Tuesday, 23 August 2016

Appeals: not worth the candle?

“I burnt one candle to seek another, and lost bothe my time and my trauell (work)”
(Stephen Gosson : The Ephemerides of Phialo, 1579)

Poor Mr. Gosson would appear to have fared badly: the meagre earnings from his midnight candle were only sufficient to pay for the cost of its replacement!  Perhaps a little forethought would have been in order.

Caution must also be an essential watchword - when deciding whether to incur the costs of an Appeal – particularly if you are seeking to challenge the discretion exercised by the Court below.


The recently reported authority of EIL v. Knowsley Metropolitan Borough Council is a case in point;  it makes for salutary reading.

The adult Claimant (EIL) claimed damages arising from a teacher’s sexual assault upon him when a pupil at a comprehensive school.  It is now settled law that a local authority may be held liable for such a matter, if the occasion for the assault has arisen from the employment of the teacher in question.

CMC and costs

In keeping with current practice the Court was required to examine the Pretrial costs of the parties.

Those costs were considered at a special hearing known as a Costs and Case Management Conference (CMC).

There were two elements of costs involved:

(a) the parties’ actual costs incurred to the CMC; and
(b) those further costs estimated to include trial.

Prior to the CMC each party had submitted details of (a) and (b).

Costs Budget

The conduct of all Civil Litigation in England and Wales (including for instance a CMC) are governed by the Civil Procedure Rules (CPR).  CPR 3.15 empowers the Court to:

“manage the costs incurred (and in respect of future costs) to set a budget.”

Setting a Costs Budget may have a dramatic and beneficial impact.

Knowing the overall costs in store should serve wonderfully to concentrate all parties’ minds and encourage them to look at economic ways of bringing an early end to their particular dispute.

Such knowledge provides a clear persuasive impetus for compromise.

Detailed Assessment of Costs

If part of negotiations to settle include a request by one party to contribute towards their costs what is the solution if the contribution is acceptable in principle but the amount cannot be agreed?

Might the opportunity of an early settlement be lost solely because of costs considerations?
The solution can be straightforward: it is open to the parties to agree terms of compromise which include the condition that any costs contribution be assessed by the Court.

This is known as a detailed assessment of costs which – in relation to any sums below £50,000 normally takes place before a Costs Officer; higher than that the assessment is carried out by a Costs Judge.

Approved Costs Budget : determinative

When it comes to detailed assessment (under CPR 3.18) a Costs Judge will usually rely upon the last approved Costs Budget.  The Costs Judge will not lightly depart from it - unless satisfied that there is good reason for so doing.

ELI v. Knowsley MBC

At the CMC the Claimant’s (a) actual costs and (b) estimated fees were roughly equivalent to each other.  They totalled £104,373.

The main question was whether EIL’s earlier delay in bringing his claim should bar him from proceeding.  If, on the other hand, he was allowed to continue, what then were the steps required to prepare his compensation claims for trial?  How much should be allowed in the way of a costs budget for that work?

The Court was quite scathing in its criticism of the Claimant’s costs claimed; it described  (b), the estimate, as excessive or outrageous.

Court’s Costs Ruling

Following argument, the Court allowed the Claimant £55,397.75 (about £30,000 of actual costs and another £25,000 or so for future costs).

The Claimant was not happy at the Court limiting his costs in this way.

Two sums had been claimed for the costs of the CMC:

(i) actual costs incurred (to the point at which the Costs Statement had been prepared): £2,493.50; and
(ii) the Claimant’s estimated further costs of the CMC (which - by the time of the CMC - had been incurred too): £2,310.00.

At the CMC the Court agreed to allow (i) in full but awarded nothing for the estimated costs at (ii).

Accordingly the Court confined the Claimant’s total costs of the CMC to £2,493.50.

Double Jeopardy

The Court had been trenchant in its criticisms of the Claimant’s costs levels.

The Claimant had already lost effectively half of his costs of the CMC.  If there were a detailed assessment might there be further inroads made into the figure of £2,493.50?

In other words, was there a risk of double jeopardy?


Amongst other points, the Claimant chose to Appeal the Court’s decision to limit his costs of the CMC.

The Appellate Court viewed the Claimant’s fears as well founded: it recognised that there was a real risk that a Costs Judge might take an axe to the sum allowed for the CMC (£2,493.50) because of the Lower Court’s earlier costs criticisms.

Approved Costs Budget

The Appellate Court subscribed to the beauty of simplicity: it adjudged that the £2,493.50 awarded at the CMC should be treated as an Approved Sum.  This meant that even if there was a detailed assessment, the Costs Judge was effectively bound by this figure.

This gave the Claimant elemental protection.


However there was an unhappy sting in the tail.

Allowing for other items on Appeal, the Claimant’s Appeal costs overall had amounted to shortly over £11,500.

