CAVENDISH PRACTICE NOTES
Contentious Costs THIRD EDITION
HARRY BIRKS, BSC FELLOW OF THE ASSOCIATION OF LAW COSTS DRAFTSMEN SERIES EDITOR CM BRAND, SOLICITOR
CP Cavendish Publishing Limited
London • Sydney
Third edition first published in Great Britain 2001 by Cavendish Publishing Limited, The Glass House, Wharton Street, London WC1X 9PX Telephone: +44 (0)20 7278 8000 Facsimile: +44 (0)20 7278 8080 Email:
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© Birks, H 2001 Second edition 1997
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except under the terms of the Copyright Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 9HE, UK, without the permission in writing of the publisher.
Contentious costs – 3rd ed (Practice notes series) 1 Costs (law) – England 2 Costs (law) – Wales 3 Arbitration and award – England 4 Arbitration and award – Wales I Title 347.4'2'077
ISBN 1 85941 451 6 Printed and bound in Great Britain
Preface
This is the third edition of Contentious Costs and the second for which I am responsible. This edition updates the second edition by incorporating the many changes in practice and procedure which arose with the implementation of the Civil Procedure Rules 1998 and the extensive Practice Direction on Costs on 26 April 1999. Since that date, there have been numerous amendments to the Civil Procedure Rules, the Practice Direction has been heavily revised and new provisions for public funding and conditional fees have been implemented. My aim has been to summarise concisely the law relating to contentious costs, to provide guidance for further reference where appropriate and to offer advice to practitioners on frequently recurring issues. Throughout this text, the traditional term ‘costs draftsman’ is used to refer to draftsmen of either sex. The costs drafting profession may at one time have been largely a male preserve, but this is certainly no longer the case. The law stated is as at 1 March 2001. Harry Birks Sutton Coldfield March 2001
Contents
1 Definitions and Basic Information
1
1.1
Introduction and definition of costs
1
1.2
Legislation governing costs
3
1.3
Summary assessment and detailed assessment
3
1.4
Ownership of costs
4
1.5
Bases of detailed assessment
5
1.6
Definition of costs orders
6
2 File Management
9
2.1
File organisation
9
2.2
Attendance notes
10
2.3
Categories of work to be noted
11
2.4
Time limits
14
2.5
Disbursements
15
2.6
LSC funding
16
2.7
Instructing a costs draftsman
17
3 Costs Between Parties
21
3.1
The indemnity principle
21
3.2
Court’s discretion as to costs
23
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3.3
Importance of wording of order for costs
24
3.4
Summary assessment
25
3.5
Costs estimates
25
3.6
When to seek detailed assessment
26
3.7
Negotiations on costs
27
3.8
Costs-only proceedings
28
3.9
Costs recoverable on detailed assessment
28
3.10 Irrecoverable or doubtful costs
30
3.11 Claim and counterclaim
33
3.12 Conditional fee agreements
34
3.13 Hourly rates
35
3.14 Fast track trial costs
36
3.15 Certificates for counsel
37
3.16 Delay
38
3.17 Value added tax
38
4 Public Funding
41
4.1
Background
41
4.2
Effect of legal aid/LSC funding on retainer
43
4.3
Certificates, amendments and limitations
44
4.4
Disbursements and prior authorities
49
4.5
Discharge and revocation of certificates
50
4.6
Notices
51
4.7
Assessment of costs
56
4.8
Change of solicitor
58
CONTENTS
4.9
The statutory charge
vii
59
4.10 Franchising
60
4.11 General civil contracts
61
4.12 Rates for LSC funded work
62
4.13 Enhancement
62
4.14 Costs draftsmen’s fees
63
4.15 Payments on account
63
4.16 The effect of the 1994 Regulations
65
4.17 Legal Help
66
4.18 Corporate Information System
66
4.19 Late claims submitted to the LSC
67
5 Costs in Family Proceedings
69
5.1
Civil Procedure Rules 1998
69
5.2
Definitions and regulations
70
5.3
Public funding
73
5.4
Assessment of costs in the Principal Registry
75
6 Court of Protection
77
6.1
Generally
77
6.2
Detailed assessment, fixed costs or agreed costs
77
6.3
Costs of receivership application
79
6.4
General management costs
79
6.5
Other costs
80
6.6
Disbursements
81
6.7
Format of bill
81
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7 The Detailed Assessment Process
83
7.1
Commencing detailed assessment proceedings
83
7.2
Default costs certificate
84
7.3
Points of dispute
84
7.4
Replies
88
7.5
Request for detailed assessment hearing
89
7.6
Offers to settle without prejudice
89
7.7
Preparing for detailed assessment
91
7.8
Advocacy on detailed assessment
92
7.9
Disbursements
94
7.10 Legal aid detailed assessment
95
7.11 Mixed detailed assessments
95
7.12 Appeals
96
7.13 Detailed assessment checklist (between parties)
97
8 Costs in Criminal Proceedings
99
8.1
Defendant’s costs and costs between parties
99
8.2
Legal aid
103
8.3
Enhancement
109
9 Costs Practice Direction
113
9.1
Introduction
113
9.2
Form of bill of costs
113
9.3
Information to be included in bill of costs
114
9.4
Costs of preparing the bill
114
9.5
Estimates of costs
114
CONTENTS
9.6
Factors to be taken into account in deciding the amount of costs
116
9.7
Summary assessment
118
9.8
Costs on the small claims track and fast track
120
9.9
Costs-only proceedings
120
9.10 Providing information about funding arrangements
122
9.11 Legal representative wishing to recover success fee from client
124
9.12 Time when detailed assessment may be carried out
126
9.13 Venue for detailed assessment proceedings
127
9.14 Documents to be served on commencing detailed assessment proceedings
128
9.15 Date for service of points of dispute
129
9.16 Period for commencing detailed assessment proceedings
130
9.17 Points of dispute
130
9.18 Default costs certificate
130
9.19 Setting aside a default costs certificate
131
9.20 Optional reply to points of dispute
132
9.21 Time for requesting a detailed assessment hearing
132
9.22 Documents to be filed with request for detailed assessment hearing
132
9.23 Variation of bill, points of dispute or reply
134
9.24 Provisional assessment where costs payable out of the Community Legal Service Fund
134
9.25 Costs of detailed assessment proceedings
135
ix
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9.26 Calderbank offers
136
9.27 Litigants in person
137
10 Further Reading
139
11 Useful Addresses
141
1 Definitions and Basic Information
1.1 Introduction and definition of costs On 26 April 1999, changes to the law governing costs were part of the major changes implemented generally by the Civil Procedure Rules (CPR) 1998. Of the 51 rules in the original version of the CPR, no less than six – rr 43–48 – were concerned solely with costs. These six rules were supplemented by an extensive Practice Direction on Costs (PD). Extensive amendments have since been made to the PD, principally to deal with changes flowing from the Conditional Fee Agreements Regulations 2000 and the implementation of the Access to Justice Act (AJA) 1999, with its numerous implications for public funding of legal advice, assistance and representation. References to the PD hereafter are to the sections and paragraph numbers of the amended version in force from 3 July 2000. The powers of the court in relation to costs are exercised by ‘costs officers’, defined as costs judges (formerly taxing masters), district judges and authorised court officers. ‘Costs’ are defined in r 43.2 and include fees, charges, disbursements, expenses, remuneration, reimbursements allowed to a litigant in person, any additional liability incurred under a funding arrangement (see below, 3.12) and any fee or reward charged by a lay representative for acting on behalf of a party in proceedings allocated to the small claims track. A solicitor’s bill will usually consist of profit costs, disbursements and VAT. The historical term ‘profit costs’ is a misnomer: it is the term used for the solicitor’s professional charges for his own services, and by no means do such costs entirely represent profit, as practitioners will be well aware. The drafting team responsible for such matters is thought to be keen to abolish the term in a future amendment to the PD and
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costs precedents. Disbursements are payments made by the solicitor on behalf of the client, for example, court fees, counsel’s fees, experts’ fees and witness expenses. ‘Contentious costs’ is a term that refers to costs which may be charged by a practitioner to his client, in circumstances where proceedings have been instituted. Section 87(1) of the Solicitors Act 1974 defines ‘contentious business’ as ‘business done, whether as solicitor or advocate, in or for the purposes of proceedings begun before a court or before the arbitrator … not being business which falls within the definition of non-contentious or common form probate business contained in s 128 of the Supreme Court Act 1981’. The Solicitors Act defines ‘non-contentious business’ as ‘any business done by a solicitor which is not contentious business’. Solicitors’ charges continue to be based largely on hourly rates. One almost immediate effect of the CPR was to sound the death knell of the ‘A plus B’ method of charging, where A is the cost of doing the work based on hourly expense rates and B is a ‘care and conduct’ element, or mark-up. Costs between parties are now almost universally sought on the basis of hourly charging rates, inclusive of any care and conduct uplift. There are two principal reasons for this change: • most private clients agree retainers which specify inclusive charging rates; • the application of the indemnity principle (see below, Chapter 3) on an item-by-item basis, following the decision in General of Berne Insurance Company v Jardine Reinsurance Management Limited [1998] 2 All ER 301 and Bailey v IBC Vehicles Limited [1998] 3 All ER 570, creates problems where bills are drawn on the A plus B basis. Time is, however, only one of the factors to be taken into account when the court is required to decide the amount of costs. Others include (CPR r 44.5(3)): • the conduct of all the parties, including efforts made, if any, to try to resolve the dispute; • the amount or value of any money or property involved; • the importance of the matter to all the parties; • the particular complexity of the matter or the difficulty or novelty of the questions raised; • the skill, effort, specialised knowledge and responsibility involved; • the time spent on the case;
DEFINITIONS AND BASIC INFORMATION
3
• the place where and the circumstances in which work or any part of it was done.
1.2 Legislation governing costs 1.2.1 Civil costs
The principal legislation governing contentious costs is provided by the CPR 1998, in particular Parts 43–48. The statute governing legal aid granted prior to 1 April 2000 is the Legal Aid Act 1988. Public funding after 1 April 2000 is governed by the AJA 1999. For the main regulations under these Acts which relate to civil costs, see below, 4.1. 1.2.2 Costs in criminal proceedings
• Provisions for legal aid granted prior to 2 April 2001 are found in the Legal Aid in Criminal and Care Proceedings (Costs) Regulations 1989 SI 1989/343 (the date originally planned for the introduction of the Criminal Defence Service was 2 October 2000. At the time of writing, the date has been revised by the Legal Services Commission (LSC) to 2 April 2001). • Public funding of criminal cases after 2 April 2001 is provided by the Criminal Defence Service, which was created by the AJA 1999 to replace the previous criminal legal aid system. • Costs from central funds and costs between parties are governed by the provisions of ss 16–19 of the Prosecution of Offences Act 1985.
1.3 Summary assessment and detailed assessment 1.3.1 Summary assessment
Costs may be summarily assessed whenever the court makes an order about costs which does not provide for the payment of fixed costs. The general rule is that the court should determine costs by summary assessment at the conclusion of a hearing which has lasted not more than a day, and if this hearing is final, the assessment may deal with the costs of the whole action. This includes costs of a case allocated to the fast track. In practice, a number of factors mitigate against summary assessment:
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CAVENDISH PRACTICE NOTES
• the paying party may have such substantial grounds for disputing costs that the issues cannot be resolved summarily; • there may be insufficient time to carry out a summary assessment – very likely to be the case at the end of a fast track trial or other hearing which has lasted a full day; • judges, despite training received on assessment of costs, feel uncomfortable about being able to deal justly with a complicated costs assessment on the basis of the limited information before them; • the receiving party may be in receipt of legal aid/LSC funding; • if the receiving party’s solicitors act under a conditional fee agreement (CFA), the additional liability (success fee, insurance premium or additional amount in respect of provision made by a membership organisation) cannot be assessed until the conclusion of the proceedings. 1.3.2 Detailed assessment
Detailed assessment of costs is the procedure whereby the amounts to be allowed in bills of costs are adjudicated upon by the court, whether they be for payment by one party to another, by a client to his solicitor or out of the Community Legal Service (CLS) fund or other fund. For the procedure on detailed assessment, see below, Chapter 7.
1.4 Ownership of costs Costs belong either to the solicitor or his client. Where a solicitor acts under the provisions of the legal aid/CLS regulations, costs as assessed or determined belong to the solicitor. The final amount of such costs, calculated at legal aid rates, is payable to the solicitor regardless of nonrecovery or partial recovery of any costs ordered between parties. Where costs are recovered under a between parties order, they are payable to the Legal Services Commission (LSC) until any deficiency to the fund is satisfied. It should be noted that, where costs between parties incurred under a certificate dated on or after 25 February 1994 are recovered in excess of the amount paid or due to be paid to the solicitor in accordance with the provisions of the Legal Aid in Civil Proceedings (Remuneration) Regulations 1994 or the Legal Aid in Family Proceedings (Remuneration) Regulations 1991, the excess costs recovered belong to the solicitor: see below, 4.16. Where a solicitor acts privately for his client under contract, costs payable by the client clearly belong to the solicitor, the quantum of such costs being subject to detailed assessment under CPR r 48.9 or
DEFINITIONS AND BASIC INFORMATION
5
the Solicitors Act 1974, as the case may be, if the client or the solicitor so requires. Costs between parties payable as a result, for example, of a court order or the acceptance of a payment into court, belong to the client and constitute an indemnity in respect of the costs which the client is liable to pay his solicitor. The indemnity principle (see below, 3.1) stipulates that a receiving party may not recover from a paying party an amount of costs which exceeds the amount which he is liable to pay to his own solicitor. Whilst the solicitor may seek to recover such costs between parties on behalf of his client, he has no right to look to the opponent for payment of his costs. Any sum(s) received by way of payment of costs between parties should be credited to the client’s account. The Civil Legal Aid (General) Regulations 1989, as amended in 1994, now provide a significant exception to the indemnity principle: a LSC funded client’s solicitor may recover more from the paying party than he is able to claim from the CLS Fund.
1.5 Bases of detailed assessment 1.5.1 The standard basis
CPR r 44.4(2) defines costs on the standard basis as costs which are proportionate to the matters in issue, with any doubt as to whether costs were reasonably incurred or reasonable and proportionate in amount to be resolved in favour of the paying party. 1.5.2 The indemnity basis
CPR r 44.4(3) states that, where the amount of costs is to be assessed on the indemnity basis, the court will resolve any doubt which it may have as to whether the costs were reasonably incurred or were reasonable in amount in favour of the receiving party. If neither the indemnity basis nor the standard basis is specified, costs are assessed on the standard basis (CPR r 44.4(4)). Prior to the CPR, the difference between the two bases of costs essentially arose only when there was doubt in the taxing officer’s mind as to the reasonableness of any item, whether with regard to the cost being incurred or, if reasonably incurred, with regard to its amount. When there was no doubt, there was no difference in the costs to be allowed on the two bases.
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CAVENDISH PRACTICE NOTES
The CPR introduced a major difference between the bases – the requirement of proportionality in relation to costs assessed on the standard basis. Guidance on the factors to be taken into account by the court in applying the test of proportionality can be found in paras 11.1, 11.2 and 11.3 of the PD (see below, 9.6). These paragraphs found their way into the PD at a late stage, to counter the notion gaining currency that some formula limiting costs to a proportion of damages might be a way of interpreting proportionality.
1.6 Definition of costs orders In determining where the costs shall lie, the court commonly makes orders in one or other of the following standard forms (para 8.5 of the PD). 1.6.1 ‘Costs’ or ‘costs in any event’
The party in whose favour the order is made is entitled to the costs in respect of the part of the proceedings to which the order relates, whatever other costs orders are made in the proceedings. 1.6.2 ‘Costs in the case’ or ‘costs in the application’
The party in whose favour the court makes an order for costs at the end of the proceedings is entitled to his costs of the part of the proceedings to which the order relates. 1.6.3 ‘Costs reserved’
The decision about costs is deferred to a later occasion, but if no later order is made, the costs will be costs in the case. 1.6.4 ‘Claimant’s/defendant’s costs in the case/application’
If the party in whose favour the costs order is made is awarded costs at the end of the proceedings, that party is entitled to his costs of the part of the proceedings to which the order relates. If any other party is awarded costs at the end of the proceedings, the party in whose favour the final costs order is made is not liable to pay the costs of any other party in respect of the part of the proceedings to which the order relates.
DEFINITIONS AND BASIC INFORMATION
7
1.6.5 ‘Costs thrown away’
Where, for example, a judgment or order is set aside, the party in whose favour the costs order is made is entitled to the costs which have been incurred as a consequence. This includes the costs of: (a) preparing for and attending any hearing at which the judgment or order which has been set aside was made; (b) preparing for and attending any hearing to set aside the judgment or order in question; (c) preparing for and attending any hearing at which the court orders the proceedings or the part in question to be adjourned; (d) any steps taken to enforce a judgment or order which has subsequently been set aside. 1.6.6 ‘Costs of and caused by’
Where, for example, the court makes this order on an application to amend a statement of case, the party in whose favour the costs order is made is entitled to the costs of preparing for and attending the application and the costs of any consequential amendment to his own statement of case. 1.6.7 ‘Costs here and below’
The party in whose favour the costs order is made is entitled not only to his costs in respect of the proceedings in which the court makes the order, but also to his costs of the proceedings in any lower court. In the case of an appeal from a Divisional Court, the party is not entitled to any costs incurred in any court below the Divisional Court. 1.6.8 ‘No order as to costs’ or ‘each party to pay his own costs’
Each party is to bear his own costs of the proceedings to which the order relates, whatever costs order the court makes at the end of the proceedings.
2 File Management
2.1 File organisation There is no single ‘correct’ way for a solicitor’s file to be kept in order. Different fee earners will have different views on the best way of maintaining their files. What is right for one person or one particular type of matter may well not be acceptable for another person or a different matter. However, there are certain basic routines which will assist in ensuring as far as possible that the solicitor’s remuneration for the work done is fair and reasonable to both the solicitor and the client. The following points are relevant irrespective of whether the file will be costed in-house or sent to an independent costs draftsman: • correspondence and file notes should be kept on the same clip, in chronological order; • pleadings, affidavits, lists of documents, etc, as filed and served should be kept on a clip or in a folder, separate from drafts and copies; • similarly, experts’ reports, witness statements and the like should be kept separately; • original instructions and briefs to counsel, as endorsed by counsel, together with original opinions and settled documents, should form another sub-division of the file; • if the client is legally aided or LSC funded, there should be a separate folder containing legal aid/LSC funding documents, including certificates, amendments and any authorities for expenditure (which should not be filed on the correspondence clip); • receipted invoices, fee notes and disbursement vouchers should be kept in a separate bundle – not hidden in the middle of the correspondence clip. Any activity on the file which is more than simply perusal of an incoming letter and dictation of routine correspondence in response should be
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recorded at the time when the work is done. A clear distinction should be made, however, between chargeable and non-chargeable time; unless the latter is to be left to the discretion of the costs draftsman, it should be either clearly marked as non-chargeable or not recorded at all.
2.2 Attendance notes The purpose of detailed and time recorded contemporaneous notes is fourfold: (a) they are of great assistance to the conducting fee earner when a file is reviewed after a period of time; (b) they enable another fee earner to assume conduct of the matter in case of absence through illness or holiday, or simply because the fee earner has left the firm or handed over conduct to someone else; (c) they assist the costs draftsman to draw a bill of costs which accurately represents the value of the file; (d) last, and by no means least, they help to satisfy the costs officer that the charges claimed in the bill of costs are reasonable: Properly kept and detailed time records are helpful in support of a bill provided they explain the nature of the work as well as recording the time involved. The absence of such records may result in the disallowance or diminution of the charges claimed. They cannot be accepted as conclusive evidence that the time recorded has either been spent or if spent, is ‘reasonably’ chargeable.
That is what the former Supreme Court Taxing Office Practice Direction (No 2 of 1992) said about time records. The CPR PD is noticeably silent on the question of estimated time. There has certainly been increasing reluctance in recent years on the part of costs officers to accept substantial claims for estimated time. The widespread use of electronic time recording systems, whilst convenient for regular billing of private clients, has produced problems in the assessment of costs. Computer time records fall far short of being infallible evidence that time spent is reasonable. Indeed, the error-prone nature of data capture and entry to computerised time systems means that many costs officers view such records, unsupported by file notes, with great suspicion. With anything more than the simplest of files, difficulties are created for both costs draftsman and costs officer when faced with a computer printout as the only evidence, apart from the documents on file, of the time spent. Most printouts are lacking in
FILE MANAGEMENT
11
narrative detail. The difficulties may be compounded by other factors, such as the entry of time on a different date from when the work was done or the summary of time in daily or weekly blocks. Most solicitors’ practices now have computerised time recording systems; however, unless the basic information is on the file as to when and where an attendance took place, what was discussed or considered, or what work involving consideration and preparation was undertaken, these sophisticated time recording systems do not really benefit the practitioner on detailed assessment. A bland statement as to the amount of time which has been spent on a file on one particular date, without further detail, is totally insufficient and leaves itself wide open to attack on detailed assessment. If practitioners hope to secure adequate recompense for the work which they have undertaken, it is vitally important to ensure that costs officers can ascertain what has been done, why it was done, by whom it was done and how long it took. In its Guidance Notes on legal aid franchising standards, the LSC states: ‘Care should be taken to ensure not only that all attendance notes are timed, but that they are reasonably detailed. File notes should distinguish between personal attendances, waiting time, travel time, file reading time etc.’ An example is given overleaf of a clear and concise attendance note of the type which makes all the difference, not only when preparing a bill of costs, but also when justifying the same on detailed assessment. Attendance notes need not be typed, although it assists both in file management and on detailed assessment if they are, particularly if the fee earner’s handwriting is difficult to read. A handwritten note is better than no note at all. If a note is dictated from a handwritten original, only the typed note should be placed on the correspondence file, to avoid confusing the costs draftsman and costs officer.
2.3 Categories of work to be noted Any work on the file other than routine correspondence, which is costed on a unit basis, should be supported by an attendance note: • personal attendances, noting separately any time spent in travel and waiting and any travel expenses to be claimed; • telephone attendances, with the time engaged noted if the call is to be claimed at the hourly rate rather than as a routine call (usually regarded as being six minutes or less);
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FILE
ATTENDANCE ON
Notes
TIME (mins)
DATE Personal attendance Timed telephone attendance Short telephone attendance Non-routine letter Document or other preparation Document perusal/consideration Document collation Other
COURT
TRAVEL
WAITING
CONFERENCE
HEARING
ATTENDANCE OR CONFERENCE
TRAVEL: MILES PARKING OTHER EXPENSES
FEE EARNER
• court and conference attendances; time at court should clearly indicate the distinction between attendances on the client or others, waiting time and time in the hearing itself; preparation time, travel time and expenses should be shown separately; • time spent in preparation, perusal or consideration of documents; this should also include time spent in identification and collation of documents to be exhibited to affidavits, to accompany instructions to counsel or experts, to comprise lists of documents, to be disclosed on inspection, or to comprise trial bundles;
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• preparation/perusal/consideration of documents includes: time spent in drafting/dictating non-routine letters, if more than six minutes; perusing and considering non-routine letters received; preparation of the attendance note itself; • time spent in reviewing the file: over-frequent or excessively long reviews, for example, on change of fee earner, will not usually be allowed between parties; however, regular reviews of files to comply with legal aid franchise criteria have been held to be chargeable (Legal Aid Board Costs Appeals Committee – Decisions CLA22 and CRIMLA54). 2.3.1 Unrecorded time
It is a myth that unrecorded time will not be allowed on detailed assessment. In many complex or urgent cases, it is impossible to record every minute spent when there may be great activity on the file, possibly involving two or more fee earners. It may well be, for example, that it is wholly impractical in some instances to keep such notes. In an exceptionally complex case, such as this which is occupying two fee earners, there may be short but important discussions in respect of which it would be wholly unreasonable to expect attendance notes to be kept. In such cases, an estimate of the time involved is inevitable. The question which then arises for decision is whether the estimate given is reasonable [Re Frascati (1982) unreported, per Parker J].
Brooke J in Brush v Bower Cotton and Bower [1993] 4 All ER 741 disallowed substantial claims for unrecorded time. In doing so, he referred to the quote of Parker J (above), the judgment of Walton J in Maltby v DJ Freeman and Co [1978] 1 WLR 431 and the judgment of Evans J in Johnson v Reed Corrugated Cases Ltd [1992] 1 All ER 169, and concluded that ‘it would only be in an unusual case that any substantial allowance would be made for unrecorded time’. This is not quite the same as saying that estimated time will never be allowed – but it does present a cautionary note to fee earners for whom attendance notes are a rarity rather than the norm. 2.3.2 Non-chargeable items
Time which is usually regarded as non-chargeable, on the standard basis of assessment, includes the following:
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• supervision by a partner of a junior fee earner; • research of law and procedure, with the possible exception of complex or very unusual points of law; it is possible, however, that some items of this nature may be deemed reasonable for junior fee earners with lower charging rates, whereas the Grade 1 fee earner would be expected not to charge his/her client for such work; • time spent on photocopying and faxing or other administrative tasks; • personal filing or service of documents, unless the circumstances are unusual; • solicitor agents’ time in respect of advice to the principal on procedure; • secretarial or administrative time, except where the secretary or assistant does work which may be classed as fee earner’s work (Brush v Bower Cotton and Bower); • perusal of routine letters received – para 4.16(1) of the PD; • local travelling expenses; ‘local’ is usually taken to mean within a radius of 10 miles of the court – para 4.16(3) of the PD. Some district judges in the provinces are prepared to allow reasonable travelling expenses over a lesser distance.
