Rolls, Lord Justice Dyson who has made it clear that the reforms WILL all be introduced in April 2013.

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1 October 2012 Even more on the Jackson Reforms Costs Newsletter The Jackson Reforms and the implementation of LASPO next April, continues to dominate much of the legal press and are the subject of any number of conferences, seminars and webinars. As can be seen from Andrew s article (pages 2-5), District Judge Chris Lethem (who is responsible for judicial training on the implementation of the reforms) has stated that in his opinion the changes are second only to the introduction of the Civil Procedure Rules in their likely impact. Both Andrew and I fully agree with this sentiment and have already delivered three seminars on the subject with more to follow. Doubts have been expressed as to whether all of the changes could possibly be introduced at the same time i.e. 1 st April 2013 but such doubts have been laid to rest by the new Master of the Following several favourable comments on our July Newsletter, we are again focussing on the practical aspects of recent costs developments rather than on costs case law. I hope you continue to find the Newsletter both useful and interesting. Sue Nash ACL In this edition... Sue Nash Page 1 Jackson and Omnia Civil Justice Reforms Pages 2-5 MoJ Update CFA or DBA Pages 6-9 By Roger Mallalieu Fixed Costs/Family Page 10 Family/Case Law Page 11 In Brief Pages Rolls, Lord Justice Dyson who has made it clear that the reforms WILL all be introduced in April A useful summary of his speech can be found on the Litigation Futures website ( What is of particular interest to me is his emphasis on costs management/budgeting as being the central feature of the reforms. Those of you who have already attended Help is at Hand! Finally, and linked into my previous comments (and Lord Justice Dyson s!) concerning costs management/budgeting, you will I hope be interested to hear that for the last few months we have been working on the development of a software product - OMNIA - that will sit alongside your existing practice management systems to enable you to produce costs budgets in Form H (or HB). It will also enable you to produce bills of costs and schedules both in their current format and, in due course (when announced) the new formats which it is hoped will be formalised prior to the reforms being implemented next April. Some clients have commented that this is like turkeys voting for Christmas! but I genuinely believe that this is not the case. You are still going to require costs expertise to ensure that you do not include irrecoverable costs, to maximise the costs that you can legitimately claim and to assist you with the costs budgeting process. In other words, in future, you are going to require specialist costs input throughout a case, not just at the end. This principle is well known to one of our seminars will now (hopefully) have some understanding of how this new procedure will affect the way that you need to set up and run cases. I will return to this in the near future but in the meantime, if any firms would like us to come in and deliver some in-house, CPD accredited training on the new Regime, could they please contact myself or Andrew as soon as possible. those of you who do group action work who already involve us in this way but it is likely to be a new concept for those of you used to dealing with non-group action civil litigation. I will be sending out a newssheet next month by which time the first milestone in the software development (the production of a Form H/HB) will have been completed. As always, should you have any queries or comments about any of the issues raised in this newsletter or have specific issues that you would like us to cover in our next one, please do not hesitate to contact either myself or Andrew. Roger Mallalieu I am very grateful to Roger Mallalieu of 4 New Square Chambers for contributing an article considering the issues surrounding client retainers as a result of the proposed reforms. This is something all Solicitors need to be considering now for the reasons outlined in Roger s article. Page 1

2 Civil Justice Reforms - 1 Continuing the theme of Jackson Reforms from our last newsletter, copies of which are available on request or on our website I have set out below a summary of the Ministry of Justice s latest update on the planned changes. Their justification remains: to remove unnecessary costs and restore balance to the system. The full package of reforms is stated as being: The Reform of Conditional Fee Agreements The Act will abolish the recovery of success fees and After The Event (ATE) insurance premiums from losing parties. People will still be able to use Conditional Fee Agreements but will have to pay their lawyer s success fee and any ATE insurance themselves. Recovery of ATE Insurance Premiums in Clinical Negligence A limited exception in respect of clinical negligence cases is provided for in the Act where the insurance relates to expert reports the premium will remain recoverable. A further announcement is to be made with regard to this aspect following consultation with stakeholders. 