Time for service of Replies to Points of Dispute

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Replies to Points of Dispute occupy a strange place in the detailed assessment process.

Many costs practitioners and costs judges have traditionally viewed them as largely a waste of time, often consisting of self-serving argument or pointless comment (eg “Not agreed”). At worst, they extend beyond setting in skeleton form the receiving party’s position and are drafted in the form of complete submissions (rather rendering attendance at a detailed assessment hearing redundant).

They have always been optional. The pre and post April 2013 rules are, for practical purposes, identical with CPR 47.13 reading:

“(1) Where any party to the detailed assessment proceedings serves points of dispute, the receiving party may serve a reply on the other parties to the assessment proceedings.

(2) The receiving party may do so within 21 days after being served with the points of dispute to which the reply relates.”

This has always seemed a straightforward rule to me. The service of Replies is optional. If the receiving party considers that Replies will assist in narrowing the issues or addressing a point of principle they can serve Replies within 21 days. If service of Replies is viewed as being unlikely to facilitate settlement or narrow a point of principle, in advance of assessment, the receiving party can choose not to serve Replies. Prior to 1 April 2013 they would still be free to make whatever submissions they wanted at the detailed assessment hearing. Failure to serve Replies did not limit the ability to make oral submissions.

However, it was common practice amongst many costs draftsmen and costs lawyers to serve Replies outside 21 days and often only shortly before a detailed assessment hearing. When challenged, the response was often along the lines that they had hoped to avoid the cost of preparing Replies but now it was clear the matter would proceed to assessment it was now necessary to prepare Replies. This totally misunderstood the purpose of Replies. They were to be served at an early stage in the assessment process, if at all, if they may have assisted in avoiding the matter having to proceed to a final assessment. If they were unlikely to avoid a hearing, there was no need to serve them. They were not a necessary predatory step in the final run up to an assessment hearing.

I’ve also seen bizarre interpretations of the wording of the rules such as “replies to your Points of Dispute are optional to reply in 21 days” and therefore the receiving party was free to serve outside the 21 days. Other arguments have been that because the rules contain no sanction for serving outside the 21 day period the receiving party was again free to serve whenever they liked.

Pre-April 2013 there was often limited point in complaining about late service, other than on the issue of the associated costs. The matter would proceed to an assessment hearing and, as mentioned above, the receiving party could make whatever submissions they wanted at the hearing. The late Replies could probably be treated as the receiving party’s Skeleton Argument, even if not technically admissible Replies.

Post April 2013, the position has radically altered. Firstly, the contents of Replies are now limited by PD 47 para.12.1:

“A reply served by the receiving party under Rule 47.13 must be limited to points of principle and concessions only. It must not contain general denials, specific denials or standard form responses.”

(In practice, the limitation on the contents of Replies is often ignored and it will be interesting to see what approach the courts take to this.)

Secondly, and perhaps more importantly, for cases where the costs claimed do not exceed £75,000, the matter will usually be subject to provisional assessment and there will be no opportunity to make oral submissions to the court. The only opportunity for receiving parties to put forward submissions on the disputes raised is within the Replies. Now when receiving parties are advised they are out of time for serving Replies, panic sets in. Or denial.

If you are out of time for service, and the paying party does not consent to late service, an application needs to be made for permission to serve out of time. Although such an application would not be the same as an application for relief from sanctions, the courts are likely to expect there to be a good reason why they were not served on time. Is there any support for the view that an application is necessary? The Senior Courts Costs Office Guide 2013 states at paragraph 19.5:

“The time limit for serving a reply to points of dispute is summarised in para 6.1 above and the time limit for filing a request for a detailed assessment hearing is summarised in para 9.1(c), above. In any case directions of the court may impose further time limits for the taking of certain steps, eg the service of witness statements. All these time limits may be extended by the agreement of the parties or, alternatively, by an order made upon an application.”

I recently had a case where I had advised the receiving party I did not consent to late service. Nevertheless, they made a request for provisional assessment with a copy of Replies being filed in support. Naughtily, and not following Precedent G (in breach of PD 47 para.12.2), the Replies were undated. The court had no way of knowing the Replies were late. Application issued to have the Replies struck out. Matter came before District Judge Woodburn in Liverpool County Court. Replies struck out. Defendant awarded costs. Although the judge made is clear the receiving party was not thereby precluded from making an application for serve late, they could not simply serve late without an application. This is common sense. Otherwise it makes a mockery of having a timescale in the rules. If the rules give a 21 day period for service, that cannot be interpreted as meaning service may be made at any time. The words “within 21 days” are not meaningless.

This may all be a nasty shock for those who act for receiving parties as they find themselves having to work with the same 21 day timescales faced by paying parties having to deal with Points of Dispute. The obvious distinction being that the time to draft Replies limited to points of principle and concessions only is a fraction of that of having to draft Points of Dispute. Nevertheless, the Mitchell lesson is that firms should not take on more work than they can comfortably handle:

“Solicitors cannot take on too much work and expect to be able to persuade a court that this is a good reason for their failure to meet deadlines. They should either delegate the work to others in their firm or, if they are unable to do this, they should not take on the work at all. This may seem harsh especially at a time when some solicitors are facing serious financial pressures. But the need to comply with rules, practice directions and court orders is essential if litigation is to be conducted in an efficient manner. If departures are tolerated, then the relaxed approach to civil litigation which the Jackson reforms were intended to change will continue.”

None of this is to suggest that parties may not agree a general extension of time for Replies before the deadline is reached. On occasion that may be entirely sensible. What is not sensible is to ignore the timescales set out in the CPR and to assume there are no adverse consequences.

Impact of Jackson on cost firms

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Patrick Allen, writing in the New Law Journal, commenting on the Jackson reforms:

“Many smaller PI firms are closing, selling their cases at a discount to their WIP or being taken over. Firms are being hoovered up by the mega firms such as Slater Gordon. … If firms do have cash this is because they have no new business and they are in that brief cartoon moment before they fall to earth.”

The impact being felt by PI firms will quickly be felt by costs firms, although many have never been busier because of the time lag between new instructions being received by solicitors and the cases settling. Has the impact started to hit some costs firms yet?

Provisional assessment hearing

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Notice received from court:

“Take notice that the provisional assessment will take place on 7 February 2014 at 2:30pm at X County Court

when you should attend

90 minutes has been allowed for the provisional assessment

NB – No parties are to attend the provisional assessment hearing”

That’s clear then.

Cap on costs budgeting process

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Claimant serves costs budget totalling £100,000. Defendant serves costs budget totalling £20,000. Defendant’s budget is, unsurprisingly, not disputed and approved by the court. Claimant’s budget is, unsurprisingly, hotly disputed and is dealt with at a costs management hearing.

PD 3E para.2.2 states:

“Save in exceptional circumstances –

(1) the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% of the approved budget;

(2) All other recoverable costs of the budgeting and costs management process shall not exceed 2% of the approved budget.”

The Claimant’s budget is reduced by the court to £60,000.

Each side’s costs of the contested costs management hearing appears to be limited to 2% of their own approved budget (rather than the budget of the other side).

So, the Claimant gets a maximum of £1,200 and the Defendant a maximum of £400, despite the fact the only reason for the costs management hearing is because the Claimant submitted an inflated budget. Fair? And is £400 even going to begin to cover the Defendant’s costs?

This has the appearance of not being very well thought through.