This year has been an exceptionally busy one in the field of costs and it is with a degree of relief, that one looks forward to 19th December, and two weeks of turkey, presents and snoozing peacefully by the fire.
However 2015 will soon be with us. What issues are likely to arise during the course of that year? In this post I look at five areas, that I can be reasonably confident will arise during the course of the next twelve months.
The new costs war
The first costs war was occasioned by the introduction of the Access to Justice Act 1999 and its scheme of recoverable additional liabilities, success fees and ATE insurance. Since then battles have waged over many other fronts as liability insurers have struggled to curb costs. The Coalition government taking power in 2010 saw the adoption of the Jackson Report, the abolition of the scheme of recoverable liabilities and a friendly ear in government to the cries of the insurance industry. The next two fronts in 2015 that will undoubtedly be fought relate to costs in NIHL, HAVS and other similar claims and in respect of whiplash claims. In another post I shall consider in more detail the arguments in relation to NIHL in particular.
It is perhaps surprising that no decisions have reached the appellate courts (yet) on the test of proportionality. As the second anniversary since the implementation of LASPO and the introduction of the reformulated test of proportionality arrives, this is a point which should surely be considered in the Court of Appeal. It is a central point and theme, which will surely arise in the context of NIHL costs, if nowhere else.
Master Gordon-Saker has recently observed in his lecture to the Commercial Litigation Association on 1st October 2014:
We have a new test of proportionality and proportionality now trumps reasonableness. Even if the costs are reasonable, they will not be recoverable on the standard basis if they are disproportionate. Costs incurred are proportionate if they bear a reasonable relationship to – the sums in issue in the proceedings; the value of any non-monetary relief; the complexity of the litigation; any additional work generated by the conduct of the paying party; and any wider factors involved in the proceedings, such as reputation or public importance.
It is said that we will need guidance on how to apply the new test. I disagree. The guidance is already there. It is likely that somebody will in some case or another seek to appeal the approach that has been taken. But I would suggest that there is no reason to suppose that the court hearing the appeal will do other than restate the guidance that has already been given by Jackson LJ in his final report: … I propose that in an assessment of costs on the standard basis, proportionality should prevail over reasonableness and the proportionality test should be applied on a global basis. The court should first make an assessment of reasonable costs, having regard to the individual items in the bill, the time reasonably spent on those items and the other factors listed in CPR rule 44.5(3). The court should then stand back and consider whether the total figure is proportionate. If the total figure is not proportionate, the court should make an appropriate reduction. There is already a precedent for this approach in relation to the assessment of legal aid costs in criminal proceedings: see R v Supreme Court Taxing Office ex p John Singh and Co  1 Costs LR 49.
In the 15th implementation lecture on 29th May 2012 – the lecture entitled “Proportionate Costs” – Lord Neuberger, then MR, quoted that passage and said that it seems likely that the courts will develop the approach to proportionality “as Sir Rupert described it” in that paragraph.
Singh, a decision of the Civil Division of the Court of Appeal concerned the costs of criminal proceedings but the same process can easily be applied to a civil bill.
So applying the Singh principle to an inter partes civil bill in a case commenced after 1st April 2013 in respect of work done after that date, the court would assess it in the usual way, but then stand back and look at the total which has been allowed. If that total is disproportionate the court would then reduce it to a proportionate amount.
This approach has been criticised as arbitrary, but it is no more arbitrary than the Lownds approach. After all, to decide, at the outset of an assessment, whether a bill has the appearance of being disproportionate, one must have an idea of what would be proportionate – that is, one must have a figure for proportionate costs in mind.
Whether the Court of Appeal will agree with the Senior Costs Judge’s views the point will surely be argued.
The Foskett review proved to be a busted flush, in that despite the work that was undertaken (without payment) by the committee and those who engaged with it, and the production of a lengthy report, its more radical suggestions were not implemented, and a more general review foundered for lack of an evidential basis.
Hourly rates set from the centre, as guidelines, not tramlines are not going to go away. The Master of the Rolls is to meet with the Ministry of Justice and the Law Society to discuss the way forward. To what extent the work already done by Foskett J will be carried forward remains moot at the current time, but given the impasse since 2010 in the setting of new rates, the impetus must surely be swelling for something to be done in 2015.
Interestingly it seems that the introduction of a scheme of provisional assessments with fixed costs, has in a sense backfired as more cases seem to be going forward to provisional assessment than ever went to detailed assessment.
The reason is not hard to discern: once a Bill has been prepared, Points of Dispute prepared and Replies served, as far as the paying party is concerned the money has already been spent and the offer that will have been made with the Points of Dispute not proved enough to tempt the receiving party. In such circumstances, the temptation is to see what the District Judge does, as the downside is limited.
Provisional assessment can of course be challenged at an oral hearing. It remains unclear to what extent the court treats this as a full rehearing, or a further hearing by way of review. And to what extent fresh arguments or documents may be deployed.
Anecdotally, District Judges seem unwilling to shift greatly from their views expressed on paper assessments, a common refrain being “So Mr Bloggs, where do YOU say, that I made a mistake?”.
The nature of the oral hearing, the interrelationship with part 36, to what extent the provisional assessment cap applies to Part 8 proceedings, or work done between settlement and the service of the Notice of Commencement are all nice points to unfold by way of satellite litigation in the New Year.
One case is already in the diary: the Supreme Court consideration of the Access to Justice Act scheme in the appeal of Coventry.v.Lawrence: the views of Master Gordon-Saker are worth noting:
Inevitably in a considerable number of the detailed assessments that have taken place since the end of July, paying parties have been asking for an adjournment of the assessment of any additional liabilities claimed until the Supreme Court’s decision in Coventry v Lawrence is known. Similarly parties ordered to pay costs at the end of a hearing have been asking for the question of their liability to pay additional liabilities to be adjourned. These applications have, I understand, been given short shrift. Additional liabilities are recoverable under primary legislation. If that primary legislation is incompatible with the Human Rights Act, that should not affect recoverability as between the parties. Although I know that there are arguments to the contrary.
Some of these contrary arguments, will be directed to the fact that although the primary legislation may not be amenable to quashing (and indeed has been repealed) the secondary legislation and the way that the court’s have assessed success fees and ATE premiums might be subject to challenge. Why 100% for a case that concludes at trial? Why more than 5% above the board for anything? Why not take into account an opposing party’s ability to pay as opposed to focusing on revenue neutrality, for the receiving party’s lawyers, or rather lawyers in general?
I foresee no shortage of work for costs lawyers yet.