NEWS

Acceptance of Part 36 offer after end of relevant period (CPR 36.13(4)) – right to detailed assessment

Where a Part 36 offer is accepted after the end of the ‘relevant period’ the liability for costs must be determined by the court unless the parties have agreed the costs[. The effect of this is that the parties must agree a consent order dealing with costs or the court will need to make an order. Conversely where a case settles within the relevant period a deemed costs order arises (CPR 44.9(1)(b)).

It is the cost order, whether made by court, by consent or deemed, which gives rise to the right to detailed assessment (CPR 47.7). Therefore, when a claim settles after the expiry of the relevant period there is no automatic costs order on settlement and, unless the parties agree a consent order, the receiving party will need to apply for a cost order before commencing detailed assessment.

An interim bill can be a statute bill even though it only includes profit costs or disbursements, and not both

Richard Slade and Company Solicitors v Boodia and Boodia [2018] – EWHC Civ 2667

The Court of Appeal held that a solicitor’s invoice could be an interim statute bill for the relevant period, even though it did not contain disbursements incurred during that period. As a matter of practicality and policy, it was unsatisfactory for a solicitor to be unable to issue a statute bill until it had been invoiced for all disbursements incurred during the relevant period which left the solicitor dependent upon third parties, such as experts and counsel, to raise invoices.  

While a client needs sufficient information to determine whether to exercise the right to assess the bill, a bill containing profit costs only would not necessarily fail that test.

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Success fee – it is not necessary to undertake a risk assessment and/or charge success fee in line with prospects of success, but the solicitor must explain the calculation of success fee

Herbert v HH Law Limited [2019] EWCA Civ 527

The CFA contained a 100% success fee capped at 25% of damages. Post-settlement Ms Herbert challenged the CFA on the basis that the solicitor had not conducted a risk assessment. The Court of Appeal considered whether it is necessary to undertake a risk assessment and charge a success fee in line with the prospects of success.

The Court of Appeal found that, as a success fee is traditionally calculated by reference to risk, if a solicitor charges a success fee on a different basis, the solicitor must (1) explain why the success fee is calculated in that (different) way and (2) be clear that risk plays no part in the calculation. (3) The solicitor must tell the client that the success fee is irrecoverable from the opponent and must be paid by the client. If a client has been told these things it will amount to informed consent.

An interim bill can be a statute bill even though it only includes profit costs or disbursements, and not both

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Unreasonable and Improper Conduct – Solicitor Remains Responsible for the Detailed Assessment Process

Gempride Ltd -v Bamrah [2018] EWCA Civ 1367

The Court of Appeal handed down a ruling on the conduct of detailed assessment proceedings, which one of the lawyers involved described as a ‘watershed’ moment.

The Claimant (who was a personal injury solicitor herself) tripped over a doorstep while visiting a client.  The Claimant’s own firm of solicitors acted for her in the litigation.  A bill of costs was subsequently drawn and certified by the solicitor.  It was found that the bill of costs was claiming rates in excess of those that had been agreed in the funding documentation.  In the Replies to the Points of Dispute, the Claimant averred that there was no BTE Insurance available, however it was found there was in fact BTE available.

The Court of Appeal ruled that even though the Claimant was not found to be acting dishonestly, the conduct was regarded as something more than an honest mistake.  The salient point of this judgment was that the authorised persons certifying the bill of costs has ultimate responsibility for the acts and omissions of those to whom they delegate parts of the conduct of litigation.  Consequently, the Court disallowed half of the profit costs within Part 1 of the bill.

Interim Payments on Account of Budgeted Costs – Case Update

Cleveland Bridge UK Ltd v Sarens (UK) Ltd [2018] EWHC

In this case the Court allowed a 90% interim payment upon the budgeted costs but made a final decision of 70% for an interim payment overall when taking into account the incurred costs element of the matter. The Judge went on to say that, “Accordingly in my Judgment, a reasonable sum in respect of incurred costs will often be one that is an estimate of the likely level of recovery, subject to an appropriate margin to allow for error”.

Costs on Discontinuance – Case Update

Harrap v Brighton and Sussex University Hospitals NHS Trust [2018] EWHC 1063 (QB) (9 May 2018)

The Court held that a failure to properly deal with witness evidence was a justifiable departure from the normal rule on discontinuance (CPR 38.6(1)).  The Defendant in the clinical negligence matter provided new evidence after a cross examination of their witness. Following the cross examination, the Claimant discontinued its claim. The evidence was not in the Defendant’s witness statement and, as a consequence of this, the Court held that this amounted to unreasonable conduct by the Defendant and was a good reason to depart from the general rule that the discontinuing party pays the other party’s costs.

Electronic Bills – Update

Filing of the new electronic bill

There has been some tension between paragraphs 5.A4 and 5.1A of Practice Direction 47 which has led to confusion on when it is necessary to file/serve a bill of costs.  As a quick overview, the confusion was whether it was necessary to file an electronic bill at Court at the N252 commencement stage (when the bill is served upon the paying party), or when a hearing is requested, as is currently the case.  Master Gordon-Saker has quashed any confusion by noting that in his personal view, ‘Electronic copies of the bill should not be filed at Court when notice of commencement is served on the paying party’.

Fixed Fees – Case Updates

Clinical negligence cases

The government is proceeding with its plans to cap recoverable costs in clinical negligence cases by setting up a working group with a view to cutting costs on claims worth less than £25,000.00. It is anticipated that the working group will be in a position to publish its recommendations in the Autumn of 2018. The group, which at the time of writing consists of representatives from the legal profession and the NHS, will consider Jackson’s proposals on fixed costs.  An announcement will be made in due course.

