Archive for December 2016
Few lawyers realise that they are not allowed to charge a client anything beyond costs recovered from the other side in any County Court matter, even a multi-track matter, unless they have the client’s written agreement expressly permitting a greater amount to be paid.
This becomes of greater importance as fixed costs spread to all types of work and with a higher damages limit.
In the absence of this wording, solicitors, and indeed counsel, are limited to the costs recoverable from the other side.
In a small claim this is virtually nothing and in any portal or fixed costs claim it is uneconomic.
In any other case it effectively means that the maximum charge to the client is the guideline hourly rate for the particular level of fee earner and the particular geographical area.
In the event of defeat the same rules apply as the law is that the charge to the client cannot exceed the amount which “could have been allowed in respect of that item as between party and party in those proceedings”.
Thus had the matter been won, that charge could have been allowed and therefore the lawyer is allowed to charge in the event of defeat.
This has been the law for a long time. The relevant legislation is Section 74 of the Solicitors Act 1974.
Section 74 of the Solicitors Act 1974
Section 74(3) of the Solicitors Act 1974 provides:-
“(3) The amount which may be allowed on the assessment of any costs or bill of costs in respect of any item relating to proceedings in a county court shall not, except in so far as rules of court may otherwise provide, exceed the amount which could have been allowed in respect of that item as between party and party in those proceedings, having regard to the nature of the proceedings and the amount of the claim and of any counterclaim.”
This is an important and little known provision, which on its face prevents a solicitor charging any client any element of solicitor and own client costs in any County Court matter, including small claims, fixed costs matters as well as non-fixed costs matters in both the fast-track and multi-track in the County Court.
It allows a charge on defeat, but only to the extent that between the parties recovery would have been made in the event of a win.
However Section 74(3) has the escape clause “except in so far as rules of court may provide otherwise…”
CPR 46.9 reads:-
“Basis of detailed assessment of solicitor and client costs
(1) This rule applies to every assessment of a solicitor’s bill to a client except a bill which is to be paid out of the Community Legal Service Fund under the Legal Aid Act 1988 or the Access to Justice Act 1999 or by the Lord Chancellor under Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.
(2) Section 74(3) of the Solicitors Act 1974 applies unless the solicitor and client have entered into a written agreement which expressly permits payment to the solicitor of an amount of costs greater than that which the client could have recovered from another party to the proceedings.
(3) Subject to paragraph (2), costs are to be assessed on the indemnity basis but are to be presumed –
(a) to have been reasonably incurred if they were incurred with the express or implied approval of the client;
(b) to be reasonable in amount if their amount was expressly or impliedly approved by the client;
(c) to have been unreasonably incurred if –
(i) they are of an unusual nature or amount; and
(ii) the solicitor did not tell the client that as a result the costs might not be recovered from the other party.
(4) Where the court is considering a percentage increase on the application of the client, the court will have regard to all the relevant factors as they reasonably appeared to the solicitor or counsel when the conditional fee agreement was entered into or varied.”
Thus the Act, read in conjunction with this rule, does allow the solicitor to charge the client more than would have been recovered, but only if there is a written agreement expressly permitting payment of a greater sum.
CPR 46.9(4) refers to Conditional Fee Agreement success fees.
The appropriate wording should go in every retainer/Client Care Letter/agreement dealing with County Court or potential County Court litigation.
I suggest the following wording:-
“Section 74 Solicitors Act 1974 agreement
This agreement expressly permits the solicitors to charge an amount of costs greater than that which you will recover or could have recovered from the other party to the proceedings and expressly permits payment of such sum.
This part of this agreement is made under section 74(3) of the Solicitors Act 1974 and Civil Procedure Rules 46.9 (2) and (3).
In so far as any costs or disbursements are of an unusual nature or amount these costs might not be recovered from the other party.”
This law only applies to County Court matters and therefore this wording does not have to be put in matters which do not come before the County Court, for example CICA claims.
There is a circular argument as to whether this clause needs to be in a Contingency Fee Agreement covering pre-issue of proceedings. By definition the Contingency Fee Agreement covers pre-issue work and if proceedings are issued then the Conditional Fee Agreement is in place from day one.
However if the matter is settled pre-issue and costs are sought from the other side, with an additional charge to be made to the client as is usual, then it is arguable that on assessment the client could rely upon Section 74(3) in the absence of this clause being.
