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Costs and Litigation Funding Newsletter - January 2020

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The offer in the precedent R does not become the benchmark below which the costs cannot be budgeted

Guidance, which we have regularly shared, regarding the approach to the completion of the precedent R has been confirmed in the case of Gray v Commissioner of Police for the Metropolis [2019] EWHC 1780 (QB). The Defendant’s budget was agreed in this claim; however, only elements of the Claimant’s budget had been agreed. Those phases that remained in dispute, where offers had been made in the precedent R and not accepted, were open to approval by the Judge in a lower sum at the costs and case management hearing.
 
The case of Gray was an appeal from a costs budgeting decision made by HHK Baucher in the Central London County Court where an increase to the budget was being sought. There were several grounds for the appeal, the salient ones being that the Judge had failed to address proportionality lawfully; the sums budgeted for witness statements, trial preparation and trial were manifestly too low which rendered the litigation uneconomic; and that there were ‘free-standing’ mistakes in that the Judge failed to appreciate that the trial was listed for five days and not three days; and that she failed to give reasons for allowing a sum for witness statement preparation which was lower than that which had been offered by the Defendant.
 
Mrs Justice Lambert on appeal found that (1) the proportionality test was addressed correctly with equal weighting being applied to all of the factors of CPR 44.3(5), one of those factors being the sums in issue, a point which had been raised by the Defendant in their submissions; (2) the Judge’s reasoning was not flawed or that the sum allowed was manifestly too low, and (3) the Judge was not required to spell out why the figure, which was allowed for witness statements, was less than the figure offered by the Defendant. The reason is obvious: the figure offered by the Defendant was not the proportionate figure. It goes without saying that, if a Defendant (or any party) makes an offer, that offer does not become the benchmark below which the cost cannot be budgeted.  The appeal was refused.

Please contact Sue Fox on 0113 336 3389 or at sue.fox@clarionsolicitors.com if you have any questions. 

Damages Based Agreements: new developments and the future

New draft rules for Damages Based Agreements (DBAs) were published in October 2019 with the intention of creating a “workable” DBA regime. At present, under a DBA, a solicitor may only take a fee calculated as a proportion of the Claimant’s damages / restitution. The DBA may not provide for a solicitor to charge based on the time they have actually spent in any circumstances (known as ‘hybrid’ agreements) and this has led to low uptake. The new proposals would allow hybrid agreements, under which solicitors could recover the DBA payment (calculated as a proportion of damages) as well as costs recovered from the opponent. The DBA payment would therefore act much more like a traditional success fee; the solicitor would be entitled to any costs recovered on assessment on the usual “time spent” basis, plus the DBA payment as an “uplift”. The full proposals can be found here.
 
In a recent decision the County Court gave some guidance in relation to the interpretation of DBAs. The Claimant brought a claim funded by a DBA and the Defendant made a successful application to strike out. The Claimant subsequently appealed, which was successful. The appeal was funded by a Conditional Fee Agreement (CFA). The DBA explicitly excluded appeals. The Defendant argued that this was a “hybrid” arrangement and therefore prohibited. The Claimant (represented by Clarion) argued that it was not on the basis that section 3 of the Damages Based Agreements Regulations 2013 provides that a DBA must specify “the claim or proceedings or parts of them to which the agreement relates”. As such, the DBA regulations explicitly provide for a solicitor to fund discreet elements of litigation under a DBA, and that the prohibition on charging on a time-spent basis applies only to those parts of the litigation to which the DBA relates. The Court found for the Claimant in this first instance decision.

Please contact Matthew Rose on 0113 222 3248 or at matthew.rose@clarionsolicitors.com if you have any questions.

Some welcomed guidance and reminders regarding appealing a provisional assessment

In the case of PME -v- The Scout Association (30/07/2019), the High Court upheld Master Leonard’s first instance decision limiting the claims which are heard on an appeal following a provisional assessment, to a re-hearing of only those requested claims. It was found that parties are not entitled to use this as an opportunity for a redetermination of any other claims within the bill of costs.
 
Mr Justice Stewart rejected the Claimant’s argument that the “proceedings which gave rise to the decision appealed against” could mean that all of the decisions that were made on provisional assessment could be challenged at an oral hearing rather than simply the requested ones. The obvious benefits of the Claimant’s interpretation of the rules would be a new assessment of the bill, with the potential for a better outcome overall, and it would neatly sidestep the disincentive to requesting an oral hearing in CPR 47.15(10) i.e. that the party who requests an oral hearing pays the costs unless they achieve an improvement of at least 20%.
 
Mr Justice Stewart approved the earlier judgment of Master Leonard, who ruled that a provisional assessment is not a hearing and that a hearing is fixed only when an oral hearing is requested: in other words, a re-hearing can only be a further hearing of the oral hearing, not of the provisional assessment. This case provided a helpful reminder regarding both the process and the jurisdiction of the Judges in terms of appealing a provisional assessment. The Authorised Costs Officer, who is the person who undertakes the provisional assessment, is indeed an appointed Civil Servant, rather than a Judge, and because of that the parties have the right to appeal without permission being required. The appeal lies to a Costs Judge or District Judge and it is this hearing that is deemed to be the first hearing. Therefore, it is any further appeal from the Costs Judge or District Judge that is the first appeal in the meaning of CPR 52.
 
It also clarified that the correct procedure following a provisional assessment is for parties to either accept the outcome or challenge it on risk as to costs. If there is a challenge, then the parties are required to state which items are to be challenged (there is no restriction on the number of challenges), and it is those items only that are determined at the oral hearing. Unless a party challenges all the decisions in the provisional assessment, any subsequent appeal by way of a re-hearing will proceed only in respect of those issues which the party chose to raise in the oral hearing.

Please contact Robert Patterson on 0113 336 3337 or at robert.patterson@clarionsolicitors.com if you have any questions.

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