14 March, 2014 at 5:30 am

Senior Court Costs Office renovations

Filed Under Legal Costs | 1 Comment 

The Senior Courts Costs Office (SCCO) is somewhat in a state of disruption, and will be for the next couple of months, with refurbishment works being undertaken to the Thomas More Building (TMB) at the RCJ. Apparently this is part of a planned refurbishment of the Royal Courts of Justice to accommodate the arrival of the Central London County Court (although rumour has it that asbestos was discovered in the building).

In any event, costs judges and costs officers on floors six to eight of the Thomas More Building have been moved around the building. The ACL has helpfully obtained a list showing the change in court rooms for the costs judges and costs officers for the period 10 March to 9 May when the refurbishment ends:

If you are attending the SCCO during this period, you should expect to appear in these court rooms rather than the ones set out on hearing notices previously sent to the parties.

Chief Master Hurst: From TMB 7.07 to court room 52 (1st floor, TMB)
Master O’Hare: From court 58 (7th floor) to court room 95 (5th floor)
Master Campbell: From court 59 (8th floor) to court room 56 (5th floor)
Master Simons: From court 57 (6th floor) to court room 93 (5th floor)
Master Gordon-Saker: From TMB 6.07 to court room 53 (2nd floor)
Master Haworth: From TMB 7.06 to court room 54 (3rd floor)
Master Leonard: From TMB 6.09 to court room 55 (4th floor)
Master Rowley: From TM 7.05 to court room 94 (5th floor)
Deputy Master’s room: From TM 6.11 to court room 91 (4th floor)

Costs Officers Lambert, Martin and Piggott will be on the 3rd and 4th floors:
Mr Lambert: From TM 6.05 to court room 89 (4th floor)
Mr Martin: From TM 8.06 to court room 88 (4th floor)
Mr Piggott: From TM 6.06 to court room 90 (4th floor)

The court staff will be on the 2nd floor; the Public Counter will be on the 3rd floor; and court rooms beginning with a 5 are in what is known as the ‘Stack’, in the corner of the TMB. Court rooms beginning with a 9 are in the main part of the building.

Allow yourself an extra 5 minutes to find the correct room.

11 March, 2014 at 5:58 am

Statement of truth for costs budgets

Filed Under Legal Costs | 14 Comments 

The statement of truth used to verify a costs budget will change from 22 April 2014 to:

“This budget is a fair and accurate statement of incurred and estimated costs which it would be reasonable and proportionate for my client to incur in this litigation.”

This amendment was presumably made to deal with some of the problems in-house lawyers experienced signing the old statement:

“The costs stated to have been incurred do not exceed the costs which my client is liable to pay in respect of such work. The future costs stated in this budget are a proper estimate of the reasonable and proportionate costs which my client will incur in this litigation.”

For in-house lawyers no actual payment is usually made.

However, this still leaves the problem of the distinction between inter partes costs and solicitor/own client costs.

Costs budgets are only concerned with what it would be reasonable for the other side to the litigation to pay if a costs order is made in favour of the party preparing the budget. It has nothing to do with what it is reasonable for the client to pay his own solicitor. Solicitor/own client costs have no place in a costs budget but the statement of truth takes no account of this, hence the wording “which it would be reasonable and proportionate for my client to incur”.

There has been some heated debate about whether solicitor/own client costs should be included or excluded in the budget. There are no doubt be grey areas, but what about, for example, costs relating to setting up funding? It may not be recoverable between the parties but should it be in the budget if it is a cost that will be incurred. (We’ll ignore for the moment those costs draftsman who continue to include such work in bills.)

19 February, 2014 at 5:35 am

Burton v Cranfield Delta Whiskey Group – Relief from sanctions

Filed Under Legal Costs | 25 Comments 

The recent decision of Costs Judge Master Rowley, in Burton v Cranfield Delta Whiskey Group, granting relief from sanctions, is an unusual one.

The breach occurred pre-1 April 2013. Litigation Futures reported that the reasoning behind the decision was that Master Rowley said that the message sent by the Court of Appeal in Mitchell was it:

“seems to me to be aimed at current and future practice, rather than being a stick to beat parties with for errors for which relief, rightly or wrongly, would routinely have been granted had an application been made at the time”.

It was accepted that the breach was due to human error, not normally a sufficient excuse under Mitchell for relief, but the Master held:

“However, it seems to me that the reasoning in Mitchell is very much aimed at human errors occurring after April 2013, rather than 15 months or so before.”

Taken from first principles there appear to be two reasons for distinguishing between breaches that occur pre and post April.

Firstly, where the consequences of the breach (in terms of prejudice to the other side, delay to litigation, etc) are more serious where the breach has occurred after April.

