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Cost limits discourage legal representation for Children

The Court of Appeal decision in Dockerill & Healy v Tullett; Macefield v Bakos; Tubridy v Sawar [2012] EWCA Civ 184 has effectively reduced solicitor and barrister involvement in low value infant PI claims. Nova Costs looks at the impact of the judgment for solicitors who provide a valuable service to vulnerable clients.

In the first two cases, the claims for costs arose in routine infant settlements, where the damages were provisionally agreed below £1,000 without the need for court involvement. Part 8 proceedings were then issued for court approval. The parties then disagreed upon the applicable costs regime.

Three possibilities were considered:

1. Small claims costs under CPR Part 27

2. Fixed costs under CPR 45.II

3. General standard basis costs under CPR 44.5

The Court of Appeal awarded costs on the standard basis as the CPR precludes the two other possibilities. However, this could result in the unacceptable situation that more costs are recovered pre-litigation than if the claim had been allocated to the small claims track. So the court took the level of costs that would have been recovered had the claim been allocated to be “highly material” to the cost assessment. It must be remembered that profit costs are effectively not recoverable when a claim is allocated to the small claims track.

Clearly, this judgment will discourage solicitors from agreeing to act in low value infant claims as there is no presumption in favour of a profit cost recovery upon successful conclusion. The Court of Appeal considered arguments that this will leave a vulnerable class of litigant without legal representation but concluded that this was a matter for the rules committee if there was any merit in such claims.

Legal representation will still be required to facilitate the court approval of a settlement but this was also limited in the third appeal. This appeal related to an infant settlement where damages were above £1,000 and fixed costs under 45.II applied. Here, the paying party questioned whether Counsel’s fees for providing the settlement advice and attending the infant approval hearing were recoverable disbursements under CPR 45.II.

The court concluded that the advice was necessary, as it was a specific CPR requirement in infant settlements. However, attendance by Counsel at the infant approval hearing was not required simply because the Claimant was an infant and (unless there were complicating features) the solicitor attendance was sufficient. Again, this judgment discourages solicitors from acting in low value PI work as no separate fee for this attendance exists in the Fixed Costs regime.

However, there are difficulties applying this judgment. The small claims track applies where the value of the case is less than £1000. It must be remembered that this is the realistic expectation of the sensible solicitor at the time the case might have been issued. In light of this, will it be possible to argue realistic expectation where the case settles for £650, £750, £850? Will this litigation risk allow claimant solicitors to leverage agreements for costs on the fast track in prima facie small claims track cases where it is possible to argue realistic expectation?

If you have any queries about recovering costs in light of this judgment then Nova Costs can advise upon the best course of action in existing and concluded claims.

If you would like to speak to one of our costs experts please call us today on 0161 276 2000 or email us at info@novacosts.com

On 16 February 2012 the Court of Appeal handed down judgment in Adrian Simcoe v Jacuzzi UK Group Plc [2012] EWCA Civ 137

This judgment confirmed that interest on costs is recoverable from the date that the court awards costs / date of agreement to pay costs and not, as the Defendant argued, from the date that costs are assessed.

The case notes that such interest is mandatory in County Court cases, as pre-CPR statute removes any judicial discretion, but that the High Court may look at all factors when deciding interest.

The judgment is based upon the general rule that interest is recoverable from the date that costs are awarded. There is no reason to alter the position purely because the Claimant is funded by a CFA and may not have paid out costs during the litigation.

As this entitlement to interest is now mandatory in most CFA–funded cases, Claimant’s should calculate interest on every claim for costs and set this out as a separate figure.

The only exception is where costs and damages total less than £5,000.00. Here interest cannot be claimed as only recoveries above this sum are covered by statute.

In light of the judgment, Claimant’s should reconsider all recent offers to meet costs in CFA cases; are these offers inclusive of exclusive of interest? Does the recovery of interest alter the attractiveness of such offers?

Nova Costs will be happy to advise upon any issues arising out of this judgment to maximise your costs recovery.