The counter-argument is that it is not contentious business and Section 74(1) specifically applies only to contentious business.
It is simply not worth taking the risk. Include the wording.
Driverless cars are receiving extensive coverage in the media generally but very little in the legal press, even though solicitors’ firms are likely to be among the most affected businesses.
How many personal injury cases have you dealt with, or heard of, arising from the use of driverless trains? The Victoria Line on the London Underground was the first – in 1967 – and has been joined by the Central, Jubilee and Northern Lines and the inter-terminal trains at Gatwick and Stansted Airports. There are hundreds of driverless railway systems worldwide.
True it is that there are generally no other drivers on the railways, but therein lies the rub.
Virtually all statistics show that over 90% of road traffic accidents are caused by driver error. Take driving out of the equation and that should mean 90% fewer accidents, 90% fewer road traffic accidents and 90% fewer road traffic accident fee earners.
There are likely to be some accidents even in a driverless world, but based on the tests to date they will be few and far between, and in any event are unlikely to end up in the hands of typical road traffic claimant lawyers.
Volvo has already announced that it will cover all loss involving any of its vehicles and that example is expected to be followed by most, if not all, motor manufacturers.
Any lawsuits are likely to be between car manufacturers and software suppliers or the Highway Agency or whichever body is responsible for road and system maintenance. These are likely to be heavyweight product liability cases, not the general territory of portal lawyers.
The gathering pace of technological and legal developments is astonishing. One fact says it all: the Department of Transport Consultation Paper – Pathway to Driverless Cars: Proposals to Support Advanced Driver Assistance Systems and Automated Vehicle Technologies – on potential changes to the Highway Code, the Road Traffic Acts and insurance law was issued before the Consultation Paper on increasing the personal injury small claims limit and scrapping or restricting general damages claims in minor soft tissue injury cases. The consultation closed on 9 September 2016
Privately some senior figures are wondering if there is any point in the small claims limit and soft tissue reforms as driverless cars will quickly make them redundant.
As the paper itself says “This consultation represents a major step on the pathway to driverless cars .It starts a rolling programme of reform that will keep our regulations up to date, ensuring we can safely take advantage of what automated vehicles can offer, tailored to near-to-market technologies.”
So what is the timescale?
Ford expect to be mass producing driverless cars for use by 2021 and Google by 2020. Ford has announced that it is proceeding straight to Level 4 and Level 5 driverless cars that is they will not bother with Levels 1, 2 and 3 transitional hybrid cars. Level 4 is for use in a city area and Level 5 is full autonomy in any driving conditions or location. (Statement by Ford President Mark Fields– Palo Alto, California, 16 August 2016).
These are United States terms but have been adopted, with slight amendments, by the UK government. The UK Level 5 definition is “System can control lateral AND longitudinal movement in all use cases. Driver intervention is not needed”.
Ford has for some time described itself as a technology company, not simply a car manufacturer and now says it is an “auto and mobility company”.
The Google Self-Driving Car Testing Report on Disengagement of Autonomous Mode, December 2015, contains a wealth of statistics on the first year of testing in California, generally in a city environment, which involves far greater problems than freeways.
Where the software detects an issue with the autonomous vehicle that may affect its safe operation it immediately hands controls over to the driver. In the fourth quarter of 2014 that was occurring on average every 785 miles. A year later that was down to once every 5,318 miles.
Driver initiated disengagement occurs with a similar frequency, usually due to perceived problems with unpredictable behaviour by drivers of ordinary cars.
The report lists every instance of disengagement and the date and the reason.
Google has also announced that it is going straight to Level 4. Such cars are “designed for very specific urban environments. It’s a car that’s going to take people at 20-30 mph through city centres.” – Wayne Cunningham – Managing Editor of Motoring News.
In August 2016 in Pittsburgh in Pennsylvania, Uber started using self-driving taxis, albeit with a driver available to take over, and also with an observer. The fleet is a mixture of Volvo XC 90 Sport utility vehicles and Ford Focus cars.
Initial changes in the law to allow remote parking and hands off driving on motorways, but with driver overrides still available, are expected in the United Kingdom in 2018, with fully driverless cars, that is with no steering wheel or pedals or any facility for anyone to take control, by the mid-2020s. Many think it will be earlier.
