Assessment of Costs in the Supreme Court

It is always a pleasure to attend the Supreme Court for the purposes of a detailed assessment. Visitors to its building on Parliament Square find a pleasing venue far removed from the squalor of the county courts or the remote eyries of the upper floors of the Thomas More building with its inadequate lifts.

Costs assessments are undertaken by the Costs Officers of the Supreme Court: usually the Senior Costs Judge or his nominee, and the Registrar of the Supreme Court. Hearings take place in the chamber. The principal provisions which govern such assessments are to be found in Practice Direction 13 of the Supreme Court.

Solicitors fees are assessed on the familiar basis, which would apply in any other detailed assessment as follows:

15.1 The Court adopts the guideline rates issued by the Senior Courts Costs Office for summary assessment and the rates are the starting point for all assessments. These are consolidated figures that include a mark-up for care and attention. Form 5 must be completed using a consolidated figure for the hourly rate. If a rate is charged that exceeds the guideline rate an explanation must be given under the heading ‘Fee earners and hourly rates’ in part 1 of Form 5.

15.2 The following table sets out the current hourly rates and localities:

Grade of fee earner A B C D
London 1 £409 £296 £226 £138
London 1 £409 £296 £226 £138
London 2 £317 £242 £196 £126
London 3 £229 to £267 £172 to £229 £165 £121
National 1 £217 £192 £161 £118
National 2/3 £201 £177 £146 £111
         
 

An explanation of the grades and details of localities is set out in Section 3 below. If the rates set by the Senior Courts Costs Office have been amended the Supreme Court will allow the amended rates in lieu of those in this table.

15.3 Where solicitors have charge of producing large documents such as the authorities or core volumes, it will not usually be appropriate for a higher grade rate to be applied. Time spent photocopying is not recoverable (although the cost of photocopying is). See also paragraph 11.3 above for documents.

15.4 Travel and waiting are allowed at the rate agreed with the client, unless this is more than the hourly rate allowed on assessment.

15.5 Letters and telephone calls are allowed at one tenth of the hourly rate.

Solicitors costs rarely prove problematic: indeed it is common to reach agreement on them. What often proves to be harder to gauge are counsel’s fees: and often these are the largest element of the Bill, as by the time the case reaches the Supreme Court, on a point of law, counsel’s input will be greatest.

Practice Direction 13 has this sage advice when it comes to the assessment of counsel’s fees both at the permission stage and the substantive appeal:

15.6 The following guideline figures are used in assessing payments to counsel at the application for permission to appeal stage:

Applications for permission to appeal Junior QC
Settling application £1250 £1750
Advice for legal aid provider £500 £800
Preparing respondents’ objections £800 £1100
One conference £250 £500
Attending oral hearing by Appeal Panel £1600 £2100
     
 15.7 A claim for an increase on any of the above items or claim for any other item must be explained in a detailed note from counsel.

15.8 The general rule is that only one counsel’s fees is allowed on assessment for any stage of an application for permission to appeal, unless a public funding or legal aid certificate authorises two counsel (but see paragraphs 6.6 and 6.7).

15.9 The following guideline figures are used in assessing payments to counsel at the appeal stage:

Appeals Junior QC
Notice of appeal (where UKSC has granted permission) £150 £150
Notice of appeal (where permission is not required) £1250 £1750
Statement of facts and issues £2250 £4500
Authorities £900 £1800
Conferences (each, up to a maximum of six) £600 £1200
Advice £1000 £2000
Brief (based on a 1 day hearing) £7500 £15000
Brief (based on a 2 day hearing) £10000 £20000
Refresher (from day two of the hearing) £1625 £3250
     
 15.10 Counsel’s fees are assessed in respect of each item of work counsel has undertaken. It is essential that this approach is reflected by those completing Form 5. It should be borne in mind that the number of hours spend by counsel in preparation is rarely of assistance to the Costs Officers when assessing the amount of counsel’s fees at any stage of the proceedings.

15.11 Counsel for an appellant generally commands a higher fee than counsel for a respondent.

15.12 The brief fee includes all work on the brief, the written case, counsel-only conferences and the first day of attendance at the Court.

