Harmans Costs Brief - September 2013
It's back!  Costs Brief had a break over the summer but we're back for the Autumn with lots of industry comment on the latest developments in Costs.  We hope you enjoy it and continue to find Costs Brief a useful resource.  Don't forget we are holding our free costs seminar on 27 September at The Law Society, spaces are now limited so if you would like to come please contact us as soon as possible.
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Matthew Harman tells this month's PI Futures seminar in Manchester
how a High Court master more than halved a £1m budget

A High Court master last week more than halved a proposed budget in a quantum-only cerebral palsey case, it has emerged.

Leading costs lawyer Matthew Harman told this month’s PI Futures seminar in Manchester that the master also refused to hear any argument on hourly rates.

He said Master Cook reduced the proposed budget of just under £1m to just over £430,000, in the first significant budget hearing of which he was aware.

While on the face of it “that’s a very substantial cut”, Matthew suggested that though such a case would cost a lot of money, “I don’t think it would cost £1m and perhaps the solicitors were making sure they had every possible eventuality put into their budget”.

He continued that Master Cook refused to hear any argument on hourly rates on the basis that his role was to set an appropriate figure for the work that was required, rather than to micro manage the case.

Read more on this story here.

Mary Collins reviews Plebgate...

I am quite sure that by now all of our followers are aware that under the new rules (with the notable, and quite frankly in my opinion cynical, exception of the Commercial Court and budgets in excess of £2m in the TCC, Mercantile and Chancery courts) parties to an action are required to exchange and file costs budgets in the form of a new precedent H.  The court will then consider and “approve” the total figure.   If the party fails to file within the specified time rule 3.14 applies, “Unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees.”

Costs budgets must set out what costs have already been incurred as well as those anticipated costs to the conclusion of the case.  Assumptions must be provided and will be extremely important particularly if, at any time in the future, there needs to be any amendment to the approved budget.

These changes were implemented on 1 April 2013 (please note the date!) and since then we have all been waiting with bated breath for some decisions from the courts bearing in mind the earlier case of Henry –v- NGN and in that case the court’s refusal to allow the claimant’s solicitor to recover costs in excess of an earlier approved budget.

The first apparently relevant case is that of Mitchell –v- NGN.

In March Andrew Mitchell MP commenced an action against News Group Newspapers.  This came after The Sun claimed that Mitchell had sworn at and called police officers plebs at the gates to Downing Street.  The parties were ordered to file costs budgets.  Whilst the Master accepted that this case falls outside the brave new world post April, it did fall within the previous defamation proceedings pilot (as did the case of Henry –v- NGN).  Mr Mitchell's solicitors failed to file the budget in time.

The Master considered the sanction in relation to failure to provide a budget as per the principles of the new rule 3.14 although accepted that the rule did not apply in this case and as a result the court found that Mr Mitchell would be "limited to a budget consisting of the applicable court fees for his claim".

The Master also considered the new wording of the overriding objective (which does apply) and the more rigorous requirements of relief from sanction under 3.9

You can read the rest of Mary's 'Plebgate' article here.
Mat Knight looks at the true cost of provisional assessment
On 1 April 2013, new rules were introduced for all bills up to £75,000.00 to be assessed on a provisional basis (i.e. paper only), instead of proceeding  to a detailed assessment as they would have done in the past, in the event that the parties in question were unable to reach an agreement with regards to costs.

CPR 47.15 sets out the procedure for provisional assessment which applied to all bills where the notice of commencement together with supporting documents is served upon the paying party after 1 April 2013.

It was unclear from the new rules how much any party could recover in respect of the provisional assessment process itself as CPR 47.15 (5) states that: “The court will not award more than £1,500.00 to any party in respect of the costs of the provisional assessment.”

There was no mention of whether this maximum amount was inclusive of VAT, court fees, success fees, etc. The maximum amount recoverable in relation to a party’s costs of the provisional assessment has now been clarified in the 66th update of the civil procedure rules which come into force on 1 October 2013.

The new rule 47.15 (5) states that: “In proceedings which do not go beyond provisional assessment, the maximum amount the court will award to any party as costs of assessment (other than the costs of drafting the bill of costs) is £1,500.00 together with any VAT thereon and any court fees paid by that party.”

Now that this rule has been made clear (i.e. VAT and court fees are payable in additional and any success fee will be included within the maximum allowance of £1,500.00), the only question is if the rule is retrospective in nature.

Parties who are faced with paying provisional assessment costs, may still argue that the maximum allowance is £1,500.00 inclusive of VAT, court fees and success fee for bills which are provisionally assessed where the notice of commencement and supporting documents were served between 1 April 2013 and 30 September 2013. Only time will tell.
Mat Knight, Partner and Costs Lawyer

Free costs breakfast seminar - 6 months post Jackson

Our latest costs seminar is quickly getting booked up, if you haven’t already reserved your space then do it now!

The seminar will focus on the Jackson reforms 6 months on.

Our first session is now fully booked but there is some limited availability for our second session at 10.45-12.00pm.  Each session carries 1 CPD point.

Our seminar is free and open to all but is limited to 30 attendees per session.  As places are limited and going fast they will be allocated on a first come first served basis, email for latest availability.

The recovery of costs “incidental” to proceedings
Legal fees incurred in connection with a claim cannot be claimed as damages from the opposing party. They fall within the Court's sole jurisdiction and discretion to award costs should litigation ensue.

It is a well established principle that legal costs incurred before an action has been commenced can be recovered in the subsequent litigation. In Ross v Caunters [1980] Ch. 297 at page 323, the Court noted that:

"The statement of claim also claims the legal expenses of investigating the plaintiff's claim up to the date of the issue of the writ .... . ... at present I doubt whether any sum is recoverable under this head. If an order for costs is made in favour of the plaintiff, then some of these legal expenses of investigation may fall within that order as being "costs of or incidental to" these proceedings, and so of course could not be claimed as damages."

Provided they are "costs incidental to proceedings", pre-action costs are properly recoverable. Of course, whether costs are “incidental” must depend upon the circumstances of the case: for instance, the costs of work carried out under one of the pre-action protocols are incidental to any subsequent proceedings.

There is a potential complication. In the early stages of a dispute, it may be thought prudent to investigate a range of potentially relevant issues, but not all of these issues may feature in the subsequent claim.

To read the rest of Jim Knight's article just click here


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