Provisional Detailed Assessment Limit set at £75,000 (CPR 47.15)
In a surprise development the limit for provisional assessment of bills of costs has been trebled from £25,000 (the limit in the pilot scheme) to £75,000. This will apply to any detailed assessment proceedings commenced in the High Court or a County Court on or after 1 April 2013.
Points of Dispute and Replies will be served in the normal way but in a new format that is set out at Precedent G.
The Court may, at any time, decide that the matter is unsuitable for a provisional assessment and may give directions for the matter to be listed for hearing. In such cases, the procedure will be the same as it was pre 1st April. It is unclear as to whether it is open to parties to suggest a provisional assessment is not appropriate when making the application. In my opinion I think it is necessary to raise this with the Court where, say, there is a technical costs issue at stake or in dispute.
The Rules state that the Court will not award more than £1,500 to any party in respect of the costs of the provisional assessment. Of concern is that neither the Rules nor the Practice Directions clarify whether this would include the Court fee for the assessment. There are no new proposed Court fees for provisional assessment and if it is the intention that the fees for inter partes assessments are to remain, for a bill of between £50,000 - £100,000 the Court fee is £980. If this is included in the figure of £1,500 then the costs for dealing with what could be a substantial dispute in respect of significant costs will be minimal.
If any party is unhappy with the provisional assessment, an oral Hearing can be requested, however, the party applying will be ordered to pay the costs of and incidental to any Hearing unless they achieve an adjustment in their favour of 20% or more of the sum provisionally assessed. From my experience it is extremely rare for an appeal against a detailed assessment to result in such a significant adjustment. I would hope that with the new rule on proportionality the Court will not entertain excessive claims for costs of detailed assessment and that in some cases it may be worthwhile appealing as the amount which may be reinstated/reduced (if less than 20%) will not be negated by excessive costs of assessment.
I believe that when drafting bills for assessment, they will need to contain detailed information fully setting out all issues and further the drafting of Points of Dispute and Replies will be crucial in terms of persuading the Judge that your stance is the correct one, in a matter in which they are unlikely to have had any significant knowledge or involvement.
For full details of the new rules (CPR 47.15), click here.
For details of the Practice Direction, click here.
Costs Management And Budgeting – First Court Of Appeal Decision
The Court of Appeal have handed down Judgment in the case of Henry v. News Group Newspapers Ltd which is the first Court of Appeal decision on costs management/budgeting and arose out of the Defamation Proceedings Costs Management Scheme. The Appeal dealt with the situation where an approved budget is exceeded and whether those additional costs are recoverable. In the specific circumstances of the case the Court held that they could, albeit that this was still subject to detailed assessment.
Paragraphs 27 and 28 are of particular interest as the Court felt obliged to specifically refer to the future introduction of Costs Management as part of the Jackson reforms and to make it clear what it expects of the courts in managing costs. This looks like an attempt to minimise the impact of their decision on the new rules.
The following reflects some of the most significant aspects and effects of the new rules:
- Costs management can only be avoided if a case is issued (not necessarily served) before 1 April 2013 and if the case is conducted in the Commercial or Admiralty Court.
- If the costs budget is up to £25,000 net of VAT only the first page of Precedent H need be completed. Costs budgets in excess of £25,000 net will require completion of the full form. Please see the link above for Precedent H.
- Costs budgeting will be prospective and not retrospective. The Court will not have power to interfere with pre-issue costs but the new rules do allow the Court to record comments on the cost of work already undertaken in a case. The Court will also be allowed to take into consideration the amount of work already undertaken when budgeting commences and take this into account when assessing and considering future budgeted sums.
- Costs budgeting will be very closely linked to the new rule on proportionality. Matters in issue between the parties will still be a relevant consideration. I have been told that during judicial training Judges are being encouraged to use their new powers to persuade parties to be realistic about what is in dispute and to seek to ensure costs remain commensurate to the value of the claim. This includes making increased use of joint experts (introduced by the CPR) and potentially ordering parties at Cost Management Conferences to seek alternative quotes from experts.
- It will be crucial to continually monitor budgets, particularly those approved by the Court. It is permissible for a party to revise a budget for future costs upwards or downwards if there are significant developments in the litigation that warrant such revisions. Amended budgets must be submitted to other parties for agreement and in default of agreement are to be submitted to the Court together with a note of the changes made, the reason for those changes and any objections from any other party.