15.13 The Costs Officers exercise discretion in instances where junior counsel has undertaken most of the work on a particular item.

15.14 For settling a notice of appeal where the Supreme Court has granted permission, only one counsel’s fee is permitted.

15.15 The Costs Officers have no discretion to allow the fees of more than two counsel unless the Court has ordered otherwise.

These fees are intended as a guide. If counsel seek higher fees, they must provide an explanation in a detailed note.

This guidance has been honoured more in the breach than in the observance.

The guideline figures are mysterious in their origin: they do not seem to have been the subject of consultation. They certainly cannot be justified on the basis of a survey of the “market rate” for a silk to undertake work in the highest court in the land. And in my experience they are routinely ignored.

The approach of the Costs Officers has been hitherto, to assess counsel’s fees in accordance with the principles established in the key cases which govern the calculation of counsel’s fees.

Thus consideration of the formulation for assessing counsel’s fees by Pennycuick J in the case of Simpsons Motor Sales (London) Limited.v.Hendon Borough Council [1965] 1 WLR 112 remains relevant:it can be useful to estimate what a hypothetical counsel capable of conducting the particular case effectively would be content to take on the brief.

One should also note  Perry.v.The Lord Chancellor (The Times 26th May 1994),  where the court emphasised that one of the roles of junior counsel justifying his fee can be to carry out legal or other research. When seeking to challenge a brief fee, noting that the generally helpful statement of principle set out in the case of  Loveday.v.Renton (Number 2) [1992] 3 All ER 184 as to the work the “brief fee” encompasses requires substantial moderation both due to the existence of the Practice Direction and the peculiar nature of appeals in the Supreme Court.

Practically the Costs  Officers base themselves heavily on the number of hours done by counsel, the fees paid to the opposing counsel and a notional hourly rate, starting at £350 per hour but moving sharply upwards, depending on the nature of the appeal under consideration.

I am not at home

The 13th June 2014 saw the coming into force of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. These Regulations replace the Consumer Protection (Distance Selling) Regulations 2000 and the Cancellation of Contracts Made in a Consumers Home or Place of Work etc Regulations 2008.

Keen credit hire litigators will already be familiar with these regulations, as they will have scrutinised them anxiously, either to ensure that credit hire agreements comply with them or to see whether there is scope to argue that particular agreements do not.

The Regulations potentially have effect for solicitors more generally: there is no reason why solicitors retainers should be exempted from the Regulations and indeed the legal profession and its retainers do not feature in the lengthy list of exemptions contained within the Regulations.

The Regulations probably represent an easing in the burden of red tape, as they have repealed the penalty of absolute unenforceability which bedevilled the 2008 Regulations and led to the mass redrafting of Conditional Fee Agreements.

The Regulations broadly define contracts into three types: a distance contract which means a contract concluded between a trader and a consumer under an organised distance sales or service provision scheme without the simultaneous physical presence of the trader and the consumer, with the exclusive use of one or more means of distance communication up to an including the time at which the contract is concluded.

Many contracts of retainer concluded over the internet, and which are part and parcel of bulk personal injury litigation may fall into this category. Regulation 13 provides that the trader must provide to his consumer client in this instance, a lengthy list of information prescribed by schedule 2 of the Regulations. But failure to do so will only result in a deemed breach of contract by the trader: see regulation 18. As every lawyer knows, breach without more, does not terminate a contract. It has to be accepted by the innocent party. It can reasonably be assumed that many clients will simply not notice whether the prescribed information is provided or not, and unless or until the contract of retainer is terminated, there is not a point for a paying party to take.

In relation to off premises contracts, which are tortuously defined to include contracts made in the physical presence of the trader and the consumer in a place away from the trader’s office, or contracts where at least the offer was made away from the business premises, or contracts where the consumer was personally and individually addressed by the trader off site or where the contract was made on an excursion, there is a more draconian consequence. In certain contexts such contracts carry a right to cancel: if the requirements to provide information and notices of the right to cancel are not met, then a criminal offence is committed.

Such a contract is likely to be illegal: by which I mean that it is not only unenforceable, but as these Regulations have a consumer protection element to them, any sums paid over under the contract by the wronged consumer are likely to  be capable of being clawed back by a restitutionary remedy.