2.4 Time limits The most important time limits to note are stated below. 2.4.1 Commencement of detailed assessment proceedings
The receiving party must commence detailed assessment proceedings within three months of the event giving authority for detailed assessment. Proceedings are commenced by serving a notice of commencement and bill of costs, together with documents specified in paras 32.3 or 32.4 of the PD. The court is not involved at this stage; permission to commence detailed assessment proceedings out of time is not required (para 33.4 of the PD), although sanctions may be imposed for delay – see below, 3.16. 2.4.2 Points of dispute
The paying party has 21 days from service of notice of commencement to serve points of dispute on the party whose bill it is. This time limit is very important, because the receiving party may request a default costs certificate if points of dispute are not filed and served within 21
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15
days. If it will be difficult to comply with this time limit – for example, if the bill is particularly large or complex – an extension should be agreed if possible with the receiving party. 2.4.3 Appeals
Any party (other than an assisted person/LSC funded client) who is dissatisfied with the decision of an authorised costs officer may appeal to a costs judge or district judge of the High Court, by way of a notice in Form N161 (CPR r 47.20). Other appeals are dealt with under the general provisions with regard to appeals in accordance with Part 52 and its associated practice direction. The time limit for lodging an appeal is 14 days after the decision of the lower court.
2.5 Disbursements Receipts should be obtained for all disbursements. The receipted invoices should be carefully filed together and not placed on the correspondence clip, where they may be overlooked. A considerate costs draftsman will detach any such receipts from the correspondence clip and place them together in a bundle in readiness for serving with the bill. Copies of fee notes of counsel and any expert, together with receipts for all disbursements exceeding £250, should be annexed to the copy of the bill served on the paying party (para 32.3 of the PD) and should accompany the bill when it is lodged for detailed assessment (para 40.2 of the PD). The previous requirement that substantial fees should be supported by details of the computation of the charge, including dates, work done, time taken and status of the person(s) involved, does not appear in the PD, which merely requires ‘written evidence’ to be served in respect of any disbursement over £250. Failure to provide sufficient detail, however, may well be seen by the costs officer as conduct leading to the possibility of sanction. It is preferable to obtain such details at the time the work is done, when the relevant information is readily to hand, rather than having to chase them with the detailed assessment imminent, possibly years later. The chore of providing receipts for minor disbursements can be overcome by endorsing the bill to the effect that all disbursements under £500 (with the exception of counsel’s fees) have been discharged (Precedent F of the Schedule of Costs Precedents).
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2.6 LSC funding 2.6.1 Applications
When making an application for LSC funding, it is crucial for the eventual recovery of the costs about to be incurred that the certificate gives the intended scope of cover (see below, 4.3.4). Over the years, there have been numerous instances of solicitors losing costs because their certificates did not afford the extent of cover that they believed they had. For example, the client may be granted a certificate to defend proceedings brought against him. If he, advised by his solicitor, then decides to make a counterclaim in the same proceedings, the work done in pursuit of the counterclaim will not be covered by the certificate unless an amendment is sought and granted. Similarly, a certificate issued to cover ancillary relief within divorce proceedings will not cover any subsequent wrangles over contact or residence unless an amendment in the appropriate terms is obtained. Mistakes like this are particularly prone to occur when someone else is looking after a file in the absence of the fee earner usually having conduct. It is, therefore, imperative that the LSC funding certificate is always close to hand and checked to ensure that the practitioner is covered for the work which he or she is about to undertake. A simple way to achieve this is to keep a clear plastic folder in the file, containing all funding documentation, including application, current certificate, applications for amendment and any authorities granted. The legal aid/LSC funding certificates issued following implementation of the Legal Aid Board’s Corporate Information System (see below, 4.18) make such checks easier, because there is only one certificate, which shows a continually updated legal aid history from application to discharge or revocation, rather than an initial certificate followed by (possibly) numerous amendments, all of which must be checked to determine scope of cover. If this single updated certificate is always visible on top of the legal aid documentation, the risk of undertaking unpaid work should be minimised. 2.6.2 Amendments
The need to apply for amendment to a certificate should be given full consideration at an appropriate stage (see below, 4.3.3). This means applying as soon as it is known that a step must be taken which is not currently within the scope of the certificate, as in all cases other than
FILE MANAGEMENT
17
emergencies there will inevitably be a delay, sometimes of weeks rather than days, before the amendment is granted. If there is doubt as to whether the certificate already covers the contemplated step, guidance may be found in the LSC Manual. Alternatively, a telephone call to the regional office of the Commission may produce the required answer; an attendance note of any such conversations should be placed on file. Amendment of the certificate should also be sought before any costs limitation is exceeded (see below, 4.3.4). 2.6.3 Authorities
Consideration should be given to the need to obtain prior authority from the LSC before instructing experts or incurring unusual expenditure. The allowance or disallowance of such costs remains subject to the test of reasonableness on detailed assessment, but the prudent practitioner will always seek the protection of an authority for disbursements which may be out of the ordinary in nature and/or amount. see below, further details below, 4.4.2.
2.7 Instructing a costs draftsman 2.7.1 Preparing the file
If the guidelines on file organisation above are followed, the file will be ready to despatch to the costs draftsman as soon as the authority for detailed assessment is received. In fact, it is not even necessary in most circumstances to wait for this. If the authority is a final court order, the terms of which are apparent from an attendance note or counsel’s endorsed brief, the file can be sent for costing without waiting for the sealed order from the court. Of course, if the matter is a substantial one, there may still be work to do in implementing the terms of the order, obtaining details of witness expenses for inclusion in the bill, and so on. Further, the practitioner may hope to negotiate costs between parties without the need for a formal bill to be drawn up. If it is a legal aid only bill that is required, it is usually possible to despatch the file as soon as the case is concluded, unless attention is needed to the implementation of an order, for example, conveyancing work following a matrimonial settlement. There is enough delay in the process of being paid for legal aid work without adding to it by hanging on to your file unnecessarily. Indeed, your costs draftsman will not thank you for suddenly realising that you are almost out of time to lodge your
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bill and sending your file marked ‘URGENT’ in large letters. Remember that he/she has other clients who would not be too impressed if they knew that the costing queue was being jumped by practitioners who have a mental block when it comes to costs! This aspect of file management is even more important in the light of amendments to the regulations in March 2000, permitting the LSC to impose sanctions on late submission of claims to be assessed by the Commission. For full details, see below, 4.19. As to how much of your file to send to the costs draftsman, it is usually safest to despatch the entire file and let him/her sort out what he/she requires, unless you are fully aware that two banker’s boxes contain nothing but duplicate copies of the trial bundle. If your firm uses computerised time recording, ensure that up to date time and disbursements printouts are enclosed. 2.7.2 The letter of instruction
If the case was straightforward, the letter to the costs draftsman can be suitably brief. The names of the parties, followed by ‘We enclose our file of papers for costing pursuant to the order dated 3 November 2000’ may well be sufficient. There is no need to make extra work by giving the costs draftsman information that will be readily apparent from his/her reading of the file. On the other hand, the costs draftsman should be informed of specific requirements: • If the certificate was transferred from other solicitors, have they agreed that your costs draftsman can draw their part of the bill as well as yours (including an undertaking to pay the relevant proportion of the draftsman’s fee)? • Was the matter complex or difficult, warranting a claim for enhanced rates (public funding) or an increased hourly rate (between parties)? If so, give the appropriate instructions – even if this is simply to say: ‘We believe some enhancement is justifiable but are content to leave this decision in your hands.’ • If you are asking for a solicitor and client bill, make sure that your draftsman is aware of the rate(s) to be applied. • Many costs draftsmen will prepare a bundle of papers to be lodged in support of your bill. If you do not want your file disturbed in this way, say so. • Was there a period of intense activity when you were well aware
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19
that a substantial amount of time went unrecorded? If so, tell the draftsman about it: he/she will be accustomed to estimating time when evidence of work done is clear, but will hesitate to include substantial chunks of time which are not fully apparent from the file. • If the file has already been partly costed (for example, at the conclusion of an injunction application within divorce proceedings, when further work is to be undertaken on matters relating to finances and/or children), do not forget to bring this to the draftsman’s attention, so that he/she does not spend time costing work only to find his/her (or another draftsman’s) letter referring to the return of the file with a bill of costs!
3 Costs Between Parties
3.1 The indemnity principle 3.1.1 Historical perspective
Costs payable by one party to another as a result, for example, of a court order or the acceptance of a payment into court, belong to the client and constitute an indemnity in respect of the costs which the client is liable to pay his solicitor. The indemnity principle, established in Harold v Smith [1865] H & N 381 and Gundry v Sainsbury [1910] 1 KB 645, stipulates that a receiving party may not recover from a paying party an amount of costs which exceeds the amount which he is liable to pay to his own solicitor. Whilst the solicitor may seek to recover such costs on behalf of his client, he has no right to look to the opponent for payment of his costs. The primary liability to pay the solicitor’s costs rests with his client, to whom a bill should be rendered for the whole amount of those costs. Any sum(s) received by way of payment of costs between parties should be credited to the client’s account. However, in its conclusions following consultation on Collective Conditional Fee Agreements, the Government has stated its intention to commence s 31 of the AJA 1999, which permits rules of court to be made providing that the amount of costs awarded to a receiving party is not limited to what that party would have been liable to pay to his legal representatives, had he not been awarded costs. If and when such rules receive parliamentary approval, this section will be consigned to history, to the relief of the vast majority of costs officers, solicitors and costs draftsmen.
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3.1.2 The 1998 cases
For many years following Gundry v Sainsbury, the indemnity principle was applied without difficulty. Then, in the wake of a flurry of cases in the Court of Appeal relating to the application of the indemnity principle, many objections to bills of costs began to commence with a query as to a possible breach of this fundamental principle. In General of Berne Insurance Company v Jardine Reinsurance Management Limited [1998] 2 All ER 301, May LJ found that Gundry did not address the question of whether the principle should apply once only to the total assessed costs or to individual items by comparison with the sums or rates charged to the client by his solicitor. Since there was a contentious business agreement in place, the judgment turned on the construction of s 60(3) of the Solicitors Act 1974 and concluded that the comparison is not global and may require, in appropriate circumstances, an item by item comparison. This decision was rapidly followed by Thai Trading Co v Taylor [1998] 3 All ER 65, in which the court ruled that there is nothing unlawful in a solicitor agreeing to forgo all or part of his fee if the case is lost, provided that he does not seek to recover more than his ordinary profit costs and disbursements if the case is won. Conditional normal fee agreements, as they came to be known, therefore became lawful – for a short time – and not contrary to public policy, which had hitherto been the case. The decision in Bailey v IBC Vehicles Limited [1998] 3 All ER 570 was significant for the statement that copies of documents proving that the indemnity principle had been observed, or a short written explanation, should normally be attached to the bill of costs to ‘avoid skirmishes which add unnecessarily to the costs of litigation’. The circle begun by General of Berne was completed by Tucker J on review of taxation in Nederlandse Reassurantie Group Holding NV v Bacon and Woodrow (1998) unreported, 21 April, when he held that the interpretation of the indemnity principle in that case applies to other cases in which there is no contentious business agreement. The final twist in the bizarre series of 1998 cases was the decision of the Divisional Court in Hughes v Kingston upon Hull CC [1999] 2 All ER 49, which cast doubt on Thai Trading on the basis that the Court of Appeal had failed to appreciate that the Solicitors’ Practice Rules had the force of statute. At the time, r 8 of the said Rules made any arrangement to receive a contingency fee unlawful.
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3.1.3 The effect of the Geraghty decision
No sooner had practitioners rewritten their client care letters and entered into Thai Trading retainers, encouraged by a change in the Solicitors’ Practice Rules on 7 January 1999 to allow practitioners to enter into contingency fee arrangements permitted under statute or the common law, than a differently constituted Court of Appeal declared, in Geraghty and Co v Awad Awwad [2000] 1 All ER 608, that such agreements were, in fact, unlawful, because the attention of the court in Thai Trading had not been drawn to the decision of the House of Lords in Swain v The Law Society [1982] 2 All ER 828, in which it was held that Practice Rules had the force of statute. Matters were turned on their head again and hundreds of practitioners were left with potentially unenforceable retainers. The position was finally regularised by the implementation, on 1 April 2000, of the Conditional Fee Agreements Regulations 2000, which permit solicitors to enter lawfully into arrangements for no fee or a reduced fee in the event of the case being unsuccessful. Nothing, however, is plain sailing on this most turbulent of the seas of litigation: the amended costs rules and practice directions did not come into effect until 3 July 2000, leaving an awkward three month hiatus in which practitioners had to decide whether to sign CFAs on new cases, or to wait to see what would turn out to be the position with regard to recovery of costs. The latter is considered further below, 3.12. Hourly rates are considered at 3.13. Where does that leave the Thai Trading type retainers entered into between 7 January 1999 and 1 April 2000? The Law Society, with the support of counsel’s advice, concluded that such agreements are lawful and enforceable, as they were entered into on the basis of the change in r 8 of the Solicitors’ Practice Rules following Thai Trading and Hughes. If enforceability is challenged, it should be contended that, given the change in r 8, the common law as at 1999 should be construed to allow conditional normal fee agreements; the decision in Thai Trading was wrong only in so far as it failed to note the significance of the Practice Rules; once r 8 was changed, this obstacle was removed. 3.1.4 Burden of proof
There is a presumption that a client is liable to pay his solicitor’s charges – R v Miller and Glennie [1983] 3 All ER 186. Simply putting a receiving party to proof that there is a valid agreement to pay costs privately does not mean that it is necessary to adduce evidence to that effect – Hazlett v Sefton MBC [1999] 149 NLJ 1869, QBD.
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3.2 Court’s discretion as to costs The costs of and incidental to all proceedings in the Civil Division of the Court of Appeal and in the High Court are in the discretion of the court (s 51 of the Supreme Court Act 1981). Formerly, RSC Ord 62 stated that the court should order the costs to follow the event, except when it appeared that, in the circumstances of the case, some other order should be made as to the whole or any part of the costs. Under the CPR, r 44.3 sets out the court’s discretion and circumstances to be taken into account when exercising its discretion as to costs. The general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, but the rule permits the court to take into account partial success and the conduct of the parties in making the appropriate order for costs, which may include a proportion of the costs or costs for a specified period only.
3.3 Importance of wording of order for costs Costs are assessed in accordance with specific orders, the wording of which is vital. The court must give effect to any orders made – CPR r 44.5(2). Costs officers are bound to assess pursuant to the wording of the order, rather than its interpretation by a solicitor or costs draftsman. To protect the interests of the receiving party, orders should, where appropriate, specify items which will not otherwise be covered, for example: • costs of counterclaims and cross-appeals; • costs of third party proceedings; • costs of succeeding against one of joint defendants; • costs of preparation and approval of a trust deed for investment of infants’ or patients’ damages – see Morey v Woodfield (No 2) [1964] 1 QBD 1. Conversely, the interests of the paying party should be protected by the specific exclusion of items which otherwise might be allowed, for example: • costs of issues on which the successful party has failed; • witnesses called unnecessarily; • experts called who are not authorised by a directions order. At all times, it should be ensured that the right order for costs is obtained; it is much easier to have the intention clearly specified at the time when
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the issues are before the court, rather than to leave it to the interpretation of a costs officer at a much later stage. Specific instructions should be given to counsel as to the order that is required. It is unwise to leave it to counsel alone to decide what order as to costs should be sought. The ‘slip rule’ (CPR r 40.12) allows the court at any time to correct an accidental slip or omission in a judgment or order. Application may be made without notice, by letter. The judge may deal with the application without notice if the slip or omission is obvious, or may direct that notice of the application be given to the other party or parties.
3.4 Summary assessment Section 13 of the PD sets out the general provisions relating to summary assessment. Practitioners must be prepared for summary assessment, unless the case or application is one in which summary assessment will not normally happen, for example, client legally aided or case listed for more than one day. This means preparing a statement of costs, following as closely as possible Form N260, for filing and service not less than 24 hours before the hearing (para 13.5 of the PD – see below, 9.7). In Macdonald v Taree Holdings Ltd (2000) The Times, 28 December, Neuberger J held that failure to serve a schedule of costs should be taken into account by the court, but its reaction should be proportionate. Options the court should consider were to have a brief adjournment for the paying party to consider the schedule, to stand the matter over for detailed assessment or to stand the matter over for summary assessment at a later date or to be dealt with in writing.
3.5 Costs estimates Section 6 of the PD defines an ‘estimate of costs’ as: (a) an estimate of base costs (including disbursements) already incurred; and (b) an estimate of base costs (including disbursements) to be incurred, which a party intends to seek to recover from any other party under an order for costs if he is successful in the case.
‘Base costs’ means costs other than the amount of any additional liability. For the meaning of additional liability, see below, 3.12.
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This revised definition of an estimate of costs appeared in the July 2000 version of the PD in order to provide that a party represented under a conditional fee agreement need not reveal the amount of any additional liability in the estimate. Estimates of costs are specifically required to be filed and served in the following circumstances: • on filing an allocation questionnaire; • on filing a listing questionnaire. A precedent annexed to the PD (Precedent H) indicates the format in which an estimate of costs should be prepared. Essentially, it comprises a mini-version of a bill of costs. However, the wording of the revised allocation questionnaire, mandatory from 1 April 2001, implies that in straightforward cases, such as those in the fast track, a full costs schedule is not required at the allocation stage. Since the provision of estimates is a requirement of the court, the reasonable costs of preparing these estimates must be recoverable by the successful party as costs of the action. The sting in the tail of costs estimates is that the court may have regard, on summary or detailed assessment, to any estimate previously filed by the receiving party or any other party, when assessing the reasonableness of the costs claimed (see below, 9.5). The message is clear: skimp on the estimate of costs at your peril. Underestimation may lead to eventual substantial underrecovery of costs; overestimation may be regarded as conduct to be taken into account by the court, with possible penal consequences in costs.
3.6 When to seek detailed assessment CPR r 47.1 stipulates the general rule that the costs of any proceedings shall not be assessed until the conclusion of the proceedings. It is important to note the significance of this rule: the fact that an interlocutory order for between parties costs has been obtained does not mean that the party obtaining the order can immediately put in a bill for detailed assessment. Only in certain circumstances will the court assess the bill at an earlier stage than the conclusion of proceedings. Principally, these circumstances are: • when the court orders an earlier detailed assessment; the previous wording of the order was ‘costs to be taxed forthwith’. Under the CPR, the court should order costs to be assessed ‘immediately’; • if there is no realistic prospect of the claim continuing;
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• where the parties agree that, although the proceedings are continuing, they will nevertheless be treated as concluded; • where judgment is obtained with an inquiry as to damages to follow (Mölnlycke AB v Proctor and Gamble (No 6) [1993] PSR 154, Patents Court). Whilst this is a pre-CPR case, it is suggested that the court is likely to accept a request for detailed assessment in such circumstances. Detailed assessment proceedings are not stayed pending an appeal, unless the court so orders – CPR r 47.2. Subject to the above, detailed assessment proceedings should be commenced within three months of the event which provides the authority for detailed assessment. The parties may agree under r 2.11 to extend this time, or any party may apply to the court for an order under r 3.1(2)(a) to extend the time. The court’s permission to commence detailed assessment proceedings out of time is not required – para 33.4 of the PD.
3.7 Negotiations on costs Before commencing negotiations, it is essential that practitioners ensure that their negotiating figures are as accurate as possible. This is an area where, over the course of any one year, many thousands of pounds of costs are lost (or gained, from the paying party’s point of view) through practitioners commencing negotiations with a figure which does not adequately reflect the amount of work undertaken on a file. On the other hand, time may be wasted by attempting to recover an unrealistically high figure. Now that a costs draftsman’s fee is recoverable, at least in part (see below, 3.9), it may well make sense to avoid wastage of time in negotiations on unrealistic figures by obtaining a properly drawn bill of costs. In heavy cases, negotiations can lead to difficulty with the time limit, as three months is often too short a time to collect full details of disbursements (some of which may have been incurred at a late stage in proceedings), have a bill of costs drawn and conduct negotiations with the paying party on the basis of that bill. In such circumstances, it is a good idea to agree an extension of time, perhaps to six months. In any event, the court will usually be inclined to take into account the fact that negotiations were conducted in an attempt to agree costs if an issue arises as to delay. (See further discussion of delay below, 3.16.) Relatively civilised negotiations between solicitors and/or costs draftsmen have become less common since the increasing practice
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amongst insurers, in particular, to farm out the business of reduction of claimants’ costs to firms of costs negotiators. Often armed with little more than a basic knowledge of the principles of costs, these negotiators rely on browbeating hard-pressed claimant solicitors into accepting reductions greater than they might expect to suffer on detailed assessment in order to avoid the delay and risk as to costs involved in the assessment process. Indeed, until the July 2000 amendments to the CPR, there was no simple procedure for detailed assessment of costs incurred in pursuing claims settled without the need to issue proceedings. A rule was added to CPR Part 44 to provide a remedy in such situations, as described below. Practitioners should be prepared to make full use of this provision to resist the unreasonable stances adopted by some costs negotiators.
3.8 Costs-only proceedings The new CPR r 44.12A provides a mechanism for the assessment of costs when parties have reached agreement in writing on all issues, save as to the amount of costs, and proceedings have not been commenced. Either party may start proceedings under this rule by issuing a Part 8 claim, in accordance with s 17 of the PD. A reduced court fee applies upon the issue of such proceedings. An order for detailed assessment may then be made by consent. If the Part 8 claim is opposed, it will be dismissed by the court, so that this is not a backdoor means of starting an action without incurring the full court fee. The rule and the PD are unspecific as to the costs of the Part 8 application, stating only that the court may make an order for costs and that order will be treated as an order for costs to be decided by detailed assessment in accordance with CPR Part 47. The costs of the application must clearly be dealt with following the event of the assessment of the bill. If the receiving party makes the application, it seems sensible that these costs should be included in the bill of costs. If the paying party intends to seek costs of the Part 8 application, they should be summarily assessed, if appropriate, at the conclusion of the hearing.
3.9 Costs recoverable on detailed assessment ‘Where the amount of costs is to be assessed on the standard basis the court will … resolve any doubt which it may have as to whether costs were reasonably incurred or reasonable and proportionate in amount in favour of the paying party’ – CPR r 44.4(2).
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The interpretation of what is ‘reasonable’ and ‘proportionate’ is, in the end, dependent on the opinion of a costs officer. In Brush v Bower Cotton and Bower [1993] 4 All ER 741, Brooke J gave guidance as to certain items, in respect of which costs officers had previously held widely divergent opinions, which he regarded as properly claimable against the paying party. These included: • attendance notes: work properly and reasonably done in furthering the client’s interests may reasonably include the preparation of attendance and file notes recording what work has been done; • communications with counsel and the court: there is no reason why a solicitor should not be paid for time appropriately and reasonably spent in communicating with counsel and the court; • work done by a secretary: to the extent that such work can properly be described as clerical work, it should not be allowed as chargeable time. If, however, there are features of the work which would be properly charged by a fee-earner at an appropriate rate, it ought to be allowed. Other instances of recoverable costs to be noted are: • Estimated time: a myth has arisen, possibly in the wake of Brush v Bower Cotton and Bower, that time will not be allowed on detailed assessment unless it is recorded. What Brooke J actually said in that case was that very substantial claims for unrecorded time are likely to be viewed with very considerable care, and it would only be in an unusual case that any substantial allowance would be made for unrecorded time. In the largest of the bills reviewed in Brush, there was a claim for 158 hours of estimated time out of a total of 900 hours 45 minutes. Because Brooke J disallowed all of this estimated time, it cannot be assumed that there should never be any allowance for unrecorded time. If, for example, there is a four page pleading prepared by the fee-earner, with no time recorded on file, it would clearly be unjust to make no allowance for the production of that document. • Conduct money: where conduct money has been paid to a witness upon service of a witness summons and the witness does not subsequently attend court, the money so paid will be allowed on detailed assessment if the practitioner can satisfy the costs officer that an attempt has been made to secure its return. Production of a copy letter to the witness is usually accepted as evidence of the attempt – Martin v Andrews (1856) 26 LJQB 39 – very old case law, but presumably still good! • Fees of foreign lawyers are a disbursement and should be allowed if
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it was reasonable, rather than a luxury, to instruct a lawyer based outside the jurisdiction. For the avoidance of doubt, ‘foreign’ includes Scotland. • Costs of preparing the bill: para 4.18 of the PD provides that a claim may be made for the reasonable costs of preparing and checking the bill of costs. There has been considerable debate as to what constitutes ‘reasonable costs’ in this context. Guidance given by the Vice Chancellor to designated civil judges suggested that the appropriate costs draftsman’s hourly rate for the majority of bills is that of a Grade 3 fee-earner (see below, 3.13). This was countered by the Costs Practitioners Group, which submitted that less straightforward bills of over £10,000 should be drawn by a Grade 2 fee-earner. As to the appropriate time to be allowed – how long is a piece of string? There is insufficient space here to delve into the difficulties frequently faced by costs draftsmen in preparing complex bills, a task which is often vastly underrated. Those costs officers who attempt to portray the costs draftsman’s job as little more than a routine clerical exercise do a great disservice to the many dedicated costs practitioners and their professional organisation, the Association of Law Costs Draftsmen. • Costs of detailed assessment: para 4.13 of the PD makes it clear that the costs draftsman should not include in the bill any claims in respect of the detailed assessment proceedings, other than costs claimed for preparing and checking the bill. However, if the matter proceeds to a detailed assessment hearing, the receiving party is normally entitled to his costs of the detailed assessment proceedings (CPR r 47.18), subject to the overriding discretion of the court to make some other order. As a general rule, the court will make a summary assessment of the receiving party’s costs and add them to the bill, although it is not necessary to file and serve a statement of costs in these particular circumstances (para 45.3 of the PD). When seeking these costs at the end of the detailed assessment hearing, it should not be forgotten that they include the preparation of any replies to points of dispute, as well as other preparation for detailed assessment.
