Hailsham Chambers Costs seminar 9 June 2016 The shape of things to - - PowerPoint PPT Presentation

Hailsham Chambers Costs seminar 9 June 2016

Alexander Hutton QC Hailsham Chambers

The shape of things to come? Fixed costs, the new format bill and the Briggs reforms

Topics

• 1. The change that’s already with us: Fixed

Recoverable Costs

• 2. The change that’s probably on its way:

the new format bill

• 3. The change that may be coming: the

Briggs report

Fixed Recoverable Costs

• 1. Their present scope
• 2. Proposals for extension
• 3. Escape routes

Present scope of FRC

• RTA Protocol: claims for damages of

£1,001-£25,000 arising out of accident on

• r after 31/7/13 (£10,000 if accident

30/4/10-30/7/13)

• Low Value PI (Employers’ Liability and

Public Liability) Claims: claims for damages of £1,001-£25,000, arising out of injury or disease on or after 31/7/13

Present scope of FRC

• Part 45 contains a thicket of complex rules

fixing the costs for RTA and low value PI claims in almost every circumstance.

• In broad terms Protocols apply where

liability not is dispute, but Fixed Costs under Part IIIA apply where it is.

Present scope of FRC

• Fixed costs under part IIIA do not apply to

disease claims which exit the Protocol.

• Clinical Negligence is presently outside

the scope of the various fixed costs schemes.

Proposals for Extension

• Jackson LJ proposes fixed costs for all civil

claims up to £250,000, and that scheme could be in place within a year

• One advantage, he says, is to avoid

spending time and money on costs management (!)

Proposals for Extension

• Total costs would range from £18,750 for

£50,000 claim to £70,250 for £250,000 claim

• Lots of criticism of figures; Jackson LJ now

says that the grid is a “starting point for debate”

• One year timetable won’t happen!

Proposals for Extension

• Department of Health said in January 2016

that a fixed costs regime for clinical negligence claims would be introduced in October 2016

• But proposed consultation has not

happened yet

Proposals for Extension

• Widespread criticism including from

Master Cook, one of the QB clinical negligence Masters.

• Appears to have been subsumed into

wider Jackson proposals

Escape from FRC

• The key weapon for a Claimant: an order

for indemnity costs

• If a Claimant makes an effective Part 36
• rder, the court will usually make an

indemnity costs order

The effect of an indemnity costs order

• Court of Appeal has decided in

Broadhurst v Tan [2016] EWCA Civ 94 that fixed costs and assessed costs are different, and a Claimant with an effective Part 36 offer is entitled to assessed costs, not limited by reference to the FRC scale.

• Same rule under new schemes?

New Format Bill

• 1. What is it?
• 2. Why is it so unpopular?
• 3. Will it be strangled at birth?

So what is the New Format Bill?

The BoC is a self-calculating, self-summarising spreadsheet document based on the J-Codes, which is capable of being generated automatically by use of the J-Codes and adopting the same structure

Benefits of New Format Bill

• Generated directly from contemporaneous

time-recording, no need to reinvent wheel

• Self calculating
• Cheap and quick to produce
• No need to recast where rate reduced or

different grade of fee earner allowed

• Useful in negotiation

Problems of New Format Bill

The challenge in developing a spreadsheet (as

• pposed to using the traditional blank piece of

paper on which to write a bill of costs) is that one has to try to think of every eventuality and factor them all into the construction of the spreadsheet template.

Problems of New Format Bill

• Multiple parts

(a)costs budgeting (b) solicitor client bills

• Complicated document with many active

worksheets

Problems of New Format Bill

• Changes to formula boxes
• Need for expertise – do your local judges

Have a working knowledge of Excel Pivot Table functionality ?

• Judicial resources and training

Why’s it so unpopular?

• Complexity of the spreadsheet and

assumed time-recording software expense

• Fee earners struggle to record time under

codes

• Does it threaten the future of costs

lawyers?

• ACL proposes a simplified “new bill lite”

The SCCO Pilot

• SCCO 1/10/15-1/4/16
• Very limited take-up
• Problems with the few cases that have

been seen

The SCCO Pilot

• If you have to J-code retrospectively,

drawing the bill and responding to it expensive and prolonged

• The full version does not print, so you

have hidden rows and columns in the printed version

The SCCO Pilot

• Still no assessments yet, although there

was one new bill which the paying party applied to strike out but failed – the assessment then settled

• Some interlocutory/costs hearings: firms

like Irwin Mitchell, Ince & Co and Weightmans are using J-Codes

Mandatory use of the New Bill?

• Unwillingness to invest in time-recording

software until compulsory

• Original proposal for mandatory from

October 2016, Jackson now says Oct 2017

• Rules Committee deferred decision, but

has now formed a new bill sub-committee under Birss J

The Future

• Self-calculating spreadsheet on its way
• But transition difficult
• Transitional regime? Or 1 October 2017

cut-off – all work before then old bill, all work from then in new bill?

