The defendant costs specialists

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Premature witness statements

By on Jan 23, 2018 | 5 comments

The recent decision of Master Leonard in Douglas v Ministry of Justice & Anor [2018] 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...

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Cap on costs of provisional assessment

By on Dec 21, 2017 | 4 comments

The Court of Appeal has given an important judgment on the issue of the costs of provisional assessment.  In W Portsmouth and Company Ltd v Lowin [2017] EWCA Civ 2172, the Court ruled that the £,1500 cap on the costs of provisional assessment continues to apply even where a party has succeeded on a Part 36 offer made in the assessment proceedings. This is to be distinguished from the situation where a party succeeds on a Part 36 offer in relation to a fixed fee matter.  In that case, Part 36 trumps fixed fees (as per Broadhurst v Tan [2016] 1 WLR 1928). This is a sensible decision and should speed up the provisional assessment process by reducing the scope for argument and ensure the overall costs are proportionate. Interestingly, an unnamed spokesman for the Association of Costs Lawyers was reported as commenting: “While the clarity provided by the ruling was needed, the outcome is very harsh for costs lawyers. There will be plenty of cases where the paying party does not accept a part 36 offer and instead causes the other side to spend significantly more than £1,500 in dealing with costs issues. But on beating their own offer at assessment, the receiving party enjoys all the usual benefits, except in relation to this one aspect of their case. And it will be their costs lawyer who suffers through no fault of their own. We call on the Civil Procedure Rule Committee to consider the impact and fairness of this ruling – making this exception seems at odds with the thrust of the whole part 36 scheme.” I am not sure I agree. Plainly, this decision will have no adverse impact on in-house Costs Lawyers. It will also have no impact on Costs Lawyers employed by costs firms. I believe the “harsh” outcome being described was intended to mean: “Costs Lawyers who own their own costs firms and who conduct costs litigation on a CFA Lite basis will lose out because they will be unable to recover any shortfall between the work undertaken and the cap of £1,500”. I do not know how common it actually is for costs firms to agree to limit their fees to the level...

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BNM v MGN Ltd – Court of Appeal decision on proportionality

By on Nov 8, 2017 | 0 comments

The Court of Appeal decision in BNM v MGN Ltd [2017] EWCA Civ 1767 manages to be both very important and a massive anti-climax. The decision is important because it finally resolves the issue of whether post-1 April 2013 additional liabilities are subject to the old or new proportionality test.  The answer is that the old test applies (contrary to Master Gordon-Saker’s original decision).  Although this will potentially have a large impact on the costs recoverability of some big-ticket costs claims, this is mainly limited to a dwindling number of old cases (4½ years and older). What the judgment entirely fails to do is give any wider guidance as to how the new test should be applied.  Even on the facts of the case, we still do not know the answer as the matter is to be referred back to Master Gordan-Saker for him to have another...

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Changes to Costs Lawyer training

By on Nov 2, 2017 | 13 comments

In light of the problems facing ACL Training, I commented that: “It seems unlikely it can possibly continue in its current form”. Unsurprisingly, the CLSB has now announced that it is to suspend any further intake onto the current three year Costs Lawyer qualification. The CLSB “will now focus on other means of entry into the profession e.g. Costs Lawyer competence test, apprenticeship, thus assuring standards expected of a regulated profession are...

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More horror stories

By on Oct 31, 2017 | 1 comment

The negative impact of the Jackson reforms continues apace. Virtually simultaneous to the news about Just Costs, is the announcement that defendant costs firm Cost Advocates is to close at the end of the year. As an example of the rise and fall of the costs industry, Cost Advocates’ story is, perhaps, even more dramatic than that of Just Costs. Cost Advocates (then Cost Auditing) was purchased by outsourcing giant Capita in 2002 for an initial consideration of £4.9m in cash with additional deferred payments of potentially another...

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Jackson strikes again

By on Oct 30, 2017 | 1 comment

The inevitable post-Jackson shake down continues to make itself felt across the industry. Back in December 2016, costs firm Just Costs Ltd entered into a company voluntary arrangement (CVA) due to significant debts including owing £781,758 to HM Revenue & Customs. In a statement at the time, the firm said: ‘The business has traded profitably every year since our inception in 2006. We continue to do so and our forecasts moving forward show continued profitability. We continue to have the total support of our bank and funders. …  We will be meeting our liabilities in full. … We are dealing with work of an ever-increasing value and complexity. It is business as usual.’ Presumably matters did not go quite as smoothly as anticipated as Just Costs Ltd has just folded, only to be reborn as Just Costs Solicitors Ltd by means of a pre-pack administration deal. Back in December 2016, it was explained that Just Costs had “consolidated” from four to two offices and reduced its headcount from 110 to 70. The latest statement, explaining the CVA, states that it has saved 46 jobs. It is clearly a good thing that so many jobs have been saved but 46 must be viewed as against 70 less than a year ago and 110 before that. It must not be overlooked that these job losses have come about following just the first wave of the Jackson reforms, with the negative impact being felt largely in the fast-track arena.  The next wave of reforms has yet to...

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