Legal Cost Specialists

Posts by GWS Law

Assessing costs on the indemnity basis

By on Aug 2, 2021 | 0 comments

The recent decision of Louis Dreyfus Company Suisse S.A. v International Bank of St. Petersburg (Joint-Stock Company) [2021] EWHC 1039 (Comm) contains a short passage dealing with the approach on detailed assessment where costs are to be paid on the indemnity basis. The decision was reported in Costs Law Reports.  (Copies of their latest reported judgments are available free for a short period on their website, where you can also sign up to their monthly newsletter.) The headnote to this decision included: “On taxation the costs would be heavily taxed down, even after the application of the receiving party’s presumption that the costs had been reasonably incurred and any doubt was to be given in its favour under CPR 44.3(3).” However, there is nothing in the judgment itself that refers to there being a presumption that costs have been “reasonably incurred”. The relevant part of the judgment reads: “CPR 44.3 and 44.4 provide that where costs are to be assessed on an indemnity basis, the court (1) will not allow costs which have been unreasonably incurred or are unreasonable in amount; (2) will have regard to all the circumstances in deciding whether costs were unreasonably incurred or unreasonable in amount; and (3) will resolve any doubt which it may have as to whether costs were unreasonably incurred or were unreasonable in amount in favour of the receiving party (“the receiving party presumption”).” It is more than simple semantics to note that there is a crucial distinction between “any doubt” being resolved in favour of the receiving party and whether there is a “presumption” that any costs have been reasonably incurred.  This judgment supports the former (because that is what the rule says) but not the latter. Interestingly, comments closer to the summary in the headnote were made by Woolf CJ in Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson (a firm) [2002] EWCA Civ 879, dealing with the pre-Jackson rules, addressing the distinction between costs on the standard basis and the indemnity basis: “The differences are two-fold. First, the differences are as to the onus which is on a party to establish that the costs were reasonable. In the case of a standard order, the...

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Costs budgets when costs on the indemnity basis

By on May 26, 2021 | 0 comments

When is it preferable to have a costs order on the standard basis rather than on the indemnity basis?  Potentially, where a costs management order has been made. CPR 3.18(b) provides:  “In any case where a costs management order has been made, when assessing costs on the standard basis, the court will not depart from such approved or agreed budgeted costs unless satisfied that there is good reason to do so” Although the decision in Barts Health NHS Trust v Salmon [2019] took a different approach, the generally accepted position is that, all other things being equal, a receiving party will recover their costs up to the amount of the last approved budget. Therefore, for example, if a budget (in respect of estimated costs) is approved at £100,000 to take a matter to trial, and the case settles at trial, if the receiving party has incurred costs of £95,000 they should expect to recover those costs in full.  The exception is where the paying party can identify a “good reason” to depart from the approved budget.  However, crucially, this only applies to an assessment on the standard basis. If costs are payable on the indemnity basis, CPR 3.18(b) has no application.  On detailed assessment the court will assess the costs on a line-by-line basis applying just the test of whether the court considers the costs claimed to be reasonable.  The receiving party will benefit from the fact that any doubt will be resolved in their favour and proportionality will not apply.  However, the benefit of the doubt conferred by CPR 3.18(b) will not apply if they are within budget.  In the above example, if a court assesses the reasonable costs as being £90,000, that is all they will allow, notwithstanding the approved budget of £100,000. From the paying party’s perspective, there is no “good reason” hurdle to overcome. It is therefore perfectly possible for a receiving party to find themselves at a disadvantage with an indemnity basis costs order in their favour rather than a standard basis one.  Parties might wish to be careful before they push too eagerly for a costs order on the indemnity...

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Part 36 offers in detailed assessment – Best v Luton & Dunstable Hospital NHS Foundation Trust

By on May 21, 2021 | 0 comments

The costs subcommittee of the Civil Procedure Rule Committee (CPRC) is apparently due to consider whether it should be possible to make Part 36 offers in relation to the costs of detailed assessment. This follows the recent decision of Master Leonard in Best v Luton & Dunstable Hospital NHS Foundation Trust [2021] EWHC B2 (Costs) whereby he concluded a Part 36 offer could not be made in respect of the costs of the detailed assessment proceedings (although Part 36 offers can clearly be made in respect of the costs claimed in the Bill). It will be a missed opportunity if the CPRC considers this narrow issue alone. Part 36 offers in detailed assessment proceedings create a unique imbalance between receiving parties and paying parties. Normally, the Part 36 benefits to claimants will only crystalise if a claimant wins on a Part 36 offer at trial.  In relation to substantive matters, there is the process of disclosure.  By the time a matter reaches trial, and usually long before then, both parties will have received disclosure of all relevant evidence and documents from the other side and will therefore be on a broadly equal footing in terms of considering the reasonableness of any Part 36 offers.  The Part 36 sanctions therefore bite when a defendant has failed to accept a reasonable offer in circumstances where they were in a fair position to judge the reasonableness of that offer. In detailed assessment proceedings, the receiving party is treated as the claimant for the purposes of Part 36.  However, unlike in substantive proceedings, there is no disclosure process to the paying party of any kind during detailed assessment proceedings. A paying party is required, for example, to consider the reasonableness of the number of communications and attendances on the claimant without sight of any of those communications or attendance notes.  A paying party is required to consider the reasonableness and quantum of advices from, and conferences with, counsel, often with no information from the Bill or fee notes as to what they related to, much less copies of the advices or attendance notes themselves.  And on it goes. Paying parties are at a material disadvantage to the usual position that arises when Part...

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Cost of travelling to conferences

By on May 14, 2021 | 0 comments

As far back as 2005, Lord Justice Brooke observed in Black v Pastouna & Anor [2005] EWCA Civ 1389 that: “It is incumbent on those advising parties appearing before this, or any, court to take all the steps they can in accordance with CPR Rules 1.1 and 1.3 to reduce the cost of the proceedings. This includes taking advantage of such cost-saving facilities as video-conferencing whenever they are available and it is appropriate to use them.” It is fair to say that this was probably observed more in the breach than the observance. Eighteen months ago, many solicitors would have been astounded at the suggestion that it might be possible to hold a conference with the client and/or counsel and/or experts other than around a table with everyone in attendance. As a consequence, £1,000s of additional costs were routinely incurred in travel time and costs for each conference. Now, conferences, JSMs, and even full trials, are routinely being conducted remotely. It will no longer be plausible to argue that a conference needs to be face-to-face to be effective. However, the technology to make this happen has not been invented in the last eighteen months. Its existence was recognised in 2005. The technology has been in most people’s pockets for at least the last decade. It is not really much of an excuse to argue that it is only because of Covid-19 that solicitors realised what was possible and available. For any existing, or future, claims for costs, receiving parties are likely to face an uphill struggle justifying the cost of travel to...

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Costs podcast

By on May 12, 2021 | 0 comments

The latest podcast from the Practico “Costs chat with friends” series features Andrew Hogan and covers a number of interesting costs issues.  Available via: Video – https://youtu.be/JluOwGBASyU Audio Soundcloud – https://soundcloud.com/user-144902971/2021-05-05-costs-chat-with-friends-andrew-hogan-with-jeremy-morgan-qc-and-andy-ellis Audio Spotify  – https://open.spotify.com/episode/4xffxvZwu6CN2l4RbCgkc1?si=383bfae2ecbc4a3b Audio iTunes https://podcasts.apple.com/gb/podcast/practico-the-podcost-series/id1445931706#episodeGuid=tag%3Asoundcloud%2C2010%3Atracks%2F1046097754 A pleasant and convenient way to pick up some free CPD...

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