The Future

• Simplified ACL proposal? Traditional bill

structure but using J codes and spreadsheet technology

• Or recent Jackson compromise proposal?

New format bill but without J-codes

• Likely revised Practice Direction adopting

the latter in July 2016

Briggs Reforms

• 1. The proposals
• 2. Timescale
• 3. Effects

The proposals

• Interim report published January 2016
• Contains proposals to reform the structure
• f civil courts to run in parallel to HMCTS

plans for reform of courts (i.e. court closures)

The proposals

• Rather scary adoption of management

speak: A structure built on the strong, independent and trusted justice brand – but with different channels/experiences for different cases – all consistent with this brand.

The proposals

• Proposal for an online court, covering

claims up to £25,000, with no provision fro costs shifting

• IT at the centre of the proposal, with

expert systems intended to allow litigants to set out their own cases.

The proposals

• A paperless court

The central assumption …which underlies … this review is that it is now technically possible to free the courts from the constraints of storing, transmitting and communicating information on paper

Timescale

• In a word, tight.
• Consultation completed at end of May;

review to be completed by end of July 2016

Effects

• Based on investing proceeds of valuable

sale of city centre court buildings in IT

• Very large scale IT project
• How good is government at these?

The reforms in general

• Reform will continue
• The focus will be on the interests of court

users

• Current level of costs seen as barrier to

justice

Dan Stacey Hailsham Chambers

The Battle over assignment of CFAs: who is winning?

Assignment of CFAs: how to inflict, or how to avoid, a (technical) knock out….

Dan Stacey

Assignment of CFAs

• Problem
• Potential Solutions
• Pitfalls

Standard Scenarios…

Firm A Firm B Client Firm A A LLP Client Firm A Firm B Client Firm A Firm B Client

Fee earner Pre-pack Merger

The Problem

• LASPO 44(6)…
• It only preserves right to uplift for CFAs

entered into before the commencement date (1st April 2013).

The Problem

• Failed assignment  novation and a novation is

a new contract.

• The modest windfall

– No recoverable success fee for Firm B

• The mega windfall

– No enforceable retainer in a personal injury claim – Failure to limit success fee to 25% of general damages for PSLA and past pecuniary loss (Art. 5 CFA Order 2013)

Potential Solutions

• Agency

– Only really possible on incorporation – Regulatory/insurance considerations

• Novation

– New retainer with firm B – Will not preserve a recoverable success fee

Assignment

A B C Contract

Assignment

Can sue

You can’t assign the burden of a contract

Assignment

• Linden Gardens Trust Ltd v Lenesta Sludge

Disposal Ltd [1994] 1 AC 85 at 103 per Lord Browne-Wilkinson:

It is trite law that it is, in any event, impossible to assign "the contract" as a whole, i.e. including both burden and

• benefit. The burden of a contract can never be assigned

without the consent of the other party to the contract in which event such consent will give rise to a novation.

Don King…

What Can Be Assigned?

• Don King Productions Inc v Warren [2000] Ch

291 – Assignments impossible in law because:

• No assignment of burden
• No assignment of benefit of contracts based on

personal mutual confidence

• Express prohibitions on assignment

What Can Be Assigned?

• Don King at 318:

– “The only assignment in respect of a contract which is legally possible is an assignment of the benefit of the contract (i.e. the rights thereby created) or some benefit (e.g. the profits) derived by the assignor from the contract” – Consider each right separately – Assignment of otherwise unassignable rights may be expressly

• r implicitly permitted by the terms of the contract

– “Unless the contract expressly or impliedly otherwise provides, the character of an obligation precludes assignment of the benefit of the obligation if the identity of the obligee is material to the obligor”

Personal Contracts

• Nokes v Doncaster Amalgamated Collieries Ltd

[1940] AC 1014 at 1018 per Viscount Simon LC:

“It is, of course, indisputable that (apart from statutory provision to the contrary) the benefit of a contract entered into by A to render personal service to X cannot be transferred by X to Y without A’s consent, which is the same thing as saying that, in order to produce the desired result, the old contract between A and X would have to be terminated by notice or by mutual consent and a new contract entered of service entered into by agreement between A and Y.”

A Knockdown but not a Knockout ….

Jenkins v Young Brothers Transport [2006] 1 WLR 3189

• The relevant benefit was the right to be paid
• The benefit of the CFA was assignable, because

the client placed trust and confidence in the solicitor

• Because the benefit was conditional on the work

being done, the burden of the CFA was assignable under the principle of conditional benefits

– Tito v Waddell (No 2) [1977] Ch 106 – Rhone v Stephens [1994] 2 AC 310

Jenkins v Young Brothers Transport [2006] 1 WLR 3189

“Whether, absent that trust and confidence, a CFA could validly be assigned is not a matter upon which it has been necessary for us to reach a conclusion” (para 31).

