The Curse of Cromwell

All over the country the May-poles were hewn down, lest old village dances around them should lead to immorality or at least to levity. Walking abroad on the Sabbath, except to go to church, was punished, and a man was fined for going to a neighbouring parish to hear a sermon. It was even proposed to forbid people sitting at their doors or leaning against them on the Sabbath….To the mass of the nation, however, the rule of Cromwell manifested itself in the form of numberless and miserable petty tyrannies, and thus became hated as no Government has ever been hated in England before or since.

-A History of the English-Speaking Peoples, Winston S. Churchill

One of the mysteries of the current Covid 19 pandemic, is how Parliament has gone Missing-in-Action for the last 8 months. There has been very little policy debate and only cursory scrutiny applied to the wealth of secondary legislation which has been passed in a rush, to restrict so many details of our daily lives, in ways which often seem arbitrary if not downright capricious.

Given the emphasis in the prorogation case last autumn upon the constitutional role of Parliament in scrutinising the executive and holding the government to account, I find it odd that there has been so little challenge made during this pandemic, to the government’s decisions and the rationale for them. But then again, the government does have a significant majority in the House of Commons, so perhaps that should not be surprising.

A particular example which is vexing at the current time, is the quasi-lockdowns produced by tier 3 status and the lack of rigour applied to the evaluation of the evidence which supports such matters. It may be that after the graphs, hypotheses and statistics are dissected and evaluated in public debate all would become clear that “there is no alternative.” But given that the death toll is likely to be far higher from cancer than Covid 19 in the next few months, there is a real debate to be had here.

With these sombre thoughts in mind, I turn to consider the latest tranche of rules on costs budgeting and management which came into force this month. The most significant change is to be found in the new rule 3.15A which is directed at the process of revising budgets and provides as follows:

(1) A party (“the revising party”) must revise its budgeted costs upwards or downwards if significant developments in the litigation warrant such revisions.

(2) Any budgets revised in accordance with paragraph (1) must be submitted promptly by the revising party to the other parties for agreement, and subsequently to the court, in accordance with paragraphs (3) to (5).

(3) The revising party must—

(a) serve particulars of the variation proposed on every other party, using the form prescribed by Practice Direction 3E;

(b) confine the particulars to the additional costs occasioned by the significant development; and

(c) certify, in the form prescribed by Practice Direction 3E, that the additional costs are not included in any previous budgeted costs or variation.

(4) The revising party must submit the particulars of variation promptly to the court, together with the last approved or agreed budget, and with an explanation of the points of difference if they have not been agreed.

(5) The court may approve, vary or disallow the proposed variations, having regard to any significant developments which have occurred since the date when the previous budget was approved or agreed, or may list a further costs management hearing.

(6) Where the court makes an order for variation, it may vary the budget for costs related to that variation which have been incurred prior to the order for variation but after the costs management order.

The rule is accordingly directed to and I would suggest meant to encourage lawyers to consider their cases as they progress, and where the criteria are satisfied to apply promptly for a variation of their budgets.

Although it is true that it has always been possible hitherto to apply to vary a budget, parties have by and large ignored this option, only to be confronted with an overspend on the case at its conclusion, and then have to cast around for “good reasons” to depart from the budget.

There is a tendency amongst costs judges to then apply Morton’s Fork, and to note that as no application was made to vary a budget prospectively, there cannot then be a “good reason” to depart from it retrospectively. This logistic syllogism however, does not withstand scrutiny of the rules which clearly give two separate paths for a departure from the originally set budget and impose no requirement that it must have been impossible to apply for a prospective variation.

This in turn means that there is a de facto requirement on the part of solicitors to monitor their spend during the case, so that a warning light flashes on the case management console, when an overspend is likely. This in turns means they need to digitally record their time accurately, by phase, so that they know when this point is reached.

Failing to do so, means that they will likely forgo the potential recovery of the costs from the other side, and at the same time, be unable to claim the costs from their own client, who will point to the failure to apprehend the true position and to make an application to vary the budget. Whether that failure is is couched as negligence, or simply the incurrence of unreasonable costs, perhaps does not really matter: the solicitor is unlikely to be able to get the overspend from the client.

Instead, what should be done in every case now, is to programme revisions of the costs budget into the timetable of the case, so that the requirement to show a “significant development” in the litigation is softened and blurred, and the argument can be grounded on the simple basis that far more is known about the case at the later stages, and the assumptions set at the initial stage of costs management have changed. Again, this is positively encouraged by the rules. 

Buried within the depth of the preceding rule 3.15 is this useful provision:

(6) The court may set a timetable or give other directions for future reviews of budgets.

Thus a facility to update costs budgets can be included when listing questionnaires are sent in, or at the time of a pre-trial review, or in a significant case at a subsequent case management conference, when it is known, for example, if expert evidence needs to be adduced orally at trial for example.

The Practice Direction accompanying the rule also provides:

(b) Precedent T, also annexed to this practice direction, is to be used in the event of variation of a budget pursuant to rule 3.15A.

Precedent T can be found here: https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part03/practice-direction-3e-costs-management

Precedent T, now provides the “missing middle column” of Precedent H, which read in conjunction with rule 15A(6), clarifies the scope of the court’s power to vary figures in existing budgets, and removes the need for more inventive approaches, grounded in pragmatism, in some of the caselaw to costs-that-were-formerly-estimated-but-are-now-incurred by the time of the application to vary.