Almost everyone agrees that the major benefits in safety, increased speed and lack of congestion and improved fuel economy come when driving is banned and all cars must be driverless. That is likely to be a social and political hot potato.
The benefits to the state are significant – “big prizes” in the words of the Department of Transport. Time off work through injury and payment of benefits will slump. NHS expenditure on treatment of road traffic accident victims will slump. Fuel consumption will fall sharply as vehicles are “platooned”, that is effectively made into a type of train.
The benefits to society and its members are enormous. Those with limited mobility, including disabled people and elderly people will have a new lease of life. Families will not be devastated by the death or serious injury of a loved one in a car crash.
There will be losers, including professional drivers, but entertainment generally, including pubs, restaurants, sporting events, theatres etc. are likely to benefit.
Much of the personal injury claims sector will disappear.
Driverless cars will make the small claims limit/soft tissue injury debate look like the proverbial vicar’s tea party as far as road traffic firms are concerned.
Many lawyers struggle to have a five minute plan, let alone a five year plan, but if you do have a five year plan and you do road traffic work the impact of driverless cars on your practice should be the number one item.
In September 2016 the National Highway Traffic Safety Administration, part of the United States Department of Transportation, published its detailed policy on driverless cars and that is entitled Federal Automated Vehicles Policy – Accelerating the Next Revolution in Roadway Safety, and, as the name suggests, it applies to all states of the United States of America.
The front cover says it all: a picture of a car with the back seats in the usual positions and the front seats with their back to the windscreen facing the other passengers.
On 13 October 2016 President Barack Obama hosted a summit in Pittsburgh bringing together car makers to talk about ways to speed up the use of autonomous vehicles.
The House of Lords Science and Technology Committee is holding an enquiry into the use of driverless cars and written submissions closed on 26 October and the House of Lords took oral evidence in November 2016.
I deal with this subject in detail in my forthcoming book – Personal Injury Small Claims, Portals and Fixed Costs available from Amazon here.
the Senior Courts Costs Office considered some principles in relation to hourly rates and Conditional Fee Agreement success fees.
This was difficult litigation in relation to phone hacking and was regarded of great importance to the claimant.
The Court allowed the following rates, and it will be seen that these were not significantly above the Guideline Hourly Rates last reviewed in 2010.
|Grade||Rate Allowed||Guideline Hourly Rate|
Thus it seems now that even in the most difficult and important case, as far as recoverable costs are concerned there will be no significant increase on guideline hourly rates.
No doubt this is part of the move to Fixed Recoverable Costs for everything.
The effect is that the Guideline Hourly Rates have not gone up for seven years.
With the incoming tide of Fixed Recoverable Costs they will almost certainly never rise again.
These rates are as follows:-
|Grade||London 1||London 2||London 3||National 1||National 2||National 3|
|Grade A – Solicitors or Fellow of CILEX over 8 years’ qualified experience
(my italics to emphasise the change under the Guideline Hourly Rates 2014).
|£409.00||£317.00||£229.00 – £267.00||£217.00||£201.00||£201.00|
|Grade B – Solicitors or Legal Executives (CILEX) over 4 years’ qualified experience and Costs Lawyers who are suitably qualified, and subject to regulation, depending on the complexity of the work
(my italics to emphasise the change under the Guideline Hourly Rates 2014).
|£296.00||£242.00||£172.00 – £229.00||£192.00||£177.00||£177.00|
|Grade C – Other qualified Solicitors or Legal Executive and Costs Lawyers who are suitably qualified, and subject to regulation, depending on the complexity of the work
(my italics to emphasise the change under the Guideline Hourly Rates 2014).
|Grade D – Trainee Solicitors, paralegals or equivalent||£138.00||£126.00||£121.00||£118.00||£111.00||£111.00|
A full list of the areas covered by the categories (London 1, London 2, London 3, National 1, National 2 and National 3) can be found here.
The Civil Justice Council Costs Committee, chaired by Foskett J., made recommendations on the Guideline Hourly Rates for 2014 in their report to the Master of the Rolls, Lord Dyson, in May 2014.