25% Cap on Success Fees in Personal Injury Cases It is stated that the success fees will be capped at 25% of damages (subject to that amount not exceeding the maximum of 100% of base costs excluding damages for future care and loss). The 25% maximum includes both the solicitor s and the barrister s success fees and VAT. Further clarification is provided insofar as the cap will apply to net damages after Department of Work and Pensions benefit recovery. There will be a new requirement for both Conditional Fee Agreements and Damages Based Agreements that solicitors provide clear information to their clients on how the success fee has been calculated including showing the breakdown between solicitor and barrister and the type of damages that the cap applies to. The cap will not apply to appeal proceedings in which the amount of the success fee will be negotiated between the lawyer and the client. Damages Based Agreements Damages based agreements are introduced as: providing a useful additional form of funding for Claimants There will be a 25% cap on the amount of damages excluding future care and loss, that can be taken as the fee under a damages based agreement in personal injury cases. There is already an existing cap of 35% damages in employment tribunal cases. There will be a cap of 50% on damages for all other cases in civil litigation. Page 2

3 Civil Justice Reforms - 2 Increased Sanctions Under Part 36 of CPR References are made to reform in order to encourage earlier settlement and to the previous written ministerial statements which are summarised as follows: There is to be an additional amount to be paid by a Defendant who does not accept a Claimant s offer to settle where the Court gives judgment for the Claimant that is at least as advantageous as an offer the Claimant made to settle the claim. The additional sanction is to be calculated as 10% of damages where damages are in issue, and 10% of costs for non damages claims In mixed (damages and non-damages claims) the sanction will be calculated as 10% of the damages element of the claim The sanction is to be subject to a tapering system for claims over 500, so that the maximum sanction is likely to be 75,000.00; and There would only be one sanction applicable for split trials Costs Protection in Personal Injury Claims: Qualified One Way Costs Shifting A system of qualified one way costs shifting (QOCS) in personal injury cases will be introduced: so that Claimants conducting their case properly will not have to pay towards Defendants costs if the claim fails. Reference is made to previously issued written ministerial statements which set out further details on the application of QOCS summarised as follows: QOCS would be available for all: Claimants whatever their means; there is to be no financial test determining eligibility. Claimants who lose will not have to contribute towards Defendants costs as long as they behave appropriately (there is to be no minimum payment by a losing Claimant) Claims that are discontinued during proceedings (subject to the claim not being fraudulent); and Appeal proceedings; the requirement for permission to appeal would be able to control unmeritorious appeals QOCS protection would be lost if the: Claimant is found to be fraudulent on the balance of probabilities; Claimant has failed to beat a Defendant s Part 36 offer to settle; and Case has been struck out where the claim discloses no reasonable cause of action or where it is otherwise an abuse of the Court s process (or is otherwise likely to obstruct the just disposal of the proceedings) The principles set out in Part 36 of the Civil Procedure Rules would override QOCS protection but only up to the level of damages recovered by the Claimant. Page 3

4 Civil Justice Reforms % Increase in Non-Pecuniary General Damages A 10% increase in non-pecuniary general damages such as for pain, suffering and loss of amenity is: being introduced outside of the Act. This is stated to : help balance the impact of the CFA changes. Reference is then made to the Court of Appeal case of Simmons v Castle [2012] EWCA Civ This case was revisited by the Court of Appeal with Judgment delivered on 10 th October 2012 and is reported later in this newsletter. Proportionality It is stated that there will be a new rule on proportionality with a test intended to control the costs of activity that is clearly disproportionate to the value, complexity and importance of a claim. Road Traffic Accident Scheme The Government s intention to extend the current RTA personal injury scheme to include claims up to 25,000.00, to extend the scheme to cover employer s liability and public liability and reduce fixed recoverable costs within the scheme is re-stated and a report on progress is provided but little else. Referral Fees The payment or receipt of referral fees in personal injury cases will be prohibited which is stated as being consistent with the CFA reforms and will further reduce incentives for unnecessary litigation. Whiplash A consultation document on reducing the costs and numbers of whiplash claims is announced in which stakeholders views will be sought on a number of areas including increasing the small claims limit of personal injury cases from 1, to 5, The paper ends with the heading Background which simply summarises the history of Conditional Fee Agreements and the work of Lord Justice Jackson. It concludes by asserting that the: reforms will restore a much needed sense of proportion and fairness to the existing regime, not by denying access to justice, but by returning fair balance to the system. The reforms will also help businesses and other Defendants who have to spend too much time and money dealing with avoidable litigation, actual or threatened. Substantial unnecessary costs will be removed from the system, leading to significant savings to Defendants. Page 4

