Hourly rates under CCFAs

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Many cases are still being run under CCFAs which define “basic charges” along the following or similar lines:

“charges for work done by or on behalf of Smith and Jones Solicitors, calculated on the basis of the hourly rates allowable for the work in the court in which the claim in question is conducted or would be conducted if proceedings were to be issued”

I take “allowable” to refer to the Guideline Hourly Rates for the relevant court. “Allowable” cannot refer to whatever hourly rates it might be possible to persuade a judge to allow at the conclusion of the case. This would create all kinds of indemnity principle problems. Neither can it mean the rates that another judge in that court once allowed in a vaguely similar case in the past. That does not make the rate “allowable” but simply “once allowed in the case of X”.

If that is correct, it means there is no discretion to seek rates in excess of Guideline Rates.

Secondly, what happens if the claim was one of those issued out of Northampton (CCMCC) County Court and settled prior to transfer to a specific court? Although it was a purely administrative matter that Northampton County Court was the named court, was it not being “conducted” in that court if issued or “would be conducted” in that court if not yet issued? If so, the rates under a similarly worded CCFA would be limited to National 2 rates.

Definition of road traffic accident

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Is an accident concerning an elderly lady being hit by a mobility scooter in the fruit and vegetable aisle of a Tesco superstore a “road traffic accident” under CPR 45.7 (now CPR 47.9) such that fixed predictive costs apply; a road traffic accident being defined as:

“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”
“‘motor vehicle’ means a mechanically propelled vehicle intended for use on roads”
“‘road’ means any highway and any other road to which the public has access and includes bridges over which a road passes.”

Yes, said Deputy District Judge Dawson in Scott v Malcolm (Liverpool County Court, 5 April 2013).

Thanks to Patrick Driscoll at Shakespeares for providing a copy of the judgment.

Drafting bills of costs

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PD 47 para.5.8 states:

“Where it is necessary or convenient to do so, a bill of costs may be divided into two or more parts”

It is difficult to conceive a more necessary or convenient situation then where, due to the transitional provisions, part of the costs will be subject to the old proportionality test and part will be subject to the new Jackson test.

Why then do some law costs draftsmen fail to do this?

How is a judge on assessment meant to apply the correct tests where the bill is not clearly split?

Should applications be made to compel such bills to be re-drafted? Alternatively, should the judge just adopt a robust broad-brush approach and apply the new test to all costs claimed (with the receiving party having nobody but themselves to blame for not having drafted the bill properly)?

Binding legal authority

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I don’t know how Mark Friston feels when sitting as a Deputy Master at the Senior Courts Costs Office when one of those appearing before him quotes from his book Civil Costs: Law and Practice as being a persuasive record of the law as it stands. Even odder, perhaps, if his opponent in court refers to his book to support an argument counter to that which Friston is advancing.

However, I can confirm that I find it rather surprising when I read Replies to Points of Dispute citing something I once wrote on the Legal Costs Blog as though this was somehow likely to sway the poor judge one way or the other.

Costs of Part 8 proceedings

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Has the Court of Appeal messed up again (Mitchell/Denton style)?

One of the problems with the English legal system is that the higher courts will sometimes try to do justice to the facts of a case but create a precedent in the process with unintended consequences. This is perhaps particularly acute when it comes to legal costs matters where the higher courts often have only limited understanding of the day-to-day issues that arise.

Step forward Tasleem v Beverley [2013] EWCA Civ 1805. This is a decision from the tail end of last year and appears to have received only limited commentary to date.

The issue facing the Court of Appeal was:

“whether the court can award a claimant its costs of what are known as costs-only proceedings brought under CPR Part 8 in accordance with the procedure set out in CPR rule 44.12A where a default costs certificate has been obtained, as the claimants contend; or is a claimant in those circumstances limited to the amount of the costs specified in the default costs certificate, as the respondents contend? Is the default costs certificate the end of the matter, in other words.”

The substantive claims had settled without proceedings being issued. Part 8 costs-only proceedings were issued and notices of commencement served. No points of dispute were served and the claimants obtained default costs certificates. Were the claimants limited (in addition to the amounts set out in the bills) to the fixed costs payable for obtaining a default costs certificate (£80 fixed fee plus court fee) or were additional costs recoverable for the work concerned with issuing the Part 8 proceedings?