Secondly, on the basis that parties had proper notice of the likely consequences of a breach after April but did not before. The argument here is that it would be unfair to penalise parties for pre-April breaches in circumstances where pre-April there was a more relaxed approach to breaches and parties would have expected relief to be granted. As such, parties would, not unreasonably, have been less assiduous in ensuring 100% compliance pre-April and it would therefore be inappropriate to penalise them, in effect, retrospectively. However, since April parties have been on notice as to the likely consequences of breaches. As such, they cannot complain if the sanction bites without relief for a post-April breach.

There seems nothing in the change in approach since April that means the consequences of a breach have become more serious where they occur post-April. I can therefore only conclude that just the second potential factor might be relevant, and it certainly seems to be this which Master Rowley focused on.

But there are two problems with this. First, it would have been perfectly possible when the new relief from sanctions test was introduced for the transitional provisions to be drafted such that the relevant test to apply was governed by the date of the breach. That could have been done, but it was not. The transitional provision determines that the relevant date is the date of the application:

“The amendments made by … these Rules do not apply to applications made before 1 April 2013 for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order.”

Given that is the relevant transitional provision, I struggle to see how a different trigger date can be applied by the courts. Of course, parties knew the new rules were coming into force before 1 April 2013 and had the opportunity to get their houses in order before that date. If a breach was indentified, and in most cases it would be possible to identify a breach by undertaking a proper review of the file (although possibly not on the facts of this case), an application could have been made before 1 April 2013 and the party thereby benefited from the old test.

Secondly, it must be remembered that in the Mitchell case the sanction that was imposed was not one contained in the pilot scheme that the case was proceeding under. The judge imposed a sanction not provided for by the rules. The sanction was not one that the defaulting party was on notice of or, I would suggest, one that would have been anticipated. That was the surprising element of the Court of Appeal’s decision. Nevertheless, the Court of Appeal was not impressed by the “lack of notice” argument.

In light of the transitional provision and the Mitchell judgment it is difficult to see why the date of the breach should impact on whether relief is granted.

6 February, 2014 at 5:48 am

Interest on costs

Filed Under Legal Costs | 9 Comments 

CPR 44.2(6)(g) states:

“The orders which the court may make under this rule include an order that a party must pay interest on costs from or until a certain date, including a date before judgment.”

However, the Senior Courts Costs Office Guide 2013 correctly advises:

“The power to order interest to run from a date other than the date of judgment has, as at the date of preparing this guide, been found to be ultra vires in the county court until the Treasury takes certain steps to validate it. For the time being, in county court cases, interest on costs (other than the costs of assessment) will always run from the date of judgment.”

4 February, 2014 at 5:58 am

Costs reserved

Filed Under Legal Costs | 6 Comments 

Of the different types of order the court can make in relation to interim matters is one for “costs reserved”. PD 44 para.4.2 explains the effects of such an order:

“The decision about costs is deferred to a later occasion, but if no later order is made the costs will be costs in the case.”

I have always understood this to mean that where such an order is made but this is overlooked when the matter settles, whether at trial or by agreement, then tough luck for the party who is ultimately unsuccessful. The costs of that interim matter are treated as costs of the claim overall. Cook on Costs states:

“It is worth pointing out that an order for ‘costs reserved’ becomes an order for ‘costs in the case’, if there is no later determination of where responsibility for those costs lies.”

It is not uncommon for this issue to be overlooked, particularly where counsel is not properly briefed as to the existence of such orders before a final hearing.

However, a recent decision from the Court of Appeal suggests that this analysis is not necessarily correct.

In Taylor v Burton & Anor [2014] EWCA Civ 21 an interim order was made permitting the claimant to amend their particulars of claim, permitting the service of an amended defence and permitting the defendant to serve a further statements of fact dealing with any new factual issues arising in the amended case. The judge ordered that the “costs of and occasioned by the amendment are reserved to the trial judge”.

At trial the defendant was ordered to pay the claimants' costs of the action on the standard basis. This had the effect of also picking up the costs of the amendment reserved to the trial judge. The Court of Appeal proceeded on the basis that the trial judge was unaware of this as he had not been referred to the fact that those costs had been reserved to him and did not refer in his costs judgment to the fact that they had.

The Court of Appeal’s conclusion was:

“In my view, the judge was innocently in error in not dealing separately with this head of costs. I say 'innocently' because he was not told that this head of costs had been reserved to him. He ought to have been told and he ought then to have considered separately how to deal with them. He might have decided simply to include them as the costs to which the Burtons were entitled as part of their costs of the claim. He might have thought it appropriate to make a different order. We do not know. As, however, he did not address his mind to how to deal with them, we consider that he fell into error and that, in consequence, we can and should exercise our own discretion as to what order to make in respect of the reserved costs.”

