Case Management Refresher

Cost estimates are necessary for fast track claims when the fixed costs regime is not applicable and for non-budgeted cases

In accordance with CPR 28 PD6.1 (4), a cost estimate is required to be filed and served at the same time as the pre-trial check list.  It is stated on the pre-trial checklist (N170) that ‘for legal representatives only: a cost estimate to be filed and served at the same time as the pre-trial check list is filed‘.  Therefore, for all fast track claims where there is not a fixed costs regime in place then a costs estimates should be filed. Furthermore, for non-budgeted multitrack claims a costs estimate should be filed.  What is particularly interesting is that this captures those claims that are not automatically included in the costs management regime, e.g. claims over £10m.

Case management conferences and indemnity basis costs

In accordance with CPR 26 PD 6.6, the court can impose a costs sanction where a party has failed to file a directions questionnaire or failed to provide further information which the court has ordered.  The court will usually order a party to pay on the indemnity basis the costs of any other party who has attended the hearing, summarily assess the amount of those costs, and order them to be paid forthwith or within a stated period.

Disposal hearings

In accordance with CPR 26 PD 12.5(2), Section VI of Part 45 (fast track trial costs) will not apply to a case dealt with at a disposal hearing whatever the financial value of the claim. So, the costs of a disposal hearing will be in the discretion of the court.

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

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Clarion Costs Legal Updates

We have incorporated a collection of our blogs into a Blog booklet. The blogs were current at the

date of publication, however these may have now been superseded. Please visit our blog

(https://clarionlegalcosts.com/) for continuous updates on all costs law.

• Page 1 – Introduction

• Page 2 – Good news for those that prepare an accurate costs budget by Sue Fox

• Page 4 – Fixed Costs – the effect of acceptance of a Part 36 offer by Matthew Rose

• Page 6 – Payment on Account or Final Invoices? – another solicitor/own client costs

battle… by Andrew McAulay

• Page 7 – The Disclosure Pilot Scheme – what roles do costs estimates and precedent H

costs budgets have? by Sue Fox

• Page 8 – Proportionality – a flurry of cases by Andrew McAulay

Joanne Chase

• Page 9 – Part 36 offers, the basis of assessment, and knowing your expert by

Joanne Chase

Please click here

For any assistance, please contact the Costs and Litigation Funding Team at Clarion Solicitors 0113 246 0622.

 

 

Proactive Costs Recovery – Thinking Ahead

The traditional approach to costs recovery has been to prepare a statement of costs for trial, perhaps convert it into a without prejudice schedule of costs for negotiation and, when all else fails, instruct your costs specialist to prepare a formal bill of costs and commence detailed assessment proceedings. Unsurprisingly, this whole process can take many months and, if the paying party are unwilling to make a payment on account of costs, it can cause difficulties with cash flow. This is particularly noticeable for firms with a large caseload.

The tide, however, has started to turn and we are receiving an increasing number of instructions to prepare a skeleton bill of costs in readiness for a JSM. This proactive approach means that your costs are summarised and presented to the opponent on an occasion where, hopefully, they have the appetite for negotiation and therefore there is a realistic chance that both damages and costs can be concluded in one go.

For matters subject to costs management, it is essential that the costs are presented in accordance with precedent H phases to enable the paying party insight into whether there has been any over spend in a particular phase. Costs that fall outside costs management should be isolated and thought should be given to good reasons for departure from the budget if there has been an overspend. This will equip you with the information required to try and persuade the opponent to reach an agreement on costs and avoid the costs associated with detailed assessment.

And, of course, if you are unable to settle your costs then the skeleton bill can be updated and converted into a formal bill of costs in readiness to commence detailed assessment proceedings.

Those clients who adopt a proactive approach to costs recovery are reducing the amount of time it takes to conclude costs negotiations and, ultimately, for the money to reach their bank account. They, wisely, think about the costs aspect of their case in tandem with their client’s claim and they reserve their Costs Lawyer well in advance of the JSM.

Joanne Chase is a Senior Associate Costs Lawyer in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact her at joanne.chase@clarionsolicitors.com and 0113 336 3327, or the Clarion Costs Team on 0113 246 0622.

Disproportionate Costs in the Court of Protection

In the case of Hounslow v A Father & Mother (Costs in the Court of Protection – Disproportionate litigation) [2018] EWCOP 23, Judge Eldergill looked at the effects of deviating away from the simple issue at hand and the way that costs can spiral when disproportionate and unnecessary work is undertaken. It also looked at the costs consequences and the unfairness that can be encountered by a Litigant in Person.

