Court holds that an application under CPR 44.11 to reduce a party’s costs on the basis of misconduct is not a vehicle to give paying parties a “second bite of the cherry”

In Paul Andrews & Anor -v- Retro Computers Ltd & Ors [2019] EWHC B2 (Costs), Master Friston held that an application that the receiving party’s costs should be reduced or disallowed under CPR 44.11 on the basis of that party’s conduct was not to be used as a vehicle to contest the order for costs made by the trial judge.

This update is a summary of a complex and lengthy judgment. A full analysis will follow in due course.

CPR 44.11

CPR 44.11 states (so far as relevant) that:-

(1) The court may make an order under this rule where –

(a) a party or that party’s legal representative, in connection with a summary or detailed assessment, fails to comply with a rule, practice direction or court order; or

(b) it appears to the court that the conduct of a party or that party’s legal representative, before or during the proceedings or in the assessment proceedings, was unreasonable or improper.

(2) Where paragraph (1) applies, the court may –

(a) disallow all or part of the costs which are being assessed; or

(b) order the party at fault or that party’s legal representative to pay costs which that party or legal representative has caused any other party to incur.

The Case

The Defendants applied under CPR 44.11(2)(b) on the basis that the Claimants’ conduct had been “unreasonable or improper”. There was no suggestion that the Claimants’ legal representatives had acted improperly or that there had been a failure to comply with a rule or practice direction.

Summary of Judgment

The court held that:-

  1. An application under CPR 44.11 is not a vehicle to allow the paying party to have a “second bite of the cherry”, and that issues which were before the trial judge (or which the parties were reasonably capable of bringing to the trial judge’s attention) could not be considered on such an application;

2. The conduct complained of must have been relevant to the proceedings;

3. There is a high bar for establishing that the conduct was unreasonable; and

4. The sanctions the court can impose are limited.

Conclusion

It is important that solicitors and advocates ensure that issues of conduct are raised at trial and are incorporated into the order for costs.

The issues which the court can consider are wide-ranging but should generally have some relevance to the proceedings.

There is a high bar to establishing that conduce was unreasonable, that “unreasonableness” is to be interpreted narrowly, and is conduct which is so bad as to “permit no reasonable explanation” or which “the consensus of professional opinion would regard as improper”.

The sanction which the court can impose will generally be restricted to disallowing the costs which have been incurred as a result of the unreasonable conduct.

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Impersonating a Protected Party grounds for imprisonment – Dudley v Hill

Court of Protection orders imprisonment of a Respondent for falsely impersonating the Protected Party and breaching an injunction.

In the case of Dudley Metropolitan Borough Council v Hill (2018), the Court of Protection made an Order for committal to prison after the Respondent was found guilty of impersonating the Protected Party and incurring costs on the Protected Party’s behalf without the authority to do so.

The Court of Protection were concerned for the Protected Party, both in relation to his health and welfare and also his property and financial affairs. There had been a provisional declaration made within the proceedings that the Protected Party lacked capacity. The Protected Party resided in his own home with his support workers, and the Local Authority were heavily involved in the matter.

The Protected Party was an 82-year-old man who suffered from dementia and the Respondent had been impersonating the Protected Party for a significant amount of time. The Respondent was served an injunction which forbid him to directly or indirectly contact the Protected Party or come within 100 meters of his property. The Respondent breached the injunction by attending the Protected Party’s property on 25th November 2017 and in January 2018, the Respondent fraudulently arranged for the installation of BT equipment without the required authority. Furthermore, the Respondent made a large number of telephone calls from the Protected Party’s property, which incurred unnecessary charges and proved that he had entered the Protected Party’s property.

The Respondent was required to attend a hearing, which was to determine whether he had breached the Order for injunction. The Respondent failed to attend the hearing and the Court then found him guilty as a result of the breach of the Order of injunction. The Respondent was sentenced to 4 months imprisonment, to be served concurrently.

If you have any queries, please do not hesitate to contact Casey McGregor or the team at COPCosts@clarionsolicitors.com

A new year, a new statement of costs. But why stop at that? A few intended changes to Costs Management too

The CPR committee have been hard at work again coming up with solutions to the problems that have been encountered by the legal profession since the Jackson reforms nearly 6 years ago.  Following the scratching of many heads, a few of those creases have been ironed out and the following proposals have been made:

Statements of costs

A voluntary 2 year pilot scheme for the new statement of costs will be implemented, starting from 1 April 2019.

