new J-Codes. These are integral to future case management software that will be used for drafting of costs budgets, costs schedules and bills of costs. As the Jackson Final Report stated, the purpose of the new software included the ability to "automatically generate schedules for summary assessment or bills for detailed assessment as and when required".
The new bill of costs format (the development of the J-Codes being a necessary part of the process) has yet to be finalised and most commentators expect this to be at least 12-18 months before it will be rolled out.
The new bill of costs format will mirror the various phases that appear within costs budgets. It will therefore be possible to see at a glance (in theory) whether there has been an overspend in any phase.
Unfortunately, we have a further 12-18 months where this is not possible. The process of trying to determine from a bill drafted in the current format whether costs are above or below an approved budget is painful and time-consuming at best and impossible at worst.
Lord Justice Jackson always envisaged that his proposals were a complete package to be implemented in full. Sadly, the problems caused by the piecemeal introduction of costs budgeting and the new bill of costs format is a prime example of what was always likely to happen if this was not followed through.
9 September, 2014 at 6:01 am
I was recently instructed to prepare points of dispute and advise in relation to a bill running to a little over £220,000. Instructing solicitors had obtained various estimates from in-house and external draftsman. The other estimates varied from:
• 10-15 hours at £120 per hour
• 15-20 hours at £175 per hour
• 5 hours at £120 per hour
To be fair, these estimates appear to have all been given without the benefit of seeing the actual papers.
Nevertheless, 5 hours appears incredibly optimistic and it is difficult to see how it would be possible to properly read the papers in addition to drafting points of dispute in that time for a bill of this size. As to £175 per hour, nice work if you can get it but I would suggest this is not realistic for defendant insurance personal injury work.
To be fair, trying to estimate at the outset what it will cost to undertake this task is a virtually impossible task. How long is a piece of string? It would be like, I don’t know, trying to estimate at an early stage in the proceedings what the legal costs would be of conducting a complex claim through to trial. A fool’s errand.
(I estimated 10-14 hours at £118 per hour. Time actually spent: 8.7 hours. A margin of error of 13%-40% on my estimate.)
5 September, 2014 at 6:19 am
A Costs Lawyer was quoted in a recent edition of Costs Lawyer magazine as saying Costs Lawyers should:
“get as much experience and knowledge of costs budgeting as they can, as this will prove to be the main source of work for [them] in the future”
Presumably the logic of this is that we will get to a stage where receiving parties will know they cannot recover more than an approved budget and paying parties will know they cannot reduce costs below the approved budget. This will remove the need for bill drafting, points of dispute, costs negotiations and detailed assessment hearings.
The profession is in trouble if this is true. Costs budgeting can never replace the traditional income streams generated by costs work. If costs budgeting makes up the majority of the work that is left, then that is going to be a small pie to divide up between those still working in costs.
3 September, 2014 at 6:33 am
Discussing the new Costs Lawyer training scheme, in Costs Lawyer magazine, the ACL Council member for education, Claire Green, said:
“The new Costs Lawyer qualification teaches student that the court timetable is now sacrosanct”.
This was written pre-Denton and highlights the problem of trying to develop a training programme in an area of law that is in constant flux. Any training material based on Mitchell will already be out of date.
13 August, 2014 at 6:09 am
Fixed success fees have been in place for “disease” claims since 1 October 2005. It is therefore surprising that it was not until 2012 that any serious consideration was given as to which claims fell within the scope of the fixed success fee regime (see Fountain v Volker Rail Limited, Bird v Meggit Aerospace Limited and Patterson v Ministry of Defence  EWHC 2767 (QB)).
The leading case of Patterson concerned an unusual non-freezing cold injury. The area of real importance is whether Noise Induced Hearing Loss (NIHL) claims are disease claims for the purposes of the rules. Traditionally such claims have been viewed as “disease” claims. The problem arises because the rules themselves do not define “disease”.
There are currently a growing number of decisions at first instance where the courts have concluded that NIHL is not a “disease”, including Mansfield County, Sheffield County Court and Harrogate County Court. Although a binding decision is still awaited, there is an increasing wiliness by the judiciary to adopt a narrow interpretation to the word.
11 August, 2014 at 6:23 am
Despite the disappointment that no new Guideline Hourly Rates have been published, the recent review has finally killed off the argument that Guideline Hourly Rates are of no relevance to detailed assessment and are designed purely for summary assessments on the fast track.
The Costs Committee stated of the GHRs they are:
“primarily a guideline rate for summary assessments and a starting point for calculating rates in detailed assessments”
“The GHR are themselves guidelines and a benchmark for summary assessments. As such, they may provide a helpful starting point in the detailed assessment process, but no more than that.”
The Master of the Rolls wrote:
“It is also important to emphasise the the guidelines were originally intended to be broad approximations of actual rates in the market.”
This is key, the GHRs are intended to reflect the rates that solicitors actually charge in different localities. They were never intended to reflect only what solicitors charge for fast-track litigation (£409 per hour anyone?). Much less was it ever suggested that solicitors charged their clients different hourly rates, for example, for interim hearings where the court dealt with the costs by way of summary assessment as opposed to deferring the matter to detailed assessment.