The proceedings were in relation to a young man. The Applicant was the London Borough of Hounslow and the Respondents, were the young man’s parents.  The young man resided with his father and suffered from a severe learning disability, which rendered him unable to manage his own property and financial affairs. The financial assets were modest, and the young man received a number of benefits. At the time that the proceedings were issued, the father was the Department of Work and Pensions appointee and the mother assisted with the administration of his state benefits.

In this case, the local authority considered that a Deputyship would be more appropriate due to financial safeguarding concerns, obtained by an anonymous informant.  On 6 February 2017, the Court issued an application filed by the local authority, which asked the Court to appoint the Director of Children’s and Adult Social Services as the Deputy.

On 1 March 2017, the father filed an acknowledgement of service, opposing the application. The father stated that the local authority had failed to provide him with a copy of the application saying it was ‘confidential’. It was also stated that the local authority had not provided any more details or evidence in support of the application.

A Dispute Resolution Hearing had been listed for 2 May 2017, following which no resolution was reached. Judge Hilder listed a number of comprehensive directions in relation to the filing of evidence, position statements and the trial. The matter then came before Judge Eldergill and he stated the following;

1) A case involving the alleged misuse of state benefits has generated an enormous amount of documentation, and no doubt legal costs, quite disproportionate to the simple central issue of an alleged misuse of benefits.

2) The position statements and correspondence are full of generalised assertions of abuse of process, applications being misconceived, summary judgment, etc, which no doubt partly explains why so much paper has been generated.

3) Both legally-represented parties have made basic procedural errors (filing lengthy documents electronically despite what the rules say, including references to discussions at a DRH, filing bundles that are immediately to be returned, not serving the application within the required time limits).

I make these points because of the very clear costs implications.

He then made a further order on 13 November 2017, setting out concerns and the following directions:

UPON

(1)  Considering bundles and other filed documentation concerning this application of in excess of one thousand pages.

WHEREAS

(1)  The local authority has applied to be appointed as the deputy for property and financial affairs of [the son] who is a gentleman in receipt of social security benefits that are managed under a DWP appointeeship held by the First Respondent.

(2)  The outcome of the application will be either that the First Respondent continues to act as [his son’s] appointee (if the application is dismissed) or that the local authority is appointed as [his son’s] deputy, in which case the local authority automatically becomes his appointee.

(3)  The overriding objective of the rules is to enable the court to deal with a case justly. This includes ensuring that it is dealt with expeditiously, in ways which are proportionate to the nature, importance and complexity of the issues, saving expense, and allotting to it an appropriate share of the court’s resources. The parties are required to help the court to further the overriding objective.

(4) Unfortunately, an application concerning the management of [the son’s] benefits has generated over one thousand pages of documents and a huge amount of professional time, expenditure and legal costs quite disproportionate to a simple central issue of alleged misuse of benefits. While the court acknowledges that some of the documentation and expense was required of the parties as a result of the court’s case management directions of 2 May 2017, the amount of documentation filed has nevertheless been contrary to the overriding objective.

(5) Furthermore, and notwithstanding any submissions to the contrary:

(a) The position statements and correspondence are full of generalised assertions of abuse of process, applications being misconceived, summary judgment, etc, which no doubt partly explains why so much paper has been generated.

(b) Both legally-represented parties have made basic procedural errors (filing lengthy documents electronically despite what the rules say, including references to discussions at a DRH, filing bundles that are immediately to be returned, not serving the application within the required time limits, referring inappropriately to public interest immunity, etc).

(6) The parties will be aware that such considerations and observations have clear implications in terms of the recovery of the legal costs generated by these proceedings.

(7) On the documentary evidence filed to date, the court makes the following provisional observations in order to assist the parties:

(a)  The safeguarding investigation was fundamentally flawed and unfair.

(b) The financial information filed to date suggests that there was a lack of prudent good housekeeping under the previous arrangements in force until February 2017 in relation to the way in which benefits were used for [the son’s] benefit.

(c)  The position statement dated 27 September 2017 filed on behalf of the First Respondent is in quite general terms, in particular the financial tables at (internal) pp.10-12.

(d)  A hearing in the Court of Protection regarding the redaction of the identity of the informant would be disproportionately costly. Whether the initial report was malicious or not, and whoever the informant was, it is for the local authority to establish on evidence that there has been mismanagement or misuse by the Second Respondent of [her son’s] funds, that such mismanagement or misuse means that the First Respondent (sic) cannot remain as [his son’s] appointee, and furthermore that it justifies a deputyship order in favour of the local authority.

