Be costs ready at trial if your claim is being heard in the SHORTER AND FLEXIBLE TRIALS SCHEMES

In the 100th update to the CPR, PRACTICE DIRECTION 57AB for SHORTER AND FLEXIBLE TRIALS SCHEMES has been published and is implemented from 1 October 2018. This Practice Direction supplements CPR Part 57A.

A claim in the Shorter Trials Scheme may be started in any of the Business and Property Courts.

Costs are to be assessed by way of summary assessment, save in exceptional circumstances. Furthermore, the court can order, or parties can agree that costs management applies and if a costs management order is made costs will be summarily assessed on a phase by phase basis.

Costs

2.56 – CPR 3.12 shall not apply to cases in the Shorter Trials Scheme, unless the parties otherwise agree. If at the outset of the proceedings the parties agree that Costs Management should apply, they should seek an order to that effect at the CMC and apply for directions as to when budgets should be subsequently exchanged, discussed and submitted for the court’s approval.

2.57 – Within 21 days of the conclusion of the trial, or within such other period as may be ordered by the court, the parties shall each file and simultaneously exchange schedules of their costs incurred in the proceedings.

2.58 – Such schedules should contain sufficient detail of the costs incurred in relation to each applicable phase identified by Precedent H to the Costs Budgeting regime to enable the trial judge to be in a position to make a summary assessment thereof following judgment.

2.59 Save in exceptional circumstances—

(a) the court will make a summary assessment of the costs of the party in whose favour any order for costs is made; (b) rules 44.2(8), 44.7(1)(b) and Part 47 do not apply.

Any questions? Please contact me at sue.fox@clarionsolicitors.com or call me on 0113 336 3389.

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The Disclosure Pilot Scheme – what roles do costs estimates and precedent H costs budgets have?

Details of the disclosure pilot scheme are now available on the MOJ website, with a large focus of the scheme centring around saving costs – accurate costs estimates are essential (PRACTICE DIRECTION 51U – DISCLOSURE PILOT FOR THE BUSINESS AND PROPERTY COURTS).

In terms of costs, the pilot scheme reveals that costs estimates are now required to support different disclosure proposals; costs estimates of the intended disclosure exercise are required; estimating the costs of disclosure can be deferred until after the precedent H costs budget; costs don’t necessarily follow the event and be prepared for adverse costs orders being made. Be ready to be able to justify any estimates at a hearing and ensure that the estimates are accurate enough to be transferred across to the precedent H costs budget. Please see below some important paragraphs of the pilot scheme that relate to costs and estimates:

Costs don’t necessarily follow the event.

Para 9.9 – In an appropriate case, the court may order that the question of which party bears the costs of disclosure is to be given separate consideration at a later stage rather than the costs being treated automatically as costs in the case;

Para 10.3 – The parties’ obligation to complete, seek to agree and update the Disclosure Review Document is ongoing. If a party fails to co-operate and constructively to engage in this process the other party or parties may apply to the court for an appropriate order at or separately from the case management conference, and the court may make any appropriate order including the dismissal of any application for Extended Disclosure and/or the adjournment of the case management conference with an adverse order for costs.

Costs estimates are required to support different disclosure proposals.

10.6 – Having agreed the List of Issues for Disclosure and exchanged proposals on Model(s) for Extended Disclosure, the parties should prepare and exchange drafts of Section 2 of the Disclosure Review Document (including costs estimates of different proposals, and where possible estimates of likely amount of documents involved) as soon as reasonably practicable and in any event not later than 14 days before the case management conference.

Costs estimates of the intended disclosure exercise are required.

22.1 – The parties are required to provide an estimate of what they consider to be the likely costs of giving the disclosure proposed by them in the Disclosure Review Document, and the likely volume of documents involved, in order that a court may consider whether such proposals on disclosure are reasonable and proportionate (as defined in paragraph 6.4). These estimated costs may be used by the court in the cost budgeting process.

