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 »
Tag: precedent h
Summary of the fundamental changes to Costs Management from 6 April 2016 and the new format Precedent H which must be filed
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:
Practical guide to the forthcoming changes to CPR Part 3 – 83rd Update to the CPR
CPR Part 3 is being tidied up. There have been further amendments to CPR Part 3 and Practice Direction 3E, which will come into force on 6 April 2016.
Negotiate, negotiate, negotiate
The court has awarded costs against a party who has claimed unreasonable amounts in their budget. In the case of King & Anor v Thipthorp & Ors [2016] EWHC 3859 (COP) the court reduced areas of the budget due to unreasonable claims and disproportionate amounts. Although the budgets appeared overall not to be excessive, the budget was still reduced in relation to particular items. This is contrary to the intended approach of the court, which is to adopt a global approach when considering reasonableness. Furthermore the CPR is to be amended with regards to this global approach, confirming that hourly rates within budgets should not be set – here is a link to my previous blog regarding the yet to be implemented changes Least worse option.
The court ordered that the costs of the challenge could be recovered by the party objecting to those items.
Negotiations are key to successful costs management, avoiding the litigation risk associated with any hearing is certainly beneficial. Furthermore, in view of the amendments to be made to the CPR regarding parties having to file “an agreed budget discussion report which sets out the agreed and disputed areas for each phase and a brief summary of the grounds of dispute schedules of agreed/disputed areas with the budgets”, negotiations have never been so important.
You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com
“Remuneration on a time basis rewards inefficiency”- says LJ Jackson!
“Remuneration on a time basis rewards inefficiency”- says LJ Jackson!
At the IPA Annual Lecture on 28 January 2016, titled “Fixed Costs – The Time has Come”, LJ Jackson discussed the inevitability of fixed costs, the question that remains unanswered is – to what extent?Read More »
The CPRC least worst option! How to resolve the position regarding negotiating budgets
Negotiations
The Civil Procedure Rules Committee has amended the rules to include a new rule 3.13(2), in the event that a party files and exchanges a budget, all other parties will have to file an agreed budget discussion report which set out the agreed and disputed areas for each phase and a brief summary of the grounds of dispute – something many courts have been ordering for some time. The CPRC have described this as their “least worst option”!
The debate over hourly rates!
The Practice Direction is to be amended regarding hourly rates, it is confirmed that they will not be set and puts an end to this much debated area – “The making of a costs management order under part 3.15 concerns the totals allowed for each phase of the budget. It is not the role of the court in the cost management hearing to fix or approve the hourly rates claimed in the budget. The underlying detail in the budget for each phase used by the party to calculate the totals claimed is provided for reference purposes only to assist the court in fixing a budget.”
That said, consideration will have to be given to the hourly rate, how can the claim be quantified without an hourly rate? I agree with not setting the hourly rate and when I negotiate I don’t agree to the setting of the hourly rate, however, I may agree to the hourly rate for quantification purposes. My aim is not to have the rate set for the purposes of detailed assessment, unless of course there is no reason for the hourly rate to be disputed.
You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com
Five Gold Rings!
I have been preparing budgets for over 5 years, during the pilot scheme and onwards. I have prepared budgets in all areas of law and I have drafted well in excess of 1,000 budgets, so I would like to share with you my 5 Gold Rings!
- File your budget well in advance of the hearing, this allows parties to negotiate properly.
- Mutual exchange. Agreeing to mutually exchange the budgets may be beneficial, it may assist your case if neither party is aware of the opponent’s budget. This may help strategically and stop parties adapting their budget, following consideration of the opponent’s budget.
- Only include foreseeable contingent costs, the rules are clear regarding this. Do not include every eventuality, consider how you think your case will proceed and only include the relevant contingencies.
- Filing v service. This is a cute point. The court sanction only relates to failing to file rather than failing to serve. If you are experiencing a tight deadline then file your budget first rather than serve. Obviously I am not condoning a lackadaisical approach to service, however it is something to bear in mind if time is of the essence.
- The rules provide for downward revisions of budgets. This is a good point to remember. Defendants often consider budgeting to be a waste of time, simply a box ticking exercise, this is usually defendant insurers or defendants that will be subject to QOCS. However, if there are material changes to the case, then it may be appropriate to seek a revision downwards. This is a good tactic for the defendant because it may reduce their costs liability – so defendants, please do not ignore the budgets.
Incurred Costs – Shifting Change
LJ Jackson has recognised there are problems surrounding incurred costs. As predicted by many, he is concerned that some parties will undertake as much work as possible before the case management conference, thereby putting large swathes of costs outside of the reach of costs budgeting. This tactic of “front loading” goes against the very essence of what costs budgeting stands for. LJ Jackson in his lecture earlier this year referred to incurred costs, stating that “a residual power to set a global figure for both incurred and future costs for any phase is to be introduced”.
