Fixed Recoverable Costs – the pilot scheme

News story imageFollowing on from my newsletter below, the Civil Procedure Rule Committee meeting notes have been published today. Last month I explained how Jackson LJ had suggested how ‘capped fixed costs’ would work. The meeting notes have now confirmed how the pilot scheme will work, explaining that costs for preaction would be capped at £10,000, for particulars of claim at £7,000 and for defence and counterclaims at £7,000.

Many thanks to John Hyde of the Law Society Gazette who has reported that “Parties can claim up to £6,000 for a reply and defence to the counterclaims, £6,000 for the case management conference, £6,000 for disclosure and £8,000 for witness statements. Expert reports are capped at £10,000, with the trial and judgment costs limited to £20,000.

The working group dedicated to the pilot scheme proposes an overall cap of £80,000 rather than setting an actual fixed amount at this stage.

The proposal, backed in principle by the committee, is to run the pilot in certain specialist civil courts: the London Mercantile Court and three courts in each of the Manchester District Registry and Leeds District Registry. Any cases where the trial will go beyond two days, or where the value is more than £250,000, are excluded“.

Clarion May 2017 Newsletter: Fixed Recoverable Costs. A taster of how the pilot scheme may work.

The judiciary have released an outline regarding how the fixed recoverable costs regime may work. Jackson LJ attended a costs seminar in Birmingham back in March 2017, which focused on mercantile and business litigation. At that seminar both Jackson LJ and HHJ Waksman outlined their proposals for the fixed costs pilot scheme, those proposals being subject to the approval of the Civil Procedure Rules Committee. The details of their proposals were as follows:

The pilot scheme will run in the London Mercantile court, and Manchester and Leeds specialist courts.

  • It is likely that the pilot will commence in October 2017 and will last for two years.
  • The pilot scheme is optional.
  • There will be a separate fixed costs list.
  • The pilot can be joined at certain stages:
    • The pre-action stage
    • No later than 14 days after service of the defence
    • At the case management conference (CMC)
    • Claimants can commence proceedings in the fixed costs list.

The Defendant has an absolute right to object to this, and if so then the proceedings would be removed from the fixed cost list.

  • The CMC will be the last opportunity to join the pilot.
  • Parties will not be able to withdraw from the pilot, apart from the Defendant if the Claimant issues in the pilot scheme (see above).
  • There will be a shortened process with strict case management .

The pilot is currently a ‘work in progress’, however it is envisaged that these proposals will be making their way to the Civil Procedure Rules Committee in June 2017, so these could be public by July 2017. It is currently predicted that:

  • Parties will be required to file their “core documents” (the documents that are relevant to the issues in the claim) with their statements of case, i.e. the particulars of claim, defence, reply and defence to counterclaim.
  • There will be no need for further disclosure, unless parties can justify this at the CMC.
  • If further disclosure is required, parties will need to apply for the same before the CMC. If the parties cannot agree, an order will be made.
  • At the CMC, the judge will suggest Alternative Dispute Resolution (ADR), including Early Neutral Evaluation (ENE).
  • The CMC will be the only interim hearing, this will include setting the trial timetable.
  • Consideration is being given to limiting the number of witnesses, the thoughts are that there will be one factual witness on each side.
  • Costs budgeting will not be required and there will be no pre-trial review.
  • The trial length will be up to two days (excluding judicial reading).
  •  Cross-examination will be “very strictly controlled”.
  • An early hearing date will be guaranteed.
  • Judgments will be produced within a short period of time.
  • Pilot participants can expect “active and proactive” case management.
  • Costs will be summarily assessed at the end of trial.

