Coronavirus Update: Bar Council guidance on attendance at Court

The Bar Council has today given further guidance to its members that advocates should not attend hearings in person unless they are “genuinely urgent” and cannot be done remotely. However, it is anticipated that such a hearing will be a rare occurrence.

My standing advice is that where a hearing is listed, practitioners should contact the court as soon as possible and ask for guidance. I recently wrote to the County Court at Huddersfield and asked what procedures are currently in place; I received a response today stating that “all hearings will be adjourned: you will be contacted before the hearing”.

The situation continues to develop rapidly and therefore it is likely that the position in relation to hearings will change.

Matthew Rose is a solicitor in the Clarion Costs Department. You can contact him on 0113 222 3248 or by email at Matthew.Rose@clarionsolicitors.com.

Coronavirus Update: Attendance at Court and “Key Worker” status

The Bar Council has recently announced new guidance for barristers on attendance at Court and on “Key Worker” status. 

Attending Court

HMCTS has informed the bar council that “listing officers are working urgently to let people know what is happening but a good ‘rule of thumb’ is that if the trial is underway, the default is to attend unless the court tells you otherwise, but if the trial has not started the default is to stay away unless told to attend”.

HMCTS is advising in the Magistrates Court, that ‘it is best to attend if you are expecting to work today’.

In my view, where a hearing of any kind is currently listed, practitioners should keep in regular contact with the court to confirm the status of the hearing. For more information about standing advice in relation to hearings as well as some hints for working from home and dealing with the practicalities of hearings you can view my Coronavirus Update video here posted Friday 20th March 2020:

Up-to-the-minute guidance is available from the Courts on the HMCTS website.

Key worker status updated

The government has acknowledged that legal practitioners are fundamental to the running of the justice system and The Department for Education has just issued further guidance on which legal practitioners come within the limited category of key workers whose children may continue to attend school or nursery whilst they deliver essential services:

  • Advocates (including solicitor advocates) required to appear before a court or tribunal (remotely or in person), including prosecutors;
  • Other legal practitioners required to support the administration of justice including duty solicitors (police station and court) and barristers, solicitors, legal executives, paralegals and others who work on imminent or ongoing court or tribunal hearings;
  • Solicitors acting in connection with the execution of wills, and
  • Solicitors and barristers advising people living in institutions or deprived of their liberty.

Practitioners are responsible for deciding for themselves whether they fall within these categories.

Clarion continues to be open for business, with some changes in working practices to ensure that the safety of our clients and employees remains our top priority. Matthew Rose is a solicitor and you can contact him on 0113 222 3248 or by email to Matthew.Rose@clarionsolicitors.com

Coronavirus: Working Under Lockdown

Coronavirus has caused widespread disruption. This brief update lets you know the Courts’ current approach, and how you can work effectively under lockdown.

Further information and our newsletter containing an explanation of how to sign documents electronically can be found here

Matthew Rose is a Solicitor in the Costs team. You can contact him on 0113 222 3248. Clarion Solicitors remains open for business as normal, with enhanced processes to ensure the safety of our clients and staff.

 

Third Party Funders – Exposure to Legal Costs

The Court of Appeal has recently handed down its Judgment in the case of Chapelgate Credit Opportunity Master Fund Limited -v- Money and Others [2019], which was an eagerly awaited decision for litigation funders. The outcome of the case is as follows:

The Arkin Cap should be considered when determining costs, but it is not binding on the Courts.

Paragraph 38:

“……..I do not consider that the Arkin approach represents a binding rule. Judges, as it seems to me, retain a discretion and, depending on the facts, may consider it appropriate to take into account matters other than the extent of the funder’s funding and not to limit the funder’s liability to the amount of that funding”

For those unfamiliar with litigation funding and the Arkin Cap, this arises out of the Court of Appeal decision in Arkin -v- Borchard Lines Limited 2005. In that case, a company which had provided third party funding for an unsuccessful claim was ordered to pay the costs of the winning party, but only to the extent of the funding provided. The Arkin Cap has been a principle which has been regularly applied by the Courts since. The decision in Chapelgate will cause uncertainty for litigation funders, in a world which has significantly evolved since 2005.

The Judgment increases the requirement for litigation funders to properly engage costs lawyers. Funders should be engaging costs lawyers to scrutinise a law firm’s legal budget when they are applying for funding. Costs lawyers should also be retained to monitor costs versus budget (including the opponent’s costs) and to advise on costs management orders.

