COSTS PRACTITIONERS GROUP

Thomas More Building, Royal Courts of Justice, Strand London WC2A 2LL

MINUTES OF MEETING HELD ON

THURSDAY 7 NOVEMBER 2013

Present
Master O’Hare (in the chair) / SCCO
Master Simons / SCCO
Mr M Heskins / The Law Society
Mr D Marshall / APIL
Mr A Parker / LSLA
Mr M Heining / ACL
Mr J Martin / Minute Secretary

1.  APOLOGIES FOR ABSENCE

Apologies for absence were received from Master Hurst, District Judge Besford and Mr. Barker.

2.  COMMENTS UPON APPROVED MINUTES OF THE LAST MEETING

With regard to item 7, Master O’Hare said that the new SCCO Guide had now been published, and was on the SCCO page on the HMCTS website.

3.  MATTERS ARISING NOT OTHERWISE ON THE AGENDA

Master O’Hare noted that the last two Minutes of CPG meetings had yet to be published on the SCCO page on the HMCTS website. He would endeavour to get them so published.

4.  RECENT RULE CHANGES

4.1 Costs management; Mr Marshall said that this had been slow to get going. In cases where budgets were being set, a lot of the budgeting work was being undertaken by costs lawyers, a point which Mr Heining confirmed.

Mr Heining also said that ACL was still consulting on the new form of bill, and its sub-committee had met in the last week.

Mr Heskins said that the feedback he had received, from Law Society workshops on the topic, was that accurate budgets were leading to more cases being settled.

Master O’Hare asked whether it was appropriate, or desirable, for hourly rates to be approved as part of the budgeting process. The Meeting thought not. Not only would the need to deal with such issues as level of fee earner and appropriate locality of solicitors consume too much time on costs budgeting hearings, but, as Master Simons pointed out, the approval of rates at this stage would take away the discretion the costs officer would otherwise have on detailed assessment.

4.2 Provisional assessment; Mr Heining expressed concern that, in some courts, some provisionally assessed bills were being returned without the costs officer’s reasons being indorsed on the bill, or Points of Dispute. This made it extremely difficult for costs lawyers to advise their clients whether to accept an assessment or request a formal hearing. He did not think that such reasons need to be extensive (often a single line or sentence would suffice for each point or preliminary point) but it was important that they were given. He also expressed concern that assessments were not being dealt with in the six week time limit envisaged In Practice Direction 47. This appeared to be mainly a problem outside London. Master Simons reported that, at the present time at least, SCCO was dealing with most cases within six weeks.

4.3 The RTA and EL/PL Protocols: Master O’Hare asked whether the extension of the Portal upwards and sideways (to incorporate other types of personal injury litigation) had led to more cases dropping out of the Portal. Mr Parker said that it had, but often this appeared to be because of a lack of understanding from practitioners how the system actually worked.

4.4 Success Fees; Master O’Hare enquired whether, given that success fees were no longer generally recoverable inter partes for CFAs entered into after 1 April, solicitors were still entering into such agreements. Mr Parker and Mr Marshall both said that they were, with the success fee now being paid by the client. Mr Marshall suggested that, in personal injury cases where the recovery of success fees was capped, solicitors cannot afford to waive the fee and clients do not expect them to do so.

4.5 Damages based agreements; There seemed to be little appetite amongst the profession to enter into such agreements. The meeting thought that there was little that could be achieved using a DBA that could not be obtained through a conventional CFA, and that the regulations for entering into a DBA were off-putting to most practitioners.

5.  COSTS PROTECTION IN DEFAMATION AND PRIVACY CLAIMS: THE GOVERNMENT’S PROPOSAL

The MoJ has issued a consultation paper which proposes the extension of QOCS to defamation and privacy proceedings. Mr Heskins said that it was proposed that claimants be means tested, and the meeting expressed general concern that this would not be practicable.