On premises contracts mean a contract which is neither a distance contract or an off-premises contract: a potentially very wide residuary class indeed. In this respect there is an obligation to provide prescribed information under schedule 1, albeit qualified by the notion “if that information is not already apparent from the context”. Again, failure to do so will put the trader in breach: but there is no right to cancel in an on-premises contract and hence no criminal offence exists for failures in this regard.

In the last 14 years, I have had precisely one case where the Consumer Protection (Distance Selling) Regulations 2000 have proved material to the recovery of costs: in relation to the Cancellation of Contracts made in a Consumer’s Home or Place of Work Regulations 2008 I have had rather more: but after standard form credit hire agreements and conditional fee agreements were redrawn to cope with the Regulations, those cases tended to die away.

I suspect it will prove to be the same with the current set of Regulations: their implementation will prove to be largely a non-event.

What is proving rather more interesting at the moment is the question of compliance with the Damages Based Agreements Regulations 2013: although relatively few solicitors are using those agreements, they remain standard fare for claims management companies who must comply scrupulously with those Regulations or suffer the fate that their retainer is unenforceable.

The Damages Based Agreements Regulations 2013 remain a horribly flawed piece of legislation but there is no sign of any appetite to amend them and so drafting problems will continue to surface for some time yet.

Costs barrister gets “sticky”

As this blog approaches its second anniversary I have been doing some tinkering under the bonnet. The first and most significant change is that I have enabled the comments feature: it is now open, to you dear reader, to leave your thoughtful, insightful and non-defamatory comments on each article that I place on here.

The second is that the blog has been reprogrammed to facilitate its appearance on mobile devices. If you are reading this on your smart phone it will look quite different to how it looks on a desktop.

The third change is that you can now share posts by email or on Linked In. At the moment Facebook is a bridge too far, as is Twitter but I will consider expanding the blog to a wider social media in the near future.

The fourth change is that I have enabled the subscription authority: if you sign up with your email address, then every time this blog is updated you should get an email gently informing you of the fact.

Finally please set your speakers to maximum to enjoy the multi-media auditory feast which I have added to the blog: on mobile devices you have to click the “play” button in the top right hand corner.

If you are interested in singing along in your office or on the train, I set out the clean version of the lyrics below:

From the Halls of Montezuma
To the Shores of Tripoli;
We fight our country’s battles
In the air, on land and sea;
First to fight for right and freedom
And to keep our honor clean;
We are proud to claim the title
of United States Marine.

Our flag’s unfurled to every breeze
From dawn to setting sun;
We have fought in ev’ry clime and place
Where we could take a gun;
In the snow of far-off Northern lands
And in sunny tropic scenes;
You will find us always on the job
The United States Marines.

Here’s health to you and to our Corps
Which we are proud to serve
In many a strife we’ve fought for life
And never lost our nerve;
If the Army and the Navy
Ever look on Heaven’s scenes;
They will find the streets are guarded
By United States Marines.

Allocation wars and incoherent defences

Since well before the Jackson Reforms on 1st April 2013 liability insurers and others have been fighting battles over allocation of claims to track. The “Holy Grail” is to achieve an allocation of a modestly valued personal injury claim or a property damage only claim to the Small Claims track.  A related point is the relentless attempt to retain claims within the MOJ Portal process through the  expansion of the ambit of stage 3 hearings: but that phenomenon is worth an article in itself.

A recent decision of the Court of Appeal illustrates one of the arguments that has been deployed successfully to force a downwards allocation of a claim to a non-costs bearing track. The case represents a qualified victory for the insurance industry but as is the way with satellite litigation has also opened the door to fresh arguments that insurers may have difficulty grappling with.

The case of Akhtar.v.Boland [2014] EWCA Civ 872 concerned the legitimacy of making partial admissions on a wholly tactical basis in order to reduce the scope of the sums in “dispute” for the purposes of allocation.

The Court of Appeal noted at paragraph 3 of its judgment the issue to be decided on the appeal in these terms:

Although nominally an appeal between two individuals, in fact this appeal is fought between a credit hire company or credit hire companies on the part of the claimant and a motor insurance company or motor insurance companies on the part of the defendant. It raises issues as to the correct track to which claims should be assigned that are of wide general importance. The essential question is what is meant by “the financial value … of the claim” in CPR 26.8(1)(a) and “any amount not in dispute” in CPR 26.8(2)(a).