Estimating the costs of disclosure can be deferred until after the precedent H costs budget.

22.2 – In cases where the cost budgeting scheme applies, if it is not practical to complete the disclosure section of Form H in relation to disclosure prior to the court making an order in relation to disclosure at the case management conference, the parties may notify the court that they have agreed to postpone completion of that section of Form H until after the case management conference. If they have agreed to postpone they must complete the disclosure section within such period as is ordered by the court after an order for disclosure has been made at the case management conference. Where possible the court will then consider (and if appropriate, approve) that part of the cost budget without an oral hearing.

If the approach to Extended Disclosure is not fully agreed, the parties should be ready to provide more detailed information at the CMC as to how their global estimates were arrived at and the impact upon them of particular requests for Extended Disclosure.

Any questions? Please contact me at sue.fox@clarionsolicitors.com or call me on 0113 336 3389.

The Pilot Scheme on Disclosure in the Business and Property Courts – how this affects Case Management

News story imageThe Judiciary have announced and published a proposed 2 year pilot scheme regarding disclosure across the Business and Property Courts (there are some exceptions that the pilot scheme will not apply to). There are some aspects of the pilot scheme that relate to Costs Management – there will be no obligation to complete the precedent H in relation to disclosure prior to the case management conference. In cases where the cost budgeting regime applies, following the disclosure order that has been made at the case management conference, the parties must complete the disclosure section of the precedent H within the period ordered by the court. The purpose of this delay is to enable parties to be able to reach an informed view regarding the likely costs of the disclosure exercise. A further short hearing may be necessary to approve those costs.

Of course, the decision regarding disclosure may have an impact on other stages within the budget resulting in additional amendments to the budget. The Judiciary recognise that there may be problems surrounding this proposal and have suggested that this may need further consideration, their intention seems to be that the calculations surrounding disclosure are based on sound footing rather than what can sometimes be crystal maze thinking in terms of the estimation of the number of documents that will require considering.

Any questions? Please contact me at sue.fox@clarionsolicitors.com or call me on 0113 336 3389.

 

Are you J Code ready?

The J-Codes are a set of electronic codes proposed by Jackson LJ, where time is recorded in phase, task and activity. These codes were first published in July 2014 and over 3 years later the MOJ have now included guidance in their 92nd update to the CPR regarding phase, task and activity time recording. The MOJ have decided not to adopt the full J-Code structure proposed by Jackson LJ and have published an alternative and apparently simpler version of the Phase, Task, Activity (PTA) approach. That said, J-Codes can still be adopted or the Phase, Task, Activity (PTA) method can be used, it is down to choice.

The electronic bill of costs is mandatory for all Part 7 multi-track claims from 6 April 2018 and therefore Phase, Task and Activity codes (PTA codes) are crucial.  J Codes/ PTA codes however are not mandatory, although it is expected that any additional costs associated with the drafting of the electronic bill of costs due to PTA code time recording not being adopted, may not be recoverable on an inter-partes basis.

This only applies to work undertaken from 6 April 2018.
Recording time in line with phase, task and activity will at last enable budgets to be monitored with ease.

Any questions? Please contact me at sue.fox@clarionsolicitors.com or call me on 0113 336 3389.

Proportionality and budget comparisons

Budgets were once again considered in the case of Red and White Services Ltd v Phil Anslow Ltd & Anor [2018] EWHC 1699 (Ch). This was a competitions claim about a bus company and its parking bays. In summary, the Claimant had the use of more parking bays than the Defendant, the Claimant sued the Defendant for trespass and the Defendant in turn brought, by way of a counterclaim, a competitions Act law claim against the Claimant and pursed a Part 20 Competitions Act claim against the Third Party.

All parties were ordered to prepare budgets with the Claimant’s and Third Party’s budgets being in similar amounts, each in the region of £1.5 million; and the Defendant’s budget coming in at just less than £300,000.00.