Costs management orders provide more certainty on detailed assessment (unless the order for costs is made on the indemnity basis). Such measures will ensure that the funder has the maximum control possible on both the costs of the firm they are funding and the opponent’s legal costs; the latter being important in the event that an adverse order for costs is made.


This blog was written 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 at mcaulay@clarionsolicitors.com

Appellant victorious in arguing indemnity costs

The Court of Appeal determined that poor conduct and a failure to accept an earlier Part 36 offer were grounds on which to award indemnity costs in the case of Lejonvarn v Burgess & Anor [2020] EWCA Civ 114. 

The appellant had provided some gratuitous help to her former neighbours in re-designing the landscape of their garden. They had a falling out and the respondent neighbours subsequently brought proceedings against the appellant on the basis that she had been negligent and owed them a duty of care. Three weeks after proceedings had commenced, the appellant made a Part 36 offer in the sum of £25,000, but this was not accepted. Although at trial it was found that the appellant had been negligent, the respondents had failed on the substantive issues and the £25,000 offer was not beaten. The respondents lodged an appeal which caused their costs to spiral as they pursued their case against the appellant. The respondents were unsuccessful at the appeal and the appellant was awarded costs on the standard basis.

The appellant then proceeded to challenge the standard costs award decision and appealed on the basis that this was incorrectly ordered and indemnity basis costs should instead have been applied. At the appeal hearing Coulson LJ considered the background and undertook a thorough review of authorities relating to indemnity costs, opining that:

No later than one month after the handing down of the judgment by the Court of Appeal…the respondents, having had time to consider the implications of the Court of Appeal judgment, should have realised that the remaining claims were so speculative/weak that they were very likely to fail, and should not be pursued any further.” 

Coulson LJ further explored the respondents’ unreasonable pursuit of the case to trial, considering it to be: 

An irrational desire for punishment unlinked to the merits of the claims” and “precisely the sort of conduct which the court is likely to conclude is out of the norm”.

It was determined overall that the first appeal trial judge had incorrectly applied the test to determine indemnity costs and indemnity costs were in fact appropriate in these circumstances from a specific point in time. 

The judgment in this case may be of assistance should you need to consider conduct and indemnity costs in a situation where a party beats their own Part 36 offer. Bear in mind however that it is nuanced to the specific facts of the case and the CPR is clear that entitlement to indemnity costs in these circumstances is not automatic.  

The outcome of this case was also interesting from a costs management angle as Coulson LJ found that costs assessed on an indemnity basis are not constrained by an approved budget. Please see my blog for further detail.

Anna Lockyer is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact her at anna.lockyer@clarionsolicitors.com and 0113 288 5619, or the Clarion Costs Team on 0113 246 0622

Interesting comments from the MXX v United Lincolnshire NHS Trust case

I posted a blog at the end of June about the case of MXX v United Lincolnshire NHS Trust (2018) (please follow this link to read the blog https://clarionlegalcosts.com/2019/06/25/ensure-consistency-between-your-costs-budget-and-bill-of-costs/).

In the Judgment of Master Rowley, there are some interesting points which I felt were appropriate to cite and share through this separate blog. Those points are as follows:

Master Rowley found that the inflated incurred costs amounted to improper conduct and said the following at paragraphs 57 and 58:

57.      The need to comply with the indemnity principle must be on page 1 of any introduction to the law of costs. It is fundamental throughout the issues regarding what sums can be claimed from one party by another. It is, or should be, engrained in everyone dealing with solicitor’s costs. Whether it is a detailed bill of costs that is being produced, a summary assessment schedule or even simply a breakdown in a letter being provided to the opponent, it is imperative that the costs set out as being payable by the opponent do not exceed the sums payable by the client to their solicitor. The case of Harold v Smith (1850) 5 H. & N. 381 is more than 150 years old but it remains correct that the sum claimed should not be a punishment to an opponent nor a bonus to the client (or solicitor) which is the effect of claiming more costs from the opponent than are payable by the client.

  1. I do not accept that the statement of truth for Precedent H is intended to be a composite statement or one akin to signing an estimate. If that was so, in my Judgement, the Statement would simply say that the document was a fair and accurate estimate of the costs which it would be reasonable and proportionate for the client to incur in litigation. But that is not what it says. It specifically refers to incurred and estimated costs separately and it seems to me that a solicitor signing a Statement of Truth has to consider whether the incurred costs figure is fair and accurate separately from whether the figures for estimated costs are fair and accurate. There is absolutely no reason why the incurred costs figure should not be accurate. There are many reasons to understand that the estimated costs figure is no more than educated guesswork. The change in the hourly rates for future work identified by Irwin Mitchell is one of those reasons.