The Court of Appeal further explained the nature of the interests lying behind the nominal parties to the appeal at paragraph 4:

Evidently, it is in the interests of a credit hire company to maximise the financial value of a claim for damages following a road traffic incident, so as to justify the instruction of lawyers and to recover the costs of doing so, and in the interests of insurers to minimise the financial value of a claim below the limit for the small claims track, so that the claimant cannot recover any legal costs of his representation.

The facts of the case are worth noting in full for two reasons. First they illustrate the way that the issue of allocation was approached. Second they demonstrate the danger of “pleading by rote”.

6. The claim relates to a road traffic accident on 13 October 2011, the facts of which are immaterial to this appeal. The claim form, issued on 17 May 2012, gave the value of the claim as “Damages in excess of £5,000 but less than £10,000 plus interest and costs”. The particulars of special damage in the claimant’s Particulars of Claim were as follows:

          1. Hire of Vehicle £5280

Recover charges £300

Storage charges £712.80

Vehicle test appointment £50

Miscellaneous Expenses £50

Total £6392.80

Accordingly, the prayer was for “Damages for (sic) exceeding £5000 but not exceeding £10,000 (sic)”. On this basis, of course, the fast track was appropriate. There was a notice of funding stating that there was a conditional fee agreement.

7. The defendant (in reality his insurer) served his defence on 26 July 2012. It was described by counsel for the claimant before the Judge as incoherent, a description with which I have some sympathy. Paragraph 1 admitted the accident and liability to compensate the claimant for “any proven loss and damage caused to the claimant as a direct result”. Paragraphs 2 to 7 were as follows:

“2. Hire charges are denied in the sum of £5280. The defendant admits hire charges in the sum of £1860. This figure represents T4 ABI GTA daily rate of £73.81 plus VAT for a period of 21 days. The hire charges remain in dispute in the sum of £3420.

3. Recovery charges are denied in the sum of £300. The defendant admits £150 plus VAT in respect of recovery charges. The defendant avers that no specialist recovery was necessary for the claimant’s accident damaged vehicle. The amount in dispute is £120.

4. Storage charges are denied in the sum of £712.80. The defendant admits £486 in respect of storage charges. This represents £15 plus VAT daily charge for a period of 27 days. The amount in dispute is £226.80.

5. The Rochdale Metropolitan Borough Council three monthly vehicle test appointment is denied in the sum of £50. The defendant avers that this head of claim is irrecoverable, pursuant to the case of Clark v Ardingtons at paragraph 155. Further, or in the alternative, the defendant avers that this would have been incurred by the claimant in any event.

6. Miscellaneous expenses are denied in the sum of £50.

7. For the purpose of allocation, the amount in dispute is £3866.80 and falls within the remit of the small claims track.”

The Court of Appeal then went on to note the following at paragraph 8 of its judgment:

However, these apparently unqualified admissions were contradicted in subsequent paragraphs. Paragraph 8 pleaded, correctly, that the claimant had entered into a credit hire agreement for a replacement car and claimed to have done so for a period of 40 days. Paragraph 9 was directed at the enforceability of that agreement:

“9. The defendant is unable to plead precisely through want of knowledge. The claimant is put to strict proof as to:

i. The written terms and conditions of hire by way of production of the original documentation.

ii. The intended date of payment as determined when he signed the agreement.

iii. What representations were made by AM or its agents, as to the terms of payment of the said hire charges. The defendant requires the claimant to attend the hearing for the purposes of cross-examination.”

Paragraphs 11 and 12 put the claimant to proof of his impecuniosity justifying his entering into the credit hire agreement. Paragraphs 13, 14, 15, 18, 21 and 22 were as follows:

“13. It is not admitted that the claimant needed to hire a vehicle at all or for the full hire period in question. The claimant is put to strict proof that he took all reasonable steps to mitigate his losses in respect of the hire period.

14. The defendant has no knowledge of whether the claimant could have had use of another vehicle at no charge or a lesser charge during the hire period, or whether the claimant had a reasonable need for a vehicle throughout the entirety of the hire period and in these respects the claimant is put to strict proof.