The Defendant not surprisingly submitted the Claimant’s and the Third Party’s budgets were seriously disproportionate, given that the damages in this claim were likely to be in the region of £80,000 to £120,000.

Mr Justice Birss commented that “It is essentially, although these are my words not counsel’s, an attempt to create figures for costs which are unrealistically low for the purpose of budgeting and to act as an unfavourable contrast to the figures from the claimant and the third party”

He considered proportionality and commented…

“I do not regard the budget costs figures in this case as proportionate or reasonable, particularly given the relatively limited nature of the disputes between the parties. The individual dispute which is worth the most is the overpayment/overvaluation claim. That will involve some quantity surveying evidence, although experience of such disputes leads me to suspect that this will not necessarily be extensive: the various valuation items in issue will probably fall into a handful of types or categories, so that once an expert has addressed the leading items in each category, there will be little left for the expert to do. The defects are a relatively modest element of this claim, so that even if they required both M and E and architectural experts, the involvement of such experts ought to be relatively limited.

He further commented that ..

“It is a matter for the defendant to have chosen to join both of those independent companies and therefore the fact that the two budgets together, each of £1.5 million, mean that the defendant could be bearing a cost risk of £3 million, does not seem to me to be a matter of great significance on the facts of this case. The individual budgets are the figures I need to consider, not the net risk to the defendant of aggregating the two.”

The judge, after applying the proportionality test and refusing to make comparisons with the Defendant’s budget, approved budgets for the Claimant and Third Party each in a sum not exceeding £800,000.00.

Any questions? Please contact me at sue.fox@clarionsolicitors.com or call me on 0113 336 3389.

 

 

 

 

What role does the hourly rate play in the budget?

This continues to spark debate. The rules states that the hourly rate cannot be set (CPR 3 PD 3E, para 7.10), but further explain that the constituent elements of the budget should be considered when assessing the amount to approved (CPR 3 PD 3E, para 7.3). So, with the hourly rate falling under the umbrella of a ‘constituent element’ the hourly rate can be taken into account, but importantly, not fixed. There will usually be a number of factors that contribute to a reduction of the budget and on occasions the level of the hourly rate may be one of those contributing factors.

Parties are often working blind in respect of the logic that the case management Judge applied. If the court did take the hourly rate into account when reducing the amount of estimated costs sought, and no evidence exists to support the Judge’s thought process, what happens when the costs are finally assessed?

At the moment there is conflicting case law in this regard.

In RNB v London Borough of Newham [2017] EWHC B15 (Costs) Deputy Master Campbell said “If (as it is the case) the hourly rate is a mandatory component in Precedent H which is not and cannot be subjected to the rigours of detailed assessment at the CCMC, it makes no sense if it is automatically left untouched when the rates for the incurred work are scrutinised at the ‘conventional’ assessment.”

“Such an approach would offend against the guidance given in Harrison at paragraph 44. Indeed, as [counsel for the defendant] points out, it is only on that occasion that a paying party has an opportunity to challenge the rate.”

This was therefore a “good reason” to depart from the costs allowed in the claimant’s last approved budget.”

However in  Nash v Ministry of Defence [2018] EWHC B4 (Costs) –  Master Nagalingam found that “a reduction in hourly rates of the incurred costs is not a good reason to depart from the budget in respect of the budgeted (future) costs”.

And finally, in Jallow v Ministry of Defence [2018] EWHC B7 (Costs) Master Rowley found “that there is no good reason to depart from the budget by virtue of the reduction to the hourly rates in this case”.

How can the legal profession employ the rules as currently drafted? Is it possible to gain clarity and a clearer view of the blind logic/working approach adopted by the Judges? If, during the course of the CMC, the Judge does comment on the hourly rate, ask him/her to record a note on the case management order that the hourly rate was considered when approving the budget and that it played a role in the reduction to the rates.

Any questions? Please contact me at sue.fox@clarionsolicitors.com or call me on 0113 336 3389.

