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  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  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.”
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.
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  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  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  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.
We now have compulsory electronic bills of costs. What we do not have are up to date rules relating to service.
PD 47 para.5.A4, dealing with transitional provisional provisions, makes it clear that the new electronic bill must itself must be served:
“Where a bill of costs otherwise falls within paragraph 5.1(a) but work was done both before and after the Transition Date, a party may serve and file either a paper bill or an electronic bill in respect of work done before that date and must serve and file an electronic bill in respect of work done after that date.”
Although the balance of the rules could be much clear, it is clearly the case that this will apply to all bills that are electronic (ie it is the electronic bill itself that must be served).
The difficulty that arises is that the Practice Direction 6A, that deals with service generally, is very restrictive when it comes to electronic service.
“4.1 Subject to the provisions of rule 6.23(5) and (6), where a document is to be served by fax or other electronic means –
(1) the party who is to be served or the solicitor acting for that party must previously have indicated in writing to the party serving –
(a) that the party to be served or the solicitor is willing to accept service by fax or other electronic means; and
(b) the fax number, e-mail address or other electronic identification to which it must be sent; and
(2) the following are to be taken as sufficient written indications for the purposes of paragraph 4.1(1) –
(a) a fax number set out on the writing paper of the solicitor acting for the party to be served;
(b) an e-mail address set out on the writing paper of the solicitor acting for the party to be served but only where it is stated that the e-mail address may be used for service; or
(c) a fax number, e-mail address or electronic identification set out on a statement of case or a response to a claim filed with the court.
4.2 Where a party intends to serve a document by electronic means (other than by fax) that party must first ask the party who is to be served whether there are any limitations to the recipient’s agreement to accept service by such means (for example, the format in which documents are to be sent and the maximum size of attachments that may be received).
4.3 Where a document is served by electronic means, the party serving the document need not in addition send or deliver a hard copy.”
Service of the electronic bill is compulsory but PD 6A para.4.1(1)(a) requires previous written permission from the other side before you can serve electronically. How can you serve electronically if permission has not been given?
PD 47 para.5.A2 provides a link to the format that an electronic bill may be in but PD 6A para.4.2 appears to allow the other side to dictate the format of an electronic document.
PD 6A para.4.3 states that when serving electronically it is not necessary to also serve a hard copy. This is directly contradicted by PD 47 para.5.1A which requires a hard copy in addition to the electronic version.
If service needs to be both electronic and in hard copy form, what date do you use for calculating deemed service (which will be different for an emailed document and the copy sent by post/DX)?
There was talk about updating the rules relating to electronic service generally, but it would have been nice if this had happened before electronic bills were made compulsory.
The new electronic bill of costs is now upon us and it already causing confusion at the most basic level.
Costs Lawyer magazine reports ACL council member Claire Green, who has paid a key role in the development of the new bill and as been running the ACL’s training courses on the new bill, warning:
“the new bill will ‘change the whole ethos and environment we’re working in’ and too many people seem unaware of what’s coming – as one small example, you now have to serve the bill on the court at the same time you serve it on the other party.”
This would be a surprising development if true.
Previously, detailed assessment proceedings were commenced by serving the bill on the paying party. It was not, at that point, filed with the court. Points of Dispute were served in response, but not filed. Optional Replies were then served, but not filed. It was only if, and when, a request was made to the court for detailed assessment that the various documents (and bill) were filed.
It would therefore be odd if the rules had now been changed so that the courts were to be bombarded with 1000’s of bills (both hard copy and electronically) at a stage of the assessment process where they have no involvement or interest and where most matters will settle without the need for any input from the court.
The problem is caused by the wording of PD 47 para.5.1A:
“Whenever electronic bills are served or filed at the court, they must also be served or filed in hard copy, in a manageable paper format as shown in the pdf version of Precedent S. A copy of the full electronic spreadsheet version must at the same time be provided to the paying party and filed at the court by e-mail or other electronic means.”
The first sentence appears tolerably clear:
- When an electronic bill is served it must be served both electronically and in hard copy; and
- When an electronic bill is filed it must be filed both electronically and in hard copy.
The second sentence is a clear as mud and is clearly the cause of the confusion.
