Tag Archives: costs draftsman

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