15. No admissions are made as to the period of hire. The claimant is put to proof regarding how he managed without a vehicle between the accident date on 13 October and the start of the hire period on 20 October. Further, the defendant avers that hire should have ceased 7 days after the date when the cash in lieu settlement was sent to the claimant (3 November), instead of continuing until 29 November.

18. The defendant avers that the rate of hire charged by AM includes a charge for additional services and benefits, which are irrecoverable pursuant to the decision in Dimond v Lovell. The defendant avers that such hire charges as the claimant can recover should be calculated at the equivalent “basic hire” rate. The defendant reserves the right to adduce such “basic hire rate” evidence to support the contention that it would have been reasonably possible to hire an appropriate vehicle at a lower cost.

21. The claimant is put under strict proof as to the nature of his insurance policy and, if comprehensive cover was provided, why the policy was not utilised rather than incurring credit hire charges and additional charges.

22. The claimant has failed to mitigate his loss in that he:

a. ….

b. Failed to make any reasonable attempt to negotiate with the credit hire company for the hire of a vehicle on less expensive terms than those set out in the credit hire agreement.

c. …..”

The scene having been set the Court of Appeal recorded the following interlocutory stages:

On 16 August 2012 the claimant’s solicitors filed their allocation questionnaire. They stated that they considered the most suitable track for the claim to be the fast track; they estimated costs to date as £7,000 plus VAT and disbursements, and the overall costs likely to be £15,000 (including a 100 per cent success fee), plus VAT and disbursements, i.e., over twice the amount of the damages claim. The defendant’s solicitors’ allocation questionnaire stated that they considered the most suitable track to be the small claims track, and gave as the reasons:

“The defendant refers to paragraph 7 of the defence and avers that the amount in dispute is £3,866.50. The issues in dispute are not complex and therefore the claim falls within the remit of the small claims track.”

In the lower courts the result was that judgment was entered on the sum “not in dispute” and the case was allocated to the Small Claims track. The Claimant appealed.

The discussion and decision by the Court of Appeal was brutally short. The Court of Appeal began by considering what were the “commonplace propositions” that formed an appropriate starting point.

I begin by mentioning what seem to me to be commonplace propositions concerning admissions and interlocutory judgments.

Where an allegation made by one party in proceedings is admitted by the other party in unqualified terms, that other party must not, seek to adduce evidence or raise arguments to the effect that that admission is not binding on him. The court has no jurisdiction to investigate a fact that has been admitted, unless the party making the admission obtains the permission of the court under CPR 14.1(5) to withdraw the admission and does so.

This principle applies even more strongly to a judgment for all or part of a claim. Neither party may adduce evidence or make submissions that if accepted would lead to decisions or findings inconsistent with the judgment, unless there is a successful application to set the judgment aside.

Where a defendant admits part, and not the whole, of an unliquidated damages claim, the claimant is entitled to judgment on that admission, and to pursue the proceedings to seek and obtain judgment for the balance. Contrary to the claimant’s submission, such a judgment does not extinguish the claimant’s cause of action.

Where an admission is equivocal, or inconsistent with other allegations in the defence, the claimant may, and should, seek further information or clarification of the defendant’s case under CPR 18.1. If the claimant fails to do so, and the court considers that it is uncertain what are the issues between the parties that fall to be determined at trial, it may itself make an order for clarification, and in an extreme case, where the defence is truly incoherent, the court may strike it out. On an application such as that heard by DJ Fox, if the court is uncertain as to whether an admission is unqualified, or as to its effect, I would expect the court to seek and to obtain clarification from the defendant at the hearing, and for that clarification to be made or confirmed in writing (under CPR 18.1 or in an amended defence).

In the present case, it is clear that DJ Fox interpreted the defence as including an unqualified admission that the claimant was entitled to the sum of £2,496: hence he entered judgment for that sum. We have the transcript of the argument before the Judge, from which it is clear that initially the claimant made no application to set the judgment aside, and that the defendant accepted that at trial the claimant could not recover less than the admitted sums totalling £2,496. It follows that at trial the allegations in the defence that were inconsistent with the admissions in paragraphs 1 to 5 would be disregarded, and could indeed have been struck out. However, in the discussion after judgment, Mr Dawes, for the claimant, accepted that if the allocation of the claim was changed the judgment would have to be set aside.

