Legal Cost Specialists

Posts made in June, 2016

Costs budgeting – success or failure?

By on Jun 29, 2016 | 0 comments

Costs counsel Andrew Hogan gave a very interesting talk at this year’s Association of Costs Lawyers’ Annual Conference on costs budgeting. The main theme of the talk was the absence of any objective criteria by which to judge whether costs budgeting has achieved its aims since being introduced.  Although Andrew Hogan makes the point much more eloquently and in more detail, this is a problem I identified in a blog post when costs budgeting was first being introduced. This is what I said back in October 2012: “The aim of costs budgeting, that will be rolled out nationally from April 2013, is to control the level of costs that are incurred. There are a large number of unpredictable factors as to whether this aim will be achieved. However, let those make a couple of assumptions: Claimants’ costs are currently reduced, by agreement or assessment, very roughly by one-third (obviously this masks an enormous amount of variation). Come April 2013 claimants are able to produce accurate budgets that broadly reflect the level of costs that are currently incurred. (The likelihood of accurate budgets being produced is, of course, a very big assumption.) If the judiciary hopes to limit costs to no more than the levels currently been incurred they would need to reduce the budgets submitted by claimants by an average of one-third. In fact, if the aim of costs budgeting is to reduce the amounts allowed below current levels it would be necessary to go further than that one-third. Reducing the budgets submitted by an average of 50% would only produce a relatively minor reduction on current figures. Are judges really going to routinely reduce budgets by this margin? The danger is that judges may think they are being “jolly robust” reducing budgets by an average of 25%, and thereby avoiding the need for matters to proceed to detailed assessment, and conclude that costs budgeting has been a great success. The difficulty is that I have not seen any suggestion that the judiciary will have any accurate yardstick with which to compare the budgets being submitted with what might be deemed a “reasonable” allowance under the current system. I would certainly not suggest that the very small proportion of...

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Wrong defendant named in CFA – again

By on Jun 27, 2016 | 2 comments

I have written before about the dangers of relying on case summaries (particularly those that appear on-line) without actually reading the full judgment. A prime example of this is the case of Engeham v London & Quadrant Housing Trust & Anor [2015] EWCA Civ 1530.  The problem was exacerbated by the fact that it has taken such a long time for the full judgment to become widely available. The case concerned the “wrong” defendant being named in the CFA.  This is hardly a new issue and I have acted for the paying party in two other reasonably well publicised cases dealing with this issue (Brierley v Prescott [2006] EWHC 90062 (Costs) and Hailey v Assurance Mutuelle Des Motards (SCCO, 2015)). In this case, the Court of Appeal decided that (some) costs were recoverable notwithstanding the fact the “wrong” defendant was named.  Various initial on-line accounts of the decision implied that naming the wrong defendant was no longer a problem in light of this judgment, including: “This is a helpful decision for receiving parties. It overturns a run of cases in the lower Courts which were decided the other way.” “Whilst it is not unusual to have cases where there may be more than one potential Defendant, it is unusual to have cases where the correct Defendant(s) have not been named; this decision will now provide comfort to those solicitors who find themselves in this predicament.  A small victory for Claimant solicitors…” “an early Christmas present for Claimant Solicitors, and a lump of coal for Defendant Solicitors” In fact, on a proper reading of the judgment, this decision was extremely fact sensitive and did not remove the underlying problem caused by naming the wrong defendant. In very brief terms, so far as relevant, the facts of the case were: The CFA stated, under the ‘What is covered by this agreement’, “Your claim against the defendants L & Q for damages”. A letter of claim was sent to L & Q on 12 June 2008. Liability was denied and a long period of investigation followed which uncovered the identity of the contractor, APL. Proceedings were issued on 5 March 2011 against both L & Q and APL. Negotiation towards a settlement followed and the matter was compromised by a...

