Fixed Costs – Where are we?
Following LJ Jackson’s report there have still not been any developments in relation to the extension of fixed recoverable costs. Rumour mill suggests that the MOJ are happy with LJ Jackson’s proposals and that likely implementation is April 2019. However, no formal communication has been issued from the MOJ and the continued silence is frustrating LJ Jackson, who retires on 7 March 2018.
The review of LASPO is underway, and as previously predicted, it might be that the MOJ want to see the outcome of that review before consulting on the proposed fixed fee reforms, BUT LJ Jackson may have retired by then. Who therefore will take over the baton and be the new ‘champion’ for fixed costs? Who would want to take over such a thorny topic? Many predict Mr Justice Coulson.We will keep you posted with developments.
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What is a good reason to depart from the budget?
[News story image] The Court of Appeal decision in Jacqueline Dawn Harrison v University Hospitals Coventry & Warwickshire NHS Trust  EWCA Civ 792 further reinforces the importance of an accurate budget. This Court of Appeal decision has ruled that a budget cannot be departed from unless there is a good reason to do so, this is a difficult test to overcome. So, the question to be answered is - will a receiving party’s costs be allowed in full if they are less than the budget? Yes –The Harrison decision confirms that any departure from the budget applies to both downward and upward revisions, hence parties have to show a good reason to depart from the budget. This only applies to the estimated costs, incurred costs are still up for grabs!
LJ Davis refused to comment on what a ‘good reason’ is, therefore this is still open to interpretation. Will a change in number of witnesses be a good reason; will a change in the number of disclosure documents be a good reason; will a trial that was listed for 8 days and concludes on the 2nd day be a good reason? Assumptions will be key.
We anticipate that there is likely to be a 2 layer test with consideration being given to the fundamental arguments, e.g. conduct etc. followed by the consideration of the change in assumptions. Parties are always in a stronger costs position if no such departure is required. This can be avoided by monitoring the budget and applying for a revision if applicable.
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Part 36 offers, the basis of assessment, and knowing your expert
[News story image] The Defendant successfully beat at trial their own Part 36 offer in the main action between The Governors and Company of the Bank of Ireland (1) and Bank of Ireland (UK) PLC (2) v Watts Group PLC , and they were awarded their costs accordingly.
The Defendant argued that costs should be assessed on the indemnity basis on the basis that the claim was hopeless and should never have been brought, that the Defendant had beaten their own Part 36 offer, and that the Claimant’s expert was heavily criticised by the trial judge.
The Claimant disagreed and argued that costs should be assessed on the standard basis, with the Defendant being entitled to interest on those costs from the date of expiry of the first Part 36 offer made by the Defendant.
The Hon. Mr Justice Coulson considered the arguments and found that this was not a case in which indemnity costs were either justified or proportionate. He recognised that if the Claimant had beaten their own Part 36 offer then, in accordance with CPR 36.17(4)(b), they would have automatically been entitled to indemnity basis costs, however, whilst the rules were misaligned and considered unjustified by some, he stated that it remained the law.
He did, however, allow costs on the indemnity basis in relation to one discrete aspect of the case – the expert’s conduct, and he relied on the decisions of Balmoral v Borealis  and Williams v Jervis  in doing so. He ordered that costs of the Defendant expert should be assessed on the indemnity basis, as well as costs of and occasioned by the oral evidence given by the Claimant’s expert at trial.
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