    The importance of the indemnity principle (which I have blogged on previously and you can find here https://clarionlegalcosts.com/2019/02/12/the-indemnity-principle-what-is-it-is-it-important/) is clearly set out above at paragraph 57 of the Judgment.

    At paragraph 58, it is clear that the signature of a Precedent H should not be taken lightly, it is a statement of truth and is not akin to signing an estimate, the signature on the Precedent H is not intended to be a composite statement. Paragraph 58 also indicates that the courts do not expect the incurred costs to be calculated incorrectly because of the inclusion of any incorrect hourly rate/s. However, the courts would be open to the use of composite rates for estimated costs given that hourly rates could clearly change (both upwards and downwards) over time. If you consider this applies to any budget that you are preparing, then make this clear in the assumptions to your budget, this will provide you with protection on detailed assessment and ensure transparency with the court and your opponent.

In the Judgment, Master Rowley did not find that the significant difference between the costs claimed in the bill and those in the costs budget (144-147 hours) amounted to improper conduct. Master Rowley said the following:

61.      Similarly, I do not think that the claimant’s approach to the amount of hours claimed in the budget and subsequently in the bill founds any significant criticism. My understanding of the limit of 1% of the total budget for the preparation of the precedent H was originally allowed for on the basis that clients would have been billed for the incurred costs by that point and so relatively little work would be needed to consider the incurred costs. If that is correct, it takes no account of matters dealt with under contingency arrangements such as a CFA when no bill will have been rendered by the time the Precedent H is prepared.

  1. It seems to me to be unrealistic to expect a party to vet the time recorded on a line by line basis in the manner suggested by the Defendant here. The bill of costs has taken nearly 100 hours to prepare and that involves a considerable greater sum than would be allowed by 1% of the budget. Whilst I accept Mr Bacon’s comment that the extent of the remuneration is not the touchstone for the effort that should be involved, it does seem to me to be a pointer as to the expectation of the time to be spent in preparing a budget. Most of the time will be spent in the estimation of future costs and much less will be spent in relation to incurred costs. Including items which are unlikely to be recoverable between the parties’ assessment runs a risk of the budgeting judge concluding that those costs are high and commenting about this in the CMO.

  2. I do not think that it can be said to be unreasonable for a solicitor to include in the budget, the time that the various fee earners have recorded on their system as being sums which the client is potentially liable to pay.

  3. Similarly, having considered that time to be vulnerable to challenge on a between the parties’ assessment, it can only be reasonable for the drafter of the bill of costs to exclude such time. Where, as here, the time is extensive, the incurred costs actually claimed between the parties will be significantly reduced. But that does not necessarily mean that something improper has occurred when the budget was prepared, in my view.

Personally, whilst I cannot say that the discrepancy in time was improper, I struggle to accept the Master’s decision that there can be such a large discrepancy on detailed assessment (because the bill drafter excludes time when drafting the bill of costs). It is important that incurred costs are broadly correct in terms of time incurred and absolutely correct in terms of hourly rates. If not, it creates an incorrect starting point on detailed assessment and questions the signature of the costs budget. Furthermore, 1% can be a generous amount when preparing a high value costs budget (A £10 million budget would potentially allow a charge of £100,000 to prepare the costs budget).

The decision of the Master also troubles me for the following reasons:

  1. It is possible to prepare a budget as a bill of costs i.e. prepare a bill of costs which can be converted into a costs budget for the CCMC. Whilst this incurs greater cost, it effectively means that the costs are front-loaded so that the costs for drafting the bill at the conclusion of the matter are much lower.
  2. Lawyers have historically struggled with recording their time (and continue to struggle) in a way that reduces the time required to draft a bill of costs, not to mention time recording by using the phase, task and activity codes. It therefore surprises me that the Master seemed to accept an approach of calculating incurred costs by simply ‘lifting’ time from a time recording ledger. To my mind, time needs to be vetted correctly and incurred costs should not change significantly between those stated in the costs budget and those stated in the bill of costs.
  3. Where a costs management order has been made and the matter proceeds to a JSM or mediation, it can be possible for the parties to agree costs at the JSM or mediation based on the costs management order (Claimant providing some very basic updated figures). If the budget was not based on the accuracy expected within a bill of costs, then any breach of the indemnity principle would not be identified and there is a real risk that costs irrecoverable inter partes would potentially be recovered from the paying party.
  4. Furthermore, the Master’s approach is in real contradiction to the requirements of a document that contains a statement of truth, of which the budget is one of those documents.