The defendant was a litigant in person representing himself at the trial but this does not appear as part of the reasoning for the decision and there is nothing in the judgment to suggest the position would have been different if the defendant had been represented.

This judgment appears to place the onus on the trial judge to check whether there are any interim costs orders reserved to him and gives virtually an automatic right of appeal if the judge does not do this. It must be said that whatever the fairness of the decision, resolving such issues by way of appeal appears a very cumbersome and expensive route. Why not just allow the matter to be remitted to the trial judge for consideration? It also begs the question as to when the wording of PD 44 para.4.2: “if no later order is made the costs will be costs in the case” actually applies. This decision suggests there must be a formal judicial decision on the point before there is any finality.

30 January, 2014 at 5:49 am

Time for service of Replies to Points of Dispute

Filed Under Legal Costs | 11 Comments 

Replies to Points of Dispute occupy a strange place in the detailed assessment process.

Many costs practitioners and costs judges have traditionally viewed them as largely a waste of time, often consisting of self-serving argument or pointless comment (eg “Not agreed”). At worst, they extend beyond setting in skeleton form the receiving party’s position and are drafted in the form of complete submissions (rather rendering attendance at a detailed assessment hearing redundant).

They have always been optional. The pre and post April 2013 rules are, for practical purposes, identical with CPR 47.13 reading:

“(1) Where any party to the detailed assessment proceedings serves points of dispute, the receiving party may serve a reply on the other parties to the assessment proceedings.

(2) The receiving party may do so within 21 days after being served with the points of dispute to which the reply relates.”

This has always seemed a straightforward rule to me. The service of Replies is optional. If the receiving party considers that Replies will assist in narrowing the issues or addressing a point of principle they can serve Replies within 21 days. If service of Replies is viewed as being unlikely to facilitate settlement or narrow a point of principle, in advance of assessment, the receiving party can choose not to serve Replies. Prior to 1 April 2013 they would still be free to make whatever submissions they wanted at the detailed assessment hearing. Failure to serve Replies did not limit the ability to make oral submissions.

However, it was common practice amongst many costs draftsmen and costs lawyers to serve Replies outside 21 days and often only shortly before a detailed assessment hearing. When challenged, the response was often along the lines that they had hoped to avoid the cost of preparing Replies but now it was clear the matter would proceed to assessment it was now necessary to prepare Replies. This totally misunderstood the purpose of Replies. They were to be served at an early stage in the assessment process, if at all, if they may have assisted in avoiding the matter having to proceed to a final assessment. If they were unlikely to avoid a hearing, there was no need to serve them. They were not a necessary predatory step in the final run up to an assessment hearing.

I’ve also seen bizarre interpretations of the wording of the rules such as “replies to your Points of Dispute are optional to reply in 21 days” and therefore the receiving party was free to serve outside the 21 days. Other arguments have been that because the rules contain no sanction for serving outside the 21 day period the receiving party was again free to serve whenever they liked.

Pre-April 2013 there was often limited point in complaining about late service, other than on the issue of the associated costs. The matter would proceed to an assessment hearing and, as mentioned above, the receiving party could make whatever submissions they wanted at the hearing. The late Replies could probably be treated as the receiving party’s Skeleton Argument, even if not technically admissible Replies.

Post April 2013, the position has radically altered. Firstly, the contents of Replies are now limited by PD 47 para.12.1:

“A reply served by the receiving party under Rule 47.13 must be limited to points of principle and concessions only. It must not contain general denials, specific denials or standard form responses.”

(In practice, the limitation on the contents of Replies is often ignored and it will be interesting to see what approach the courts take to this.)

Secondly, and perhaps more importantly, for cases where the costs claimed do not exceed £75,000, the matter will usually be subject to provisional assessment and there will be no opportunity to make oral submissions to the court. The only opportunity for receiving parties to put forward submissions on the disputes raised is within the Replies. Now when receiving parties are advised they are out of time for serving Replies, panic sets in. Or denial.

If you are out of time for service, and the paying party does not consent to late service, an application needs to be made for permission to serve out of time. Although such an application would not be the same as an application for relief from sanctions, the courts are likely to expect there to be a good reason why they were not served on time. Is there any support for the view that an application is necessary? The Senior Courts Costs Office Guide 2013 states at paragraph 19.5:

“The time limit for serving a reply to points of dispute is summarised in para 6.1 above and the time limit for filing a request for a detailed assessment hearing is summarised in para 9.1(c), above. In any case directions of the court may impose further time limits for the taking of certain steps, eg the service of witness statements. All these time limits may be extended by the agreement of the parties or, alternatively, by an order made upon an application.”