It follows from this that at trial the defendant could not, for example, challenge the entitlement of the claimant to damages for loss of use of his vehicle, or the reasonable need of the claimant to hire a replacement vehicle for a reasonable time and at a reasonable hire charge: for the defendant to do so would be inconsistent with the admission in paragraph 2 (as well as with the judgment). The rate of the hire charge and its duration beyond 21 days would be in issue.

CPR 26 fell to be applied to the proceedings after the claimant had obtained his judgment. CPR 26.7 and 26.8 provide, so far as relevant:

26.7

(1) In considering whether to allocate a claim to the normal track for that claim under rule 26.6, the court will have regard to the matters mentioned in rule 26.8(1).

26.8

(1) When deciding the track for a claim, the matters to which the court shall have regard include –

(a) the financial value, if any, of the claim;

(b) …

(c) the likely complexity of the facts, law or evidence.….”

(2) It is for the court to assess the financial value of a claim and in doing so it will disregard –

(a) any amount not in dispute;

Once the court had determined that the defendant accepted that the claimant was entitled to judgment in the sum of £2,496, the only sum in dispute was the balance of the claim, which was less than £5,000. This is confirmed by paragraph 7.4(2) of CPR PD 26A. The relevant parts of that PD are as follows:

“7.2  The object of this paragraph is to explain what will be the court’s general approach to some of the matters set out in rule 26.8.

‘The financial value of the claim’

7.3

(1) Rule 26.8(2) provides that it is for the court to assess the financial value of a claim.(2) Where the court believes that the amount the claimant is seeking exceeds what he may reasonably be expected to recover it may make an order under rule 26.5(3) directing the claimant to justify the amount.

‘any amount not in dispute’

7.4  In deciding, for the purposes of rule 26.8(2), whether an amount is in dispute the court will apply the following general principles:

(1) Any amount for which the defendant does not admit liability is in dispute,

(2) Any sum in respect of an item forming part of the claim for which judgment has been entered (for example a summary judgment) is not in dispute,

(3) Any specific sum claimed as a distinct item and which the defendant admits he is liable to pay is not in dispute,

(4) Any sum offered by the defendant which has been accepted by the claimant in satisfaction of any item which forms a distinct part of the claim is not in dispute.

It follows from these provisions that if, in relation to a claim the value of which is above the small claims track limit of £10,000, the defendant makes, before allocation, an admission that reduces the amount in dispute to a figure below £10,000 (see CPR Part 14), the normal track for the claim will be the small claims track. As to recovery of pre-allocation costs, the claimant can, before allocation, apply for judgment with costs on the amount of the claim that has been admitted (see CPR rule 14.3 but see also paragraph 7.1(3) of Practice Direction 46 under which the court has a discretion to allow pre-allocation costs).”

In my judgment, in the circumstances before him, in which the claimant retained the judgment for £2,496, the Judge was entitled to allocate the claim to the small claims track, since the sum remaining in dispute was less than £5,000.

Mr Weir pointed out that this result meant that many, if not most, of the issues in the case would be those that would have to be decided if the claim had remained in the fast track. That may be so, but it would equally be so if the claim had been for less than £5,000 from the beginning. If a case is too complex for the small claims track, the court may allocate it to another track: see CPR 26.8(1)(c). The present case is not such a case, and it has never been suggested that it is.

So in theory it is open to a defendant to make partial admissions which are sufficient to enable a claimant to enter judgment and to defend the balance of the claim on the Small Claims track.

In practice many defendants are going to find this conceptually hard to do. Will a defendant be prepared to admit a daily rate of hire ? A duration of hire ? Forego arguments on need for a vehicle, enforceability of a hire agreement and throw overboard all the cherished points which typically appear in the standard mass produced defence and counter schedule?

Experience to date indicates that they are not prepared to do so. And moreover attempts to rely on the Akhtar point can backfire horribly with the risk that if a defence proves to be “incoherent” the document will be struck out. The satellite litigation will continue yet.