Andrew Post QC

Hailsham Chambers

The shape of things to come?Fixed costs, the new format bill and the

Briggs reforms

Topics

1. The change that’s already with us: Fixed Recoverable Costs

2. The change that’s probably on its way: the new format bill

3. The change that may be coming: the Briggs report

Fixed Recoverable Costs

1. Their present scope

2. Proposals for extension

3. Escape routes

Present scope of FRC

• RTA Protocol: claims for damages of £1,001-£25,000 arising out of accident on or after 31/7/13 (£10,000 if accident 30/4/10-30/7/13)

• Low Value PI (Employers’ Liability and Public Liability) Claims: claims for damages of £1,001-£25,000, arising out of injury or disease on or after 31/7/13

Present scope of FRC

• Part 45 contains a thicket of complex rules fixing the costs for RTA and low value PI claims in almost every circumstance.

• In broad terms Protocols apply where liability not is dispute, but Fixed Costs under Part IIIA apply where it is.

Present scope of FRC

• Fixed costs under part IIIA do not apply to disease claims which exit the Protocol.

• Clinical Negligence is presently outside the scope of the various fixed costs schemes.

Proposals for Extension

• Jackson LJ proposes fixed costs for all civil claims up to £250,000, and that scheme could be in place within a year

• One advantage, he says, is to avoid spending time and money on costs management (!)

Proposals for Extension

• Total costs would range from £18,750 for £50,000 claim to £70,250 for £250,000 claim

• Lots of criticism of figures; Jackson LJ now says that the grid is a “starting point for debate”

• One year timetable won’t happen!

Proposals for Extension

• Department of Health said in January 2016 that a fixed costs regime for clinical negligence claims would be introduced in October 2016

• But proposed consultation has not happened yet

Proposals for Extension

• Widespread criticism including from Master Cook, one of the QB clinical negligence Masters.

• Appears to have been subsumed into wider Jackson proposals

Escape from FRC

• The key weapon for a Claimant: an order for indemnity costs

• If a Claimant makes an effective Part 36 order, the court will usually make an indemnity costs order

The effect of an indemnity costs order

• Court of Appeal has decided in Broadhurst v Tan [2016] EWCA Civ 94 that fixed costs and assessed costs are different, and a Claimant with an effective Part 36 offer is entitled to assessed costs, not limited by reference to the FRC scale.

• Same rule under new schemes?

New Format Bill

1. What is it?

2. Why is it so unpopular?

3. Will it be strangled at birth?

So what is the New Format Bill?

The BoC is a self-calculating, self-summarising spreadsheet document based on the J-Codes, which is capable of being generated automatically by use of the J-Codes and adopting the same structure

Benefits of New Format Bill

• Generated directly from contemporaneous time-recording, no need to reinvent wheel

• Self calculating

• Cheap and quick to produce

• No need to recast where rate reduced or different grade of fee earner allowed

• Useful in negotiation

Problems of New Format Bill

The challenge in developing a spreadsheet (as opposed to using the traditional blank piece of paper on which to write a bill of costs) is that one has to try to think of every eventuality and factor them all into the construction of the spreadsheet template.

Problems of New Format Bill

• Multiple parts

(a)costs budgeting

(b) solicitor client bills

• Complicated document with many active worksheets

Problems of New Format Bill

• Changes to formula boxes

• Need for expertise – do your local judges Have a working knowledge of Excel Pivot Table functionality ?

• Judicial resources and training

Why’s it so unpopular?

• Complexity of the spreadsheet and assumed time-recording software expense

• Fee earners struggle to record time under codes

• Does it threaten the future of costs lawyers?

• ACL proposes a simplified “new bill lite”

The SCCO Pilot

• SCCO 1/10/15-1/4/16

• Very limited take-up

• Problems with the few cases that have been seen

The SCCO Pilot

• If you have to J-code retrospectively, drawing the bill and responding to it expensive and prolonged

• The full version does not print, so you have hidden rows and columns in the printed version

The SCCO Pilot

• Still no assessments yet, although there was one new bill which the paying party applied to strike out but failed – the assessment then settled

• Some interlocutory/costs hearings: firms like Irwin Mitchell, Ince & Co and Weightmans are using J-Codes

Mandatory use of the New Bill?

• Unwillingness to invest in time-recording software until compulsory

• Original proposal for mandatory from October 2016, Jackson now says Oct 2017

• Rules Committee deferred decision, but has now formed a new bill sub-committee under Birss J

The Future

• Self-calculating spreadsheet on its way

• But transition difficult

• Transitional regime? Or 1 October 2017 cut-off – all work before then old bill, all work from then in new bill?

