The mandatory pilot scheme in the Senior Courts Costs Office for the new J-Codes based bill of costs format had been due to start in April but was then delayed until October 2016. It has now been announced that this date has also been abandoned for further consideration.
Part of the impetus for this appears to have come from the Law Society who wish to consult with their members. (The Law Society can hardly be blamed for this. Jackson only recommended a new software based bill of costs in December 2009 and so this will have come as quite a surprise to them.)
For the time being, we are left with a continuing potential gap between budgeted cases and bills of costs that do not properly reflect those budget phases. The recent “summary by phase” requirement is wholly inadequate as an interim measure.
The conspiracy to make the Jackson reforms unworkable continues.
Do fixed costs continue to apply if a claimant is entitled to costs on the indemnity basis? I am grateful to Gordon Exall’s Civil Litigation Brief for highlighting two conflicting decisions on this issue. This is now apparently due to be heard by the Court of Appeal in February.
Something has gone seriously wrong with the drafting of the rules that it can be anything other than 100% clear as to when fixed costs applies. It makes a mockery of the certainty that such a regime is designed to create.
I’ve uploaded an article on the conflict between the phase-by-phase/item-by-item approach of costs budgeting/detailed assessment and the new proportionality test to the Costs Law Articles Archive, first published in the Solicitors Journal.
I am always rather mystified when I receive Replies that contain a preamble along the following lines:
“Many of the Defendant’s points of dispute do not comply with the costs practice direction as they do not state concisely (or at all in some cases) the nature and grounds of the dispute. The Defendant has chosen, in many cases, to either offer no reason for the proposed reduction or just state that the claim is ‘excessive’.
CPR Part 47.9 CPD 8.2(d) states –
Points of dispute must be short and to the point. They must follow Precedent G in the Schedule of Costs Precedents annexed to the Practice Direction, so far as practicable.
They must –
(b) identify specific points, stating concisely the nature and grounds of dispute.
The Claimant submits that where the Defendant has failed to state the nature and
grounds of their dispute then that dispute should be struck out and the item(s) allowed in full.”
If I understand the point being taken, it is being suggested that a Dispute that simply states the number of communications claimed, hourly rate, disbursement, time claimed, etc, is “excessive” without further detail or explanation is non-compliant with the Practice Direction.
Now, it is no doubt possible that where, for example, 10 routine communications are being claimed to obtain a single set of GP records that instead of a dispute reading: “Excessive. Reduce to 3”, this could be elaborated on:
“The Defendant respectively submits that the 10 routine communications claimed to obtain a single set of medical records is unreasonably high and disproportionate and that a competent litigator acting with all due skill and alacrity should have been able to obtain the same without the need to undertake this level of communications. To the extent to which this level of communications has been undertaken, this implies a number of chase-up communications (responsibility for which should not fall on the shoulders of the paying party on an inter partes assessment) or are of a non-fee earner, purely administrative nature. The Defendant submits a reasonable allowance would be 3 routine communications. The Court is reminded that this is a standard basis assessment and by virtue of CPR 44.3(2)(b) when assessing costs the Court will ‘resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party’.”
However, I am not sure that (other than length and cost) this adds anything to the substance of the dispute.
Nevertheless, that may just be my view of the matter. What I really struggle with is the suggestion that the shortened dispute is non-compliant with the Practice Direction, particularly where the receiving party’s Replies themselves expressly make reference to the requirement that Points of Dispute “must follow Precedent G in the Schedule of Costs Precedents annexed to the Practice Direction, so far as practicable”. I can only conclude that those who churn out these kind of Replies have never taken the time to read Precedent G.
Here it is: Precedent G.
And here are some of the example “model” disputes:
What is good enough for Precedent G is good enough for me (and the Courts).
Interest on costs usually runs from the date of the order for costs. CPR 47.7 provides that detailed assessment proceedings should be commenced within 3 months of the final order/judgment.
CPR 47.8 provides that where a receiving party fails to commence detailed assessment proceedings within the period specified, the paying party may apply for an order requiring the receiving party to commence detailed assessment proceedings within such time as the court may specify. By virtue of CPR 47.8 (3), if the paying party has not made such an application and the receiving party commences detailed assessment proceedings late, the court may disallow all or part of the interest otherwise payable to the receiving party but will not impose any other sanction.
I would suggest it has therefore been generally accepted that a receiving party will have a three month period to commence detailed assessment proceedings and will recover interest for that three month period in any event. If they commence detailed assessment proceedings after three months, the court may will disallow interest for the period of any subsequent delay.
Given interest currently runs at 8%, for firms with a good cash-flow there is a positive incentive to delay commencement until the end of the three month period and it is certainly common to see some firms delay until very close to the three month period before providing details of their costs.
The decision of Mr Justice Leggatt in Involnert Management Inc v Aprilgrange Limited & Ors  EWHC 2834 (Comm) is therefore a potentially important development. As with all such decisions, the full judgment should be read to properly appreciate the reasoning and specific facts of the case but, in essence, he held that it would be unreasonable to order interest to run until the paying party knows what costs are being claimed and has had a reasonable opportunity to consider what sums are properly payable. He therefore ruled that interest should start to run from three months after the order for costs.