The Court of Appeal concluded that the fixed costs for obtaining a default costs certificate did not include the costs of issuing Part 8 proceedings and such costs were in the discretion of the court. So far, so unremarkable.

The difficulty that arises lies in the reasoning behind the Court’s decision. The Court held:

“The bringing of Part 8 costs-only proceedings is not the commencement of, or part of, the detailed assessment proceedings, albeit it is a necessary preliminary to that process if there are no underlying proceedings in existence.”

So, Part 8 proceedings are apparently not “part of” the detailed assessment proceedings.

The clever readers of the Legal Costs Blog will see where this is going and it has nothing to do with default costs certificates.

CPR 47.15(5) states:

“In proceedings which do not go beyond provisional assessment, the maximum amount the court will award to any party as costs of the assessment (other than the costs of drafting the bill of costs) is £1,500 together with any VAT thereon and any court fees paid by that party.”

If Part 8 proceedings are not “part of” the detailed assessment proceedings, are the costs of issuing Part 8 proceedings payable in addition to the provisional assessment cap?

What makes the Court of Appeal’s decision particularly odd is that they were expressly referred to the earlier Court of Appeal decision in Crosbie v Munroe which appeared to treat Part 8 proceedings as part of the assessment process. Here is how they dealt with it and with the relevant quote from Crosbie:

“I do not think that this interpretation of the rules is contrary to the approach of the Court of Appeal in Crosbie v Munroe [2003] EWCA Civ 350, [2003] 1 WLR 2033, as Mr Marven contends. In that case, the court had to consider whether, in a case where detailed assessment was commenced under Part 8, an offer in respect of costs made pursuant to CPR 47.19 offer to settle without prejudice save as to costs of the detailed assessment proceedings, did or did not include the costs of the Part 8 proceedings. The defendants contended that it did. The court, however, held it did not because the costs of the proceedings within CPR 47.19 referred to the costs of the substantive claim up to its disposal by the agreement by the defendant to pay damages and costs. Brooke LJ said this at paragraph 34:

‘By this route it is easy to see that even when Part 8 proceedings have to be commenced in order to obtain a court order for detailed assessment, the ‘costs of the proceedings’ within the meaning of CPR 47.19 still relate only to the costs leading up to the disposal (on this occasion by agreement) of the substantive claim. They are ‘the proceedings which gave rise to the assessment proceedings’, and the assessment proceedings cover the whole period of negotiations about the amount of costs payable through the Part 8 proceedings to the ultimate disposal of those proceedings, whether by agreement or court order.’

That the costs of the Part 8 proceedings did not form part of the substantive costs contained in the bill of costs, which is the issue the court addressed, seems to me, with respect to Mr Marven, to be a point which assists the respondents rather than the appellants. Certainly the court did not consider, still less decide, the costs of the Part 8 proceedings formed part of the ‘costs of the detailed assessment’ for the purposes of CPR 47.11 and the default costs certificate or otherwise.”

Am I alone in considering there to be a significant contradiction between Crosbie’s:

the assessment proceedings cover the whole period of negotiations about the amount of costs payable through the Part 8 proceedings [emphasis added] to the ultimate disposal of those proceedings”

and Tasleem‘s:

“The bringing of Part 8 costs-only proceedings is not … part of, the detailed assessment proceedings”

My experience to date is that the courts, including the Senior Courts Costs Office, have treated the Part 8 proceedings as part of the costs of the detailed assessment and subject to the provisional assessment cap. It is interesting to note that the actual wording of CPR 47.15(5) refers to “any court fees [in the plural] paid by that party”. It is clear that this is therefore meant to go further than just the fee payable for requesting assessment. At the very least this suggests it includes any interim applications and I anticipate those drafting this believed it would include the Part 8 court fee where applicable.

However, the Court of Appeal appears to have opened the door to argument on the point. It would be regrettable, to say the least, if the costs of issuing Part 8 proceedings were entirely at large, unlike all the other work necessary to deal with provisional assessment, as this is likely to lead to further argument which the cap was presumably designed to avoid.

The facts in the two cases heard under the Tasleem judgment take this into cuckoo land territory. The Deputy District Judge (not a civil litigator I would hesitate to guess) had summarily assessed the claimants’ costs of issuing Part 8 proceedings at £1,614.60 and £1,400.76 respectively. WTF?

