Recent Civil News

April 2015
Another year post-Jackson and we felt it would be a good idea to put together a
summary of current “hot topics”

J-Codes
It has been suggested that J-codes (long version EW-UTBMS codes!) will, going forward,
save a huge amount of time and cost. The way time is recorded will be different and more
‘front-end loaded’ but it should assist greatly with preparation of Precedent Hs and accurate
monitoring of budgets.
Whilst there may be some initial conflict between the codes and the current Precedent H, the
general view appears to be that this will not be insurmountable; it will however require some
further guidance to be made available. It has been suggested that it would be more
appropriate for Brief fees to be split between preparing for trial and actual attendance (this
might be something you want to start doing as a matter of course, fees can always be added
together at a later date).
To use J-codes to their full potential there needs to be a move away from thinking that costs
can be ‘back-engineered’. The key is that you should be carefully considering where time is
initially recorded; thinking about why you are doing a specific piece of work should help you
identify the category of work.
Key Points
‐ Consider the time you are recording against the guidance available through the ACL
website (http://www.associationofcostslawyers.co.uk)
‐ Move away from the idea that you are working ‘on a file’, look specifically at the task
being undertaken or the document you are considering
‐ Take the initial time to record and categorise work correctly

Provisional Assessment
Master Howarth spoke at a recent White Paper Conference about Provisional Assessment
and how he personally, and the SCCO generally, approach the task.
He emphasised that assessments were made based on the Bill of Costs, any supporting
documentation, Points of Dispute and Replies (CPR 47.15(4)). If the argument you are
making is supported by evidence on the file, make 100% sure that evidence is submitted
with the documents for assessment. He advised that the SCCO are asking for the full file of
papers to be submitted for provisional assessment; it was Master Howarth’s personal view
that an assessment cannot take place without them but he did concede that where Points of
Dispute relate only to points of principle, there is far less need to see the file.
An issue we as a firm have faced is how detailed Replies to Points of Dispute should be;
CPR 47 PD 12.1 clearly states these should be limited to “points of principle and
concessions only” but to our mind this leaves the receiving party at a distinct disadvantage if
the matter goes to provisional assessment. This issue was discussed by the Master and he
agreed that where necessary, additional details should be given because there will be no
opportunity for oral argument. Caution was advised however in excessively citing case law;
the Courts are aware of relevant law and you risk “putting the Judge’s back up” if standard
case law is repeatedly cited for standard arguments.
Key Points
‐ Provide the documents to support your arguments
‐ Make points clear and concise; whilst it is accepted further information may be
required Points of Dispute and Replies should still comply with Precedent G and CPR
47
‐ If providing your file to the Court do ensure, by marking the file with tabs if necessary,
that the Court can easily locate documents supporting each argument (this is
something we do as a matter of course when attending assessments and can say it
is always well received!)

Cost Budgeting and varying Cost Management Orders
It has been emphasised that every effort should be made to agree assumptions. Every
possible eventuality does not necessarily need to be budgeted for but in most instances both
parties will be aware of how the claim is likely to progress and should be able to agree to a
greater extent.
The Courts cannot assess incurred costs but can comment on them; they should also be
taken into account when the budget is being set. If what they perceive to be an excessive
amount has already been spent, ongoing costs can be limited. In the matter of Redfern v.
Corby Borough Council [2014] this is exactly what happened and on appeal the first instance
decision was upheld.
If your budget is reduced by the Court it is important that the assumptions are amended to
reflect this; you should always have a correct and complete version of the approved budget
to monitor costs against.
Some judges are specifically stating they will not look at hourly rates whereas others
address the issue before anything else; our advice is to carefully consider rates claimed for
forecast costs in particular.
There have been issues over when budgets should be filed and it is clear that many local
practice directions have been introduced.
To be successful in any application to amend a budget you must be able to demonstrate a
material change in the case, it is not sufficient to say that you have under budgeted. This is
where assumptions are key; if you clearly outline the basis on which your budget is prepared
and the case deviates from this, you are more likely to be successful in an application.
In the event that an indemnity costs order is obtained there is argument that any Costs
Management Order could be ignored; budgets are set with proportionality in mind and this is
obviously not relevant where indemnity costs are ordered. This could have significant
benefits to receiving parties and be a particularly good reason for there to be a departure
from an approved Budget.
Key Points
‐ Agree assumptions with your opponent
‐ Comply with the directions/time limits