    It is therefore imperative that the incurred costs figure is not only calculated correctly in terms of the hourly rate but is calculated correctly (with no significant errors) in relation to inter partes incurred costs. When litigating, each party should be able to proceed on the basis that the incurred costs included in the budget are correct and can be relied upon. Whilst the Claimant substantially reduced the incurred costs in the MXX case (which was to the benefit of the Defendant), it does raise a real question over the costs management process if a party can change their incurred costs figure, which in this instance was by nearly 150 hours.

The aim of this blog was to share some of the wider points which arise from the Judgment of Master Rowley. I would be interested to hear any other people’s views and opinions which can be shared through this blog.

Please note that the case was the subject of an Appeal and I will blog separately (and shortly) in relation to the outcome of the Appeal. The outcome does not impact the points raised in this blog.

This blog was prepared by Andrew McAulay who is a Partner at Clarion and the Head of the Costs Litigation Funding Team. He can be contacted at andrew.mcaulay@clarionsolicitors.com or on 0113 336 3334.

Can you recover Counsel Fee’s for an Advice on Quantum in a £70,000 case?

Dover v Finsbury Food Group plc [2019] EWHC B11 (Costs)

What a terrible day for the Defendant to cut a long story short. This was an appeal from a Costs Officer’s decision which concerned a costs dispute stemming from an Employers Liability claim which was submitted via a Claims Notification Form “CNF” in 2015. As such the Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims “The Protocol” was to apply.

The Defendant did not respond to the CNF within the prescribed period under the Protocol and as such by automatic operation of 6.13 (2) of the Protocol the matter exited the Protocol. The Claim was later compromised for £70,000 pre-issue, as such Fixed Costs under Section IIIA of CPR 45 were to apply as the matter had not been allocated to the Multi Track.

Within their claim for costs, the Claimant sought a fee for Counsel advising in conference on the value of the Claimant’s claim; the Claimant sought a fee of £650.

The Defendant alleged the fee was not recoverable if the fee had been incurred after the claim had left the Protocol; or in the alternative, if the fee was allowed then it should be limited to £150 plus VAT.

As the matter had exited the Protocol it was agreed between the parties that the applicable section of the CPR which applied to this matter was Section IIIA of CPR 45.

The Rules

“CPR 45.29D

Subject to rules 45.29F, 45.29H and 45.29J, and for as long as the case is not allocated to the multi-track, in a claim started under the EL/PL Protocol  or in a claim to which the Pre-Action Protocol for Resolution of Package Travel Claims applies, the only costs allowed are—

(a) the fixed costs in rule 45.29C;

(b) disbursements in accordance with rule 45.29I.”

“CPR 45.29I

(1) Subject to paragraphs (2A) to (2E), the court—

(a) may allow a claim for a disbursement of a type mentioned in paragraphs (2) or (3); but

(b) will not allow a claim for any other type of disbursement.

(2) In a claim started under …. the EL/PL Protocol …, the disbursements referred to in paragraph (1) are—

(a) the cost of obtaining medical records and expert medical reports as provided for in the relevant Protocol;

(b) the cost of any non-medical expert reports as provided for in the relevant Protocol;

(c) the cost of any advice from a specialist solicitor or counsel as provided for in the relevant Protocol;

(d) court fees;

(e) any expert’s fee for attending the trial where the court has given permission for the expert to attend;

(f) expenses which a party or witness has reasonably incurred in travelling to and from a hearing or in staying away from home for the purposes of attending a hearing;

(g) a sum not exceeding the amount specified in Practice Direction 45 for any loss of earnings or loss of leave by a party or witness due to attending a hearing or to staying away from home for the purpose of attending a hearing; and,

(h) any other disbursement reasonably incurred due to a particular feature of the dispute.”

Paragraph 7.8 of the Protocol

“In most cases under this protocol, it is expected the claimant’s legal representative will be able to value the claim. In some cases, with a value of more than £10,000, an additional advice from a specialist solicitor or from counsel may be justified where it is reasonably required to value the claim.”