5 Civil Justice Reforms - 4 Comment on the Ministry of Justice s Update by Andrew Reynolds There really is nothing new in this most recent announcement other than apparent clarification on the 25% caps for CFAs and DBAs. There had been ongoing discussion as to whether or not the 25% should be of total damages but it would appear that this is not to be the case and the 25% will also include VAT. I am uncertain as to how this can be categorically stated because to my knowledge the Rules for DBAs have not as yet been finalised and/or approved by the Civil Justice Council Rules Committee. The Ministry of Justice s justifications for the reforms are somewhat disappointing but again unsurprising. I can only reiterate the comments made in my article in the last newsletter in that it is going to be absolutely crucial for all fee earners to ensure that all clients are kept fully informed as to not only costs that have already been incurred but also those that are to be incurred. Costs budgeting is undoubtedly here to stay and the proper use of this tool should enable solicitors to maximise recovery of their costs. Since our last newsletter I have continued my quest to keep on top of the reforms and participated in a recent webinar run by District Judge Chris Lethem which in addition to being very interesting also reinforced everything that Sue and I have both said in recent talks and indeed the last newsletter. Chris Lethem introduced the reforms as being the second biggest revolution in civil procedure, the first being the introduction of the Civil Procedure Rules and he foresaw two years of turmoil whilst the various rules and regulations bedded in. District Judge Lethem has been appointed to the Rules Committee and indicated that it was the intention that the rules should be signed off in December this year but if not certainly early next year. He reiterated that the best way to keep on top of the reforms was by attending/ considering the various lectures and referred in particular to the Fifth Lecture and the discussion therein with regard to the Singapore Experience and made it clear that the Courts would be maintaining a tough and robust approach. As many readers will I am sure know, the expected appeal in the case of Henry v Newsgroup Newspapers, where Master Hurst had disallowed around 300, worth of costs because the costs budgeting requirements had not been fulfilled, was no longer proceeding as the parties had settled the matter. District Judge Lethem opined that had the decision been appealed it was most unlikely that Master Hurst s ruling would have been overturned. With regard to the new Precedent H form it was suggested that the preparation of a short skeleton to accompany at least the first costs budget would most likely be of considerable use. No guidance has been given, and in my opinion it is unlikely that any will be, with regard to how District Judges should approach proportionality. I do believe that this is going to be the most controversial area of the reforms and personally absolutely disagree with the suggestion that proportionality trumps necessity. One observation that was made during the webinar both surprised and disappointed me greatly and that was that the industry norm was that receiving parties lost approximately one third of their costs on assessment. It seems to me that if that is the case then the bills that are being assessed, unless they are exceptional like many child abuse matters have not been drawn correctly in the first place! Where does this leave us? Where do we go from here? Forward, presumably! Page 5

6 CFA or DBA? - 1 Conditional Fee Agreement? Or Damages Based Agreement? Roger Mallalieu Costs Barrister Page 6 In this article Roger Mallalieu considers the issues surrounding client retainers What is a CFA? In broad terms, a CFA is the classic no win, no fee agreement, whereby the solicitor agrees with the client that the solicitor s fees, or part of them, will only be payable on the occurrence of a pre agreed contingency (normally success in the claim), with the fee being (normally) calculated on a conventional hourly rate basis and the solicitor being entitled, on the contingency occurring, to the hourly rate agreed with the client, which is the rate which would have applied had the agreement not been a CFA. In addition, on the contingency occurring, the solicitor is commonly entitled to a success fee which is determined as a percentage of the fee payable under the CFA, the precise percentage being agreed with the client at the time of the agreement, but being limited by law to a maximum of 100% of the fee otherwise payable. CFAs have been lawful for the majority of civil cases (criminal and most family proceedings being excluded) since the coming into force of the amendments made by the Access to Justice Act 1999 to the Courts & Legal Services Act CFAs will remain lawful after April 2013, the main differences being that the success fee will no longer be recoverable inter partes (save in mesothelioma and insolvency cases) and, in personal injury cases (including clinical negligence) there will be a cap on the amount of the success fee that may be charged