3.10
Irrecoverable or doubtful costs
• In the situation where a solicitor accepts instructions from a client living in the locality where the cause of action arose, but at a distance from the solicitor, the matter may be treated as having been conducted by a local solicitor. Accordingly, time spent in travel and travelling expenses to attend court and client or to inspect the locus are likely to be disallowed, unless there are particular factors which make it
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•
•
•
•
•
•
31
reasonable for the client to have instructed the remote solicitor – Truscott v Truscott and Wraith v Sheffield Forgemasters Ltd [1998] 1 All ER 82. A similar situation may arise with regard to hourly rates. Litigants may instruct any lawyer of their choice, but the court will judge objectively the question of whether it is reasonable to instruct solicitors in a higher cost area with which the case has no obvious connection, when there are other firms in the appropriate locality well capable of handling the matter – Sullivan v Co-operative Insurance Society Ltd (1999) The Times, 19 May. Costs associated with the instruction of leading counsel will not be allowed where there are no complex problems, no need for special expertise and no difficult questions of law. Even when it is conceded that the instruction of counsel was reasonable, the quantum of counsel’s fees is frequently in dispute. There is no precise standard of measurement and the judge must determine the proper figure using his/her knowledge and experience – Simpson’s Motor Sales (London) Ltd v Hendon BC [1965] 1 WLR 112. If more than one fee-earner attends at court, it is unlikely that the costs of the second fee-earner will be allowed. The general practice is to allow costs of attendance of only one fee-earner in conference or at a hearing. Whilst there are cases of such complexity that the attendance of more than one fee-earner is necessary and consequently recoverable on detailed assessment between parties, these are very much the exception to the rule. In the vast majority of cases where such claims are made, they are disallowed. In connection with interlocutory attendances, it is important that extremely careful judgments are made as to the grade of fee-earner sent to attend. If, for example, a summons for directions is clearly not going to be contested, it may be unwise to send an assistant solicitor, whose rate may not be allowed on detailed assessment. In these circumstances, unless the client insists otherwise and is informed that costs incurred are unlikely to be recovered between parties, a trainee solicitor or paralegal (Grade 3 fee-earner) may be the best option. On the other hand, under the CPR, the court requires that the legal representative in attendance at important case management hearings should, if possible, be the fee-earner responsible for conduct of the case. If a case settles at the last minute, expert witnesses will frequently charge a cancellation fee. Costs officers are becoming increasingly
32
•
•
•
•
•
CAVENDISH PRACTICE NOTES
reluctant to allow substantial fees between parties unless it is clear that actual loss has been suffered by the expert in view of the lateness of cancellation. The direction formerly applicable in the Royal Courts of Justice, that local travelling expenses within a radius of 10 miles of the court will not, in general, be allowed, now appears in para 4.16(3) of the PD. However, this is not an absolute rule, and the definition of ‘local’ is left to the court’s discretion. In practice, many district judges in the provinces continue to allow reasonable travelling expenses over lesser distances. The expenses of a client attending his or her own legal or medical advisers are always irrecoverable between parties as costs of litigation, but the LSC has power to grant prior authority to incur such expenses under a legal aid certificate – R v Legal Aid Board ex p Eccleston [1998] 1 WLR 1279. There are very few circumstances where practitioners will be paid for personally serving documents upon the other party. This is not regarded as fee-earner’s work, and accordingly in all instances it is preferable to utilise the services of a process server, whose reasonable fee will be allowed on detailed assessment, provided the court is satisfied that other cheaper methods of service were not appropriate. In normal circumstances, a solicitor’s overhead expenses include postage, telephone charges, telex messages and courier’s charges, which will not therefore be allowed separately as disbursements. Paragraph 4.16(4) of the PD does, however, give the court discretion to allow such expenses ‘in unusual circumstances or where the cost is unusually heavy’. Such circumstances might include cases involving extensive communication with a client or witnesses living abroad. Photocopying is another expense which is part of overheads, although para 4.16(5) of the PD gives the court discretion to ‘make an allowance for copying in unusual circumstances or when the documents copied are unusually numerous in relation to the nature of the case’. For example, they will generally be allowed in proceedings in the Court of Appeal. As to what volume of copies is ‘unusually numerous’, judicial guidance is found in Johnson v Reed Corrugated Cases Ltd, in which Evans J disallowed a claim for 10,450 pages copied to accompany briefs to leading and junior counsel and instructions to experts. This decision should be viewed with some caution, since Evans J made clear in his judgment that he took account of the fact that there was not one, but 11 cases, at least six of which remained active when briefs were delivered, and that he had allowed a high mark-up on
COSTS BETWEEN PARTIES
33
the hourly costs claim. Some costs officers apply a rule of thumb that photocopying costs are exceptional if they exceed two and a half percent of the profit costs claimed. • Correspondence by fax is now commonplace, but this does not mean that a letter sent by fax as well as by post or DX can be claimed twice. The usual six minute allowance is for the fee-earner’s time in consideration and dictation of the letter, howsoever it is dispatched. • Claims for considering emails received will not normally be allowed. Emails sent may be allowed, in the court’s discretion, on the basis of a 6 minute unit each, or a time charge (provided that the time is recorded) where the email properly amounts to an attendance – para 4.16(2) of the PD. • Costs of transcripts are normally costs of appeal and not costs of the action.
3.11
Claim and counterclaim
Pre-CPR, where a claim and counterclaim were both wholly successful, or where both failed, there were generally two judgments with, if appropriate, a final set-off as to damages and two orders for costs, with a final set off after taxation. The principles applicable on taxation were set out in Medway Oil and Storage Co Ltd v Continental Contractors Ltd [1929] AC 88. It appears that this case remains good law post-CPR, in cases where two orders for costs are made. The application of this authority means that the successful claimant will almost invariably receive more in costs than the defendant who simultaneously succeeds in his counterclaim. It also means that there are often difficulties in dividing the costs appropriately, both in drawing the bill and in resolving the issues on detailed assessment, when the time needed to achieve an equitable outcome may be totally disproportionate to the amounts of costs at stake. Under CPR r 44.3, however, the court may make various costs orders, including an order that a party must pay a proportion of another party’s costs. The option to make an order for costs relating only to a distinct part of the proceedings is available, but discouraged. Rule 44.3(7) specifies that where the court would otherwise consider making the latter type of order, it must instead, if practicable, make a proportional costs order, an order for a stated amount of costs or an order for costs from or until a certain date only. Giving two separate judgments in favour of the claimant and defendant
34
CAVENDISH PRACTICE NOTES
respectively and making two orders for costs may be unjust for cases where the issues on the claim and the counterclaim are substantially the same or are very much interwoven. This often applies, for example, in road accident cases, where the only different issues might be the damages themselves as claimed by the respective parties. In such a case, the court should be invited to exercise its discretion as to costs with consideration to the effect of the order, so as to avoid an incongruous outcome and to avoid consequent problems on detailed assessment. An order that the defendant pay, for example, 70% of the claimant’s costs of the proceedings might well be the order that best serves the interests of justice, at the same time relieving costs draftsmen and costs officers of the task of properly identifying and separating the costs of claim and counterclaim.
3.12
Conditional fee agreements
Important amendments to the CPR and the costs practice direction came into force on 3 July 2000. They provide the framework for the recovery of success fees, insurance premiums and equivalent sums arising from funding by membership organisations. These extra amounts of recoverable costs are referred to as ‘additional liabilities’. The rules cover conditional fee agreements signed pursuant to the Conditional Fee Agreements Regulations 2000 (SI 2000/692), which came into effect on 1 April 2000. Under transitional provisions, if proceedings were commenced under a new conditional fee agreement entered into between 1 April and 3 July 2000, practitioners had until 31 July 2000 to comply with the rules and practice directions in order to ensure that advantage could be taken of the provisions for additional costs recovery under the new regime. The requirements in respect of information to be given to the client and notification to be given to the opposing party are onerous and there is insufficient space here to cover all details. Practitioners intending to enter into conditional fee agreements must study the rules, regulations and practice directions carefully to avoid the many pitfalls for the unwary. Particular note should be taken of the following requirements with regard to success fees: • that part of the success fee which relates to the cost of funding the action through postponement of payment must be stated separately in the conditional fee agreement and is not recoverable between parties; • any shortfall in the success fee as a result of disallowance on assessment ceases to be payable by the client under the agreement unless the
COSTS BETWEEN PARTIES
35
court is satisfied that it should continue to be so payable. There are detailed directions in s 20 of the PD relating to the procedure where a legal representative wishes to recover such shortfall from his client (see below, 9.11); • any additional liability cannot be assessed until the conclusion of the proceedings; • the court may summarily assess all costs or base costs only, adjourning additional liabilities to detailed assessment; or it may refer all costs to detailed assessment; it may not summarily assess additional liabilities and order detailed assessment of base costs; • the court will not use hindsight in assessing additional liabilities, nor will it reduce a success fee solely on the grounds that its addition to the assessed base costs will make the total appear disproportionate.
3.13
Hourly rates
Prior to the implementation of the CPR, decisions as to the appropriate hourly rates to be allowed on taxation were based on the taxing officer’s knowledge and experience of rates claimed by receiving parties and conceded by paying parties. This knowledge was often supplemented by surveys undertaken by local law societies, leading to guideline rates being promulgated and published by many provincial courts. On the other hand, many other courts gave little or no guidance, outside the district judge’s chambers, as to the rates they were prepared to allow. With the introduction of the CPR, and in the wake of the cases referred to above, 3.1, solicitors are encouraged to claim costs at charging rates which will normally coincide with the rates charged to the client. Of course, these rates may be reasonable as between solicitor and client, but the paying party will not be required to pay them if they are held to be unreasonable between parties. The problem that remains for the costs officer is to determine what rate or rates are reasonable for the type of work done in the appropriate locality at the relevant time. In February 1999, the Supreme Court Costs Office (SCCO) published guideline rates for all areas. Unfortunately, several of the published rates did not accord with those generally known to be applied without argument in the areas concerned. A revised version, published in November 1999 in booklet form (Guide to the Summary Assessment of Costs, available from the SCCO), corrected some of the errors. The Guide acknowledges that rates arrived at by local agreement are likely to be much more reliable than those suggested centrally by the SCCO.
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Whilst intended to assist judges making summary assessments of costs, the published rates have inevitably been referred to on detailed assessment as the ‘reasonable’ rates to be allowed. Indeed, the Guide confirms that the general approach to summary and detailed assessment should be the same. Revised hourly rate guidelines were published in January 2001. The published rates are charge-out rates, inclusive of uplift, reinforcing the trend away from the A plus B method of determining reasonable rates, as discussed in Chapter 1. Another important change which has been widely adopted, in accordance with the SCCO’s recommendations, is the classification of fee-earners into three categories: • Grade 1 – solicitors with over four years’ post-qualification experience; • Grade 2 – other solicitors and legal executives and fee-earners of equivalent experience (‘legal executive’ means a Fellow of the Institute of Legal Executives); • Grade 3 – trainee solicitors and fee-earners of equivalent experience.
3.14
Fast track trial costs
3.14.1 Amounts to be awarded
A key part of the Woolf reforms was the introduction of the fast track for claims between £5,000 and £15,000, to be heard over not more than one day. Fixed costs were to be a feature of this procedure, so that parties would know the extent to which they might be exposed to paying costs to the ‘winner’ and the amount of costs they could expect to recover if successful. The proposal to fix pre-trial costs has not yet been implemented, because of the difficulty of devising a regime which would fulfil the overriding objective of dealing with cases justly. Further investigation is being undertaken by the Lord Chancellor’s Department. The halfway stage introduced by the CPR is fixed trial costs. The amounts to be allowed (no more or no less, unless the circumstances below apply) on summary or detailed assessment are: The amount may be apportioned between the parties to reflect their
COSTS BETWEEN PARTIES
Value of claim
37
Amount of fast track trial costs
Up to £3,000
£350
More than £3,000, but not more than £10,000
£500
More than £10,000
£750
respective degrees of success. 3.14.2 When the court may award more or less
• The court may decide not to award any fast track trial costs; • where, in addition to the advocate, the party’s legal representative also attends trial, the court may award an additional £250 if it considers that it was necessary for the representative to attend to assist the advocate; • if there is a split trial, the court may award an additional amount for the separate trial of not more than two-thirds of the amount payable for the claim, subject to a minimum of £350; • the court may award a sum representing an additional liability (see above, 3.12); • the court may penalise unreasonable or improper behaviour at the trial by awarding more or less than would otherwise be payable.
3.15
Certificates for counsel
The former practice of the court certifying a hearing ‘fit for counsel’ in order that the receiving party could justify the costs incurred is rendered redundant by para 8.7 of the PD, which confirms that the court will, in general, only express an opinion as to the attendance of counsel where: • the paying party so requests; • more than one counsel appeared for a party; • the court is of the opinion that the attendance of counsel was not necessary.
3.16
Delay
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CAVENDISH PRACTICE NOTES
CPR r 47.8 provides that where a party entitled to costs fails to commence detailed assessment proceedings within the specified period, the paying party may apply for an order requiring the receiving party to commence detailed assessment proceedings. The application must be in writing, and notice must be served at least seven days before the hearing. On such application, the court may direct the commencement of detailed assessment proceedings within a specified time and, in default, all or part of the costs to which the receiving party would otherwise be entitled may be disallowed. In the event of late commencement of detailed assessment proceedings without an application having been made under r 47.8, the only sanction the court may apply (other than its more draconian powers in relation to misconduct under r 44.14) is the disallowance of all or part of the interest on costs otherwise payable to the receiving party. Such interest runs from the date on which the event which gave rise to the entitlement to costs occurred – r 44.12(2). It should be noted that the court’s permission to commence detailed assessment proceedings out of time is not required – para 33.4 of the PD.
3.17
Value added tax
Costs between parties indemnify the successful party in litigation for costs payable to his own solicitor. If the successful party is registered for VAT and the litigation was undertaken as a business expense, he will be able to recover the VAT element of his solicitor’s charges as input tax through his quarterly VAT returns. It follows that he does not require an indemnity for VAT in the between parties bill of costs delivered to the unsuccessful party. This bill should not, therefore, include items of VAT as separate entries in the bill. There is no need for the bill to bear the solicitor’s VAT registration number. It is not a tax invoice, and cannot be used by the paying party to recover the VAT paid. The question of VAT on disbursements is a thorny problem which is rarely addressed absolutely correctly in bills of costs for detailed assessment. The difficulty arises in the true definition of a disbursement, for VAT purposes. The answer is to be found in Customs and Excise Public Notice 700, which specifies eight conditions, each of which must be fulfilled if the item is to be classed as a disbursement for VAT purposes. The key test is: ‘Who received and used the services supplied by the third party?’ If the answer is ‘the solicitor’ (rather than his client), then VAT is chargeable to the client, whether or not the services bear tax when the solicitor pays the supplier. For example, if the solicitor
COSTS BETWEEN PARTIES
39
incurs a rail fare to enable him to render his service to his client, VAT must be charged on that ‘disbursement’ and a VAT registered client can recover the VAT as input tax in his VAT return. Similarly, a process server who is not VAT registered provides a service to the solicitor, not the client, and therefore the solicitor should charge VAT on this service in his bill to his client. Expenses which meet the eight criteria are treated as disbursements, in the sense of payments relating to services supplied to the client (even if the solicitor pays the supplier in the first instance). Input tax cannot be recovered on these supplies. Examples of such disbursements are court fees, oath fees, fees for medical reports, company search fees and witness fees. It follows that such payments should be included in full in the between parties bill of a VAT registered party. If any of them include VAT, the total amount should be claimed in the bill. There is always an exception to any rule and, in this case, it is counsel’s fees. Although these fees relate to services rendered to the client, a concession is made by HM Customs and Excise, permitting the fee notes to be re-addressed to the client, who pays counsel direct. Input tax can then be recovered by the registered client and counsel’s fee appears net of tax in the between parties bill. In certain circumstances, the receiving party can obtain credit from Customs and Excise for only a proportion of the VAT as input tax. Where this is the case, only the proportion for which credit cannot be claimed should be included in the between parties bill. The procedure with regard to VAT in bills for detailed assessment is set out in s 5 of the PD.
4 Public Funding
4.1 Background Up to 1 April 2000, legal aid was available under the Legal Aid Act (LAA) 1988 to enable a person, not otherwise financially able, to retain a solicitor. Certificates granted to assisted persons under the LAA 1988 continue to provide cover until the proceedings to which they relate are concluded or until they are discharged or revoked. From 1 April 2000, public funding through the Community Legal Service (CLS) is available on a more limited basis under the Access to Justice Act (AJA) 1999. At that date, the administration of public funding was transferred from the Legal Aid Board (which ceased to exist) to its new incarnation, the Legal Services Commission (LSC). Any practitioner intending to apply for public funding on behalf of clients should be in possession of the current issue of the Legal Services Commission Manual, which consists of three looseleaf volumes: • Volume 1 – The Framework; • Volume 2 – Contracting; • Volume 3 – The Funding Code. A fourth volume will be issued containing material relevant to the Criminal Defence Service: see above, 1.2.2. The principal regulations which gave effect to the costs provisions of the LAA 1988 were: • the Civil Legal Aid (General) Regulations 1989 (CLA(G)R); • the Legal Aid in Civil Proceedings (Remuneration) Regulations 1994; • the Legal Aid in Family Proceedings (Remuneration) Regulations 1991.
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CAVENDISH PRACTICE NOTES
These Regulations survive (with some amendments) with regard to LSC funding under the AJA 1999. A raft of statutory instruments under the AJA 1999 was necessary to implement the new provisions from 1 April 2000. The more important of these, from a costs point of view, are: • the Community Legal Service (Financial) Regulations 2000 (SI 2000/516) (containing financial eligibility limits and rules about means testing and contributions); • the Community Legal Service (Cost Protection) Regulations 2000 (SI 2000/824) (defining the scope of a funded client’s protection against costs under s 11(1) of the AJA 1999 and the circumstances in which costs may be awarded against the CLS Fund); • the Community Legal Service (Costs) Regulations 2000 (SI 2000/441) (setting out the procedures for awarding costs to an opponent of a funded client, and the handling of money recovered for a funded client by way of costs or damages). Sections 21–23 of the PD give detailed guidance as to the application of the above regulations and the costs rules, with particular reference to cost protection, costs payable by a funded client and costs awarded against the LSC. Every application for certificated LSC funding is subject to a new set of criteria and procedures, called the Funding Code. The following levels of service are available under this code: • Legal Help (replacing advice and assistance or ‘green form’ work); • Help at Court (assistance and advocacy in relation to a particular hearing); • Family Mediation; • Legal Representation (taking or defending proceedings, replacing civil legal aid) – available as Investigative Help or Full Representation; • Approved Family Help (including services covered by Legal Help and also representation where necessary to obtain disclosure or a consent order) - available as Help with Mediation or General Family Help; • Support Funding (partial funding of very expensive cases otherwise privately funded under a CFA) – available as Investigative Support or Litigation Support; • General Civil Contract (covering all controlled and licensed work
PUBLIC FUNDING
43
– see below, 4.11); • other contracted work (covering family mediation and certificated work in very expensive individual cases); • non-contracted work (until April 2001 – legal representation that does not fall under the heading of controlled or licensed work).
4.2 Effect of legal aid/LSC funding on retainer The relationship between the solicitor and the lay client undergoes a radical change following the grant of public funding. In granting funding, the LSC underwrites the solicitor’s costs and disbursements, subject to stringent observance by the solicitor of the work authorised (scope) and any costs limitations imposed – see below, 4.3.4. The solicitor is prohibited by law from approaching the client for any shortfall, or indeed from billing the client privately in any way once LSC funding has been granted, save in certain very limited circumstances (reg 64 of the CLA(G)R). It is vital that clients are informed before LSC funding is issued that they cannot dictate how the matter must be handled, as their costs are being met from public funds, and that the solicitor has a statutory duty to protect the fund by reporting any client who insists on work being done which is not authorised. Regulations 67 and 70 of the CLA(G)R require practitioners to report to the LSC any unreasonable demands made by an assisted person, resulting in or likely to result in unjustifiable expense to the fund, or any unreasonable requirements to continue the case (such as refusal of a reasonable offer of settlement). The reporting requirement also covers the making of false statements or representations by the client and situations in which the practitioner is uncertain whether it would be reasonable for him to continue acting for the client. Reporting to the LSC under regs 67 or 70 should be seen as another protective step for practitioners. Its purpose is to enable the LSC to intervene by writing to the funded client, giving him the opportunity to show cause why his certificate should not be revoked or discharged. This may have a benefit on a subsequent detailed assessment, in that the
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costs officer may be inclined to look more favourably upon any work undertaken which is strictly outside the scope of the certificate. Whilst there is no guarantee that the costs officer will allow such costs, at least the practitioner will be seen to have done everything in his power to rectify the situation.
4.3 Certificates, amendments and limitations 4.3.1 Emergency certificates
Applications are made by post, fax or telephone, depending on the urgency of the case. Telephone applications are appropriate only in cases where a decision is needed before a faxed application could reasonably be processed and the work to be covered must be undertaken within a few hours, usually on the same date. The basic tests applied by the LSC in making a decision on an emergency application include whether it appears likely that the standard criteria for full representation will be satisfied (including financial eligibility) and whether it is a matter of urgency (the ‘interests of justice’ requirement). Specific scope limitations are imposed, to the minimum amount of work required in the interests of justice, for example, to cover representation at a particular hearing. Every emergency certificate contains a costs limitation (standard amount £1,500), which includes profit costs, counsel’s fees and disbursements, but not VAT. If a non-standard costs limitation in excess of £2,500 is required, a report must accompany the application and must provide a breakdown of the likely costs to be incurred. Time limitations are also imposed, usually four weeks from the date of issue. This period will only be extended in certain limited circumstances. It is, therefore, important that the client co-operates as quickly and fully as possible in the means assessment process. If the emergency certificate expires and does not merge with a substantive certificate, there will be a break in LSC funding cover; during this period, the client may be vulnerable to a costs order against him and practitioners may accept private client funding without breaching reg 64 of the CLA(G)R. Full guidance with regard to emergency applications can be found in the LSC Manual. 4.3.2 Full certificates
PUBLIC FUNDING
45
The procedure for deciding applications under the Funding Code differs fundamentally from the previous decision making under the LAA 1988. Formerly, if the relevant tests were satisfied, funding was granted regardless of priorities and resources. In contrast, there are limits on funding under the AJA 1999 and the Funding Code seeks to direct available resources to areas of greatest need and highest priority. Schedule 2 to the AJA 1999 lists exclusions from the scope of funding. Of particular significance is the exclusion of most personal injury claims, boundary disputes, matters of company or partnership law and matters arising out of the carrying on of a business. The issue of a substantive LSC funding certificate is subject to means and merits tests, save in special Children Act proceedings, in which non-means, non-merits tested LSC funding is available to parents, children and those with parental responsibility, who must be granted LSC funding for proceedings under ss 31, 43, 44 and 45 (care/supervision orders, child assessment orders and emergency protection orders). Nonmeans, non-merits tested LSC funding must also be granted to the child only in applications under s 25 (use of accommodation for restricting liberty). Costs in such cases are covered from the time of receipt of instructions, provided the application is received at the appropriate area office within three working days. In all other cases, the issue of a full certificate is subject to structured decision making in accordance with strict criteria and guidance set out in the Funding Code. In particular, quantifiable claims for damages are subject to cost benefit criteria, which may be summarised by the following matrix: Different ratios apply to clinical negligence cases. Prospects of success
Minimum ratio of damages to costs
Very good (80% or more)
1:1
Good (60%–80%)
2:1
Moderate (50%–60%)
4:1
4.3.3 Amendments
An amendment should be applied for whenever there is need to take
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CAVENDISH PRACTICE NOTES
any step not authorised under the certificate. There can only be one substantive order made under each head of cover (see below, 4.3.4), together with the work necessary to give effect to and implement an order (excluding enforcement). If there is need to take alternative further steps, amendment must be sought before undertaking such work, as amendments in general cannot be backdated, save to correct an immaterial mistake – R v Area Director of the Legal Aid Board ex p Edwin Coe (A Firm) and Another (2000) 150 NLJ 770) – or to impose a new costs limitation. A simple example is the breach of a non-molestation injunction. Having obtained an order, the work authorised is complete. Therefore, to deal with breach, an amendment to cover an application for a further order (or committal) must be made. If in doubt, it is safer to make an application for amendment, which the Commission rules to be unnecessary, rather than to press on and incur costs that are not covered. 4.3.4 Limitations Scope
The certificate may be limited as to its scope and it is essential that the solicitor (and counsel) should check the extent of the cover. Typical limitations fall into one of three categories: (a) investigative limitations, such as limitation only as to obtaining counsel’s opinion; (b) limitations for negotiations, such as limitation to work necessary to obtain disclosure, to negotiate a settlement and to pursue any preaction protocol applicable; (c) proceedings limitations, such as all work up to exchange of witness statements and filing of a listing questionnaire. Payment will be authorised only for work done within the scope of the certificate. Even if costs outside scope are allowed against the CLS Fund on detailed assessment, the LSC will refuse payment of those costs. No comfort is provided by reg 64 of the CLA(G)R, which prohibits a charge to the client for work done outside the scope of the certificate, unless the circumstances are such as to fall within the authority given by Littaur v Steggles Palmer [1986] 1 All ER 780.