I believe the correct position is set out in Cook on Costs 2018:
“The electronic bill of costs cannot be fully printed out on paper. A summary version only will have been served in hard copy on the paying party. The full version will have been sent electronically. When requesting a hearing date, the summary paper version will need to be lodged with the N258 in the usual way together with the various other accompanying documents as described above. At the time of writing, the only court email address currently available is the SCCO’s, namely firstname.lastname@example.org.”
This appears to mirror the current position (other than the fact that service/filing must also be electronic).
Further support comes from Senior Costs Judge Gordon-Saker, speaking at the Law Society Commercial Litigation Conference on 16 October 2017, who confirmed that the bill will be emailed to the court at the same time as lodging papers for assessment, together with the paper version.
Poorly drafted rules are the least of the problems to come.
Gordon Exall’s excellent Civil Litigation Brief has a post reporting the decision in Cross v Black Bull (Doncaster) Limited (Sheffield County Court) concerning the appropriate consequences of a party not serving a statement of costs at least 24 hours before a hearing.
His Honour Judge Robinson summarised the issue thus:
“Miss Buck who did not appear before me in the appeal nor did she appear before the Deputy District Judge submits on instructions that because a costs statement had not been filed at the hearing before the Deputy District Judge in accordance with the CPR namely, without looking it up and from memory 24 hours before the hearing, then summary assessment could not have occurred and therefore the claimant should be deprived of all of his costs.
Now, I asked Miss Buck if there was anything by way of authority or principal or direction or anything that might assist me in determining the appropriateness of that costs direction. Namely the costs should be denied a successful claimant and as very fairly said no. Therefore, I am asked to exercise my discretion.”
Exercising his discretion from first principles, he declined to disallow the costs.
It is unfortunate that neither Miss Buck nor the judge (nor, presumably, the advocate for the other side) appeared to be aware of the actual wording of PD 44:
“9.5(4) The statement of costs must be filed at court and copies of it must be served on any party against whom an order for payment of those costs is intended to be sought as soon as possible and in any event –
(a) for a fast track trial, not less than 2 days before the trial; and
(b) for all other hearings, not less than 24 hours before the time fixed for the hearing.
9.6 The failure by a party, without reasonable excuse, to comply with paragraph 9.5 will be taken into account by the court in deciding what order to make about the costs of the claim, hearing or application, and about the costs of any further hearing or detailed assessment hearing that may be necessary as a result of that failure.”
It is also unfortunate that the judge, who was clearly aware there was a provision within the CPR that required filing of the costs statement in advance of the hearing, decided to rely on memory rather than looking up the actual wording. If there is a sanction for non-compliance of a rule, it is invariably contained within the rule itself.
The actual outcome may not necessarily have been different. The note in the White Book states:
“The failure of a party to comply with (what is now) para.9.5(4) of Practice Direction 44 by omitting to file and serve a copy of the statement of costs not less than 24 hours before the date fixed for the hearing did not warrant the wholesale disallowance of costs. Where the only factor against awarding costs was merely the failure to serve a statement of costs without aggravating factors a party should not be deprived of all their costs. The court would take the matter into account but its reaction should be proportionate. The court should ask itself what if any prejudice there had been to the paying party and how that prejudice should be dealt with, e.g by allowing a short adjournment or adjourning the summary assessment to another date, or directing detailed assessment: MacDonald v Taree Holdings Ltd, The Times, 28 December 2000, Neuberger J. The court may mark the failure to serve a statement by disallowing some of the costs that would otherwise have been allowed: Simpson v MGN  EWHC 126 (QB)(Warby J).”
Nevertheless, the approach taken to the exercise of discretion would no doubt have differed.
The real lesson from this is that even experienced lawyers do not necessarily possess photographic memories of every aspect of the Byzantine civil procedure rules and there is no substitute to carefully reviewing the relevant provisions rather than relying on “on instructions” or “memory”.
The new electronic bill of costs becomes mandatory from 6 April 2018.
The relevant transitional provisions state that where work was done both before and after 6 April 2018, a party may serve and file either a paper bill or an electronic bill in respect of work done before that date and must serve and file an electronic bill in respect of work done after that date.