I have long thought that any application to vary the budget must be grounded either on a change in the assumptions or on the basis of conduct of the opponent to litigation. This latter point is now reflected in the Practice Direction.

13. Any party may apply to the court if it considers that another party is behaving oppressively in seeking to cause the applicant to spend money disproportionately on costs and the court will grant such relief as may be appropriate.

The Practice Direction has also been recast, to include material formerly in guidance, on how a budget is to be drawn, and what the assumptions are:

10. (a) The assumptions that are reflected in the table below are not to be repeated. Include only those assumptions that significantly impact on the level of costs claimed such as the duration of the proceedings, the number of experts and witnesses or the number of interlocutory applications envisaged. Brief details only are required in the box beneath each phase. Additional documents should only be prepared in exceptional circumstance and, where they are disregarded by the court, the cost of preparation may be disallowed.

(b)  Written assumptions are not normally required by the Court in cases where the parties are only required to lodge the first page.

Phase

Includes

Does NOT include

Pre-action

  • Pre-Action Protocol correspondence
  • Investigating the merits of the claim   and advising client
  • Settlement discussions, advising on   settlement and Part 36 offers
  • All other steps taken and advice   given pre action
  • Any work already incurred in relation   to any other phase of the budget

Issue/statements of case

  • Preparation of Claim Form
  • Issue and service of proceedings
  • Preparation of Particulars of Claim,   Defence, Reply, including taking instructions, instructing counsel and any   necessary investigation
  • Considering opposing statements of   case and advising client
  • Part 18 requests (request and answer)
  • Any conferences with counsel   primarily relating to statements of case
  • Updating schedules and counter   schedules of loss
  • Amendments to statements of case
 

CMC

  • Completion of DQs
  • Arranging a CMC
  • Reviewing opponent’s budget
  • Correspondence with opponent to agree   directions and budgets, where possible
  • Preparation for, and attendance at,   the CMC
  • Finalising   the order
  • Any further CMC that is built into   the proposed directions order
  • Preparation of costs budget for first   CMC

Disclosure

  • Obtaining documents from client and   advising on disclosure obligations
  • Reviewing documents for disclosure,   preparing disclosure report or questionnaire response and list
  • Inspection
  • Reviewing opponent’s list and   documents, undertaking any appropriate investigations
  • Correspondence between parties about   the scope of disclosure and queries arising
  • Consulting counsel, so far as   appropriate, in relation to disclosure
  • Applications for specific disclosure
  • Applications and requests for third party   disclosure

Witness

Statements

  • Identifying witnesses
  • Obtaining statements
  • Preparing witness summaries
  • Consulting counsel, so far as   appropriate, about witness statements
  • Reviewing opponent’s statements and   undertaking any appropriate investigations
  • Applications for witness summaries
  • Arranging for witnesses to attend trial (include   in trial preparation)

Expert Reports

  • Identifying and engaging suitable   expert(s)
  • Reviewing draft and approving   report(s)
  • Dealing with follow-up questions of   experts
  • Considering opposing experts’ reports
  • Any conferences with counsel   primarily relating to expert evidence
  • Meetings of experts (preparing agenda   etc.)
  • Obtaining permission to adduce expert evidence   (include in CMC or a separate application)
  • Arranging for experts to attend trial (include in   trial preparation)

PTR

  • Bundle
  • Preparing and agreeing chronology,   case summary and dramatis personae (if ordered and not already prepared   earlier in case)
  • Completing and filing pre-trial   checklists
  • Correspondence with opponent to agree   directions
  • Preparation for and attendance at the   PTR
  • Assembling and/or   copying the bundle (this is not fee earners’ work)

Trial

Preparation

  • Trial bundles
  • Witness summonses, and arranging
  • for witnesses to attend trial Any   final factual investigations Supplemental disclosure and statements (if   required)
  • Counsel’s brief fee
  • Agreeing brief fee
  • Any pre-trial conferences and advice   from counsel
  • Pre-trial liaison with witnesses
  • Assembling and/or copying the trial   bundle (this is not fee earners’ work)
  • Counsel’s refreshers

Trial

  • Solicitors’ attendance at trial
  • All conferences and other activity   outside court hours during the trial Attendance on witnesses during the trial
  • Counsel’s trial refreshers
  • Dealing with draft judgment and
  • related applications
  • Preparation for trial
  • Counsel’s brief fee for trial   (include in trial preparation)

ADR/Settlement

  • Any conferences and advice from   counsel in relation to settlement
  • Work directed to settlement   negotiations and meetings between the parties and any other ADR (including   mediation), to include Part 36 and other offers and advising the client
  • Approval of settlement if needed
  • Drafting settlement agreement or   Tomlin order
  • Advice to the client on settlement   (excluding advice included in the pre action phase)

The Practice Direction however does not attempt to address the inventiveness of costs lawyers and draftsmen, who are adept at dividing costs between the various phases, in order to ensure that budgets are adhered to.

In summary, costs budgeting has always been meant to be “light touch” and the chief purpose of costs budgeting is to provide a bottom line figure a litigant might have to pay if they decide to take a case to trial, and lose. The new rules bring a more rigorous approach to bear, shine a spotlight on the power of variation, and should ensure that budgets are more accurately pitched to the true costs of the case.

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