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Trust the experts

By on Jun 22, 2016 | 3 comments

It was only recently that the press was reporting on David Beckham’s library burning down.  He was described as being absolutely distraught. Apparently both books were destroyed and he hadn’t even finished colouring one of them in. Now matters have reached the point where Beckham’s intellectual strengths have grown to such heights that it is being reported across the press, including the broadsheets and BBC, as actual “news” which way Beckham intends to vote in the EU Referendum. There has already been enough bitter debate in the EU Referendum about the extent to which the advice of various “experts” should be trusted on the likely consequences of Leaving/Remaining, but can we at least agree that the views of “celebrities” are not relevant and are not “news”? This follows on from Noel Edmunds advising the public they can cure cancer by wrapping tin foil around their heads (or something similarly scientific). What next, the Chuckle Brothers making recommendations about reform of the civil justice system?  Having said that, they are probably no more likely to make a dog’s dinner of that than some others one could think of. Rather more serious analysis comes from Andrew Hogan, in an article originally published in Litigation Funding magazine suggesting: “it does not seem fanciful to suggest that if the country votes to leave the European Union, the Ministry’s efforts for the next 20 years will be spent uncoupling the country’s laws from the European Union and all interest in fixed costs proposals and similar schemes, will just fall of the political agenda.  It follows in turn that the financial interests of litigation lawyers will be served by voting for Brexit, the costs tail wagging the constitutional dog.” Fortunately, litigation lawyers are far too public spirited to consider voting based on such narrow possible self-interest. This blog is going to steer clear of making any predictions about how readers might benefit from Leaving/Remaining or from making any recommendations on how to vote.  However, with the polls suggesting the vote is neck-and-neck, I will suggest this may come down to the weather on the day.  As a European official was quoted in The Telegraph: “A colleague of Mr Juncker fears that, ‘come hell, wind or...

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Proportionality and court fees

By on Jun 21, 2016 | 3 comments

Much of the commentary on Master Gordon-Saker’s recent proportionality decision in BNM v MGN Limited [2016] EWHC B13 (Costs) has understandably focused on the reductions made to the “reasonable” costs (approximately a 50% reduction).  However, almost as interesting is what was not reduced. To remind you of the figures, the Master initially assessed the costs, applying reasonableness alone as follows: Base profit costs £46,321 Base Counsel’s fees £14,687.50 Court fees £1,310 Base costs of drawing the bill £4,530 Atkins Thomson’s success fee £16,780.83 Counsel’s success fee £4,846.88 ATE premium £61,480 VAT £17,433.24 Total costs £167,389.45 Having concluded this was disproportionate he then, in his own words: “concluded that the sums which had been allowed as reasonable on the line by line assessment were disproportionate and were about twice the sum which would be proportionate. As I had been given the breakdown set out above I gave separate figures for the sums allowed”: Base profit costs £24,000 Base Counsel’s fees £7,300 Court fees £1,310 Base costs of drawing the bill £2,250 Atkins Thomson’s success fee £7,920 Counsel’s success fee £2,409 ATE premium £30,000 VAT £8,775.80 Total costs £83,964.80 It is not obvious to me that there was any need to provide a breakdown of the further “Jackson adjustment”. It seems artificial to rule that it was reasonable to spend, say, £10,000 on experts’ fees but that this will then be adjusted down to £5,000.  The “Jackson adjustment”, as the second part of the proportionality test, is to ensure that the total the paying party is asked to pay is proportionate to the claim.  This is concerned with the total, not the constituent parts of that total.  The constituent parts are dealt with in the line by line element of the assessment. Nevertheless, having decided to adopt that approach, the one striking part of the bill that was not reduced was the court fee element. This was left untouched. On the one hand, I can see why a judge, particularly the Senior Costs Judge, might be reluctant to rule that court fees are disproportionate, with the implicit criticism of the Ministry of Justice (although many judges have done just that).  However, does it not rather miss the point of the new...

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The new proportionality test in costs

By on Jun 17, 2016 | 1 comment

Hot on the heels of Master Gordon-Saker’s proportionality decision in BNM v MGN Limited [2016] EWHC B13 (Costs) is another decision from the Senior Courts Costs Office, this time from Master Rowley in Dr Brian May v Wavell Group Plc. Here, the figures are even starker in terms of the reductions applied.  The initial assessment, on the basis of reasonableness alone, reduced the bill from £208,236.54 to £99,655.74.  The second part of the test, the “Jackson reduction”, reduced this to £35,000 plus VAT.  The damages agreed were £25,000. A fuller summary of the decision and a copy of the judgment can be found on the Civil Litigation Brief. The stand out parts of the judgment are: “The amount that can be recovered from the paying party is not the minimum sum necessary to bring or defend the case successfully.  It is a sum which it is appropriate for the paying party to pay by reference to the five factors in CPR 44.3(5).  It is not the amount required to achieve justice in the eyes of the receiving party but only a contribution to that receiving party’s costs in many modest cases. … In cases such as this, it seems to me that the new test of proportionality … will require legal representatives to inform their clients that, even if successful, they will receive no more than a contribution to the costs that will be incurred.  It may be that such advice proves to be a driver for the costs to be reduced or for alternative dispute resolution mechanisms to be explored.” In both this case and the earlier case of BNM v MGN Limited, Jamie Carpenter acted for the paying party.  A rising star of the Costs...

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