 

If you would like to speak to one of our costs experts please call us today on 0161 276 2000 or email us at info@novacosts.com

It is uncontroversial that Part 36 offers can be made at any point, including before the commencement of proceedings (r.36.3(2)(a)) and, if accepted in time, the claimant is entitled to the costs of the proceedings up to the date on which notice of acceptance is served (r.36.10(1)).

However, there has been some uncertainty over whether costs would automatically follow the acceptance of a pre-issue Part 36 offer. The Courts offered some clarification in July 2011 when Thompson v Bruce [2011] EWHC B14 (QB) (Judgment 28.06.11) held that ‘proceedings’ in r.36.10 must include work taken pre-issue.

In December 2011 this position was cemented by the Court of Appeal in Solomon v Oliver [2011] EWCA Civ 1584 where it was confirmed that ‘costs of proceedings’ in r.36.10 does include the claimant’s costs where an offer is accepted before proceedings are issued.

However, the Court of Appeal emphasised that this will not go so far as to amount to a deemed order for costs under r.44.12. There is therefore no automatic right to ask the Court for a Detailed Assessment on the basis of the acceptance of a pre-issue Part 36 offer. Instead, the Court confirmed that the parties must bring costs-only proceedings under r.44.12A (Part 8 proceedings) for an order giving the Claimant a right to the assessment of costs.

This distinction was justified on the basis that a purposive construction of “proceedings” can easily and rightly include all steps taken before issue. However, a “deemed order” cannot possibly exist in isolation and must attach to some Court proceedings, hence the requirement for Part 8 in the absence of Part 7.

In reaching these general conclusions, the Court of Appeal also decided a distinct issue of the interplay between CPR Part 36 and CPR Part 45. The claim was a pre-issue RTA case that settled for under £10,000.00. The Claimant pursued costs on the standard basis using the argument that following the acceptance of a Part 36 offer an order for costs on the standard basis is deemed to have been made. The Defendant maintained that there was no “deemed order” and so fixed costs under CPR 45.II must apply.

At first instance the Court found in favour of the Claimant and awarded standard basis costs. If left, this judgement would have a huge impact upon costs recovery, taking many RTA cases outside the fixed costs regime of CPR 45.II. However, the Court of Appeal reversed the decision, confirming that it was not possible to have a deemed order for costs on the standard basis without the issue of proceedings. In this RTA case, the acceptance of the Part 36 offer would lead to a claim for the fixed costs set out in CPR 45.II only.

Generally, this is a positive judgement for those recovering costs after the acceptance of a Part 36 offer. However it is always advisable to express cost expectations as part of the settlement. This removes ambiguity and closes the gate on any potential challenges a paying party may concoct once a claim for costs has been submitted.

Nova Costs frequently make applications for Part 8 as part of our overall commitment to maximise the recovery of legal costs without delay.

If you would like to speak to one of our costs experts please call us today on 0161 276 2000 or email us at info@novacosts.com

It has been 3 months since the Court of Appeal decision in Motto v Trafigura Limited [2011] EWCA Civ 1150. The case has determined some important areas of costs law but appears to have limited impact on day to day negotiations and the content of bills of costs. It is certainly not the bullet to costs recovery that some aspects of the judgment were feared to be.

The case has been hailed as a blow for claimant solicitors as the court emphasised that the monetary disparity between damages and the costs was one of the most important factors when analysing proportionality under the Home Office v Lownds test. Where there is a finding of disproportionality the costs judge must assess each item in the bill, and is not limited by the points of dispute. So, proportionality arguments now have extra weight at court, especially in relation to complex and high value claims.

The big issue for claimants is how this translates into practice: will proportionality be more readily applied by courts? Will claimants be faced with the onerous task of justifying every item in their bill at detailed assessment? The answer is no. Whilst Motto v Trafigura may find its way into every set of points of dispute that raise proportionality we predict that this will be of limited effect in court; firstly because it is still evident that a judge must look at all the facts of a case when ruling on the issue and secondly because very few judges will wish to spend already stretched court time considering every item in a bill of costs to determine whether it was necessarily incurred. Indeed, we would positively recommend emphasising the consequence of the test at detailed assessment if a judge appears to be erring upon the side of the defendant.

