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SCCO is “gearing up for Costs War 2”, says judge


Cutting costs: bound to lead to disputes

The Senior Court Costs Office (SCCO) is “gearing up for Costs War 2” as it is unlikely the Jackson reforms will go smoothly, one of the SCCO’s judges said yesterday.

Master Haworth also predicted that there is little prospect of damages-based agreements (DBAs) being used in low-value cases.

Speaking at the LexisNexis Costs and Litigation Funding Forum in London – and emphasising that he was expressing his personal views alone – Master Haworth said that there was too much to play for to expect claimant and defendant lawyers not to enter into satellite litigation. “There’s a lot to gain for the profession, and a lot to lose,” he said.

He highlighted several areas of the post-April regime that appear vulnerable to court challenge, including the new rule on proportionality, over which there will be little guidance in the revised costs practice direction. “It’s going to be left to decisions up and down the country to determine what is proportionate,” he said, emphasising to lawyers that under the rule costs will not be proportionate simply because they were necessarily incurred.

Master Haworth – who was one of three SCCO masters to oppose the Jackson reforms [2] – added that the costs parts of the CPR are to be shaken up, with parts 43 and 44 merged, as well as parts 45 and 46. The costs practice direction – the longest of any practice direction in the CPR – will be cut up, with a practice direction following each of the four parts relating to costs.

On DBAs he questioned what would happen if recoverable costs exceeded the value of the cut of damages going to the solicitor. As the Legal Aid, Sentencing and Punishment of Offenders Act 2012 does not appear to abrogate the indemnity principle, this meant the solicitor would not be able to recover more than what he would receive as a contingency fee.

So in a £12,000 personal injury case – where the contingency fee will be capped at 25% – with costs of £6,000, a solicitor operating under a DBA would only be able to recover £3,000, whereas under a conditional fee agreement it would be the full amount. “It makes DBAs meaningless in low-value claims,” the master said.

In a separate session on third-party funding, Marius Nasta, chief executive of Redress Solutions, was asked if he could see a role for funding in low-value cases. “To be brutally frank, no,” he said.

Meanwhile, an appeal against the high-profile costs management ruling [3] in Henry v Newsgroup Newspapers is to be heard by the Court of Appeal in February. Master Haworth noted that costs management is the “buzzword” of the reforms: “I can’t imagine that the Court of Appeal is going to row back from costs management and costs budgeting,” he said.