The recommendations made by the CJC Costs Committee included:-
- new rates as follows:-
|Grade||National||Inner London||Outer London|
|Grade E – paralegals or non-legally qualified fee-earners with less than 4 years’ civil litigation experience||£75.00||£109.00||£83.00|
- introduction of Grade E for paralegals;
- a single National rate, outside of London, for each Grade;
- two rates for London, rather than three, that is an “Inner London” rate and an “Outer London” rate;
All of these recommendations have been rejected.
Grade D of the Guideline Hourly Rate will continue to be the starting point for paralegals until evidence of the market is available.
Lord Dyson stated:-
“I have given very careful consideration to the recommendations for new rates, but regret that I cannot accept them.”
The only amendments that have been accepted by Lord Dyson are as follows:-
- Fellows of CILEX with eight years’ post qualification experience are to be included within Grade A; (This will introduced on 1 October 2014)
- Costs Lawyers who are suitably qualified, and subject to regulation, depending on the complexity of the work are to be eligible for Grade C or Grade B payments; (This will introduced on 1 October 2014)
Lord Dyson concluded by stating:-
“The present situation is deeply unsatisfactory. GHRs are needed to guide summary and detailed assessments of costs…I propose, therefore, to have urgent discussions with The Law Society and the Government to see what steps can be taken to obtain evidence on which GHRs can reasonably and safely be based.
…It is imperative that sound and reliable evidence is obtained.”
But for now; the rates do not change…
The Civil Justice Council Costs Committee has conducting a survey (Guideline Hourly Rates Survey 2013) of solicitors concerning Guideline Hourly Rates and the deadline for completing the questionnaire was Friday 29 November 2013.
Quite separately there is a Call for Evidence (PDF 22.2kb) on the costs of running a litigation practice and written submissions were be made by Friday 6 December 2013.
There is an introduction by Mr Justice Foskett and a letter from him and the questionnaire/survey (Guideline Hourly Rates Survey 2013) together with Frequently Asked Questions ( FAQ: Guidelines for Hourly Rates Survey 2013), including information and guidance concerning Guideline Hourly Rates, prepared by Mr Justice Foskett.
Here is the speech given by Mr Justice Foskett to MASS – The Motor Accidents Solicitors Society – on 25 October 2013 and which deals with Guideline Hourly Rates.
As part of the review the Civil Justice Council’s Costs Committee will consider whether to introduce a further category of fee earner for costs lawyers and costs clerks (their terms).
A recommendation concerning Guideline Hourly Rates will be made by the Civil Justice Committee to the Master of the Rolls by 31 March 2014.
There is more misunderstanding about Guideline Hourly Rates than any other aspect of costs. Here I am not setting out the rates, but rather when they should be used, and more particularly of detailed assessment when they should not be used. Quite simply they have no application at all in relation to anything other than summary assessment, and even in summary assessments they are guidelines and not tramlines, and are not supposed to replace the experience and knowledge of those familiar with the local area and field and the field of law generally (see (1) KMT, (2) Kay, (3) Mey, (4) MJY (Children proceedings by their Litigation Friend the Official Solicitor) v Kent County Council  EWHC 2088 QB.
Similar observations had previously been made in Sarah Cox v MGN Ltd  EWHC 1235 and Choudhury v Kingston Hospital NHS Trust  EWHC 90057 and Various Claimants v TUI UK Ltd  EWHC 90017 (Costs).
In Higgs v Camden and Islington Health Authority  EWHC 15 (QB) the High Court concluded that the guidelines were of limited assistance, a decision followed in KMT and others v Kent County Council above.
His Honour Judge Jeremy Richardson QC, sitting with assessors on an appeal from Kingston Upon Hull County Court, has recently considered the issue of guideline hourly rates.
The court said:
“20. A detailed assessment is not a scientific process, neither is it a process which will produce a necessarily right or wrong answer. A multiplicity of different methods for establishing the appropriate hourly rates has flourished. At the heart of this appeal is the question of the relevance of the guideline rates. The range of possibilities varies from following those rates slavishly to ignoring them altogether. There are clearly many shades in between those two extremely. Whilst they are described a “guidelines” for “summary” rather than details assessment, it is nevertheless commonplace on both summary and detailed assessments for courts to be referred to the guidelines. This is often on the basis that they should be uplifted (on the receiving party’s submission); disregarded entirely (receiving party); or followed (a common submission from a paying party in response to a Bill claiming higher rates than those in the Guidelines). However it is put, it is a matter for the court’s discretion. The seven factors in CPR 44.5(3) will be relevant; but the weight afforded to each factor is a matter for the wide discretion of the costs judge.