- It is important to note that if interim applications are necessary during litigation which reasonably were not included in a budget then the costs of such interim applications shall be treated as additional to the approved budget.
- It is entirely possible that at Trial, if the winning party’s costs are within the Court’s approved budget the Court could simply award those costs, entirely bypassing the detailed assessment procedure. This occurred during the pilot scheme.
Extension Of RTA Portal Scheme Postponed
Extensions to the RTA Portal Scheme have been postponed as a result of the inability to make changes to the Portal in time for 1 April 2013. No alternative date has been proposed.
Concern Over Lack Of Rules, Regulations & Practice Directions For Jackson Reforms
There has been deafening silence from the Ministry of Justice in relation to production of draft rules and Regulations relating to the changes to come into force on 1 April 2013. My understanding is that these should be published next month. Clearly this gives little time for consideration and preparation for the reforms.
Satellite Litigation Anticipated Over the New Proportionality Test
Lord Neuberger has revealed that satellite litigation is anticipated and may be necessary to establish the new rule on proportionality in costs. He has indicated that two specific members of the Court of Appeal will sit on all appeals arising out of the Jackson Reforms “to ensure consistency and efficiency”. He conceded that one of the problems which beset the successful implementation of the Woolf Reforms was the failure to effectively implement proportionality as a test in respect of costs assessment.
The new CPR Rule 44.4(5) is to state as follows:
44.4(5) Costs Incurred are proportionate if they bear a reasonable relationship to:
- the sums in issue in the proceedings;
- the value of any monetary relief in issue in the proceedings;
- the complexity of the litigation;
- any additional work generated by the conduct of the paying party; and
- any wider factors involved in the proceedings, such as reputation or public importance.
Lord Neuberger was unwilling to reveal what might constitute proportionality, but it could not be clearer that the Government and Judiciary are determined to prevent a repeat of the admitted failure of the Woolf reforms by ensuring that proportionality is the cornerstone which will underpin much of what the Jackson reforms are trying to achieve.
It also appears that the issue of Costs Management (please see below) will be used to keep costs at a proportionate level as multi-track cases progress and the two are intrinsically linked.
In a further speech by Mr Justice Ramsey the issue of costs management was set out and which will be contained in the new CPR 3.11-3.18 and Practice Direction 3e.
Costs management will apply to multi-track cases commenced on or after 1 April 2013 in the County Court, the Chancery or Queen’s Bench Division (except the Admiralty and Commercial Courts) unless the Court otherwise orders and to any other proceedings where the Court so orders.
Unless the Court otherwise orders, parties (except litigants in person) must file and exchange budgets in accordance with the rules or as the Court may otherwise direct within 28 days of service of any Defence. These will have to be produced in the new form, Precedent H.
It is clear that the Government and Judiciary attach great importance to this reform and that used in conjunction with the proposed test of proportionality, hope that this will result in costs being driven downwards.
Much will turn on just how ready and trained the Judiciary are to get to grips with these issues and to be pro-active which was not the case following the last round of reforms.
For more details of Mr Justice Ramsey’s speech on this issue click here.
Court of Appeal Confirm General Damages Increase by 10% from April 2013
The Court of Appeal handed down a Judgment on 26 July 2012 which will lead to an increase in general damages in most civil cases from 1 April 2013. The decision was announced in the Court of Appeal case of Christopher Simmons and Derek Castle.
The Court of Appeal used this case to announce well in advance the increases in line with the Jackson recommendations.
The decision announced an increase of 10% for the following categories of case:
1.Pain, suffering and loss of amenity in respect of personal injury;
4.All other torts which cause suffering, inconvenience or distress to individuals.
Government Announces Delay in Implementation of Jackson Reforms until April 2013
The Government recently announced that the implementation of the Jackson Reforms, which had originally been expected to be introduced in October of this year, have been postponed to April 2013. This is to allow sufficient time to ensure the complex details relating to the changes to legal rules and regulations are properly dealt with. A number of other reforms that had been recommended by Lord Justice Jackson and which do not require primary legislation and which will be dealt with via amendments to the Civil Procedure Rules are also apparently being delayed, to be incorporated at the same time as the significant legal changes in April 2013.