His suggested solutions are sensible ones – (1) the court should have the power to comment on the incurred costs and to summarily assess those costs at the case management conference, if necessary; or alternatively (2) the court should be able to set a global figure for any phase, to include both incurred and future costs. This would be a welcome development in the task of controlling costs via the costs budgeting regime. The clear benefit to parties is that at the conclusion of the case where costs have fallen within limits of the budget, then parties may start to experience their costs being allowed in full, including the incurred costs. At present, when a party has actively managed their case effectively and efficiently, the incurred costs continue to be subject to either detailed assessment or summary assessment. LJ Jackson’s proposal would avoid this expensive and costly assessment process.
If this proposal was to be encompassed into any future revisions to the rules, then the parties to the litigation would begin to encounter some additional benefits. LJ Jackson has also suggested an introduction of pre-action costs management principally for clinical negligence costs. It appears there is a shift towards applying more focus to the issue of incurred costs in the future.
LJ Jackson’s proposal to change the position regarding incurred costs is one of the many steps needed to make costs management work.
You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com
New deadlines for filing Costs Budgets
The CPRC’s committee has agreed to amend the timeframe for the filing and service of budgets. Claims that are worth less than £50,000, budgets will need to be filed with the directions questionnaire. Claims worth more than £50,000, budgets will need to be filed 21 days before the case management conference. They have not released a date yet for the implementation of these changes.
You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com
£3,500.00 in damages and nearly half a million pounds in Legal Costs – How do you deal with Disproportionate Costs?
I’ve often found myself wanting to get into the mind of a Costs Judge and the case of Gilks -v- Hodgson [2015] EWCA Civ 5 is one such case.
The case centred around a boundary dispute between the parties in relation to the boundaries of land and a right of way. The matter ran all the way to Trial which lasted 10 days, thereafter an appeal was allowed and heard in the Court of Appeal which lasted 3 days and was solely in relation to the boundary dispute. The Claimant was awarded £3,500.00 in damages.
Sir Stanley Burnton’s judgment makes for some particularly interesting reading. He stated that “this [was] a depressingly unfortunate dispute between neighbours. The costs so far approach half a million pounds, far more than the value of the rights involved. It is a dispute that could and should have been compromised on terms that both parties could live with. The trial took 10 days, and even then some issues, referred to by the judge at paragraph 2 of his judgment, were left undecided.”
So to be clear, although the matter in dispute was undoubtedly important to the client, damages were awarded in the sum of £3,500.00 and legal costs totalled nearly half a million pounds. There’s clearly some large proportionality issues and the Judgment handed down certainly goes some way to addressing this.
This is particularly interesting when read in the context of the recent case of Savoye -v- Spicers Ltd [2015] EWHC 33 (TCC) (a useful post on this case can be found here) It is almost certain that this case will be raised when dealing with the issue of costs. In the case of Savoye, the Bill of Costs was reduced from £201,790.66 on summary assessment, to £96,465.00.
This is a case which is worth keeping an eye on in terms of costs. The Costs Judge will no doubt have some difficult issues to determine and depending upon which proportionality test applies there could be some drastic reductions.
Is Costs Budgeting the Key?
For those doubting Costs Budgeting, is there a better case than this to highlight the need for some form of monitoring costs? The amount incurred is astonishing and some form of Costs Management would certainly have been beneficial in curbing the level of costs incurred.
Lord Justice Bean who also heard the Appeal added in the Judgment the following;
I only add how dismayed I have been by this Dickensian litigation. The disputed strip of land and right of way do not constitute the sole means of access to anyone’s home. The award of damages to Mr & Mrs Gilks was £3,500. Yet, at a time when the courts are under great pressure, the battle between these two couples took up ten days of court time – more than some murder trials – before Judge Armitage and a further three days in this court; and about half a million pounds has been spent in costs. It is almost as though Lord Woolf and other civil procedure reformers over the years have laboured in vain.
I have faith that the reforms in place will start to work, particularly once the Bill of Costs follows the same format as the Budget which will enable the correct comparisons to be made (there’s a clear disconnect between the two at present).
Costs Management can assist if applied correctly. Get the Costs Budget right and everything else will naturally fall into place. As with most things in life, prevention is better than cure.
Are people seeing a more aggressive approach from the Court in terms of proportionality? Should the Court be doing more to prevent such disproportionate claims for legal costs?
The full Judgment is available online http://www.bailii.org/ew/cases/EWCA/Civ/2015/5.html
If you have any questions or queries in relation to this blog please contact Sean Linley (sean.linley@clarionsolicitors.com and 0113 336 3327) or the Clarion Costs Team on 0113 2460622.