- As we shall come to explain the guidelines are an extremely useful tool for detailed assessments, but they are not to assume an enhanced status beyond a useful starting place or cross-reference point. We emphasize at once that a detailed assessment requires the exercise of judgement as we hereafter set out”.
Although technically dismissing the claimant’s appeal the Judge was critical, as many others have been, of the rigid guidelines approach of Regional Costs Judge Ian Besford, who made provocative remarks in his judgment. The court held that he imposed a straitjacket upon himself by the comments that he made and that he did not extricate himself from that straitjacket.
His disregard of expertize, which the court held to be synonymous with skill as a charging factor set out in CPR 44.5(3)(e) was an error of law, described by the court as “significant”, “an error of principle” and “plainly wrong”, (paragraph 43) and compounded by an “overly robust approach to the application of the guideline rates”. (Paragraph 44).
The court rejected the argument that Guideline Hourly Rates have no relevance whatsoever on detailed assessments.
“…….it is not wrong in principle at all, and is entirely appropriate, for the guidelines to be referred to during a detailed assessment and/or for them to be used as a starting point or crosscheck”. (Paragraph 39).
Although this decision contains no new point of law or principle, it contains a useful summary of case law.
It is also timely, given the current consultation on Guideline Hourly Rates and the risk that those rates will indeed be slavishly followed in provisional assessments, where the costs Judge will generally not have the solicitor’s file of papers, as well as of course being deprived of oral submissions.
It is most important to note that Guideline Hourly Rates have no relevance in the new scheme of Provisional Assessment in place since 1 April 2013 in relation to bills where the total costs claimed are £75,000 or less.
Provisional Assessment is a form of Detailed Assessment and is dealt with at new CPR 47.15, itself part of CPR 47 which is entitled “Procedure for Detailed Assessment of Costs and Default Provisions”.
The opening words of CPR 47.15 are:
“(1) This rule applies to any detailed assessment proceedings…”
Clearly Judges may be tempted to utilize Guideline Hourly Rates on a Provisional Assessment and equally clearly that is an appellable error of law.
Consequently it is important to make it clear at the beginning of the bill as to why those rates do not apply. I suggest the following wording:
“This bill is subject to Provisional Assessment under CPR 47.15 and Provisional Assessment is a form of Detailed Assessment under CPR 47: Procedure for Detailed Assessment of Costs and Default Provisions.
Consequently Guideline Hourly Rates are not applicable as they are for use in Summary Assessment proceedings only. The rates utilized in this bill are
I am grateful to Judge Michael Cook for much of the following, which appears in Butterworths Personal Injury Litigation Service.
The Senior Courts Cost Office (SCCO) “Guide to the Summary Assessment of Costs” contains guideline hourly rates for different levels of fee earner in different parts of the country. It is not the fault of the guide that the profession and the judiciary ignore its title and most of its content, and focus entirely on the tables of hourly rates. As the title and the content state, the guide is specifically limited to summary assessments of costs, and is intended to provide a simple collation of hourly rates applicable for routine costs to be assessed summarily at the end of a hearing which has lasted no more than a day. It has nothing to do with detailed assessments.
Increasingly the guide is treated as if it prescribes hourly rates: it does not, it merely collates them. To regard these rates as a substitute for solicitors calculating their own rates is to put the cart before the horse – the figures in the guide are no more than a simple collation of figures that individual firms of solicitors have calculated. The original figures for each locality were arrived at through a framework of local co-ordinators based on civil trial centres set up by the Law Society to assist in the agreement of local rates. The co-ordinators were responsible for liaising with local law societies and district judges, and afterwards with the designated civil judge for each trial centre to ensure consistency across the group. The figures were then communicated to the SCCO for publication on its website and in the guide.
In 2005 the guide ceased to give hourly rates approved for each court. It massaged the rates into three groups for the entire country plus London. As a result the rates are no longer approved by any member of the judiciary, do not refer to any particular court and to that extent have become a bureaucratic and not a judicial exercise.