The current proposals are for two new forms of costs statements, namely N260A and N260B which may be used for summary assessment. These new forms will  include a VAT declaration and the forms will now include the signature of a legal representative, which is in line with the rules, as opposed to a company partner. The Form N260A will cross refer to the document schedule in the summary. No model forms are available yet.

Master Howarth has suggested that the precedent Q, the document that identifies whether there has been an under or overspend in a phase of a budget, is incorporated into the statement of costs. This will create transparency at the summary assessment stage regarding the amount incurred in comparison to the approved budget – supporting the need for a well drafted budget.

The committee is to give consideration to lower value cases and the relevance of statements of costs for those cases where there will never be a summary assessment, as there was concern regarding the wasted costs incurred in those instances.

Costs management

The precedent H costs budget will remain the same, but there will be some adjustments to the guidance notes to align costs budgeting with the new electronic bill approach.

There has been many a debate regarding what date the incurred costs should be included up to in the budget and there is tension in the wording of the rules in that regard. The committee have recognised this and have debated the very same problem. They have understood that differing practices appear to be in place and that overall there is value in a consistent approach. It has been advised that this issue should be resolved as part of a future review of the practice direction.

There will be some adjustments to the precedent R, however that is the only guidance that has been provided at this stage, so the amendments remain unknown for the time being.

Sue Fox is a Senior Associate and the Head of Costs Management 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.

 

The effect of Payments on Account on Part 36 and Judgment

The case of Gamal -v- Synergy Lifestyle [2018] EWCA Civ 210 has reinforced the position that a payment on account does not “increase” the value of a paying party’s Part 36 offer when considering whether the offer has been “beaten” for the purpose of CPR 36.17.

Case Summary

The original action between Synergy Lifestyle (the Claimant / Respondent), and Ms Nivin Gamal (the Defendant / Appellant) related to a claim for unpaid invoices. For ease of reading, the parties are referred to throughout as the Claimant and Defendant respectively. There were various issues relating to the fraudulent nature of the invoices, applicability of VAT, payment or a carpet in October 2013, and the level of costs payable as a result, however these have been omitted for the sake of simplicity and ease of reading.

29 October 2013 – Defendant paid the Respondent £6,600

October 2014 – Claim issued for £151,000

24 August 2015 – Defendant’s CPR 36 offer of £15,000

8 February 2016 – Defendant pays £10,000 to the Claimant

10 May 2016 – Judgment for the Claimant in the sum of £14,275.49 (assessed at £30,275.49 less £16,600 already paid by the Defendant in respect of that work) and the Defendant pay the Claimant’s costs.

The Defendant appealed on the basis that she had beaten the CPR 36 offer of £15,000 and that the judge had failed to properly apply CPR 36.17.

Judgment on Appeal

Giving Judgment, Flaux LJ placed great reliance upon the earlier authority of MacLeish -v- Littlestone [2016] EWCA Civ 127. In that case, Briggs LJ had held that a Part 36 offer was made to settle the entirety of the claim, and that admissions made by a defendant do not have the effect of modifying the Part 36 offer such that it applied only to those parts of the claim which remained in dispute (i.e. a Part 36 offer made in respect of the whole of the claim relates to the whole of the claim, whether or not part of that claim is subsequently admitted).

In Gamal, the court extended this principle to apply not only where a payment had been made following admissions but to any payment on account whether or not an admission had been made. The effect of the payment on account was to reduce the amount which the Defendant could ultimately be ordered to pay, and therefore to a corresponding reduction to the Part 36 offer. As such, the Court dismissed the appeal, held that the Part 36 offer had not been beaten, and upheld the award of costs.

Summary

In summary, the judgment reinforces what many would consider to be the “common sense” position. A payment on account is just that; a payment in anticipation of a future liability. It therefore does not have the effect of making a defendant’s offer more attractive or a claimant’s offer less attractive.

The discussion regarding a “reduction” to the Part 36 offer in the judgment may be somewhat confusing, however this is simply because there are two ways of looking at the issue:-

1. The court gave judgment for £23,675.49[1], distinct from the balance of £14,275.49 payable once credit was given for the payments applicable payments on account (i.e. those made after the date of the offer). Looked at in this way,  the Defendant had obviously not beaten her own offer.

2. The court gave judgment for £14,275.49 (as a result of the payments on account), however just as the payment on account reduced the judgment sum, it also reduced the level of the Defendant’s Part 36 offer (i.e. the offer of £15,000 became £5,000 once the payment on account was applied). This is the approach the court adopted.

Both of the approaches above arrive at the same conclusion though by different methods.

All practitioners should note that whether a payment is “on account” is open to judicial interpretation however the general presumption is that payments made during the currency of a claim are payments on account unless specifically stated otherwise.