(e) To date, and despite a prolonged safeguarding investigation, the local authority has not established that the Second Respondent has used [the son’s] funds for her own benefit or that the First Respondent is an inappropriate appointee. If the local authority cannot prove that then it follows that the informant was an unreliable informant.

(f)  In relation to that issue, the local authority has not received unredacted copies of the Second Respondent’s bank statements or had an opportunity to test the evidence of both Respondents by way of cross-examination. That being so, summary dismissal of the application (with the likely costs consequences) would not be just or appropriate at this stage.

(g) On the basis that the local authority is unwilling to withdraw its application, a short half-day final trial is appropriate with the following witness template: First Respondent Evidence-in-Chief 15 minutes, Cross-Examination 30 minutes; Second Respondent Evidence-in-Chief 15 minutes, Cross-Examination 30 minutes; Submissions 30 minutes; Judgment 30 minutes.

(h) Prior to the hearing the Second Respondent must (as she has very fairly willingly agreed to do) file and serve unredacted copies of the previously filed bank statements.

The mother provided the bank statements and details of the withdrawals and expenditure and the final hearing was on 2 February 2018. The Local Authority had withdrawn its application and left the matter of costs to be determined.

The young man had no savings so the usual rule of costs, that the costs be paid from the estate was not an option.  Judge Eldergill stated that the ‘proceedings had taken up a wholly disproportionate amount of court time and had been conducted with insufficient proportionality.’ The Judge concluded that the case could have been resolved in an efficient manner by simply reviewing bank statements and asking questions, but instead there were ‘hundreds of unnecessary and bad-tempered correspondence, witness statements, position statements and emails’ which amounted to approximately £50,000.00 plus VAT costs in respect of the Respondents costs and £15,000.00 in respect of the local authority’s costs.

Payment of costs in respect of property and financial affairs applications under Rule 19.2, state that the ‘costs should be paid by P or charged by to P’s estate’, however Rule 19.5 can be applied when there is support in departing from the general rule. The judge held that the litigation was conducted disproportionately by both sides and there was a failure to focus on the simple central issue of; whether the bank statements could indicate any misuse of funds. Furthermore, Judge Eldergill stated that he did not believe that the ‘costs incurred by the First Respondent were proportionate to the issues, complexity of the case and the son’s circumstances’.

The proportionality of the work undertaken on behalf of the First Respondent were deemed to be assessed on an item-by-item detailed assessment basis. The Local Authority would then pay 90% of those costs, with the 10% reduction reflecting the Courts findings of the conduct of the other party. The costs in relation to the Litigant in Person were much more complex and the Judge felt that they lead to an injustice. The Judge also called for the rules to be reviewed and revised so that the Court can award a Litigant in Person costs in a case such as this one. It will be interesting to see if there are any developments in this area.

Partial strike out of the budget – Page v RGC Restaurants Ltd !

Partial strike out of the budget in the case of Page v RGC Restaurants Ltd !

Be wary when preparing budgets, do NOT prepare a budget up until a particular stage, unless the court orders otherwise. In this case, the Claimant had decided to prepare their budget up until the PTR stage only, the Master found that they had not complied with the CPR and limited the budget to court fees only. The Claimant appealed the decision on the grounds that a budget had been filed, questioning the Master’s irrational approach of limiting the budget to court fees, claiming that CPR 3.15 (the fact that the parties had agreed the Claimant’s budget up to the PTR stage) trumps the sanctions imposed by CPR 3.14 and submitting that the default sanction should be dis-applied. 

On appeal, the Master found that this was partial non-compliance rather than full non-compliance. So rather than striking the full budget out, the court struck out those phases of the budget where forecast costs had not been provided.

It has to be said, the preparation of partial budgets makes assessing proportionality impossible, which is an essential part of costs management. 

In practical terms, this is important for split trials. My advice has always been NEVER to prepare a budget up to the first trial, unless the court orders otherwise as there is the risk that the court will deem this to be non-compliant and the budget may be reduced to court fees. We now have case law which provides guidance regarding the approach to be adopted, which is helpful.  

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.