 

 

Various Claimants v MGN – Some much needed clarity!

 

Bespoke budgets in multi-party litigation, proportionality, updating the incurred costs included in the budget prior to the CCMC, including the costs of interim hearings in the budget, disapplying the 2% cap for costs management and the resourcing of fee earners were all points that were dealt with at the most recent CCMC in the latest phone hacking cases (Various Claimants including (1) John Leslie (2) Chantelle Houghton v MGN Limited [2018] EWHC 1244 (Ch)).

MULTI-PARTY LITIGATION – The court’s approach to this multi-party litigation avoided the need for multiple costs management hearings for similar claims. The court applied a structure that was similar to a GLO and directions were made regarding managing the costs of the claim. Common and individual costs were split, and Costs Management was dealt with by the application of template budgets for individual costs and common costs. There were 3 categories of claims for the individual costs and the court could order that there be bespoke individual budgets in place of the template budgets. In this decision the court agreed that bespoke budgets were applicable to two of the Claimants, Leslie and Houghton.

THE BUDGET AND PROPORTIONALITY – Chief Master Marsh applied the proportionality test to the Claimants’ budgets commenting that “I would emphasise that the court is not required to have regard to the constituent elements of each budget phase (it may do so) and the court’s task is to decide whether the total for each phase falls within a range of reasonable and proportionate costs…. And the court is not looking to establish what the budget figure should be objectively ascertained, but rather a figure that falls within the applicable range applying the reasonableness and proportionality tests alongside each other.”

“The court must apply both the reasonableness and proportionality tests, but the former may yield to the latter. And, in practice, although PD3E, paragraph 7.3, requires the court to consider each budget phase separately, and therefore to consider the proportionality of each phase total, the task has to be undertaken with an initial overall review of proportionality by reference to the factors in CPR44.3(5)…

The costs in the budget phases must not only be reasonable but must also bear a reasonable relationship with the proportionality factors I have indicated. The proportionality factors that are relevant are to be taken together and given notional weight as a whole. In these cases, the sums in issue are not large for High Court claims when taken in isolation. But when the proportionality factors are put together, the financial value of the claims proves to be relatively unimportant because of the wider factors. The budgets substantially exceed the sums in issue but is not a reason to conclude that the overall budgeted sums and the totals per phase are disproportionate.

It seems to me that the wider factors I have summarised, in particular the public importance and test case factors, will have the effect that if the costs are reasonable they are proportionate. That conclusion chimes with the approach the parties have adopted and avoids the court wielding a concept of uncertain application.”

UPDATING INCURRED COSTS – There was a considerable time period between the date that budgets were required to be filed and when the CCMC was listed. Mr Leslie updated his budget prior to the CCMC to include incurred costs up to 1 May 2018, however the other parties did not. The Master recognised the problems of one party updating the incurred costs and the other parties not, explaining that this approach resulted in Mr Leslie having “ousted the court’s jurisdiction to consider a significant amount of expenditure” and consequently found that “the relevant date for the purposes of incurred costs as being 17 January 2018.”

This can be avoided by agreeing a date that the incurred costs are included up to and in turn obtaining the court’s permission to update the incurred costs.

HOURLY RATES – Chief Master Marsh refused to be drawn into the debate regarding hourly rates and instead considered the allocation of work in the budget between different grades of fee earner and the total figure claimed for each phase was of greater importance.

INTERIM HEARINGS – An amount for specific disclosure had been included in the disclosure phase, the Master found that the inclusion of interim hearings in the budget were wrong in principal as they may be subject to an inter partes costs order, the costs were moved into the contingency phase.

COSTS MANAGEMENT COSTS – The costs associated with costs management are subject to a 2% cap. Chief Master Marsh was asked to consider lifting the cap, he agreed on the basis that the complexities surrounding the multi-party litigation warranted exceptional circumstances in this case.

Any questions? Please contact me at sue.fox@clarionsolicitors.com or call me on 0113 336 3389.