Part 36 offers
As you will be aware the Part 36 Rules changed on 6th April 2015.
One important point to remember is that Part 36 cost consequences only apply in
proceedings at first instance (CPR 36.1(1)); if an appeal is to be pursued a further Part 36
offer should be made.
Time limited offers can now be made with automatic withdrawal after a certain period or
series of events; dispute is likely to arise as to whether the terms of a specific offer do
actually provide for this and it is likely to be something Courts will have to provide guidance
on. Our advice would be to ensure that all parties are clear and in agreement as to when an
offer has been withdrawn.
You may or may not be aware of new CPR 36.23 which could be the ‘saving grace’ if you
find yourself in the unfortunate position of being limited to only Court fees having filed your
budget late/not filed one at all. CPR 36.23(2)(a) states that where this is the case, it may be
possible to recover 50% “of the costs assessed without reference to the limitation” along with
(b) “any other recoverable costs”. The intention of this is to ensure the intended Part 36
benefits remain even where a party is limited to Court fees alone.
The new rules state that before making an order including the ‘benefits’ of beating a Part 36
offer the Courts will consider whether any offer was “a genuine attempt to settle proceedings”
(CPR 36.17(5)(e)); what constitutes ‘genuine’ is something the Courts will need to provide
guidance on. In our opinion in assessment proceedings however if you have considered the
costs claimed and realistically assessed recovery of those costs, the offer should be
considered genuine; we definitely won’t be advising Clients to make reduced offers ‘just’ to
meet this requirement.
We have been encouraging our Clients to make well placed and realistic Part 36 offers
where it seems a matter is likely to proceed to assessment; this approach could also have
significant benefits in main proceedings and one we, as a firm, would advocate at every
opportunity.
Part 36 offers are likely to be favoured by the receiving party but there can be uncertainty in
relation to the costs that are required to be paid by the paying party – costs liability runs to 21
days (or the date specified) from the making of the offer therefore if the offer is made with
Points of Dispute there may still be liability for preparation of Replies; if you find yourself on
the side of the paying party, you may wish to give careful consideration to making a
Calderbank offer!
Acceptance once assessment proceedings have commenced can only be with permission of
the Court. It is not uncommon for assessment proceedings to continue over a fairly lengthy
period, particularly in large complex litigation, with a preliminary issue being heard before the
remainder of the case. We hope there will be guidance on this point in the future and will of
course update you as to any developments. A pitfall that many are apparently falling into is
not stating whether Part 36 offers are inclusive of interest VAT and Bill preparation when the
offer relates to assessment proceedings. Whilst we cannot see the need for an offer to be
made exclusive of VAT or Bill preparation, interest can have a huge impact on the amount
recovered. Unless the offer states otherwise, it will be assumed to be inclusive of the above.
Key Points
‐ Carefully consider the facts of the case and assess likely settlement value; make a
well placed Part 36 offer early on
‐ Ensure offers in assessment proceedings state what they are inclusive, or exclusive,
of.

Proportionality
Almost two years since the introduction of the new regime Proportionality should still be at
the front of every litigators mind. Whilst there is little case law to date defining the approach,
the case of Khazakhstan Kagasy PLC v. Zhunus [2015] gives an interesting summary “the
touchstone is not the amount of costs which it was in a party’s best interests to incur, but the
lowest amount which it could reasonably have been expected to spend in order to have its
case conducted and presented proficiently, having regard to all the relevant circumstances.”
If you are to have costs assessed on a standard basis draw the Court’s attention to the
complexities of the matter, highlight any conduct issues which resulted in increased costs,
consider the ‘wider factors’ listed in CPR 44.3(5)(e) and marry any aspects of your case up
with these.
At the recent White Paper conference emphasis was placed on doing all that you can to
obtain indemnity costs orders to avoid having your costs found to be disproportionate.
Key Points
‐ Identify complexities throughout the matter and highlight them to the Court when
seeking an Order
‐ Carefully consider what the likely value of the claim is and manage costs to remain
proportionate to this amount
Relief from Sanctions
The panic that ensued the Mitchell judgment has greatly decreased in the past 12 months
following the decision in Denton v TH White Limited and others [2014]. Solicitors can breathe
a sigh of relief now knowing that they are not as likely to be ‘Mitchell’d’ for a small breach.
The emphasis is now not on whether a breach was ‘trivial’ but whether it was ‘serious’ or
‘significant’; the difference between these is drastic. Generally Courts appear to be taking
the approach that a breach is serious where it had an impact on progress of proceedings
through the Court and/or the impact on the opposing party. Matters before the Court of
Appeal post-Denton appear to be upholding the more lenient approach.
It is not the case that the Court won’t enforce compliance with rules, but they are likely to
adopt a less draconian approach than that outlined in the Mitchell case.
You should of course ensure all rules and Orders are complied with but if you do find
yourself in the unfortunate situation of failing to comply, make sure an application is made
swiftly and that you can demonstrate all that efforts are being made to resolve the issue.
Key Points
‐ Do all that you can to comply with the rules
‐ Make applications for relief as early as possible and make sure you can demonstrate
‘good reason’.

Bills of Costs
We are of course still awaiting details of the format of the ‘new’ Bill of Costs but in the mean
time how should a Bill of Costs be prepared where a Cost Management Order has been
made? It does seem the only way to clearly demonstrate that a budget has not been
exceeded is for a Bill to be drawn in phases. As you know Bills are already split into parts for
a number of reasons including changes in funding, VAT or invoice periods so they are likely
to become considerably more complex, at least initially.