newsletter Issue 17 correct costs were as set out at 45.7 and it was that order that was appealed. 1st Appeal

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1 newsletter Issue 17 Minor costs for minor claimants Minor Inside this issue costs for minor claimants Fee earner training Jackson update LASPO update, courtesy of Michael Lent at temple ATE Recruitment & promotions Just Costs charity initiatives Dockerill v Tullitt The saga of Dockerill v Tullitt ( [2012] EWCA Civ 184) concluded in the Court of appeal on 24th February 2012 with a final judgment that seemingly represents another blow to claimants costs. In Dockerill, personal injury claims were brought on behalf of two child passengers. The defendant offered in respect of each claim on condition that Should these offers be accepted, then our clients will also agree to pay fixed costs. At the Part 8 approval hearing an argument arose as to whether the fixed costs referred to were under CPR 45.7 (predictable costs) or CPR 45.2 (small claims costs). DDJ Ford ruled that the correct costs were as set out at 45.7 and it was that order that was appealed. 1st Appeal HHJ Oliver-Jones at Birmingham County Court held that infant approval claims do not attract fixed costs of any kind as under CPR (b) where the sole purpose of proceedings is to obtain the approval of court to a settlement or compromise, the claim must be made using the procedure set out in Part 8, which would be allocated to the multitrack pursuant to CPR 8.9c and therefore costs were to be assessed. Costs were subsequently assessed by DDJ Fowler on 1/10/2010 at 6, together with the costs of the assessment which were summarily assessed at 6, nd Appeal On an appeal before HHJ McKenna a decision was handed down on 7th April He argued there were two potential approaches to such claims. The first was to allow only small track costs plus additional costs of any specified step which required legal advice, such as obtaining advice on quantum. The second was to give no practical effect to the fact that the small claims track would be the normal case for the claim, but instead simply to assess the full reasonable costs. CONTINUED ON NEXT PAGE

2 Minor Costs for minor claimants (continued) HHJ McKenna argued that had Part 7 proceedings been issued, only fixed costs would be recoverable and it made no sense to have higher costs for an approval hearing than for a trial. Therefore, costs should be assessed under CPR 44.5, taking into account not only the normal tests set out therein, but also that had the claimant been an adult, small claims fixed costs would have applied. Accordingly the appeal was allowed. 3rd appeal This appeal was heard in the Court of Appeal and the lead judgment of Lord Justice Patten handed down on 24th February 2012 also dealt with the linked cases of Macefield v Bakos and Tubridy v Sarwar. The key issues were whether the costs were to be calculated in accordance with the predictable costs regime or subjected to detailed assessment, and if assessed, how such an assessment should be carried out if the damages did not exceed On the first issue, Patten LJ found the claim was excluded from the predictable costs regime by CPR 45.7(2)d if a claim had been issued for the amount of the agreed damages, the small claims track would not have been the normal track for that claim, and the Part 8 claim therefore fell for detailed assessment. The second issue was how the detailed assessment should be conducted. Mr Mallalieu, for the Respondent,, argued for what he referred to as Small Claims Plus, namely the limited costs that would have been recovered had the claim for damages been issued, being small claims track fixed costs plus any additional costs permitted under PD 21.5 (such as counsel s advice on quantum). Mr Bacon, for the Appellant, argued that in Part 8 cases the Court had to approve the compromise of a claim for the benefit of children The court s intervention on their behalf has to be an informed process which cannot be achieved without the instruction of a lawyer if only in order to assess the value of the claim and to advise whether the sum on offer is reasonable.. If the costs are liable to be assessed on a small claims basis the reality will be that solicitors will be unable and therefore unwilling to undertake the work. The protected party assisted by their litigation friend will become effectively unrepresented whereas the defendants, through their insurers, will have the advantage of professional representation and advice throughout. Furthermore, to regard small claims track costs as the starting point for assessment would be to convert an order for costs to be assessed under CPR 44.5, to an order for assessment under CPR 27, contrary to the rule set out in Cope -v- United Dairies (London) Ltd., The Court accepted this point and concluded that where an order for detailed assessment has been made, the Court s obligation is to apply CPR 44.5(1)a and decide whether the costs were reasonably and proportionately incurred, but that is a fundamentally different exercise to allowing only those costs specified under CPR Lownds v The Home Office [2012] EWCA Civ 184 was considered, which states; The fact that the litigation has been conducted in an insufficiently rigorous manner to meet the requirement of proportionality does not mean that no costs are recoverable. It means that only those costs which would have been recoverable if the litigation had been appropriately conducted will be recovered. Consideration was also given to Voice and Script international Ltd v Ashraf Algahar [2003] EWCA Civ 736, where the claim had not been allocated prior to assessment, in which the Court of Appeal stated;. The omission may have meant that the small claims costs regime did not follow as a virtually automatic starting point, but it did not preclude the court even from considering whether it would be reasonable to make an assessment consistent with the small costs regime. it follows from two essential principles, first, the discretionary nature of costs orders, and second, the overriding requirement of proportionality in civil litigation generally.. These cases were both considered in the Court of Appeal case of O Beirne v Hudson [2010] EWCA Civ 52 and therefore the final judgment in Dockerill and Macefield was that they and O Beirne were authority that the question whether it was necessary to have employed solicitors to do the work is a matter for legitimate consideration as part of the assessment process. Therefore the appeals in both Dockerill and Macefield were dismissed. In Tubridy the issue was whether Counsels fee for attending an approval hearing was recoverable in a case that fell within the predictable costs regime at CPR 45 Section II. On appeal, the paying party argued that costs of legal representation at the hearing should have been met by the receiving party s solicitors as part of the costs recoverable under CPR This appeal was dismissed by HHJ Hornby who held as a matter of principle I consider that the rules are clear and are that, where a claimant is a child or a protected party, the fees payable for instructing counsel are necessarily incurred because of the simple fact that the court is concerned enough with claimants who are children or protected parties to have, if I may say so, the Rolls- Royce skills of experienced counsel. In this appeal, Mr Mallalieu held that the requirement to demonstrate necessity in CPR 45.10(2) and CPR the Court may allow a claim for a disbursement,confirm that there has to be some specific justification for counsel to be instructed. CONTINUED ON NEXT PAGE