When presented with these Appeal costs the Appellate Judge held that the Claimant’s Appeal could not have been:

“a sensible expenditure of money, a proportionate use of Court time or a rational exercise at all that costs of this Order should have been incurred in pursuing so very little.”

Accordingly the Claimant ultimately lost out, he was not awarded the not insignificant costs of his Appeal.


There are some useful reminders or pointers.

(1) Compromise

Put shortly the Claimant had had a number of points which he legitimately wished to pursue on Appeal.  Compromise of his claims changed all of that.  It limited the range of arguments to one or two items including the costs of the CMC.  The scenery had shifted.

(2) Costs/Benefit Ratio

Given that the scope and range of arguments by the time of the Appeal hearing had radically reduced (owing to the pretrial settlement) it was essential to conduct a ruthless examination of the likely costs/benefit ratio of continuing.

Put bluntly, when all was said and done, would the likely costs of Appeal be worth the candle?

The Appellate Court clearly thought not.

Accordingly it is wise to tread warily when looking to pursue the time and costs of an Appeal.  Careful assessment needs to be made of the benefits that might ensue - in comparison with the inevitable burden of costs that an Appeal would incur.

Death of the Stone Age and Dawn of the Protocol

With the advent of the Civil Procedure Rules (in 1999) old style approaches to disputes and claims were cast into the Neolithic and heralded a new dawn for dispute resolution.

Woolly mammoths of disputes could no longer be rendered safe by the flint-tipped spears of aggressive litigation.

Rather (and for the past 15 years) the emphasis has been upon steps and procedures to tame and nullify the beast.

What is a Preaction Protocol?

It is a means by which the parties and their legal advisers are encouraged to try and settle their claims before the start of Court proceedings (or unhappily, where those proceedings have begun at least to assist the Court in ensuring that the case is efficiently run).

How might this be achieved?

At heart is the need for all parties to engage in the exchange of early information, including production of all relevant documents and evidence.

What happens in practice?

In summary the party claiming recompense (the Claimant) must serve a formal Letter of Claim.  This must contain as much information as possible to do with their case and if need be append relevant documents upon which that party needs to rely (for example a contract, invoices or relevant correspondence which supports the party’s claim).

The recipient (the Respondent) in turn is allowed the opportunity to respond: this is known as the Letter of Answer.

If that response raises fresh or new questions then the Claimant is normally allowed an opportunity to put in a Letter of Reply.

Through such correspondence the parties should arrive at a position where each is aware of the case that they have to meet and then attempt a broadly informed assessment of strengths and weaknesses on either side.

Such an assessment is likely to inform the timing and content of negotiations to try and settle matters before they go to Court.

Even if say fault or liability is conceded there may be other disputes (over perhaps the amount of compensation claimed); even so, litigation is not the immediate answer.

Rather the parties must properly look to try and resolve their differences through the employment of Alternative Dispute Resolution (ADR). such as without prejudice negotiations, meetings face-to-face and possible mediation or arbitration.

Going to Court is now viewed as a step of last resort.

What if I choose not to adopt a Protocol or follow ADR?

The Courts will take a close and hard look as to how the parties were conducting themselves in the period leading to litigation.

What might amount to non-compliance?

The Court may conclude that a party has failed to comply with Preaction Protocol conduct where they have:
  • failed to provide sufficient information to enable the other party to understand the real questions in the case;
  • not acted within either reasonable or mandatory time limits;
  • unreasonably refused to consider and pursue ADR; or
  • for no good reason have failed to disclose documents requested.

How might the Court deal with non-compliance?

Should the Court decide that one party is in breach a range of options lay open including:
  • stay: that is putting the litigation on ice until the proper steps have been taken to implement a Protocol or pursue ADR;
  • costs sanctions;punishing parties by depriving them of interest which might have accrued on a potential award;  or
  • the award of punitive rates of interest in addition.

Do certain kinds of disputes have a particular Protocol?

The answer is yes.

There are currently eleven types of disputes to which fixed Protocols apply, including (for example):

  •          Personal Injury
  •          Clinical Disputes
  •         Professional Negligence
  •         Housing Disrepair
  •         Possession Claims (based upon either rent arrears or mortgage arrears)
  •         Dilapidations (affecting commercial property).

However if no mandatory Protocol exists a cautious client allied with the prudent practitioner will take care to ensure that one is formulated and adopted.

This Article cannot wholly do justice to the underlying complexities and strategic benefits attendant upon the imaginative deployment of a Protocol.

What about the costs?

It is impossible to be prescriptive.

A word of warning, however : the prosecution of a Protocol claim can result in an appreciable stratum of expense.

Care must be taken to see whether and to what extent all or at least part of that expense might be recoverable as part of any settlement.

Accordingly it is essential to examine - if looking at compromise - the feasibility of a condition requiring your opponent to make a financial contribution toward the costs of your successful Protocol claim.

