There are still several practical issues with the new regime that must be addressed.
A white paper published recently by the ACL makes it clear that costs management is not only here to stay, but will continue to spread through the litigation world.
The teething problems will take some time to pass, but there are several practical issues with the regime that the ACL would like to see addressed in the coming months:
Solicitor and own client costs
Whilst the results of the costs management exercise do not impose a ‘costs cap’ on recoverable costs, at CPR 3.18 the court will not depart from an approved or agreed budget unless satisfied that there is good reason to do so. There will often thus be no detailed scrutiny of the receiving party’s costs and no requirement for a bill of costs.
It is therefore important that paying parties can be assured that the receiving party’s budget does not include costs of a solicitor and own client nature, which should never be recoverable in any event. Whilst the rules refer to ‘recoverable costs’, there is no clear direction that the costs in a party’s costs budget should not include costs of a solicitor and own client nature.
This becomes even more important if, during the proceedings, an adverse or costs neutral order for costs is made on any aspect of the case that is covered by the budget. It would make sense for Practice Direction 3E to provide more clarity and/or for the statement of truth to be amended.
Similarly, there has already been confusion arising over the court’s power to intervene in costs that have been agreed between the parties where a court feels that such costs are disproportionate and contravene the overriding objective.
Although it can be argued that the court has the authority under its general case management powers, it would make sense to add to rule 3.15(2)(a) the phrase, ‘save where the court has concerns as to the proportionality of the agreed budgets in which event the court shall make appropriate revisions to those budgets or part thereof’.
Rules under CPR 3.12-3.18 should be harmonised with CPR 31.5 (e-disclosure) particularly as to time-tabling.
For example, the parties are not obliged to complete electronic documents questionnaires until ordered to do so by the court and it is indicated at paragraph 15 of PD 31b that they will be given 14 days to do so. It appears unreasonable to expect parties in cases to which this practice direction applies to accurately budget their costs for the disclosure phase until this exercise is completed.
In many cases – such as personal injury and clinical negligence – a considerable proportion of the costs of an action can be incurred prior to proceedings being issued and therefore prior to the first budget being prepared. It is not beyond the bounds of possibility therefore that at the first case and costs management hearing, a court could determine that the costs already incurred are disproportionate, in which event how is a court to deal with estimated/forecast costs?
Until and unless fixed recoverable costs are introduced for all fast-track cases, it remains the case that ‘disproportionate’ costs are as likely to be incurred in such matters as in multi-track cases – if not more so. As the stated aim of the costs management regime is to control the costs of litigation, it seems to be an anomaly that costs are only being managed on the multi-track.
There are no specific provisions governing costs management for these actions but, arguably, there should be. For example, in an environmental pollution case, there could be several thousand claimants whose individual costs could be in the order of several hundred pounds – these cases are automatically assigned to the multi-track.
Should there be a requirement for a costs budget for each individual case or for the individual costs as a whole? If the latter, then should this be for the whole cohort of claimants or each firm’s cohort of claimants (there are quite often several firms representing the claimant cohort)?
Furthermore, some cases may have been added to the group register prior to 1 April 2013 whilst others may have been added afterwards, so is costs management to be imposed only for the latter or be disapplied? The same query applies to QOCS, Part 36 and the recoverability of additional liabilities.
Though the statement of truth for Precedent H has been changed – to ‘this budget is a fair and accurate statement of incurred and estimated costs which it would be reasonable and proportionate for my client to incur in this litigation’ – there is no requirement for certification that the client has approved the budget. This could be a simple but sensible step, easily dealt with by a further amendment to the statement of truth.
Should PD 3E require that the parties when serving their budgets also serve and file a schedule of incurred costs and/or a schedule of issues in the case? That some courts are already ordering these indicates that it should.
Through its role on the Civil Justice Council’s costs sub-committee, the ACL will continue to lobby to make the costs management regime as sensible and workable as possible – to the benefit of lawyers, clients and the wider administration of justice.