3 Minor Costs for minor claimants (continued) The Court found that If the use of counsel in all Part cases had been considered appropriate by the Rules Committee then one would have expected to see that reflected in CPR 45.10(2)(c) or in the provisions of the Practice Direction to CPR 21. As it is, a much stricter test has to be satisfied. 56. Many of these cases (and this one seems to be no exception) do not involve difficult issues and can be dealt with shortly on the basis of the written advice on the merits. In such cases the convenience of having counsel attend the hearing has, I think, to be borne by the solicitors as part of their costs. Accordingly this appeal was allowed. Conclusion Theses judgments seem to represent a significant victory for paying parties as the most likely outcome for smaller firms is that they will now reject any child claim that is not obviously Fast Track. However, larger firms will have a significant investment in such cases and as such this may lead to satellite litigation not only over the obvious access to justice issue, but also over the question of when is a case sufficiently complex to justify its conduct throughout by a solicitor. Such litigation is likely to continue until the rules are amended either to remove child and protected persons claims from the small claims track, extend the predictable costs scheme to cover such claims, or to introduce a further fixed costs regime for low value Part 8 infant approval claims. As far as Tubridy is concerned, potential arguments are liable to hinge on the interpretation of CPR 45.10(2) d, which could permit (for instance) solicitors to argue an agent s instruction was necessary due to their distance from the Claimant s home Court. John Rimmer: Chesterfield office Fee earner training We strive to help our clients maximise the value in their business. By training fee earners on all aspects of costs and recovery, we can help you to help yourselves. Just Costs are accredited for Continuing Professional Development by the Solicitors Regulation Authority and our practical seminars will bring your fee earners completely up to speed with all aspects of costs and funding. The latest developments in law and practice will be discussed, clear and practical guidance provided on the legislative framework and full use will be made of topical case illustrations. Topics covered include: File Management to Maximise Recovery Maximising Hourly Rates Budgeting & Estimates Jackson and the future of costs & funding Case Law update Other Subjects dealt with on Request Many of our clients have taken advantage of this seminar, and are reaping the benefits in greater profitability, more attractive funding arrangements and increased new business. For further information please contact your local client services manager, listed at the end of this newsletter.