Of more significance for claimants was the decision on all funding costs, which the court concluded cannot be recovered from the paying party. This will have a considerable impact upon claims for costs, especially in cases where funding has been difficult to obtain, or where insurers apply stringent reporting requirements.

However, the court did allow “vetting costs”. Despite this, paying parties will argue that all costs incurred before the CFA should be disallowed as funding costs. This is nonsense and we always counter on the basis that appreciable and recoverable work has been undertaken at this time. There is a fine line between the costs associated with “vetting” a case and those devoted to organising funding. We therefore advocate including all reasonably incurred costs within the bill and letting the court adjudicate upon the issue.

Finally, the Court of Appeal looked at costs associated with abandoned claims. This is an area often attacked by defendants as non-recoverable work. However, the court confirmed that associated costs will be recoverable where it was reasonable to investigate, plead and pursue the claim. Solicitors generally do not waste time pursing claims that are unreasonable and without purpose and most abandoned investigations will be relevant to the successful action. We therefore recommend that the costs associated with such claims are maintained.

As you can see, the legal landscape is slightly clearer since the judgment but the effect is not entirely in favour of either the paying or receiving party. Once again it appears to be business as usual!

If you would like to speak to one of our costs experts please call us today on 0161 276 2000 or email us at info@novacosts.com

Defendants are always thinking up new ways of attempting to argue out of paying reasonable costs at the conclusion of litigation.

The latest attack is upon any and all claims for costs where damages were finally agreed below the small claims track threshold. So, how do Claimants resist this latest challenge?

It has long been established that a Court will limit costs to the small claims track (or any other appropriate fixed costs regime) if a claim has been purposefully overvalued, pleaded on the basis of obviously incorrect information or where a Claimant has attempted to mislead (see Afzal v Ford Motor Co [1994] CA).

However, Defendants are using the recent case of Stuart Lisbie v SKS Scaffolding Ltd [2011] EWHC 90203 (costs) to extend this limitation to claims made in good faith, but which failed for whatever reason, to produce damages above the fixed costs threshold.

In this unlitigated RTA, costs were limited to the small claims track after contributory negligence reduced damages to under £1,000.00. The Court concluded that RTA fixed costs only apply if the amount of damages actually paid was above the small claim limit and that contributory negligence must be deducted before these damages are determined.

This case can be especially problematic when combined with O’Beirne v Hudson [2010] EWCA Civ 52, where the Court limited costs to those that would have been recovered on a fixed regime despite the Defendant agreeing to meet “reasonable costs on the Standard Basis” at the end of the main action. This was on the basis that “reasonable costs” cannot exceed those that would have been recovered had the correct regime been applied.

However, Nova Costs recommends that Claimants resist such challenges where damages were reasonably valued above the fixed costs threshold during the litigation and costs have been agreed on the Standard Basis.
The case of Lisbie was specifically decided by reference to the RTA fixed costs regime and so it should not be possible to argue for any wider application.

In any event, the decision of Master Gordon-Saker sitting as a Deputy District Judge appears to be at variance with the Court of Appeal judgement in Voice and Script International Ltd v Ashraf Alghfar [2003] EWCA Civ 736, which confirmed that costs would only be limited where the claim could not possibly have ever had a value above the applicable threshold. This decision was not considered in the case of Lisbie, which only concentrated upon the final damages agreed.

In order to strengthen the position, Claimants should be attempting to conclude damages settlements below £1,000.00 on the strict understanding that costs will be paid under the RTA fixed costs regime / Standard Basis assessment. If this is not possible then please contact Nova Costs, who will be happy to take these arguments forward.

If you would like to speak to one of our costs experts please call us today on 0161 276 2000 or email us at info@novacosts.com