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US Lookalike v Rulemakers Unlimited [2020] SJ Costs Report 1

Validity of contingency fee agreement (CFA) '“ whether advising solicitor independent '“ liability of unsuccessful defendant

The claimant, with only a remote prospect of success, had entered into clear and understandable CFAs with both his solicitors and barrister in which he respectively contracted to pay 20 per cent of the total of his damages to his solicitors and ten per cent of general damages and past losses to his barrister. Before signing the agreements, he sought advice from a solicitor from another firm to whom he paid a fee. That solicitor had at the time a consultancy contract with the claimant's solicitors.

Held: (i) The CFA with the solicitors was unenforceable because it allowed for a deduction from damages for future losses; the advising solicitor was not independent; and the 30 per cent total deductible under the two agreements exceeded the 25 per cent maximum.

(ii) Since the common law indemnity principle has been abrogated, the claimant was entitled to recover from the defendant his reasonable costs and disbursements to be assessed on the standard basis.

Author's note: it is likely that any contingency fee arrangement in the civil courts will be severely regulated and it will behove solicitors, barristers and litigants to take great care to comply with all aspects of the legislation regulating CFAs. It is expected that the regulations will not give rise to the range or volume of satellite litigation that emerged from the

Conditional Fee Agreement Regulations '“ well, that is the hope of district judges!

Lazy Solls LLP v Jackson Management plc [2020] SJ Costs Report 2

Case management '“ relief from sanctions

In a claim for damages for personal injuries, the defendant's insurers failed to respond to the claimant's solicitors on the issue of liability within the time prescribed by the Personal Injuries Pre-action Protocol and then failed to file a defence. Default judgment having been set aside, and the defence having been filed, they failed to reply to a part 18 request for further particulars and to deal with disclosure. The court made an unless order without a hearing which was breached. Judgment was entered for the claimant with damages to be assessed. The defendant neither objected to the claimant's choice of medical expert proposed in the letter of claim, nor did he apply promptly to set aside the directions order that only the claimant had permission to rely on expert medical evidence. He failed to put questions to the claimant's expert within the timetable set in the directions order. The claim was ready for an assessment hearing and the trial window was near.

Held: (i) While pre-Jackson the courts might have granted relief from sanctions under CPR 3.9, the amendment to rule 3.9 enabled district judges who managed this type of claim to take a more robust approach to unjustified delays and breaches of orders.

(ii) From the outset, the defendant's insurers had failed to deal with the matter in accordance with set timetables. The defendant articulated various reasons for the defaults, none of which included unforeseeable events that would enable the court to grant relief and, accordingly, the decision to bar him from contesting the liability issue was not so plainly wrong that it must be regarded as outside the generous ambit of discretion entrusted to the judge.

The decision was upheld.

(iii) As to the expert medical evidence, if a defendant disagreed with the claimant's expert evidence, he was required to act promptly and diligently and in accordance with timetables that had been set by protocols or rules or the court and to explain to the court the grounds for believing that there may be a contrary expert opinion. Delays in addressing issues such as these would not be tolerated as they sometimes used to be and, accordingly, the case management decision that barred the defendant from relying on its own expert medical evidence was upheld.

Author's note: this report reflects that there will rarely be allocation hearings or case management conferences in fast-track cases or low-value multi-track cases;template directions (amended if necessary) setting sensible and manageable timetables will be used; and if it transpires that a variation of a direction or a timetable is required, a prompt application will be made. Chapter 39 of Jackson's final report is worth reading carefully. It signals an intention that the judiciary will be less tolerant of delays and breaches of orders.

Hardup v Scrooge [2020] SJ Costs Report 3

Fast-track personal injury cases '“ fixed costs

Hardup claimed damages of up to £25,000 arising from a road traffic accident. The claim was allocated to the fast track by a district judge to whom the matter was reserved in accordance with arrangements at the county court. Liability was denied by the defendant. Apart from a claim for miscellaneous expenses (in respect of which the defendant served a lengthy part 18 request for particulars of each and every travel cost, telephone call and correspondence item) special damages were agreed.