to the client, by reference to a percentage (25%) of the damages recovered excluding damages for future loss in addition to the statutory maximum limit on the percentage of the success fee which will remain at 100. The new 25% cap will include not merely the solicitor s success fee, but also any success fee for counsel (including VAT), but will not apply to any appeal proceedings. The cap only applies to the success fee and does not therefore impose any limit on the solicitor s ability to claim unrecovered base fees from the client. What is a DBA? In broad terms, a DBA is an agreement whereby the solicitor agrees with the client that the solicitor s fees will only be payable on the occurrence of a pre agreed contingency (normally success in the claim) which confers a financial benefit (usually damages), with the fee that is being payable being determined as a percentage of the financial benefit received by the client in the claim. Until s.45 of LASPO comes into effect in April 2013 a DBA is an unlawful form of agreement (save in employment cases or save where the agreement is in the form of a Non- Contentious Business Agreement and covers non-contentious work only). Post April 2013 a DBA will be lawful in all case save where a CFA also would not be lawful (i.e. criminal and most family matters). There will be a cap on the amount of damages that can be taken as a fee. In personal injury claims this will be 25% of the damages, excluding damages for future care and loss. In employment claims it will be 35% of damages, as at present. In all other claims it will be 50% of the damages obtained. Both a CFA and a DBA must be in writing in order to be enforceable (s.58 and 58AA Courts & Legal Services Act 1990). A DBA (currently - i.e. in employment matters) must be signed by the client and the solicitor in contrast to a CFA which need not be signed by either the solicitor or client (though this would be good and sensible practice). The draft SBA regulations adopt the latter, less rigid, approach for DBAs for non-employment matters.

7 CFA or DBA? - 2 What are the key differences? These are probably fairly obvious from the descriptions given above, but in summary: Under a CFA the fee is calculated by reference to time spent and an agreed hourly rate. Under a DBA the fee is calculated as a percentage of damages recovered, which may be more or less than the fee which would have been calculated on an hourly rate basis. This introduces the key incentive in a DBA (and the greatest reason why DBAs have not previously been lawful because of the temptations it may give rise to) that the greater the damages recovered the greater the fee. Under a CFA a success fee is payable on top of the hourly rate fees. Under a DBA there is no separate success fee. Under a DBA the cap applies to the entire fee. Under a personal injury CFA the cap only applies to the success fee. How will a DBA be regulated? This is one of the key remaining questions. The Civil Justice Council Working Party on DBAs produced a detailed report in July Although not required of them, this included draft regulations governing DBAs. It is not clear whether the MOJ will adopt these at all or, if so, with what modifications. Further reference below to the draft regulations is to the draft produced by the Working Party. It must, however, be appreciated that the final regulations may bear little resemblance to these (note, for example, that the draft regulations do not anticipate a cap on the DBA fee in non personal injury and employment cases a position rejected by the Government). The draft regulations mirror the 2010 regulations for Employment DBAs. They provide, inter alia, that an agreement that does not comply is unenforceable. The strictest requirements, on the giving of advice pre CFA (an echo of the disastrous CFA Regulations 2000) are limited to employment matters, though whether this will remain so in the final regulations remains to be seen. The key requirement for DBAs generally is that the agreement must specify the claim to which it related, the circumstances in which the fees and expenses are payable and the reason for setting the fee that is payable under the agreement. Under a DBA is it necessary for damages to be successfully recovered or merely awarded? Neither s.58aa Courts & Legal Services Act 1990 nor the draft regulations produced by the working party specify. Under the statute the words used are obtains a specified financial benefit and those words certainly seem capable of including a situation where judgment is obtained for a certain sum, rather than it being necessary for that sum to have been received. The present DBA Regulations 2010 (and the Working Party draft) use the term recovered which is more suggestive of receipt rather than mere entitlement, however this is still ambiguous see the approach taken in relation to CFAs where Colman J accepted that the term recovered under a particular CFA meant ordered by the court rather than actually paid (Arkin v Borchard Lines Ltd (no. 1) (19 th June 2001). This is supported by clause 7 of the draft Regulations which define sums recovered as all sums other than costs that are paid or payable in a claim whether by agreement or judgment (underlining added). What will be vitally important is to ensure that the position is clearly spelt out in the DBA and understood by the client. As highlighted in our last newsletter, the