Fixed Costs – Where are we?
We are now approaching February 2018 and a defining silence remains from the Ministry of Justice in relation to Lord Justice Jackson's fixed fee recommendations.
David Lidington has been replaced as Lord Chancellor by David Gauke, which could create further delay in any implementation.
Apparently, the MOJ are still receptive to Lord Justice Jackson's recommendations and we predict that implementation will be from October 2019 (at the earliest).
We will keep you posted with any developments.
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The Pilot Scheme on Disclosure in the Business and Property Courts - how this affects Case Management
“The Judiciary have announced and published a proposed 2 year pilot scheme regarding disclosure across the Business and Property Courts (there are some exceptions that the pilot scheme will not apply to). There are some aspects of the pilot scheme that relate to Costs Management - there will be no obligation to complete the precedent H in relation to disclosure prior to the case management conference. In cases where the cost budgeting regime applies, following disclosure order that has been made at the case management conference, the parties must complete the disclosure section of the precedent H within the period ordered by the court. The purpose of this delay is to enable parties to be able to reach an informed view regarding the likely costs of the disclosure exercise. A further short hearing may be necessary to approve those costs.
Of course, the decision regarding disclosure may have an impact on other stages within the budget resulting in additional amendments to the budget. The Judiciary recognise that there may be problems surrounding this proposal and have suggested that this may need further consideration, their intention seems to be that the calculations surrounding disclosure are based on sound footing rather than what can sometimes be crystal maze thinking in terms of the estimation of the number of documents that will require considering.
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Wasted Costs; A Warning
It is a threat often made in correspondence that a party will apply for “wasted costs” if they succeed. It is important for parties to remember that a “wasted costs” order is not merely an order that the unsuccessful party pay the successful party’s costs. A wasted costs order is an order that the solicitor of the party against whom the order is made must pay the costs, and may not pass those costs on to his client. When considering whether to make such an order, the court must consider:-
- Did the legal representative act improperly, unreasonably or negligently;
- Did this conduct cause a party to incur unnecessary costs; and
- Is it just in all the circumstances to order the legal representative to compensate that party for the whole or part of those costs.
It is important to distinguish between a lawyer’s conduct, and the conduct of the lawyer’s client. If a party instructs his lawyer to act in an unreasonable manner, for example by refusing all offers of settlement or ADR out of hand, it is doubtful that the court would penalise the lawyer. On the other hand if the lawyer filed pleadings which were defective that might be a reason to make a wasted costs order, as the format of pleadings are within the purview of the lawyer’s responsibility.
One fact which is often overlooked is that following the Criminal Justice and Courts Act 2015, if the court makes a wasted costs order against a legal representative it must also inform the relevant regulatory body (the SRA, BSB or ACL). Therefore if an application for wasted costs is made there are also now potentially serious regulatory consequences, especially for “serial offenders”. The courts are increasingly seeking to enforce compliance with the Rules and one of the tools available to them is the wasted costs order, which is more effective than simply penalising the party.
An object lesson in the consequences which may follow a failure to comply with court procedure may be found in the judgment in Mylward -v- Weldon  EWHC Ch 1, in which the court held that the matters relevant to the claim could have been set out in 16 pages, rather than the 120 page bundle which the claimant’s lawyer had filed. The court ordered that the representative be brought to the court, and that the warden “shall cut a hole in the myddest of the [bundle], and put his head through the hole, so that the [bundle] hangs about his shoulders; and then shall lead him, bare headed and bare faced, round about Westminster Hall whilst the Courts are sitting and shew him at the bar of every of the three Courts within the Hall, and shall then take him back again to the Fleet, and keep him prisoner, until he shall have paid 10l. to Her Majesty for a fine, and 20 nobles to the defendant, for his costs in respect of the aforesaid abuse”
So legal representatives really are putting their necks on the line when it comes to preparation!
The effect of CPR 36 offers on Fixed Costs
On 14 December 2017 Her Honour Judge Melissa Clarke dismissed an appeal against an order that that the Claimant be limited to pre-action fixed costs in an RTA claim.
The Claimant had accepted an offer made pursuant to CPR 36.20 made by the Defendant following the issue of proceedings, and the Defendant then raised conduct issues and argued that the Claimant should be limited to pre-action fixed costs on the basis that the Claimant had withdrawn the claim from the portal prematurely. The Claimant argued that where a CPR 36.20 offer was accepted ‘in time’ the Claimant was entitled to the costs in table 6B for the stage in force at the time notice of acceptance was given, plus disbursements, that this was fixed, and that there was no mechanism by which the Court could interfere with the rules. Giving Judgment, Judge Clarke held that the fact that CPR 36.20 made no provision for London Weighting suggested that there was an error in the construction of CPR 36.20 such that the consequence of acceptance of such an offer was that the entirety of CPR 45 applied and the court had discretion to make an order limiting or disallowing the Claimant's costs.
As the court always has a discretion to award a lower (but not higher) amount, ‘fixed’ costs are not, in fact, fixed at any point in proceedings, and should be viewed as a cap not an entitlement (something which goes against the core principles of Lord Justice Jackson's fixed fee recommendations). Practitioners should ensure that they abide with the absolute letter of the rules at all times in order to avoid any procedural argument to justify a reduction to costs at conclusion.
The appeal was in the County Court and is therefore advisory, not binding.
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