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Refusing offers of ADR

By on Dec 8, 2015 | 4 comments

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. Edited with BlogPad...

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Court fees in provisional assessment cap

By on Dec 2, 2015 | 7 comments

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...

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More transparent bill of cost

By on Nov 14, 2015 | 2 comments

Those given the job of trying to design the new bill of costs format have been cursed with a herculean task (probably the legal equivalent of mucking out the Augean stables). At the heart of the problem is Lord Justice Jackson’s view that: “The bill format must be compatible with existing time recording systems, so that at any given point in a piece of litigation a bill of costs can be generated automatically”. This has inevitably led to all the focus being on J-Codes so bills can be (semi-)automatically generated based on case management software. However, it is worth considering the three requirements that he believed would “have to be satisfied” so we can consider to what extent the current bill produced for the pilot scheme meets those requirements. The first requirement was: “The bill must provide more transparent explanation than is currently provided, about what work was done in the various time periods and why.” I may have missed something here, but so far as I can tell, the pilot model bill does nothing to attempt to address this issue. To be fair, I am not really sure what Jackson LJ had in mind. When I first saw this statement, my heart sank. Narratives to current bills are often verbose, selective, misleading twaddle. The idea that receiving parties should be encouraged to provide more “why” was never a great one. Certainly, some badly drafted bills lack certain information that common sense would suggest could, and should, be helpfully added. If there is a claim for work interviewing a witness despite the fact no evidence from that witness was ever served, provide in the bill at least a brief explanation as to what evidence it was hoped this witness could produce and why no actual evidence was served. The same goes, for example, to expert’s evidence not served. But, do we really need bills to pre-emptively seek to explain and justify work where there is every possibility no challenge will be made? Nor is it obvious how the new bill provides a more transparent explanation (if that was lacking from the current version) as to “what work was done”. The one advantage of the requirement for bills to be...

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Costs budgets and necessary costs

By on Oct 21, 2015 | 6 comments

It has been suggested that in the case of Stocker v Stocker [2015] EWHC 1634 the most interesting observation by Mr Justice Warby was: “I readily acknowledge the importance of ensuring that the costs budgeting process does not result in a party being unable to recover the costs necessary to assert their rights.” I would entirely agree if it were not for the fact the judge has so clearly misdirected himself in relation to the post-Jackson approach to costs. CPR 1.1(1): “These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost.” CPR 44.3(2)(a), relating to assessment on the standard basis: “Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred” The fact a case is subject to costs management does not mean that it is therefore immune to the new proportionality test. The same approach surely applies to both budgeting and assessment. To ensure proportionality, in both cases a figure may be allowed that is less than the “necessary” to conduct the case. But, perhaps it is me that is wrong. Perhaps a judge setting a budget is only concerned with fixing a figure that allows for all “necessary” work to be done. If that figure is ultimately found to be disproportionate for the facts of the case, it is then for the judge on assessment to reduce the costs below the approved budget on the basis that this amounts to a “good reason”. If that is so, it undermines two of the purported benefits of costs management: certainty for the parties as to the extent of the adverse costs they are likely to face and avoiding the need for detailed assessment. Having said that, at this stage nothing would surprise me about the implementation process....

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