Dispute Resolution analysis: Where a firm of solicitors had been instructed under a discounted conditional fee agreement (CFA), the interim invoices they had issued to their client for the non-conditional portion of their fees were not capable of being interim statute bills. Accordingly, the client was entitled to an assessment of all 79 invoices, amounting to nearly £12.8m, notwithstanding the fact that many of them had been paid more than one year prior to the application for assessment. Written by Alice Nash, barrister at Hailsham Chambers.

The procedure to be followed where, before court proceedings are commenced, the parties to a dispute reach an agreement on all issues, including which party is to pay costs, but are unable to agree the amount of those costs.

This Practice Note explains costs only proceedings and the procedure to be followed. The costs only procedure allows a Part 8 claim to be brought so the parties can obtain a costs order enabling them to subsequently commence detailed assessment. The costs-only procedure is set out in Section IV of CPR 46 at CPR 46.14 which sets out a list of requirements which need to be met prior to commencing the costs only procedure. This includes settlement of all issues in dispute except for the costs incurred pre-action and for no proceedings to have been commenced. The procedure cannot be used if costs are payable pursuant to a contract (CPR 44.5). Purpose of costs only Part 8 proceedings The costs only (Part 8) procedure is intended to provide a simple and convenient means of resolving a costs dispute that is brought with the consent of both parties. Costs only proceedings are used by a party to recover pre-action costs where the parties have agreed to settle the dispute before the commencement of proceedings but have been

Employment analysis: When deciding whether to make a preparation time order or an order for costs of representation on the ground that the claim or response had no reasonable prospect of success, the tribunal should consider each cause of action comprised in the ET1 separately (or each defence to each such cause of action in the ET3). The correct point in time in respect of which to make that assessment will either be at the point when the claim or response was submitted, or at some later point when circumstances changed such as to alter the prospects and materially change the assessment, according to the Employment Appeal Tribunal.

DR analysis: the Queen’s Bench Division has considered the meaning of the term ‘special circumstances’ in s 70(10) of the Solicitors Act 1974. It held that the fact there were a large number of bills during the assessment (15 in total) and that there had been a capitulation on the four largest value bills did not equate to be ‘special circumstances’. The authority was laid down in 1896 by the Court of Appeal that when considering the application of the 1/5 rule (then the 1/6 rule) the court was to apply the approach of looking at the aggregate of the bills. It is most likely that ‘special circumstances’ will result as a consequence of a party’s conduct eg arguing pointless matters of law which rack up the costs of the assessment.

Bespoke system of costs management The standard costs management scheme does not lend itself well to multi-party/multi-claim litigation either within or outside a Group Litigation Order (GLO). Generally speaking, a bespoke system of costs management is required if costs management is to be made to work in these types of claim. Chief Master Marsh in Sharp v Blank (2017) considered that there was ‘ample power’ pursuant to CPR 3.1(2)(n) (which at the time of this judgment was old rule 3.1(2)(m)) for the court to create a bespoke costs management arrangement for cases that require it. Certain features of bespoke costs management schemes do not fit (or may be inconsistent) with the standard costs management regime. In Various Claimants v MGN (2018), Chief Master Marsh held that it would be wrong to see these schemes as operating in a wholly parallel universe and it was better seen as an adaptation of the standard regime and where there was any uncertainty, the court should look to the standard regime. When dealing with a bespoke system of costs management

Construction analysis: In this post-trial costs judgment, the Technology and Construction Court (TCC) held that the usual order for costs should apply after the claimant’s negligent design claim was dismissed. The claimant had to pay the defendant’s costs, subject to detailed assessment, with no reduction for alleged unreasonable refusal to mediate and no indemnity costs against the claimant for the expert phase. The court held that the defendant’s stance on mediation was not unreasonable in the circumstances, because it consistently sought a proper understanding of the claimant’s expert case and proposed other forms of ADR and settlement discussions. Although the claimant’s expert was heavily criticised in the substantive judgment, the defects in his evidence and the claimant’s tactical approach did not take the case sufficiently ‘out of the norm’ to justify indemnity costs.

This Practice Note considers recovery of costs where such recovery is provided for in a contract and the provisions in CPR 44.5. It also considers summary assessment of costs under a contractual indemnity, the court’s general approach to interpreting indemnity clauses and examples of contractual indemnity cost clauses in leases and the court’s interpretation of them. Court’s discretion The general position in relation to the court dealing with the issue of costs is that the costs follow the event, ie the loser will be liable for the winner's costs. However, the court has a discretion when it comes to making costs orders and may depart from this general rule. A costs order will set out the basis in which costs are to be assessed, ie standard basis or indemnity basis. For guidance on the general principles covering these issues, see Practice Notes: Costs assessment—basis of assessment, Indemnity costs orders—principles, Costs orders—the general rule and Costs orders—the court's discretion. The courts’ discretion when dealing with costs may be impacted where a contract between the parties

Mr Justice Akenhead has reiterated that mediations are carried out on a ‘without prejudice’ basis, which is essential to allow parties and their representatives to be open during the process. Mediations are not carried out on a ‘without prejudice, save as to costs’ basis. Accordingly, reliance cannot be placed on issues arising during a mediation when dealing with the issue of costs.

Property Disputes analysis: In light of a recent decision of the First-tier Tribunal (FTT) in Poplar Housing and Regeneration Community Association Ltd v Samuel Khan LON/00BG/LSC/2023/0205 and the decision of the Upper Tribunal (UT) G & A Gorrara Ltd v Kenilworth Court Block E RTM Co Ltd Laura Tweedy Callum Reid-Hutchings and of Gatehouse Chambers consider when service charges are deemed to be ‘admitted’ by payment.

The interest in possession (IIP) may be no longer continuing for a number of reasons, eg due to the terms of the Will, because the trustees or a beneficiary have exercised a power of appointment or because there has been a deed of surrender. As noted in HMRC’s Inheritance Tax Manual at IHTM35042, there must be property in existence which may be redirected under an instrument of variation to take advantage of section 142 of the Inheritance Tax Act 1984 (IHTA 1984). Where the IIP no longer continues, this may be an issue. However if it is possible for the beneficiary to disclaim the life interest as a matter of general law, then HMRC may

Crime analysis: Following the Supreme Court’s unanimous approval of the appeal in Waya, Tim Owen QC of Matrix Chambers determines the main issues of the case, looks to its impact on current legislation and assesses what the judgment means for lawyers.