MASS Article for Costs Lawyer Magazine

For those of us concerned with civil litigation and costs, particularly in RTA, we may be somewhat challenged by the business mantra ‘love change’ as we view the wide raft of changes that are hurtling towards us.

First, there is the threatened substantive changes as part of the Government’s delayed ‘whiplash’ reforms. A combination of a ridiculously low tariff system and a proposed increase in the small claims limit for RTA related cases to £5,000 would have a major impact upon solicitors and their ability to manage costs in a way that is economically viable. These proposals are still being vigorously fought by the sector and there will no doubt be many twists and turns in the debate to come.

No discussion on costs can, of course, avoid extensive reference to Lord Justice Jackson and his past and present fixed costs reforms. His latest round of reforms – fixed costs on all cases up to £25,000, intermediate track for most civil cases up to £100,000, a pilot scheme for commercial claims between £100,000 and £250,000 – are not expected until either April or October 2019, but they will have a major impact across the board, to include clinical negligence cases to the dilution of the relatively recent Broadhurst principle.

Proportionality has been a central plank of the Jackson Reforms. However, over 4 years on, the practical implementation of this remains vague. The old ‘Proportionality Test’ was based on Lownds, but are the costs proportionate having regard to the “7 pillars” found in CPR 44.4 (3)? If yes, then each item must be reasonably incurred and at reasonable cost. If not, was each item necessary? If so, is the cost of the item reasonable?   With conflicting views, BNM will finally be heard by the Court of Appeal this month and hopefully will provide some clarity.

CPR 44.3(3)(h) recently added the 8th “pillar of wisdom” into cost budgeting which came into effect in 2013. The view of practitioners is broadly that budgeting has certainly improved since the early days in 2013 and it is now difficult to argue against the notion that it is here to stay. Practitioners must be fluent in the rules though. Where the stated value on the claim form is less than £50,000, Budgets must be filed and served with their directions questionnaire (CPR 3.13(1)(a)) and in any other case, not less than 21 days before the first case management conference (CPR 3.13(1)(b)). Practitioners must enter in reasonable negotiations, but agreeing a Costs Budget does not mean it is approved (Brown –v- BCA Trading Ltd & Ors [2016]). The Bill of Costs must certainly reflect the Costs Budget (CPR PD 47(5.8)).

It has long been the view of practitioners that Part 36 was poorly drafted, in particular in respect of the late acceptance of a Part 36 offer by a Defendant. Does this equate to indemnity costs? There are conflicting judgments in this issue (see Russell; Anderson; McKeown; Richardson; Car Craft Test Centre and more recently Parsa and Knibbs), but surely, this is a matter which requires urgent guidance from the Court of Appeal.

The mandatory use of a new electronic Bill of Costs is set to be compulsory from April 2018 in all County Courts and the SCCO, but with only minimal take up of the voluntary pilot since 2015, few are likely to be ready.

With Qader & Ors –v- Esure Services Ltd & Ors [2016] the Court of Appeal determined that CPR Part 45 Section IIIA is automatically dis-applied in any case that is allocated to the multi-track. Thereafter there was a rule change in April 2017, but there is now an anomaly for cases which settle pre-allocation but for more than £25,000. Even if it is clearly a multi-track case, then you are caught by CPR 45.29B or D. CPR 45.29J allows in “exceptional circumstances” to seek an amount greater than fixed costs. This lacuna requires either a rule change or guidance from the Court of Appeal sooner rather than later.

A combination of challenging new proposals and uncertainties created by previous changes are certain to keep lawyers on their toes and sweating at what may be around the corner.

MASS Article for Costs Lawyer MagazineMASS Article for Costs Lawyer MagazineSimon Stanfield, author of ‘MASS Article for Costs Lawyer Magazine’ is Chair of the Motor Accident Solicitors Society (MASS) and Partner, Simpson Millar

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