6. REVIEW OF UNIMPLEMENTED JACKSON RECOMMENDATIONS Master O’Hare said that a review had been set up to look into the unimplemented recommendations from the Jackson Report. The form of bill (to align it with the costs budgeting form, Precedent H), the abolition of the indemnity principle and the extension of QOCS to Judicial Review proceedings were among the areas being considered.

7.  CIVIL JUSTICE COUNCIL COSTS COMMITTEE

Mr Marshall said that the Committee had now met four times, and that the intention was that a summary of the matters raised at each meeting would be published. It was due to report to the Master of the Rolls by the end of March 2014. Mr Heskins said that a costs survey had been sent out to the profession, and that the Committee would be calling for evidence.

8.  RECENT AND FORTHCOMING CASES CONCERNING COSTS

Master O’Hare drew the meeting’s attention to the following cases:-

Fountain –v- Volkerrail Ltd : this was an EL claim in which the claimant sought the fixed success fee percentage payable in disease cases but was allowed only the (lower) percentage payable in injury cases. The claimant sought to appeal against the decision of HHJ Mitchell (sitting at the Central London County Court with Master Hurst, Senior Costs Judge) that an aggravation or worsening of symptoms cannot be regarded as a disease (see also Patterson –v- MOD [2012] EWHC 2767 (QB): Males J) an appeal to the Court of Appeal was listed for May 2013, but was later withdrawn.

Khans –v- Chifuntwe [2013] EWCA Civ 481; [2013] 4 Costs LR [2012]: allowing an appeal against a decision made by MacKay J (EWHC 2108 (QB)) the Court of Appeal held that the court should intervene to protect a solicitor’s claim on funds due to be recovered by a former client if the paying party was colluding with the former client to cheat the solicitor of his fees; or if the paying party was on notice that the former client’s solicitor had a claim on the funds for outstanding fees. Collusion and notice were parallel routes to equitable interference with the disposal of damages and costs; Ross –v- Buxton 42 Ch. D. 190 approved, Brunsdon –v- Allard 121 E.R. 8 doubted.

PGF II SA –v- OMFS Co I Ltd [2013] EWCA Civ 1288: the Court of Appeal extended the guidelines set out in Halsey –v- Milton Keynes General NHS Trust [2004] 1 W.L.R. 3002 regarding whether a refusal to engage in alternative dispute resolution amounted to unreasonable conduct which should attract a costs penalty. As a general rule, silence in the face of an invitation to participate in ADR was itself unreasonable, regardless of whether there was good reason for a refusal to engage in ADR. In a case eminently suitable for mediation, the Defendant failed to respond to a request for mediation and failed at the time to give any reason for so doing. After the commencement of proceedings the Defendant made a Pt 36 offer which, ultimately, the Claimant accepted. The lower court judge was held entitled to allow the Claimant costs up to offer with no order for costs thereafter.

Mitchell –v- Newsgroup Newspapers: in early 2014 the Court of Appeal will hear an appeal leapfrogged from the decision of Master McCloud in this case (a libel claim arising out of the “Plebgate” affair) in which Master McCloud refused to grant relief against the sanction imposed by r3.14 on a claimant who failed to file his budget until the day before the first CMC. Rule 3.14 states that a party who fails to file a budget is treated as having filed a budget limited to applicable court fees.

Murray –v- Dowlman Architecture Ltd [2013] EWHC 872 (TCC): the claimant’s solicitors failed to use the then standard form of budget and therefore omitted to indicate that the budget they had drafted did not include the success fee and ATE insurance premium which would otherwise be recoverable in that case. The mistake was spotted at about the time of trial and, in giving judgment and costs to the claimant, Coulson J permitted a rectification of this mistake but gave warning that, in other cases, it will be extremely difficult to persuade the court to forgive careless mistakes. “[16] …if approved costs budgets can be revised at a later date because of mistakes or self-induced inadequacies in the original, the whole purpose and effect of the new costs management regime may be thwarted” (Coulson J).

