Guideline Hourly Rates for 2015, 2016, 2017…

The Master of the Rolls has announced guideline hourly rates (GHRs) are to be frozen at their 2010 levels indefinitely as there is no prospect of proper evidence being produced to justify a revision.

This may not be entirely bad news for claimant lawyers as it was widely anticipated any revision would be in a downward direction.

On the other hand, what role now for GHRs? Dyson statement noted:

“They remain an integral part of the process of judges making summary assessments of costs in proceedings. They also form a part, even if only a starting reference point, in the preparation of detailed assessments. They also provide a yardstick for comparison purposes in costs budgeting.”

Without any amendments to the published rates, over time they will inevitably be given less and less weight on assessment. Claimant solicitors will inevitably seek to argue the rates should be uplifted. They will face the obvious problem that they cannot simply seek to ask the court to increase the rates in line with inflation. That is the approach the Master of the Rolls has positively rejected. Further, the payment of referral fees was one of the justifications previously put forward in a GHRs review as to why claimant hourly rates were higher than those charged by defendants. With referral fees now banned, guideline rates are arguably to high. This was the logic used to reduce fixed fees in low value RTA claims.

The one inevitable outcome of all this is more uncertainty and more satellite litigation. If individual judges increasingly department from GHRs, but not based on any empirical evidence, how are parties to predict what might or might not be allowed? For all the flaws with GHRs, at least they provided a useful guide as to what the starting point. If this is lost, what is the alternative?

Lord Dyson’s answer, in part, is to continue pressing the government to extend the use of fixed fees. Solicitors may come to regret not taking part in the GHRs survey when they had the chance.

Drafting time

Further to my post yesterday, the time claimed for drafting the three virtually identical Notices of Funding was a total of three hours (one hour for each). Did you guess correctly?

Being charitable, I suppose it is possible the fee earner recorded the time as being 1 unit per notice. An inexperienced costs draftsman then misread the corresponding attendance notes as recording 1 hour per notice and failed to engage brain when drafting the bill to consider whether this was remotely realistic. The matter was then passed to a partner who was too busy to give even a cursory glance at the contents of the bill before signing the certificate of accuracy. At no stage was there ever any intention to defraud the defendant.

Other possible explanations are also available.

Drafting Notice of Funding

I’m currently dealing with a case where the claimants’ solicitors were acting for three claimants arising out of the same incident. Same fee earner dealing with each claim.

Notices of Funding were prepared; one for each of the three claimants, all on the same date. Each claimant had the benefit of a CFA and an ATE policy. The dates of the three CFAs were identical. The dates and details of the three ATE polices were identical other than the policy numbers. To make matters easier, the policies were not staged. Other than the name of the claimant and the date of the ATE policy, each Notice of Funding was identical.

Would readers like to take a guess as to how long is being claimed for completing these three notices (which were, of course, just standard N251 forms)? The answer is higher than you might suppose.

Answer tomorrow.

Naming wrong defendant in CFA

What are the consequences of naming one party as the opponent in a CFA but then succeeding in the claim against another party?

This is a long-running issue with various non-binding and conflicting decisions on the issue including Brierley v Prescott [2006] EWHC 90062 (Costs), Law v Liverpool City Council [2005] EWHC 90020 (Costs), Scott v Transport for London (2009) (unreported) and Brookes v DC Leisure Management Ltd & Anor [2013] EW Misc 17 (CC).

Deputy Master Friston has recently handed down judgment in another case addressing this issue in Hailey v Assurance Mutuelle Des Motards (SCCO, 2015). Although the facts of the case were rather unusual, the reasoning adopted is of more general application.

One more case to throw into the mix.

Defining “disease” claims

The dispute as to whether noise induced hearing loss (NIHL) claims are “disease” claims for the purposes of the fixed success fee regime stems from the complete failure to define “disease” in the Civil Procedure Rules. What is less obvious is whether this was a careless oversight or a deliberate decision.

Males J when faced with the issue of determining whether a certain condition was a disease, in the case of Patterson v Ministry of Defence [2012] EWHC 2767, held:

“Notwithstanding the objective of CPR 45 to provide a clear and certain test for the award of success fees, inevitably questions may arise as to whether particular conditions are to be characterised as ‘diseases’. When that occurs, and when the answer is not obvious, there is in my judgment no single test or definition which can be applied. In circumstances where the Rule itself provides no definition of ‘disease’, and where the dictionaries do not assist, it would not be practicable or sensible for the court to attempt to supply its own definition.”

Phillips J, in the recent case of Dalton v British Telecommunications plc, recognising he was taking the opposite approach to Males J, attempted to define disease:

“In my judgment consideration of the legislative history in this case strongly indicates that Parliament intended the term ‘disease’ in sections IV and V of CPR 45 to include any illness (whether physical or physiological), disorder, ailment, affliction, complaint, malady or derangement other than a physical or physiological injury solely caused by an accident or other similar single event. The provisions of section IV are therefore restricted to injuries caused by accidents (or other single events), preserving the long-established distinction.”

I take this to mean that under Phillips J’s definition:

  1. Symptoms caused by a single accident or event = injury
  2. Symptoms caused by more than one accident or event = disease

This would mean that if I bang my thumb with a hammer, I have suffered an injury. If I bang it a second time I am suffering from a disease.

With respect, that is nonsense.

Therein lies the difficulty with trying to provide a definition for disease. This is, in part, the very issue that arises in most NIHL claims. If my hearing is damaged as a result of an explosion in a factory, that appears to be clearly an injury. If my hearing is damaged as a result of a single acoustic shock caused by defective electrical equipment, that would also appear to be an injury I have suffered. Does it really become a disease if the hearing loss follows a number of minor acoustic shocks or exposure to a high level of noise over a prolonged period?