The above proposals were made in March 2017, however since then there have been further proposals, as follows:

  • The pilot will only relate to claims that are less than £250,000.
  • The pilot will only relate to claims where the trial is no more than 2 days.
  • The pilot will only relate to non-complex matters.
  • The maximum costs that will be allowed will be £80,000. The pilot scheme will be similar to the IPEC costs regime. There will be caps for phases of litigation and those phases will be the same as the phases used in costs budgets.
  • Parties can only leave the scheme under exceptional circumstances, examples of those circumstances are; allegations of fraud, if the matter subsequently is listed for a 3 day trial.
  • Judgment will be handed down within 6 weeks.
  • The proposed ‘grid’ is not yet available and it is likely that this will not be available until the practice directions are published, so it may make its way into any July update to the rules. The main benefits of the pilot scheme are that claims will be resolved speedily and parties will be more aware of their potential costs exposure.
  • We will continue to provide updates regarding fixed costs, as well as all costs related law.

 

Sue Fox who is a Senior Associate and Head of Costs Budgeting at Clarion, can be contacted on 0113 336 3389 or on sue.fox@clarionsolicitors.com

 

 

 

 

Interest on Costs

The case of MacInnes v Hans Thomas Gross [2017] is a very useful case to read as it covers a number of topics including indemnity basis costs awards, interest, proportionality, costs budgeting and payments on account. The focus of this article is the useful contents from the Judgment in relation to interest on legal costs. Pages 3, 4 and 5 are the relevant aspects of the Judgment to consider in this regard and I set out below the key points:

  • The court awarded pre-judgment interest at a rate of 4% above base rate and relied heavily on the Judgments in McPhilemy v Times Newspapers Limited [2002] and KR v Bryn Alyn Community (Holdings) Limited [2003] EWCA Civ 383 when making its decision.
  • In relation to post-judgment interest the court ruled that it should not start to accrue until 27 April 2017 (which was 3 months after the date of the Judgment). The reason for this was because the court awarded a very substantial payment on account and followed the logic of Leggatt J in the case of Involnert Management Inc v Aprilgrange Limited and Others [2015] which provided some very useful guidance in relation to post-judgement interest. The logic behind the deferral of 3 months was the fact that by that time Detailed Assessment Proceedings should have been commenced, and therefore the paying party would have had sight of the bill and could start to make a realistic assessment of the amount of their liability. Without sight of the Bill of Costs, it could not do that.
  • It is important to note that in relation to the post-judgement interest point, the deferral of interest for 3 months was primarily due to the fact that a Costs Management Order was in place and the court made an order for a substantial payment on account. If a Costs Management Order was in place, but a substantial payment on account was not made then one would expect the court not to make such an Order in relation to post-judgment interest i.e. interest would run in the traditional way (8% from the date of Judgment).
  • The position in relation to pre-judgment interest should be considered by any law firm acting for a client on a private fee paying retainer. When it comes to the issue of interest on costs, the court has a wide discretion as to when interest starts to run under CPR 44.2 (6) (g).

Therefore, where appropriate, law firms should be seeking interest from before the date of Judgment as it will be beneficial to the client given that the rate is likely to be 4% above base rate from when the law firm’s invoices were paid (invoices could date back a number of years).

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 at andrew.mcaulay@clarionsolicitors.com.

New Guidance on Travel Costs for Deputies

Additional guidance has been released from the Office of the Public Guardian in relation to the travel costs that can be claimed by Deputies.

The guidance sets out what travel costs might be covered and how to calculate them. It also looks at the following;

  • fixed costs that solicitors and public authorities acting in Court of Protection proceedings may claim
  • fixed amounts of payment that solicitors and public authority office holders acting as a deputy may claim

It follows amendments to practice direction B to part 19 of the Court of Protection Rules, made in April 2017, that introduced a new provision allowing public authorities and other third sector deputies to claim a fixed amount for travel costs (paragraph 21).

Interestingly, the guidance states:

The hourly travel rate may only be claimed for more than one member of staff where it’s strictly necessary for the case. For example, a risk assessment may have shown that staff need to ‘double up’ for health and safety reasons.

 Deputies need to justify claims for more than one member of staff in their annual report.

I would always ensure that claiming two fee earners at an attendance is only undertaken when necessary.

The guidance also looks at ways that the Deputies should calculate travel time from their work base to the meeting location and for the return journey.

Please note, that this merely general guidance and that the Court of Protection has the ultimate discretion as to what accounts as reasonable.

