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Shaping the legal landscape in the world of costs!

15/07/2020

One of my favourite films as a teenager was Ferris Bueller’s Day Off, starring a very young Matthew Broderick. I considered Ferris a ‘cool’ guy – he was engaged throughout in bold and exciting situations instead of being where he should have been… at school! I frequently watched the film in my youth, dreaming of a life where I would no longer have to be at school day in, day out, and could have similar adventures to Ferris.

I recently introduced Ferris to my wife – promising her great characters, good-humoured interaction and catchy one-liners. She wandered off halfway through declaring it very dated, boring and a waste of her valuable time. I don’t think she shared my magical and nostalgic enthusiasm…

Nevertheless, one of the great quotes of the movie (from Ferris himself) is: “Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it.”

And, equally so, life at Keoghs moves pretty fast. Well into my second decade now, it is perhaps a good opportunity to stop, look around, and see what has been achieved whilst reflecting on how Keoghs dynamic and proactive approach has helped shape the legal landscape in the world of costs.

We develop the law in order to produce significant savings

  • Garrett v Halton Borough Council [2007] EWCA Civ 278

The Issue: Whether the solicitors had acted in breach of Regulation 4(2)(e)(ii) of the CFA Regulations 2000 in failing to disclose their financial interest(s) in recommending a particular ATE insurance product.

Judicial Comment: “The public interest in protecting solicitors’ clients required that the satisfaction of the statutory conditions was an essential prerequisite to the enforcement of CFAs… The purpose of the Regulations is to protect clients, not the financial interests of solicitors.”

The Outcome: Solicitors did not disclose their real financial interest. A breach of the regulations had occurred rendering the CFA unenforceable so that no costs could be recoverable.

The Impact: Along with the conjoined appeal of Myatt v National Coal Board, this was arguably the most important case of the decade for insurers and compensators, saving vast sums of money.

We challenge the definition of words to reduce claims spend

  • Thomas v Cardiff County Council (CC Cardiff) 31 January 2008 (HHJ Vosper QC)

The Issue: The interpretation of the words “road traffic accident” at CPR 45.7(2)(a).

Judicial Comment: “A plain application of the words of Part 45 … appears to me to cover precisely the facts of this case …”

The Outcome: Despite being pleaded and pursued as an employer’s liability claim, only Fixed Recoverable RTA costs were recoverable.

The Impact: Savings of circa £400,000 achieved for clients in cases between 2008 and 2012.

  • Gidman v Patel (CC Manchester) 22 January 2010 (HHJ Tetlow)

The Issue: Whether counsel’s fee for attending the settlement hearing on behalf of a protected party was “necessarily incurred” under CPR 45.10(2).

Judicial Comment: “I cannot persuade myself … the fees were necessarily incurred … because a solicitor could have done it equally well.”

The Outcome: Counsel’s brief fee for attending the settlement approval hearing was disallowed in full.

The Impact: Tens of thousands of pounds saved for insurers and compensators under the Fixed Recoverable RTA costs regime by deploying this case in similar factual circumstances.

We clarify meaning so that only reasonable and proportionate costs are paid

  • O’Beirne v Hudson [2010] EWCA Civ 52

The Issue: Where a case had settled by consent order before allocation with costs to be paid on the standard basis, was the costs judge entitled to take the view the claim would have been allocated to the small claims track and thus the paying party should only pay such costs.

Judicial Comment: “… in making an assessment the costs Judge is entitled to take account of … the fact that the case would almost certainly have been allocated to a small claims track … In so doing she would have regard to what could or could not be recovered if the case had been so allocated.”

The Outcome: The test formulated by the Court of Appeal was: “… whether it is reasonable for the paying party to pay more than would been recoverable in a case that should have been allocated to the small claims track”. At detailed assessment, the costs Judge ordered only a global figure equivalent to the fixed costs sum was recoverable as though the claim had been allocated to the small claims track. 

The Impact: Tens of thousands of pounds was saved for insurers and compensators by deploying the test formulated by the Court of Appeal in other similar claims. O’Beirne v Hudson remains good law and was cited as recently as April 2018 by the Court of Appeal in [2018] EWCA Civ 852.

  • Parveen v Farooq (CC Liverpool) 30 June 2009 (HHJ Stewart QC)

The Issue: Whether a claim for damages compromised at £875 after a 50% reduction for contributory negligence placed the matter in the small claims regime.

