The 109th update has clarified what falls within the “incurred” costs, and made some changes to the guidance regarding which phase costs fall into. Watch the video for more detail and some tips on how to manage the period between the drafting of the budget and the date of the costs management hearing.
Anna Lockyer is an Associate and Costs Lawyer in the Clarion Costs Department. You can contact her by email at Anna.Lockyer@Clarionsolicitors.com, or by phone on 0113 288 5619.
We found in Culliford & Anor v Thorpe [2018] EWHC 2532 (Ch) that a payment on account can be made by the Court after the judgement has been made and after the Order has been sealed. Previously, it had been widely understood that a Part 36 agreement, as it is a deemed Order for costs under CPR 44.9(b), provides authority for a party to apply for an Order for a payment on account and the Court can make such an Order upon settlement, as obligated pursuant to CPR 44.2(8).
However, in the High Court case of Finnegan v Frank Spiers [2018] EWHC 3064 (Ch),a successful professional negligence claim from last year, Mr Justice Birss ruled that the Court does not have the power to make an Order for a payment on account where a claim is settled by way of Part 36, as the agreement does not provide authority to do so.
It was considered and argued by the Claimant Counsel that the decision for a payment on account should be based on the authority under CPR 44.9 for a deemed costs Order. The Part 36 agreement is a deemed costs Order and provides authority for costs to be assessed on the standard basis, outlined under CPR 44.3(2) and which Part 36 indicates. Counsel for the Claimant relied on the rule under CPR 44.2(8) – where an order has been made for costs to be assessed by way of detailed assessment, as they would be here, then an order shall be made for a payment on account.
Presiding over the case, Justice Birss ruled that Part 36 was a self-contained code, as is written within the part. He highlighted that it is clearly not entirely complete given the inclusion of the CPR 44.9; however, as it is a self-contained code, it should follow that it should be treated as such. Part 36 contains its own authority for the consequence of costs following settlement, and as such, there is no reason that CPR 44.2(8) should be followed when looking at whether to make an order for a payment on account. Justice Birss stated that much of CPR 44.2 is not applicable to Part 36 settlement and therefore one could not correctly apply CPR 44.2(8) to the rule. This is because the place for any authority for making a payment on account following Part 36 should be within the Part itself, from which it is absent. Furthermore, the Defendant Counsel argued that CPR 44.9 is in place in order to trigger the detailed assessment proceedings; however, it does not include any other provision of Part 44.2 when triggering the process, therefore highlighting that it should be no different when dealing with Part 36. Justice Birss dismissed the Claimant’s appeal.
The ruling has caused much debate, and was a topic of discussion at the annual Association of Costs Lawyers Conference, in which even the Counsel for the Defendant, Mr Rupert Cohen, agreed with costs judges that perhaps the decision went the wrong way. I am sure that it will not be the last time we see argument over this point and will discuss further any decisions that arise on this blog.
You will have all heard about the ‘Jackson Reforms’, which so far, have not been something that Court of Protection practitioners have had to be too concerned about – until now.
As part of the ‘Jackson Reforms’, a new test of proportionality was introduced. Proportionality now trumps reasonableness and ‘necessity’. Even if a cost was reasonable and was necessary, it can be disallowed on the basis of proportionality. The purpose of this reform was to tackle disproportionate claims for costs.
The case of BNM and MGN Limited (see https://clarionlegalcosts.com/2016/06/10/who-needs-fixed-costs/#more-876) is an interesting case to consider in relation to the new test of proportionality, where a bill of costs was reduced from £167,389.45 to £83,964.80 on the basis of proportionality. This is one of the first cases to really demonstrate the power of CPR 44.3 (2) (‘Jackson test of proportionality’), which states:
Where the amount of costs is to be assessed on the standard basis, the court will –
(a) 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; and
(b) resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party.
This ‘Jackson test of proportionality’ is something that has primarily been having an impact on civil and commercial claims for costs, however, we (Court of Protection Costs team at Clarion) are now starting to see the new test being applied to Court of Protection cases.
Under the new test, the Senior Courts Costs Office must assess a bill of costs (line by line) and determine what is reasonable. Thereafter, the new test of proportionality can be applied. The Costs Officer has the power to stand back and ask ‘was this a proportionate sum to incur on this matter taking into account all the factors relating to the case’, and in some instances, the answer can lead to significant further reductions to a Bill of Costs.
Going forward, we believe that this is something that will have an impact on Court of Protection cases. Not only will your costs be assessed based on what was reasonably incurred, but the SCCO can also consider other factors, such as the value of the Protected Party’s estate and other non-monetary influences when considering whether the assessed (reasonable amount) is proportionate.
We considered a recent assessment whereby the Protected Party’s estate was worth approximately £46,000.00. The Deputy submitted a bill of costs totalling £12,200.00. The bill was provisionally assessed at £11,500.00, but was thereafter limited to £9,000.00 due to the issue of proportionality, as a result of the value of the estate.
There is no guidance as to what is proportionate in these cases, however, the Costs Officer has the authority to determine what is proportionate at their own discretion. It will be interesting to see how this is applied going forward and whilst this area is still developing, requests for reviews or appeals may be appropriate. Albeit the financial position of the Protected Party is key, other factors such as the conduct of the Protected Party, the complexity of the matter and any key elements (international and business) may be influential in justifying your claim for costs.
If this is something which you require assistance with, please do not hesitate to contact myself or our team at COPCosts@clarionsolicitors.com.
Further to my previous blog on this point Forthcoming Changes I can confirm that the changes to the CPR made in the 83rd update only apply to cases commenced after 6 April 2016, as follows:Read More »
The 83rd update to the CPR which will come into force on 6 April 2016 includes several changes which I have summarised in a previous blog Practical guide to the changes to the CPR – April 2016. However, I thought it would be helpful to identify the essential changes as follows:
