The Senior Court Costs Office Guide 2023 (the ‘Guide’) has now been released and can be foundhere. Although this guide is meant for proceedings in the Senior Court Costs Office (‘SCCO’), this is a very useful starting point to understanding detailed assessment proceedings generally.
As with the SCCO Guide 2021, the Guide is split into 4 parts:
Part A General Matters = covering matters such as entitlement to costs, costs management orders, costs capping orders and the electronic bill;
Part B Detailed Assessment Proceedings = covering the processes of, and time frames for, commencing detailed assessment, serving points of dispute, serving replies to the points of dispute, and requesting an assessment;
Part C Applications = covering the processes of obtaining and setting aside a default costs certificate, obtaining a payment on account and applications in detailed assessment proceedings; and
Part D Specific Proceedings = covering solicitor and client assessments, costs only proceedings, appeals and litigants in person.
The changes in the Guide are minimal but include:
Amendment to the qualified one-way costs shifting (‘QOCS’) section in light of the change to CPR 44.14 in April of this year;
the inclusion of Precedent R and T in the schedule of precedents; and
the inclusion of standard orders for assessments under CPR 46.4(2) in the schedule of precedents.
See Ella Wilkinson’s blog here regarding the changes to the Guide in relation to COP cases.
Although four key areas were considered, costs budgeting was the focus.
Costs Budgeting
The overarching finding was that budgeting is useful and should be retained, but ought to vary between different areas of civil justice.
Despite a wide range of responses, a clear outcome from the consultation was expressed in the following statement:
“Since costs budgeting was adopted, there is now evidence of real and sustained progress in the discipline and understanding around costs and this has consequently improved case management and the proportionality of costs”
Although a handful of respondents suggested the abolition of budgeting, most recognised that visibility of meaningful costs estimates is useful and should be retained, but “a fresh, more nuanced approach” to budgeting was recommended.
It has been proposed:
Front sheets replace full budgets for Defendants where QOCs apply, but the courts will still have the power to order a full budget at its discretion. It is unclear how this will be of benefit given the fact a full budget is still required in order to produce a front sheet.
A ‘costs budgeting light’ scheme is introduced applying to claims valued between £100k and £1m. A separate ‘light touch’ approach to claims of £1m+ in the Business & Property Courts is adopted. These ‘light’ schemes are yet to be defined.
A staged process between directions and costs management is introduced where directions are contentious. Some costs information would however still need to be filed before directions. It is not yet clear what this information would consist of.
Mesothelioma and Media and Communications claims (and perhaps other specialist proceedings) are to adopt more bespoke practice arrangements for conducting budgeting.
Timescales for exchanging budget discussion reports are extended to allow for meaningful negotiation. It is hoped this will reduce the amount of budgeting hearings.
The budget variation process (Precedent T) is simplified. Details of a more straightforward process have not been provided.
There should be penalties for those who default on aspects of the budget timetable leading to a wasted court resource.
Hourly rates and incurred costs in the budgeting process are reviewed further.
Guideline Hourly Rates
The general consensus of respondents took the view the GHRs had a useful role in that they were a starting point for assessment and broadly reflect market rates.
In the short term, recommendations are:
A new band for complex, high value, commercial work is introduced, whether in London or elsewhere.
Hourly rates are subject to yearly reviews linked to SPPI on the 1 January each year. A retrospective uplift to the 2021 figures is to be applied and a detailed review should take place every 5 years.
Counsel’s fees should be capable of being assessed by reference to GHRs, separately to solicitor GHRs.
A clearer test is introduced to allow for departure from GHR. No details of this proposed test are provided.
Costs under pre-action protocols/portals and the digital justice system
The aim of pre action processes, digital or otherwise, to settle claims without the need for litigation or to narrow the issues where possible, should be encouraged and any reform should further this aim.
Key proposals are:
Changes to pre-action costs; specifically the extent of recovery for new digital pre-action protocols. These should not impact recovery of pre-action costs post-issue.
