RollOnFriday has reported rumours that at Shakespeares solicitors:

“Some staff in the costs department have seen their pay drop by nearly £10,000.”

The shape of things to come?

I recently came across the following on another costs related blog (note the capitalisation):

“The Guideline Hourly Rates ARE DESIGNED FOR FAST TRACK CASES.”

Poppycock.

The 2010 Guideline Rates for Grade A fee earners in the City is £409 per hour.

A bottle of champagne to the first reader who can send me a transcript of a judgment, where the rates have been challenged, allowing a rate of £409 for a fast track matter.

They are guideline rates for judges carrying out summary assessment. That might include interim applications in complex multi track commercial disputes or summary assessments of the costs of an appeal in the Court of Appeal.

The confusion appears to come from the fact that because it is intended that a summary assessment would be undertaken at the end of a fast track trial that this is the full extent of the role of the guideline hourly rates.

See: How the rates were calculated.

I note the commentary to the White Book’s 2013 Cumulative First Supplement states, in relation to provisional assessment:

“The Civil Procedure Rule Committee decided that as from April 1, 2013 the rules should apply in England and Wales and that the monetary limit should be £75,000. There are two potential problems with this. One is that during the pilot scheme the number of bills lodged for assessment increased by 50 per cent because parties realised that they were able to test the water with a provisional assessment without running the risk of having to pay the costs of a detailed assessment hearing. … The second potential problem is the increase in the monetary limit which will catch far more bills than previously and if this leads to an increase in the number of bills lodged, as in the pilot scheme, it is likely to cause difficulties with workflow and the administrative work necessary to deal with the incoming papers. The Rule Committee has agreed to review these rules in due course.”

Who could have guessed this might cause a problem?

Interesting issue raised by specialist costs counsel Paul Hughes: Can parties agree to extend time for service of Points of Dispute? The answer may not be as obvious as you would first think.

I am grateful to Professor Dominic Regan, writing in Litgation Funding magazine, for providing some welcome clarification on how the new proportionality test will work in practice:

“No one has a clue.”

CPR 3.13 states:

“Unless the court otherwise orders, all parties except litigants in person must file and exchange budgets as required by the rules or as the court otherwise directs. Each party must do so by the date specified in the notice served under rule 26.3(1) or, if no such date is specified, seven days before the first case management conference.”

The new Directions Questionnaire states (at Section H) “I confirm Precedent H is attached” and “If your claim is likely to be allocated to the Multi-Track Precedent H must be filed in accordance with CPR 3.13”.

The notice being sent out with these Questionnaires states: “Each questionnaire has different and specific questions the judge requires answering in relation to the type of claim therefore the correct form must be used”.

I have heard it being suggested that the Directions Questionnaire is therefore wrong as Precedent H does not need to be attached to it; rather, if no date is expressly specified, it does not need to be filed or exchanged until seven days before the first case management conference.

It is possible the Questionnaire contains an error but I can also see the possibility that the Court is making an express order in the Questionnaire requiring parties to file and exchange at the same time as completing the Questionnaire.

In any event, I have recently been instructed in a couple of cases where the parties had exchanged budgets at the same time as completing the Directions Questionnaire. I was asked to prepare challenges to the other side’s budgets.

PD 3E para.2.3 states:

“If the budgets or parts of the budgets are agreed between all parties, the court will record the extent of such agreement. In so far as the budgets are not agreed, the court will review them and, after making any appropriate revisions, record its approval of those budgets. The court’s approval will relate only to the total figures for each phase of the proceedings, although in the course of its review the court may have regard to the constituent elements of each total figure. When reviewing budgets, the court will not undertake a detailed assessment in advance, but rather will consider whether the budgeted costs fall within the range of reasonable and proportionate costs.”

It is not clear how it is envisaged the court usually establishes the agreement, or otherwise, of the parties. Is this before or at the first CMC?

In any event, in both these cases, proceeding in different courts, rather than list the matters for CMCs the courts have simply approved the directions sought without commenting on the budgets and appear to have no intention of making costs management orders. The courts are not obliged to make costs management orders but it was anticipated this would be the norm. In the first case the other side’s costs budget had been put in at £80,000 net of any success fee or VAT (meaning the full value of a costs claim might be £140,000+). In the second case the budget totalled £186,000 net of any success fee or VAT (meaning a potential costs claim of £335,000+).