It takes 30 minutes to issue Part 8 proceedings (unless the court makes a total mess of the process). Admittedly the Court of Appeal did recognise:

“I take Mr Marven’s point that the costs of bringing such Part 8 proceedings may be, or should be, relatively minimal. … Care should therefore be taken to ensure that matters properly encompassed within the detailed assessment and default regime are not claimed as part of the Part 8 costs-only process. But that is a matter which should be sorted out by the summary assessment process in the event that the parties cannot agree those extra costs.”

The figures allowed in these cases suggest some judges are entirely incapable of dealing with the matter properly by way of summary assessment.

We seem now to be faced with three possibilities:

1. The courts decide the the reasoning in Crosbie is correct so far as the costs of issuing Part 8 proceedings are concerned (ie they are part of the assessment process and subject to the cap).

2. Fixed costs are rapidly introduced for issuing Part 8 proceedings (a possibility suggested by the Court of Appeal: “The problems which this may give rise to (that is, that there is no fixed costs regime for Part 8 costs-only proceedings) is a matter which may merit examination by the Civil Procedure Rules Committee in due course”). Say, £80 plus VAT.

3. The Rules Committee amends Part 47.15(5) (third time lucky?) to make it absolutely clear it includes any costs of issuing Part 8 proceedings.

In the interim…

Costs budgeting and new bill of costs format

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Approval has recently been given to the new J-Codes. These are integral to future case management software that will be used for drafting of costs budgets, costs schedules and bills of costs. As the Jackson Final Report stated, the purpose of the new software included the ability to “automatically generate schedules for summary assessment or bills for detailed assessment as and when required”.

The new bill of costs format (the development of the J-Codes being a necessary part of the process) has yet to be finalised and most commentators expect this to be at least 12-18 months before it will be rolled out.

The new bill of costs format will mirror the various phases that appear within costs budgets. It will therefore be possible to see at a glance (in theory) whether there has been an overspend in any phase.

Unfortunately, we have a further 12-18 months where this is not possible. The process of trying to determine from a bill drafted in the current format whether costs are above or below an approved budget is painful and time-consuming at best and impossible at worst.

Lord Justice Jackson always envisaged that his proposals were a complete package to be implemented in full. Sadly, the problems caused by the piecemeal introduction of costs budgeting and the new bill of costs format is a prime example of what was always likely to happen if this was not followed through.

Law costs draftsmen’s fees

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I was recently instructed to prepare points of dispute and advise in relation to a bill running to a little over £220,000. Instructing solicitors had obtained various estimates from in-house and external draftsman. The other estimates varied from:

• 10-15 hours at £120 per hour
• 15-20 hours at £175 per hour
• 5 hours at £120 per hour

To be fair, these estimates appear to have all been given without the benefit of seeing the actual papers.

Nevertheless, 5 hours appears incredibly optimistic and it is difficult to see how it would be possible to properly read the papers in addition to drafting points of dispute in that time for a bill of this size. As to £175 per hour, nice work if you can get it but I would suggest this is not realistic for defendant insurance personal injury work.

To be fair, trying to estimate at the outset what it will cost to undertake this task is a virtually impossible task. How long is a piece of string? It would be like, I don’t know, trying to estimate at an early stage in the proceedings what the legal costs would be of conducting a complex claim through to trial. A fool’s errand.

(I estimated 10-14 hours at £118 per hour. Time actually spent: 8.7 hours. A margin of error of 13%-40% on my estimate.)

Future of Costs Lawyers

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A Costs Lawyer was quoted in a recent edition of Costs Lawyer magazine as saying Costs Lawyers should:

“get as much experience and knowledge of costs budgeting as they can, as this will prove to be the main source of work for [them] in the future”

Presumably the logic of this is that we will get to a stage where receiving parties will know they cannot recover more than an approved budget and paying parties will know they cannot reduce costs below the approved budget. This will remove the need for bill drafting, points of dispute, costs negotiations and detailed assessment hearings.

The profession is in trouble if this is true. Costs budgeting can never replace the traditional income streams generated by costs work. If costs budgeting makes up the majority of the work that is left, then that is going to be a small pie to divide up between those still working in costs.

Costs Lawyer training programme

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Discussing the new Costs Lawyer training scheme, in Costs Lawyer magazine, the ACL Council member for education, Claire Green, said:

“The new Costs Lawyer qualification teaches student that the court timetable is now sacrosanct”.

This was written pre-Denton and highlights the problem of trying to develop a training programme in an area of law that is in constant flux. Any training material based on Mitchell will already be out of date.