The Future

• Simplified ACL proposal? Traditional bill structure but using J codes and spreadsheet technology

• Or recent Jackson compromise proposal? New format bill but without J-codes

• Likely revised Practice Direction adopting the latter in July 2016

Briggs Reforms

1. The proposals

2. Timescale

3. Effects

The proposals

• Interim report published January 2016

• Contains proposals to reform the structure of civil courts to run in parallel to HMCTS plans for reform of courts (i.e. court closures)

The proposals

• Rather scary adoption of management speak:

A structure built on the strong, independent

and trusted justice brand – but with different

channels/experiences for different cases –all consistent with this brand.

The proposals

• Proposal for an online court, covering claims up to £25,000, with no provision fro costs shifting

• IT at the centre of the proposal, with expert systems intended to allow litigants to set out their own cases.

The proposals

• A paperless court

The central assumption …which underlies … this review is that it is now technically possible to free the courts from the constraints of storing, transmitting and communicating information on paper

Timescale

• In a word, tight.

• Consultation completed at end of May; review to be completed by end of July 2016

Effects

• Based on investing proceeds of valuable sale of city centre court buildings in IT

• Very large scale IT project

• How good is government at these?

The reforms in general

• Reform will continue

• The focus will be on the interests of court users

• Current level of costs seen as barrier to justice

The Battle Over Assignment of

CFAs: Who Is Winning?

Jamie Carpenter

Old Firm & Co New Firm & Co

Client

Fees

Assignment of CFAs

• Problem

• Potential Solutions

• Pitfalls

The Problem

Firm A Firm B

Client

Firm A A LLP

Client

Firm A Firm B

Client

Firm A Firm B

Client

Fee

earner

Pre-pack

Merger

The Problem

Potential Solutions

• Agency

– Only really possible on incorporation

– Regulatory/insurance considerations

• Novation

– New retainer with firm B

– Will not preserve a recoverable success fee

Assignment

A B

C

Contract

Assignment

Can sue

Assignment

Assignment

of a

Contract

Assignment

• Linden Gardens Trust Ltd v Lenesta Sludge

Disposal Ltd [1994] 1 AC 85 at 103 per Lord

Browne-Wilkinson:

It is trite law that it is, in any event, impossible to assign

"the contract" as a whole, i.e. including both burden and

benefit. The burden of a contract can never be assigned

without the consent of the other party to the contract in

which event such consent will give rise to a novation.

The Practicalities

• To be a legal assignment:

– Absolute assignment

– In writing from the assignor

– Express notice in writing given to the debtor

• Section 136 Law of Property Act 1925

• Otherwise an equitable assignment

What Can Be Assigned?

• Don King Productions Inc v Warren [2000] Ch

291

– Assignments impossible in law because:

• No assignment of burden

• No assignment of benefit of contracts based on

personal mutual confidence

• Express prohibitions on assignment

What Can Be Assigned?

• Don King at 318:– “The only assignment in respect of a contract which is legally

possible is an assignment of the benefit of the contract (i.e. the

rights thereby created) or some benefit (e.g. the profits) derived

by the assignor from the contract”

– Consider each right separately

– Assignment of otherwise unassignable rights may be expressly

or implicitly permitted by the terms of the contract

– “Unless the contract expressly or impliedly otherwise provides,

the character of an obligation precludes assignment of the

benefit of the obligation if the identity of the obligee is material to

the obligor”

Personal Contracts

• Nokes v Doncaster Amalgamated Collieries Ltd

[1940] AC 1014 at 1018 per Viscount Simon LC:

“It is, of course, indisputable that (apart from statutory

provision to the contrary) the benefit of a contract entered into

by A to render personal service to X cannot be transferred by

X to Y without A’s consent, which is the same thing as saying

that, in order to produce the desired result, the old contract

between A and X would have to be terminated by notice or by

mutual consent and a new contract entered of service entered

into by agreement between A and Y.”

CFA – Benefits and Burdens

Getting paid

Requiring instructions

Doing the work

Jenkins v Young Brothers Transport [2006] 1 WLR 3189

• The relevant benefit was the right to be paid

• The benefit of the CFA was assignable, because

the client placed trust and confidence in the

solicitor

• Because the benefit was conditional on the work

being done, the burden of the CFA was

assignable under the principle of conditional

benefits

– Tito v Waddell (No 2) [1977] Ch 106

– Rhone v Stephens [1994] 2 AC 310

Jenkins v Young Brothers Transport [2006] 1 WLR 3189

Jenkins v Young Brothers Transport [2006] 1 WLR 3189

“Whether, absent that trust and confidence, a

CFA could validly be assigned is not a matter

upon which it has been necessary for us to reach

a conclusion” (para 31).

Why Does It Matter?

