Nice quote from Christian Stuerwald and Leslie Perrin in a recent edition of Litigation Funding:
“the only certainty in litigation is that the costs will be high, impossible to predict and difficult to manage”
[Gibbs Wyatt Stone now recruiting. Visit: http://www.gwslaw.co.uk/recruitment/]
One of the constant problems defendants face in low value RTA claims is claimant solicitors issuing proceedings at the earliest opportunity to avoid fixed costs.
The case of Javed v British Telecommunications plc [2011] EWHC 90212 (Costs) is an interesting example of claimant solicitors being penalised for issuing proceedings unnecessarily and prematurely.
Costs Judge Master Simons concluded:
“I am in no doubt that the Claimant was unreasonable in commencing proceedings when she did. By issuing the proceedings when she did, the Claimant was in breach of the pre-action protocols. It is clear from the correspondence that at the time proceedings were issued a settlement was still being actively explored by the Defendant.
… The Pre-Action Protocol states that the issue of proceedings is a last resort. It is noteworthy that the Solicitors’ file of correspondence shows that proceedings had been prepared at the beginning of September 2009, and had been signed by the Claimant on 9 September 2009, almost a month before any medical evidence was disclosed to the Defendant. This, in my judgment, shows an intention to issue proceedings, not as a last resort, but at the earliest opportunity. There was no necessity to issue proceedings as there was no danger of any limitation period expiring. The Defendant was actively engaging in settlement negotiations having already admitted liability and having already made a payment in respect of special damages. The Claimant’s solicitors were happy to incur the cost of preparing the proceedings even before they had disclosed any medical evidence or made any Part 36 offer.
… This was a fairly standard, small road traffic accident claim. The only slight complication was the Claimant’s previous accident. Had the Claimant disclosed all the relevant medical evidence with her Part 36 offer, in accordance with the Pre-Accident Protocols, I have little doubt that this claim would have settled without the necessity for the issue of proceedings. Therefore my decision on the first issue is that the Claimant acted unreasonably in issuing proceedings.”
The Defendant argued that as the Claimant had issued proceedings prematurely, the Claimant’s costs ought to be assessed by reference to the sums that would have been allowed had the proceedings not been issued. These costs would have been calculated under the fixed recoverable costs regime set out in Section II of Part 45 of the CPR, which would have amounted to £1,190 plus additional liabilities, VAT and relevant disbursements. This was despite the fact that the matter had settled on acceptance of a Part 36 offer and a consent order sealed ordering costs to be paid on the standard basis.
The Master concluded:
“Pursuant to her acceptance of the Defendant’s Part 36 offer, the Claimant is entitled to her costs to be assessed on the standard basis, if the amount of costs is not agreed.
… In carrying out a detailed assessment I am obliged, pursuant to CPR 44.5(1), to have regard to all the circumstances, one of which is the fact that costs were unreasonably incurred by the premature issue of the proceedings. I must also have regard, pursuant to CPR 44.5(3), to the conduct of the parties, including in particular the efforts made, if any, before and during proceedings in order to try and resolve the dispute.
… In carrying out this detailed assessment the first decision that I have reached is that the Claimant’s costs have been unreasonably incurred as a result of the Claimant issuing proceedings prematurely. My second decision is that the costs claimed are disproportionate. The next step I have to take is to assess those costs to which the Claimant is reasonably entitled. To do this I must have regard to the factors set out in 44.5(3). Having regard to those factors I conclude that the Claimant should recover those costs that she would have recovered had she acted reasonably. I consider that it is within my discretion, if I consider it to be unnecessary, not to carry out a line by line assessment to enable me to decide what costs it is reasonable for the paying party to pay and whether it is reasonable for the paying party to have to pay more than would have recoverable if an alternative regime applied. I have not been referred to any requirement in CPR for a Costs Judge to carry out a line by line assessment in order to decide the amount of costs that it is reasonable for the paying party to have to pay. In this case, I am satisfied that had the Claimant acted reasonably, then her Solicitors would not have been entitled to recover any more than fixed recoverable costs and it seems to me that it would create an injustice if they were to profit as a result of their unreasonable conduct. Having made that decision it is not necessary for me to carry out a line by line assessment. In my judgement, the Court can limit the costs to fixed recoverable costs, and in this case the court should limit the Claimant’s costs to fixed recoverable costs and the court is not necessarily obliged to carry out a line by line assessment of the Claimant’s bill of costs.
