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Costs and Litigation Funding Newsletter - February 2020

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The Precedent T - a new Costs Management Precedent, watch this space!

The CPRC’s latest meeting minutes not only detail discussion surrounding proposals to revise CPR r3.15 and PD 3E but also refer to a new Excel format draft Precedent T for setting out the particulars of a proposed budget variation. The committee resolved to agree a Precedent T in principle. Please see Sue Fox’s blog for a more in-depth insight into the committee’s considerations.

Appellant victorious in arguing indemnity costs 

The Court of Appeal determined that poor conduct and a failure to accept an earlier Part 36 offer were grounds on which to award indemnity costs in the case of Lejonvarn v Burgess & Anor [2020] EWCA Civ 114. 

The appellant had provided some gratuitous help to her former neighbours in re-designing the landscape of their garden. They had a falling out and the respondent neighbours subsequently brought proceedings against the appellant on the basis that she had been negligent and owed them a duty of care. Three weeks after proceedings had commenced, the appellant made a Part 36 offer in the sum of £25,000, but this was not accepted. Although at trial it was found that the appellant had been negligent, the respondents had failed on the substantive issues and the £25,000 offer was not beaten. The respondents lodged an appeal which caused their costs to spiral as they pursued their case against the appellant. The respondents were unsuccessful at the appeal and the appellant was awarded costs on the standard basis.

The appellant then proceeded to challenge the standard costs award decision and appealed on the basis that this was incorrectly ordered and indemnity basis costs should instead have been applied. At the appeal hearing Coulson LJ considered the background and undertook a thorough review of authorities relating to indemnity costs, opining that:

“No later than one month after the handing down of the judgment by the Court of Appeal…the respondents, having had time to consider the implications of the Court of Appeal judgment, should have realised that the remaining claims were so speculative/weak that they were very likely to fail, and should not be pursued any further.” 

Coulson LJ further explored the respondents’ unreasonable pursuit of the case to trial, considering it to be: 

“An irrational desire for punishment unlinked to the merits of the claims” and “precisely the sort of conduct which the court is likely to conclude is out of the norm”.

It was determined overall that the first appeal trial judge had incorrectly applied the test to determine indemnity costs and indemnity costs were in fact appropriate in these circumstances from a specific point in time. 

The judgment in this case may be of assistance should you need to consider conduct and indemnity costs in a situation where a party beats their own Part 36 offer. Bear in mind however that it is nuanced to the specific facts of the case and the CPR is clear that entitlement to indemnity costs in these circumstances is not automatic.  

The outcome of this case was also interesting from a costs management angle as Coulson LJ found that costs assessed on an indemnity basis are not constrained by an approved budget. Please see my blog for further detail.

Please contact Anna Lockyer on 0113 288 5619 or at anna.lockyer@clarionsolicitors.com if you have any questions. 

Hourly rates

We have had the SCCO Guideline Hourly Rates since 1999 and they were regularly updated until 2010. However, no update has occurred for 10 years. 

In the commercial case of Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] EWHC 2504 (TCC), Mrs Justice O’Farrell said: 

“...It is unsatisfactory that the guidelines are based on rates fixed in 2010 and reviewed in 2014, as they are not helpful in determining reasonable rates in 2019. The guideline rates are significantly lower than the current hourly rates in many London City Solicitors, as used by both parties in this case. Further, updated guidelines would be very welcome.” 

Other parts of the judiciary have expressed their frustration at the fact that there has not been an update or review for such a long period of time. There is a feeling that the rates are doing more harm, than good. 

The Association of Costs Lawyers recently reported that a group of senior judges are considering a review “as a matter of urgency”. Minutes from the December meeting of the CPR Rule Committee state that the civil executive team are “actively considering this matter as a matter of urgency, with a short report to follow”. We will of course keep you up to date with developments. 

In the interim, do remember that the Guideline Hourly Rates, as their title suggests, are a guideline. The Courts will allow more than the GHR’s for those cases that can justify an enhancement. Therefore, when contemplating an enhancement think about inflation, bearing in mind that inflation has been on average 2.1% since 2010. When arguing hourly rates at Clarion, we have created an ‘inflation guideline hourly rates table’ to justify the hourly rates. We are regularly securing increased hourly rates by using the inflation rates as the starting point, hence the importance of adopting the correct starting point.  i.e. the inflation Guideline Hourly Rates, and then focus the Costs Judge’s attention to any appropriate enhancement. 

Please feel free to contact Andrew McAulay on 0113 336 3334 or at andrew.mcaulay@clarionsolicitors.com to discuss our approach to hourly rates and the inflation rates argument. 

The definition of a “Vulnerable Adult” under the EL/PL protocol is not limited solely to the Claimant, the court finds that this can also apply to the Defendant

The case of Scott v Ministry of Justice [2019] EWHC B13 (Costs) provides some guidance regarding the determination of a “vulnerable adult”. The Claimant did not place the matter through the EL/PL Protocol as they believed that the Defendant, who was a prisoner in the care of NHP Winchester, was a vulnerable adult. 

The Claimant referred to CPR 4.3 (8) which states “This Protocol does not apply to a claim … for damages in relation to harm, abuse or neglect of or by children or vulnerable adults”. The Claimant submitted that the use of the words “of” or “by” resulted in the exception created by paragraph 4.3 (8) being engaged. Therefore, the definition of a “vulnerable adult” was not limited solely to claims brought by “vulnerable adults” who have been injured, but that it was also capable of applying where a “vulnerable adult” has caused an injury to someone else. 

On consideration of the matter, Deputy Master Friston agreed with the Claimant that in general a Defendant could be deemed a vulnerable adult, however in this instance he did not consider the Defendant to be vulnerable. The Claimant had attempted to argue that the recent death of the Defendant’s son deemed him to be a vulnerable adult, but the Judge found that the exception in paragraph 4.3(8) of the EL/PL Protocol did not apply on the facts of this case.

Please contact Darren Campling on 0113 288 5671 or at darren.campling@clarionsolicitors.com if you have any questions.

Our latest blogs

Court of Appeal finds approved costs budget irrelevant when indemnity basis awarded

The Court of Appeal decision in Lejonvarn v Burgess & Anor [2020] EWCA Civ 114 has determined that an approved costs budget is irrelevant where indemnity costs are ordered.
The appellant’s case was that whilst there was an approved costs budget of £415,000, her actual costs were £724,265.63. To allow this would effectively reward her for failing to keep within the budget. Interestingly the budget was only partially costs managed and therefore was subject to change in certain phases in any event.

Is a Court Fee Recoverable Inter Partes when a Fee Remission was suitable?

The issue of whether a Court Fee is recoverable by the receiving party, when a fee remission was available, is a contentious one. However, in the recent case of Ivanoy v Lubble which was an appeal to a Circuit Judge, guidance has been provided.
This case was a low value Personal Injury matter which settled for £6,500 and the Court Fee in dispute was the Hearing Fee. The Defendant argued that the Claimant was eligible for a Fee Remission and so they should not have to pay the Court Fee as part of the Claimant’s cost.

The Precedent T – a new Costs Management precedent, watch this space!

The CPRC have released minutes of their latest meeting. The committee had been asked to consider proposals and options relating to revisions to CPR r3.15 and PD 3E.
Discussions centred around whether the no retrospective costs budgeting rule applies and how it works within the budget variation. It was mooted that a rule change which sets out the factors that the court should take into account may be appropriate. Proposals were also made regarding a new draft precedent T (in excel format), its intention being to set out the particulars of the proposed budget variation.

You can view all our blogs at clarionlegalcosts.com.

Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.