The case of Tibbles v SIG PLC , dealt with issues of allocation and ‘prompt recourse’ which directly affected the Claimant’s costs recovery.
The Court originally allocated the matter to the small claims track, which the Claimant’s solicitor disputed and the matter was successfully reallocated to the fast track. The Claimant was successful at Trial and was awarded costs ‘on the standard basis to be subject to detailed assessment, if not agreed’. The Claimant subsequently prepared a bill of costs and commenced detailed assessment proceedings. The Defendant argued that the Claimant was only entitled to small claims track costs whilst the matter was within the remit of the small claims track and entitled to fast track costs post allocation to that track.
Within the detailed assessment proceedings, the Claimant made an application to seek an order under CPR 3.1(7) or CPR 40.12, to vary the order and reallocate the entire matter to the fast track. The District Judge varied the order accordingly. The Defendant successfully appealed that decision and the Claimant therefore appealed to the Court of Appeal.
The Court of Appeal upheld the decision. In essence, it held that the Claimant should have applied more promptly to vary the order and amending the order would be unfair on the Defendant who had relied on it.
What was interesting in the Judgment was what Rix LJ said at paragraph 48:
“There is nothing in civil procedure about which solicitors can justifiably be expected to know as much, as matters of costs”.
Whilst the above case relates to a procedural issue, it does feed into a topic which we (as a legal costs team at Clarion) regularly encounter difficulties; orders not being prepared properly or failing to include basic, but salient points.
Here are some basic costs related points that litigators should always think about when preparing consent orders, tomlin orders or any costs settlement agreement:
- Pursuant to the above case, think about any track issues. If you do have a case which flips between tracks, then deal with the matter immediately upon reallocation to the higher track. If you fail to do so then maybe not all is lost because you could word the order for costs as follows:
- “The Defendant do pay the Claimants costs (based on fast track costs for the entirety of the case) on the standard basis to be subject to detailed assessment, if not agreed”.
- Always use the words incidental or occasioned by. For example, “the Defendant do pay the Claimant’s costs of and incidental to the Claimant’s application for specific disclosure to be subject to detailed assessment on the standard basis, if not agreed”. The words incidental or occasioned by are very powerful and can in most circumstances broaden the remit of the costs agreement.
- Think about payments on account. Most matters are now budgeted and in light of the decision in ‘Harrison’ payments on account should always be sought. It is much better to receive money sooner, rather than later.
- When dealing with the payment of money always make the date for payment clear. Don’t just include a date, include a time i.e. by 4:00 pm on xxxx date. Also include the words ‘clear funds’. It is much better to receive money which is cleared and immediately accessible rather than a cheque which can take 3-5 days to clear.
- Always ensure that the agreement to pay costs makes clear whether the assessment is on the standard or indemnity basis. If the order is silent, then standard basis is the default. You might be entitled to indemnity costs for a specific period, make it clear in the order or agreement.
- Always include the words “to be assessed, if not agreed”. We have ran successful arguments (acting for the paying party) that an order for costs has not provided for an assessment and the Court therefore did not have the power under the order to hear the detailed assessment.
- Where the matter is subject to fixed costs, you should quantify the amount and include it in the order. Failure to do this can result in paying parties challenging the amount of fixed costs i.e. premature issue of proceedings or certain disbursements are unreasonable. It would be wise to agree the amount of fixed costs and define it in the settlement agreement to prevent such disputes occurring.
- In respect of interlocutory matters, ensure that the order provides for an “immediate” assessment. Failure to do so can create a technical argument that you do not have authority to commence detailed assessment proceedings until the claim has concluded (allowing the paying party to delay payment of the costs). An immediate assessment can create a significant tactical advantage.
- Think about counterclaim costs. It may be that the claim and counterclaim are both successful and therefore the case of Medway Oil and Storage Co Ltd v Continental Contractors Ltd  needs to be considered. However, it may be that you win your claim and successfully defend the counterclaim. Make it very clear (in the order for costs) that the Claimant is entitled to both the costs of the claim and the costs of the counterclaim. Again, lack of clarity could cause confusion and would result in arguments on detailed assessment.
- It is also worth making clear the position in relation to interest. The default position is 8% (see Judgments Act 1938). However, we are increasingly seeing paying parties successfully reduce interest to a much lower rate given that the current Bank of England base rate is 0.5% (please see https://clarionlegalcosts.com/2017/06/20/interest-on-costs/). Therefore, it is advisable for the settlement agreement to state that interest is agreed and notably include a provision that interest is to be calculated at 8% from the date of the order for costs. This provides additional protection, therefore potentially preventing a paying party from attempting to argue a lower rate of interest (and a reduced time period) at a later stage.The inclusion of some of the points highlighted above will create a more robust order for costs and should result in a quicker and more economical compromise with the opponent. What you do not want to do is work hard on a case, win it and then get bogged down in technical costs issues on detailed assessment which could have easily been avoided by a more clear and well drafted final order/agreement.
- The above are just some examples of difficulties that we have seen in the past. There will probably be many more, and if you have any examples, then please feel free to share them through this blog.
This blog was prepared by Andrew McAulay who is a Partner at Clarion and the Head of the Costs and Litigation Funding team. Andrew can be contacted on 0113 336 3334 or 07764501252 or at firstname.lastname@example.org