PUBLIC FUNDING
47
Costs
In addition, all certificates for full representation contain a costs limitation, initially £2,500 unless the LSC decides otherwise. This was the most significant change that appeared with the introduction of the Corporate Information System (CIS) by the Legal Aid Board in 1997, when costs limitations replaced costs conditions. Under pre-CIS provisions, the inclusion of a costs condition in a legal aid certificate was an implied request for a report to the Board under reg 70(1) of the CLA(G)R when costs were anticipated to exceed the sum specified in the condition. The sanction for failure to report was possible deferment of the solicitor’s profit costs until the report was made and the condition amended. Only in extreme cases, where the fund had suffered loss and the solicitor had been disciplined by the Solicitors’ Disciplinary Tribunal, did this sanction extend to actual retention of profit costs by the Board. Post-CIS, the condition became a true limitation, meaning that LSC funding cover extends only to work done up to the costs limitation imposed. The specified figure includes disbursements and counsel’s fees, but not VAT. It does not include costs of assessment and associated disbursements. The costs of drawing the bill, being costs incurred before commencement of detailed assessment, are not part of the costs of assessment. It should be noted, however, that reg 107A of the CLA(G)R does not preclude the lodging of a bill for detailed assessment, or assessment by the LSC (subject to the general assessment limits, if applicable – see below, 4.7.1), in which the costs exceed the limitation. In such circumstances, costs will be assessed in the usual way, and then any assessed costs that exceed the final limitation imposed will be disallowed by the LSC, even if the sealed legal aid assessment certificate fails to take account of the costs limitation. Further, the amended reg 107B of the CLA(G)R makes it clear that the indemnity principle does not apply to costs limitations, which do not inhibit the recovery of costs between parties. See, also, below, 4.16. Certificates issued prior to CIS and amended post-CIS impose a costs limitation in place of any previous costs condition. The limitation applies to costs incurred from the date of first amendment of the certificate post-CIS. When it comes to drawing the bill of costs in such circumstances, a separate part is required showing post-limitation costs, so that the Commission is satisfied that the limit has not been exceeded. It is therefore vital that practitioners keep a vigilant watch on costs in order
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CAVENDISH PRACTICE NOTES
to ensure that an application for amendment of the limitation is made well before the initial or revised limit is reached. In general, where a costs limitation is exceeded, counsel will be paid in full and the conducting solicitor will bear the shortfall. The Legal Aid Board’s Focus 27 gives the following example (all figures exclusive of VAT): A certificate bears a costs limitation of £2,500. On assessment, the solicitor’s bill, as allowed, is £4,000, which consists of £1,000 counsel’s fees and £3,000 profit costs and other disbursements. Under the costs limitation, the maximum payable from the legal aid fund is £2,500. The payment made would be £1,000 to counsel and the balance of £1,500 to the solicitor, covering both profit costs and disbursements. If, however, counsel’s fees alone were £3,000 and the solicitor’s profit costs and other disbursements £5,000, counsel would be paid £2,500 and the solicitor nothing. Additionally, counsel could seek an indemnity for his loss of £500 if he had not been given notice of the costs limitation imposed. Where counsel had such notice, he would receive the £2,500 due under the limitation, but would not be entitled to claim further sums from the solicitor.
One cause or matter
A legal aid/LSC funding certificate covers only one cause or matter and cover ceases when there has been a substantive or final hearing, unless an amendment is granted to cover further work. In Bridgewater v Griffiths (SCCO Review No 8 of 1999), the plaintiff ’s first solicitors issued a writ, funded by his legal aid certificate, but did not serve it. The certificate was then transferred to other solicitors who, unaware of the first writ, issued a further writ and pursued proceedings which were eventually settled by the plaintiff recovering damages and costs to be taxed if not agreed. On taxation, the defendant raised the issue of the plaintiff ’s solicitors’ breach of reg 46(3) of the CLA(G)R and submitted that no inter partes costs were payable by virtue of the indemnity principle. It was held that there was no cover for the second writ. This case provides a clear warning to practitioners: check very carefully what has been done already under a certificate, particularly if it travels with the funded client from solicitors previously instructed.
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49
4.4 Disbursements and prior authorities 4.4.1 Disbursements
Disbursements allowable in principle under certificates for Legal Representation, Approved Family Help and Support Funding include accident report fees; arbitration fees; birth and other certificates; client’s travelling and accommodation expenses (in certain circumstances); counsel’s fees; court fees; enquiry agents; interpreters; experts’ fees (including medical reports); oath fees; newspaper advertisements; nonfamily mediation fees; photographers’ charges; search fees; nominal stamp duties; and solicitors’ travelling expenses. 4.4.2 Prior authorities
The major benefit to practitioners of obtaining prior authority to incur disbursements is that no question as to the propriety of any step in relation to which prior authority has been obtained can be raised on detailed assessment; further, where a limit on expenditure has been imposed, costs up to that limit can only be disallowed on detailed assessment if the solicitor or funded client knew or ought reasonably to have known that the purpose for which authority was given had failed or become irrelevant or unnecessary before the costs were incurred. Other than in respect of the instruction of leading counsel or more than one counsel, failure to obtain prior authority for unusual expenditure is not fatal to a claim under the certificate. Regulation 63(4) comes to the rescue, providing that payment may still be allowed on detailed assessment even when authority has not been given. It should be noted that authority cannot be given retrospectively (Wallace v Freeman Heating Co Ltd [1955] 1 WLR 172) and that the client’s consent should be obtained in the case of unusually large disbursements, including the instruction of leading counsel. In obtaining such consent, the client should be advised of the probable additional costs and the effect of the statutory charge (Re Solicitors (Taxation of Costs) [1982] 2 All ER 683). The three main areas in which prior authority should be considered are: (a) the instruction of counsel, in particular, leading counsel; (b) the employment of experts; (c) the incurring of unusual expenditure.
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In the case of instruction of leading counsel or more than one counsel, costs will be disallowed on detailed assessment unless they are allowed on inter partes assessment (reg 63(3) of the CLA(G)R, Hunt v East Dorset HA [1992] 1 All ER 539 and Din v Wandsworth LBC (No 3) [1983] 1 WLR 1171). Solicitors should make clear in the application whether authority is sought to brief or to instruct counsel. Authority to brief counsel will not cover any conference or other work undertaken by counsel before delivery of the brief. Authority to instruct counsel is wider, and covers the general involvement of counsel in the proceedings, including being briefed to appear. With regard to the fees of expert witnesses, there is an important difference in the professional responsibilities of solicitors in LSC funding cases, as compared with private instructions. Note 3 to Principle 21.11 of The Guide to the Professional Conduct of Solicitors 1996 states: In legal aid cases, whether civil or criminal, a solicitor should draw the attention of the witnesses to the fact of legal aid and that the witness’s fees and disbursements will have to be taxed or assessed, and that only such amounts can be paid to the witness. A solicitor should expressly disclaim personal responsibility for payment of fees beyond those allowed on taxation or assessment.
4.5 Discharge and revocation of certificates A certificate may be discharged on financial grounds, on merits, or in certain other circumstances such as the death or bankruptcy of the funded client. The effect of discharge is that the client ceases to be a funded client from the date of discharge. The solicitor’s retainer is determined either forthwith or upon receipt of notice of dismissal of an appeal against discharge by the funded client, except that if proceedings have commenced, the retainer is not determined until notice of discharge has been filed and served. It should be noted that cost protection under s 11 of the AJA 1999 (formerly s 18 of the LAA 1988) is not necessarily extended to the date of discharge, if the client has started to act in person before that date (Burridge and Another v Stafford and Another [1999] 4 All ER 660). Revocation of a certificate is much more serious for the client, who becomes liable to repay to the Commission all costs payable under the certificate. In addition, the client loses all cost protection otherwise applicable under s 11 of the AJA 1999. From the practitioner’s point of view, the position with regard to costs is to all intents and purposes the same following discharge or
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revocation. The only difference is that, in the case of revocation, the solicitor has the right to recover from the former funded client the difference between the legal aid costs payable out of the fund and the full amount of the solicitor and own client costs (reg 86(1)(b) of the CLA(G)R). In practice, this right is likely to be of academic interest only. Regulation 84 of the CLA(G)R requires that costs should be submitted for detailed assessment or assessment by the LSC ‘as soon as is practicable after the determination of the retainer’ upon discharge or revocation. If, however, the proceedings in which the client is involved are to continue, a conflict arises between reg 84 and CPR r 47.1, which stipulates that costs shall not be assessed by the detailed procedure until the conclusion of the proceedings. The view of the Senior Costs Judge is that r 47.1 prevails. In practice, most county courts and District Registries will accept discharge or revocation as authority for detailed assessment.
4.6 Notices Whenever a party to proceedings becomes a funded client or a funded client becomes a party to proceedings, notice in a form approved by the Commission should forthwith be given to all other parties (reg 50 of the CLA(G)R). Notice should likewise be given in respect of extension of an emergency certificate (reg 25), amendments (reg 54), discharge or revocation (reg 82). Certificates and amendments must also be filed in the appropriate court office. The purpose of notices is to ensure that the funded client’s opponent is aware of his LSC funding status and the proceedings for which LSC funding has been granted. Limitations on the certificate do not have to be disclosed, except in appeal cases. To notify the funded client’s opponent of limitations could prejudice his interests and might be regarded as tantamount to negligence. The forms approved by the Commission are reproduced below. NOTICE OF ISSUE OF CERTIFICATE (The Notes form part of the Notice) LEGAL SERVICES COMMISSION ACCESS TO JUSTICE ACT 1999 Rules C16 and C17 Funding Code Procedures
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No In the Between
[County Court][Division] [Applicant][Claimant][Petitioner]
and
[Defendant][Respondent]
TAKE notice that Certificate No dated the day of has been issued by the Legal Services Commission to The certificate is:
Emergency
Substantive
The level of service covered by the certificate is: Investigative Help Full representation Investigative Support Litigation Support General Family Help Help with Mediation The description/scope of the certificate is: Emergency certificates only – the emergency certificate [has][has not] been granted for a specified period. [It will expire on]: To: From: Signed: Date: Note to Client’s Solicitor 1. This notice must be served in accordance with Rules C16 and C17 Funding Code Procedures. Notes to Opponent or Opponent’s Solicitor 1. Definitions of the different levels of service are contained in the Funding Code 2. If a certificate has already been issued to your client in these proceedings you must notify your Legal Services Commission Regional Office that a certificate has been issued to your client’s opponent – Rule C43 Funding Code Procedures
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3. All monies payable to the client must be paid to his/her solicitor or, if he/she is no longer represented by a solicitor, to the Legal Services Commission. This is so even if his/her certificate has been discharged or revoked. Only the solicitor or the Legal Services Commission is capable of giving a good discharge for monies so payable – reg 18 Community Legal Service (Costs) Regulations 2000. 4. Under Section 11 of the Funding Code Procedures you have the right to make representations regarding the grant or continuation of a certificate. Notice approved by the Legal Services Commission. NOTICE OF EXTENSION/AMENDMENT OF CERTIFICATE (The Notes form part of the Notice) LEGAL SERVICES COMMISSION ACCESS TO JUSTICE ACT 1999 Rule C39 Funding Code Procedures No In the Between
[County Court][Division] [Applicant][Claimant][Petitioner]
and
[Defendant][Respondent]
TAKE notice that Certificate No dated the day of which was issued by the Legal Services Commission to was amended on the The certificate is:
day of Emergency
Substantive
Nature of amendment: Amendment to description of proceedings covered The new description of the certificate is: The level of service covered by the certificate has been amended to
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cover full representation The certificate has been extended to bring or defend an appeal The certificate now covers: To: From: Signed: Date: Notes to Client’s Solicitor 1. This notice must be served in accordance with Rule C39 Funding Code Procedures. 2. Under Funding Code Procedure C39.4 this notice is only required to be served on opponents in the limited circumstances provided for overleaf. Service of this notice is not required for other types of amendment (for example, changes to limitations on the certificate) and the costs of service may not be recoverable in such circumstances from the Legal Services Commission. Notes to Opponent or Opponent’s Solicitor 1. If a certificate has already been issued to your client in these proceedings you must notify your Legal Services Commission Regional Office that a certificate has been issued to your client’s opponent – Rule C43 Funding Code Procedures. 2. All monies payable to the client must be paid to his/her solicitor or, if he/she is no longer represented by a solicitor, to the Legal Services Commission. This is so even if his/her certificate has been discharged or revoked. Only the solicitor or the Legal Services Commission is capable of giving a good discharge for monies so payable – reg 18 Community Legal Service (Costs) Regulations 2000. 3. Under Section 11 of the Funding Code Procedures you have the right to make representations regarding the grant or continuation of a certificate. Notice approved by the Legal Services Commission. NOTICE OF DISCHARGE OR REVOCATION OF CERTIFICATE (The Notes form part of the Notice) LEGAL SERVICES COMMISSION ACCESS TO JUSTICE ACT 1999
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Rule C56 Funding Code Procedures No In the Between
[County Court][Division] [Applicant][Claimant][Petitioner]
and
[Defendant][Respondent]
TAKE notice that Certificate No dated the day of which was issued by the Legal Services Commission to was [discharged][revoked] on the
day of
To: From: Signed: Date: Note to Client’s Solicitor 1. This notice must be served in accordance with Rule C56 Funding Code Procedures. Notes to Opponent or Opponent’s Solicitor 1. All monies payable to the client must be paid to his/her solicitor or, if he/she is no longer represented by a solicitor, to the Legal Services Commission. This is so even if his/her certificate has been discharged or revoked. Only the solicitor or the Legal Services Commission is capable of giving a good discharge for monies so payable – reg 18 Community Legal Service (Costs) Regulations 2000. 2. Where the certificate is revoked the client will no longer have the benefit of any costs protection provided under Section 11(1) of the Access to Justice Act 1999. Notice approved by the Legal Services Commission.
4.7 Assessment of costs 4.7.1 Assessment by the LSC
Costs must be assessed by the LSC in the following circumstances:
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• where proceedings have not been commenced; • where proceedings have taken place in the magistrates’ court or the Family Proceedings Court; • where there is no order for costs between parties and total costs, disbursements and counsel’s fees do not exceed £500 (excluding VAT). If proceedings have been commenced and the total of the bill is more than £500 but less than £1,000, costs may be assessed by the court or the LSC (reg 105 of the CLA(G)R). It is not possible to circumvent the £1,000 limit by submitting a bill marginally in excess of the limit on the basis that, following assessment, costs will be below the limit. The assessment limit applies to costs as claimed, not as assessed. 4.7.2 Detailed assessment by the court
In all other circumstances, costs must be decided by detailed assessment by the court in which the proceedings have taken place, the Supreme Court Costs Office or another county court which has become the venue for detailed assessment proceedings pursuant to a direction under CPR r47.4(3). Detailed assessment requires authority by way of order, notice of acceptance of payment into court, discharge or revocation. An order for costs between parties is not an order for legal aid detailed assessment, which should be the subject of a separate direction within the final order. This point is sometimes overlooked in drawing up a consent order when a case settles, and can result in delay whilst an amendment is sought or discharge of the certificate is awaited. Acceptance of payment into court is itself authority for both between parties and legal aid detailed assessment (reg 107 of the CLA(G)R). Where the funded client has a financial interest in the assessment of the bill, whether because of the statutory charge (see below, 4.9) or a financial contribution, he/she must be served with a copy of the bill and an explanation of the steps that may be taken to safeguard that interest, and a certificate to that effect must be included in the bill, in the format specified in Precedent F of the Schedule of Costs Precedents annexed to the PD. The certificate is reproduced below. CERTIFICATE AS TO INTEREST OF ASSISTED PERSON/ LSC FUNDED CLIENT PURSUANT TO REGULATION 119 OF THE CIVIL LEGAL AID (GENERAL) REGULATIONS 1989 I certify that the assisted person/ LSC funded client has no financial interest in the detailed assessment.
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or I certify that a copy of this bill has been sent to the assisted person/LSC funded client pursuant to Regulation 119 of the Civil Legal Aid (General) Regulations 1989 with an explanation of his/her interest in the detailed assessment and the steps that can be taken to safeguard that interest in the assessment. He/she has/has not requested that the costs officer be informed of his/her interest and has/has not requested that notice of the detailed assessment hearing be sent to him/her.
Provisional assessment
The form used to request detailed assessment of legal aid/LSC costs only is N258A. Where the funded client expresses a wish to attend, the court will list the matter for a detailed assessment hearing. Otherwise, the court will provisionally assess the bill and notify the solicitor of the amount of costs that it proposes to allow. At this stage, the solicitor has two options: (a) accept the provisional assessment, complete the bill by entering the amounts allowed or otherwise making clear the correct figures allowed (paras 42.2 and 43.9 of the PD), recalculate the summary and re-lodge with a completed legal aid/LSC assessment certificate and the appropriate fee; or (b) inform the court within 14 days that he/she wants the court to fix a date for a detailed assessment hearing. If counsel’s fees are reduced or disallowed on assessment, counsel must be notified within seven days, in order that he/she may exercise his/her right to request a detailed assessment hearing or to appeal against a detailed assessment. The form of certificate for this purpose is reproduced below.
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CONSENT TO THE SIGNING OF THE CERTIFICATE WITHIN 21 DAYS OF DETAILED ASSESSMENT PURSUANT TO REGULATION 112 AND 121 OF THE CIVIL LEGAL AID (GENERAL) REGULATIONS 1989 I certify that notice of the fees reduced or disallowed on detailed assessment has been given in writing to counsel on [ date ]. or I certify that: there having been no reduction or disallowance of counsel’s fees it is not necessary to give notice to counsel. I/we consent to the final costs certificate being issued immediately.
Costs between parties
If there is a between parties order for costs, the procedure set out below, 7.1, must be followed. Interlocutory orders should not be overlooked. Often, it is preferable, if a matter is to be settled by consent, to provide that there will be no order as to costs between parties, including any costs previously ordered to be paid by one party to the other. This will avoid the inconvenience of having to go through the procedure for detailed assessment between parties for what might only be a small amount of costs associated with a simple interlocutory application. It is important to bear in mind, however, that in financial interest cases, the client’s agreement to this course of action should be obtained.
4.8 Change of solicitor The retention of papers by way of lien cannot be justified in a wholly CLS funded case, since the original solicitor’s costs are guaranteed, subject only to assessment. The original solicitor should hand over his papers as soon as possible. The only justification for a short delay is a desire to have a bill of costs prepared, to be incorporated in the final bill eventually to be submitted by the new solicitors. Such a bill may also be used to support an application for payment on account (see below, 4.15.3). Where there is a claim for pre-certificate work, the papers should be handed over specifically to be held to order in respect of such costs and the LSC notified accordingly, to provide for such costs to be dealt with under reg 103 of the CLA(G)R.
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4.9 The statutory charge By statute (s 16 of the LAA 1988 or s 10 of the AJA 1999), the LSC is bound to recover costs by way of a first charge (‘the statutory charge’) on any property – including money – recovered or preserved. The principle behind the charge is to put the funded client in the same position as to his own costs as a privately paying client, who is obliged to pay any costs that are not met by an opposing party in the proceedings. The charge prevents a funded client from making a profit at the expense of public funds. Whilst LSC funding application forms give warnings about the possible effect of the charge, it is clearly the responsibility of the solicitor to make the client fully aware of the implications of the charge, both before embarking on proceedings and as the case progresses. The discovery of the charge and its ramifications at a later stage can be catastrophic for the client and failure to advise could be held to be professional negligence or, at least, failure of professional duty. Most practitioners have a standard letter available, explaining the charge, to supplement oral advice given when the application for LSC funding is made. A copy of such a letter, signed and dated by the client, can be retained on file as acknowledgment that the matter has been fully explained, understood and accepted. Exemptions from the statutory charge are set out in reg 94 of the CLA(G)R. The principal cases in which the charge does not apply are: • when no money or property is recovered or preserved; • when the whole of the costs are recovered from an opposing party; • when maintenance payments are ordered; • to the first £2,500 of any money or property recovered or preserved in matrimonial proceedings and certain other proceedings. The LSC has no power to waive the statutory charge, save for a limited number of cases in which the Commission provides funding on the grounds of public interest. Interpretation of the meaning of ‘recovery’ and ‘preservation’ can be difficult in particular circumstances, and may have to be referred by the solicitor to the LSC for a decision. The principles established in Hanlon v The Law Society [1980] 2 All ER 199 and Curling v The Law Society [1985] 1 All ER 705 continue to apply, as they derive from interpretations of wording in s 16 of the LAA 1988, which is very similar to that in s 10 of the AJA 1999. Attempts to defeat the statutory charge by transferring property or money to a client’s child or to creditors are doomed to fail, as the charge will attach by virtue of the new words which appear in the AJA 1999, ‘whether for himself or
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any other person’. Reference to earlier authorities on this point is no longer necessary. It should be noted that reg 119 of the CLA(G)R excludes the costs of detailed assessment proceedings from the calculation of the statutory charge. However, this does not include the costs of preparing the bill of costs, since the bill must be drawn up before detailed assessment proceedings can be commenced. Further information may be found in the LSC Manual.
4.10 Franchising Legal aid franchising is the system under which firms of solicitors are able to contract with the Legal Services Commission to provide LSC funded services in certain categories of work. The Legal Aid Franchise Quality Assurance Standard (LAFQAS) sets out the criteria with which applicants must comply in order to gain franchises. It also sets out the benefits to franchisees, which include some devolved powers (for example, to grant emergency legal aid), better arrangements for payments on account and slightly higher rates of remuneration. The scheme has four essential elements (LAFQAS 2.1): (a) the specification of standards of quality assurance that the LSC expects suppliers to meet; (b) audits by the LSC to ensure that standards are being achieved and maintained; (c) continuous improvement in the service offered by suppliers of legal services to their clients and reduction of their administration costs; (d) the control of case costs. Franchises cover the following categories of work: • family; • personal injury; • clinical negligence; • employment; • debt; • consumer/general contract; • housing; • welfare benefits; • crime;
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61
immigration/nationality; mental health; education; community care; actions against the police; public law.
The number of categories has been extended since the scheme started in 1994 and additional categories may be created to reflect changes in the law. Full details of LAFQAS are contained in the LSC Manual, Vol 2, Part B. Application forms and checklists are also available from the Commission’s regional offices, and must be returned to the office covering the geographical location of the organisation applying (LAFQAS 3.3). The application pack also includes the LAFQAS contract standard terms.
4.11 General civil contracts Only contracted organisations are allowed to commence the supply of funded services in: • Controlled Work cases – broadly, the former advice and assistance (green form) scheme for all civil and family cases; • Licensed Work cases in the family, immigration, personal injury and clinical negligence categories – broadly, the former civil legal aid and family ABWOR. A schedule to the contract specifies the number of matter starts and tolerances for Controlled Work in the schedule period. Equal monthly payments on account are made by the LSC, in accordance with a schedule payment limit based on these matter starts and estimates of cases started before the contract commences. Quarterly statements are sent to contractors; any additional payment or recovery of overpayment is taken into account in setting the next schedule payment limit. Controlled Work claims must be submitted within three months of completion of the matters to which they relate. The LSC has the right, pursuant to Clause B12, to reduce payment as follows: • 25% for claims up to one month late; • 50% for claims between one and two months late; • 100% for claims over two months late.
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The LSC reserves the right to assess a Controlled Work claim at any time within six years following its submission. Practitioners will no doubt ponder the stark contrast between the time limit allowed for them to submit claims and the time limit allowed to the LSC to assess them!
4.12 Rates for LSC funded work There are prescribed rates for: • Legal Help; • civil proceedings; • family proceedings; • contempt proceedings. There is differentiation of rates between work done in the High Court, the county court and the magistrates’ court, between work done in the London area (Area No 1) and other areas and between work done by franchisees and non-franchisees. Space does not permit the publication here of full details of actual rates of remuneration, which may be found in the LSC Manual.
4.13 Enhancement The remuneration regulations provide that fees may be allowed at more than the prescribed rates, subject to the costs officer or assessing officer being satisfied that specified criteria are fulfilled. In civil non-family cases, it must be shown that there was an exceptional element in one or more of the following factors: • the competence, skill, expertise or dispatch with which the work was done; • the circumstances or complexity of the case. Once this is established, any of the prescribed rates may be enhanced by a percentage up to 100% in the county court and up to 200% in the High Court, having regard to the degree of responsibility accepted by the solicitor, the care, speed and economy with which the case was prepared and the novelty, weight and complexity of the case. In Diacou v Staden (SCCO Review No 3 of 2000), one of the points considered was the enhancement of legal aid only rates. The case was one of alleged clinical negligence, in which new solicitors took over conduct two weeks before the expiry of an extension of the validity of
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the writ issued by the first solicitors. Much work was done in a short time, but the one remaining defendant was successful in his application to strike out the writ. Counsel’s advice (negative) on the merits of an appeal was obtained. In the bill of costs, enhancement of 75% was claimed. The taxing officer allowed 35% and the master increased this to 45%. On review, the judge agreed that the work had been done with exceptional competence, skill and expertise and further increased the allowance to 60%. He declined, however, to give general guidance to the profession as to enhancement of prescribed rates. Enhancement in family cases is considered at 5.3.6.
4.14
Costs draftsmen’s fees
The LSC accepts that where it assesses bills which are subject to civil prescribed rates, there should be an allowance for the costs of preparing the bill. Its guidance suggests that the time allowed should not generally exceed one hour and, in the vast majority of cases, 30 minutes will be more appropriate. Where a greater time is claimed, justification should be included in the bill with reference to the circumstances of the case. The rate allowable is the relevant preparation rate for the conducting solicitor. In addition, an allowance will be made for the solicitor’s time in checking and signing the bill in compliance with the regulations. The costs of preparing the bill in family cases are considered below, 5.3.4.
4.15
Payments on account
4.15.1 Permanent payments on account
Provisions for periodic payments on account of profit costs are contained in reg 100 of the CLA(G)R. Non-franchisees may make a maximum of three claims after 1, 2 and 3 years from the date of issue of the certificate. There is a six month ‘window’ during which applications must be made: • first payment (12 months): not before 10 months or after 16 months from issue; • second payment (24 months): not before 22 months or after 28 months from issue; • third payment (36 months): not before 34 months or after 40 months from issue.