Advisory Committee on Civil Costs
In 2008, the Ministry of Justice transferred the task of collating hourly rates to an Advisory Committee on Civil Costs under the chairmanship of Professor Stephen Nickell, who wrote to the Master of the Rolls on 9 December 2008 as follows:
‘The Advisory Committee on Civil Costs recommends the attached Table of Guideline Hourly Rates to apply from 1st January, 2009. As you know these guideline rates are broad approximations to be used only as a starting point for judges carrying out summary assessment. These rates are interim in nature in the sense that there remain some unresolved issues which are made clear in the enclosed document entitled “The Derivation of New Guideline Hourly Rates”, from which you will understand that at least one member was pressing for an immediate reduction in rates. The unresolved issues include the extent of work done by solicitors outside the region in which they are located and the extent to which referral fees can account for the gap between the hourly rates charged by claimants’, as opposed to defendants’, solicitors. We hope to have looked at these specific issues by 2010.
Our new interim Guideline Hourly Rates are based on data collected in a survey of solicitors and other interested parties as well as both written and oral evidence provided by representatives of the main interest groups and others. The information collected refers to the calendar year 2007 and, as last year, we have used the rise in the Office of National Statistics Average Earnings Index (AEI) for Private Sector Service industries, excluding bonuses, seasonally adjusted, from 2006 Q3 to 2008 Q3 to uprate the 2007 numbers.
I should emphasise that the Committee sees this as unfinished business and that when the outstanding issues have been resolved, we shall revisit the question.’
The committee was concerned that the figures were skewed because an increasing number of firms have offices both in London and the provinces and by the payment of referral fees.
The Master of the Rolls accepted the recommendation of the Advisory Committee that the guideline hourly rates for Summary Assessment should be increased in line with inflation by 1.7% with effect from 1 April 2010. The rates for London 3, Bands A and B are presented as ranges which are said to go some way towards reflecting the wide range of work types transacted in these areas.
Using the guide
The following extracts from the SCCO Guide to the Summary Assessment of Costs are important to its application:
- The guide is specifically limited to summary assessments of costs and is intended to provide a simple collation of hourly rates incorporating a 50% profit mark-up appropriate for routine costs to be assessed summarily at the end of a hearing which has lasted no more than a day. It has nothing to do with detailed assessments.
- The rates, in the words of the guide, ‘are broad approximations only’. They are not prescribed by the SCCO. They are not a scale. They may be amended locally at any time by the Designated Civil Judge. They are not carved in stone.
- The guideline figures have been grouped according to locality by way of general guidance only. Although many firms may be comparable with others in the same locality, some of them will not be. For example, a firm located in the City of London which specialises in fast track personal injury claims may not be comparable with other firms in that locality and vice versa.
- In any particular case the hourly rate it is reasonable to allow should be determined by reference to the rates charged by comparable firms. For this purpose the costs estimate supplied by the paying party may be of assistance. The rate to allow should not be determined by reference to locality or postcode alone.
- An hourly rate in excess of the guideline figures may be appropriate for Band A fee earners in substantial and complex litigation where other factors, including the value of the litigation, the level of complexity, the urgency or importance of the matter as well as any international element, would justify a significantly higher rate to reflect higher average costs.
- The guideline rates for solicitors provided here are broad approximations only. In any particular area the Designated Civil Judge may supply more exact guidelines for rates in that area. Also, the costs estimate provided by the paying party may give further guidance if the solicitors for both parties are based in the same locality.
In (1) Brown-Quinn (2) Webster Dixon LLP and Others v (1) Equity Syndicate Management Ltd (2) Motorplus Ltd  EWCA Civ 1633 the Court of Appeal said that the Guideline Rates for Summary Assessment were of no use or relevance in relation to the hourly rates to be paid by before-the event insurers to non-panel solicitors.
I am grateful to Jon Williams of Williams Associates for bringing the Kingston upon Hull County Court decision to my attention.
Master Rowley allowed the following recoverable hourly rates in a heavyweight clinical negligence case:-
Grade A – £375.00
Grade B –
Grade C – £250.00
Grade D – £130.00
There was no grade B fee earner work post 2009 but prior to that Master Rowley allowed £270.00 per hour.
Welcome to the Briggs Online Live Open Court (BOLLOC).
It is just £200.00 to bring a claim and all proceeds go to paying judges to write even more reports!
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You don’t have to have a real claim.