A review of the Solicitors Act 1974 in view of the digitisation of dispute resolution.
Consequences of the extension of Fixed Recoverable Costs
As the extension of FRC regime is already underway, the general implications were not addressed in any depth. The only recommendation of note is:
The introduction of a costs cap of £500k into the Shorter Trials Scheme for patent cases.
Next steps…
The CJC will now consider how these recommendations are taken forward.
Look out for further commentary from the Clarion Costs Team.
Today, I presented at our annual commercial litigation webinar on the topic of Statements of Costs for Summary Assessment, where I covered the following:
What is a summary assessment?;
A review of the rules and practice direction;
Recent case law and practical points; and
What’s new?
Statements of Costs for Summary Assessment have been a somewhat ‘dry’ area of costs law for a long period of time, but over the last few years there has been a lot of activity and an increase in reported cases concerning breaches of CPR 44 CPD 9.5. The Court has a fairly wide discretion when faced with such breaches by virtue of CPR 44 CPD 9.6 which states:
‘The failure by a party, without reasonable excuse, to comply with paragraph 9.5 will be taken into account by the court in deciding what order to make about the costs of the claim, hearing or application, and about the costs of any further hearing or detailed assessment that may be necessary as a result of that failure.’
The court should also apply the case of MacDonald v Taree Holdings [2001] 1 Costs L.R. 147 when considering imposing its power under CPR 44 CPD 9.6. The test set out in this case is:
“What, if any, prejudice has that failure to comply caused to the other party? If no prejudice, then the court should go on and assess the costs in the normal way. If satisfied it has caused prejudice, the next question is: how should that prejudice be best dealt with.”
The case law that I covered in the presentation was:
The above cases are all examples of where the Courts were faced with breaches of CPR 44 CPD 9.5 and they all reached different outcomes.
If you have any questions on Statements of Costs for Summary Assessment or require assistance with the preparation of a Statement of Costs or help with challenging a Statement of Costs ahead of a hearing, then please do contact me at andrew.mcaulay@clarionsolicitors.com or on 07764501252. We also offer in person or remote/video training on this area of costs law.
Following the fixed costs consultation published in September 2021, two further consultations have now opened in respect of provisions for vulnerable parties and the QOCS issues arising from Ho v Adelekun [2021] UKSC 43.
The consultations close on 20 June 2022 and details of how to respond can be found here.
QOCS consultation
We looked at the judgment in Ho v Adelekun back in December. The case clarified the position in respect of the interplay between CPR 44.12 and CPR 44.14, and the effect of QOCS on a Defendant’s ability to offset an order for their own costs against the Claimant’s costs. You can read that article here.
The decision confirmed that Defendants can only enforce their costs orders up to the amount ordered for the Claimant’s damages and interest (CPR 44.14 (1)). It was suggested at the time that this may lead to results that appeared unfair and that the CPRC may need to consider the issue to put right any ambiguities.
The proposed changes seek to address those concerns by adding the amount of any costs order to the sums set out in CPR 44.14 (1) and by including ‘deemed orders’ under Part 36:
The vulnerable parties consultation proposes to add additional provisions for an amount in excess of fixed costs to be claimed where a party or witness is vulnerable, where that vulnerability has caused additional work to be required, and the claim is for an amount at least 20% greater than the applicable fixed costs.
Such claims will be assessed and, if the assessed sum is less than 20% greater than fixed costs, the court will make an order for the lesser amount of fixed costs or the assessed costs.
The minutes of the CPRC’s March 2022 meeting were published today and can be found here.
The Costs sub-Committee confirmed that work has commenced in respect of the extended fixed costs regime which was reported last year. The committee’s first meeting was held last month but a precise timetable has yet to be fixed.
The Sub-Committee will also be considering FRC in the context of vulnerable witnesses/parties and there is likely to be a substantive review of the structure of CPR 45.