SRA Guidance is an excellent starting point to address the basis of the reforms 4.22 Costs information and fee arrangements Clients must be given the best possible information about the cost of their matter, both at the start of the retainer and throughout Fees. All information should be clear and easily accessible and in a form that is appropriate to the client s needs and circumstances. You should discuss with the client how they will pay and explain the consequences of being publicly funded in relation to costs. You should explain your fees and if and when they are likely to change Fees Failure to provide adequate costs information is one of the areas most likely to cause complaint. You should explain your fees clearly and in a manner the client can understand both at the outset and as the matter progresses. Page 7

8 CFA or DBA? - 3 To what extent are the fees payable under a DBA or a CFA recoverable inter partes At present, success fees under CFAs are recoverable inter partes subject to an assessment of their reasonableness and, in certain types of cases, to rules in the CPR limiting the maximum success fee that may be allowed by the court. From April 2013 success fees will no longer be recoverable inter partes (save for agreements entered into prior to that date where work has started on the case before that date see s.44(6) of LASPO). Post April 2013, inter partes costs will continue to be awarded on a conventional basis that is to say by reference to a reasonable hourly rate and a reasonable amount of time spent regardless of whether the receiving party is on a CFA or a DBA. This is what is known as the Ontario model. Where the receiving party is on a DBA (and therefore there is no hourly rate agreed between client and solicitor) the process is likely to be similar to a legal aid assessment, where the court will simply have to decide on a reasonable notional hourly rate for the purposes of the inter partes assessment. Accordingly, the sum allowed inter partes should not differ depending on whether the client is on a CFA or a DBA. There is an unresolved question as to what impact the indemnity principle will have. It is not expressly abrogated for DBAs. So, for example, if the damages recovered were low, and the percentage DBA fee payable by the client was also therefore low and was less than the notional fees payable on a conventional basis (as may happen, say, where a case lasts longer than expected and the damages recovered are less than anticipated), will the DBA fee act as an indemnity principle cap limiting the inter partes recovery to a maximum of the DBA fee? The answer to this and the perhaps more interesting question of whether the indemnity principle bites inter partes if the DBA is unenforceable will depend on the new rules being drafted to govern the inter partes award of costs where a DBA is used and, in particular, on the extent to which the rule makers invoke the power under s.51(2) Senior Courts Act 1981 to, in effect, disapply the indemnity principle. What happens to costs recovered from the other side? The question here is whether the solicitor gets to keep the costs recovered inter partes on a conventional basis in addition to the DBA fee, or whether the DBA fee is the maximum and is inclusive of any costs recovered inter partes. The answer is the latter. The inter partes recovery belongs to the client. The maximum fee payable by the client under the DBA cannot exceed the DBA fee and accordingly any sums recovered inter partes go to reduce the client s liability and are not a bonus for the solicitor. To the extent that the DBA fee exceeds inter partes recovery, the balance (but only the balance) is payable out of the client s damages. This, of course, means that in cases where the damages are relatively low in comparison to the likely cost, the inter partes costs recovery may be equal to or greater than the DBA fee. In such circumstances the client will pay nothing from his damages and the solicitor will only receive normal fees with no reward for the risk that has been undertaken (contrast the position with a CFA where a success fee would be payable). Does using a DBA expose the solicitor to a risk of an adverse costs order? No more so, it would appear, than using a CFA. The working party has recommended that the Hodgson immunity (Hodgson v Imperial Tobacco) [1998] 1 WLR 1056, which, in effect, established that a solicitor should not be exposed to a third party costs order simply because he is funding his client s case by entering into a CFA, should be extended to cover DBA s. Of course, there are interesting arguments in relation to CFAs as to the extent to which a solicitor going beyond the mere use of a CFA (for example by funding disbursements or acting without an ATE policy in place) may render himself vulnerable to a Third Party costs order and the recent case of Tinseltime Ltd v Roberts [2012] EWHC 2628 will have provided some welcome support for solicitors in that regard. Page 8