Just pay £200.00 and name someone you don’t like as a defendant and you are in with a chance of a £25,000.00 win!
That’s the benefit of courts with no evidence, no witnesses, no lawyers and no judges!
If the automated triage garbage online digital artificial intelligence court can’t make up its mind then you are in the weekly Litigation Rollover Draw!
This week’s Litigation Rollover Draw is worth £200,000.00!
The President of the Supreme Court will be announcing the winner part way through the Brexit appeal.
So stay tuned to Supreme Court TV!!!
Next week: How to get a divorce by text.
See my related blogs:-
Joan, who once produced six Nettleweed and Avocado teabags from her handbag when they had run out of coffee at the Isles of Scilly North Property Solicitors Organisation Subcommittee, will be the Law Society Gazette’s Legal Personality of the Year.
The Association of British Insurers welcomes the new £10 million fee for issuing personal injury claims.
Motor insurance premiums do not fall.
The Briggs Court online McKenzie Friend scheme runs into trouble when the Digital Court accesses the wrong Friend site and gets some digital content it did not expect.
The Ministry of Justice expresses surprise that court fee income has dropped, not risen, since the introduction of a minimum £25 million issue fee.
Cameras pick out confidential papers being carried by the Lord Chancellor. Legal commentators speculate on the significance of Janet and John and Noddy goes to the High Court.
Motor insurance premiums do not fall.
The MOJ announces reverse damages – the more you are injured the more you have to pay the insurance company.
The Daily Mail intervenes in the Supreme Court to argue that small men with little moustaches, not Parliament, should make the law.
Following the new £1 billion court fee only Bolton County Court has any cases.
Bolton Council is asked to explain why it has spent the entire UK budget on court fees for Asons.
Police struggle to control a mass demonstration of lawyers chanting “Bring back Osborne and Grayling”.
Legal aid is reintroduced for everyone, provided that they pay the £10 billion court fee themselves.
Queen’s Park Rangers will not be promoted.
Motor insurance premiums do not fall.
See my related blogs:-
AWARDING COSTS OF THIRD PARTY FUNDING – HAS THE HIGH COURT JUST REINTRODUCED RECOVERABILITY OF SUCCESS FEES?
the Commercial Court, a division of the High Court, in refusing to set aside part of an arbitrator’s award held that an arbitrator’s general power to award costs included the power to award the costs of third party funding.
In an International Chamber of Commerce Arbitration, the arbitrator ordered Essar to pay costs on an indemnity basis, including £1.94 million which Norscot had paid to a third party funder.
The arbitrator held that Essar had deliberately put Norscot in a position where it could not fund the arbitration from its own resources and therefore it was reasonable for Norscot to obtain third party funding.
That funding consisted of an advance of around £650,000.00 on the basis that if successful, Norscot would repay either 300% of that sum, that is £1.94 million, or 35% of the damages.
Essar challenged the award on the basis of serious irregularity under Section 68(2) (b) of the Arbitration Act 1996 but the High Court rejected that challenge and held that the third party costs were recoverable in principle under Section 59(1) (c) of the Act and the relevant International Chamber of Commerce Arbitration Rules.
The High Court held that the third party costs fell within the definition of “other costs” as referred to in Section 59(1) (c).
The court said that as a matter of language, context and logic, “other costs” could include the costs of obtaining litigation funding, given that they were related to, and for the purpose of, the arbitral proceedings.
It was entirely a matter of discretion whether a tribunal awarded such costs in any given case.
The judge expressly distinguished the position under the Civil Procedure Rules, where there is no similar provision enabling a court to order a losing party to pay “other costs” as compared with legal costs.
Thus the general view is that this case has no application to ordinary litigation.
I am not so sure.
Generally the position in English law has been that the cost of financing litigation has been irrecoverable as an item of costs, and is rather reflected in an award of interest – see for example Motto v Trafigura Ltd  1WLR 657 for comments on the fact that the cost of funding is not recoverable.
See also Simcoe v Jacuzzi  1 WLR 2392 which explains that the purpose of an award of interest on costs is to compensate for the cost of financing that litigation.
However, until this case, everyone would have said the same about arbitration awards. It is worth noting that this decision was made under an Act of Parliament of the United Kingdom, namely the Arbitration Act 1996 and I see no reason why a court should not construe the Civil Procedure Rules in a way consistent with that Act of Parliament.
