Clarion Costs and Litigation Funding’s February 2017 Newsletter

Please follow this link for Clarion Costs and Litigation Funding’s February 2017 Newsletter.  In this month’s issue:

Andrew McAulay provides a “Fixed Costs Update”.

Sue Fox provides a case management refresher and discusses “costs estimates for fast track cases and non-budgeted cases”; “indemnity basis costs awards at CMCs” and “no fixed fast track costs for disposal hearings”.

And finally………..

Matthew Rose discusses the dangers of the late filing of points of dispute to a bill of costs.

 

 

What impact the budget has on recoverable costs – Merrix v Heart of England Trust NHS Foundation Trust [2016]

In my most recent article that was published in the Litigation Funding magazine, I discussed the Merrix case and what impact the budget has on recoverable costs.

  • The recent case of Merrix v Heart of England Trust NHS Foundation Trust [2016] has again brought the interaction between costs  budgeting and costs assessment into focus.  Before we look at what we can take from the decision, I will set out below a number of cases that have come along and shaped our thinking on the court’s application of costs budgeting (precedent H)…………….

For the full article please follow this link  Budgetary position.

Sue Fox is the Head of Costs Budgeting in the Costs and Litigation Funding department at Clarion Solicitors. You can contact her at sue.fox@clarionsolicitors.com and 0113 336 3389, or the Clarion Costs Team on 0113 246 0622.

Proportionality – a common sense decision from Master Rowley

In the case of BNM v MGN Limited [2016] EWHC B13 (costs) the Senior Costs Judge applied the new test of proportionality to post Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) additional liabilities. The claim was for defamation and therefore the additional liabilities (despite being incurred post 1 April 2013) were recoverable inter partes (additional liabilities for defamation and mesothelioma cases remain recoverable inter partes post LASPO).

In BNM the Senior Costs Judge based his decision on the fact that pursuant to CPR 44.3(7) the old test of proportionality was not preserved for additional liabilities incurred post 1 April 2013. The key paragraphs from BNM on this point are as follows:

28 – It seems to me that the intention was that the rules as to the recoverability of additional liabilities would be preserved in relation to those additional liabilities which remain recoverable after 1 April 2013. However, the old test of proportionality was not preserved in relation to those additional liabilities. Had that been intended it could have been achieved quite easily by a further exception in CPR 44.3(7).

31 – A consequence of the reduction of the base costs to a proportionate figure will be that the success fee, a percentage of those base costs, also reduces. It would be absurd and unworkable to apply the new test of proportionality to the base costs, but the old test of proportionality to the success fee.

32 – Ring fencing and excluding additional liabilities from the new test of proportionality would be a significant hindrance on the court’s ability to comply with its obligation under CPR 44.3(2)(a) to allow only those costs which are proportionate.

In the case of King v Basildon & Thurrock University Hospitals NHS Foundation Trust [2016] EWHC B32 (Costs) Master Rowley reached a difference conclusion, albeit the additional liabilities in this care were incurred pre 1 April 2013 i.e. pre LASPO. Master Rowley’s decision was primarily based on the definition of costs in the CPR post 1 April 2013. The useful paragraphs of Master Rowley’s judgment to consider are as follows:

23 – The key phrase in the new proportionality test in 44.3 (5) states that “costs incurred are proportionate if they bear a reasonable relationship to ….”. The word “costs” as now defined refers to profit costs and disbursements but does not include additional liabilities. Given that the proportionality test in 44.3 (5) only applies to work carried out since that definition of costs has come into being, the obvious interpretation is that it only relates to the base costs of a CFA. It is not clear to me why additional liabilities should necessarily be caught by a test which is based on a definition recast specifically to exclude such liabilities.

24 – In my view, treating the word “costs” as only referring to base costs fits in with the provisions of Part 3 in relation to costs budgeting which were also brought into the CPR in April 2013. For example, in rule 3.15 the court “may manage costs to be incurred by any party in any proceedings” and in doing so will make a costs management order. Such an order will record the extent to which budgets are agreed between the parties and, to the extent they are not agreed, will record the court’s approval after making appropriate revisions. “The court will thereafter control the parties’ budgets in respect of recoverable costs”. Precedent H, which sets out the costs to be managed, expressly excludes any additional liabilities that may still be recoverable between the parties. Consequently, the only interpretation of the recoverable costs which the costs management order is controlling, is that they are the base costs of a CFA as set out in the Precedent H. The court is required to set a budget which is specifically described as allowing reasonable and proportionate costs notwithstanding that it excludes additional liabilities.