Judicial Comment: “… the words ‘amount of the agreed damages’ in 45.7(2)(d) … is to be realised … in effect the beginning and the end of the matter … if a claim had been issued for the amount … the small claims track would have been the normal track”.

The Outcome: Appeal dismissed. Only fixed (small claims track) costs were payable.

The Impact: Tens of thousands of pounds were saved for insurers and compensators by deploying this case to other claims with similar factual circumstances.

We reduce the recoverable costs of those who behave unreasonably

  • Sulaman v AXA Insurance Plc & Anor [2009] EWCA Civ 1331

The Issue: Whether a party who had lied to the trial judge but otherwise succeeded in the litigation should only recover 1/3 of her legal costs.

Judicial Comment: “… it is incontrovertible that the litigation was made more difficult and the judge’s task more intractable as a result of Ms Sulaman’s lies … There is … no need for the judge to apportion different parts of his order between lies which prolong the trial process and lies of which he merely disapproves”.

The Outcome: Appeal dismissed and trial judge’s order upheld.

The Impact: Significant (six-figure) savings for the insurer achieved with useful guidance provided by the Court of Appeal as to how to approach the making of such orders in other similar cases.

We have claims for costs struck out in full where they are mis-certified as accurate

  • Pirta v Shahi (CC Birmingham) 2 July 2015 (DJ Griffith)

The Issue: The validity of the claimant’s retainer and issues arising thereunder.

Judicial Comment: “Mr Abbas was not an impressive witness and changed his evidence as he was going along … It is clear that he was, at the very least, extremely lax in the way that he administered the firm in terms of matters relating to time charging. That laxness was apparent in the way he gave evidence. Most worrying of all, from the court’s point of view, is the rather cavalier attitude he had in respect of signing certifications on Bills and statements of costs … I do find that he has acted with a high degree of incompetence in failing to properly check, if at all, the statement of costs and the Bill, before signing them. He seems to have had a complete disregard as to the importance of the certification and his responsibility as the person signing.”

The Outcome: A finding of unreasonable / improper conduct under CPR 44.11(1)(a)&(b) was achieved and the CFA retainer was ruled unenforceable due to a breach of s58 of the Courts and Legal Services Act 1990.

The Impact: All costs in the bill claimed at £454,471.20 were unrecoverable from the defendant.

We have bills of costs struck out where they are mis-certified as complete

  • Sharp v Aviva Insurance Ltd (CC Liverpool) 04/07/2019 (DJ Baldwin)

The Issue: Whether the bill of costs had been mis-certified as to completeness.

Judicial Comment: “… the prescribed level of compliance [with PD47 para 5.11(2)] is to be expected in order for the detailed assessment process to work properly and engender the confidence of all those are bona fide engaged in its procedures”.

The Outcome: Bill as drafted stands struck out for non-compliance with PD47 para 5.11(2) to an extent which is not otherwise sensibly remediable other than by re-drafting the bill.

The Impact: Bill of costs must comply with PD47 para 5.11(2) to specify the status of the fee earner at all material times. The judgment can be deployed in other cases where parties attempt to mask the identity and status of whom in fact has conducted the work being claimed for.

We take a stand against “improper” conduct

  • Tucker v Hampshire Hospitals NHS Trust (High Court of Justice: SCCO Ref – JR1607217) 19 May 2017 (Master Rowley)

The Issue: Mis-certification of the claimant’s Precedent H costs budget.

Judicial Comment: “… a solicitor preparing a costs budget should not overstate a party’s liability to his solicitor for costs that have already been incurred … it is bound to mislead both the opponent and the court …”

The Outcome: Finding of improper conduct in accordance with CPR 44.11(1)(b) achieved against Irwin Mitchell Solicitors.

The Impact: All of the costs management elements, or “non-phase” part of the bill disallowed by way of sanction [to the value of £24,379.78]. Judgment deployed in other similar cases to secure savings to insurers and compensators (potentially seven-figure sums).

  • MXX v United Lincolnshire NHS Trust (High Court of Justice: SCCO Ref – JR1707078) 4 July 2018

The Issue: The status of the statement of truth in a Precedent H costs budget; compliance with the indemnity principle.

Judicial Comment: “I do not accept that the statement of truth for a Precedent H is intended to be a composite statement or one akin to signing an estimate … I do not think that it would even occur to solicitors in general to set out anything other than the sums calculated by the time spent to date multiplied by the rates agreed with the client as the incurred costs … To do so deliberately, as Irwin Mitchell have done, seems to me to have flouted the fundamental requirement to comply with the indemnity principle.”