… Consequently, I assess the Claimant’s costs at an amount which is equal to those costs that would have been payable under Section II of Part 45 of CPR.”
A sensible and robust decision and a warning to misbehaving claimant solicitors. They can go on Santa’s naughty list.
In costs law you can be sure of only one thing: If something looks like a duck, swims like a duck and quacks like a duck, it’s probably not a duck.
Following on from my recent post as to When is an RTA not an RTA?, the decision of Costs Judge Master Campbell in Schneider v Door2door PTS Ltd [2011] EWHC 90210 (Costs) is worth reviewing. The issue being:
“did the Claimant, Mrs Schneider, suffer injury in a road traffic accident, in which case her costs are limited to those fixed under the recoverable costs regime in CPR rule 45 Part II; or are they ‘at large’ because the accident was an accident, but not a road traffic accident and accordingly her costs are recoverable without limit, subject to being proportionate and reasonable?”
The facts were that the claimant was offered transport by an NHS Trust after a hospital appointment. Following the appointment the claimant was waiting with another patient. Transport was provided by the defendant. The claimant was informed by the defendant that the steps at the side of the transport vehicle were not working. They were supposed to unfold so that the patients could use them to gain access to the vehicle. Instead, the defendant offered the claimant a steep ramp which was for wheelchairs or passage through the central part of the vehicle. She chose the latter. She was holding on to two contact points (one of which was a handle). She placed her foot high up and this was on the floor of the vehicle. As she transferred weight onto the right foot, she felt her hip dislocate.
The subsequent claim for damages against the defendant for negligence succeeded with a costs order in the claimant’s favour.
The claimant’s bill of costs sought a total of £22,982.91 including VAT and disbursements, whereas it was the defendant’s case that the costs should be limited to those payable under the fixed costs RTA regime in CPR 45 Section 2, so that no more than £800, plus 20% of the damages calculated at £1,000 and a success fee of 12.5% plus VAT together with a reasonable sum for the disbursements listed in CPR.45.10 (2), would be payable.
The rules state, so far as relevant:
“In this Section –
(a) ‘road traffic accident’ means an accident resulting in bodily injury to any person or damage to property caused by, or arising out of, the use of a motor vehicle on a road or other public place in England and Wales;
(b) ‘motor vehicle’ means a mechanically propelled vehicle intended for use on roads; and
(c) ‘road’ means any highway and any other road to which the public has access and includes bridges over which a road passes.”
It was common ground that the transport vehicle belonging to the defendant was a “motor vehicle” within the meaning of CPR 47.7(4)(b) and that at the date of the accident, it was parked on a “road” within the meaning of sub-section (4)(c).
Following the Court of Appeal’s reasoning in Dunthorne v Bentley & Hume (Administrators of the Estate of Diane Elizabeth Bentley) and Cornhill Insurance Plc [1996] P.I.Q.R. 323, the Master concluded:
“Whilst I accept in layman’s terms that it might appear to defy logic were I to find on the facts of this case, that a road traffic accident could have taken place when, at the moment of injury, (1) Mrs Schneider was not the owner of the vehicle, (2) she was not inside the vehicle, (3) she was not the driver of the vehicle, (4) the vehicle was not in motion and (5) the vehicle was not in collision with Mrs Schneider or another vehicle, it is clear from Dunthorne that for a road traffic accident to occur, the tortfeasor’s vehicle does not need to be moving, nor must it be involved in a collision. On the contrary, in Dunthorne the Court of Appeal held that a road traffic accident had occurred through Mrs Bentley’s use of the car, even though at the moment of injury, it was stationary, undriveable and she was moving away from it. It follows that simply because the mini-bus had not commenced its journey, nor had it collided with another vehicle or pedestrian, that no road traffic accident could have taken place*. As was the case in Betty Green, I consider that use of the minibus occurred when Mrs Schneider placed her foot on the floor and her hands on the holding contact points, one such point being a handle. From that moment, she was engaged in an act or mode of “using” the vehicle and contrary to Mr James’ submission, in my judgment, what Mrs Schneider was not doing was simply putting herself into a position so that she could use it and that that use would not start until she was safely in her seat and the mini-bus had set off. Far from being a “causal concomitant”, in my judgment, her injury arose out of her use of the contact points and vehicle floor which were causal to the injury Mrs Schneider suffered.”
