SENIOR COURTS COSTS OFFICE
COSTS PRACTITIONERS GROUP
MINUTES OF MEETING HELD ON THURSDAY 26 MARCH 2015
PresentMaster O’Hare (in the chair) / SCCO
Chief Master Gordon-Saker / SCCO
Mr A Tunkel / The Bar Council
Mr G Barker / The Law Society
Mr M Heskins / The Law Society
Mr P Allen / APIL
Mr D Marshall / APIL
Mr A Parker / LSLA
Ms C Green / ACL
Mr J Martin / Minute Secretary
1. APOLOGIES FOR ABSENCE
Apologies for absence were received from District Judge Besford, Mrs Nash, Master Rowley and Master Simons
2. COMMENTS UPON THE APPROVED MINUTES OF THE LAST MEETING
There were no comments upon the approved minutes of the last meeting.
3. MATTERS ARISING NOT OTHERWISE ON THE AGENDA
Coventry v Lawrence: the hearing in the Supreme Court has been reserved for judgment (see case summary below)
LASPO insolvency exemption: the meeting noted that the Government has now abandoned its proposal to end the exemption which permits the recovery of success fees in insolvency cases.
Legal Aid Client and Cost Management System (CCMS): civil legal aid contract holders have received notice from the Legal Aid Agency (LAA) that use of the client costs management system (CCMS) will be mandatory from 1 October. Some CCMS users have raised issues of slowness and poor functionality. The Society has therefore urged CCMS users to report all performance and functionality problems to the LAA as soon as they occur. Master O’Hare explained that the new model bill had the potential to become too unwieldy a document for bills exceeding £10,000.
Backlog of work in the SCCO: Master Gordon-Saker reported that there has been a substantial diminution in the administrative delays in the SCCO. The waiting time for Costs Judges’ hearings was still some eight months. However, it was hoped that two new judges would be appointed by the October 2015. Costs officers were still able to deal with provisional inter partes assessments within four weeks of receiving the solicitor’s file of supporting papers.
4. FIXED COSTS ON THE FAST TRACK
Lord Neuberger has expressed his disappointment that, over four years after Government backing for the Jackson reforms “we still do not have fixed costs for all fast track cases”. Mr Marshall said that the Costs Committee of Civil Justice Council was looking into this issue. The meeting noted that it had been one of the proposals in the reforms proposed by Lord Woolf in 1998.
5. UPDATE ON THE CIVIL JUSTICE COUNCIL’S RECENT WORK ON DAMAGES BASED AGREEMENT
Mr Parker reported on the progress of the Civil Justice Council working group set up in November to look at possible revisions to the regulations governing Damages Based agreements (“DBAs”). In the first phase, several issues had been identified, including whether the regulations could be changed to allow defendants to use DBAs, clarifying that the lawyer’s payment could only come from damages and whether the regulations should contain provisions as to early termination of the DBA. Mr Tunkel, amongst others, said that the current lack of take up of DBAs was because there were so many potential difficulties surrounding them. Mr Parker agreed and said that as many of the concerns as possible raised by the meeting would be considered. It was hoped that a report on this work will be published soon after April 2015.
6. DEDUCTION FROM CHILD DAMAGES OF SUCCESS FEES NOT EXCEEDING 25% OF THE DAMAGES
As from 6 April 2015, CPR 21.12 is to be amended to reflect when and how a deduction from damages can be made in respect of a CFA success fee or DBA allowance payable to the child's/protected party's legal team. The amendments are confined to those cases where the damages agreed or awarded do not exceed £25,000. Consequential amendments are made to PD21 and PD46 and are to be made to Part 47. All the amendments will come into force at the same time.
7. GUIDELINE HOURLY RATES
Master Gordon-Saker reported that there was still no movement on new Guideline rates. Mr Heskins said that the principal stumbling block was the lack of financial resources available to conduct a survey which would provide the reliable information on rates to meet the Master of the Rolls’ concerns.