Holiday claims

Following the 97th CPR update, the pre-action protocol for resolution of package travel claims came into force on 7th May 2018.  Since 2013, statistics have shown that there has been a 500% rise in travel claims and over £240 million was spent by the travel industry in defending gastric illness claims.  Actual recorded cases of sickness claims have reduced over the years however – even though some cases will be genuine, the massive increase in claims does not compare with the sliding figures on recorded claims.

The update to CPR 45 includes fixed fees for travel claims in order to curb the spiralling costs of litigation. CPR 45.29E Table 6D denotes the amount of fixed fees allowed within travel claims:

  • settlement between £1,000 and £5,000 – fixed costs £950 and 17.5% of the damages
  • claims worth up to £10,000 – fixed costs £1,855 and 10% of the damages over £5,000
  • claims exceeding £10,000 – fixed costs £2,370 and 10% of damages over £10,000.

Bratek v Clark-Drain Ltd 2018 (Cambridge County Court 2018)

The parties had settled a personal injury matter by consent with the Defendant paying the Claimant’s damages in the sum of £10,000.  In terms of costs, the consent order noted that “the Defendant pay the Claimant’s solicitor’s costs of the action, inclusive of VAT and disbursements on the standard basis, to be assessed if not agreed”.

The Claimant argued that the consent order superseded the fixed costs set out in CPR 45.29A due to the agreement made with the Defendant.  Of course, the Defendant disagreed and argued that the order did not supersede CPR 45.29A.

The first instance Judge had agreed with the Claimant, however the Appeal Judge overruled the decision and confirmed that in accordance with the principles in Sharp v Leeds City Council [2017],  the “plain object of intent of the fixed costs regime for claims started but not continuing under the protocol was that from the moment of entry into the portal pursuant to the protocol recovery of the costs of pursuing or defending that claim and all subsequent stages was intended to be limited to the fixed rates of recoverable costs subject only to a very small category of clearly stated exceptions” (para 8).

Williams v The Secretary of State for Business, Energy & Industrial Strategy [2018] EWCA

This employment liability claim was conducted without the use of the portal.  It was the Claimant’s argument that because there were two Defendants being pursued at the outset then it was a claim outside the EL/PL portal.  However, the Court held that it was evident that the claim was clearly a one Defendant claim and it concluded that the matter should have gone through the portal at the outset.  The Court regarded the Claimant’s behaviour as unreasonable and awarded fixed costs using the sufficient width of discretion under CPR 44.

Budgets – Case Updates

Sharp v Blank Ors [2017] EWHC

This significant case involved nearly 6,000 Claimants in an action against former directors of TSB and Lloyds Bank.  One of the key areas considered related to establishing what was deemed a ‘significant development’ to justify a revision to an agreed budget.  The Judge considered that there were 7 relevant issues in this case:

(1) Extension to trial timetable – there is ‘no doubt that the extension to the trial timetable is a significant development’ (para 79).  Further, he noted that ‘the mere fact of a longer trial timetable, with a delayed start date and longer breaks is not, of itself, a sufficient basis upon which to approve an increase to the budget’.

(2) Disclosure – ‘if an application for specific disclosure results in a large number of documents (in this case 984 additional documents) that must be reviewed and assimilated, this may be a significant development in litigation’.

(3) and (4) Expert related work – The Defendants sought an increase to their budget phase of £212,956 due to the service of the Claimants’ expert report which consisted of 74 pages and 676 pages of exhibits and appendices. The Claimants served the expert report without permission from the Court.  The Judge confirmed that this was a significant development (paras 87-88).

(5) Third Party Disclosure – due to the Defendant’s limited involvement in the application, this did not suffice as a significant development.

(6) Additional questions to experts – there must be more than merely a modest increase in the anticipated cost of work within a phase to amount to a significant development.

(7) Expert witness relied upon by Claimants – The Defendant argued that an additional tranche of expert evidence within the Claimants’ expert witness report, which did not appear in the first report, amounted to a significant development.  The Judge averred that it was a development, but not one which was substantial.

There are some important points to take away from this case in terms of what is deemed a significant development (dependant on the facts of each case).

Ali & Anor v Channel 5 Broadcast Ltd [2018] EWHC 840

This case emphasises the importance of filing a costs budget.  The Claimant failed to beat a Defendant’s Part 36 offer at trial and the Defendant was awarded 50% of their costs in accordance with CPR 36.23 (2).  The Defendant had failed to file a costs budget – had they done so they would have been awarded their costs in full.

RNB v London Borough of Newham/Nash v Ministry of Defence [2018]/Jallow v Ministry of Defence [2018] EWHC

The Appeal case in RNB v London Borough of Newham, which was due to be heard, has now been settled.  As a quick summary, Master Campbell reduced hourly rates for incurred costs and then found that it was a ‘good reason’ to reduce budgeted costs also.

However, two further cases have come to light on this point.  In Nash v Ministry of Defence [2018] EWHC B4 (Costs) Master Nagalingam noted that non-budgeted rates were not a good reason to depart from the approved budget.  He went on to say that ‘hourly rates hold no special status and are not to be given any elevated status on an assessment of costs with regards to estimated costs subject to a costs management order’. This case will prove to be a useful tool for Claimant practitioners.

In Jallow v Ministry of Defence [2018] EWHC B7 (Costs) Master Rowley confirmed that ‘once the phase total has been approved the underlying figures are no longer relevant’.

So far it appears the Court is finding that a reduction to hourly rates on assessment is not a good reason to depart from an approved budget.

Service – Case Update

Barton v Wright Hassall [2018] UKSC

The Claimant, acting as litigant in person, had served a claim form upon the Defendant via email when that method of service was not accepted by the Defendant.  It was made clear by Lord Sumption, on a majority vote of three to two, that there is no special category for litigants in person and they should not be treated differently in the application of the CPR.