Matthew Rose is a Solicitor and Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact him on 0113 222 3248 or by email at matthew.rose@clarionsolicitors.com.

[1] In fact, the court assessed the value of the work at £30,275.49, which was necessary as the Claimant admitted that the invoices it had submitted were part of a fraud between it and the Defendant. However, the Claimant had already paid £6,600 towards this work in satisfaction of invoices prior to the commencement of proceedings. Therefore, the total value of the work done was found to be £30,275.49 but the total value of the claim against the Defendant was £23,675.49.

Voluntary capped costs pilot scheme in the Business Courts

Following on from my blog and newsletter (see below) over a year and half ago, it has now been announced that the capped costs pilot scheme will go live in January 2019 to coincide with the launch of the disclosure pilot scheme. The capped costs pilot scheme will apply to the Business and Property Courts in Leeds and Manchester (Chancery, Circuit Commercial and the Technology and Construction Court) and the London Circuit Commercial Court.

It is a voluntary scheme that will last for 2 years, with costs capped at £80,000.00.

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Blog published 20.06.17

Fixed Recoverable Costs – the pilot scheme

Following 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”.

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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 is a Senior Associate and the Head of Costs Management 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.

All you need to know about Counsel’s Fees in COP – How are they assessed?

Deputyship management is not always plain sailing, and on occasions, professional Deputies may be instructed to take on a case whereby the background is complicated, the circumstances are unusual and where Counsel are required to progress the matter. We have investigated the general rules applied when Counsel’s’ fees are to be assessed, and here is everything you need to know.

On what basis are the reductions made?

Firstly, it is important to recognise that in Deputyship matters, all costs are open for assessment. When a Deputyship Order is issued, it provides the authority for the professionals involved in the case to have their costs assessed. This includes the Professional Deputy, Counsel and in some instances, if a translator is required, their costs would also be subject to assessment.

What do the SCCO look at when deciding whether Counsel’s fees should be allowed?

Following a conversation with an experienced Costs Officer, advice was obtained regarding what aspects they consider when reviewing Counsel’s fees, once a bill of costs had been submitted for assessment. As there are no clear “black and white” guidelines for the assessment of Counsel’s fees, the Costs Officers are able to use their discretion on a case by case basis to review what would be a reasonable and proportionate amount to allow. Approximately, £300.00 per hour is allowed for a hearing, and £250.00 per hour for general work, however based on the complexity, volume of work undertaken, geographical location of Counsel and the breakdown of work outlined on Counsel’s fee note, these hourly rates could be revised by the Costs Officer.

It is important to note that it is your responsibility to work with your costs provider to include a detailed narrative within the Bill of Costs, explaining and justifying Counsel’s fees and involvement. For example, the Costs Officer would question why a Leeds based firm would instruct a London based Counsel. Details of the facts of the case, any hearings that have taken place, and the necessity of the work conducted should be included within the bill. Furthermore, when the bill is submitted for assessment, a Counsel’s fee note should be provided with the Bill of Costs. A further point to take into account is that not all Counsel’s fee notes are detailed enough, and therefore this increases the importance of including information relating to the complexity and background of the case when preparing the Bill of Costs.

A general understanding is that if Counsel had claimed for overall “refreshing themselves on the case” as they have not worked on the matter for a prolonged period of time this would not be allowed upon assessment as it would be deemed disproportionate and unreasonable.

Are the Deputyship firm expected to cover the reductions?

Counsel and professional Deputies are both aware that their costs are to be assessed and therefore, they are also aware that their costs could be reduced upon assessment. It is recommended for Counsel and the professional Deputy to make an agreement before the Bill of Costs is sent for assessment, whether the Deputy’s firm would cover the shortfall if reductions are made, or Counsel agrees to refund the reductions. Secondly, it was advised to wait until the Bill of Costs has been assessed before settling Counsel’s fees.

Do Counsel have a right to dispute the reductions?

If Counsel’s fees have been reduced upon assessment, they have a right to dispute the decision. This would be done in the format of a Request for Reassessment, prepared by your costs provider, outlining the reasons why you disagree with the reductions made and evidence in support of this.

It is noteworthy that Counsel are considered to be an “interested party” and therefore the professional Deputy would have to serve a copy of the provisionally assessed Bill of Costs on Counsel, and receive confirmation that they accept the amount allowed before the SCCO will issue the Final Costs Certificate, which provides authority for the Deputy and Counsel to be paid.

If you have any queries, or require any further information then please do not hesitate to contact Georgia Clarke at georgia.clarke@clarionsolicitors.com