David Greene, a member of the CJC Costs Committee, writing in the New Law Journal stated:
“GHRs apply largely to fast track and multi track litigation outside the fixed costs regimes. … Further while GHRS were originally introduced to assist judges with summary assessment they had become the cornerstone for all assessment.”
The Master of the Rolls concluded:
“GHRs are needed to guide summary and detailed assessment of costs.”
They are a starting point for both. Nothing more, nothing less.
5 August, 2014 at 5:26 am
A further interesting issue arises as to Costs Lawyers being potentially classified as Grade B fee earners (from October 2014). This is as a result of the wording used by Lord Dyson and in the original report recommendation.
To achieve Grade B status as a solicitor or Fellow of CILEX requires a combination of qualification (solicitor or Fellow of CILEX) and experience (over 4 years PQE).
Although we wait to see whether any further guidance will be published, the Costs Committee Report contained the following recommendation:
“The ACL provided evidence giving details on the qualification route, continuing professional development and regulatory framework for Costs Lawyers. The Committee agreed, and determined that the following approach should be adopted for those Costs Lawyers who are suitably qualified and subject to regulation under the Legal Services Act 2007 to undertake reserved legal activities:
(i) For budgeting and bill drafting, save in exceptional circumstances, Costs Lawyers should sit within the grades for Grade C and D fee earners;
(ii) For practising litigation and advocacy, save in exceptional circumstances, costs lawyers should sit within the grades for Grades C or B.”
Lord Dyson accepted the recommendation with these words:
“Costs Lawyers who are suitably qualified and subject to regulation be eligible for payment at GHR Grades C or B, depending on the complexity of the work”
Neither the Report nor Lord Dyson’s words make any comment on experience. Taken together it seems to suggest that a newly qualified Costs Lawyer could attract Grade B status for advocacy if the case was sufficiently complex.
It is, of course, important to recognise that there is a distinction between formal status and the rates that would be justified on assessment. A solicitor of 20 years PQE would clearly fall within Grade A status but would struggle to justify Grade A rates for dealing with a low value RTA. Equally, a non-qualified paralegal might fall firmly within Grade D status but be able to justify rates similar to a Grade A if they were punching considerably above their weight dealing skilfully with a complex clinical negligence claim.
The Report itself recognised this issue:
“The current situation is rather ambiguous; many Costs Lawyers will be bracketed for most work in Grade D, but the criteria for the grades is sufficiently flexible for Costs Lawyers to submit for fees at Grade C and occasionally Grade B where the complexity of the work and the experience/expertise to undertake the work warrants it.”
The strange result of the Report and Lord Dyson’s acceptance of this recommendation is that it appears to have blurred the lines between status (as a matter of definition) and what rates can be justified. It should be a matter of definition as to whether a Costs Lawyer is a Grade B, C or D. It should be a matter of argument as to what rates are reasonable. What we have to date appears to make status an entirely subjective test.
1 August, 2014 at 6:38 am
Congratulations to Master Gordon-Saker who has been appointed as Senior Costs Judge with effect from the beginning of October.
He has timed this perfectly as the next couple of years should be a relatively calm period in the costs world and this will allow him to ease himself gently into the new role.
30 July, 2014 at 6:16 am
The recent decision of Lord Dyson to allow Costs Lawyers to potentially qualify as Grade C or Grade B fee earners raises an interesting issue.
What level of qualification and training is required for a Costs Lawyer to now potentially be classified as a Grade C fee earner?
A typical solicitor will have stayed at school until age 18, then undertaken a 3 year law degree, followed by a 1 year LPC full time course and then undertaken a two year training contract. At that stage they will be entitled to call themselves a Grade C fee earner. This is, post-age 16, a combination of 8 years full time education and training. During the 6 years of education they will have lost potential earnings. During the 4 years of a law degree and LPC will have incurred significant tuition fees. (For those undertaking a non-law degree there will be the further delay and cost of the CPE.) It is unlikely that Grade C status would be reached before the age of 24.
In contrast, the minimum academic qualifications to start the Costs Lawyer course is 4 GCSEs at grade C or above, English and Maths being compulsory. (Even this can be avoided if an aptitude test is passed.) The minimum age to start the course is 18. The Costs Lawyer course is designed to be undertaken whilst students are in full time employment. Although the course is no doubt demanding, it appears students are only required to attend a single compulsory seminar each year. To achieve Costs Lawyer status at least three years of relevant experience in costs law and practice is required before, during or after study for the Costs Lawyer qualification. The current cost of the course is a very modest £1,400 plus VAT per year. It is therefore possible to become a Grade C fee earner having left school at 16 and worked in a non-legal environment until the age of 18 and then undertaken the Costs Lawyer course over the next 3 years whilst working for a costs firm. It would be possible to attain Grade C status by the age of 21 whilst earning consistently since age 16 and for a fraction of the financial commitment of training to become a solicitor. Many Costs Lawyers earn just as much, and often much more, than a large proportion of the solicitor profession.
Of course, not all Costs Lawyer students will have such a “basic” entry level background. Many will have been law costs draftsmen for many years previously. Many will have undertaken a law degree and the LPC or BVC. Nevertheless, this does offer a surprisingly streamlined, and cheap, route to Grade C status.