9 CFA or DBA? - 4 What are the consequences of getting it wrong? In personal injury claims where the new CFA success fee cap will apply, new regulations will require the solicitor to provide clear information as to how the success fee has been calculated, what types of damage it applies to and how it breaks down between solicitor and counsel. The new regulations are yet to be made public. It seems likely that a (material) failure to comply will render the agreement unenforceable, as, at present, does a failure to comply with the few mandatory requirements of s.58 Courts & Legal Services Act For a DBA, s.58aa Courts & Legal Services Act 1990 provides that, provided the agreement complies with the stipulated conditions, it What variants are available? shall not be unenforceable by reason only of being a DBA. Echoing the court s approach to CFAs, this provision in effect creates an island of legality in a sea of illegality. Such agreements are generally unlawful and therefore unless they comply with the stipulated conditions in s.58aa and the associated DBA Regulations they will be unenforceable. There is no wholesale disapplication of the indemnity principle the Government chose to reject Jackson LJ s recommendation that they should consider this and so, if a DBA is unenforceable, it appears arguable that the opposing party may rely on this to avoid inter partes costs recovery. This is all probably dependent on the new rules which are being drafted to There are a range of well-known variants of CFAs the main ones being: A CFA lite whereby the client s liability under the agreement is limited to sums recovered inter partes, whether by way of costs or damages, though it is common nowadays for the limit, especially in personal injury cases, to be by way of costs, so that the client s damages are ringfenced govern the award of conventional costs where a receiving party has instructed a solicitor on a DBA. If these provide, as the rule makers appear to be able to do under s.51(2) Senior Courts Act 1981, that the indemnity principle shall be disapplied for these purposes, then it may be that an unenforceable DBA will not be a bar to the inter partes recovery of costs. This may, however, then give rise to problems in relation to the question of to whom those costs belong, if the DBA is unenforceable. Equally, the inter partes costs are only likely to represent a part of the client s liability in a successful case and if the DBA is unenforceable the balance will be irrecoverable. Whatever the final position, the short answer must be that great care should be taken to ensure such problems do not arise. A discounted CFA whereby the client is liable for fees on a reduced hourly rate, no matter what the outcome but in the event of success is liable for the normal fees together with a success fee on those normal fees. In addition, it is possible to have blended agreements, such as a discounted CFA lite. It is not anticipated that there will be any additional restriction on such agreements, save that any CFA in relation to personal injury would also have to include the 25% cap on damages. In a CFA lite (where the damages are likely to be ring-fenced) this will not present a problem in theory, though the practicality and commercial viability of such agreements will have to be considered once the success fee is irrecoverable inter partes and therefore, of necessity such an agreement, will simply never be payable by anyone. A hybrid limiting the base costs to sums recovered inter partes and the success fee on those base costs to 25% of damages appears possible. In relation to DBAs, the Working Party has indicated no objection in principle to such blended agreements being used for example an agreement providing for a discounted fee to be paid no matter what (whether fixed or on an hourly rate basis) with a percentage of damages being paid on success, provided (presumably) that the total fee payable under the DBA, including the discounted fee, could not and does not exceed the relevant statutory maximum. Equally, there appears to be no difficulty in principle with incorporating the sort of terms which may be necessary to achieve commercially attractive agreements such as deferred payment of fees to interim payment of discounted fees subject always to careful drafting to ensure that the new Regulations are fully complied with. Barrister Roger Mallalieu is ranked as one of the leading juniors in the field of costs law of all types and has been involved in many of the leading cases in the area and has regularly appeared in the Court of Appeal on important costs cases. He is a member of the Professional Negligence Lawyers Association and the Commercial Bar Association and has been a member of 4 New Square Chambers since You may contact him via Page 9

10 Fixed Costs / Family Fixed Costs I recently came across the case of Liversidge v Owen Mumford Ltd and Another Company [2012] EWPCC40. This is a case as can be seen from the heading in the Patents County Court. It related to infringement of a patent and the two Defendants successfully defended the claim. The aspect that caught my interest was that it was held that the Claimant could not be ordered to pay more than the 50, maximum in costs under Rule 45.42(1) despite the fact that there were two Defendants. This prompted me to re-visit Part 45 of the Civil Procedure Rules which covers fixed costs in RTAs, employer s liability and deals with the pre-action protocol for low value personal injury claims arising out of road traffic accidents, but also the scale costs for claims in the Patents County Court and fixed costs for HM Revenue and Customs. I will not recite the details of the fees themselves but would remind readers of their existence and highlight a few that we do not come across on a day to day basis. There is a fixed cost