Posted by Bradley Meads, senior associate at Litigation Futures sponsor Kain Knight , and Virginia Rylatt, partner at Rylatt Chubb
In the first case dealt with under the new pilot scheme – Practice Direction 51L – J-Codes were retrospectively applied to the new Precedent AA bill of costs. We dealt with the issues within the Senior Courts Costs Office (SCCO) on behalf of the paying party/defendant.
The first thing which the parties appreciated, and no doubt the SCCO now appreciates as well, is the sheer complication and difficulties of dealing with the pilot scheme. It was exposed at the hearing that the SCCO (and the claimants) had previously relied upon members of the Hutton committee behind the scenes and were left short when significant technical questions arose.
Without the pilot scheme, the matter would have been dealt with on a far simpler basis. There had been a budget. As the matter had settled before trial, some phases of work envisaged under the budget had not been carried out and there were some phases within the bill where the costs exceeded the budget.
Moreover, there were certain tasks, within phases that were not exceeded, which were not completed. It should therefore have been a straight forward case of the claimants explaining why, in certain respects, costs exceeded the budget and trying to persuade the court that they should be allowed additional costs.
As became evident, the pilot scheme allowed a receiving party in effect to go back to the drawing board – ignoring all the work that was previously done when the case was budgeted.
Last month the Law Society launched a survey to ascertain “more about how members record their time and discover which members are already using J-Codes to time record”. What is clear at present is that very few firms record their costs in J-Codes.
When the time came to prepare the bill, the claimants’ solicitors certainly did not record their time in J-Codes. In this case (as in any case that will use the pilot scheme where all of the costs are not already recorded in J-Codes), a need for a retrospective application of time to J-Codes was required should one wish to engage in the pilot scheme. As the claimants discovered, without retrospectively applying J-Codes to time entries, the format of the new pilot scheme could not be populated correctly and would not work.
In order to demonstrate these difficulties for the defendant at a hearing for directions in February 2016, Kain Knight produced a number of screen shots to explain the situation to the court.
The bill of costs that was provided was immensely extensive and, in reality, could only be viewed properly in court electronically. Despite the fact that the claimants’ costs lawyer had spent some 96 hours and 30 minutes on preparing the detailed bill, totalling £375,000, in Precedent AA, there were still a number of areas where drilling down into various schedules electronically left gaps to be filled in or explanations which were missing.
One reality that follows from this is that not only the court but also all the parties in the SCCO using a Precedent AA form would need to have an electronic version of it in the courtroom. This would be essential for any final assessment hearing, where bills of costs can be so long and so wide that they could not be printed out in any sensible or manageable format.
From the court’s point of view, the meat within the item descriptions was missing. The J-Codes do not differentiate communications between personal attendances, telephone attendances and correspondence.
In this case, as no doubt in many others, the key issue at detailed assessment was why the costs were higher than those in the approved budget. The new format gave no assistance to the court. It was necessary for the court to deal with that by way of additional directions and to make appropriate orders for further and additional schedules to be served on behalf of the claimants.
Following on from such directions the parties settled and the court must have been left considering that as soon as it got to grips with the issue as to why the costs claimed exceeded the approved budget, the parties were able to resolves matters.
The question must be why one needs to have such a complicated system for achieving this and whether Precedent AA is in fact going to be a useful tool for the SCCO and other courts in assessing costs.
Technically there are less rigid and humane ways for costs to be presented which resolve some of the issues dealt with here. The Association of Costs Lawyers has produced a more manageable version which deals with some of the issues which arose during this case and a subsequent meeting with the Senior Costs Judge.
From the courts’ point of view, if the pilot scheme was meant to be a system which allowed the court to quickly come to a determination as to the costs to award a party, it failed. Had the cost issues not settled, then the matter was due to occupy the court’s time for a three-day hearing, despite the fact that this was a case in which cost issues had been dealt with at a full case and costs management conference and a budget imposed by the court on the parties.
The experience showed that the new J-Codes are too complicated, that dealing with such costs is too labour-intensive and that the time spent dealing with costs under the new scheme is at least 100% increased on what they would have been otherwise.
The claimants’ costs of the detailed assessment without an assessment hearing, (and which excluded the hearings for directions and the costs of preparing the bill itself) were assessed at £22,224!