The rule makers may well have made a conscious decision not to define “disease” recognising the difficulties of the process.

However, if it has been intended that NIHL claims would fall within this category, it would surely have been preferable if Category C claims had been defined something along the following lines:

“‘Type C claim’ means a claim relating to a disease not falling within either type A or type B, including noise induced hearing loss claims”

That would have still left scope for some argument over more obscure conditions, such as in Patterson, but would have left the situation clear for most claims.

Costs Judge vacancies

The Judicial Appointments Commission is advertising for three Costs Judges (two immediate, one future vacancy).

So far as I can work out, in light of the retirements of Master Hurst, Master Campbell and, presumably, another Master in the not too distant future, this will not represent an increase in overall numbers. On the other hand, at least cuts to the court service have not led to a decrease in numbers.

I note the position is open to solicitors and barristers but still not Costs Lawyers. The level of knowledge expected is high: “Detailed knowledge of the law of costs and its application is required and this will be assessed as part of the selection process for these roles. As well as requiring knowledge of all aspects of costs law, Costs Judges need a general knowledge of all other civil, family and criminal law.  Typical civil cases will involve such diverse areas of law as defamation, clinical negligence, planning, personal injury, commercial law or marine law.”

Fixed success fees in disease claims

The issue of what amounts to a “disease” for the purposes of the old fixed success fee regime rumbles on. Judgment has now been given by Mr Justice Phillips in Dalton v British Telecommunications plc ruling that noise induced hearing loss (NIHL) claims are “disease” claims for the purposes of the rules.

This is unlikely to be the end of the matter. Permission to appeal is being sought. It needs to be understood why this matter was heard by a High Court judge given the claims were County Court matters. Both parties, and the Regional Costs Judge, had agreed that the issue had “Court of Appeal” written all over it and it would be preferable for the issue to be determined at High Court level. (There had already been a number of conflicting first instance decisions at County Court level.) With the matter heard by a High Court judge, that would finally decide the matter subject to any appeal that would move straight to the Court of Appeal.

Watch this space.

Costs budget “slashed”

The recent costs management case of CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd & Ors (Costs No. 2) [2015] EWHC 481 (TCC) has been widely reported as an example of the court “slashing” the claimant’s excessive costs budget.

By way of example, the claimant’s estimate sought a budget of £324,880 for drafting witness statements, being 880 hours at a Grade A rate of £370 per hour.

As to hourly rates the judge had commented:

“Although the claimant’s solicitors are based in Birmingham, they are claiming for a partner at a Grade A rate of £370 per hour. This is to be contrasted with the guideline Grade A rate for Birmingham of £217 per hour. I consider the £370 to be unreasonable.”

The judge does not appear to have fixed an appropriate hourly rate when fixing the budgets but clearly considered this excessive. (Note the judge considered guideline rates to be an appropriate reference point for a claim being pursued for £18 million odd.)

The judge further commented:

“In addition, the claimant’s costs budget identifies vast swathes of hours worked/estimated to be done by the lead Grade A partner, with much less work being performed by junior lawyers. Having considered the written submissions on this issue, I consider that this is a specific cause of the unreasonable level of the claimant’s costs. The hourly rate is too high but more importantly, the claimant is using the Grade A partner for work which is inappropriate and could be done more cheaply by lower grade assistants.”

As to the nature of the witness statements that would be required:

“It appears that it is envisaged that the claimant will prepare witness statements from three people who dealt with the claimant’s acquisition of the property, a topic which is likely to be entirely uncontroversial. The budget also envisages multiple witness statements dealing with the remedial scheme. Those statements too are likely to be peripheral at best because the principal issues are going to be what defects emerged and whether the remedial scheme to deal with them was reasonable (which are matters for the experts), not what actually happened.”

At this stage it is worth remembering the views of HH Judge Simon Brown QC that when it comes to costs budgeting he is always dubious about costs budgets that contain significant time for drafting witness statements on the basis that these are documents that are meant to be in witnesses’ own words.

At this stage I’m going to stick my neck out and suggest that those responsible for acquiring the multi-million pound building subject to this dispute and those responsible for the multi-million pound remedial works are probably vaguely literate and could be expected to draft much of their statements with minimal assistance from lawyers.

Taking all into account, the judge “slashed” the claimant’s budget for preparing witness statements to £150,000.

Adjusting the hourly rates to something closer to guideline rates and at a level appropriate for the task (say a combination of Grade B/C) would allow something very close to the original 880 hours estimated or 780 hours at guideline Grade B rates or 691 hours at guideline Grade A rates. This for a case where witness statements were going to be uncontroversial or peripheral.

Thank God for the new costs budgeting regime. Costs being incurred and approved by the courts at silly levels has now become a thing of the past.

You couldn’t make it up.

Defendants’ low costs budgets

In the recent case of CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd & Ors (Costs No. 2) [2015] EWHC 481 (TCC), Coulson J was dismissive of the suggestion a defendant might try to submit a knowingly low costs budget:

“In his written submissions on behalf of the claimant, one of the points made … was that the court should not have any great regard to the costs budget figures put forward by the defendant and the additional parties because they had ‘an incentive’ to advance low figures in their costs budgets. This suggestion of manipulation of the figures by the other parties was, understandably, the subject of considerable protest. It seemed to me to be an unwarranted accusation. In truth, the party who was most vulnerable to such an accusation was the claimant itself.”

Hopefully, this will be an end to similar suggestions made by claimants in other cases that defendants have any incentive to put forward artificially low figures in their budget. I would suggest that in the future, in the absence of very specific evidence to support the same, such a suggestion should be treated as being a serious professional conduct issue and adverse costs orders should be made against those advancing such arguments. The very idea that defendants would pitch their budgets low for tactical reasons…