The claim for personal injury damages was supported by an orthopaedic surgeon's report and a psychologist's report. The district judge used the standard template, suitably adapted to the requirements for managing this case and refused a request by both parties for a case management conference. The medical experts replied to the defendant's questions. Several part 36 offers were exchanged. At trial, the claimant succeeded on the issue of liability, general damages were assessed at £9,964, agreed special damages were awarded and the claim for miscellaneous expenses was reduced from the sum claimed '“ £750 to 39p.

Held: (i) The claimant was entitled to recover only the relevant fixed costs sum provided for in the matrix. Although there were in the management of this case by the respective parties some additional factors that it might be argued should allow departure from the fixed costs sum, either an increase or a deduction, it would be very rare indeed and there would need to be some wholly exceptional reason to depart from the fixed sum.

(ii) The fees charged by the claimant's experts were in excess of those currently approved by the Costs Council and the defendant's liability would be limited to those specified sums.

(iii) The defendant claimed for some costs of dealing with the claimant's grossly inflated miscellaneous expenses claim but this was defeated by the one-way costs shifting rule.

(iv) The new process for dealing with low-value road traffic accident claims introduced in April 2010 had, as Jackson LJ hoped (see chapter 22, paragraph 4.7 of his final report) encouraged the development of a streamlined process for all fast-track personal injury cases. The process continued to be developed. It was not yet mandatory, but it might become so. Elements of the present case (e.g. the argument about the miscellaneous expenses claim) suggested that proportionality and efficiency had not yet achieved the importance that they merited in the minds of the lawyers handling these relatively low-value cases. It was likely that further efficiencies would be imposed if they could not be developed by agreement.

(vii) The general damages in this case were assessed with reference to the latest software system that was available. It had produced a specific figure (thankfully omitting the pence) not rounding its assessment up or down to the nearest round figure. It remained to be seen how many cases were reported where the trial judge disagreed with the software figure. It seemed likely that the software figure would be the sum at which damages were assessed unless that figure was manifestly wrong.

Authors's note: the facts and decisions in this case are drawn from several different chapters of the final report of Jackson LJ. It is clear that all levels of the legal profession will need to engage with the rule makers (and vice versa) to ensure the success of the implementation of the recommendations in the report.

Bankbuilder v Tight Budget Limited [2020] SJ Costs Report 4

Costs management '“ budgeting '“ capping '“ format of schedules

In a multi-track claim, an initial costs budget was filed on issue but not amended. The budget was approved by the court applying the test of reasonableness and the proceedings case managed in accordance with the unamended budget. The successful party sought to recover costs in excess of its budget figure.

Held: (i) The court was satisfied that there has been sufficient training available to legal representatives and costs draftsmen in the art of costs management so that the costs management rules now embodied in the CPR should be rigorously enforced.

(ii) Costs management rules required a party to file and serve not only the initial costs budget at the start of the proceedings, but also amended budgets as and when there were grounds for believing that the initial figures were likely to increase (or decrease).

(iv) The district judge managing proceedings was required to consider approving the costs budgets and, in so doing, to apply the test of reasonableness and, separately, the test of proportionality.

(v) The total costs figure arising from the test of reasonableness might be reduced on applying the test of proportionality which had been redefined in the one millionth CPR revision which had come into force earlier this year. Proportionality included consideration of the sums in issue, the value of non-monetary relief, complexity, conduct, reputation, public importance and other relevant wider factors.

(vi) Had the district judge applied the proportionality test, the approved budget figure may have been less or (and this would have eliminated the possibility of recovering more that the approved figure) a costs cap may have been ordered.

(vii) The case had been managed in accordance with the approved initial budget figure. It might have been managed differently if a higher or lower costs budget had been approved.

(viii) Accordingly, the costs recoverable from the unsuccessful party would be limited to the costs budget figure approved by the court at the outset of the proceedings, notwithstanding that a considerably higher figure (not least on account of the litigation conduct of the unsuccessful party) might have been allowable had an amended costs budget been filed, served and approved.

(ix) Obiter: the time was drawing near when all bills of costs must be drawn using the software package that had been developed over recent years and approved by the Costs Council. The schedules were in a simple, intelligible and informative form and, provided legal representatives had kept proper records, could be produced in the time it took to press a button.

Author's note: costs management, particularly in the larger claims, is going to become an integral part of case management in the face of the pressure on the courts to control costs. Reluctance to participate in the debate about how the management of costs will develop is likely to be counterproductive.