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The maximum payment at each stage is 75% of costs incurred, taking into account any previous payments. Costs must be claimed at prescribed rates, even if it is believed that enhanced rates will be allowed on detailed assessment or assessment by the LSC. Franchisees are not able to claim under this scheme; instead, under s 5.9 of LAFQAS, they may claim 75% of profit costs incurred and still outstanding six months after issue of the certificate and every six months thereafter. 4.15.2 Hardship payments
Reg 101 of the CLA(G)R permits a solicitor (or counsel) to apply for payment on account where: • proceedings to which the certificate relates have continued for more than 12 months; and • it appears unlikely that an order for detailed assessment will be made within the next 12 months; and • delay in detailed assessment will cause hardship to the solicitor (or counsel). To establish hardship, it is necessary to provide evidence in the form of information about the firm’s bank account and overdraft limit. For certificates issued on or after 1 April 1996, there is provision for payment on account under reg 101(3) if proceedings have been concluded, detailed assessment proceedings have been commenced in compliance with time limits and no payment has been received for at least six months from the date of submission of the bill for detailed assessment. 4.15.3 Change of solicitor
Under reg 100(6), if a certificate has been transferred to another firm of solicitors and costs are unlikely to be assessed within six months, payment in full of the previous solicitor’s costs will be made, subject to sufficient evidence being provided in support of such a claim (see above, 4.8). 4.15.4 Disbursements
Under reg 101(1), claims may be made at any time for payment on account of disbursements incurred or about to be incurred (although claims for under £30 will be rejected on grounds of disproportionate administrative
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expense). The usual condition for payment of a disbursement not yet incurred is that it should be payable within three months.
4.16 The effect of the 1994 Regulations For legal aid certificates dated before 25 February 1994, the indemnity principle of costs meant that any costs claimed between parties could not be allowed in a higher sum than that payable to the funded client’s solicitor from the Legal Aid Fund. Amendments to the CLA(G)R in 1994 (SI 1994/229) gave birth to a strange new category of costs called ‘legal aid inter partes costs’. Effectively, for legal aid certificates dated on or after 25 February 1994, the indemnity principle is disapplied, allowing the solicitor to seek ‘private’ rates against the paying party, whilst being restricted to receiving payment from the Fund at LSC funding prescribed rates. Any excess inter partes costs recovered after detailed assessment belong to the solicitor, once any deficiency to the Fund has been satisfied. In practice, this means that bills of costs for LSC funding and inter partes detailed assessment have to be accompanied by a schedule which sets out the inter partes costs claimed in the main bill, recalculated at LSC funding rates (hence ‘legal aid inter partes costs’). Alternatively, costs may be claimed at prescribed rates in the legal aid only columns of bills following the format of Precedent C in the Schedule of Costs Precedents. Assessed costs are claimed from the LSC by way of the Legal Aid/LSC Assessment Certificate. If, however, there is little prospect of recovery of between parties costs against an impoverished paying party, the bill is best drawn at LSC funding rates throughout, thus obviating the need for the additional schedule. In such cases, it is advisable to point out in a covering letter that the schedule is not required, to avoid unnecessary return of the bill by over-zealous court staff. If costs between parties are agreed and paid, it is possible under the 1994 Regulations to claim costs of LSC funding only, that is: • items in respect of which there is no order between parties; or • items covered by a between parties order but for which the paying party will not accept responsibility. Form CLS CLAIM2 must be used where such costs are to be assessed by the LSC (amount less than £1,000) and may be used where costs are to be assessed by the court. In practice, this form is unsuitable for all but the simplest of detailed assessments, and the costs officer is likely to require the details provided in a full bill.
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4.17 Legal Help The amount of costs which may be incurred without obtaining an extension is limited to three hours’ work at current rates for petitioners for divorce or judicial separation and two hours’ work in other cases. These limits include disbursements as well as profit costs (but not VAT). It follows that the need to seek extension should be carefully monitored. Principals and partners should ensure that all fee earners (especially those under training) understand the system and its limitations and observe a check on costs and disbursements whenever activity takes place on a file. In this way, extension can be sought before the limit is reached, not when it has been reached or exceeded. One method of checking is to attach a pro forma record to the file cover, to be completed at current rates whenever work is done. This achieves a running total and the need for extension is made clear well in advance. Disbursements should also be entered and included in the running total. Since Legal Help does not cover court attendances (other than as a McKenzie adviser), application for full LSC funding or Help at Court should be made at the earliest possible opportunity, if court proceedings are likely.
4.18 Corporate Information System Reference has been made above (4.3.4) to the introduction by the Legal Aid Board of the Corporate Information System (CIS), which was installed to replace the multiple systems which had grown up during the lifetime of the Board. It is intended to be nationally accessible, providing up to date on-screen information for LSC staff. This facilitates decision making and responses to enquiries and improves the processing of applications and claims. Clients have a unique reference number, made up of their surname at birth, their initials and their date of birth. This number appears in the heading of the new style funding certificate, changing only in respect of a final digit which identifies different certificates issued to the client. Individual solicitors have a ‘legal aid supplier number’, consisting of their existing legal aid office account number followed by their Law Society roll number. The certificate is a continually updated funding history, from application to final discharge (or revocation). When an amendment is granted, a replacement certificate is issued, showing the original and revised scope of the certificate, including limitations and conditions, with their effective dates.
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With the arrival of CIS, there were new forms for all types of claims for costs. Since the creation of the LSC, frequent amendments have been made to application and claim forms. Form CLS CLAIM1, used to submit a bill of costs in civil cases to be assessed by the LSC or to claim costs assessed by the court, consists of eight pages in total. The old system of batches of blank forms being distributed by the Legal Aid Board has been replaced by licensed software enabling practitioners to generate their own forms as required. Following criticism of the sheer waste of paper, there is now provision to submit only the necessary pages for any particular claim. More details of the case and the way time was spent on it are required from practitioners in the completed claims for civil costs. This, said the Board, was to enable it to collect more information about the costs of cases and to ensure a reduction in the number of times a bill has to be returned with a request for more information. It is understandable if practitioners have come to view this aim with a degree of scepticism, as the LSC often seems intent on returning forms for the most trivial of reasons, sometimes involving incorrect interpretation of costs rules and regulations by the Commission’s own caseworkers.
4.19 Late claims submitted to the LSC A number of amendments to the CLA(G)R came into effect on 18 March 2000. Perhaps the most significant of the changes, as regards their potential effect on remuneration, was the amendment to reg 105, permitting the LSC to disallow or reduce costs where solicitors fail ‘without good reason’ to comply with the time limit for submission of a claim for costs to be assessed by the LSC. The time limit is the same as that specified by CPR r 47.7 for the commencement of detailed assessment proceedings – three months from the date of judgment, final order or other authority for detailed assessment. In the case of termination of the retainer by discharge or revocation of the certificate, or by the solicitor with good reason and upon reasonable notice, the limit is three months from such termination. If there is an appeal against discharge/revocation, the three month period runs from the date of a decision by the Funding Review Committee to dismiss the appeal. The time limit may be extended by the Regional Director, either before or after expiry of the three month period, provided the solicitor can show ‘good reason’. Guidance issued by the LSC states that what constitutes ‘good reason’ is a question of fact in every case. Examples given include where the court has delayed sending the final order (a
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reason with which practitioners will have no hesitation in concurring) and necessary conveyancing work to implement an ancillary relief order. Differences of opinion will doubtless exist between solicitors and the regional office as to the ‘question of fact’ in less clear cut cases. If ‘good reason’ is shown, costs should not be reduced solely on the grounds of late submission. Where ‘good reason’ cannot be established, the regional office must then consider whether there are ‘exceptional circumstances’ justifying extension of the time limit. If it decides that there were ‘exceptional circumstances’, it must then go on to consider whether to impose a penalty. Maximum sanctions imposed will be: • 5% for bills up to three months out of time; • 10% for bills up to six months out of time; • 15% for bills up to nine months out of time. Where neither ‘good reason’ nor ‘exceptional circumstances’ have been shown, costs will be disallowed in full. Beyond lateness of nine months, costs may be disallowed, although ‘truly exceptional circumstances’ may lead to payment with greater deductions than those stated above. For practitioners, the sting in the tail is that counsel’s fees are preserved, provided he/she has not contributed to the delay, and any deductions are therefore made from profit costs. There is, of course, an obligation on the part of the solicitor to pay disbursements in full. The message is clear: Lord Woolf sought to minimise delay, and that philosophy has been carried through to the assessment of costs. Practitioners who are not enamoured by the thought of reduction of their hard earned costs, albeit at ungenerous legal aid rates, should move the file to the in-house costs department or external costs draftsman as soon as possible after the conclusion of the matter.
5 Costs in Family Proceedings
5.1 Civil Procedure Rules 1998 5.1.1 Applicability of CPR costs rules
Except as noted below, Parts 43, 44, 47 and 48 of the CPR apply in family proceedings, as provided by the Family Proceedings (Miscellaneous Amendments) Rules 1999 (SI 1999/1012). The Matrimonial Causes (Costs) Rules 1988 (SI 1988/1328) and the Family Proceedings (Costs) Rules 1991 (SI 1991/1832) are revoked. 5.1.2 Exceptions
The following rules do not apply to family proceedings: • rr 44.9–44.12 (relating to small claims track and fast track costs and cases where costs orders are deemed to have been made) are excluded; • r 44.3(2), which provides that in general costs of a successful party are to be paid by the unsuccessful party, does not apply. By a Practice Direction dated 22 April 1999 issued by the President of the Family Division, the previous practice in relation to ‘costs reserved’ was abolished and such an order now has the effect specified in the Practice Direction on Costs (PD) – see above, 1.6.3. Previously, it was necessary to ensure that any costs reserved were picked up in the final order; otherwise no party was entitled to claim those costs. The disapplication of r 44.3(2) reflects the previous position, which was that the principle of costs following the event did not necessarily apply in family cases. One reason is that the outcome which might
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result in an order for costs between parties is often difficult to identify. Certainly in Children Act cases, such orders for costs are extremely rare. Even in applications for financial relief, it may be difficult to decide who has succeeded overall – Martin v Martin [1976] 3 All ER 625. 5.1.3 Proportionality
The CPR requirement that costs on the standard basis should be proportionate to the matters in issue must apply equally to family proceedings as it applies to other civil proceedings. How are the courts to interpret this condition in matters such as complex care proceedings, where the ‘matters in issue’ cannot be assigned a monetary value? In practice, costs officers will continue to apply the standard basis test of reasonableness in deciding whether the parties’ legal representatives have exercised sufficient control over costs. Proportionality in applications for financial relief, however, is easier to determine. Control of costs in ancillary relief matters has been of concern to the courts for many years, yet cases still come to light where most or all of the assets have been swallowed up in costs. In Piglowska v Piglowski [1999] 2 FLR 763, the assets were estimated at £127,400, but the costs on both sides, by the time the case had been heard in the House of Lords, were estimated to be in excess of £128,000. The implementation, from 5 June 2000, of the Family Proceedings (Amendment No 2) Rules 1999 (SI 1999/3491) put in place procedures which will reduce costs, principally by applying the ancillary relief pilot scheme, operational in some courts since 1996, to all courts. For example, r 2.61F states that at every hearing or appointment, each party must produce to the court an estimate in Form H of the costs incurred by him up to the date of that hearing or appointment. (Confusingly, this is the matrimonial Form H, which existed well before the revised PD in July 2000 created Precedent H as the format to be used in providing estimates of costs.)
5.2 Definitions and regulations The definition of ‘family proceedings’ for the purposes of costs has always been notoriously difficult. What follows is a brief summary of the ways in which family work is categorised in certain statutes, codes and regulations.
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5.2.1 Matrimonial and Family Proceedings Act 1984
In s 32, ‘family business’ is defined as business which in the High Court is for the time being assigned to the Family Division. 5.2.2 LSC Funding Code
For the purposes of identifying case categories, the Code states that: ‘Family Proceedings’ means proceedings which arise out of family relationships, including proceedings in which the welfare of children is determined (other than judicial review proceedings). Family Proceedings also include all proceedings under any one or more of the following: (a) the Matrimonial Causes Act 1973; (b) the Inheritance (Provision for Family and Dependants) Act 1975; (c) the Adoption Act 1976; (d) the Domestic Proceedings and Magistrates’ Courts Act 1978; (e) Part III of the Matrimonial and Family Proceedings Act 1984; (f)
Parts I, II and IV of the Children Act 1989;
(g) Part IV of the Family Law Act 1996; (h) the inherent jurisdiction of the High Court in relation to children.
The Funding Code goes on to define ‘special Children Act proceedings’ and ‘other public law children cases’. 5.2.3 LSC family franchise category
The family franchise definition (LSC Manual 2A-524) includes a much longer list of matters and proceedings which fall within the scope of franchised work in this category, for the avoidance of doubt in relation to the less common statutes and applications. The list also serves to define the boundary of the franchise category: for example, it clarifies the limits of proceedings under the Protection from Harassment Act 1997 for the purposes of franchised work.
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5.2.4 The remuneration regulations
There is a convoluted definition of ‘prescribed family proceedings’ in reg 2(1) of the Legal Aid in Family Proceedings (Remuneration) Regulations 1991 (LAFP(R)R). These are proceedings in which costs allowed are in accordance with Sched 2 to the LAFP(R)R (Sched 2A for franchisees), including: • matrimonial proceedings; • proceedings for financial relief and other applications ancillary to divorce, nullity or judicial separation; • proceedings under the Children Act 1989, excluding care proceedings; • certain proceedings under the Married Women’s Property Act 1882; • certain proceedings under the Child Support Act 1991; • certain proceedings under the Human Fertilisation and Embryology Act 1990. Also remunerated under Sched 2 is work done in proceedings under Part IV of the Family Law Act 1996 (from 1 November 1997), which are not, however, prescribed family proceedings. Representation in care proceedings is remunerated under Sched 1 to the LAFP(R)R (Sched 1A for franchisees), although again these are not prescribed family proceedings. 5.2.5 Exclusion from conditional fee agreements
Section 58A of the Courts and Legal Services Act 1990, as inserted by the Access to Justice Act 1999, provides that family proceedings cannot be the subject of an enforceable conditional fee agreement, and defines ‘family proceedings’ as proceedings under: (a) the Matrimonial Causes Act 1973; (b) the Adoption Act 1976; (c) the Domestic Proceedings and Magistrates’ Courts Act 1978; (d) Part III of the Matrimonial and Family Proceedings Act 1984; (e) Parts I, II and IV of the Children Act 1989; (f) Part IV of the Family Law Act 1996; (g) the inherent jurisdiction of the High Court in relation to children. Note the omission of the Inheritance (Provision for Family and Dependants) Act 1975, which appears in the LSC funding definition above.
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The variety of definitions above gives a flavour of the potential hazards facing the unwary when costing family matters. Bringing all family proceedings assessments under the umbrella of CPR may have gone some way towards removing the anomalies which previously existed.
5.3 Public funding 5.3.1 Remuneration
As indicated above, remuneration for work done in care proceedings is set out in Scheds 1 and 1A, and for prescribed family proceedings in Scheds 2 and 2A, to the LAFP(R)R. Schedules 2 and 2A are divided into sub-schedules (a) and (b), the sub-schedule (b) relating only to work done in the magistrates’ court (usually referred to as the Family Proceedings Court in this context). The exception is Part IV of the Family Law Act 1996 (non-molestation and occupation injunctions), to which the county court rates in Sched 2(a) apply regardless of the court in which the proceedings are heard. Certain types of family proceedings are remunerated in accordance with the Legal Aid in Civil Proceedings (Remuneration) Regulations 1994. Principally, these are: • adoption proceedings; • wardship proceedings; • proceedings under the Inheritance (Provision for Family and Dependants) Act 1975; • proceedings under the Child Abduction and Custody Act 1985. 5.3.2 Assessment by the LSC
The assessment limit is the same as for other publicly funded matters (see above, 4.7.1). Costs must be assessed by the LSC if the work was done in the magistrates’ court or Family Proceedings Court, or if proceedings were not issued. Note, however, that in the case of financial matters within divorce proceedings settled without the need to issue an application for ancillary relief, the existence of the divorce proceedings means that the court must assess costs if they are above the £1,000 limit.
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5.3.3 Detailed assessment by the court
Where proceedings have been issued in the High Court or county court and costs exceed the limit for assessment by the LSC, the bill must be lodged at court for provisional assessment. The procedure is set out above, 4.7.2. 5.3.4 Costs of preparing the bill
In family proceedings, the costs of preparing the bill and completing the assessment are prescribed in the schedules to the LAFP(R)R. The Court of Appeal in A Local Authority v A Mother and Child (2000) unreported, 20 December, considered whether the provision in the PD for the reasonable costs of preparing and checking the bill of costs allowed solicitors to claim for the costs draftsman’s time in drafting the bill as well as the solicitor’s time in checking it. It was held that the solicitor’s work was part of the ‘preparation’ of the bill and therefore costs could be allowed only up to the maximum permitted by the relevant regulation (currently £51.75). The court suggested, however, that a further allowance could be made for considering the provisional assessment, in appropriate cases, as this fell within the item for preparing for the detailed assessment. In practice, an estimated claim for this item could be made in the bill as lodged for provisional assessment. 5.3.5 Non-contentious costs
Often, a final order on an ancillary relief application will include the transfer or sale of the former matrimonial home or the assignment of life insurance policies. A legal aid/LSC funding certificate that covers proceedings up to the obtaining of a substantive order will also cover the implementation of the terms of that order. Such work, being noncontentious, is not subject to prescribed rates – C v C (Costs: Non-Contentious Business) [1997] 2 FLR 22. The same principle applies when costs are assessed by the LSC, in accordance with decision CLA10 of the Legal Aid Board’s Costs Appeals Committee: The rates of remuneration in the Legal Aid in Family Proceedings (Remuneration) Regulations 1991 do not apply to non-contentious work undertaken on behalf of an assisted person as a direct result of a court order. The rates allowed should be those which are reasonable in all the circumstances of the case for privately funded non-contentious work.
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5.3.6 Enhancement
In family cases, pursuant to reg 3(4)(c) of the LAFP(R)R, the costs officer may allow enhanced rates, where it appears reasonable to him to do so. It is necessary to establish that there was an exceptional element in: • the competence or expedition with which the work was done; or • the circumstances of the case (including, in care proceedings, the solicitor’s membership of the Law Society’s Children Panel). The family regulations do not prescribe a maximum enhancement, but simply refer to the allowance of ‘a larger amount than that specified’. However, enhancement provisions do not apply to prescribed family (non-care) proceedings in the magistrates’ court, with the exception of proceedings under Part IV of the Family Law Act 1996. Guidance as to what might constitute exceptional circumstances in care proceedings was given on the review of taxation in the case of Re Children Act 1989 (Taxation of Costs) [1994] 2 FLR 934, also reported as London Borough of A v M and SF (1994) The Times, 21 October. 5.3.7 Counsel’s fees
Fees for Queen’s Counsel are not prescribed by the regulations. For junior counsel, Scheds 1 and 2(a) set out prescribed fees for briefs on unopposed applications, contested trials, hearings of ancillary applications or children cases, conferences, written work and travelling time. In respect of advocacy, standard and maximum fees are prescribed. The court has discretion under reg 3(5) of the LAFP(R)R to allow higher fees than those prescribed, including a fee greater than any maximum specified if that fee would not provide reasonable remuneration. Counsel must be notified of any reduction in his/her fees on assessment – see above, 4.7.2.
5.4 Assessment of costs in the Principal Registry As from 1 November 2000, the costs judges and officers of the Supreme Court Costs Office (SCCO) have had full jurisdiction in all matters concerning the assessment of costs in the Principal Registry of the Family Division (PRFD). Requests for assessment of costs in proceedings in the PRFD should therefore be directed to the Costs Branch of the PRFD at the SCCO – see below, Chapter 11, for the address.
6 Court of Protection
6.1 Generally The Court of Protection, which deals with the financial affairs of people (referred to as ‘patients’) who are mentally incapable of handling such matters themselves, has the power to award costs of proceedings before it. Costs orders between parties are rare; usually, the costs will be paid from the patient’s funds. There is no provision for legal aid to be granted for proceedings in the Court of Protection. Rule 87 of the Court of Protection Rules 1994 provides that all costs incurred in relation to proceedings under the Rules shall be in the discretion of the court or the Public Trustee. By the Court of Protection (Amendment) Rules 1999 (SI 1999/2504), in force from 1 October 1999, the CPR apply to costs in Court of Protection matters, which are usually assessed on the indemnity basis.
6.2 Detailed assessment, fixed costs or agreed costs Fixed costs are available for various categories of work in the Court of Protection (see the table below). In all cases, practitioners may opt to have their costs decided by detailed assessment, if they believe that the amount of the fixed costs is inadequate in particular circumstances. If costs for a type of work for which fixed costs are not prescribed are less than a specified amount (currently £1,000, excluding VAT and disbursements), practitioners may seek agreement of their costs. A narrative bill should be lodged, with a summary of the work done, time engaged and status of fee earner. Agreed costs are not normally available where there is an option for fixed costs, the alternative to which is detailed assessment (Master’s Practice Note of 17 March 1992).
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FIXED COSTS Category I Work up to and including the date upon which the First General Order is entered: £620 (plus VAT). [The commencement fee of £230 and fees for medical evidence and evidence of notification of the patient may be added. Please produce receipts for fees paid.] Category II (a) Preparation and lodgement of a receivership account: £160 (plus VAT). (b) Preparation and lodgement of a receivership account which has been certified by a solicitor under the provisions of the Practice Notes dated 13 September 1984 and 5 March 1985 reported at [1984] 3 All ER 320 and [1985] 1 All ER 884 respectively: £175 (plus VAT). Category III General management work in the second and subsequent years: (a) where there are lay receivers: £490 (plus VAT); (b) where there are solicitor-receivers: £545 (plus VAT). [Note: Categories II and III may be claimed together.] Category IV Applications under s 36(9) of the Trustee Act 1925 for the appointment of a new trustee in the place of the patient, for the purpose of making title to land: £300 (plus VAT). Category V In respect of conveyancing, two elements will be allowable as follows: (a) a sum of £115 in every case to cover correspondence with the Public Trust Office, the preparation of the certificate or affidavit of value and all other work solely attributable to the Court of Protection or the Public Trust Office, together with (b) a value element of 0.5% of the consideration up to £400,000 and 0.25% thereafter, with a minimum sum for this element of £315. As well as a fee for both the above elements, VAT and disbursements will be allowed.
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New rates of fixed costs will apply as follows: • in Category I, to all draft First General Orders sent out on or after 1 January 2001; • in Category II, to all receivership accounts lodged on or after 1 January 2001; • in Category III, to all general management costs in respect of years ended on or after 1 January 2001; • in Category IV, to all orders sent out on or after 1 January 2001.
6.3 Costs of receivership application If assessed costs are to be sought in respect of an application for the appointment of a receiver, practitioners should ensure that the First General Order contains a direction for detailed assessment. To avoid difficulties in determining the point at which general management costs commence, the costs officer will treat the application for receivership as having ended on the date on which the First General Order is entered, costs incurred thereafter being held to be costs of general management. As the date of entry of the order is usually some weeks after the date appearing on the face of the order and the accounting year runs from the latter date, it follows that the first ‘year’ of general management is actually less than a full 12 months. This explains why fixed costs for general management are available only for the second and subsequent years. For the first ‘year’, costs should be assessed or agreed.
6.4 General management costs A lay receiver is expected to take on the routine non-professional work of receivership, such as paying household bills and nursing home charges. The Court of Protection has pointed out (Practice Note dated 11 August 1995) that solicitors should be careful not to become involved in aspects of a patient’s affairs which are not financial, as the costs officer is unlikely to allow the associated costs on detailed assessment. Indeed, r 90(1) of the Court of Protection Rules 1994 expressly states that: ‘No receiver for a patient, other than the Public Trustee or the Official Solicitor, shall, unless authorised by the court, be entitled at the expense of the patient’s estate to employ a solicitor or other professional person to do any work not usually requiring professional assistance.’ Allowable general management work will normally include work done in connection with the sale of stocks and shares, completion of income tax returns
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and other matters with which the lay receiver might not be expected to be conversant. The court does not expect general management costs to be left to accumulate over a number of years. They should be claimed every year, soon after the anniversary of the First General Order. No specific order is required for the detailed assessment of general management costs, which may be assessed pursuant to a General Direction dated 19 November 1982. Whilst the CPR apply, the bill of costs may consist of a brief narrative followed by the status of the fee earner and a summary of correspondence and time spent.
6.5 Other costs 6.5.1 Prior costs
Rule 92 of the Court of Protection Rules 1994 states: Where in proceedings relating to a patient a claim is made against his estate in respect of any costs alleged to have been incurred by him or on his behalf otherwise than in relation to the proceedings, the court or the Public Trustee may refer the claim to a Taxing Master of the Supreme Court so that the amount due to the claimant may be ascertained by him or under his direction.
In practice, if such claims arise, they are likely to be in respect of costs incurred before the person concerned became a patient and before proceedings in the Court of Protection were contemplated. These prior costs may be included as Part One of the bill of costs for detailed assessment, of which Part Two comprises the costs of the application for appointment of a receiver. 6.5.2 Costs of sale or purchase of a property
The Court of Protection may make an order for the sale of the patient’s property and/or the purchase of another property. Such order may include a direction that the costs of the sale or purchase be assessed. A bill of costs for detailed assessment should be lodged if fixed costs are not being taken. The costs may be included as a separate part of a bill containing receivership or general management costs.