If courts are not bothering to make costs management orders is cases of this size (and £2million cases are exempt in the Chancery Division, Technology and Construction Court, and Mercantile Court) where can we expect them to be made?

What are other reader’s experiences?

I recently mentioned the application I successfully opposed to have point of dispute struck out due to a failure to make an open offer when serving the points of dispute.

You will therefore imagine the no small sense of irony I felt when a week later I found myself opposing an application for relief from sanctions made by the same firm of solicitors where they had failed to give proper notification of an additional liability during a claim. They had advised the claimant had the benefit of an undertaking from a trade union when, in fact, there was an ATE policy in place. (There is a lesson to be learnt here. Before embarking on a campaign to persuade your local courts to take a very strict approach to breaches, make sure your own house is 100% in order).

The skeleton argument they had filed in support of their previous application had dealt at length with the guidance given by the Master of the Rolls as to the tough approach to be taken by judges to breaches of the rules post-1 April 2013 and concluded:

“It is necessary to give tough justice to the defaulting party so as to ensure proper compliance with the rules by others, to properly give effect to the … party’s expectation that rules will be complied with, and to enable the efficient administration of justice upon assessment.”

In the skeleton argument to their application for relief from sanctions they sought to argue the amendments to CPR 3.9 and relief from sanctions were no more than a simplification exercise to remove the need for judges to “tick off” each of the factors previously listed and thereby save time. The implication being that nothing of substance had changed since 1 April 2013.

Their application failed.

This is now the third application for relief from sanctions I have successfully opposed since 1 April 2013.

The other two concerned alleged failures to serve the correct documents in support of additional liabilities when commencing detailed assessment proceedings.

In one case the judge ruled there had been a breach and refused relief from sanctions.

In the other case the judge (wrongly) held there to have been no breach but held that if he had been wrong about that he would not have granted relief from sanctions.

Pre-1 April 2013, all three of these cases would have had a reasonable chance of succeeding. District Judges appear to have taken on board the new strict approach and are applying it accordingly.

Funnily, the higher courts are already starting to backpeddle.

I recently drafted Points of Dispute that contained the following dispute:

“It is noted that work is claimed relating to funding (eg items 7 and entries on 13/9/11 (fourth) under documents) despite clear Court of Appeal authority from 2011 (see paragraphs 108, 114 and 145 of Motto v Trafigura Ltd [2011] EWCA Civ 1150) that such work is not recoverable. It is clear that the fee earner/s responsible for drafting the Bill and checking the same are not aware of the distinction between recoverable and irrecoverable work and it is anticipated that non-chargeable routine communications with the Claimant have been included. The Defendant, adopting a broad-brush approach, offers 80% of the routine communications claimed (ie 20 routine communications). If the same is not accepted the Court will be asked to determine the recoverability of each and every item claimed and the Defendant will request that the cost of this task be paid by the Claimant in any event.”

When Replies were served, out of time, they contained the following response:

“The Claimant is surprised by the dispute raised which illustrates that the Defendant’s fee earner responsible for preparing the Points of Dispute are not aware of the methodology applied in costs proceedings. The funding costs can be included within any Bill of Costs as they have been properly incurred. We have now conceded the said items rendering them irrecoverable.

Does the Defendant seriously suggest that all Bill of Costs that suffer a reduction have been improperly drawn through a lack of awareness?”

Now, the statement that these costs were rendered irrecoverable as a result of the concession in the Replies is clearly poppycock. They are irrecoverable because that is what the law is (as clarified by the Court of Appeal). Such costs were irrecoverable before, during and after the Bill, Points of Dispute and Replies were prepared.

However, ignorance of how the law operates aside, this shows why costs is an area of the law that has fallen into such disrepute. If this work had been included within the Bill as a result of ignorance of the relevant case law, that would be unfortunate but no worse. Instead this is a perfect of example of parties including work they know to be irrecoverable in the hope the other side does not pick up on this.

Murray Heining, Chairman of the Association of Costs Lawyers, recently commented on this issue and repeated the comments of Dyson LJ (as he then was) in Buxton v Mills-Owens [2010] 1 WLR 1997:

“[the solicitors] were under a professional duty not to include in the court documents that they drafted any contention which they did not consider to be properly arguable and not to instruct counsel to advance contentions which they did not consider to be properly arguable.”