[*I think this should read: “It does not follow that…”]
The claim was therefore deemed to be an RTA under the rules. As the claim settled for £5,000, the costs fell within the fixed recoverable costs regime in CPR rule 45 and were limited accordingly.
I’ve been using Twitter for some time now. I’m not yet 100% convinced that this is the future, particularly for promoting law firms to the wider public. And who are those APIL tweets congratulating such-and-such for becoming an APIL senior litigator aimed at?
However, it can be a useful way of providing quick links to useful bits of information elsewhere on the internet and getting the latest updates from others in the know.
I’m going to start testing this to the limit and see if it is possible to summarise interesting costs law decisions in 140 characters or less (including link).
I’m just glad I didn’t try to do this with the Court of Appeal judgment in Motto v Trafigura [2011] EWCA Civ 1150. (Any suggestions?)
You can follow my future attempts here: http://twitter.com/#!/GWS_LAW
Our Legal Costs Blog branded range of t-shirts continue to be a big hit and received a recent mention on RollOnFriday.com.
I did have planned a new line of his and hers t-shirts but one of my partners pulled these on the grounds of taste. Shame.
Association of Costs Lawyers’ press release:
The number of people choosing to train as a Costs Lawyer has almost doubled during 2011 as the impact of several major forces – including the Jackson reforms and the Legal Services Act – are felt in the costs sector.
The Association of Costs Lawyers received 112 applications to take its join its rigorous training programme this year, compared to 65 in 2010. Study leads ultimately to qualification as a Costs Lawyer, an authorised person under the Legal Services Act with independent rights of audience and to conduct litigation.
Iain Stark, chairman of the Association of Costs Lawyers, said one major factor was the growing insistence of the courts that only those with rights of audience can appear in costs hearings – law costs draftsmen, who are not members of the ACL, have to rely on an out-of-date “legal fiction” that they are temporary employees of their instructing solicitor and so can “borrow” their rights of audience.
Mr Stark explains: “Following the recent costs management pilot in Birmingham and the current nationwide pilot in Mercantile Courts and Technology and Construction Courts across England and Wales arising out of the Jackson reforms, the profile and importance of costs has never been higher. As such, judges increasingly want to hear from those with the relevant experience and recognised level of qualification.
“All litigators will have to get to grips with costs budgeting as part of these reforms and we are seeing more firms – including some of the largest in the City – deciding to bring costs expertise in-house so they can manage costs from the start.”
The increased status of costs professionals coupled with the continued downturn in the legal jobs market has changed people’s attitude towards a career in costs, Mr Stark continues. “The unprecedented rise in student numbers demonstrates that people are starting to realise that there are other routes to a successful and rewarding legal career. Under the Legal Services Act, Costs Lawyers undertake reserved legal activities and enjoy the same benefits and status of many other legal professionals – including partnership in legal disciplinary practices.”
The Costs Lawyer route to qualification also supports the social mobility agenda in the legal profession, as students need only a minimum of four GCSEs to begin the training – those who have completed law degrees or postgraduate legal education can gain exemptions from parts of the programme.
Earlier this year I successfully argued that a CFA was unenforceable and the solicitors’ costs were therefore disallowed. The challenge was on the basis of the, now revoked, Conditional Fee Agreement Regulations 2000, in that the solicitors had failed to advise the client of the interest they had in recommending a particular ATE insurance policy.
The claim concerned the National Accident Helpline scheme. I am not aware of any reported decisions concerning this scheme and it may be that the outcome was fact specific.
The decision shows that Regulation 4(2)(e) challenges have not been killed off by the judgment in Tankard v John Fredricks Plastics Ltd [2008] EWCA Civ 1375. (That judgment simply muddied the waters.)
What I find interesting about this matter is how long it has dragged on for. This was a routine RTA claim resulting from an accident on 12 December 2003 which settled for £8,000. The claim settled on 21 February 2008. Detailed assessment proceedings were commenced on 3 March 2009 and rumbled on until judgment was handed down in relation to the preliminary issue of the enforceability of the CFA on 14 April 2011.
But did not end there.
The Claimant is appealing the decision of the Costs Judge and the appeal is due to be heard very shortly. (If the appeal is dismissed I will let you know. If it succeeds I will keep quiet about it and hope posterity records this as being an outright win on my part.)