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6.5.3 Costs of application for a statutory will and related applications
No fixed costs apply to such applications. There may, of course, be interested parties who should be served and costs of the application are in the discretion of the court. The order made by the court will include a direction for costs to be assessed, either between parties or to be paid out of the estate of the patient.
6.6 Disbursements Court fees, transaction fees and estate agents’ fees should not be included in a bill of costs for detailed assessment. Instead, they will appear in the receivership accounts or the completion statement upon sale of a property. Doctors’ fees for medical certificates should be included in the bill.
6.7 Format of bill As stated above, the CPR apply to the detailed assessment of Court of Protection costs. The format of the bill should, therefore, follow that suggested by the Practice Direction on Costs, except that summary bills may be accepted in certain instances (for example, when detailed assessment is sought for general management or conveyancing costs). Costs are assessed in the Supreme Court Costs Office, which has a Court of Protection branch. In cases of doubt as to the format or content of the bill, a telephone call to the court will usually yield a helpful response. Further, it should be noted that the Supreme Court Costs Office (Court of Protection Branch) has produced Notes for Guidance of Solicitors on Costs in Court of Protection Matters, which will be sent to solicitors on request.
7 The Detailed Assessment Process
7.1 Commencing detailed assessment proceedings Detailed assessment proceedings should be commenced within three months of the event which provides the authority for detailed assessment. Under the CPR 1998, a significant difference from the previous procedure is that the court is not involved at all in the detailed assessment unless and until the costs cannot be agreed. A further three months are allowed for attempts to settle without the need for a hearing, so that the time for requesting a detailed assessment hearing is six months from the date of the authority for detailed assessment. The permission of the court is not required to commence detailed assessment proceedings out of time. Detailed assessment proceedings are commenced by serving on the paying party (see below, 9.14): • notice of commencement (Form N252); • a copy of the bill of costs; • copies of the fee notes of counsel and experts; • written evidence of any other disbursement exceeding £250; • a statement of parties on whom notice of commencement is served. Care should be taken to insert in the notice of commencement the correct date for service of points of dispute. This is 21 days from the date of service, which by CPR r 6.7 is deemed to be two days after dispatch by DX or first class post. An incorrect date makes the notice irregular and could lead to the setting aside of a default costs certificate, with costs penalties.
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7.2 Default costs certificate If the paying party fails to serve points of dispute within 21 days of service of the notice of commencement, the receiving party may file a request for a default costs certificate, using form N254, in accordance with CPR r 47.11 and s 37 of the PD (see below, 9.18). Costs payable to the receiving party on the issue of a default costs certificate are fixed, as specified in the PD (currently £80). The circumstances in which a default costs certificate may be set aside are: • when the receiving party was not entitled to it; • when the receiving party discovers that the notice of commencement was not received by the paying party at least 21 days before the default certificate was issued; • when the paying party makes an application to set it aside. An application by the paying party to set aside a default costs certificate is made under r 47.12(2) and must be supported by evidence to show good reason why the detailed assessment proceedings should continue, together with draft points of dispute which the paying party proposes to serve.
7.3 Points of dispute The importance of serving points of dispute within the time allowed will be apparent from 7.2 above. For substantial matters, 21 days may well be insufficient time to take the client’s instructions, instruct a costs draftsman to prepare points of dispute and approve the same for service. If this is the case, extension of time should be agreed, if possible, with the paying party. Consideration may have to be given to making an application to the court in accordance with para 35.1 of the PD if an extension of time is refused. A party cannot raise an objection which has not been notified in the written points unless the court gives permission. Supplementary points of dispute may be served at any time, however. It may, therefore, make sense, if time is tight, to serve the main points of dispute first in order to buy time to amplify them with supplemental points at a later stage.
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In the past, it was common for both parties to turn up to a taxation appointment and argue the issues before the taxing officer on the day, with little or no prior notification of points to be raised. When the Chief Taxing Master’s Practice Direction No 2 of 1992 was issued, requiring the filing and serving of points in issue, the pendulum swung in the opposite direction, to the position where written objections frequently became detailed and verbose, inviting perhaps even longer responses. This in turn provoked a further Practice Note from the Chief Taxing Master (17 July 1995), in which he stated: The purpose of points in issue is to get away from the situation which previously obtained where neither the Taxing Officer nor the parties attending taxation knew in advance what was going to be raised. All that is required is an indication of what items the paying party objects to, a concise statement of the reason for the objection, and where appropriate, the suggested figure. This should not occupy more than a few lines per item. Whilst there is no requirement for a response to be served in every case, if a party chooses to reply, that response should be equally brief. It is not necessary to set out the full argument in writing, but a response may assist in narrowing the issues.
The provisions in the PD (see below, 9.17) are a logical extension of these directions, the intention being that many issues might well be agreed in advance of the hearing. In practice, this does not appear to have happened to the extent that those who drafted the new directions had hoped; however, it seems that the requirement to put the arguments in writing has resulted in more cases being settled without a hearing. Precedent points of dispute are shown below.
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IN THE [ BETWEEN:
] COUNTY COURT [
]
Claimant
]
Defendant
CASE NO: [ ]
and [
DEFENDANT’S POINTS OF DISPUTE WITH THE CLAIMANT’S BILL OF COSTS Item No
Item
Dispute
–
Hourly rate
Defendant submits that the hourly rate of £95.00 for a Senior Clerk is too high for the period concerned and that an appropriate rate would be £85.00.
4
Conference 11.03.99
Defendant submits that conference at this stage was unnecessary. Disallow.
6
Telephone conference Trial 10.05.99
Defendant repeats dispute with item 4.
7
Defendant objects to payment for the attendance of two fee-earners. Disallow trainee solicitor’s time.
8
Attendances on claimant
Defendant submits that reasonable times for the three attendances listed are 2 hours, 1 hour 30 mins and 1 hour 30 mins. Total of 5 hours offered for personal attendances (£425.00 at reduced rates).
9
Dr Abbot
Defendant opposes all costs claimed in respect of attendances upon and correspondence with Dr Abbot, on the grounds that his report was not disclosed.
Claimant’s comments
THE DETAILED ASSESSMENT PROCESS
10
Dr Abbot
Defendant objects to payment of Dr Abbot’s fee for his report and court attendance, on the grounds stated above. Further, Dr Abbot’s presence at court was not necessary to transcribe any of his notes, since Defendant’s application for disclosure of the Claimant’s GP notes was refused.
11
Documents
17.12.98 – 40 mins. In view of the claim at 10.12.98 of 2 hours, Defendant offers 15 mins. 18.03.99 – 2 hours. Defendant opposes this item in its entirety, on the grounds stated in dispute with item 9. 07.05.99 – 2 hours 30 mins. Some of this work could have been delegated to a non-feeearner. Offer 1 hour 15 mins. 12.05.99 – 2 hours. This is solicitor and client work, not costs of the action. Disallow. Total estimated time – 5 hours. Only in an unusual case should any substantial allowance be made for unrecorded time (Brush v Bower Cotton and Bower [1993] 4 All ER 741). Defendant submits that this was not an unusual case and that estimated time should be disallowed or substantially reduced.
87
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CAVENDISH PRACTICE NOTES
Work done on documents totals 32 hours 12 mins (incorrectly claimed as 35 hours 12 mins). Taking into account the above objections, Defendant offers 23 hours (£1955.00 at reduced rates). 12
Photocopying
The making of photocopies is part of normal overhead expenses – PD, para 4.16(5). Disallow the two claims for £75.25 and £77.05.
14
Checking bill
The bill is unsigned and contains arithmetical errors, as noted above. Estimated claim of 1 hour disputed. No offer made, pending confirmation of actual time spent.
15
Preparing bill
Time claimed excessive. Charge is equivalent to over 10% of profit costs claimed. Offer £300.
Served on …………………………………………………[date] Signed ………………………………………………………… Buggins and Co Railway Terrace Midtown MI5 3OT SOLICITORS FOR THE DEFENDANT
7.4 Replies Replies are optional. Careful consideration should be given before deciding not to serve replies, however, as this may result in penalty on costs of detailed assessment, if the hearing is prolonged by the absence of written replies.
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Paragraph 35.6 of the PD allows the receiving party to request a copy of the points of dispute on disk, where possible, to facilitate the presentation of replies alongside disputed items, in a format helpful both to the court and the parties at the detailed assessment hearing. Unfortunately, the delay involved in making this request and receiving the response has meant that this helpful provision has not been extensively used. It would perhaps have been better to make service of a disk copy compulsory, in addition to the written points, where the latter are prepared on a computer. If it is intended to take up this option, the request should be made as soon as the points of dispute are received. If an external costs draftsman was instructed to draw the bill, it may be cost effective to have replies prepared by the same draftsman, who will probably appreciate further sight of the file to facilitate this task.
7.5 Request for detailed assessment hearing A request for a detailed assessment hearing must be filed within three months of expiry of the period for commencing detailed assessment proceedings; that is, within six months of the event giving authority for detailed assessment. The request must be in Form N258 and accompanied by the documents specified in para 40.2 of the PD (see below, 9.22). Section 40 of the PD gives extensive guidance as to procedure, including: • applications by either party in the detailed assessment proceedings; • settlement of costs before the hearing; • variations of a bill of costs, points of dispute or replies (see below, 9.23); • papers to be filed in support of the bill; • disclosure of documents by the receiving party.
7.6 Offers to settle without prejudice An offer by the paying party to pay a specific sum in settlement of the receiving party’s costs, expressed to be ‘without prejudice save as to the costs of detailed assessment’, is still often referred to as a Calderbank offer (Calderbank v Calderbank [1975] 3 All ER 333), although the term ‘rule 47.19 offer’ is also used. The receiving party may also make an offer under r 47.19 to accept a specific sum in satisfaction of the costs claimed. An offer by the paying party under this rule should normally be made within 14 days of service of the notice of commencement (see
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below, 9.26). Late offers will carry less weight than offers made promptly – para 46.1 of the PD. An offer by the receiving party should normally be made within 14 days of service of the points of dispute. The purpose of a Calderbank offer is to put the receiving party at risk as to costs of detailed assessment. The general rule is that the receiving party is entitled to his costs of the detailed assessment proceedings (CPR r 47.18(1) and para 45.1 of the PD). Offers made under r 47.19 may be taken into account by the costs officer when deciding who is liable for costs of the assessment proceedings. The situation is now comparable to litigation generally under the CPR, where the ‘winner’ should not necessarily expect an order for the whole of his costs. Waller J set out the position with clarity in Chrulew v Borm-Reid and Co [1992] 1 All ER 953, which arguably remains good case law post-CPR. The main point decided on this review of taxation was that, in ordinary circumstances, the offeror is not obliged to provide a breakdown of how the offer has been formulated. A Calderbank offer of £8,750 had been made and the bill had been taxed at £8,609. The paying party made a claim not only to have the costs of taxation disallowed, but also to have their own costs of taxation paid by the receiving party. Waller J said: It is in this area that the distinction between taxation and ordinary litigation is once again important. The expectation at the conclusion of a taxation is that normally the party whose bill is being taxed will be entitled to his costs and there is not an expectation that the ‘winner’ will receive an order for costs, ie, that someone who succeeds in taxing the bill down will necessarily be entitled to his costs of attending the taxation.
In this case, where the difference between the offer and the amount allowed on taxation was small, a proper exercise of the discretion was to disentitle the receiving party from the costs of the taxation proceedings, including the taxing fee, but not to go so far as to award the paying party their costs of taxation. To avoid situations common in the past, where the precise extent of a Calderbank offer was unclear, para 46.2 of the PD requires that the offer should make clear whether or not it includes VAT, interest and the costs of preparing the bill. In the absence of this information, the offer will be taken to include all these items.
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7.7 Preparing for detailed assessment 7.7.1 Opposing the bill
If the points of dispute have included requests for clarification or for further details, for example, with regard to substantial disbursements, a note should be made to prompt the receiving party if details are not forthcoming. Any adjournment necessary on account of failure to comply with such requests will usually be at the expense of the receiving party, but it is preferable to avoid the delay that this causes whenever possible. If authorities have been cited in the points of dispute, it should be ensured that copies of at least the salient passages are available for the benefit of the receiving party and the costs officer. This element of good practice is, of course, even more important if it is intended to refer to authorities which have not been notified to the opposing party prior to the detailed assessment. If a costs draftsman is to be instructed to conduct the detailed assessment, not having been involved in the preparation of points of dispute, he/she should be given adequate time to consider the papers, including the paying party’s file. It is not unusual for the costs draftsman to pick up further points which have escaped the practitioner’s attention and require clarification in advance of the hearing – although, of course, points not notified in writing may not be raised on detailed assessment without the court’s permission. It goes without saying that the costs draftsman should also be fully informed of any negotiations which may have been ongoing in respect of costs, including any offers made or received under CPR r 47.19. 7.7.2 Defending the bill
If the fee earner concerned is interested in the detailed assessment process and fully acquainted with the points which are commonly raised on detailed assessment, his attendance may be beneficial, as the fee earner’s knowledge of the case and its conduct will clearly outweigh that of the costs draftsman. However, the law relating to costs is extensive, and a competent costs draftsman may be aware, for example, of recent directions or authorities which can easily escape the attention of the busy practitioner.
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If the costs draftsman who drew the bill of costs is instructed, his/her reading of the file at the time of drawing the bill and notes made at the same time will be of assistance in preparing to defend the bill on detailed assessment. The costs draftsman will usually wish to have further sight of the file in order to draft replies and/or prepare for attendance on detailed assessment. The points of dispute may challenge items in respect of which the costs officer will wish to refer to the file – to read an attendance note of a conference, for example. Good preparation includes the flagging of such items so that they can be easily located without wasting valuable court time at the hearing. The comments above relating to authorities cited apply equally to the defence of the bill. The costs officer is unlikely to be impressed by your reference, however eloquent, to a case which is in your favour, unless you are able to provide him with some documentary evidence of it. It is of paramount importance that the practitioner or costs draftsman attending the detailed assessment has a thorough knowledge of the file. It cannot be assumed, particularly in county courts or District Registries, that the costs officer has read the papers. Whilst courts are increasingly adopting the practice of listing reading time before the case is called, this is not always the case. Even when reading time is listed, the district judge may not have been able to take advantage of it because of an urgent application or a previous hearing overrunning. It must be remembered that the purpose of a detailed assessment is for the receiving party, through his representative, to satisfy the court and/or the paying party as to the reasonableness of the costs claimed. It is, therefore, inadvisable to attend upon detailed assessments inadequately prepared, or to fall into the trap of sending junior fee earners who have insufficient knowledge of the particular file or of costs in general.
7.8 Advocacy on detailed assessment 7.8.1 Opposing
Opposing a bill essentially amounts to the presentation of the points of dispute raised in writing. This does not mean that the costs officer will be over-impressed by an advocate who merely reads aloud the written objections. Indeed, the latter should be regarded more as a ‘skeleton argument’, putting the receiving party on notice as to the areas of disagreement to be raised, rather than a full exposition of the paying
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party’s case. The detailed assessment hearing gives the opportunity to present fully each point of dispute. However, prolixity can be counterproductive. Short, well reasoned arguments, concluding with an invitation to the costs officer to reduce or disallow the item, are likely to fare much better. It is important to judge when to pursue an argument and when to hold back. Continuing to argue a point on which the costs officer has clearly reached a decision will only serve the purpose of unduly prolonging the detailed assessment. By all means ask for clarification if you are unsure of the precise details of the decision and take a note for future reference, but do not antagonise the costs officer by pressing him on a point which has clearly been lost. 7.8.2 Defending
The points of dispute will have drawn attention to the weak points of the bill of costs. If written replies have been served, this exercise in itself constitutes part of the preparation for detailed assessment. Sometimes, however, replies will not have been prepared or will be little more than a straight rebuttal of the objections. Prior to detailed assessment, therefore, a devil’s advocate approach is beneficial. It is imperative to spend some time anticipating potential areas of difficulty, considering the bill from the point of view of the paying party. Time spent in familiarising oneself with the file, as suggested above (see 7.7.2), will assist the advocate in responding to unexpected amplification of points of dispute or additional challenges raised with the costs officer’s permission. A quick, fluent answer based on knowledge of the file is much more likely to defeat the objection than a hesitant and vague response. It should not be forgotten that the party whose bill is being assessed is normally entitled to his costs of the detailed assessment proceedings (see above, 7.6). Part of advocacy in defending a bill, therefore, is to ask for costs of detailed assessment at the conclusion of the hearing, subject of course to any valid Calderbank offer having been beaten. Neither party is required to file a statement of costs, unless ordered to do so by the court (para 45.3 of the PD – see below, 9.25), so the usual procedure is for the costs officer to assess these costs and add them to the bill. The defending advocate must be ready with figures to put to the costs officer at this stage. Costs of detailed assessment include preparation as well as attendance, and time spent in the drafting of written replies should be claimed as part of the preparation.
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7.9 Disbursements 7.9.1 Between parties
Disbursements can cause particular difficulties on detailed assessment. When serving a paying party with a bill, it is necessary to serve fee notes and accounts for substantial disbursements, including counsel’s fees – para 32.3 of the PD (see below, 9.14). Compliance with this direction does not, of itself, ensure, however, that problems will be avoided. Experts and counsel are notorious for producing fee notes for substantial amounts, with little or no supporting detail. In the absence of such details – the work done, the time spent, by whom and when, and the computation of the charge – there is a risk that the detailed assessment will be adjourned, with a possible costs penalty against the receiving party. With regard to counsel’s fees, it should be noted that costs officers tend to have regard to counsel’s seniority and it is advantageous to know his length of call, particularly on more substantial detailed assessments. As to expert witnesses, it is sensible to seek a breakdown of the time engaged and the hourly rates charged, particularly if the amount at stake is substantial. Many accountants and consulting engineers do provide, as a matter of course, a detailed breakdown, which looks much more convincing than a short narrative followed by a fee of several thousand pounds! When attacking an opponent’s bill, it may assist to consider the fee notes of the paying party’s experts. Whilst such comparisons are not conclusive, they are a helpful indication as to whether or not the fees are excessive. 7.9.2 Legal aid
To safeguard against the reduction on legal aid detailed assessment of experts’ fees or unusual items of expenditure, it is advisable to obtain prior authority from the LSC (see above, 4.4). Unless experts are specifically warned when instructed that their fees will be subject to assessment and that the practitioner’s firm will not accept liability for any shortfall, the responsibility for payment of fees in full rests with the instructing solicitors. The practice of engaging an expert on terms that their remuneration would be restricted to the amount allowed on detailed assessment was approved by Phillips J in Cementation Construction v Keaveney [1988] NLJR 242. He also confirmed that it was the solicitor’s responsibility to use his best endeavours on detailed assessment to secure
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the allowance of a proper fee. As to the admission of evidence from an expert in support of his fee, the decision is within the costs officer’s discretion; however, the costs officer would normally be expected to permit such evidence in exceptionally heavy cases.
7.10 Legal aid detailed assessment In a legal aid only detailed assessment, the interested parties who may attend the detailed assessment are usually limited to the solicitor whose bill it is and the assisted person, if he has a financial interest in the outcome. The costs officer may give a direction as to any other parties entitled to be heard. As indicated above, 4.7.2, a legal aid only detailed assessment will usually proceed by way of provisional assessment, although in cases involving very large bills, the costs officer may bypass the provisional stage and list the matter for a hearing at which the solicitor’s (or costs draftsman’s) attendance is required. In a legal aid detailed assessment, the costs officer’s role is inquisitorial and he is entitled to raise any matters on the bill which he considers to be appropriate. It should be remembered that the costs officer is in effect taking on the guise of guardian of the CLS fund and is charged with the duties of a ‘vigilant inquisitor’. Legal aid costs are always assessed on the standard basis – reg 107A of the Civil Legal Aid (General) Regulations 1989, and see, also, Willis v Redbridge HA [1996] 3 All ER 114. Costs of detailed assessment, including any attendance on detailed assessment, may be claimed against the CLS fund. It should be remembered, however, that such costs are within the discretion of the costs officer. If, following a provisional assessment, the costs officer reaffirms his decisions or further reduces the bill, costs of attending the detailed assessment hearing may be disallowed. The statutory charge does not apply in relation to any increase in the net liability of the fund arising out of the costs of the detailed assessment proceedings – reg 119(2) of the Civil Legal Aid (General) Regulations 1989.
7.11 Mixed detailed assessments The detailed assessment of a legal aid bill containing an element between parties varies according to whether the certificate was issued before or
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after 25 February 1994. The significance of this date relates to the implementation of amendments to the relevant regulations, bringing in prescribed legal aid rates for civil proceedings. Implications with regard to costs sought between parties and against the legal aid fund are stated above, 4.16. The practice to be followed in drawing and lodging bills and completing the detailed assessment is given in s 49 of the PD.
7.12 Appeals The Civil Procedure (Amendment) Rules 2000 added a new Part 52 covering all civil appeals. Part 52 applies to appeals against decisions of the court on summary assessment and in detailed assessment proceedings. In line with appeals generally, permission is now required to appeal against assessments of costs, except for appeals from authorised court officers, which are excluded from Part 52 and dealt with under Part 47 of the CPR. The routes of appeal are summarised in the table below. Costs officer/judge
Type of assessment
Appeal to
District judge
Detailed/summary
Circuit judge
Costs judge
Detailed/summary
High Court judge
Circuit judge
Summary
High Court judge
High Court judge
Summary
Court of Appeal
Authorised court officer
Detailed
Costs judge or district judge of the High Court
An authorised court officer is an officer whom the Lord Chancellor has authorised to assess costs. Currently, such costs officers operate only in the Supreme Court Costs Office and the Principal Registry of the Family Division. Rules 47.20–47.23 provide for appeals from decisions of authorised court officers. In such cases, there is no requirement to obtain the court’s permission or to seek written reasons (para 47.2 of the PD). The appeal notice should be filed within 14 days of the decision, even though a suitable record of the authorised court officer’s decision may not be available within that time. The appeal notice may be subsequently amended with the permission of the judge hearing the
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appeal (para 48.4 of the PD). This type of appeal is a full re-hearing; all others are limited to the decision(s) appealed against, unless the appeal court orders otherwise.
7.13 Detailed assessment checklist (between parties) (1) (2) (3) (4) (5) (6) (7) (8) (9)
(10) (11) (12) (13) (14)
(15)
Before considering detailed assessment, attempt to agree costs. If agreement cannot be reached, arrange for a bill of costs to be drawn. Check and sign the bill, paying particular attention to compliance with the indemnity principle. Serve a copy on the paying party, with fee notes and notice of commencement (see above, 7.1). Request default costs certificate if points of dispute not received within 21 days of service (or any longer period agreed). If points of dispute served, consider whether replies are necessary (see above, 7.4). Continue negotiations if settlement appears possible. If agreement still cannot be reached, file a request for a detailed assessment hearing (see above, 7.5). Receive notice of detailed assessment hearing and inform paying party (court should inform them, but it is by no means unknown for notice not to reach the appropriate person). Decide whether to attend detailed assessment or to instruct costs draftsman to attend (see above, 7.7.2). Lodge relevant documentation at court in accordance with para 40.12 of the PD. Attend detailed assessment (or receive costs draftsman’s report). Consider appeal against detailed assessment if client is dissatisfied (see above, 7.12). Complete the bill in accordance with para 42.2 of the PD; pay any unpaid disbursements; re-lodge bill within 14 days of hearing, with receipts for disbursements (or those to which Certificate (5) of Precedent F does not apply) – para 42.4 of the PD. Receive final costs certificate.
8 Costs in Criminal Proceedings
8.1 Defendant’s costs and costs between parties 8.1.1 Defendant’s costs orders
Section 16(6) of the Prosecution of Offences Act (POA) 1985 states: A defendant’s costs order shall … be for the payment out of central funds, to the person in whose favour the order is made, of such amount as the court considers reasonably sufficient to compensate him for expenses properly incurred by him in the proceedings.
Central funds costs are governed by the provisions of ss 16–19 of the POA 1985, which apply to proceedings in the magistrates’ court, the Crown Court, the Divisional Court of the Queen’s Bench Division, the Court of Appeal and the House of Lords. The amount to be paid may be either: • specified by the court, where appropriate – s 16(9)(a) of the POA 1985; or • determined in accordance with regulations made by the Lord Chancellor – s 16(9)(b) of the POA 1985. Whilst the POA 1985 does not specify a basis on which such costs should be assessed, in practice assessing officers will deal with assessment on the standard basis, as applicable to civil matters, allowing a reasonable amount in respect of all costs reasonably incurred.
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Prior to the implementation of the provisions of the 1985 Act, an order had to be obtained in open court if, in a Crown Court matter, the lower court costs were also to be taxed. The absence of such order meant that the Crown Court determining officer would not entertain a claim for magistrates’ court work. With the advent of ‘defendant’s costs orders’ under the POA 1985, an order for costs carries all work with it – s 21(1)(a) of the POA 1985. In privately funded cases, costs ordered out of central funds belong to the defendant. Since the charging rates allowed are likely to be less than those which will be charged by a solicitor to his own client, a privately paying client should be made aware from the outset that he will be unlikely to recover all of his costs if the case against him is withdrawn or he is acquitted. Where a party in receipt of legal aid has a central funds order made in his favour, different considerations apply. In such cases, because of the indemnity principle (see above, 1.4 and 3.1), the receiving party cannot expect to obtain more than his solicitor will be paid for work done on his behalf under the legal aid order. The solicitor should lodge his legal aid bill in the usual way (see below, 8.2). The only costs which may be separately claimable from central funds are: • work done from at or about the time of arrest, prior to the granting of legal aid; • the expenses of the defendant, excluding loss of earnings; • the expenses of witnesses (other than character witnesses); • disbursements in respect of which prior authority has been refused by the regional office of the LSC, but which on assessment are adjudged to be reasonable. 8.1.2 Claiming costs from central funds
There are surprisingly few requirements relating to the format of the bill to be submitted. Regulation 6(3) of the Costs in Criminal Cases (General) Regulations 1986 states that: A claim shall – (a) summarise the items of work done by a solicitor; (b) state, where appropriate, the dates on which items of work were done, the time taken and the sums claimed; and
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(c) specify any disbursements claimed, including counsel’s fees, the circumstances in which they were incurred and the amounts claimed in respect of them.