The Outcome: Finding of improper conduct in accordance with CPR 44.11(1)(b) achieved against Irwin Mitchell Solicitors.

The Impact: All of the costs management elements, or “non-phase” part of the bill disallowed by way of sanction [to the value of £28,106.64]. Judgment deployed in other similar cases to secure savings to insurers and compensators (potentially seven-figure sums).

We make sure our clients only pay reasonable amounts for disbursements

  • Charman v John Reilly (Civil Engineering) Ltd (CC Liverpool) 22 May 2013

The Issue: The amount of the medical report fee to be awarded under CPR 45.30.

Judicial Comment: “Solicitors who … delegate to medical agencies the task of obtaining medical reports do not necessarily absolve themselves of the responsibility to assist the court to ascertain whether the costs incurred … were reasonable and proportionate in amount ... The defendants … are entitled to ask reasonable questions as to how the costs they are asked to pay, are arrived at”.

The Outcome: No reasonable basis for not providing the paying party with the further information sought. Cost of the medical report assessed at £150. Cost of medical agency to carry out the work to obtain the report assessed at £50 plus VAT.

The Impact: Savings made to insurers and compensators on disbursements payable under the fixed costs regime. Judgment deployed in other similar cases to secure savings.

We challenge non-compliance with rules to restrict costs recovery

  • Page v RGC Restaurants Ltd [2018] EWHC 2688 (QB)

The Issue: Failure to file a complete budget and the application of CPR 3.14.

Judicial Comment: “Mr Page’s interim budget did not meet important requirements of Precedent H … I am not persuaded by Mr Page’s contention that CPR 3.15 trumps CPR 3.14 …”

The Outcome: It was only appropriate to dis-apply the sanction of CPR 3.14 to those parts of the agreed budget up to the phases of trial and trial preparation.

The Impact: A costs budget must comply with the rules and not be an abridged or partial budget. Unless ordered otherwise, the budget must cover the entire proceedings. Saving provisions such as that within CPR 3.14 are of much wider application than might previously have been thought. The importance of this point extends beyond budgets (see for example CPR 31.21, 32.10 and 35.10).

We challenge unreasonable behaviour in the budgeting / costs management process

  • MXX v United Lincolnshire NHS Trust [2019] EWHC 1624 (QB)

The Issue: The standard against which improper or unreasonable conduct is to be judged in the costs management process.

Judicial Comment: “The principles set out in Gempride which apply in the context of a bill of costs apply equally to improper or unreasonable conduct in preparing a costs budget.”

The Outcome: “The Master carrying out the detailed assessment of costs will decide whether the substantial overstatement in the budget of the hourly rate for a Grade A fee earner is a good reason within the meaning of CPR 3.18 for departing from the Budget.”

The Impact: The statement of truth on a Precedent H costs budget is to be given the same weight as the certification on a detailed bill of costs. It remains to be determined whether overstated rates in a budget give rise to good reason to depart from the budget.

We recover client’s money when the other side don’t want to pay it back

  • Pirta v Shahi (CC Birmingham) 5 September 2016 (HHJ Tindal & DJ Gibson)

The Issue: Whether the unsuccessful receiving party had to repay the interim payment of costs of £200,000.

Judicial Comment: “… on the handing down of the first judgment on 2nd July 2015, Mr Abbas would have been under no illusion that his evidence had been rejected and that, if he wanted to prove authority for an actual payment of disbursements at the second hearing on 24th November 2015, he would need to produce proper evidence … In this case, the Appellant had no liability himself to pay counsel’s fees … there can be no authority without client liability”.

The Outcome: Appeal dismissed with the order below requiring the claimant repay to the full £200,000 interim payment upheld.

The Impact: 100% saving made for the insurer of £538,730.14 in respect of all costs liabilities faced. Recovery made from the claimant of £332,710.07 consisting of the interim costs payment (£200,000) and costs of assessment, costs of the appeal and interest (£132,710.07).

The Future

Keoghs continues to look at innovative ways to reduce claims spend and interact with their clients to achieve the best outcomes for all concerned, including those injured in unfortunate accidents. With plenty of change and further reform on the horizon, maybe it is time for insurers and compensators to stop, look around, and explore how Keoghs can bring an extra dimension to containing and controlling claims spend. 

 

Author

Ben Petrecz

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