8. INCREASE IN THE SPECIFIED HOURLY RATE FOR LITIGANTS IN PERSON
The meeting noted that as from 6 April 2015, the figure specified in PD 46, para 3.4 is changed from “£18” to “£19”. The new rate is retrospective in effect.
9. RECENT AND FORTHCOMING CASES CONCERNING COSTS
Master O’Hare drew the Meeting’s attention to the following cases:-
McGraddie v McGraddie [2015] UKSC 1: in a financial dispute between a father and son, taken through the Scottish courts, the father won before the Lord Ordinary, lost on an appeal to the Inner House but won again in the Supreme Court. After hearing submissions as to what order for costs it should make the Supreme Court ruled that the costs of legal expenses insurance (whether BTE or ATE) are not recoverable except where specific statutory provision expressly permits such recovery. In this case an ATE policy had been taken out after section 29 of the Access to Justice Act 1999 had been repealed and, in any case, Scots law applied under which there is no statutory provision similar to that section.
Coventry v Lawrence: in this noise nuisance case the claimants won at trial (in part), lost in the Court of Appeal and won again in the Supreme Court. On their application for a restoration of the award of costs made at trial the defendants raised arguments that the claimants’ claim for success fees and an ATE insurance premium were not Human Rights Act compliant. This matter was adjourned for a further hearing which took place in February 2015. Judgment was reserved.
Blankley v Central Manchester NHS Trust [2015] EWCA Civ 18: the Court of Appeal has upheld Phillips J’s decision that a client’s loss of mental capacity terminates the solicitor's authority to act on behalf of that client but does not terminate the retainer; in the circumstances the solicitors could continue acting under a pre-April 2013 CFA once the client had regained capacity or on the appointment of a deputy.
Conlon v Royal Sun Alliance Plc [2015] EWCA Civ 92: in this “credit hire” case allocated to the small claims track the claimant was awarded some compensation, successfully appealed for more and then brought a second appeal in order to obtain the full compensation she had claimed. When it became apparent that the appeal was to be joined to other proceedings as a test case the defendant indicated that it would rather pay the full compensation claimed than incur any further costs. The appeal was allowed by consent, an order was made for payment of the full compensation claimed but no order was made in respect of the costs of the claim, including the costs of this appeal. The Court of Appeal held that the r.27.14(2) restriction on costs applies to any appeal made a claim allocated to the small claims track, including second appeals to the Court of Appeal. In this case the defendant had behaved entirely reasonably in conducting its defence as it did, that there was nothing in the circumstances which made it appropriate to re-allocate this claim to a higher track and that, even if there had been, it would not have been appropriate to make that re-allocation retrospective for costs purposes.
Cox v Woodlands Manor Care Home Ltd 27 January 2015, CA, unrep: a conditional fee agreement (“CFA”) is “made” when it is signed even if, at that time, its operation is conditional upon the willingness of a legal expenses insurer to provide funding. Accordingly, in this case a CFA, which had been entered into during a visit by a solicitor to a client's home, was unenforceable under the Cancellation of Contracts made in a Consumer's Home or Place of Work etc. Regulations 2008 because no notice had been given of the client's right to cancel.
R (HS2 Action Alliance Ltd and Hillingdon LBC) v Sec of State for Transport [2015] EWCA Civ 203: the Court of Appeal held that the new fixed costs regime for Aarhus Convention cases (i.e. CPR 45.41 which replaces Costs Protection Orders for claimants in judicial review proceedings concerning environmental matters) applies to all claimants in such cases even those who are themselves public bodies.
Bentine v Bentine; Stone Rowe Brewer v Just Costs Ltd : these two second appeals (concerning, amongst other things, the meaning of “special circumstances” entitling a costs judge to depart from the one fifth rule) are now listed for hearing by the Court of Appeal over two days starting in the last week of July 2015.