4 Jackson - past present and future - a snap shot What prompted the Jackson reforms? In preparation of his final report, Jackson LJ identified 16 causes of excessive and disproportionate costs: 1. Compliance with some of the CPR are time consuming and expensive; 2. Complex litigation can cause substantial costs; 3. The Costs Rules often lead to satellite litigation; 4. Too few solicitors, barristers and judges have a sufficient understanding of costs law and how to manage costs; 5. Lawyers are paid with reference to time spent rather than work done; 6. Hourly rates are not controlled satisfactorily; 7. Preparation of witness statements and expert reports can generate excessive costs; 8. Shifting costs between parties can create strange incentives; 9. The CFA regime has created unfortunate and unintended consequences (Claimants have little interest in costs, Defendants often face large bills of costs); 10. Disclosure is often expensive in light of e-disclosure and electronic databases; 11. No effective control over pre-issue costs; 12. Ineffective case management by both the parties and the Court; 13. Cases which ought to settle, settle late or not at all; 14. The detailed assessment procedure is cumbersome and expensive; 15. Current level of Court fees is too high; Despite high Court fees, Civil Courts remain under resourced with regard to staff and IT; Accordingly, measures were put in place to implement changes to deal with these issues. So where are we now? Parliament are pushing through the following in the Legal Aid, Sentencing and Punishment of Offenders Bill :- Abolition of recovery of success fees and ATE premiums; Regulation of success fees by introducing a cap of 25% of damages in personal injury cases; Payments of additional amounts to successful Claimants; The extension of contingency fee/ damages based agreements beyond employment matters; The Ministry of Justice s response to the Solving disputes in the county courts: creating a simpler, quicker and more proportionate system consultation is seeking to introduce the following:- RTA portal scheme to increase to 25,000 following a full valuation of the existing scheme and impact assessment; Introduction of a similar scheme for employer s liability and public liability claims; Consideration of the introduction of a similar scheme for low value clinical negligence claims; Consider the extension of fixed recoverable costs to all Fast Track claims; Extension of Small Claims limit from 5,000 to 10,000 (with consideration to increasing to 15,000 following a review of the first increase) No increase to personal injury limit in the Small Claims Track; Single County Court replacing the current County Court structure; The Civil Justice Council s working party are considering:- Qualified one way costs shifting atypical cases and behavioural aspects; Introduction of an additional sanction under CPR.r.36; A new test for proportionality; The Association of Costs Lawyers are considering the following in their Modernising Bills of Costs report:- Developing the format of bills of costs; Looking at integrating the creation of bills of costs with case management software Making the drafting of bills of costs an easier, more efficient process; What does the future hold? The aim is that most, if not all of the above, are brought together for the Big Bang in April Nick McDonnell: Chesterfield office

5 LASPO update, courtesy of Michael Lent at Temple ATE Recoverability for Industrial Disease claims to be preserved? In the latest defeat of the Government s LASPO Bill in the House of Lords, the ninth so far, an amendment was passed, preserving recoverability of CFA Success fees and ATE premiums for claims relating to Industrial Diseases. It is also possible but not yet known at the time of writing this article, that a similar amendment relating to medical negligence claims (or disbursements for such claims)or libel may be made. The thinking behind these amendments is all part of a well intentioned rear guard action by the Labour Party against the reactionary forces of the Government in respect of the funding of litigation. To highlight how misguided the debate has become, the argument behind the retention of recoverability for Industrial Disease claims is that while whiplash cases could be dubious, dying asbestos victims claims can never be frivolous of fraudulent. Therefore it is implicit that CFAs and ATE insurance are used to support frivolous and speculative claims. As has repeatedly been pointed out (and studiously ignored by those who should know better) there is no better deterrent for speculative claims than CFAs and ATE insurance. The most valuable asset a solicitor has is his work in progress; it will not be invested in speculative claims and ATE insurers will simply not insure them because they end up losing the cases and paying the defendant insurers costs. The Defendant insurance lobby maintains that it costs too much for them to fight claims that it does not consider have merit; this is a nonsense because they can recover their costs (and they do because we pay them!) when they win cases. It was ironic that an Article last week in the Business section of the Evening Standard noted that the motor insurer Admiral was paying out a record dividend this year to its shareholders and in the same breath, that insurer took the opportunity to have a swipe at the damage caused to its results by whiplash claims. However if the amendment made by the Lords for Industrial Disease claims were to be retained by the Government what would the implications be? First it is simply illogical that recoverability should be retained for one seemingly worthy type of claimant. The very great majority of claimants have genuine claims and should have a proper mechanism providing them with access to justice. The fact the Lords want to preserve recoverability for certain types of claims is surely recognition that CFAs and ATE provide the best type of access to justice. Secondly it is highly unlikely that there are enough Industrial Disease claims currently in the UK to support an ATE insurance market which operates on recovering premiums from unsuccessful opponents. Therefore this attempt at saving recoverability for this class of case may not succeed in any event. If recoverability was preserved for all medical negligence claims, then it is the same story. Despite the various statistics bandied about how much the NHSLA spends on ATE, we know how small this market is in fact (it is the pimple on the pimple on the backside of the NHSLA elephant) because we insure approximately one third of all claims against the NHS. It is most unlikely to leave a viable market by itself. This is certainly the case if the recoverability of premiums (as has been threatened) is allowed only for disbursements in medical negligence claims. First it defies logic to try and preserve insurance of this aspect of the costs alone. Secondly, it will just not be a big enough market. Libel is also an extremely high risk, high cost, low volume ATE market where once again, given that our company is the market leader, we find it difficult to see how such a market can be maintained as a discrete area of risk. Therefore unless recoverability for a wider class of litigation is preserved, it is doubtful whether making specific exceptions for certain types of litigation will achieve their worthy intention Michael Lent Underwriting Director Temple Legal Protection Ltd