• Failed assignment novation

• The modest windfall

– No recoverable success fee for Firm B

• The mega windfall

– No enforceable retainer in a personal injury claim

– Failure to limit success fee to 25% of general

damages for PSLA and past pecuniary loss (Art. 5

CFA Order 2013)

Recent Cases

• Jones v Spire Healthcare Ltd (HHJ Graham Wood QC,

11 May 2016)

• First instance:

– Transfer of instructions not motivated by personal trust and

confidence Jenkins distinguished

– Valid assignment of benefit (so fees of old firm could be

recovered)

– No assignment of burden (so no effective assignment of retainer)

– Novation on pre-LASPO terms unenforceable

Jones on Appeal

• D conceded burden of a contract could be assigned

– Law as set out in Jenkins taken to be correct

• Ratio of Jenkins not limited to personal trust and

confidence assignment valid in all circumstances

• D did not apparently challenge the assignment of benefit

on the basis of lack of personal trust and confidence

• Challenge to assignment of benefit as a right not capable

of assignment in law (mere contingent expectation)

rejected

• Fall-back argument for C based on LASPO transitional

provisions rejected

Other Cases

• Budana v The Leeds Teaching Hospitals NHS

Trust (DJ Besford, 4 February 2016)

• Instructions transferred after first firm decided to

leave the PI market

• Correctness of Jenkins doubted, but binding

even absent personal trust and confidence

• No assignment, because retainer already

terminated

Other Cases

• Webb v LB Bromley (Master Rowley, 18

February 2016)

• Instructions transferred after first firm closed

down

• Client’s consent to the transfer was indicative of

a novation following termination

• In any case, no personal trust and confidence,

so Jenkins distinguished no valid assignment

• LASPO transitional argument rejected

Where Are We Now?

• Waiting for a definitive view from the CA

• In the meantime:

– Apparently scope for argument about the

breadth of the ratio in Jenkins

– Termination point must be a good one

– Was there in reality an assignment at all?

– No fall back argument too desperate!

The Future?

Practical Problems: Budgets,

proportionality and Jackson in

practice

Josh Munro

Themes

• Budgets

• Part 36

• Fixed Costs/Portal Problems

• Unless Orders/Summary Assessment

• Settlements

• Costs where claim form issued but not served

Budgets

• Change to CPR 3E:

– Excluded in child and short life expectancy cases

– Budgets to be filed 21 days before CCMC in >£50k claims

– Hourly rates not to be altered

– Precedent R 7 days before

Precedent R

Budgets

Several recent cases but of note:

• Group Seven & Ors v Ali Nasir & Ors [2016] EWHC 620

• Capital for Enterprise v Bibby (18 Nov 2015, HHJ Pelling QC Ch D)

Group Seven

Claimed Allowed

C1’s QC £793,000 £398,000

C1’s Junior £468,000 £199,000

C2’s QC £567,500 Disallowed

C2’s Junior £335,400 Disallowed

D4’s QC £487,000 £250,000

D4’s Junior £319,000 C£155,000

£10m claim, 40 day trial

Capital v Bibby

Post-trial budget amendments?

No, and no indication either

Payment on account?

No rule that 90% to be allowed (not following Thomas Pink v Victoria Secret). Allowed 80%.

Part 36

• Littlestone v MacLeish [2016] EWCA Civ 127

• Sugar Hut v AJ Insurance [2016] EWCA Civ 46

• Courtney Webb v Liverpool Women’s NHS Trust [2016] EWCA Civ 365

Littlestone v Macleish

• D makes Part 36 of £35,000 and openly accepts liability (and pays) £17,500 = £52,500

• C gets judgment for £48,000

• Has C beaten D’s Part 36?

• CA’s answer: Yes.

Sugar Hut v AJ Insurance

• Complicated facts but D makes certain payments along the way

• D offers £250,00 by Part 36 on top on basis of generous valuation of large head of claim

• C gets judgment for £277,000 on top, does badly on large head of claim but well on others

• Judge says C gets 70% of large head pre-offer and pays most of the costs post-offer

• CA reverted to Part 36 – C gets 70% of costs throughout

Courtney Webb v Liverpool NHS

• Child injured at birth brought claim alleging negligence at delivery in 2 ways. Won on one, failed on second.

• C offered to settle liability at 65% on Part 36 basis.

• Judge made issue based costs order

• CA considered Part 36 and Part 44, awarded her all costs

Fixed Costs & the Portal

• Phillips v Willis [2016] EWCA Civ 401

• Parker v Butler [2016] EWHC 1251

• Broadhurst v Tan [2016] EWCA Civ 94

• Mendes v Hochtief [2016] EWHC 976

Other Points

• Gamatronic v Hamilton

– Unless Orders for non-payment of interlocutory costs orders

• Patience v Tanner [2016] EWCA Civ 158

– Case settles at door of Court, lengthy trial to resolve costs, correct approach

• Webb Resolutions v Countrywide

– Claim form issued not served. C liable to pay D’s costs