The new guidance can be found at: http://bit.ly/2rsRvTh

If you have any queries please do not hesitate to contact the Clarion Court of Protection team at : Copcosts@clarionsolicitors.com

Litigation costs in Court of Protection bills – are these recoverable?

It is extremely common for Deputies to be involved in ongoing litigation claims for Protected Parties. Deputies often become involved in interim payment applications and are usually asked to disclose details of the Protected Party’s affairs to the litigation solicitor to assist with the Schedule of Loss and other documentation. The main question that needs to be answered however is whether these costs can be claimed within the general management bill of costs.

Unfortunately, the answer is no…

Master Haworth considered this and made an unpublished judgment on 3 June 2014 in relation to civil costs within Court of Protection matters. Master Haworth stated that:

“The principal point at issue was one that appears to be coming increasingly common in COP general management bills, namely the costs incurred by the Deputy in relation to ongoing litigation. In particular, requests being made by the litigation solicitor for information relating to the affairs of the Protected Party and more particularly in relation to possible interim payment applications. The view I take is that where the Deputy is being asked to provide information and/or schedules and/or documentation to support an interim payment application in ongoing litigation these are not general management charges.”

Master Haworth directed the Deputy to withdraw their bill of costs and to re-submit a new bill of costs which did not include the litigation costs to allow him to solely assess the general management costs that had been incurred.

It is advisable that the Deputy’s costs which relate to the Protected Party’s litigation claim are not included within general management bills. Costs which relate to the litigation claim should be recovered within the litigation bill of costs. The Deputy should therefore outline their costs to the litigation solicitor to ensure that the costs are remunerated correctly.

If you require any further advice or assistance in relation to your Court of Protection costs, please do not hesitate to contact the Clarion Costs Team on COPCosts@clarionsolicitors.com or 0113 246 0622.

“Costs budgets are now working better”………

 

At this years’ APIL conference it was said that “Costs budgets are now working better”………

Thanks to Gordon Exall and Rachel Rothwell for tweeting interesting and salient comments and quotes made at this years’ APIL conference. Those tweets included – “Harrison is coming any day”, “Merrix may largely be upheld with clarification of incurred costs”, “costs budgets are now working better”………  To read a few of those comments please click here.

Thanks again to Rachel and Gordon for their continued devotion to provide updates
on costs law.

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.

 

Choose your words wisely – Plevin v Paragon Personal Finance [2017] USKC 23

This judgment concerned a request for an oral hearing by Paragon Personal Finance, the paying party, following a costs assessment by Master O’ Hare and Mrs Registrar dr Mambro in the Supreme Court on 05 February 2015.

Paragon were dissatisfied with the costs assessment, and in accordance with Rule 53 of the Supreme Court Rules 2009, they requested an oral hearing on two points of principle; the first regarding the validity of an assigned CFA, and the second regarding the recoverability of additional liabilities after the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO).

The Supreme Court, by a majority of 4 to 1, dismissed the appeal and upheld the costs assessment from February 2015.

The CFA had originally been entered into on 19 June 2008, and the ATE Policy was purchased on 29 October 2008. Both therefore under the 1999 Access to Justice Act regime, which enabled the receiving party to recoverable additional liabilities from their opponent. However, they were subsequently varied after 01 April 2013, and hence after the introduction of the LASPO regime, to cover firstly Paragon’s appeal in the Court of Appeal, and secondly their appeal to the Supreme Court.

When deciding whether or not the success fee was recoverable, Lord Sumption closely considered the language of LASPO Section 44(6), and in particular where it states if the litigation is in “connection with the matter that is the subject of the proceedings”.

He found that the success fee was recoverable as “an amendment of the existing CFA is a natural way of dealing with further proceedings in the same action”.

However, when looking at the recoverability of the ATE Premium, it was noted that the language used in LASPO Section 46 (3) differed and stated that the “amendments made by this section do not apply to a costs order made in favour of a party to proceedings who took out a costs insurance policy in relation to the proceedings”.