8.1.3 Crown Court
In Crown Court cases, the standard ex post facto bill (Form 5144) may be used, marked ‘TO BE PAID FROM CENTRAL FUNDS’. Alternatively, an itemised bill similar to that suggested for a magistrates’ court claim (see below) will be accepted. 8.1.4 Magistrates’ court
In the magistrates’ court, the claim is submitted to the justices’ clerk. In the absence of a prescribed format, save for the reg 6(3) requirements, it is suggested that the bill should be set out as follows: • heading – details of court, defendant, order for costs and solicitors; • rates sought (see below); • attendances and preparation, itemised in date order with costs claimed for each item and totalled; • travelling and waiting, itemised in date order and totalled; • disbursements incurred in connection with preparation; • court attendances, in date order, showing for each the times spent in conference and advocacy, travelling and waiting, and travelling expenses; • summary of profit costs, disbursements and VAT for preparation and court attendances. For the convenience of the justices’ clerk in assessing the bill, it is helpful to present the above details in columnar format, with six columns, comprising date, itemised details and narrative, VAT, disbursements, profit costs and amount allowed. Rates are not prescribed for central funds orders. The approach recommended by the Taxing Officers’ Notes for Guidance (TONG), updated in 1995 by the Lord Chancellor’s Department with the assistance of the Supreme Court Taxing (now Costs) Office, is to determine the ‘direct average cost’ of doing the work and add a sum for care and conduct. In exercising their discretion, determining officers should take into account rates currently prevailing in the locality in which the solicitor practises and any generally accepted local survey of rates (TONG 1995, paras 3.13–3.15).
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If a defendant’s costs order is granted in favour of an employee whose employer is funding his defence, he may nevertheless recover those costs from central funds, provided there is no specific agreement that he will in no circumstances have to pay his solicitor’s bill – R v Miller and Glennie [1983] 3 All ER 186. 8.1.5 No requirement to prove payment of costs
Under the Costs in Criminal Cases (General)(Amendment) Regulations 1999 (SI 1999/2096), an obligation was imposed on the defendant to provide evidence as to payment of his solicitor’s charges before costs were determined pursuant to a defendant’s costs order. The Divisional Court upheld a challenge to the Lord Chancellor’s construction of this regulation in R v Clerk to Liverpool Magistrates’ Court ex p McCormick (2001) The Times, 12 January, in which it was held that the concept of costs being properly incurred did not include a consideration of whether the defendant could afford to pay the costs at the time when they were incurred. The amendment did not mean that the defendant could only be reimbursed if he had already paid the costs to his solicitor. 8.1.6 Costs between parties
The power of the court to order costs to be paid by one party to another in criminal proceedings in the Crown Court derives from Part IV of the Crown Court Rules 1982. Rule 12 thereof states that ‘no party shall be entitled to recover any costs of any proceedings in the Crown Court from any other party to the proceedings except under an order of the Court’. The Rules go on to provide for taxation of costs by an appropriate officer of the Crown Court, review by the taxing officer, further review by a Taxing Master and appeal to a High Court judge. Where costs are awarded against the accused person, s 18(3) of the POA 1985 provides that the amount to be paid shall be specified in the order. As there are no provisions for the assessment of the prosecution’s costs, a hearing may be necessary to resolve any objections raised by the accused – R v Associated Octel Ltd [1997] Crim LR 144. Costs between parties in the Divisional Court are assessed in accordance with the provisions of Parts 43 to 48 of the CPR. By virtue of CPR r 2.1, the costs of all proceedings in the High Court and the civil division of the Court of Appeal are in the discretion of the court.
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8.2 Legal aid The Legal Aid Act 1988 (ss 2, 25, 34) gives authority to the Lord Chancellor to make regulations to give effect to the Act. The relevant regulations in respect of legal aid granted up to 1 April 2001 are the Legal Aid in Criminal and Care Proceedings (General) Regulations 1989 (LACCP(G)R) and the Legal Aid in Criminal and Care Proceedings (Costs) Regulations 1989 (LACCP(C)R). From 2 April 2001, public funding of defendant’s costs in criminal cases will be provided by the Criminal Defence Service, under regulations made pursuant to the Access to Justice Act 1999 (see above, 1.2.2). Firms must have been in possession of a criminal legal aid franchise by 2 October 2000 in order to undertake LSC funded criminal defence work. Regulation 3 of the LACCP(C)R defines the ‘appropriate authority’ which determines costs as: • the LSC for costs incurred in the magistrates’ court; • a determining officer appointed by the Lord Chancellor for costs incurred in the Crown Court; • the Registrar of Criminal Appeals for costs incurred in the Court of Appeal. All legal aid work is subject to prescribed rates, which are deemed to be inclusive of an uplift for care and conduct. The only method by which an increase can be sought is by invoking the provisions of para 3 of Sched 1 to the 1989 Regulations. Enhancement is discussed further below, 8.3. Costs are assessed on the basis that all the relevant circumstances of the case are considered and a reasonable amount is allowed in respect of all work actually and reasonably done – effectively equivalent to the standard basis in civil costs. 8.2.1 Magistrates’ court Standard fees
Standard fees now cover the majority of magistrates’ court costs. Paragraph 2 of Part III of Sched 1 to the LACCP(C)R specifies the three categories and types of proceedings to which standard fees apply. Principally, these cover (a) guilty pleas and other uncontested proceedings; (b) contested trials, including ‘cracked’ trials and mixed pleas; and (c) s 6(2) committal proceedings.
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Standard fees are not available for the following cases: any case where counsel is assigned; cases in which enhanced fees are claimed; extradition cases; s 6(1) committal proceedings.
To determine the standard fee applicable, the ‘core costs’ are calculated. These are the total costs, at the rates specified in Part I of Sched 1, of: • preparation, including attendances on the client, witnesses and counsel; • routine letters and telephone calls; • advocacy; • work done by a solicitor agent; • unassigned counsel’s preparation and advocacy. In each of the three categories of cases, there are higher standard fees and lower standard fees, payable according to whether the core costs exceed or do not exceed the prescribed lower limit. If the prescribed higher limit is exceeded, the case is non-standard and the core costs as determined will be allowed, unless they fall below the higher limit on determination. Travelling and waiting, at prescribed rates, is paid in addition to the core costs. It is important to remember that where counsel is not assigned, costs will be assessed on the ‘maximum fee principle’. This means that the total paid will not exceed what would have been paid, had the work been undertaken by the solicitor alone. Counsel is paid the fee agreed with the solicitor and the balance is paid to the solicitor. In such cases, solicitors will not receive payment for preparing instructions or briefs, attending conferences or attending court with counsel. Non-standard fees
Proceedings excepted from standard fees are: • proceedings in which counsel is assigned; • extradition proceedings; • s 6(1) committal proceedings; • cases for which enhanced rates are claimed; • cases in which the ‘core costs’ exceed the higher limit specified in the Regulations.
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There are prescribed hourly rates for four categories of work: • preparation; • advocacy; • attendance at court where counsel is assigned; • travelling and waiting. Routine letters written and routine telephone calls are paid at a rate per item. There is no differential between levels of fee earner. Late claims
Claims must be submitted within three months of the conclusion of the proceedings to which the legal aid order relates – reg 5(1) of the LACCP(C)R. However, the time limit may be extended ‘for good reason’. What constitutes ‘good reason’ is to be determined on the facts of each case; a typical example would be where a co-defendant’s case still awaits disposal. It is good practice to apply to the LSC for an extension of time before the expiry of the three month period. If ‘good reason’ cannot be shown, all is not lost: the LSC must then consider whether the existence of ‘exceptional circumstances’ justifies extension of the time limit. Again, each case is judged on its merits. If this hurdle is cleared, deductions of costs may be imposed on a sliding scale: • 5% for bills submitted up to three months late; • 10% for bills submitted up to six months late; • 15% for bills submitted up to nine months late; • 20% for bills submitted up to 12 months late. Twenty per cent is usually the maximum deduction, although failure to establish good reason or exceptional circumstances may result in the claim for costs being disallowed in full. It should be noted that where a legal aid order is transferred to new solicitors, the date of the transfer is deemed to be the ‘conclusion of the proceedings’ for the former solicitor’s claim (Costs Appeals Committee Decision CRIMLA 75, 26 July 1999). Pre-legal aid work
Regulation 44(7) of the LACCP(G)R permits payment for work done before a legal aid order is made, provided that: (a) the interests of justice required that the representation or
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advice be provided as a matter of urgency; (b) there was no undue delay in making an application for legal aid; and (c) the representation or advice was given by the solicitor who was subsequently assigned under the legal aid order.
In practice, the ‘interests of justice’ condition is fulfilled if there is a hearing within 10 days of the date of initial instructions, and there is ‘no undue delay’ if the application for legal aid is made no more than seven days after initial instruction (time runs from the day following instruction and includes Saturdays, Sundays and bank holidays). Other circumstances which do not fulfil these criteria may, nevertheless, justify payment. Full details must be given when the claim is submitted. Review
Solicitors or counsel dissatisfied with an assessment by the LSC may apply within 21 days to the regional office to review the assessment. Further appeal lies to the LSC’s Costs Appeals Committee, with the prerequisite that the regional office must be asked within 21 days of notification of the review decision to certify a point of principle of general importance. Maximising returns
When compared with the prescribed rates for civil legal aid, it will be noted that the magistrates’ court rates are not generous. To maximise returns on these cases, practitioners may wish to consider the following suggestions: • avoid where possible the use of higher levels of fee earner for straightforward cases; • be economical with preparation and perusal times, minimising the risk of reduction on the grounds that they were excessive or unnecessary; • do not overdo letters and telephone calls, for the same reason; • if counsel has to be instructed, but is not assigned, do not attend court with him/her; • try to obtain full instructions and comments on evidence (if applicable) in not more than two attendances, leaving outstanding points to be dealt with at court or in correspondence; • submit the claim as soon as possible after the conclusion of the
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proceedings. Do not, for example, await the conclusion of a Crown Court trial because you will, inevitably, fall foul of the three month rule. 8.2.2 Crown Court Standard fees
Standard fees are paid for the following categories of case: • Class 3 or 4 offences where the trial lasted two days or less; • guilty pleas in such cases; • appeals against conviction or sentence; • committals for sentence. Practitioners may elect to claim standard fees for work done in other proceedings, a procedure only likely to be advantageous if speed of payment is an overriding factor. There are lower and principal standard fees for preparation, which includes routine letters and telephone calls, determined by comparison of the costs calculated at the prescribed non-standard rates with lower and upper fee limits. In addition, there are standard fees for: • advocacy in respect of bail applications; • attendance at court (including waiting) where counsel is assigned; • travelling (including any waiting in connection with preparation work). Claims are submitted on a simple double-sided form (5144A). Non-standard fees
Sometimes referred to as ex post facto determinations, they differ from allowances in the magistrates’ court in that fee earners are classed in three grades: • A: senior solicitor; • B: solicitor, legal executive or equivalent; • C: articled clerk or equivalent. Hourly rates are prescribed for the same four categories of work as in the magistrates’ court and routine letters and telephone calls are similarly paid at a prescribed rate per item. Claims are submitted on Form 5144, detailing each item of work
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by reference to date, time taken, grade of fee earner and amount claimed (except for routine letters and telephone calls, for which totals suffice). Advocacy
As from 1 January 1997, a new system of payment of graduated fees for advocacy in the Crown Court was introduced by the Legal Aid in Criminal and Care Proceedings (Costs) (Amendment) (No 2) Regulations 1996 (SI 1996/2655). This statutory instrument amends the 1989 Regulations and lists the cases excluded from graduated fees. An extensive new Sched 3 sets out the proceedings for which graduated fees are introduced and the method of calculation of the appropriate fees. Offences are grouped in nine classes, ranging from Class A, the most serious, which includes homicide and related grave offences, to Class I, offences against public justice and similar offences. The formula for calculating the graduated fee consists of a basic fee plus add-ons which depend on length of trial, number of pages of prosecution evidence and number of prosecution witnesses. There are two levels of advocate: Queen’s Counsel and other advocates. Late claims
As for magistrates’ court bills, claims must be submitted within three months of case disposal. However, the regulations provide for time to be extended in appropriate circumstances. Examples given in the Lord Chancellor’s Directions for Determining Officers are because a claim is difficult to prepare, because a co-defendant’s case awaits disposal or because there is a genuine misunderstanding. Owing to the generally higher levels of costs involved, penalties for lateness are less severe than in the magistrates’ court. The guidance to determining officers is that the reduction should not normally exceed 20% and that solicitors or counsel must be invited to submit written or oral representations as to why the costs should not be reduced. See above, 8.2.1, under ‘Late claims’, with regard to the first solicitor’s claim following transfer of a legal aid order. Redetermination
In the case of standard fees, the practitioner’s only reason to seek review is the allowance of the lower standard fee when the principal fee was claimed. A request may be made in writing, within six weeks, for a review of the decision, or a detailed claim may be submitted on Form
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5144 for ex post facto determination. If still dissatisfied, the procedure for redetermination of non-standard claims should be followed, as below. An application for redetermination of a non-standard claim must be made within 21 days (subject to extension for good reason), specifying the decisions objected to and the grounds of objection. There is no prescribed format for the application. Within 21 days of the redetermination, the practitioner may seek written reasons, which are a prerequisite of the next stage, an appeal to a costs judge. Further appeal lies to a judge of the High Court, provided that the costs judge has certified a point of principle of general importance. 8.2.3 Court of Appeal
It should first be noted that a Crown Court legal aid order covers, without any further authority being required, preparation and lodgement of an appeal. If advice is given, but no appeal or application for leave to appeal is made, then the associated costs are included in the lower court bill and assessed by the LSC (magistrates’ court) or determining officer (Crown Court). Work done in an appeal which leads to an application for leave being filed (even if subsequently abandoned) must be claimed in a bill to the Court of Appeal and not the Crown Court. If legal aid is granted in respect of proceedings in the Court of Appeal, it may be backdated to cover work already done – reg 22(6) of the LACCP(G)R. A request for such authority, if required, should be made at the time of making the application for legal aid. A form is available from the court for submission of the bill of costs. Claims must be submitted to the Registrar of Criminal Appeals within three months of the conclusion of the proceedings.
8.3 Enhancement Provision for the claiming of enhanced rates is made in Part I of Sched 1 to the LACCP(C)R. One or more of the following criteria must be established: • the work was done with exceptional competence, skill or expertise; • the work was done with exceptional dispatch; • the case involved exceptional circumstances or complexity. Ultimately, it is for the determining officer to decide what he might regard as being exceptional in determining whether to apply the provisions
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of Part I of Sched 1. It is wrong, however, to compare the case with others of the same type. He should have regard to the generality of proceedings to which the regulations apply and make the comparison with ‘the usual or ordinary criminal trial’ – R v Legal Aid Board ex p RM Broudie and Co (1994) 138 SJ LB 94. Costs Appeals Committee decision CRIMLA 20 states that murder cases ‘often’ satisfy the exceptional circumstances test. It is submitted that the defence of a person charged with homicide will always be exceptional when compared with the generality of proceedings and that enhancement should always be sought in such cases. If the determining officer is satisfied that enhancement should be allowed in respect of any item or class of work, he must have regard to: • the degree of responsibility accepted by the solicitor and his staff; • the care, speed and economy with which the case was prepared; • the novelty, weight and complexity of the case. The prescribed rate may be enhanced by not more than 100%, except where the proceedings relate to serious or complex fraud, in which case up to 200% may be allowed. The regulations are silent, however, as to the definition of ‘serious or complex fraud’. Guidance is given by decision CRIMLA 74 (19 January 1999, amended 17 July 2000): It is a question of fact whether a case is serious or complex fraud under paragraph 3(5) of Part I Schedule 1 of the LACCP(C)R 1989. Each case must be considered according to its particular merits. Factors which may be relevant to the decision include where: 1.
a large amount of money is involved, although this does not necessarily make a fraud serious or complex in itself;
2.
the fraud has significant consequences for the victim, eg fraud on private individual investors resulting in loss of life savings or personal bankruptcy;
3.
the case raises complex issues of law, fact or procedure, examples of which could include access to bank accounts, foreign law jurisdictional issues, multiple offences/defendants, conspiracy charges and/or substantial forensic accountancy work;
4.
detailed consideration of extensive documentary evidence/unused material is necessary;
5.
the proceedings are transferred to the Crown Court under
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111
section 4 of the Criminal Justice Act 1987; 6.
a preparatory hearing is ordered in the Crown Court under section 7 of the Criminal Justice Act 1987;
7.
the case is investigated or prosecuted by the SFO, DTI, CPS Special Casework, Inland Revenue or Customs and Excise;
8.
whether a QC has been authorised under Regulation 48(3) Legal Aid in Criminal and Care Proceedings (General) Regulations 1989 because: (a) in the opinion of the competent authority the case for the legally assisted person involves substantial novel or complex issues of law or fact which could not be adequately presented except by a Queen’s Counsel; and (b) either – (i) a Queen’s Counsel or Senior Treasury Counsel has been instructed on behalf of the prosecution, or (ii) the case for the legally assisted person is exceptional compared with the generality of cases involving similar offences.
None of these factors should be taken alone as a conclusive indication that a case is a serious or complex fraud. Nor should this list of factors be regarded as exhaustive. Where a solicitor presents a bill on the basis that the case amounted to a serious or complex fraud within paragraph 3(5), and the regional office or Costs Committee finds otherwise, it shall refer to that finding and explain the basis of the finding in its written reasons for its decision.
In arriving at the appropriate percentage enhancement of a prescribed hourly rate, the determining officer must use the procedure described in decision CRIMLA 59: (5) Having considered whether any item of work should be enhanced, the assessing officer must first consider what hourly rate and percentage uplift would have been applied if the legal aid order had been made before 1 October 1994 when the ‘Backhouse’ principle applied. Once that composite figure is known (the hourly broad average direct cost rate plus appropriate uplift), the assessing officer should then ensure that the relevant percentage applied in the assessment of that
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item of work provides a figure not lower than the composite rate, subject always to the maxima provided by the regulations.
9 Costs Practice Direction
The extracts reproduced below are taken from the revised Practice Direction on Costs, which came into force on 3 July 2000.
9.1 Introduction *1.6
This edition of the Costs Practice Direction comes into force as from 3rd July 2000. In this edition, the paragraphs have been renumbered from 1.1 to 57.9. An asterisk appears in the margin beside every paragraph in which an amendment has been made in this edition other than an amendment caused solely by the renumbering.
9.2 Form of bill of costs * 3.7 Precedents A, B, C and D in the Schedule of Costs Precedents and the next section of this Practice Direction all refer to a model form of bill of costs. The use of a model form is not compulsory, but is encouraged. A party wishing to rely upon a bill which departs from the model forms should include in the background information of the bill an explanation for that departure.
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9.3 Information to be included in bill of costs 4.5
The background information included in the bill of costs should set out: (1)
a brief description of the proceedings up to the date of the notice of commencement;
(2)
a statement of the status of the solicitor or solicitor’s employee in respect of whom costs are claimed and (if those costs are calculated on the basis of hourly rates) the hourly rates claimed for each such person ...
(3)
a brief explanation of any agreement or arrangement between the receiving party and his solicitors, which affects the costs claimed in the bill.
9.4 Costs of preparing the bill 4.18
A claim may be made for the reasonable costs of preparing and checking the bill of costs.
9.5 Estimates of costs *6.1
This section sets out certain steps which parties and their legal representatives must take in order to keep the parties informed about their potential liability in respect of costs and in order to assist the court to decide what, if any, order to make about costs and about case management.
*6.2
(1)
In this section an ‘estimate of costs’ means – (a) an estimate of base costs (including disbursements) already incurred; and (b) an estimate of base costs (including disbursements) to be incurred, which a party intends to seek to recover from any other party under an order for costs if he is successful in the case. (‘Base costs’ are defined in paragraph 2.2 of this Practice Direction.)
COSTS PRACTICE DIRECTION
(2)
A party who intends to recover an additional liability (defined in rule 43.2) need not reveal the amount of that liability in the estimate.
6.3
The court may at any stage in a case order any party to file an estimate of base costs and to serve copies of the estimate on all other parties. The court may direct that the estimate be prepared in such a way as to demonstrate the likely effects of giving or not giving a particular case management direction which the court is considering, for example, a direction for a split trial or for the trial of a preliminary issue. The court may specify a time limit for filing and serving the estimate. However, if no time limit is specified, the estimate should be filed and served within 28 days of the date of the order.
*6.4
(1)
When a party to a claim which is outside the financial scope of the small claims track, files an allocation questionnaire, he must also file an estimate of base costs and serve a copy of it on every other party, unless the court otherwise directs. The legal representative must in addition serve an estimate upon the party he represents.
(2)
Where a party to a claim which is being dealt with on the fast track or the multi-track, or under Part 8, files a listing questionnaire, he must also file an estimate of base costs and serve a copy of it on every other party, unless the court otherwise directs. Where a party is represented, the legal representative must in addition serve an estimate on the party he represents.
(3)
This paragraph does not apply to litigants in person.
*6.5
An estimate of base costs should be substantially in the form illustrated in Precedent H in the Schedule of Costs Precedents annexed to the Practice Direction.
*6.6
On an assessment of the costs of a party the court may have regard to any estimate previously filed by that party, or by any other party in the same proceedings. Such an estimate may be taken into account as a factor among others, when assessing the reasonableness of any costs claimed.
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9.6 Factors to be taken into account in deciding the amount of costs 11.1
In applying the test of proportionality the court will have regard to rule 1.1(2)(c). The relationship between the total of the costs incurred and the financial value of the claim may not be a reliable guide. A fixed percentage cannot be applied in all cases to the value of the claim in order to ascertain whether or not the costs are proportionate.
11.2
In any proceedings there will be costs which will inevitably be incurred and which are necessary for the successful conduct of the case. Solicitors are not required to conduct litigation at rates which are uneconomic. Thus in a modest claim the proportion of costs is likely to be higher than in a large claim, and may even equal or possibly exceed the amount in dispute.
11.3
Where a trial takes place, the time taken by the court in dealing with a particular issue may not be an accurate guide to the amount of time properly spent by the legal or other representatives in preparation for the trial of that issue.
*11.4 Where a party has entered into a funding arrangement the costs claimed may, subject to rule 44.3B, include an additional liability. *11.5 In deciding whether the costs claimed are reasonable and (on a standard basis assessment) proportionate, the court will consider the amount of any additional liability separately from the base costs. *11.6 In deciding whether the base costs are reasonable and (if relevant) proportionate the court will consider the factors set out in rule 44.5. *11.7 Subject to paragraph 17.8(2), when the court is considering the factors to be taken into account in assessing an additional liability, it will have regard to the facts and circumstances as they reasonably appeared to the solicitor or counsel when the funding arrangement was entered into and at the time of any variation of the arrangement.
COSTS PRACTICE DIRECTION
*11.8 (1)
In deciding whether a percentage increase is reasonable relevant factors to be taken into account may include: (a) the risk that the circumstances in which the costs, fees or expenses would be payable might or might not occur; (b) the legal representative’s liability for any disbursements; (c) what other methods of financing the costs were available to the receiving party.
(2)
The court has the power, when considering whether a percentage increase is reasonable, to allow different percentages for different items of costs or for different periods during which costs were incurred.
*11.9 A percentage increase will not be reduced simply on the ground that, when added to base costs which are reasonable and (where relevant) proportionate, the total appears disproportionate. *11.10 In deciding whether the cost of insurance cover is reasonable, relevant factors to be taken into account include: (1)
where the insurance cover is not purchased in support of a conditional fee agreement with a success fee, how its cost compares with the likely cost of funding the case with a conditional fee agreement with a success fee and supporting insurance cover;
(2)
the level and extent of the cover provided;
(3)
the availability of any pre-existing insurance cover;
(4)
whether any part of the premium would be rebated in the event of early settlement;
(5)
the amount of commission payable to the receiving party or his legal representatives or other agents.
*11.11 Where the court is considering a provision made by a membership organisation, rule 44.3B(1) (b) provides that any such provision which exceeds the likely cost to the receiving party of the premium of an insurance policy against
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the risk of incurring a liability to pay the costs of other parties to the proceedings is not recoverable. In such circumstances the court will, when assessing the additional liability, have regard to the factors set out in paragraph 11.10 above, in addition to the factors set out in rule 44.5.
9.7 Summary assessment 13.1
Whenever a court makes an order about costs which does not provide for fixed costs to be paid, the court should consider whether to make a summary assessment of costs.
*13.2 The general rule is that the court should make a summary assessment of the costs: (1)
at the conclusion of the trial of a case which has been dealt with on the fast track, in which case the order will deal with the costs of the whole claim, and
(2)
at the conclusion of any other hearing, which has lasted not more than one day, in which case the order will deal with the costs of the application or matter to which the hearing related. If this hearing disposes of the claim, the order may deal with the costs of the whole claim;
(3)
in hearings in the Court of Appeal to which Paragraph 14 of the Practice Direction supplementing Part 52 (Appeals) applies;
unless there is good reason not to do so, eg where the paying party shows substantial grounds for disputing the sum claimed for costs that cannot be dealt with summarily or there is insufficient time to carry out a summary assessment. *13.5 (1)
It is the duty of the parties and their legal representatives to assist the judge in making a summary assessment of costs in any case to which paragraph 13.2 above applies, in accordance with the following paragraphs.