R (Ben Hoare Bell and Ors) v Lord Chancellor [2015] EWHC 523 (Admin): four claimant firms of solicitors successfully challenged the legality of an amendment to the legal aid scheme made by the Civil Legal Aid (Remuneration) (Amendment) (No 3) Regulations 2014 which sought to introduce a “no leave, no fee” regime for legal aid granted to applicants for judicial review.
Kelly v Hays Plc 20 February 2015, Jeremy Baker J, unrep: in a personal injury claim for over £400,000 C ultimately settled for £50,000 plus costs. C had instructed a City firm and her bill of costs claimed rates ranging between £450 and £160. The costs judge held that City rates were not appropriate but allowed Central London rates with enhancement (£380 to £140). The costs judge failed to provide reasons as to why Central London hourly rates were preferable and he also failed to provide reasons for rejecting the appellants' submissions that a national Band one firm was appropriate. Allowing the appeal Jeremy Baker J held that the appropriate category of solicitors was national Band one. However, there had been some aspects of complexity, which would justify some enhancement to the hourly rates (a limitation point, the extent of damages and the consideration of surveillance evidence). The degree of enhancement appropriate for senior fee earners was higher than the degree appropriate for junior fee earners. The rates allowed were £295 for grade A fee earners, £230 for grade B, £175 for grade C and £120 for grade D.
Excalibur Ventures LLC v Texas Keystone Inc [2014] EWHC 3436 (Comm): this decision is noted in the minutes of our last meeting. The trial judge (Christopher Clarke L.J) also made another important ruling as to orders for interim payment of costs. He held that it is wrong to assume that the court should never allow more than the “irreducible minimum”: CPR 44.2(a) provides that the court, “will order” a paying party “to pay a reasonable sum on account of costs unless there is good reason not to do so”. This has replaced the former rule that the court “may order an amount to be paid on account before costs are assessed”. Under the new rule there is thus a presumption that a payment will be made (“will order”), subject to an exception (“a good reason”), and a specific criterion as to amount (“a reasonable amount”). However, it may be that in any given case the only amount that it is reasonable to award is the irreducible minimum.
Kazakhstan Kagazy Plc v Zhunus [2015] EWHC 404 (Comm): in a multi-million pound claim the claimants unsuccessfully sought permission to amend their pleadings. In describing the principles upon which he would assess an interim payment of costs Leggatt J stated that his practice was estimate the recoverable amount in broad terms based on his knowledge of the case and of the issues raised by the applications and also drawing on the experience he had gained from summarily assessing and awarding payments on account of costs in other cases. He would then discount this figure to reflect the margin of error in his estimate; as a matter of principle, an interim payment should err on the side of caution. “Where, as here, the court is not actually assessing the amount of costs to be recovered and has nothing like the level of information that could be required on a detailed assessment, there is additional reason to be conservative.”
Broni v Ministry of Defence [2015] EWHC 56 (QB): Supperstone J held that the fixed success fee rules do not apply to claims for injuries suffered at work if the claimant is a servant of the Crown (for example, a soldier or a civil servant). This is because the term “employee” used in those rules incorporates the definition given in the Employers' Liability (Compulsory Insurance) Act 1969 s.2(1), which defined an "employee" as "an individual who has entered into or works under a contract of service or apprenticeship with an employer". The terms of service which a Crown servant has do not amount to a contract of service with Her Majesty or her agents. Accordingly, the success fees payable in the cases appealed were not fixed and were to be assessed according to general principles.
Savoye v Spicers Ltd [2015] EWHC 33 (TCC): which concerned a summary assessment following the trial of a claim which was largely a re-run of arguments and evidence already presented at an adjudication, as to which each party had had to pay their own costs. Applying the new test of proportionality (CPR 44.3) Akenhead held that, the claim value being about £900,000, the prevailing party’s claim of about £200,000 must be regarded as disproportionate. In respect of three items which were heavily reduced (partner time, junior fee earner time and counsel’s brief fee) the learned judge described the amounts claimed as being “not reasonable or proportionate” or as being “too high … to be reasonable and proportionate. In the result the costs were assessed at about £96,000.