Practico Roundtable with Costs Judge Leonard and Nick Bacon KC

In July 2023, we welcomed Costs Judge Leonard and Nick Bacon KC to our in-person Roundtable. As usual, we’ve had great feedback from the attendees and the discussion topics were a typically eclectic mix.

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1. Fixed recoverable costs reforms in October 2023

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• It will affect commercial practitioners sooner than PI practitioners because of the transitional provisions: ‘The new FRC will apply to claims where proceedings are issued on or after 1st October 2023, save for personal injury. The new FRC will apply to personal injury claims where the cause of action accrues on or after 1st October 2023’.

• There will be a new intermediate track – generally for cases worth between £25k and £100k. The trial must not last for more than three days, oral expert evidence at trial is likely to be limited to two per party and the claim must be brought by one claimant against either one or two defendants or by two claimants against one defendant.

• There are four bands of complexity for each of the fast and intermediate track with an ascending scale of allowable costs. For the latest draft of the tables, click here.

• There will be ‘confusion, uncertainty and argument’.

2. The increase in solicitor client disputes

• Difficulties are caused when the costs are payable by a third party (Tim Martin Interiors Ltd v Akin Gump LLP). There are an increasing number of cases where beneficiaries under a will are challenging legal fees.

• There is an increased emphasis on the shortfall between costs charged to the client and costs recoverable, coupled with the unsatisfactory nature of the statutory distinction between contentious and noncontentious costs (Belsner v CAM Legal Services Ltd [2022] EWCA Civ 1387

• Karatysz v SGI Legal LLP [2022] EWCA Civ 1388 Court of Appeal (Civil Division) provides guidance on billing and the assessment of solicitor/client costs.

• Diag Human SE and Another v Volterra Fietta (a Firm) [2022] EWHC 2054 (QB) confirms that if the retainer is unenforceable, there is no other basis such as quantum meruit which would allow a solicitor to get paid.

3. Practical guidance – Conversion of costs not billed in sterling

• For the purpose of the bill of costs, the appropriate date of conversion for sums paid by the receiving parties in a currency other than sterling is the date of payment (not the date when the bill was filed) – see attached judgment (Micula and others v Romania [2023] UKSC 2018/0177)

4. Practical guidance – The usefulness or otherwise of guideline hourly rates in detailed assessment

• The Court of Appeal has emphasised, in the context of summary assessment and interim costs awards in big commercial cases, that there must be ‘clear and compelling’ justification to depart from the new GHRs.

• The extent to which that might apply on a detailed assessment is dealt with in the case of Harlow District Council v Powerrapid Limited. The case is going to the Court of Appeal, but it is not clear whether the hourly rates decision is being challenged.

• Other cases include: Samsung Electronics Co. Ltd & Others v LG Display Co. Ltd & Another (Costs) [2022] EWCA Civ 466 Athena Capital Fund and Others v Secretariat of State for the Holy See (Costs) [2022] EWCA Civ 1061 5. Costs budgeting reforms as per the CJC report

• https://www.judiciary.uk/wp-content/uploads/2023/05/Civil-JusticeCouncil-Costs-Report-FINAL-May-2023.pdf (pages 11 to 15)

• There is a general feeling that, for commercial cases, there should be a watering down of the budgeting regime, perhaps requiring the parties to file and exchange budgets but with no obligatory requirement for costs management in all cases. The rules need to be flexible.

• Detailed assessment is a tried and tested method of ensuring that costs are proportionate. Costs management decisions can be arbitrary.