“it seems to me that a reasonable objective benchmark to take is the period prescribed by the rules of court for commencing detailed assessment proceedings. Pursuant to CPR 47.7, where an order is made for payment of costs which are to be the subject of a detailed assessment if not agreed, the time by which detailed assessment proceedings must be commenced (unless otherwise agreed or ordered) is three months after the date of the costs order. In order to commence such proceedings, the receiving party must serve on the paying party a bill of costs giving particulars of the costs claimed. It is then for the paying party to decide which items in the bill of costs it wishes to dispute. Postponing the date from which Judgments Act interest begins to run by three months will therefore generally serve to ensure that the party liable for costs has received the information needed to make a realistic assessment of the amount of its liability before it begins to incur interest at the rate applicable to judgment debts for failing to pay that amount.”
It will be interesting to see whether this becomes the new “norm”.
My recommended cocktail for the holiday season is a variation of the Boulevardier cocktail from Harry McElhone’s 1927 book Barflies and Cocktails. (Not this didn’t stop Nigella Lawson appearing to take credit for inventing the same in her recent Christmas TV special and renaming it the Kansas City Christmas).
My variation adds mulling syrup to give it a real Christmassy feel.
1. Take one and a half measures of bourbon, one measure of Campari, one measure of sweet (rosso) vermouth and half a measure of mulling syrup.
2. Stir with ice and strain into a chilled martini glass.
4. Repeat as necessary.
I think I’ll call it the Winter Jackson Special.
It is, perhaps, a moot point as to whether a dispute relating to, say, recoverability of a success fee or ATE premium is a matter of principle. The relevance of this is that PD 47 para.8.2 states:
“Points of dispute must be short and to the point. They must follow Precedent G in the Schedule of Costs Precedents annexed to this Practice Direction, so far as practicable. They must:
(a) identify any general points or matters of principle which require decision before the individual items in the bill are addressed”
Nevertheless, costs barrister Margaret McDonald, writing in Costs Lawyer magazine, makes the useful observation in relation to provisional assessment:
“One of the difficulties is that items such as additional liabilities are often at the end of Form G, when the judge is almost out of time and does not have the time that might be necessary to consider the detail and nuances of technical breaches of the mandatory provisions contained in the old costs practice directions. Think about the order and structure of the points of dispute. Put your best points and ‘big ticket’ items first.”
An unreasonable refusal to engage in ADR can lead to adverse costs consequences even to a party who is ultimately successful. This same principle applies to costs disputes.
What amounts to unreasonable refusal will be fact sensitive, but anecdotal evidence suggests that some costs judges in the Senior Courts Costs Office are ordering parties to pay the costs of assessment where they have refused an offer of ADR from the other side.
Certainly one well known personal injury law firm appears to be using this for tactical reasons. Mickey Mouse offers are made together offers of mediation, JSM, etc, no doubt in the hope that if the other side declines to engage (on the basis the offers made are not even a sensible starting place for negotiations) they will have lined up an argument as to the costs of detailed assessment.
The problem paying parties face is the fact that this combines with the default starting position that they will be ordered to pay the costs of assessment unless the court orders otherwise. Mediation, JSMs, etc can add another expensive layer of costs to the assessment process with no guarantee of success. Although making a sensible offer at an early stage should always be the appropriate approach, even this is no guarantee a court will conclude it was reasonable not to engage in ADR.
ADR can certainly assist in helping parties to reach agreement in higher value disputes but paying parties will want to ensure this is at proportionate cost.
If offered ADR, I will often agree to this but on the basis that each side bears their own costs of the process. This flushes out the time wasters as it means that it will focus the minds of both sides on trying to reach a sensible agreement, otherwise any costs incurred will have been entirely wasted with no chance of recovering the same. Given the whole purpose of ADR is that it is outside the formal litigation process, it is unlikely that placing this condition on engaging in ADR will be criticised by the courts in due course.
I’ve commented before on the issue of whether the costs incurred in relation to pre-provisional assessment applications, such as applications to set aside default costs certificates, applications for interim payments or applications for relief from sanctions fall within the £1,500 cap for provisional assessment.
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.”
It is worth pointing out again that the rule refers to “court fees” in the plural.
A paying party will never pay court fees in a provisional assessment matter other than those relating to interim applications.
A receiving party will only pay one fee (for setting the matter down) unless there have been interim application and/or a Court fee for issuing Part 8 proceedings (see my previous Blog post on this issue).
Assuming the use of the plural was deliberate (and it is to be granted that it is doubtful that any thought was given as to what was meant to be included in the cap), this would suggest interim applications are certainly included in the cap and full credit would have to be given for any interim costs orders (ordered or agreed) during the provisional assessment process (ie interim costs order made for £500 plus VAT and Court fee, only a further £1,000 plus VAT and Court fee recoverable for any further work done).
Although I have serious doubt as to what thought was given to this matter when the rules were formulated, it would be entirely consistent with the overriding aim of the provisional assessment process (to limit the costs of assessment) that it was intended to be an inclusive figure to discourage unnecessary applications, such as those for interim costs certificates. (The Senior Courts Costs Office Guide states: “An application for an interim costs certificate which is made in a case proceeding to a provisional assessment will not be listed for hearing on a date before the provisional assessment takes place unless some good reason for such an early listing is shown”.)
George Osborne’s spending review has included a pledge to raise the small claims limit for personal injury claims to £5,000 and scrap general damages for ‘minor’ soft tissue injuries.