The new electronic bill is not required for all cases. The circumstances in which bills of costs must be electronic bills are that—
“(a) the case is a Part 7 multi-track claim, except—
(i) for cases in which the proceedings are subject to fixed costs or scale costs;
(ii) cases in which the receiving party is unrepresented; or
(iii) where the court has otherwise ordered; and
(b) the bills of costs relate to costs recoverable between the parties for work undertaken after 6 April 2018 (“the Transition Date”).”
Fast-track cases are presumably excluded from the requirement to be in electronic format because:
- Those that are not already subject to fixed fees are likely to become so in the near future with the next wave of the Jackson reforms.
- The majority of bills in fast-track cases that are not already subject to fixed fees are likely to be relatively modest in amount meaning there would be little to be gained from insisting they are in electronic format.
However, the wording of the rules clearly means that the relatively large number of higher value cases that settle pre-issue and the further relatively large number of cases that settle post-issue, but pre-allocation, are not required to be in electronic format (as they are not multi-track yet) and can continue to follow good old Precedent A. I am not sure this is what was intended. (Assuming the electronic bill is a good thing,) would it not have made more sense to include cases that settle pre-allocation but for an amount in excess of the fast-track limit within the category of claim for which an electronic bill was required?
The recent decision of Master Leonard in Douglas v Ministry of Justice & Anor  EWHC B2 (Costs) concerned the issue of the recoverability of the costs of attending an inquest.
One particular comment made during the judgment has attracted attention:
“... the cost of preparing witness evidence will normally be recoverable as part of the cost of a successful claim even if that claim settles before the witness evidence is ever needed.”
Gordon Excall’s Civil Litigation Brief blog interpreted this as meaning:
“This emphasises the point that there is nothing to lose (and everything to gain) by the careful and early collection of witness evidence.”
It is no doubt correct that the mere fact a matter settles prior to witness statements being served will not of itself prevent recovery of the costs of obtaining them.
However, I am not sure that Master Leonard sought to imply that the costs of obtaining witness statements would always be recoverable regardless of the stage of the claim they were obtained. It is important to the see the context within which his comment was made:
“one must not use hindsight in applying the Gibson principles. So, for example, the cost of preparing witness evidence will normally be recoverable as part of the cost of a successful claim even if that claim settles before the witness evidence is ever needed.”
This is no more than pointing out that hindsight will not usually be applied when assessing costs. The key issue remains as to whether obtaining witness evidence was reasonable at that point in time. Obviously, each case is fact specific, but costs are routinely disallowed on detailed assessment on the basis they have been incurred prematurely.
Friston’s Civil Costs correctly summaries the position:
“Speaking of a costs regime long since passed, Lord Hanworth referred to the following extract from a Master’s certificate dealing with material thrown away:
‘We have always acted upon the principle that the costs of all work in preparing, briefing, or otherwise relating to affidavits or pleadings, reasonably and properly and not prematurely done, down to the time of any notice which stops the work, are allowable; and … the Taxing Master, having regard to the circumstances of each case, must decide whether the work was reasonable and proper and the time for doing it had arrived.’
This extract illustrates the fact that it is possible to carry out work prematurely; if the benefit of that work is ultimately thrown away, the costs may be disallowed on the basis that the work ought not to have been carried out until it was known whether there was a need for it.”
So, is there anything to lose by obtaining witness statements at an early stage? Yes, potentially the costs of that work.
Two letters received from the Claimant’s solicitors, both dated 4 August 2017. The first is a Part 36 offer. The second attaches Replies and states:
“We shall now be making a Request for a Detailed Assessment Hearing.”
As the Part 36 offer was unacceptable in amount, I simply awaited receipt of a notice of hearing from the court. (Given the date of the final costs order, a request for assessment needed to be filed by 13 October 2017 in any event.)
By 14 November 2017, I had heard nothing further and so wrote to the other side asking them to confirm the date they had filed their request for assessment.
The response received, dated 21 November 2017, read:
“We did not receive a response to our Part 36 offer and was awaiting a response before incurring further costs by lodging the matter. We assume that our Part 36 offer is rejected and are now taking instructions. We intend to lodge the matter for assessment by the end of the week.”
Am I being overly legalistic to suggest that the original statement that “we shall now be making a Request for a Detailed Assessment Hearing” failed to adequately convey what was presumably the intended meaning:
- We currently have no instructions to request a hearing.
- We intend to take no further steps in this matter, including sending any chase-ups, until we hear further from you.