(I.e., - “Silence is golden when you can‘t think of a

good answer….”)

Recent Cases

• Jones v Spire Healthcare Ltd (HHJ Graham Wood QC,

11 May 2016)

• First instance:

– Transfer of instructions not motivated by personal trust and confidence  Jenkins distinguished – Valid assignment of benefit (so fees of old firm could be recovered) – No assignment of burden (so no effective assignment of retainer) – Novation on pre-LASPO terms  unenforceable

Jones on Appeal

• D conceded burden of a contract could be assigned

– Law as set out in Jenkins taken to be correct

• Ratio of Jenkins not limited to personal trust and

confidence  assignment valid in all circumstances

• D did not apparently challenge the assignment of benefit
• n the basis of lack of personal trust and confidence
• Challenge to assignment of benefit as a right not capable
• f assignment in law (mere contingent expectation)

rejected

• Fall-back argument for C based on LASPO transitional

provisions rejected

Other Cases

• Budana v The Leeds Teaching Hospitals NHS

Trust (DJ Besford, 4 February 2016)

• Instructions transferred after first firm decided to

leave the PI market

• Correctness of Jenkins doubted, but binding

even absent personal trust and confidence

• No assignment, because retainer already

terminated

Other Cases

• Webb v LB Bromley (Master Rowley, 18

February 2016)

• Instructions transferred after first firm closed

down

• Client’s consent to the transfer was indicative of

a novation following termination

• In any case, no personal trust and confidence,

so Jenkins distinguished  no valid assignment

• LASPO transitional argument rejected

Where Are We Now?

• So:-

– Apparently scope for argument about the breadth of the ratio in Jenkins – Termination point must be a good one – Was there in reality an assignment at all?

• Await a decision by insurers or others to

take this to the CA… there are risks either way but …

“He who is not courageous enough to take risks will accomplish nothing in life.”

Practical Problems: Budgets, proportionality and Jackson in practice

Imran Benson Hailsham Chambers

Themes

• Budgets
• Part 36
• Fixed Costs/Portal Problems
• Unless Orders/Summary Assessment
• Settlements
• Costs where claim form issued but not

served

Budgets

• Change to CPR 3E:

– Excluded in child and short life expectancy cases – Budgets to be filed 21 days before CCMC in >£50k claims – Hourly rates not to be altered – Precedent R 7 days before

Precedent R

Budgets

Several recent cases but of note:

• Group Seven & Ors v Ali Nasir & Ors [2016] EWHC

620

• Capital for Enterprise v Bibby (18 Nov 2015, HHJ

Pelling QC Ch D)

Group Seven

Claimed Allowed C1’s QC £793,000 £398,000 C1’s Junior £468,000 £199,000 C2’s QC £567,500 Disallowed C2’s Junior £335,400 Disallowed D4’s QC £487,000 £250,000 D4’s Junior £319,000 C£155,000

£10m claim, 40 day trial

Capital v Bibby

Post-trial budget amendments? No, and no indication either Payment on account? No rule that 90% to be allowed (not following Thomas Pink v Victoria Secret). Allowed 80%.

Part 36

• Littlestone v MacLeish [2016] EWCA Civ 127
• Sugar Hut v AJ Insurance [2016] EWCA Civ 46
• Courtney Webb v Liverpool Women’s NHS Trust [2016]

EWCA Civ 365

Littlestone v Macleish

• D makes Part 36 of £35,000 and openly accepts

liability (and pays) £17,500 = £52,500

• C gets judgment for £48,000
• Has C beaten D’s Part 36?
• CA’s answer: Yes.

Sugar Hut v AJ Insurance

• Complicated facts but D makes certain payments along

the way

• D offers £250,00 by Part 36 on top on basis of generous

valuation of large head of claim

• C gets judgment for £277,000 on top, does badly on large

head of claim but well on others

• Judge says C gets 70% of large head pre-offer and pays

most of the costs post-offer

• CA reverted to Part 36 – C gets 70% of costs throughout

Courtney Webb v Liverpool NHS

• Child injured at birth brought claim alleging

negligence at delivery in 2 ways. Won on one, failed on second.

• C offered to settle liability at 65% on Part 36

basis.

• Judge made issue based costs order
• CA considered Part 36 and Part 44, awarded her

all costs

Fixed Costs & the Portal

• Phillips v Willis [2016] EWCA Civ 401
• Parker v Butler [2016] EWHC 1251
• Broadhurst v Tan [2016] EWCA Civ 94
• Mendes v Hochtief [2016] EWHC 976

Other Points

• Gamatronic v Hamilton

– Unless Orders for non-payment of interlocutory costs

• rders
• Patience v Tanner [2016] EWCA Civ 158

– Case settles at door of Court, lengthy trial to resolve costs, correct approach

• Webb Resolutions v Countrywide

– Claim form issued not served. C liable to pay D’s costs