After all there can be no logic whatsoever in a matter which could be referred to arbitration, or could be heard by the conventional court system having entirely different rules as to what costs are recoverable and what costs are not recoverable.
Also, the statement that I set out above, which reflects the general view, that the cost of funding has never been recoverable in English law is not in fact correct. Success fees and After-the-Event insurance premiums clearly represented the cost of funding, rather than funding itself, and were recoverable between 2000 and 2013, because an Act of Parliament said so.
It is true that recoverability has been repealed by the Legal Aid, Sentencing and Punishment of Offenders Act 2012, but it does show that Parliament was prepared to allow recoverability of the cost of funding.
Nowhere in English law is there any specific prohibition of recovery of the cost of funding and as we have seen the Arbitration Act 1996, as interpreted by the High Court in this case, specifically allows, in appropriate cases, the recovery of the third party funder’s fee from the losing party.
Commentators argue that the difference between arbitration and the Civil Procedure Rules is that Section 59(1)(c) of the Arbitration Act 1996 allows for the recovery of “the legal or other costs of the parties”, whereas in the Civil Procedure Rules there is no such reference to “other costs”.
Incidentally the fact that the Arbitration Act provides for “the legal or other costs of the parties” suggests that you cannot recover both legal costs and the costs of funding. If that was the case the wording should be “the legal and other costs of the parties”.
Thus it is strongly arguable that Parliament intended that phrase to mean, essentially, the costs of litigants in person.
Leaving that aside, let us look at the definition of costs in CPR 44.1(1). It reads:-
“‘costs’ includes fees, charges, disbursements, expenses, remuneration, reimbursement allowed to a litigant in person under rule 46.5 and any fee or reward charged by a lay representative for acting on behalf of a party in proceedings allocated to the small claims track;”
The new Shorter Oxford English Dictionary defines “expense” in the following terms:-
“1. The action or an act of expending something; the state of being expended; disbursement; consumption; loss;
- Money expended; an amount expended;
- Burden of expenditure; the charge or cost involved in or required for something; the charges etc. incurred by a person in the course of working for another or undertaking any enterprise; the amount paid in reimbursement.”
It seems to me beyond doubt that “expenses” could in an appropriate case include the cost of third-party funding.
Hence my comment in my original piece that if a success fee is in fact called a third-party funder’s fee then potentially recoverability is back.
The facts of Essar were unusual and the arbitrator was extremely critical of the conduct of the litigation by the losing, and therefore paying party and that was the main basis for the award of the third-party funder’s fee.
However if those facts arose in an appropriate case before the ordinary civil courts, then my view is that that court would have the power to make the same order.
At paragraph 69 of the judgment here the High Court said:-
“As a matter of justice, it would seem very odd and certainly unfortunate if the arbitrator was not entitled under s.59(1) (c) to include the costs of obtaining third party funding as part of “other costs” where they were so directly and immediately caused by the losing party.”
What would be wrong with the following statement in a judgment arising from ordinary civil litigation rather than arbitration:-
“As a matter of justice, it would seem very odd and certainly unfortunate if the judge was not entitled under CPR 44.1 to include the costs of obtaining third-party funding as part of “charges” or “expenses” where they were so directly and immediately caused by the losing party.”
Has the High Court just reintroduced recoverability of additional liabilities? If so, call it a third party funder’s fee and not a success fee, and hey-ho recoverability is back
As 2016 comes to an end – here is my post from 30 December 2015 with my predictions for 2016.
Not far off!
Fred, who once stepped in at short notice to take the minutes at the Rutland West Junior Lawyers’ Division Social Events subcommittee, will be the Law Society Gazette’s Legal Personality of the year.
Approximately 638 lawyer wannabees who could not be bothered passing the exams will announce new systems of delivering law.
Each will be a game changer.
Each will be reported in banner headlines by the Law Society’s Gazette.
Each will be run by people who have failed and failed again running legal services providers.
Each will fail.
10 000 firms of solicitors will carry on serving their communities and that service will hardly get a column inch in the legal press.
Claimant personal injury lawyers will huff and puff about the small claims limit rise and everything else but in fact will quietly readjust, refocus their businesses and carry on successfully.
Personal injury defence firms will be in very…
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