The Defendant sought to rely upon CPR 45.23B, which is in Section III of CPR 45

“CPR 45.23B

Additional advice on the value of the claim:

Where—

(a) the value of the claim for damages is more than £10,000;

(b) an additional advice has been obtained from a specialist solicitor or from counsel;

(c) that advice is reasonably required to value the claim,

the fixed costs may include an additional amount equivalent to the Stage 3 Type C fixed costs.”

For clarity, the Stage 3 Type C fixed costs referred to under CPR 45.23B is £150 plus VAT under Table 6A, this is where the Defendant got their ‘alternative’ provision from.

The Defendant’s Arguments

The Defendant had four arguments in relation to the recoverability of this Counsel fee.

  1. It was the Defendant’s contention that whilst CPR 45.29I applied for the recovery of the disbursements, 2 (c) of that section referred back to the Protocol and as such there was a restriction to the recoverability of the fee only where the fee had been incurred before the matter leaves the Protocol as 7.8 of the Protocol uses the phrase under this protocol; it was the Defendant’s case the matter was not under the Protocol as it had earlier exited the Protocol.
  2. If the recovery of the fee was not restricted as per point 1 above, then no fee was payable given the heading of Table 6A “Where the value of the claim for damages is more than £10,000, but not more than £25,000 which houses the Stage 3 Type C fixed costs referred to in CPR 45.23B. The Defendant contended that as the case settled for more than £25,000 no fee was payable.
  3. If the Defendant were wrong on the above 2 points, the Defendant submitted that there was an error in the drafting of the rules, particularly Table 6A, similar to Qadar and Ors v Esure Limited. That the heading of the table wrongly included an upper limit of damages of £25,000 and so by operation of CPR 45.23B the fee should be limited to £150 plus VAT
  4. Whether on a proper construction of CPR 45.29I (2) (c), CPR 45.29 (2) (h) permitted recovery of the fee.

The Decision

Master Brown did not agree with the Defendant on any of the above points.

  1. Master Brown was of the opinion that the Defendant’s reading of the rules on this argument was strained. As if the Defendant were to be correct then it would produce an anomaly to the other rules such CPR 45.29I (2) (a) and (b) which deal with the recoverability of medical evidence, the wording of these rules also contain the phrase in the relevant Protocol. Further the Master considered the legislative history and the intention to ring-fence the cost of obtaining an advice on quantum so as to ensure claims are not under-settled.
  2. Master Brown found that CPR 45.23B and Table 6A did not apply to claims which had exited the Protocol and if it were intended then CPR 45.29I (2) (c) would have included the limitation contained under Section III and it would have been included under Section IIIA.
  3. In relation to the drafting error argument of the Defendant, Master Brown found that as Table 6A did not apply to this claim he did not need to consider this argument. However there is an interesting comment from Master Brown at paragraph 49:

“I accept that in cases which have a value of less than £25,000 a judge might reasonably have regard to the sums provided for under CPR 45.23B even in cases which exit the protocol. However, in cases which exit the protocols on the grounds that the value exceeds £25,000 (see [39] of Qader on this point), it is difficult to see, given the likely added complexity associated with them that it must have been intended that costs of any independent advice required would be so limited.”

  • It was found that the fee was not covered by CPR 45.29I (2) (h) as this referred to any other disbursement, however the fee was already covered by CPR 45.29I (2) (c).

The Master therefore dismissed the Defendant’s appeal and allowed the Counsel fee at £500 plus VAT as per the original decision from the Costs Officer, as the fee was recoverable subject to reasonableness.

Comment

To me this seems a very logical decision, Section IIIA of CPR 45 applies to claims which have left the Protocol and CPR 45.29I (2) (h) allows recovery of Counsel’s fee for advice so long as it is provided for in the Protocol, which it is. I have regularly conducted Fixed Recoverable Costs Proceedings which involve Counsel’s fees for an Advice on quantum and recovered them.  

The comment made by Master Brown at paragraph 49, detailed above, has also provided food for thought. As it appears that he feels that if a case has a value of less than £25,000, the cost of obtaining an advice from Counsel should be limited to £150 plus VAT even if the matter has left the portal.

This blog was written by Matthew Waring who is an Associate in the Costs and Litigation Funding Team at Clarion. Matthew can be contacted on 0113 288 5639 or at Matthew.Waring@clarionsolicitors.com