Legal Cost Specialists

Posts made in March, 2017

Extension of fixed fees

By on Mar 9, 2017 | 2 comments

Lord Justice Jackson gave the keynote speech on Tuesday to a packed-out White Paper costs conference (conference to be repeated on 28 March 2017), discussing his current review of an extension of fixed costs. It will be remembered that Sir Rupert stated in another speech in January 2016, before he was tasked with undertaking this review: “There should be single fixed costs grid for all multi-track cases up to £250,000.” It is therefore understandable that there was a certain element of scepticism when he declared, after he had been formally tasked with undertaking this review in November 2016, that: “I will keep an open mind for the time being about what types and levels of cases should fall within such a regime” It was therefore interesting to listen to clues as to the extent his views had hardened or softened compared with his original position. Firstly, there can be no doubt that he will look to extend fixed fees across the fast-track.  Sir Rupert has repeatedly stated that the missing piece of his original reforms was the fact this was not done originally. In terms of impact: For low value commercial disputes, claims under £10,000 currently fall into the small claims track. Extending fixed costs into those claims which fall between £10,000 and £25,000 is perhaps not dramatic. The two notable areas of personal injury work that currently fall outside fixed costs are noise induced hearing loss claims and holiday claims. In the past, this probably represented on a relatively modest proportion of the costs market.  However, given earlier reforms have sucked such a large part of the personal injury market into fixed fees, these probably represent a more significant proportion of the surviving work.  Certainly, those costs firms that undertake work in this area will feel the impact and this will inevitably squeeze the profits of those claimant solicitor firms heavily reliant on these areas of work. Sir Rupert was always of the view that fixed costs, once his initial reforms had bedded-in, should be extended into the “lower reaches of the multi-track”.  The most interesting comment of his recent speech was that: “’lower value’ has different meanings according to context. In the mercantile courts (I am told)...

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Additional liabilities and proportionality

By on Mar 1, 2017 | 1 comment

One of the current battlefields in costs is over the issue of whether additional liabilities should be included (where still recoverable) when considering proportionality. One would have thought this was at least one area where there was no room for dispute as there is an express transitional provision dealing with this issue at CPR 48.1(1): “The provisions of CPR Parts 43 to 48 relating to funding arrangements, and the attendant provisions of the Costs Practice Direction, will apply in relation to a pre-commencement funding arrangement as they were in force immediately before 1 April 2013, with such modifications (if any) as may be made by a practice direction on or after that date.” To what extent the current debate is down to poor drafting or the ingenuity of lawyers is a matter I will leave to others. It is usually a mistake to try to determine the merits of an argument based on the number of people who share it, even to the extent to which they are experts.  As matters currently stand, this seems to be a relatively evenly balanced point based on the first instance judgments that are circulating, with the slight edge going in favour of the view that additional liabilities are to be considered separately (or does a Senior Costs Judge count for double?). Senior Costs Judge Master Gordon-Saker in BNM v MGN Limited [2016] EWHC B13 (Costs): “When applying the new test of proportionality, the court need not consider the amount of any additional liability separately from the base costs.” Master Simons in Rezek-Clarke v Moorfields Eye Hospital NHS Foundation Trust [2017] EWHC B5 (Costs): “the Claimants submit that when looking at the question of proportionality I should look separately at profit costs and additional liabilities. That may well have been the case prior to the 1 April 2013 but in my judgment the position is now different. Costs must include those costs that are claimed in the Bill of Costs that are presented to the Court.” Master Rowley in King v Basildon & Thurrock University Hospitals NHS Foundation Trust [2016] EWHC B32 (Costs): “when considering whether the costs in this case were proportionate, the relevant costs to consider … were in my judgment...

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Challenging costs at detailed assessment subject to a costs management order

By on Mar 1, 2017 | 2 comments

The decision by Regional Costs Judge Lumb in Merrix v Heart of England NHS Foundation Trust [2016] EWHC B28 (QB) caused many to question the point of costs budgeting. The issue the court faced was: “to what extent, if at all, does the costs budgeting regime under CPR Part 3 fetter the powers and discretion of the costs judge at a detailed assessment of costs under CPR part 47.” At the risk of oversimplifying a very carefully reasoned decision, he concluded that a costs budget acted simply as a cap (in the absence of a “good reason” to allow more) on the recoverable costs but that any costs up to the level of that cap could be challenged on detailed assessment in the normal manner. Unsurprisingly, perhaps, that decision has now been overturned on appeal: Merrix v Heart of England NHS Foundation Trust [2017] EWHC 346 (QB). The wording of the relevant rule, CPR 3.18, reads: “In any case where a costs management order has been made, when assessing costs on the standard basis, the court will –  (a) have regard to the receiving party’s last approved or agreed budget for each phase of the proceedings; and  (b) not depart from such approved or agreed budget unless satisfied that there is good reason to do so.” On appeal, Mrs Justice Carr concluded: “the answer to the preliminary issue is as follows: where a costs management order has been made, when assessing costs on the standard basis, the costs judge will not depart from the receiving party’s last approved or agreed budget unless satisfied that there is good reason to do so. This applies as much where the receiving party claims a sum equal to or less than the sums budgeted as where the receiving party seeks to recover more than the sums budgeted.  … …the central message is that set out in CPR 3.18, namely that the approved or agreed budget will bind the parties at the detailed assessment stage (on a standard basis) whether the costs claimed are for less than, equal to or more than the sums approved or agreed by that budget, unless there is good reason otherwise.” (The indemnity principle would stop greater costs being recovered than...

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