It was also confirmed that a consultation is anticipated in respect of Qualified One Way Costs Shifting (QOCS).
Before the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 ended recoverable additional liabilities in most personal injury claims, it was commonplace for Claimant Solicitors to waive any claims for costs from protected parties in excess of the amounts recovered from the paying party. Since then, however, there has been an increase in claims for the approval of deductions, not only in respect of success fees and ATE premiums, but also in respect of the shortfall between the Solicitors full costs and those recovered from the paying party.
Any deductions from a protected party’s damages can only be approved following an application under CPR Parts 21. Furthermore, since December 2021, such applications have been subject to additional guidance set out in a practice note issued by the SCCO.
What approach are the courts now likely to take to these applications?
One example can be found in BCX v DTA (Costs Judge Brown, 16 December 2021). In this case the Claimant’s costs were agreed with the paying party in the sum of £330,000, the Claimant’s Solicitor then claimed a shortfall on profit costs of £94,977.38, and £64,780.92 by way of success fees and an ATE premium. The Judge carried out a detailed assessment of all the costs claimed against the Claimant and concluded that the reasonable sum that the Claimant was required to pay his Solicitors was £274,859. As this was less than the amount the paying party had agreed to pay, the claim for a shortfall on profit costs was not approved.
This decision demonstrates that claims for shortfalls on profit costs are likely to be the subject of detailed scrutiny and considerable caution should be exercised before maintaining a claim for a shortfall from a protected party.
This article originally featured in our March 2022 newsletter which can be found here.
The Civil Justice Council working group has now published their final report on guideline hourly rates following the consultation that took place between January and March 2021.
The report responds to the concerns raised during the consultation process, however, the working group’s recommendations remain as per the interim report and will now be considered by the Master of the Rolls.
Professor Dominic Regan and Andrew McAulay, Partner and Head of the Costs and Litigation Funding team at Clarion, discuss what might be in store this year for Civil Procedure, Funding and Legal Costs.
This video was featured in our February 2021 newsletter, see the full newsletter here.
In the High Court case of ABS Company Ltd v Pantaenius UK Ltd & Ors [2020] EWHC 3720 (Comm), HHJ Pelling QC elected to assess costs at the end of a trial which was part of the shorter trial scheme. The actual judgement doesn’t deal with costs until paragraph 60 of the judgment, albeit it makes interesting reading in terms of super yachts!
The Claimant was successful in the main action, and the Claimant’s costs totalled circa £213,000. The statement of costs was phased in accordance with precedent H phases, albeit the matter was not subject to a costs management order.
The judge was mindful of his duty to undertake a broad brush approach to costs given that it was a summary assessment, and his aim from the outset was to ensure that he arrived at a figure that was reasonable and proportionate for the work undertaken. The judge recognised that current 2010 guideline hourly rates were “significant [sic] out of date” and that the “conventional approach in relation to guideline rates is to uplift them by about 25 per cent in order to reflect the effects of inflation…” He also recognised that “specialist solicitors in specialist areas of activity should recover an uplifted fee to reflect that specialism”. In addition, he considered the rate being charged by the opponent (an argument that is often seen within detailed assessment proceedings) in order to compare whether the parties were on a like for like footing with regards to charge out rates. The judge allowed the rates as claimed (the judgment did not state the hourly rates claimed).
The judge then considered his options in respect of the summary assessment and decided that it would be a disservice to apply a broad brush approach to the statement of costs globally and that, instead, he had a duty to look at the case on a phase-by-phase basis. Paragraphs 66 to 82 (paragraph 82 being the concluding paragraph to the judgment) provided an insight into how the judge undertook a summary assessment on a phase by phase basis. What is interesting is that the phased statement of costs resulted in a much more structured consideration of the work carried out, and allowed the judge to see with transparency the work that was undertaken at each stage of the claim. This, in turn, led to a well-reasoned summary assessment.
This article was featured in our February 2021 newsletter, see the full newsletter here.
