Leeds assessment pilot – costs lawyer bonanza?

Previously we considered whether the Leeds detailed assessment pilot (click link) would reduce the judicial and court time spent dealing with costs disputes.  The new rules can be viewed here: County Court Provisional Assessment Pilot Scheme at Annex 2.

The next issue is whether provisional assessment will reduce the costs to the parties. Those costs practitioners worried that provisional assessment will reduce their fee income may not need to be too concerned just yet, even if the number of actual oral detailed assessments hearings reduces.

It will be recalled that Lord Justice Jackson was very clear that his proposed costs reforms were meant to be viewed as a complete package and should not be introduced on a piecemeal basis. The provisional assessment pilot is just such a piecemeal step.

Jackson LJ envisaged a much simplified bill of costs format. He envisaged different points of dispute and replies:

“Both points of dispute and points of reply need to be shorter and more focused. The practice of quoting passages from well known judgments should be abandoned. The practice of repeatedly using familiar formulae, in Homeric style, should also be abandoned. The pleaders on both sides should set out their contentions relevant to the instant cases clearly and concisely. There should be no need to plead to every individual item in a bill of costs, nor to reply to every paragraph in the points of dispute”.

The pilot scheme proceeds with these elements unaltered.

Such a scheme might have some chance of success in the Senior Courts Costs Office where, at least the full time, costs judges and costs officers are generally familiar with all the standard costs argument. It is less obvious that those judges sitting in Leeds, Scarborough and York County Courts will be as familiar with the intricacies of costs law. There is no suggestion that the provisional assessments will be conducted by any particular designated judge or regional costs judge. How knowledgeable are the district judges and deputy district judges who sit in these courts? This is not to suggest any shortcomings in the ability of these judges, but are they really all 100% up to speed on the minutiae of costs law?

I have been before judges on detailed assessment where they were convinced that “base costs” only refers to base profit costs.

I have been before a regional costs judge where the CFA in question was held to be invalid. I proceeded to explain that the consequence of this was that all disbursements would be disallowed except to the extent that they had been paid “up-front” by the claimant, whether personally or by way of a loan. The judge asked for the authority for this proposition. I referred the judge to paragraphs 113-116 and 223 of Hollins v Russell [2003] EWCA Civ. 718). The judge was not prepared to accept that this is what the relevant passages meant and adjourned the issue for detailed skeleton arguments to be served.

When much of the judiciary is not 100% familiar with every element of costs law – and why should they be expected to be? – the problems with provisional assessment become clear.

If I am faced with a claim for communications with an ATE provider I currently may deal with this in the points of dispute as briefly as:

“Not inter partes. Disallow.”

For the small number of cases that reach as far as detailed assessment I can worry nearer the time which authorities to wheel out in support of this argument.

If a matter might now be heard in one of the pilot courts by way of provisional assessment, is a costs draftsman/costs lawyer going to be content to draft such a concise dispute and hope the judge is already familiar with all the relevant case law (in the way one might expect in the SCCO)? Very risky.

Will it be sufficient to draft a dispute along the following lines referring to the relevant authorities:

“The Defendant submits that time spent discussing/arranging funding is not chargeable inter partes and refers to the cases of Re Claims Direct Test Cases [2002] EWHC 9002 (Costs), Masters –v- Hewden Stuart Heavy Lifting Limited, Leeds County Court, 18/3/05 and Woolley v Haden Building Services Ltd (No 2) [2008] EWHC 90111 (Costs). Disallow.”

With the provisional assessment process being envisaged to take approximately 45 minutes (apparently), can one expect a judge to take the time to track down various unreported decisions, quoted in points of dispute, and work his or her way through them to find the relevant paragraphs and extract the principle? Very unlikely.

Do those drafting points of dispute have any real alternative other than including lengthy quotes from the relevant authority on every point in case the judge is not familiar with the issue? What might have previously been a four word dispute may turn into a four page dispute.

When faced with points of dispute resembling skeleton arguments, is the receiving party going to decide they do not need to serve optional replies? Not a chance.

Are receiving parties going to be content to deal with the dispute above by simply saying:

“Not agreed.”

Will they be content to respond simply by referring to the names of the authorities which go the other way?

When faced with comprehensive points of dispute the receiving party will respond in kind.

Even if the paying party initially keeps their points of dispute relatively brief, when faced with the inevitable weighty tome served by the receiving party they will feel obliged to serve amended lengthy points of dispute in response. The automatic right to amend points of dispute and replies (CPD 40.10) remains in the provisional assessment process.

CPD 4.5 states:

“The background information included in the bill of costs should set out:

(1) a brief description of the proceedings up to the date of the notice of commencement”

As things stand, there are those who struggle to keep the description “brief”. With a provisional assessment there will be no chance to orally explain any particular problems with the way the claim proceeded. There will be no way of knowing to what extent the judge will read the papers in detail, if at all. One of Lord Justice Jackson’s proposals, in his final report, was for bills of costs to “provide more transparent explanation than is currently provided about what work was done in the various time periods and why [emphasis added]”. I previously expressed my concerns about this change to the bill of costs format (click clink). I can see this provisional assessment pilot encouraging much more of the “why” without any of the corresponding costs saving that Jackson LJ envisaged.

There is about to be an arms race in relation to the length of preambles to bills of costs and the complexity of points of dispute and replies, and all in the name of reducing the costs of assessment.

Would a law costs draftsman/costs lawyer who fails to comprehensively plead every single point available open themselves up to a negligence claim? Would they be negligent if they failed to serve amended/supplemental pleadings in light of lengthy points pleaded by the other side?

This is going to be a costs building bonanza for those involved in costs until the pilot scheme is hastily amended. Would claimant solicitors kindly ensure they issue all their cases out of Leeds, Scarborough or York for the foreseeable future?

2 thoughts on “Leeds assessment pilot – costs lawyer bonanza?

  1. I’ve always had my doubts about whether the passage in Hollins v Russell you refer to on disbursements is the last word on the subject. It is obiter, and the point was not fully argued. Indeed, I do not think that it has ever been fully argued.

    Hollins is clearly correct in saying that disbusements actually paid by the client are recoverable. But is it right that other disbursements are not? This is to assume that disbursements are simply payments made or liabilities incurred by the solicitor, which he recharges to the client under his contract of retainer.

    But, in traditional legal theory disbursements are PERSONAL LIABILITIES OF THE CLIENT simply incurred through the agency of the solicitor: see for example Wakefield v Duckworth [1915] 1 KB 218.

    This principle is reflected in the way disbursements are treated by the Solicitors Account Rules (where sums are recovered for disbursements it is client money not office money). It is also recognised in VAT treatment. Where a solicitor disburses money for his own purposes, and re-charges his client, that is a supply to the client by the solicitor, and VAT must be charged even if the expense is not subject to VAT (eg a train fare). However, where a professional disbursement is made, then if it is not VATable (for example court fees and, until recently, medical reports), the solicitor does not add VAT, as the law does not treat that as a supply by the solicitor. It is a supply to the client by the disbursee. See §25.1.1 of the VAT Guide (HMRC Notice 700), which describes this sort of disbursement as one where ‘you merely pay amounts to third parties as the agent of your client and debit your client with the precise amounts paid out’

    So, where a bill contains unpaid disbursements there is a perfectly tenable argument that the client is directly liable to pay those and may recover them irrespective of the CFA. Where disbursements have actually been paid by the solicitor, the position is more difficult, but it is arguable there might be a restitutionary right independent of the CFA.

  2. Pingback: Leeds provisional assessment pilot – Update |

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