Costs in the time of Corona

May 26, 2020 | Sue Nash

costs coronavirusIt would be a mistake to imagine that costs law and costs cases are simply ‘marking time’ during the lockdown and remote working period – this simply isn’t the case! In this first of two articles, I deal with two matters; remote costs hearings and costs budgets, two of the issues most discussed in remote costs seminars and Q&As.

Remote Costs Hearings

A number of barristers’ chambers with costs sets have been running Costs Q&As and I am indebted to Hailsham Chambers for some fascinating insights into how costs proceedings/assessments are being run. As far as remote costs hearings are concerned, the following are the major ‘take-aways’:

  • Bundles – or, rather, e-bundles are crucial. The index must be agreed with the other party which must also receive the same bundle as the court save for the solicitor’s own file. It is noted that pagination both by letters and numbers would assist: for example, Bundle A could be skeleton arguments and authorities and be numbered A1 to Axx whilst the core case documents could be Bundle B with pages numbered B1 to Bxx etc etc. The key point is that the bundles need to be easily searchable and one suggestion is that bookmarks be used to assist.
  • Liaison with both the other party and with the court is essential. The Guidance says that all correspondence should be by e-mail and Hailsham’s suggestions include contacting the judge through his/her clerk at least 10 days before a costs hearing to check what physical papers the court might require and how the judge wants to conduct the hearing – MS Teams/Zoom etc. It is up the judge as he/she needs to record the hearing and will, almost certainly, be working from home as well! Also check whether the judge would like a ‘trial run’.
  • The hearing will take longer and there is nothing to stop you asking for breaks from time to time.

One other very important reference point – hosted by the ACL (Association of Costs Lawyers) – is the guidance for the conduct of remote costs hearings which can be found here:

https://www.associationofcostslawyers.co.uk/write/MediaUploads/Documents/Guidance_for_the_Conduct_of_Remote_Costs_Hearings_v.4.pdf

This sets things out in considerable detail, not only for detailed assessments but oral review hearings and those where the court is invited to certify an amount payable from a child or protected party’s damages pursuant to CPR 46.4(4).

Budgets

Points are still arising on this contentious aspect of the Jackson reforms – several years after their introduction!

Budgets v Costs Assessments

One thorny issue arose (pre-Corona) in the matter of Barts Health NHS Trust v Hilrie Rose Salmon [2019] where the court found that an under-spend in any phase of a budget constituted a good reason to depart from the budget therefore leaving the whole of that phase open to detailed assessment. In March 2020 in the matter of Chapman v Norfolk and Norwich University Hospitals NHS Foundation Trust Regional Costs Judge Lumb found otherwise stating that, “If it were otherwise, one of the principal purposes of costs budgeting would be lost, namely the certainty of the parties of the amounts that they are likely to be able to recover or pay respectively. Quite simply, the court would be required to carry out a detailed assessment of all the costs in any phase that was not completed, which cannot possibly have been the intention of the rule makers.”

Judge Lumb referred to Salmon but also, with approval, to the Court of Appeal’s ruling in Harrison v University Hospitals Coventry & Warwickshire NHS Trust where the court had agreed with Mrs Justice Carr in the case of Merrix v Heart of England NHS Foundation Trust [2017] EWHC 346 (QB). She concluded that where the costs claimed on assessment are, on a phase by phase basis, within the budgeted figure for the same phase as approved or agreed in a costs budget, then the court, in applying CPR 3.18 cannot depart from that agreed figure either upwards or downwards without good reason. In other words, absent good reason, the approved or agreed figure for estimated costs is to be allowed [on assessment].

Variation of Budgets

This is another long-standing issue. For the first 2 to 3 years of the new costs management regime both SCCO and regional costs judges were surprised by how few applications were made to amend budgets. Whilst there is an increasing number, there is much dispute as to how the incurred costs are to be presented when applying for a variation (usually an increase). One judge has said that completely new budgets ought to be presented but I disagree, as did the wise counsel of Hailsham Chambers!

Under CPD 3E, Para 7.4, the court may not approve costs incurred before the date of any costs management hearing. However, costs which were forecast as at the date of the initial CCMC will have been incurred before any subsequent hearing on an application to vary – or at least some of them will have been. The Civil Procedure Rules Committee have been considering this and a new Precedent T is expected. In the meantime however, the problem can be surmounted by inserting 2 separate columns into Page 1 of the Precedent H showing what costs have been incurred in each phase since the initial budget was set (Elite have dealt with several such cases in this way). This will show clearly why any variation is being sought and of course the application will need to be supported both by a breakdown of how those costs have been spent and why the increase can be justified. NB: Any such application will only succeed if it can be shown that the additional costs needed/work done could not have been anticipated at the time the original budget was set; a simple overspend will not be sufficient reason!

Partial Budgets

This is another issue on ‘budgets v bills’ namely how to present bills of costs where the court may decide to only budget certain phases or up to a certain point (this is more likely to happen in a large, complex matter eg group litigation or in a clinical negligence case). The case then settles. How should a receiving party present the bill of costs and, in particular, the Precedent Q which shows costs incurred as against the budget. The Hailsham experts suggested that the other party be contacted to see try and agree the format but the best solution is to divide the bill into parts – budgeted and unbudgeted – and the budgeted part into sub-parts by phase in the usual way. Explain this in the narrative to the bill and in the Precedent Q.

costs coronavirusHow Elite Law Solicitors can help

Sue Nash is a Senior Costs Consultant and former chair of the Association of Costs Lawyers. She can provide specialist advice in relation to all aspects of legal costs.

If you have any queries relating to any of the issues mentioned in this article, please get in touch with Sue by calling 0800 086 2929, emailing info@elitelawsolicitors.co.uk or completing our Free Online Enquiry Form.

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