I recently had a case where I had advised the receiving party I did not consent to late service. Nevertheless, they made a request for provisional assessment with a copy of Replies being filed in support. Naughtily, and not following Precedent G (in breach of PD 47 para.12.2), the Replies were undated. The court had no way of knowing the Replies were late. Application issued to have the Replies struck out. Matter came before District Judge Woodburn in Liverpool County Court. Replies struck out. Defendant awarded costs. Although the judge made is clear the receiving party was not thereby precluded from making an application for serve late, they could not simply serve late without an application. This is common sense. Otherwise it makes a mockery of having a timescale in the rules. If the rules give a 21 day period for service, that cannot be interpreted as meaning service may be made at any time. The words “within 21 days” are not meaningless.

This may all be a nasty shock for those who act for receiving parties as they find themselves having to work with the same 21 day timescales faced by paying parties having to deal with Points of Dispute. The obvious distinction being that the time to draft Replies limited to points of principle and concessions only is a fraction of that of having to draft Points of Dispute. Nevertheless, the Mitchell lesson is that firms should not take on more work than they can comfortably handle:

“Solicitors cannot take on too much work and expect to be able to persuade a court that this is a good reason for their failure to meet deadlines. They should either delegate the work to others in their firm or, if they are unable to do this, they should not take on the work at all. This may seem harsh especially at a time when some solicitors are facing serious financial pressures. But the need to comply with rules, practice directions and court orders is essential if litigation is to be conducted in an efficient manner. If departures are tolerated, then the relaxed approach to civil litigation which the Jackson reforms were intended to change will continue.”

None of this is to suggest that parties may not agree a general extension of time for Replies before the deadline is reached. On occasion that may be entirely sensible. What is not sensible is to ignore the timescales set out in the CPR and to assume there are no adverse consequences.

20 January, 2014 at 6:20 am

Impact of Jackson on cost firms

Filed Under Legal Costs | 24 Comments 

Patrick Allen, writing in the New Law Journal, commenting on the Jackson reforms:

“Many smaller PI firms are closing, selling their cases at a discount to their WIP or being taken over. Firms are being hoovered up by the mega firms such as Slater Gordon. … If firms do have cash this is because they have no new business and they are in that brief cartoon moment before they fall to earth.”

The impact being felt by PI firms will quickly be felt by costs firms, although many have never been busier because of the time lag between new instructions being received by solicitors and the cases settling. Has the impact started to hit some costs firms yet?

8 January, 2014 at 6:20 am

Provisional assessment hearing

Filed Under Legal Costs | 11 Comments 

Notice received from court:

"Take notice that the provisional assessment will take place on 7 February 2014 at 2:30pm at X County Court

when you should attend

90 minutes has been allowed for the provisional assessment

NB – No parties are to attend the provisional assessment hearing"

That’s clear then.
 

6 January, 2014 at 6:07 am

Cap on costs budgeting process

Filed Under Legal Costs | 13 Comments 

Claimant serves costs budget totalling £100,000. Defendant serves costs budget totalling £20,000. Defendant’s budget is, unsurprisingly, not disputed and approved by the court. Claimant’s budget is, unsurprisingly, hotly disputed and is dealt with at a costs management hearing.

PD 3E para.2.2 states:

“Save in exceptional circumstances –

(1) the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% of the approved budget;

(2) All other recoverable costs of the budgeting and costs management process shall not exceed 2% of the approved budget.”

The Claimant’s budget is reduced by the court to £60,000.

Each side’s costs of the contested costs management hearing appears to be limited to 2% of their own approved budget (rather than the budget of the other side).

So, the Claimant gets a maximum of £1,200 and the Defendant a maximum of £400, despite the fact the only reason for the costs management hearing is because the Claimant submitted an inflated budget. Fair? And is £400 even going to begin to cover the Defendant’s costs?

This has the appearance of not being very well thought through.

20 December, 2013 at 6:35 am

Costs management fees

Filed Under Legal Costs | 3 Comments 

Practice Direction 3E – Costs Management, paragraph 2.2(1):

“the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% of the approved budget”

Which of the following is included within the cap:

1. One hour discussion with the client explaining the figures within the budget and the costs consequences of any budget set.
2. One hour of time obtaining various quotes and estimates from experts and counsels’ clerks for inclusion in the budget.

Paragraph 2.2(2):

“All other recoverable costs of the budgeting and costs management process shall not exceed 2% of the approved budget.”

Case listed for two hour CMC to deal with directions and costs management. How much of the preparation for and attendance at the two hour hearing and any counsel’s brief fee falls within the cap?

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