The key difference being the language used and the interpretation of the scope each provides. Paragon argued that the language used regarding the recoverability of the success fee was much wider than that for the ATE Premium. Whilst recognising “in the ordinary course…there is also a presumption that differences in the language used to describe comparable concepts are intended to reflect differences in meaning”, Lord Sumption concluded that the use of different language was no more than recognising that the CFA was an undertaking and that “the relationship between the body and the beneficiary of the undertaking may be wider than just the conduct of the litigation”, whilst an ATE policy “by their nature are concerned with specific litigation”.

It was therefore concluded that if an ATE policy had been taken out for the costs of a trial, the insured is entitled, after the commencement date, to top up the cover for appeals, and to include them within his assessable costs under the 1999 costs regime.

It must be remembered that litigation is often commenced over the different interpretations of rules. Language is therefore fundamental. With LJ Jackson set to introduce new rules in the foreseeable future in relation to fixed costs, it is essential that those drafting the rules do so with precision and clarity to ensure LJ Jackson’s intentions are exactly what the rules say.

If you have any questions or queries in relation this blog please contact Joanne Chase (joanne.chase@clarionsolicitors.com and 0113 336 3327) or the Clarion Costs Team on 0113 2460622

Calling trumps: Sue Fox on how the court has laid its cards on the table over costs management. The interaction between costs budgeting and costs assessment – Merrix v Heart of England NHS, the appeal of the first instance ruling.

The interaction between costs budgeting and costs assessment has been considered again in Merrix v Heart of England NHS Foundation Trust [2017] EWHC 346 (QB) – the appeal of a first Merrix v Heart of England NHS instance ruling.

Mrs Justice Carr found that the court will have ‘regard to the receiving party’s last approved or agreed budget by respecting it or finding that there is a good reason to depart from it’……………………………………………

………………………….. So, the question to be answered is – will a receiving party’s costs
be allowed in full if they are less than the budget? Yes – for now! The Merrix decision confirms that any departure from the budget applies to both downward and upward revisions, hence parties have to show a good reason to depart from the budget.

Does Mrs Justice Carr’s finding in Merrix deny the paying parties an opportunity to challenge potentially unreasonable costs, despite it being their responsibility for the costs of challenging those costs? At the moment – yes.

Is it ‘just’ for the receiving party to request their costs in full simply because they have been incurred and fall within the parameters of the budget? What safety mechanism is in place to ensure that any receiving party does not include unreasonable and disproportionate costs in their claim for costs, simply justified on the basis that they ‘fall within budget’?

Mrs Justice Carr felt that the indemnity principle was sufficient, though perhaps it is not – unreasonable costs can be claimed from the client, hence the need for Solicitors Act assessments. Or alternatively, the client may have little regard to the constraints of the budget and request that ‘out of scope’ or disproportionate and unreasonable costs are incurred in any event.

How can restraints be imposed on a spendthrift client with deep pockets, and at the same time discourage a paying party from being overzealous in their requests for detailed assessment? Perhaps the introduction of the ‘one-fifth rule’ to costs budgeted cases could be the answer. This shares the burden of the costs consequences, rather than the traditional costs shifting rule. If the bill is reduced by more than 20%, then the receiving party is responsible for those costs rather than the paying party, but if the paying party secures less than a 20% reduction to the bill, then they become responsible for those costs.

This should encourage all parties to think seriously about committing to detailed assessment, rather than the onus being on the paying party. Not only does this tie in nicely with the rules for Solicitors Act assessments, but it is also in line with the rules surrounding provisional assessment relating to the recoverability of costs for an oral
hearing (see article, page 10). Further, it embraces Jackson’s intention to reduce the number of detailed assessments, and at the same time does not deprive parties the opportunity to challenge the costs. Just a thought.

Is this the end? Perhaps only for now. Mrs Justice Carr requested that if this decision were to be appealed, then it should be heard together with any existing listings covering the same point of principle.

In her decision, she referred to Harrison, which was soon to be heard in the Court of Appeal. The Harrison decision is listed for May, and so the paying party in Merrix may be running out of time to get this listed together with Harrison – but we await with interest.

Please click here to read the full article which was published in the April edition of the Litigation Funding magazine.

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.