of for service by a party of any document required to be served personally including preparing and copying a certificate of service for each individual served. Where service by an alternative method or at an alternative place is permitted under Rule 6.15 for the individual served there is a fixed cost of Where a document is served in Scotland, Northern Ireland, the Isle of Man or the Channel Islands the fixed cost is and in any other place outside of the jurisdiction There are also fixed enforcement costs for an application under Rule 70.5(4) that an award may be enforced as if payable under a Court Order where the amount outstanding under the award is between the enforcement costs are 30.75, the next bracket of , 41.00, from 600-2,000.00, and over 2, There is also provision for attendance to question a Judgment debtor when there has been an Order under Rule 71.2 of for each half hour or part thereof. Going back to the Patents Court, under Rule unless the Court considers that a party has behaved in a manner which amounts to an abuse of the Court s process or the claim concerns the infringement or revocation of a patent or registered design, the validity of which has been certified by a Court in earlier proceedings in which cases the Court will summarily assess the costs but the maximum payable on the final determination of a claim in relation to liability is 50, and on an enquiry as to damages or account of profits 25, It is interesting to note however that VAT may be recovered in addition to the amount of the scale costs, quite unlike the percentages for the damages which have been discussed previously in relation to success fees and contingency fees under the new Regime. With regard to HM Revenue and Customs there are fixed costs on commencement of a County Court claim conducted by an HMRC Officer ranging from where the value of the claim exceeds but does not exceed at to where the value of the claim exceeds 300, There are also fixed costs on an entry of a Judgment in a County Court claim conducted by an HMRC Officer where the value of the claim does not exceed 5,000.00, and where the value of the claim exceeds 5,000.00, We are more than happy to give any advice and guidance on any of the fixed costs, particularly success fees in relation to RTAs and employer s liability claims. Please don t hesitate to contact either Sue or myself. FAS Bolt-Ons Don t forget to claim these if they are applicable. The most likely one to be forgotten is the court bundle payments. These are available in all cases except domestic abuse. For interim hearings, if the bundle comprises pages a court bundle payment 1 (CBP1) may be made, and if the bundle is over 700 pages a court bundle payment 2 (CBP2) may be claimed. In Private Law proceedings, court bundles may only be claimed at one interim hearing per case. For this purpose the children and finance aspects of a case will be treated separately. In Public Law proceedings court bundle payments may be claimed for no more than two interim hearings, and each must be either a CMC, an IRH or otherwise a hearing that is listed for the hearing of contested evidence. For final hearings only, a higher CBP3 payment is available if the bundle is in excess of 1,400 pages. The definition of court bundle for the purposes of payment only includes the court bundle that is substantially considered by the court. An advocate must obtain certification of the relevant number of pages of court bundle on the AAF in order to claim payment. Other Bolt-Ons Private Law Children Expert s cross examination: 20% Client - allegations of significant harm 25% Ancillary Relief Early resolution fee Public Law/Other Public Law Expert s cross examination: 25% Client - allegations of significant harm: 25% Client lack of understanding: 25% Page 10

11 Family / Case Law Very High Costs Cases - Issues to Bear in Mind Where you act for more than one party (several children, both parents etc) this will be treated as one matter for the purpose of the referral criteria and even if the combined costs limitation is more than 25, the LSC will restrict payment to 25, unless the case has been notified as a VHCC. Once you have registered a case as a Once you have registered a case as a VHCC you will be unable to process any POA1s until a contract has been issued, so ensure you are up to date with these before registering a case. The time limit for submission of a case plan is 4 weeks unless the final hearing starts within 4 weeks of notification. Where a case concludes within this time, the LSC will agree that a case plan is not necessary and you will be able to submit pre and post contract CLAIM 1s. If a case plan is not submitted within the required timeframe, we are seeing preparation times being reduced, so it is imperative we receive the papers as soon as possible after registration. Please ensure you obtain the maximum increase on your CLS certificate (i.e. 25,000.00) before registering a case or a cumulative total of 25, if you have more than one CLS Certificate). An Exception to the Otherwise Stringent Part 36 Rules SG v Hewitt [2012] EWCA Civ This case was in respect of a road traffic accident which occurred in 2003 when the Claimant was 6 years old. It resulted in facial scarring and a severe head injury. The Defendant made a pre-action Part 36 offer in the sum of 500, on the 2 nd April 2009 and that offer was eventually accepted by the Claimant