100% of damages


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There was much fuss when the new portal fees were being proposed. Karl Tonks, previous president of APIL, said:

“Lawyers cannot reasonably be expected to run cases at a loss. But if the proposed fees are implemented, the only alternative will be to turn claimants away or take legal fees from a claimant’s damages, which flies in the face of the principles of justice.”

Interesting that I’ve just come across a Form of Authority that was signed by a claimant on 19 June 2010 giving the following authorisation to his solicitor:

“Client Management Fee – as per my signed Client Agreement with AAH to irrevocably and unconditionally pay on my behalf the AAH CMF in the sum of £379.00 plus VAT from my damages [emphasis added] to AAH (or as it shall direct) at the conclusion of my claim”

It’s not clear what the Client Management Fee is designed to cover or what service the claims management company performs that goes further than that offered by the solicitors. Nevertheless, it does seem that many solicitors (ie those who were panel members of this scheme) were happy to see their clients recover less than 100% of their damages prior to the fee change.  And given the scheme is endorsed by Esther Rantzen it must be OK.

Mitchell v News Group Newspapers Ltd


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The Court of Appeal has unanimously dismissed the appeal in the costs budgeting case of Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1526 (part of the “Plebgate” saga).

Although the decision is itself crucially important for costs budgeting purposes – fail to serve and file a budget on time and your costs will be limited to court fees only, with no real hope of relief from sanctions – it has much wider implications for the future of civil litigation. The courts can now be expected to take a very robust approach to compliance with rules. Failures to comply will be punished harshly. Relief from sanctions applications will be doomed to failure unless unusual circumstances can be shown for the breach. A mere failure to show prejudice will not come close to being sufficient.

Conclusion of the Court’s judgment:

“In the result, we hope that our decision will send out a clear message. If it does, we are confident that, in time, legal representatives will become more efficient and will routinely comply with rules, practice directions and orders. If this happens, then we would expect that satellite litigation of this kind, which is so expensive and damaging to the civil justice system, will become a thing of the past.”

Vitol Bahrain EC v Nasdec General Trading LLC


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The recent case of Vitol Bahrain EC v Nasdec General Trading LLC and others [2013] All ER (D) 38 (Nov) provides an interesting insight into how the courts may interpret proportionality under the new test.

The matter related to an interim anti-suit injunction to prevent the defendants from pursuing any application to join the claimant to proceedings in the United Arab Emirates. The issue was whether the question of title of two oil cargoes should be litigated in England or in the UAE. The Commercial Court held the anti-suit injunction should not continue and awarded costs to the defendants to be summarily assessed on the standard basis. The value of the cargoes was some US $119m, but the hearing was not about who had title to the oil, it was about whether an injunction should be granted to restrain the defendants from joining the claimant into existing proceedings in the UAE.

The claimant’s statement of costs sought a total sum of £242,760.48, which included the costs of the without notice application as well as the costs of the return date hearing. The defendants’ statement of costs sought a total of £165,421.80.

Males J held that the amounts claimed were grossly disproportionate. He commented that the message should go out loud and clear that the Commercial Court would not assess costs summarily in such disproportionate amounts merely because the figures on both sides were broadly comparable. Control would be exercised to ensure that the costs claimed from the unsuccessful party were reasonable and proportionate. Having considered the defendants’ statement of costs, his lordship assessed their costs summarily in the amount of £75,000.

This decision envisages the interesting prospect of paying parties arguing that the receiving party’s costs are disproportionate notwithstanding that they themselves have incurred costs at a level as high or higher.

It is not clear from the case summary available how the judge reached the figure of £75,000. I suspect that this was not as a result of a line-by-line analysis of the Defendants’ statement of costs.

The note at 44.5.3 of the White Book, admittedly dealing with the pre-1 April 2013 rules, states:

“The judge in a trademark dispute summarily assessed the costs at the end of the trial at £10,000 as against the £38,000 claimed. In carrying out the summary assessment the judge had not gone into any sort of detailed analysis of the objector’s statement of costs but appeared to have applied his own tariff as to what costs were appropriate for a one day paper only appeal. That approach was wrong in principle: 1-800 Flowers Inc v Phonenames Ltd [2001] EWCA Civ 721; The Times, July 9, 2001.”

It is questionable whether this still represents good law as the new proportionality rules specifically state: “Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred”. There seems little purpose in undertaking a item-by-item assessment if the end figure will then be knocked down further to produce a proportionate amount. Of course, that is exactly the same issue that will arise on detailed assessment. Lord Justice Jackson seems to envisage that the item-by-item approach is still the first step in the process. No doubt that sometimes will be appropriate but there must be other cases where it must be preferable for the judge to say to advocates at the outset: “The damages were £x and I’m not going to allow costs of more than £y at the conclusion of the assessment. Do I need to hear from either of you further?”

Guideline hourly rates for costs lawyers and law costs draftsmen


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The Civil Justice Council’s Costs Committee is currently undertaking a review into Guideline Hourly Rates. As part of that process they are considering whether to introduce a further category of fee earner for costs lawyers and costs clerks (their term not mine).

If this is done, will costs lawyers be placed in a higher category to costs clerks? Would non-costs lawyers be able to obtain similar rates as costs lawyers where they had “equivalent experience”? If so, what would that amount to? Would the costs lawyer qualification count for more than simply the number of years working in costs?