Those concerned about the impact of the Jackson reforms can console themselves with the thought that there can be a surprisingly long run-off for even the lowest value claims.
The judgment can be read here: King v Thames Water Utilities & Transport for London.
I never knew my old legal costs text books could be so valuable.
I see someone is selling a used copy of Cook on Costs 2005 on Amazon for £637.51 (plus delivery).
[Update – I see they’ve dropped the price to £19.99 this morning. Just as I thought I was sitting on a goldmine.]
[Further update. Seems to be holding its price elsewhere, although this looks like a different edition.]
I’ve said it before, and I’ll say it again, access to the Association of Costs Lawyer’s online Members’ Forum alone is arguably worth the price of ACL membership.
One of the favourite topics that keeps coming up is when is an RTA not an RTA for the purposes of the fixed success fee regime.
Endless fascinating examples keep getting thrown up but this is one of my favourites:
“I had a case where a poor old dear was casually sitting in her armchair reading when she was injured as a consequence of being blown across the room when a vehicle exploded in the road outside her home – and this was deemed to be an RTA, albeit one that occurred within the comfort of her own home!”
Should a party expect to recover costs in relation to heads of claim which they have abandoned?
In AEI Ltd v Phonographic Performance Limited [1999] 1 WLR 1507, Lord Woolf MR stated:
“…it is no longer necessary for a party to have acted unreasonably or improperly to be deprived of his costs of a particular issue on which he has failed.”
Referring to this judgment Longmore LJ, in Summit Property Ltd v Pitmans (A Firm) [2001] EWCA Civ 2020, at paragraph 16, approved this view and went further:
“In my judgment, it is also no longer necessary for a party to have acted unreasonably or improperly before he can be required to pay the costs of the other party of a particular issue on which he (the first party) has failed. That is the substance of what the Master of the Rolls was there saying.”
Again, in Dudley Fleming v Chief Constable of Sussex [2004] EWCA Civ 643, Potter LJ observed at paragraph 36:
“The principles are too well known to require to be set out in detail. The pre-CPR working rule to be found in the judgment of Nourse LJ in Re Elgindata Ltd (No 2) 1 WLR 1207 was modified by the observations of Woolf Lord in AEI Rediffusion Music Ltd v Phonographic Performance Ltd to the effect that it is no longer necessary for a party to have acted unreasonably or improperly to be deprived of his costs on a particular issue on which he has failed.”
So the test for recovery is not necessarily one of whether it was reasonable to pursue that head of claim.
In Shirely v Caswell [2001] 1 Costs LR 1, Chadwick, LJ, giving the judgment of the Court of Appeal:
“The costs of issues abandoned, or not pursued at trial, ought, prima facie, to be disallowed against the party incurring them on an assessment of the costs of that party by the costs judge – because, again prima facie, they are costs which have been unnecessarily incurred in the litigation.”
Burton J said, in Nugent v Goss Aviation [2002] EWHC 1281 (QB):
“On an assessment the costs judge, who will prima facie disallow costs in respect of issues abandoned or not pursued, as the Court of Appeal has directed to do in Shirley v Caswell, will in any event disallow the costs of any claims which were positively struck out.”
So, the starting point is that a party should not expect to recover the costs of issues abandoned.
However, the law abhors certainty and so the Court of Appeal has jumped to the rescue. This is what they had to say about abandoned heads of claim in Motto v Trafigura [2011] EWCA Civ 1150:
“So where a claimant told a … representative, and bona fide and reasonably believed, that he or she had suffered a certain type of damage as a result of the injury, then it would be right to recover the necessary, reasonable and proportionate cost of making the claim to recover for that damage.”
And further, and more bizarrely still:
“I do not consider that, absent special facts, it was unreasonable to have pleaded all heads of damage communicated by the client, with a view to amending them out or not pursuing them if and when they could not be sustained. Once a potential claimant was identified, it was sensible to add him or her as a party, and, rather than risking the cost, delay and uncertainty of adding to the heads of damage, I would have thought it perfectly sensible to include any head of damage which had been identified by the potential claimant, unless it was fanciful or some other special reason was apparent for not pleading it. Similarly so far as pursuing and investigating such heads of damage.”
So, bung in everything you can think of at the outset and expect to be able to recover the costs of the same.
Ten years worth of costs law ignored.