25 – In my judgment, being consistent with the costs management arrangements and avoiding bizarre outcomes in bills which involve both proportionality tests, point towards the rules being interpreted as continuing to require the court to assess the base costs and additional liabilities separately.

 26 – Furthermore, the purpose of the Jackson reforms in initiating a sea change could have resulted in Parliament disallowing the recoverability of success fee and ATE premiums from 1 April 2013. But it did not do so and has allowed for the run-off of recoverable success fees and premiums in the main and the continued recoverability of success fees or premiums in particular instances. It seems to me that the fact that additional liabilities are still allowed for by the provisions of CPR rule 48.1 simply means that they remain in existence. It does not mean that they have to be assessed in the aggregate with the base fees using a test which has no recognition of additional liabilities. This is particularly so when aggregation will render those additional liabilities effectively irrecoverable in practice”.

The approach of Master Rowley has recently been followed by Master Brown in the case of Murrells, Estate of v Cambridge University NHS Foundation Trust [2017] EWHC B2 (Costs).

The following are useful extracts from the Judgment:

33(7) – …It seems likely that they will have entered into such arrangements in the reasonable expectation that the additional liabilities would continue to be recoverable as they were pre-LASPO. To apply the new test to additional liabilities in the way contended for would, however, require many litigants to submit to a substantial, if not complete, disallowance of their additional liabilities as against the other party or parties to the litigation, while at the same time the liability to pay an insurer or the lawyers the additional liability would be preserved. If that were right, it would inevitably lead to many litigants, including – it might be observed – victims of mesothelioma, having to give up deserving claims or defences. I agree with Master Rowley: in these circumstances, the defendant’s contention cannot be reconciled with transitional provisions and the clear will of Parliament. The intention must have been to provide, at the very least, an orderly retreat from the old funding scheme.

34 – In the circumstances, I respectfully disagree with the decision of Master Gordon-Saker in BNM as to the application of the new proportionality test to additional liabilities and therefore also as to the need to aggregate base costs with additional liabilities.

The case of BNM is currently on its way to the Court of Appeal, with a hearing date expected for October 2017. Hopefully, this will bring some clarity to the position, but until then expect lots of costs litigation over the point. Hopefully, the Court of Appeal will not simply address the additional liabilities in BNM, but also address the position of pre-LASPO additional liabilities in the context of the King case.

Personally, I think the position adopted by the Senior Costs Judge represents a drafting error in relation to CPR 44.3(7). The intention of LASPO in my view was very clear:

  1. Additional liability incepted pre 1 April 2013 = recoverable inter partes and not subject to the new test of proportionality
  2. Additional liability incepted post 1 April 2013 = not recoverable inter partes
  3. Additional liability (defamation and mesothelioma cases) incepted post 1 April 2013 = recoverable inter partes and not subject to new test of proportionality

Surely, it was never the intention for additional liabilities at 1 and 3 above to be recoverable only for them to be crippled by the new test of proportionality (resulting in a non-recovery)?  Surely, it was never the intention to specifically ‘carve out’ defamation and mesothelioma claims only for the additional liabilities to then be squashed on detailed assessment due to the new test of proportionality? This is particularly relevant in defamation cases where costs can easily dwarf damages.

What all this does show is the problems that can be caused when even minor changes are made to the CPR. I say this in the context of a significant extension of fixed costs on the horizon. There are fixed costs disputes every day at the moment in relation to portal cases and fast track injury cases where the numbers in dispute are very small. Where the numbers in dispute are large i.e. in multi-track fixed costs cases then this will undoubtedly cause satellite litigation, for example arguments about location, what stage the case settled and disbursements.

LJ Jackson thinks that fixed costs will bring certainly, but if Defendants (paying parties) are prepared to exploit a ‘gap in the rules’ as highlighted in the BNM case then expect Costs War 2 post implementation of fixed fees! The Courts are going to be busier than ever, which would be contrary to what LJ Jackson and the governments wants.

LJ Jackson maybe about to score an ‘own goal’ with his planned extension of fixed fees……

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

Costs Budgeting is essential”, hails LJ Jackson.

“Costs Budgeting is essential”, hails LJ Jackson.