Disclosing privileged documents in detailed assessments


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The Senior Courts Costs Office Guide 2013 correctly describes the approach to disclosure in detailed assessment hearings of potentially privileged documents:

“If, having examined documents lodged with or produced to the court, the court is minded to determine a point of dispute wholly or partly in favour of the receiving party it does not automatically follow that the paying party will have a right to see all of the documents relied on by the court in reaching that decision. The court should enquire of the paying party whether the paying party is content to accept that ruling (subject to appeal) or whether the paying party wishes to see the documents relied on by the court in making the ruling. In many cases the paying party will be content to agree that the court alone should see those documents. The alternatives (see below) may lead to additional delay and an increase in costs.

(b) If the paying party declines to accept the court’s ruling without inspecting documents, then, save as explained in paras (f) to (h) below, the court will put the receiving party to his election between showing the documents in question to the paying party or not relying upon them and offering to prove the fact of which the document is evidence by some other means. Alternatively the receiving party may decide to withdraw the claim for the costs of it. The court may give directions enabling the receiving party to have a fair opportunity to provide other evidence. In reaching its final decision on the issue the court will not take account of documents which the receiving party has elected not to show to the paying party.”

Those costs draftsmen and costs lawyers who continue to believe that they can simply show the documents they rely on to the judge without also having to potentially show the same to the other side have misunderstood the true position.

The future of litigation


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Extract from Narrative to bill of costs:

“Computer technology was utilised wherever possible. … The Claimants’ solicitors have tried to use novel and efficient ways of dealing with the claim. Wherever possible standard documents have been prepared including questionnaires and in some cases, standard letters. Meetings with the individual Claimants have been minimised. Pro-active use of Part 36 offers and proposed schemes of settlement were intended to enable claims to be resolved in a cost effective and efficient manner”

“Novel”? Computer technology, questionnaires and standard letters?

Welcome to the Twentieth Century.

The “novel” element is also wearing a bit thin given this same standard wording is included in all bills prepared by these costs draftsmen for this firm of solicitors.

Splitting bills of costs


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Regional Costs Judge Marshall Phillips writing in the Solicitors Journal:

“In cases issued on or after 1 April 2013, the receiving party should differentiate between work done before and after that date, proving a total for work done before and a total for work done after. The court will be applying a different proportionality test for work done during these two periods”.

For many cases, this is no doubt a sensible suggestion, but it is not required by the rules.

Secondly, so far as the courts “applying a differently proportionality test for work done during these two periods”, not necessarily. See: proportionality transitional provisions.

Independent costs draftsmen’s rights of audience


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I note the Senior Courts Costs Office Guide 2013 explains:

“Independent costs draftsmen have no rights of audience as such but, by concession, are treated as if they are in the employ of the firm of solicitors or other legal representatives instructing them.”

I still don’t understand why they view it as a concession. Assuming they have been properly instructed, it is permitted under the Legal Services Act 2007. See: here.

Costs budgeting data


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Some excellent advice from Antony Smith of Legal Project Management Limited, writing in Litigation Funding:

“Generally, estimating is best done when based on historical data of previous projects which are similar to that at hand. Lawyers are lucky here, as their practice management systems and/or case management systems should hold this kind of data. … Ideally, the historical data used should be from cases the lawyers responsible for preparing the current estimates have themselves worked on previously. In the absence of that, lawyers should mine historical data of similar cases worked on by others in their firm. My advice would be to try and avoid any industry benchmarks – the whole point is to estimate the effort and cost it will take you and your firm to complete the matter.”

I fear this is the least understood area of costs budgeting and will be, in the early days, where things most go wrong.

Many of those preparing budgets will not be using historical data but will be using their “experience”.

To mine historical data at firm level, let alone fee earner level, so the data properly fits the phases’ stage of budgeting is generally going to be a fantastically time consuming, and therefore expensive, task for which it will not be possible to charge.

Even where costs firms have undertaken serious analysis of their historical data, this will often only produce industry averages. To apply this data to a new firm of solicitors seeking help with their costs budgeting is a recipe for disaster.

Part 36 offers in detailed assessment


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A helpful summary from the Senior Courts Costs Office Guide 2013 on the consequences of Part 36 offers in detailed assessment proceedings:

“Either party may, at any time, make a formal settlement offer in accordance with Part 36. If the paying party makes such an offer and it is accepted by the receiving party within the specified period for acceptance, the receiving party will also receive its costs of assessment to the date of acceptance.

If the receiving party does not accept and the bill is assessed at no more than the paying party’s Part 36 offer, the normal rule will be that the receiving party must meet the paying party’s costs of assessment, with interest, from the end of the specified period for acceptance. If the receiving party accepts the offer after the period for acceptance expires, the receiving party will normally have to pay the paying party’s costs from that point.

If the receiving party makes a Part 36 offer, the paying party does not accept and the bill is assessed at as much as or more than that offer, the paying party will normally have to pay, from the end of the specified period for acceptance, interest at up to 10% above base rate on the bill as assessed, the costs of assessment on the indemnity basis and interest on those costs, again at up to 10% above base rate. It shall also normally have to pay an extra 10% of the bill as assessed (reduced to 5% for any amount over £500,000 and capped at £75,000).”