(2)
Each party who intends to claim costs must prepare a written statement of the costs he intends to claim showing separately in the form of a schedule:
COSTS PRACTICE DIRECTION
(a) the number of hours to be claimed; (b) the hourly rate to be claimed; (c) the grade of fee earner; (d) the amount and nature of any disbursement to be claimed, other than counsel’s fee for appearing at the hearing; (e) the amount of solicitor’s costs to be claimed for attending or appearing at the hearing; (f)
the fees of counsel to be claimed in respect of the hearing; and
(g) any value added tax (VAT) to be claimed on these amounts. *(3) The statement of costs should follow as closely as possible Form N260 and must be signed by the party or his legal representative. Where a litigant is an assisted person or is a LSC funded client or is represented by a solicitor in the litigant’s employment the statement of costs need not include the certificate appended at the end of Form N260. (4)
The statement of costs must be filed at court and copies of it must be served on any party against whom an order for payment of those costs is intended to be sought. The statement of costs should be filed and the copies of it should be served as soon as possible and in any event not less than 24 hours before the date fixed for the hearing.
*(5) Where the litigant is or may be entitled to claim an additional liability the statement filed and served need not reveal the amount of that liability. 13.6
The failure by a party, without reasonable excuse, to comply with the foregoing paragraphs will be taken into account by the court in deciding what order to make about the costs of the claim, hearing or application, and about the costs of any further hearing or detailed assessment hearing that may be necessary as a result of that failure.
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*13.9 The court will not make a summary assessment of the costs of a receiving party who is an assisted person or LSC funded client. *13.10 A summary assessment of costs payable by an assisted person or LSC funded client is not by itself a determination of that person’s liability to pay those costs (as to which see rule 44.17 and paragraphs 20.1 to 22.33 of this Practice Direction). *13.11 (1)
The court will not make a summary assessment of the costs of a receiving party who is a child or patient within the meaning of Part 21 unless the solicitor acting for the child or patient has waived the right to further costs (see paragraph 51.1 below).
(2)
The court may make a summary assessment of costs payable by a child or patient.
9.8 Costs on the small claims track and fast track 15.1
(1)
Before a claim is allocated to one of those tracks the court is not restricted by any of the special rules that apply to that track.
(2)
Where a claim has been allocated to one of those tracks, the special rules which relate to that track will apply to work done before as well as after allocation save to the extent (if any) that an order for costs in respect of that work was made before allocation.
9.9 Costs-only proceedings *17.1 A claim form under this rule should be issued in the court which would have been the appropriate office in accordance with rule 47.4 had proceedings been brought in relation to the substantive claim. A claim form under this rule should not be issued in the High Court unless the dispute to which the agreement relates was of such a value or type that had proceedings been begun they would have been commenced in the High Court.
COSTS PRACTICE DIRECTION
*17.2
A claim form which is to be issued in the High Court at the Royal Courts of Justice will be issued in the Supreme Court Costs Office.
*17.3
Attention is drawn to rule 8.2 (in particular to paragraph (b)(ii)) and to rule 44.12A(3). The claim form must: (1)
identify the claim or dispute to which the agreement to pay costs relates;
(2)
state the date and terms of the agreement on which the claimant relies;
(3)
set out or have attached to it a draft of the order which the claimant seeks;
(4)
state the amount of the costs claimed; and
(5)
state whether the costs are claimed on the standard or indemnity basis. If no basis is specified the costs will be treated as being claimed on the standard basis.
*17.4
The evidence to be filed and served with the claim form under rule 8.5 must include copies of the documents on which the claimant relies to prove the defendant’s agreement to pay costs.
*17.7
Rule 40.6 applies where an order is to be made by consent. An order may be made by consent in terms which differ from those set out in the claim form.
*17.8
(1)
An order for costs made under this rule will be treated as an order for the amount of costs to be decided by a detailed assessment to which Part 47 and the practice directions relating to it apply. Rule 44.4(4) (determination of basis of assessment) also applies to the order.
(2)
In cases in which an additional liability is claimed, the costs judge or district judge should have regard to the time when and the extent to which the claim has been settled and to the fact that the claim has been settled without the need to commence proceedings.
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9.10 Providing information about funding arrangements *19.2 (1) In this paragraph, ‘claim form’ includes petition and application notice, and the notice of funding to be filed or served is a notice containing the information set out in Form N251. (2)(a) A claimant who has entered into a funding arrangement before starting the proceedings to which it relates must provide information to the court by filing the notice when he issues the claim form. (b) He must provide information to every other party by serving the notice. If he serves the claim form himself he must serve the notice with the claim form. If the court is to serve the claim form, the court will also serve the notice if the claimant provides it with sufficient copies for service. (3)
A defendant who has entered into a funding arrangement before filing any document: (a) must provide information to the court by filing notice with his first document. A ‘first document’ may be an acknowledgment of service, a defence, or any other document, such as an application to set aside a default judgment. (b) must provide information to every party by serving notice. If he serves his first document himself he must serve the notice with that document. If the court is to serve his first document the court will also serve the notice if the defendant provides it with sufficient copies for service.
(4)
In all other circumstances a party must file and serve notice within 7 days of entering into the funding arrangement concerned.
(5)
There is no requirement in this Practice Direction for the provision of information about funding arrangements
COSTS PRACTICE DIRECTION
before the commencement of proceedings. Such provision is however recommended and may be required by a pre-action protocol. *19.4 (1)
Unless the court otherwise orders, a party who is required to supply information about a funding arrangement must state whether he has: entered into a conditional fee agreement which provides for a success fee within the meaning of section 58(2) of the Courts and Legal Services Act 1990; taken out an insurance policy to which section 29 of the Access to Justice Act 1999 applies; made an arrangement with a body which is prescribed for the purpose of section 30 of that Act; or more than one of these.
(2)
Where the funding arrangement is a conditional fee agreement, the party must state the date of the agreement and identify the claim or claims to which it relates (including Part 20 claims if any).
(3)
Where the funding arrangement is an insurance policy the party must state the name of the insurer, the date of the policy and must identify the claim or claims to which it relates (including Part 20 claims if any).
(4)
Where the funding arrangement is by way of an arrangement with a relevant body the party must state the name of the body and set out the date and terms of the undertaking it has given and must identify the claim or claims to which it relates (including Part 20 claims if any).
(5)
Where a party has entered into more than one funding arrangement in respect of a claim, for example a conditional fee agreement and an insurance policy, a single notice containing the information set out in Form N251 may contain the required information about both or all of them.
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9.11 Legal representative wishing to recover success fee from client *20.3 (1)
If the court disallows any amount of a legal representative’s percentage increase, the court will, unless sub-paragraph (2) applies, give directions to enable an application to be made by the legal representative for the disallowed amount to be payable by his client, including, if appropriate, a direction that the application will be determined by a costs judge or district judge of the court dealing with the case.
(2)
The court that has made the summary assessment may then and there decide the issue whether the disallowed amount should continue to be payable, if: (a) the receiving party and all parties to the relevant agreement consent to the court doing so; (b) the receiving party (or, if corporate, an officer) is present in court; and (c) the court is satisfied that the issue can be fairly decided then and there.
*20.4 (1)
Where detailed assessment proceedings have been commenced, and the paying party serves points of dispute (as to which see Section 34 of this Practice Direction), which show that he is seeking a reduction in any percentage increase charged by counsel on his fees, the solicitor acting for the receiving party must within 3 days of service deliver to counsel a copy of the relevant points of dispute and the bill of costs or the relevant parts of the bill.
(2)
Counsel must within 10 days thereafter inform the solicitor in writing whether or not he will accept the reduction sought or some other reduction. Counsel may state any points he wishes to have made in a reply to the points of dispute, and the solicitor must serve them on the paying party as or as part of a reply.
COSTS PRACTICE DIRECTION
(3)
Counsel who fails to inform the solicitor within the time limits set out above will be taken to accept the reduction unless the court otherwise orders.
*20.5 Where the paying party serves points of dispute seeking a reduction in any percentage increase charged by a legal representative acting for the receiving party, and that legal representative intends, if necessary, to apply for an order that any amount of the percentage disallowed as against the paying party shall continue to be payable by his client, the solicitor acting for the receiving party must, within 14 days of service of the points of dispute, give to his client a clear written explanation of the nature of the relevant point of dispute and the effect it will have if it is upheld in whole or in part by the court, and of the client’s right to attend any subsequent hearings at court when the matter is raised. *20.6 Where the solicitor acting for a receiving party files a request for a detailed assessment hearing it must if appropriate, be accompanied by a certificate signed by him stating: (1)
that the amount of the percentage increase in respect of counsel’s fees or solicitor’s charges is disputed;
(2)
whether an application will be made for an order that any amount of that increase which is disallowed should continue to be payable by his client;
(3)
that he has given his client an explanation in accordance with paragraph 20.5; and,
(4)
whether his client wishes to attend court when the amount of any relevant percentage increase may be decided.
*20.7 (1)
The solicitor acting for the receiving party must within 7 days of receiving from the court notice of the date of the assessment hearing, notify his client, and if appropriate, counsel in writing of the date, time and place of the hearing.
(2)
Counsel may attend or be represented at the detailed assessment hearing and may make oral or written submissions.
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*20.8 (1)
At the detailed assessment hearing, the court will deal with the assessment of the costs payable by one party to another, including the amount of the percentage increase, and give a certificate accordingly.
(2)
The court may decide the issue whether the disallowed amount should continue to be payable under the relevant conditional fee agreement without an adjournment if: (a) the receiving party and all parties to the relevant agreement consent to the court deciding the issue without an adjournment; (b) the receiving party (or, if corporate, an officer or employee who has authority to consent on behalf of the receiving party) is present in court; and (c) the court is satisfied that the issue can be fairly decided without an adjournment.
(3)
In any other case the court will give directions and fix a date for the hearing of the application.
9.12 Time when detailed assessment may be carried out *28.1 (1)
For the purposes of rule 47.1, proceedings are concluded when the court has finally determined the matters in issue in the claim, whether or not there is an appeal.
(2)
For the purposes of this rule, the making of an award of provisional damages under Part 41 will be treated as a final determination of the matters in issue.
(3)
The court may order or the parties may agree in writing that, although the proceedings are continuing, they will nevertheless be treated as concluded.
(4)
(a) A party who is served with a notice of commencement (see paragraph 31.3 below) may apply to a costs judge or a district judge to determine whether the party who served it is entitled to commence detailed assessment proceedings.
COSTS PRACTICE DIRECTION
(b) On hearing such an application the orders which the court may make include: an order allowing the detailed assessment proceedings to continue, or an order setting aside the notice of commencement.
29.1
(5)
A costs judge or a district judge may make an order allowing detailed assessment proceedings to be commenced where there is no realistic prospect of the claim continuing.
(1)
Rule 47.2 provides that detailed assessment is not stayed pending an appeal unless the court so orders.
(2)
An application to stay the detailed assessment of costs pending an appeal may be made to the court whose order is being appealed or to the court who will hear the appeal.
9.13 Venue for detailed assessment proceedings *31.1 For the purposes of rule 47.4(1) the ‘appropriate office’ means:
31.2
(1)
the district registry or county court in which the case was being dealt with when the judgment or order was made or the event occurred which gave rise to the right to assessment, or to which it has subsequently been transferred; or
(2)
in all other cases, the Supreme Court Costs Office.
(1)
A direction under rule 47.4(2) or (3) specifying a particular court, registry or office as the appropriate office may be given on application or on the court’s own initiative.
(2)
Before making such a direction on its own initiative the court will give the parties the opportunity to make representations.
(3)
Unless the Supreme Court Costs Office is the appropriate office for the purposes of rule 47.4(1) an order directing that an assessment is to take place at the Supreme Court Costs Office will be made only if it is appropriate to do so having regard to the size of the bill of costs, the
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difficulty of the issues involved, the likely length of the hearing, the cost to the parties and any other relevant matter.
9.14 Documents to be served on commencing detailed assessment proceedings *32.3 If the detailed assessment is in respect of costs without any additional liability, the receiving party must serve on the paying party and all the other relevant persons the following documents: (a)
a notice of commencement;
(b) a copy of the bill of costs; (c)
copies of the fee notes of counsel and of any expert in respect of fees claimed in the bill;
(d) written evidence as to any other disbursement which is claimed and which exceeds £250; (e)
a statement giving the name and address for service of any person upon whom the receiving party intends to serve the notice of commencement.
*32.4 If the detailed assessment is in respect of an additional liability only, the receiving party must serve on the paying party and all other relevant persons the following documents: (a)
a notice of commencement;
(b) a copy of the bill of costs; (c)
the relevant details of the additional liability;
(d) a statement giving the name and address of any person upon whom the receiving party intends to serve the notice of commencement.
COSTS PRACTICE DIRECTION
*32.5 The relevant details of an additional liability are as follows: (1)
In the case of a conditional fee agreement with a success fee: (a) a statement showing the amount of costs which have been summarily assessed or agreed, and the percentage increase which has been claimed in respect of those costs; (b) a statement of the reasons for the percentage increase given in accordance with Regulation 3 of the Conditional Fee Agreement Regulations 2000.
(2)
If the additional liability is an insurance premium: a copy of the insurance certificate showing whether the policy covers the receiving party’s own costs; his opponent’s costs; or his own costs and his opponent’s costs; and the maximum extent of that cover, and the amount of the premium paid or payable.
(3)
If the receiving party claims an additional amount under Section 30 of the Access to Justice Act 1999: a statement setting out the basis upon which the receiving party’s liability for the additional amount is calculated.
9.15 Date for service of points of dispute *32.9 (1)
This paragraph applies where the notice of commencement is to be served outside England and Wales.
(2)
The date to be inserted in the notice of commencement for the paying party to send points of dispute is a date (not less than 21 days from the date of service of the notice) which must be calculated by reference to Part 6 Section III as if the notice were a claim form and as if the date to be inserted was the date for the filing of a defence.
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9.16 Period for commencing detailed assessment proceedings 33.1
The parties may agree under rule 2.11 (Time limits may be varied by parties) to extend or shorten the time specified by rule 47.7 for commencing the detailed assessment proceedings.
33.2
A party may apply to the appropriate office for an order under rule 3.1(2)(a) to extend or shorten that time.
33.3
Attention is drawn to rule 47.6(1). The detailed assessment proceedings are commenced by service of the documents referred to.
33.4
Permission to commence assessment proceedings out of time is not required.
9.17 Points of dispute *35.2 Points of dispute should be short and to the point and should follow as closely as possible Precedent G of the Schedule of Costs Precedents annexed to this Practice Direction. 35.3
Points of dispute must – (1)
identify each item in the bill of costs which is disputed;
(2)
in each case, state concisely the nature and grounds of dispute;
(3)
where practicable suggest a figure to be allowed for each item in respect of which a reduction is sought; and
(4)
be signed by the party serving them or his solicitor.
9.18 Default costs certificate 37.1
A request for the issue of a default costs certificate must be made in Form N254 and must be signed by the receiving party or his solicitor.
COSTS PRACTICE DIRECTION
37.3
A default costs certificate will be in Form N255.
37.4
Attention is drawn to rules 40.3 (Drawing up and Filing of Judgments and Orders) and 40.4 (Service of Judgments and Orders) which apply to the preparation and service of a default costs certificate. The receiving party will be treated as having permission to draw up a default costs certificate by virtue of this Practice Direction.
*37.5 The issue of a default costs certificate does not prohibit, govern or affect any detailed assessment of the same costs which are payable out of the Community Legal Service Fund. *37.8 The fixed costs payable in respect of solicitor’s charges on the issue of the default costs certificate are £80.
9.19 Setting aside a default costs certificate 38.1
(1)
A court officer may set aside a default costs certificate at the request of the receiving party under rule 47.12(3).
(2)
A costs judge or a district judge will make any other order or give any directions under this rule.
*38.2 (1)
An application for an order under rule 47.12(2) to set aside or vary a default costs certificate must be supported by evidence.
(2)
In deciding whether to set aside or vary a certificate under rule 47.12(2) the matters to which the court must have regard include whether the party seeking the order made the application promptly.
(3)
As a general rule a default costs certificate will be set aside under rule 47.12(2) only if the applicant shows a good reason for the court to do so and if he files with his application a copy of the bill and a copy of the default costs certificate, and a draft of the points of dispute he proposes to serve if his application is granted.
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9.20 Optional reply to points of dispute 39.1
(1)
Where the receiving party wishes to serve a reply, he must also serve a copy on every other party to the detailed assessment proceedings. The time for doing so is within 21 days after service of the points of dispute.
(2)
A reply means: (i)
a separate document prepared by the receiving party; or
(ii) his written comments added to the points of dispute. (3)
A reply must be signed by the party serving it or his solicitor.
9.21 Time for requesting a detailed assessment hearing 40.1
The time for requesting a detailed assessment hearing is within 3 months of the expiry of the period for commencing detailed assessment proceedings.
9.22 Documents to be filed with request for detailed assessment hearing *40.2 The request for a detailed assessment hearing must be in Form N258. The request must be accompanied by: (a)
a copy of the notice of commencement of detailed assessment proceedings;
(b) a copy of the bill of costs; (c)
the document giving the right to detailed assessment (see paragraph 40.4 below);
(d) a copy of the points of dispute, annotated as necessary in order to show which items have been agreed and their value and to show which items remain in dispute and their value;
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(e)
as many copies of the points of dispute so annotated as there are persons who have served points of dispute;
(f)
a copy of any replies served;
(g) a copy of all orders made by the court relating to the costs which are to be assessed; (h) copies of the fee notes and other written evidence as served on the paying party in accordance with paragraph 32.3 above; (i)
where there is a dispute as to the receiving party’s liability to pay costs to the solicitors who acted for the receiving party, any agreement, letter or other written information provided by the solicitor to his client explaining how the solicitor’s charges are to be calculated;
(j)
a statement signed by the receiving party or his solicitor giving the name, address for service, reference and telephone number and fax number, if any, of– (i)
the receiving party;
(ii) the paying party; (iii) any other person who has served points of dispute or who has given notice to the receiving party under paragraph 32.10 above; and giving an estimate of the length of time the detailed assessment hearing will take; (k) where the application for a detailed assessment hearing is made by a party other than the receiving party, such of the documents set out in this paragraph as are in the possession of that party; (l)
where the court is to assess the costs of an assisted person or LSC funded client– (i)
the legal aid certificate, LSC certificate and relevant amendment certificates, any authorities and any certificates of discharge or revocation;
(ii) a certificate, in Precedent F(3) of the Schedule of Costs Precedents;
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(iii) if the assisted person has a financial interest in the detailed assessment hearing and wishes to attend, the postal address of that person to which the court will send notice of any hearing; (iv) if the rates payable out of the LSC fund are prescribed rates, a schedule to the bill of costs setting out all the items in the bill which are claimed against other parties calculated at the legal aid prescribed rates with or without any claim for enhancement (further information as to this schedule is set out in Section 48 of this Practice Direction); (v) a copy of any default costs certificate in respect of costs claimed in the bill of costs.
9.23 Variation of bill, points of dispute or reply 40.10 (1)
If a party wishes to vary his bill of costs, points of dispute or a reply, an amended or supplementary document must be filed with the court and copies of it must be served on all other relevant parties.
(2)
Permission is not required to vary a bill of costs, points of dispute or a reply but the court may disallow the variation or permit it only upon conditions, including conditions as to the payment of any costs caused or wasted by the variation.
9.24 Provisional assessment where costs payable out of the Community Legal Service Fund 43.2
The time for requesting a detailed assessment under rule 47.17 is within 3 months after the date when the right to detailed assessment arose.
43.5
Where the court has provisionally assessed a bill of costs it will send to the solicitor a notice, in Form N253 annexed to this practice direction, of the amount of costs which the court
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proposes to allow together with the bill itself. The legal representative should, if the provisional assessment is to be accepted, then complete the bill. 43.6
The court will fix a date for a detailed assessment hearing if the solicitor informs the court within 14 days after he receives the notice of the amount allowed on the provisional assessment that he wants the court to hold such a hearing.
43.7
The court will give at least 14 days notice of the time and place of the detailed assessment hearing to the solicitor and, if the assisted person has a financial interest in the detailed assessment and wishes to attend, to the assisted person.
43.8
If the solicitor whose bill it is, or any other party wishes to make an application in the detailed assessment proceedings, the provisions of Part 23 (General Rules about Applications for Court Orders) applies.
*43.9 It is the responsibility of the legal representative to complete the bill by entering in the bill the correct figures allowed in respect of each item, recalculating the summary of the bill appropriately and completing the Community Legal Service assessment certificate (Form EX80A).
9.25 Costs of detailed assessment proceedings 45.1
As a general rule the court will assess the receiving party’s costs of the detailed assessment proceedings and add them to the bill of costs.
45.2
If the costs of the detailed assessment proceedings are awarded to the paying party, the court will either assess those costs by summary assessment or make an order for them to be decided by detailed assessment.
*45.3 No party should file or serve a statement of costs of the detailed assessment proceedings unless the court orders him to do so.
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45.4
Attention is drawn to the fact that in deciding what order to make about the costs of detailed assessment proceedings the court must have regard to the conduct of all parties, the amount by which the bill of costs has been reduced and whether it was reasonable for a party to claim the costs of a particular item or to dispute that item.
9.26 Calderbank offers 46.1
Rule 47.19 allows the court to take into account offers to settle, without prejudice save as to the costs of detailed assessment proceedings, when deciding who is liable for the costs of those proceedings. The rule does not specify a time within which such an offer should be made. An offer made by the paying party should usually be made within 14 days after service of the notice of commencement on that party. If the offer is made by the receiving party, it should normally be made within 14 days after the service of points of dispute by the paying party. Offers made after these periods are likely to be given less weight by the court in deciding what order as to costs to make unless there is good reason for the offer not being made until the later time.
*46.2 Where an offer to settle is made it should specify whether or not it is intended to be inclusive of the cost of preparation of the bill, interest and value added tax (VAT). The offer may include or exclude some or all of these items but the position must be made clear on the face of the offer so that the offeree is clear about the terms of the offer when it is being considered. Unless the offer states otherwise, the offer will be treated as being inclusive of all these items. 46.3
Where an offer to settle is accepted, an application may be made for a certificate in agreed terms, or the bill of costs may be withdrawn, in accordance with rule 47.10 (Procedure where costs are agreed).
46.4
Where the receiving party is an assisted person or an LSC funded client, an offer to settle without prejudice save as to the costs of the detailed assessment proceedings will not have the consequences specified under rule 47.19 unless the court so orders.
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9.27 Litigants in person 52.1
In order to qualify as an expert for the purpose of rule 48.6(3)(c) (expert assistance in connection with assessing the claim for costs), the person in question must be a (1)
barrister;
(2)
solicitor;
(3)
Fellow of the Institute of Legal Executives;
(4)
Fellow of the Association of Law Costs Draftsmen;
(5)
law costs draftsman who is a member of the Academy of Experts;
(6)
law costs draftsman who is a member of the Expert Witness Institute.
52.2
Where a litigant in person wishes to prove that he has suffered financial loss he should produce to the court any written evidence he relies on to support that claim, and serve a copy of that evidence on any party against whom he seeks costs at least 24 hours before the hearing at which the question may be decided.
52.3
Where a litigant in person commences detailed assessment proceedings under rule 47.6 he should serve copies of that written evidence with the notice of commencement.
52.4
The amount, which may be allowed to a litigant in person under rule 46.3(5)(b) and rule 48.6(4), is £9.25 per hour.
52.5
Attention is drawn to rule 48.6(6)(b). A solicitor who, instead of acting for himself, is represented in the proceedings by his firm or by himself in his firm name, is not, for the purpose of the Civil Procedure Rules, a litigant in person.
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10 Further Reading
ALCD News, newsletter of the Association of Law Costs Draftsmen (bimonthly) Cardinal, M, Matrimonial Costs, 2000, London: Jordans Cook, M (Hon) (ed), Butterworths Costs Service, London: Butterworths (looseleaf) Cook, M (Hon) (ed), The Litigation Letter, London: LLP (10 issues per year) Cook, MJ, Cook on Costs 2000, 2000, London: Butterworths Legal Services Commission, Legal Services Commission Manual, London: Sweet & Maxwell (three volumes, looseleaf)
May LJ, Civil Procedure, 2000, London: Sweet & Maxwell Rogers, PR (ed), Greenslade on Costs, London: Longman (looseleaf) Supreme Court Costs Office, Guide to the Summary Assessment of Costs, 1999, London: Court Service
11 Useful Addresses
Association of Law Costs Draftsmen Sheila Chapman (Administrative Secretary) Church Cottage Church Lane Stuston Diss Norfolk IP21 4AG Tel: 01379 741404 www.alcd.org.uk The Law Society 113 Chancery Lane London WC2A 1PL Tel: 020 7242 1222 www.lawsociety.org.uk Legal Services Commission 85 Gray’s Inn Road London WC1X 8TX Tel: 020 7759 0000 www.legalservices.gov.uk
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CAVENDISH PRACTICE NOTES
Lord Chancellor’s Department Selborne House 54–60 Victoria Street London SW1E 6QW Tel: 020 7210 8500 www.open.gov.uk/lcd The Stationery Office Publications Centre PO Box 276 London SW8 5DT Tel: 0870 600 5522 Supreme Court Costs Office Clifford’s Inn Fetter Lane London EC4A 1DQ DX: 44454 Strand Tel: 020 7947 6404 APIL (Association of Personal Injury Lawyers) 11 Castle Quay Castle Boulevard Nottingham NG7 1FW Tel: 0115 958 0585 www.apil.com