Jackson told a London Common Law and Commercial Bar Association event last night that:

“Costs budgeting is an essential element of any programme to make the costs of litigation proportionate”, and that:

Litigation is a commercial enterprise.’  He added ‘there are no other commercial projects which people enter without a budget” and that “some form of costs management or costs budgeting is essential.’ This echoes comments he made in his 2009 final report.

In Jackson’s final report in 2009 he said “Any measures to control the costs of a project are themselves a source of some expense. Quantity surveyors have to be paid professional fees for their services in monitoring the costs of a construction project and determining what amounts are payable at each stage or what sums are due in respect of variations. But no-one suggests that quantity surveyors should be dispensed with, in order to “save” the costs of employing them. The costs of any multi-track case can be substantial, ranging from tens of thousands of pounds to tens of millions of pounds. In other words, the costs of every multi-track case, unless it settles early, are comparable to at least the costs of a small building project and sometimes they are comparable to the costs of a major building project. There is precisely the same need to control the costs of litigation as there is need to control the costs of any other project”.

After 7 years since his report was written, 1 pilot scheme and the 3 year practical application of the amended Civil Procedure Rules, Jackson’s opinion on both the effect of costs management and the costs of the same, remains constant.  Costs Management works and the costs of the same are a sensible part of the ‘project’.

Please follow this link to the Law Society Gazette’s article.

Sue Fox is the Head of Costs Budgeting in the Costs and Litigation Funding department at Clarion Solicitors. You can contact her at sue.fox@clarionsolicitors.com and 0113 336 3389, or the Clarion Costs Team on 0113 246 0622.

 

New guidance issued on facilitating the participation of a Protected Party and vulnerable persons in Court of Protection Proceedings

Mr Justice Charles has issued helpful guidance in relation to how to facilitate the contributions of Protected Parties in various circumstances throughout COP proceedings.

The practical guidance is provided to suggest how practitioners and professionals in the field might consider encouraging and promoting the participation of the Protected Party in proceedings in the COP. The guidance states that it is primarily directed towards health and welfare cases in the Court, however, it is likely to be of assistance in some property and affairs cases.

The guidance includes identifying the Protected Party’s needs within the Court process, considering the Protected Party’s wishes and feelings during proceedings, the attendance of the Protected Party at hearings, meeting with the Judge, giving information or evidence to the Court and acting as a Witness.

The Protected Party’s best interests must be considered at each stage of proceedings and accommodating the Protected Party’s needs, whilst practically being realistic and proportionate, are key points to consider throughout.

The guidance may be of benefit to practicing Deputies and other professionals acting for vulnerable people in the Court of Protection.

More information and access to the guidance can be found at the link below:

http://www.familylaw.co.uk/system/froala_assets/documents/1245/Practice_Guidance_Vulnerable_Persons.pdf

Statutory Will Procedure and Practice Directions within the Court of Protection

For a person who lacks capacity, the making of a Will can only be made if approved by the Court. This is known as a ‘Statutory Will’.

The Courts have full discretion in respect of the costs of the application and no costs can be taken from a person’s estate without an Order from the Court. In general, the Courts apply the rule that the costs of proceedings concerning a person’s property and financial affairs are to be paid from that person’s estate, subject to detailed assessment. Please note that this general rule, should not be taken for granted, as the Court can, considering the conduct of parties, direct one person to pay another party’s costs or even refuse a party costs altogether, if incurred unnecessarily. The Courts also have the power to limit costs if they feel that it would be appropriate to do so.

In accordance with Practice Direction 47, Rule 47.18(3) it states that a Statutory Will Application should be filed at Court with a N258B (Request for Detailed Assessment – Costs payable out of a fund other than the Civil Legal Aid Fund) rather than a N252 (Notice of Assessment of Bill of Costs). Rule 47.18(3) reads as follows:

“The request for a detailed assessment of costs out of the fund should be in Form N258B, be accompanied by the documents set out at paragraph 17.2(1) (a) to (e) and the following—

 (a) a statement signed by the receiving party giving his name, address for service, reference, telephone number,

 (b) a statement of the postal address of any person who has a financial interest in the outcome of the assessment; and

 (c) if a person having a financial interest is a child or protected party, a statement to that effect.”

 The bill of costs will then be assessed by a Costs Officer at the Senior Courts Costs Office.