If in turn there is a dispute over the level of that costs award it is open to the parties to agree for these to be decided by the Court under a separate process known as detailed assessment of costs.

The early deployment of a Protocol - allied with imaginative strategies which emphasise commercial resolution - are much to be preferred to the time, stress and expense of Neolithic litigation.

"Shock & Surprise"

Who in the legal profession today is still not the occasional beneficiary of letters from other solicitors which begin testily and rapidly move into overdrive?

A few choice illustrations ought to suffice, as in:

“We are…
  •          shocked and surprised
  •         quite taken aback
  •          irremediably astonished
  •          utterly and professionally aghast.”

and so on, so forth.

In fact, the authors of such communications rarely ever are.

Often and regrettably their true aims are to capture the moral high ground and on the road to so doing:

(i)            create diversionary tactics (solely to deflect and distract from the real questions in the case)
(ii)           attempt to sew the seeds of discord (when your client - naturally being copied with such a communication – questions what on earth you might have said or done to have been the deserving beneficiary of such invective)
(iii)          most sinister of all, portray you as a professional in a less than flattering light (particularly if your opponent should seek to rely upon its content if your client’s case should ever get to Court).

This is not to say that there is not the odd unhappy instance when it is necessary to challenge conduct or attitude which borders on the unprofessional and in forceful terms.

However ready resort to hyperbole or protestations of exaggerated hurt is perhaps best avoided.

After all, we are wordsmiths;  as such we should properly derive genuine professional pride when it comes to the framing of criticisms on terms which do not occasion undue offence but rather drive home our points formidably but courteously.

Eloquent understatement (in contrast to patent outrage and shows of ire) - whatever the perceived provocation - not only subscribes to the professionally fitting, but may prove a more useful tool in creating a climate for amicable negotiation and ultimately commercial resolution.

So, when it comes to the tenor of all communications, whatever the circumstances, far better perhaps to leave the legal loudhailer in a dusty corner… and look to more temperate means of making one’s point.

Costs Claims: Beware

Upon the resolution of a legal dispute by way of trial and judgment, the Court usually has to decide whether Costs Orders should be made, in whose favour and how those costs are to be borne by the parties.

The general rule of thumb is that costs follow the event, which in layman’s terms means that the loser pays the winner’s costs or rather a contribution thereto.

Clients engaged on costs recovery (and indeed those advising them) would do well to take a more than passing glance at the recently reported case of BNM v. MGN Limited [2016] EWHC B13 (Costs).

The case was brought by a primary school teacher who had been in a relationship with a Premiership footballer against the Sunday People, who had come into possession of her lost mobile phone, but this judgment just concerned her legal costs.

The Court came to consider a Bill of Costs payable by the losing party of shortly over £240,000.  It was the task of the Court to decide what items of work falling within that figure were reasonable and supportable and accordingly should be reimbursed to the winning party.

The Court decided that the losing party should pay just over £167,000 by way of contribution.

However a separate and singular question arose:

            To what extent might any part of that £167,000 be considered disproportionate?

On further hearing the Senior Costs Judge made further reductions on the grounds that a substantial element of what had earlier been allowed was disproportionate.

Eventually the Bill was reduced by almost 50% to circa £84,800.

In arriving at its conclusion the Court placed emphasis upon Rupert Jackson’s final report into the costs regime: Sir Rupert said (and I respectfully quote therefrom):

“I propose that in an assessment of costs on the standard basis, proportionality should prevail over reasonableness and the proportionality test should be applied on a global basis… the Court should first make an assessment of reasonable costs… the Court should then stand back and consider whether the total figure is proportionate (and if not)… the Court should make an appropriate reduction”

Putting matters in context, this was a Bill of Costs which was broadly in two parts:
  • the base costs, i.e. the actual costs of the work carried out allied with
  • a success fee.

Of signal influence was the fact that the total costs initially allowed (£284,000) bore little relationship to the actual financial value of the claim.

On the facts the claim was one of modest financial quantum.   Other items of loss were not large either.

Although not a run of the mill case and even though the Court considered that it was reasonable for legal proceedings to have issued, the Court found that little additional work had been created by the Defendant’s conduct and that there were no wider nor more important factors at play.   The claim had also settled at a relatively early stage, the scope of the evidence had been limited and the claims were not founded on questions that were factually or legally complex.

Taking all of these items on board the Court determined that a proportionate amount would be about half of that which had been earlier allowed and moreover that the success fee did not bear a reasonable relationship to the financial value and again this was reduced by about half.

Although certain elements render this case facts-specific, there are broader principles at play.

The author respectfully submits that considerations of proportionality will now have an overarching effect upon costs recovery and that it is important to maintain a keen and ruthless eye on the relationship between:
  • costs levels and
  •  the overall or probable likely values of any particular claim or likely extent of financial recompense.