Walker –v- Burton [2013] EWHC 1311 (Ch) Cooke J allowed an appeal against a detailed assessment made by a Deputy Adjudicator in respect of proceedings taken in HM Land Registry. Six villagers had applied to close the title to a manorial lordship and all six were awarded costs. One firm of solicitors acted on behalf of all six villagers on terms set out in a CFA agreed to and to be paid for by only three of them. All of the issues were common to all six of the villagers, or were issues that affected one or all of the three CFA villagers. None of the issues depended on the individual titles of any of the villagers and none of the non-CFA villagers advanced any arguments that were on relied on by the CFA villagers. The Deputy Adjudicator was wrong to divide the costs so as to allow the CFA villagers to recover only half of the reasonable costs they had incurred. The fact that the non-CFA villagers had received the benefit of litigation wholly paid for by the other three (and so had no costs to claim) was not the point.

Grupo Hotelero Urvasco SA –v- Carey Value SL and Ors (Costs) [2013] EWHC 1732 (Comm): this decision deals with the award of costs in respect of an eight week trial of two actions in each of which claims exceeding £50 million were made. The overall finding was that one party had prevailed but, a significant number of issues had beendecided in favour of the other party. Blair J held that it was not practicable to make a issue-based order because the issues were too interwoven and interlinked. Instead the prevailing party was awarded 75% of its costs with an interim payment of £4 million, that being 50% of a conservative estimate of the winner’s costs.

Willis –v- MRJ Rundell & Associates Ltd [2013] EWHC 2923 (TCC): Coulson J declined to approve parties’ costs budgets in a professional negligence claim where the figures were disproportionate and unreasonable.

Feltham –v- Freer Bouskell (Costs) [2013] EWHC 3086 (Ch) may be the first case in which the court had to consider the new provision of enhanced compensation where a claimant recovers a sum larger than was specified in his or her Pt 36 offer. In withholding this enhancement the learned deputy judge (Charles Hollander QC) took account of three key facts: it was a last minute offer that expired just before the trial began; the principal (but not only) ground on which he decided liability only became an issue when raised in opening; and important documents were only disclosed by the claimant on the eve of the trial. The fact that the claimant had only narrowly beaten her own offer was not a relevant consideration.

Wilsons Solicitors LLP –v- Bentine [2013] EWHC 3098 (Ch): in this case a costs judge reduced the solicitors’ bills by about one third but only half of those reductions related to want of retainer rather than questions of reasonableness. The costs judge held that, because the bills had been reduced by a third, the solicitors should pay the reasonable costs of the assessment. On appeal this result was upheld but on substantially different grounds. In an illuminating judgment replete with useful references to nineteenth century cases, Proudman J held that when deciding, for the purposes of s 70 of the Solicitors Act 1974 whether a solicitor’s bill has been reduced by one fifth or more, the court should disregard any costs disallowed from the bill because of want of retainer. The question for the Costs Judge in the assessment process is the reasonableness or otherwise of the bills. The issue whether those costs are within the retainer is a necessary preliminary to the assessment process. As to the costs incurred in deciding this preliminary issue, the court may make an order dealing with them separately, or alternatively, may consider whether those costs and any other factors, amount to special circumstances justifying a departure from the ordinary application of the one fifth rule. In this case the reductions in the bills made on grounds of reasonableness rather than want of retainer were a little under one fifth. However, there were special circumstances making it appropriate to order the solicitors to pay all the costs of the proceedings.

Bartkauskaite v Beverley (6 November 2013, unrep.): the Court of Appeal ruled that, in costs only proceedings, the receiving party is usually entitled to receive the costs of the Part 8 proceedings and invited the Civil Procedure Rules Committee to consider whether an amount of fixed costs should be provided for such cases.

9. ANY OTHER BUSINESS

There was no other business.

10. DATE OF NEXT MEETING

The next meeting was fixed for Thursday March 6 2014 in the SCCO.

The meeting closed at 5.35 pm.