Further to the above, Practice Direction 47.19 of the CPR in relation to the costs payable out of a fund other than the Community Legal Service fund or by the Lord Chancellor states the following:

“Rule 47.19 enables the court to direct under rule 47.19(3) that the receiving party must serve a copy of the request for assessment and copies of the documents which accompany it, on any person who has a financial interest in the outcome of the assessment…the court will decide, having regard to the amount of the bill, the size of the fund and the number of persons who have a financial interest, which of those persons should be served and may give directions about service and about the hearing. The court may dispense with service on all or some of those persons…Where the court makes an order dispensing with service on all such persons it may proceed at once to make a provisional assessment, or, if it decides that a hearing is necessary, give appropriate directions. Before deciding whether a hearing is necessary, the court may require the receiving party to provide further information relating to the bill.”

As costs will be settled from the Protected Party’s estate, the above Practice Directions will apply. The bill of costs should be filed for assessment to enable the Costs Officer to consider the costs claimed and then direct if the bill should be served on the interested parties. It is then for the Conducting Fee Earner to decide who the assessment should be served upon.

If you have any questions please do not hesitate to contact myself, or a member of the COP Costs Team at Clarion at COPCosts@clarionsolicitors.com

Getting paid in the COP

In the Court of Protection, most Orders will contain a clause entitling the professional Deputy to be paid for their work. This clause therefore entitles you to take fixed costs, or have your costs assessed, subject to the terms of the Order.

We therefore wanted to explain the basis of assessment, to clarify how your costs will be paid. The Civil Procedure Rules, Part 44.3 states that when assessing costs on the Standard Basis, “only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred.”

Upon assessment, your costs are subject to the Costs Officer’s discretion and as a result, it is crucial that you evidence the work that you have done.

Recently, new Professional Deputy Costs Guidance has been released by the Office of the Public Guardian and the SCCO, which states that where evidence of the work carried out is not on the file (by way of file notes) the time spent could be disallowed. The Deputy must “resolve any doubt as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party.”

 In order to show that your costs were reasonably and proportionately incurred, we recommend that you prepare file notes for the work undertaken, detailing the following:

 

    1. What you did
    2. How long it took you
    3. Who did the work
    4. When you did it
    5. Why you did it
    6. What action needs to be taken

 

Points 5 and 6 are particularly important in order to resolve any doubt in the Costs Officer’s mind. If you’re attending upon the Protected Party for the third time that year, tell the Costs Officer why it was necessary and what the next steps are to progress the matter. If you do not progress the matter in any way or it was unnecessary for you to do that work, it is unlikely that you will get paid.

If you have any queries about how to appeal an assessment or any general questions, please do not hesitate to get in touch and we would be more than happy to assist you. Please contact CopCosts@clarionsolicitors.com or call 0113 246 0622.

Professional Deputy Costs Guidance

You should all now be aware that the Office of the Public Guardian and the SCCO have issued some guidance in respect of Professional Deputy Costs. In summary, here’s what you need to know:

  1. The SCCO Guideline Hourly rates will be allowed, except in exceptional circumstances
  2. Routine tasks such as arranging payments or checking bank statements should be delegated to a Grade D fee earner at best. There are also times when use of a non-fee earner would be considered appropriate
  3. Three minutes will generally be allowed for arranging payments of any kind
  4. One home visit per annum is appropriate, but more may be acceptable dependent on the needs of the case. Excessive contact with all parties should be limited
  5. Work in respect of welfare is not recoverable, without permission from the COP
  6. One senior fee earner will be allowed at investment strategy meetings
  7. File notes must be present to evidence the work carried out
  8. Office overheads ie. Research, perusing incoming correspondences, internal communications and supervision are not recoverable
  9. Three minutes will be allowed for short, routine correspondences
  10. Litigation costs should be appropriately claimed within the litigation proceedings
  11. Grade D rates will be allowed for the preparation of the bill of costs
  12. In hardship cases (net assets below £16,000.00), professional costs must be limited to 4.5% of the Protected Party’s estate per annum
  13. On the client’s death, professional costs should be agreed with the executor of the estate
  14. The OPG105 must be submitted to the SCCO with the bill of costs
  15. Bills of costs should be prepared and submitted on an annual basis

For further information, please go to the following link:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/538901/19_07_16_Professional_deputy_costs__FINAL.pdf

If you have any queries, please do not hesitate to get in touch and we would be more than happy to assist you. Please contact CopCosts@clarionsolicitors.com or call 0113 246 0622.