Good news for those that prepare an accurate costs budget

Following on from the Court of Appeal decision in Jacqueline Dawn Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] WECA Civ 792 where the Court of Appeal found that:

  • The budgeted costs will not be departed from in the absence of a “good reason”;
  • Incurred costs do not form part of the budgeted costs;
  • The good reason test does not apply to those incurred costs;
  • The proportionality test can be applied to the final claim for costs, despite the proportionality test having been applied when the costs budget was approved.

As predicted, we have seen that in practical terms this is good news for those that prepare accurate budgets, but not so for those that don’t. The practical implications of this Court of Appeal decision has an impact on the recovery of your legal fees, as follows:

If the budget has not been exceeded:

  • The budgeted costs will be allowed in full unless a good reason is demonstrated to depart from the budget;
  • A detailed assessment of the budgeted costs can be avoided.

If the budget has been exceeded:

  • The budgeted costs will be restricted to the amount of the budgeted costs that were approved, unless good reason can be demonstrated to depart from the budget.

Win win for those with well prepared budgets. In addition, following approval of the budget, further consideration should be given to the budget throughout the lifetime of the claim. Examples of which are as follows:

Q1. Is it necessary to consider the budget in preparation for the trial?

Answer – yes.

If you win and your budget has not been exceeded:

  • Ask the court to order that the budgeted costs claimed are allowed in full;
  • Only incurred costs will be assessed by way of detailed assessment;
  • If the trial is less than one day, ask the court to summary assess the incurred costs. The court may assess the budgeted costs, however if the costs fall within budget, these should be allowed in full. Present your budgeted costs in phases to demonstrate to the court that the budget has not been exceed on a phase by phase basis;
  • Assess any potential good reasons that your opponent may raise to depart downwards from your budget and be ready to defend those arguments;
  • Ask for a payment on account of the incurred costs, these remaining costs being subject to assessment.

If you win and your budget has been exceeded:

  • If no good reason can be demonstrated to depart from your budget, the court should limit your claim for costs to the approved budget amounts;
  • Therefore establish a good reason to depart from the budget so that the costs can be assessed by way of detailed assessment rather than being restricted to the approved amount of the budget. This will provide you more of an opportunity to justify your costs and overspends;
  • Request a payment of the approved costs, payable within 14 days;
  • Request a payment on account of the remaining incurred costs, payable within 14 days.

If you lose and your opponent’s budget has been exceeded, their budgeted costs should be limited to the budget:

  • The winner can obtain costs in excess of the budget if they can show a good reason to depart from the budget, so be ready so defend any good reasons that the winner may raise to depart from the budget.

If you lose and your opponent’s budget has not been exceeded, their budgeted costs should be limited to the budget:

  • A good reason is required to depart from the budget, therefore if you can identify a good reason to depart from the winner’s budget you can secure a reduction to the winner’s budgeted costs.

Q2. What are examples of a good reason?

Answer – examples of a good reason to depart down are:

  • Did the winner undertake all the work that was provided for in the budget?
  • Were there any adverse costs orders, amount needs to be excluded from the budget?
  • Proportionality test – does the proportionality test that was applied at the CCMC require revisiting?

Q3. Why raise those good reasons at the trial?

Answer

  • Defers the assessment of costs to detailed assessment, if deemed beneficial;
  • Minimises the amount of the payment on account;
  • Minimise the amount of budgeted costs payable.

Remember, incurred costs are subject to detailed assessment in the normal way – ensure that the court is aware that this is only applicable to budgeted costs.

Q4. What role does the budget have in securing a Payment on Account?

Answer – the court will scrutinise the amount that was approved in the budget when determining the amount of the payment on account.

  • If the court refuses to order the payment of your budgeted costs in full, and opts to order a payment on account instead, request the following amounts:
    • Thomas Pink Ltd v Victoria’s Secret UK Ltd [2014] EWHC 3258 (Ch) (31 July 2014) – POA of 90% of budget;
    • Cleveland Bridge UK Ltd v Sarens (UK) Ltd [2018] EWHC 827 (TCC) – POA of 70% incurred costs and 90% estimated costs.
  • Be ready to defend any good reason to depart from the budget that your opponent may raise, this will assist in securing the maximum payment on account, conversely remember to raise any good reason arguments to depart down if you are payer rather than payee.

Q5. What role does the budget have at the mediation or settlement meeting?

Answer – the budget enables parties to be fully aware of their costs exposure, so an informed decision can be made when determining whether to settle. Update the budget for the ADR meeting so that costs may be agreed at the same time and be ready with the same arguments in terms of departure from the budget that would be applied at the trial.

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