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Costs – July in review

11 August 2020
As a result of lockdown, the last few months seem to have been fairly quiet in relation to judgments and news. However, at the end of July we have had a flurry of interesting decisions and news.

Amendments to budgeting

One of the major announcements was the publication of the Precedent T document along with amendments to the CPR which will come in to force on 1st October 2020. The Precedent T is designed to solve some of the difficulties experienced with amended budgets with the aim to make it clearer as to the costs that are changing and by how much.

The new rules state that:

  • The Precedent T form must be used;
  • That any amendments must be limited to those changes to costs as a result of a significant development;
  • It must be certified that the costs sought have not been claimed in any previous budget; 
  • That a revised budget must be submitted to the other party for agreement and then subsequently to the court;
  • The court may approve, vary or disallow the variations having regard to the significant developments; and
  • That the court can approve costs which have already been incurred which relate to the variation.

It will be interesting to see how this new document plays out. There appears to be a lack of transparency with parties only being required to provide details as to the additional costs where there is a variation of £10,000. 

The rule also confirms that the court may reduce incurred costs which relate to the variation, confirming the approach of Sharp v Blank.

View a copy of the new document >

Part 8b claims, strike out and the Portal – decision from the Court of Appeal in Cable v Liverpool Victoria Insurance Co Ltd

Sukhjit Dhadwal covered the original decision and appeal. The background was that a claimant who utilised the Part 8b procedure and stayed proceedings for a year had acted unreasonably in a claim which was not suitable for the MOJ portal. The court struck out the claim and the decision was upheld on 1st appeal.

The matter was then heard by the Court of Appeal who said that the claimant's conduct was an abuse of process but that the sanction to strike out the claim was too draconian and substituted this for a costs sanction and disallowance of interest in relation to special damages. 

A number of arguments and authorities were raised before the Court of Appeal that were not taken in the hearings below. The Court of Appeal said the District Judge at first instance focused too heavily on the strike out as a primary position. That she had made findings as to prejudice which were not in evidence, were unjustified and failed to give weight to the consequences of striking out the claim and depriving the appellant of his Article 6 rights. In addition, this was a liability admitted claim and by issuing proceedings under Part 8b rather than Part 7 this had only delayed the claim by a year. There was no other prejudice which justified striking out the claim.

The Doctrine of Mistake and the Portal

Whilst there have recently been three decisions (Zommers v Litham: Lis v Rogers (DDJ Johnson, Liverpool CC, 23/6/20) and A v B (DDJ Doman, Truro CC, 26/05/20)) at a County Court level that the doctrine of unilateral mistake cannot be applied in a portal case, the Court of Appeal has recently refused permission to appeal where a mistake had been rectified on appeal.
The Court of Appeal in Harris v Browne refused permission to appeal and said:

"The appeal has no real prospect of success. The parties agreed that the Judge was required to apply the Overriding Objective. He did so entirely properly at paragraph 72 of the judgment onwards. That assessment of how the Overriding Objective applied in this case is not capable of successful challenge in this court. Further, the case raises no important point of law or practice. As the judge points out, the decision turned entirely upon the very particular facts of this case and gives rise to no general issue of importance. I agree with the points made in the Respondent’s PD at paragraph 19 Statement.

I reach this conclusion with no regret whatsoever, so avoiding what would obviously be a monstrous injustice."

In this case the claimant had inputted an incorrect figure in the portal and the defendant accepted this. The claimant had put in an offer of £6,115 rather than £8,395. If the Overriding Objective applies to all claims, I fail to see how this reasoning cannot be used on any other matter where a mistake is made which is obvious. For example, where the claimant inputs an offer of £550 rather than £5,550 as in A v B.

I do not think this is the last we will hear on the issue and this is likely to require judicial guidance from a higher court which has properly considered the issues. 

Counsel's brief fee where settlement is achieved before trial

In Coleman v Townsend (SCCO, 13 July 2020) a Costs Master disallowed the claimant’s counsel’s fees, notwithstanding that the case settled only on the afternoon before the day of the trial, when the claimant accepted the defendant’s Part 36 offer. The rational for this decision was that the claim settled before it had moved from CPR Part 45 Section IIIA, Part B of Table 6B (proceedings are issued under Part 7, but the case settles before trial) to Part C of Table 6B (the claim is disposed of at trial). The fact that the court had ordered the filing of skeleton arguments and that understandably the claimant’s solicitor had delivered the brief to counsel were irrelevant. Put simply, when the claim settled, it had still to cross the boundary between Part B and Part C.

The rise of attempts to contract out of fixed costs

As a predominantly paying party costs business it seems as though there is a rise of claimants attempting to contract out of fixed costs. Of course, the reason being, in order to maximise the recovery of costs. 

It is accepted that it is open to parties to contact out of fixed costs (see Turner v Cole (DJ Baldwin, Liverpool CC, 16/12/19)). Acceptance must be communicated clearly and cannot be imposed due to silence of one of the parties. 

In Turner v Cole an offer was made on the basis that the defendant do pay the claimant's cost to be, "detailed assessment [sic] if not agreed on the standard basis (and it is strictly accepted by the defendants that costs will be paid on the standard basis and not in accordance with any portal, fixed costs or predictive costs basis)." There was then an acceptance by the defendant of these terms confirming they will send the damages cheque. 

However, one  tactic that we are currently seeing is the claimant solicitor sending a letter with or before the medical evidence stating that states any settlement will be on the basis that costs are to be paid as if the claim had been allocated to the multi-track. Rule 45.29B makes it clear that any claim which is allocated to the multi-track is not subject to fixed costs. 

It would be wrong if a party could unilaterally apply terms to a settlement using a letter sent, which may have been sent many months prior, and forms no part of the settlement discussions and offers. Whilst we have not yet tested this point at court we think it would be unlikely that a court would find such a term applies where there has never been any reference to the letter or payment of costs on the multi-track at the time of settlement.

What is clear is that a defendant must be clear as to the terms of offers and acceptance. If a claimant does attempt to contract out of fixed costs you must ensure that you do not inadvertently accept their offer as happened in Turner (see para. 7), "Thank you for your letter indicating acceptance, I confirm I will forward a cheque for £60,000 payable to your client immediately. With regard to your costs, in view of the amount of the interim request, I will be instructing costs draughtsmen (sic) – I would suspect they would want more detail and I will leave the question of any payments on account of costs to them. If you send me details and I will instruct them at that point."

If you do have any queries as to the terms of settlement DWF Costs will be happy to assist you either on an individual basis or with general training to a team so you can ensure that you do not inadvertently contract out of fixed costs. 

If you require additional information please do not hesitate to contact William Mackenzie or Simon Murray.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice.

Further Reading