Legal Cost Specialists

detailed assessment

Recovering shortfall in costs from client’s damages

By on Mar 14, 2022 | 0 comments

During the rough-and-tumble of a typical detailed assessment hearing, where the judge will be making multiple ex tempore decisions, it is routine to hear criticisms of the amount of time claimed by the receiving party and/or criticisms of certain items that have been included within a bill of costs. It is much less usual to see such criticisms make their way into a reserved/reported judgment as such decisions are usually dealing with technical points of principle. The reserved judgement of Senior Master Gordon-Saker in ST v ZY [2022] EWHC B5 (Costs) will therefore make awkward reading for Irwin Mitchell (“IM”), the solicitors concerned. The judgement was handed down, in part, expressly for release to BAILII (ie for wider reading). The Court was dealing with a personal injury case where the successful claimant’s solicitors were seeking to recover a costs shortfall from the claimant’s damages. The very fact that seeking such recovery was viewed as being unusual was highlighted: “In the years since the 2012 Act came into force, some solicitors have sought to recover their success fees from their clients when acting for children or protected parties. In the Costs Office I am aware of only two firms of solicitors who, in such cases, regularly seek to recover the fees which exceed the basic charges recovered between the parties.” In relation to the instructions that had been given to IM’s counsel in advance of the detailed assessment hearing: “It was … unfortunate that on the day that the bill was listed for detailed assessment [IM’s counsel] told me that he had not been provided with the full set of IM’s papers in advance of the hearing, although the court had been provided with them electronically. On the previous two occasions when I have listed IM’s bills for detailed assessment under r.46.4(2), counsel had not been provided with the full set of papers. To misquote Lady Bracknell, once would have been a misfortune. Thrice begins to look like a policy.” In terms of some of the items claimed within the bill, where any shortfall in recovery was being sought from the client: “Quite why it would be reasonable to charge for even a junior fee earner to spend 48 minutes researching the...

Read More

Seeking costs from client in excess of approved budget – ST v ZY

By on Mar 7, 2022 | 0 comments

Given the Court of Appeal recently adjourned the case of CAM Legal v Belsner, we will have to wait some time for guidance from the higher courts on the issue of informed consent when deductions are made from damages in personal injury cases. However, that has not stopped important developments elsewhere on the same issue and particularly where costs are incurred in excess of an approved costs budget. CPR 46.9(3) incorporates an element of informed consent where solicitor/own client costs are being assessed: “Subject to paragraph (2), costs are to be assessed on the indemnity basis but are to be presumed – (a) to have been reasonably incurred if they were incurred with the express or implied approval of the client; (b) to be reasonable in amount if their amount was expressly or impliedly approved by the client; (c) to have been unreasonably incurred if – (i) they are of an unusual nature or amount; and (ii) the solicitor did not tell the client that as a result the costs might not be recovered from the other party.” In ST v ZY [2022] EWHC B5 (Costs), the Court was dealing with a personal injury case where the successful claimant’s solicitors were seeking to recover a costs shortfall from the claimant’s damages. At the outset, and during the claim, the claimant had been advised that there would be a shortfall in costs recovery. The claimant had also been given an estimate of the likely level of that shortfall. At the conclusion of the matter, that estimate proved to be broadly accurate. At this stage, it might be thought that the claimant must be taken to have given, at least implied, approval for those costs that were in excess of that which might be recovered from the other party. The problem for the solicitors was that much of the shortfall was as a consequence of the costs incurred by the solicitors being significantly in excess of the last approved costs budget in respect of a number of phases. During the inter partes detailed assessment, the solicitors were unable to put forward a “good reason” to depart upwards from the last approved budget. This, in part, explained a large proportion of the...

Read More

Recoverability of court fees where fee remission available – Gibbs v King’s College NHS Foundation Trust

By on Dec 21, 2021 | 0 comments

Significant costs, and much valuable court time, is taken up re-arguing identical points of principle in costs litigation due to the absence of a binding authority.  So it is with the issue of the recoverability of court fees. An example is where a claimant pays court fees and subsequently seeks to recover those from the defendant in circumstances where the claimant was of limited means and would have been entitled to a fee exemption as part of the fees remission scheme.  Is it reasonable for a claimant who is or may be entitled to court fee remission to forego that benefit and pass the costs of the court fees onto a defendant as part of a claim for costs? There was recently an interesting blog post from costs barrister Andrew Hogan setting out the argument from a claimant’s perspective.  The key arguments included: As a matter of legal principle, a claimant is entitled to require a defendant wrongdoer to pay for the damages caused by their wrongdoing and to refuse other forms of support or provision which would have the practical effect of reducing the defendant’s liabilities. In the context of mitigating damages, the case law is against the argument that a claimant is obliged to claim state support to mitigate a wrongdoer’s liability as the claimant had a right to claim damages from the wrongdoer without any requirement to mitigate her loss by reliance on the public purse. It is reasonable for a claimant to prefer self-funding and damages rather than provision at public expense, on the simple ground that he or she believes that the wrongdoer should pay rather than the taxpayer and/or council tax payer. In other words, it is not open to a defendant to say that a claimant who does not wish to rely on the State cannot recover damages because he or she has acted unreasonably. The reason why there is a fee remission scheme contained in the Civil Proceedings Fees Order is to increase access to justice for indigent litigants. It is not there to provide a windfall for the insurance industry, nor to deprive the courts of their proper fees, where there is an insured defendant well able to pay those...

Read More

Points of Dispute and electronic Bills of Costs

By on Nov 29, 2021 | 0 comments

A (minority) of electronic Bills of Costs that I see follow the Association of Costs Lawyers’ template e-bill. This Bill enables Points of Dispute to be incorporated directly into the electronic spreadsheet. For certain Bills, there may be advantages to incorporating Points of Dispute into the Bill, but I usually prepare Points of Dispute as a separate paper document.  Often, when this happens, the other side’s Replies furiously complain about the failure to include the Points of Dispute within the e-bill. This is curious. The ACL e-bill is not the official model electronic bill.  That is Precedent S (v2.0.1).  Parties are free to use “another spreadsheet format” so long as it complies with various mandatory requirements.  However, Precedent S is the approved model.  Precedent S does not have a column for incorporating Points of Dispute.  It was therefore not anticipated by the rule makers that Points of Dispute are to be incorporated into the electronic Bill. As to Points of Dispute, PD 47 para.8.2 states: “Points of dispute must be short and to the point.  They must follow Precedent G in the Schedule of Costs Precedents annexed to this Practice Direction, so far as practicable.” Precedent G is not an electronic spreadsheet.  It is clearly intended to be a paper document. Incorporating Points of Dispute into an electronic Bill is not following Precedent G.  Incorporating Points of Dispute into an electronic Bill is, on the face of it, in breach of the rules and would render the Points of Dispute defective.  No doubt, to the extent to which a court finds a combined Bill/Points of Dispute helpful, they would not take issue with the failure to follow Precedent G.  It would certainly be wholly unattractive for a party who had used the ACL e-bill to then object to Points of Dispute being incorporated into the bill. However, it is wholly misplaced for a party who fails to utilise Precedent S to then complain that the other party has followed the mandatory requirement to use Precedent...

Read More

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...

Read More

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...

Read More