Needless to say, I am still awaiting a hearing date.
At the heart of the successful appeal in May v Wavell Group was the appeal judge’s view that, apparently, the issue of proportionality is something readily discoverable once all the relevant factors have been taken into account. He held:
“the construction of the rules relating to the definition of proportionality and their application do not involve a discretion properly so called but require the court to make a judgment on what the rules mean and how they should be applied. That is a matter of law. The application of the rules, once interpreted, require a balance to be undertaken, in that weight (which includes the possibility of no weight) has to be accorded to each of the factors specified by the rules, but that again is the making of a judgment, albeit of a rather broader nature than construction of the rules, rather than the exercise of a discretion.”
“There may be a limited range of acceptable difference in the total figure once the rules have been applied, in that different judges could legitimately come to slightly different conclusions as to the proportionate sum, and so long as they have applied the rules correctly they should not be open to challenge on appeal.”
Given the rules and Practice Direction are entirely silent as to what amounts to “proportionality”, this is a surprising view. We now have a member of the judiciary who believes that the new proportionality test can be applied in a quasi-scientific manner.
“Whether the relationship is reasonable is, in my view, a matter of judgment, rather than discretion, and, as I have said above, requires a costs judge to attribute weight, and sometimes no weight, to each of the factors (a) to (e).”
His criticism of Master Rowley’s decision was that:
“the final figure in this case does not appear to be based on any specific mathematical calculation nor is there a specific explanation of how the weighting of the various factors resulted in the final figure.”
Surely then, the appeal decision undertook just such a careful mathematical calculation and/or gave a specific explanation as to the weighting given when allowing the figure of £75,000 plus VAT. Here it is:
“In those circumstances we have undertaken our own assessment of the costs having regard to the factors mentioned in this judgment. We have given greater weight to the sums in issue and to the factor of complexity, both of which tip the balance significantly in the appellants’ favour. We have discounted the notional reduction for early settlement. We bear in mind, as the respondents recognised in argument, that the reduction made on the item by item assessment was unusually large, albeit unchallenged on appeal and that the learned Master concluded that it had been reasonable for the claimants to have spent nearly £100,000 on costs prior to settlement. When the reasonable costs are compared against a value of between £50,000 and £100,000 in a reasonably complex claim requiring specialist expert evidence, in what is to judge from the pre-action correspondence likely to be hard fought litigation, they appear less disproportionate than previously. We have revisited the elements of the bill and take the following approach, having regard to our view of the factors, including the factors which were not challenged before us. First, we would not reduce the court fees or costs of drawing the bill and secondly we would apply a smaller reduction to the expert’s fees than we would to the profit costs reflecting our view of the essential part played by the expert evidence. In those circumstances I concluded that in all the circumstances the proportionate figure is £75,000 (plus VAT), which I believe to be a fair figure bearing a reasonable relationship to the factors as I see them after taking careful account of the advice of Master Whalan to whom I am particularly indebted at this stage of the process.”
I am sorry, but this is doing no more than substituting one arbitrary figure for another. There is nothing approaching any kind of reasoning as to why one figure is more proportionate than another.
For example, the judge disagreed with Master Rowley’s decision that this “case was neither legally nor factually complicated”. The appeal judge concluded:
“If one compares such a claim to the range of claims which are made in the county court it can readily be seen that this is towards the more complex end of the range. It is almost impossible to generalise but there will be many road traffic accident claims and those arising out of sale of goods or contracts, all of similar value (ie £50,000 to £100,00) which may be much less complex than this claim. … Although this case may not have been complex within its category it seems to me that it was complex when compared with other claims of similar value within the county court.”
However, the judgment fails to give any indication as to how much weight the complexity issue was given, other than it was “greater” than Master Rowley (who in fact gave it no weight as he concluded it was not complex). Put another way, if this claim had been, in terms of complexity, more like the many “road traffic accident claims and those arising out of sale of goods or contracts” that are “much less complex”, what amount would have been judged as proportionate? If this is a question of law, as opposed to discretion, there should be a ready answer and it should be spelt out in any detailed assessment (or subsequent appeal).
There is something rather unsatisfactory about an appeal judge criticising a judge below for lack of reasoning and then repeating exactly the same “error” himself.