6 Recruitment & promotions Just Costs continues to go from strength to strength, with further significant recruitment. We are now over one hundred strong and we continue to interview high-calibre costs candidates across our Manchester, Leeds, London and Chesterfield office locations. We re pleased to announce that Bob Hanlon has joined our team in Manchester, bringing over 20 years experience in complex Commercial, Personal Injury and Clinical Negligence matters. We welcome Bob to the team, alongside James Toland, Aaron Hurst, Jenny Macardy, Adele Brett, Tim Gibb, Erica Thompson, Simon Gayfer and Robert Boyd. Internally, we are pleased to announce the promotions of both Mike Fitsell and Buki Coker. Both have contributed greatly to the success of our London office and are now Associates. Just Costs charity initiatives Our staff enjoy supporting a range of charities every year. We d like to thank them, and our clients, for raising 10,000 in 2011 for the superb Help for Heroes. The contributions were many and varied, and included a myriad of hard slogs on bicycles, sweaty runs around cities in the UK and abroad, swims around Lake Windermere and countless other exhausting adventures! There was also the Just Costs Charity Golf Day, with many donations from our wonderful clients, and throughout the year you may have been involved with various raffles, cake sales, quizzes and the Queens Birthday Garden Party. In 2012 we seem to be getting fitter than ever, with 100 mile bike rides, the Manchester Marathon, a great variety of 10k runs, the 3 peaks challenge and a nerve-jangling skydive in June already lined up! If we survive all these, I m sure we ll hit our ambitious target of 12,000 for children s charities across the UK. Creative Marketing Solutions for Solicitors As the legal environment changes and competition for new business increases, it is becoming more important for law firms to market their business effectively. The Marketing Sauce is offering firms a free marketing review, which may highlight areas of your marketing activity and communications that could be improved to create more opportunites for your firm in the coming months. for further information contact: Paul Bennett on or Manchester South: Trident One Styal Road Manchester M22 5XB DX Cheadle Tel: Manchester Central: Pall Mall Court King Street Manchester M2 4PD Tel: London: Central Court 25 Southampton Buildings London WC2A 1AL DX 426 LDE Tel: Chesterfield: Dunston Innovation Centre Dunston Road Chesterfield Derbyshire S41 8NGDX Chesterfield 8 Tel: Leeds: No 1 City Square Leeds West Yorkshire LS1 2ES DX Leeds Park Square Tel: The information and any commentary on the law contained in this Newsletter is provided free of charge for information purposes only. No responsibility for the accuracy and correctness of the information and commentary, or for any consequences of relying on it, is assumed by any member of Just Costs, or Just Costs as a whole. The information and commentary does not, and is not intended to, amount to legal advice to any person on a specific case or matter. The various articles were written at the dates shown for particular audiences and purposes and may not represent the law as it stands today. You are strongly advised to obtain specific, personal advice from a lawyer about your case or matter and not to rely on the information or comments on this site.

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