The format of the precedent H budget and precedent R are working well, claims Mr Justice Birss

At February’s Civil Procedure Rules Committee meeting Mr Justice Birss reported that “work was ongoing to make certain that the new bill costs, Precedent H and Precedent H Guidance are consistent and accurate and that N260 the summary costs statement follows the same format. The content of Precedent H itself would not be changing. The Chair added that in his experience having settled down, Precedent H and R are working very well“. Therefore no changes are expected to the precedent H budget or the precedent R budget discussion report, the remaining changes relate to the bill of costs and statements of costs.

The wholesale changes to costs that we have encountered over the last 5 years were made as a result of Sir Rupert Jackson’s report whereby he likened the current bill of costs to a “Victorian style account book” making it “relatively easy for a receiving party to disguise or even hide what has gone on”. His purpose was to create transparency and unison with time recording systems and costs related documents, hence the need for the new electronic bill of costs, which is the final piece of Jackson’s jigsaw.

If the legal profession were to embrace time recording as Jackson intended, i.e. recording time in phase, task and activity, then astonishingly some 5 years after the publication of his legendary reforms, Sir Rupert Jackson may achieve his aim. However, Sir Rupert narrowly missed having his vision fully formalised and embedded into the rules during his working lifetime, his retirement has pipped him to the post.  He can now sit back and watch from afar, how his intended co-ordinated approach to costs will work in reality!

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.

 

Advertisements

Sue Fox considers the practical effect of the Harrison budgeting decision

In the eagerly awaited decision in Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] WECA Civ 792 (seearticle, page 8), the key findings of the Court of Appeal were that (1) budgeted costs will not be departed from in the absence of a ‘goodreason’; (2) incurred costs do not form part of the budgeted costs; and (3) the good reason test does not apply to those incurred costs. So, what does this decision mean in practice, and what further observations can we make?

Of particular interest is how the courts will deal with ‘incurred costs’. During the Court of Appeal case, thecourt’s attention was drawn to incurred costs when the respondent presented what was described by Davis LJ as ‘an ingenious argument’ regarding incurred costs being potentially approved ‘through the back door’ at the budgeting stage. The respondent submitted that: ‘The incurred costs will have acquired a special status:
in that, while not “approved” as such, they will have been taken into account by the court at the costs management hearing in managing the future estimated costs.’ Please click here to read the full article.

Sue Fox is a Senior Associate and 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.

 

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

 

 

 

 

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.

 

Proportionality in the Court of Protection

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.