in Part 8 proceedings were issued in August 2011 in relation to Court approval of the settlement. The parties agreed that the Defendant should pay the costs of the Part 8 claim and the costs of the main claim up to and including 22 nd April 2009 (21 days after the Part 36 offer was made) but each party contended that their costs from 23 rd April 2009 should be paid by the other party. Popplewell J decided in favour of the Defendant and ordered the Claimant to pay the Defendant s costs incurred from 23 rd April 2009 including the costs relating to the issue over the costs. The Claimant appealed. The Court of Appeal unanimously decided that the Order of Popplewell J should be set aside and that an Order should be substituted that the Claimant should have his costs throughout including the period from 23 rd April Lady Justice Arden in agreeing with the Judgments of Lady Justice Black and Lord Justice Pill stated that the normal rules of Part 36 should not apply because the prognosis for the Claimant s injury could only accurately be determined by waiting until he neared or reached adolescence. Sign up CFA clients before 1st April 2013 where possible! This case has attracted a great deal of publicity as the initial Judgment provided guidance that the proposed 10% increase in damages should apply to all cases settled after the 1 st April This caused some considerable concern to Defendants who were facing the double blow of paying out an additional percentage of damages but also still having to pay success fees and ATE insurance premiums as their recoverability only ceases on cases commenced from April The matter was re-visited by the Court of Appeal on 10 th October 2012 following application by the Association of British Insurers. The Court have now advised that the 10% increase will not be awarded to litigants who have the benefit of a Conditional Fee Agreement entered into before April 2013 although in all Simmons v Castle [2012] EWCA Civ 1039 other cases the increase will be applied to cases decided after that date regardless of when they were commenced. Clarification was also given as to the actual damages subject to the increase and those are stated as being damages for pain and suffering, loss of amenity, physical inconvenience and discomfort, social discredit and mental distress whether claimed in tort or in contract. Master of the Rolls The new Master of the Rolls gave his inaugural speech at the Law Society on 18th October He stated that Costs management is at the heart of the Jackson reforms. Click here for the speech The Court of Appeal has a vital role to play in ensuring a consistent application of the Rules pertaining to the reforms. Page 11

12 News In Brief Supplementary Legal Aid Scheme Readers will recall that the Ministry of Justice had succeeded in including the above scheme within the Legal Aid Sentencing and Punishment of Offenders Act In a surprise announcement the Ministry have said that they will no longer be proceeding with the implementation of the scheme. With all of the other changes including the limit on recoverability of success fees and damages based agreements any Claimant entering into a Legally Aided funding arrangement could well have found that he would benefit from less of his damages than had he entered into a CFA or DBA. Whilst this appears to be very good news the Ministry have been careful to point out that the scheme will remain as an option for making savings within Legal Aid at some future point. Will Writing Many readers will have already seen that the Legal Services Board now propose that will writing, estate administration and probate should be reserved activities. It may be of interest to note that the Association of Costs Lawyers has also been looking to make preparation of bills of costs a reserved activity but in our opinion this is extremely unlikely - we shall have to wait and see! Supreme Court Lord Neuberger who our readers will have seen from previous newsletters has become heavily involved in the current reforms to litigation costs, has recently been sworn in as the second President of the Supreme Court. Lord Neuberger appears passionate about reducing the disproportionate costs of litigation and it will be interesting to see whether or how his views have an effect on Supreme Court rulings. Small Claims CPR Rule 27.14(2) was amended by adding the cost of any approved transcript reasonably incurred to the list of costs recoverable under that provision. STOP PRESS STOP PRESS STOP PRESS... The Civil Procedure Rules Committee are meeting on 2 nd November and are expected to approve final versions of all the Rules implementing the various Jackson reforms (with the exception of QOCS and DBA s which are for preliminary approval and should be signed off in the new year). We understand that the Costs Practice Direction is to go. Watch this space! For more information... We hope that you found this newsletter helpful but please note that any views or opinions stated herein are those of the writers and no liability is accepted in negligence or otherwise, for anything written or omitted This is a QR code which, if scanned by a smart phone with the right app, will take you straight to the LCS website. Or simply click on the code in the pdf version to go to the LCS website DX 4449 High Wycombe 86 Easton Street High Wycombe HP11 1LT Page 12

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