A new order cometh

It has been a long time in the making!

By April 2013, 14 years will have passed from the start of the Woolf reforms (Access to Justice) in April 1999 to the introduction of the Jackson reforms due to come into effect next year.

There is much to be done and judges to be trained. CPD providers will need to offer solicitors and counsel education in how to manage disclosure in the digital world. Of course, the courts themselves still have to catch up and paper will still be needed for the foreseeable future but may be (just may be) the problems which bedevil many Government inspired projects (such as the recent IT project for electronic working in the Rolls Building) will be resolved before the fourteenth anniversary of the introduction of the Jackson reforms. That said, by 2027 it certainly will not worry this particular blogger whether they are or not!

Already, there have been a rash of articles and comments on the new proposals and there will be more to come as April 1st 2013 draws near. I have yet to see an advertisement for a conference on the new regime but rest assured they will appear before too long.

In the spirit of “quality, cost-effectiveness and speed” which Rupert Jackson identified (quoting Michael Todd QC at the IBA conference in Dubai in November 2011) as the three most important core requirements business leaders involved in commercial litigation wanted to see, I thought I would put together a summary of the major innovations with which our clients and their clients will have to deal come Big Bang! I do not intend this list to be exhaustive but merely to act as an aide memoire. I also produce much of it without comment because many of the innovations are self explanatory.

To start with, there has been a series of lectures (fifteen so far between September 2011 and May 2012 with one earlier lecture in November 2010) by senior members of the judiciary on the subject of the implementation of the Jackson reforms. Mostly they have been delivered by Rupert Jackson himself but other speakers have been Lord Neuberger of Abbotsbury, Master of the Rolls and Mr Justice Ramsey.

The official Judiciary website now contains very helpfully all sixteen of the speeches which may be found  in the Publications and Reports, Lectures section

Each lecture concentrates on one or more aspects of the problems faced by Lord Justice Jackson when considering the task of reforming the costs of civil litigation and by and large the subject matter of each is obvious from its title. For example, there is a lecture on docketing of judges, another on controlling the costs of e-disclosure and a third on costs management: a necessary part of the management of litigation.

For those who like their law uncluttered with comment, please refer to Big Bang: The new rules in April 2013 (CPR 31.5A) page  in our resources section relating to the proposed changes.

For those who want an early canter through the major changes and with the aim of assisting busy lawyers to find their way round them, the major points to note are the following:

  • There is to be a new CPR Rule 31.5A containing the menu options for disclosure for large commercial cases and any cases where the cost of standard disclosure is likely to be disproportionate: Lord Justice Jackson: Seventh Lecture - Controlling The Costs of Disclosure.
  • 4.7 One possible order under sub-para (f) – the key to the warehouse. One possible order which could be made under rule 31.5 (4) (f) is that each side (after removing privileged documents) should simply hand over the “key to the warehouse”. In other words, each party hands over all its documents and the other side can choose which ones it wishes to use. This means that each party devotes its resources to selecting what it regards as helpful from other side’s store of documents. That is the opposite of standard disclosure, which requires each party to examine its own documents and (in effect) to pick out the ones that it thinks will help the other side. I am aware of one recent case in which a “key to the warehouse” order was made by the Technology and Construction Court.
  • 4.8 If an order is made as set out in the previous paragraph, it may be appropriate to include a provision along the following lines: “Any disclosure of privileged documents shall not amount to waiver of privilege in the documents concerned.”
  • COMBINING THE MENU OPTION WITH PRACTICE DIRECTION 31B
    5.1 Big bang date.The new rule 31.5 will come into force at the same time as the other Costs Review reforms. As from that date the menu option will have to be operated in conjunction with PD 31B.5.2

The two provisions will fit neatly together. Rule 31.5 (6) provides for the rule and the practice direction to be operated together. Paragraphs 8 to 18 of PD 31B complement rule 31.5 (3). The completion and exchange of e-disclosure questionnaires will assist the parties in complying with their obligations under rule 31.5 (3). The information resulting from this exercise will enable both the parties and the court to select from the menu the most appropriate disclosure order for the circumstances of the particular case.

5.3 The wider picture. The new disclosure rule is part of a package of case management reforms which will be coming into force on big bang date. Some of these reforms have been explained in earlier lectures in the present series. See in particular lecture 4 on expert evidence and lecture 5 on case management. All lectures in this series can be found on the Judiciary website. One theme which runs through the reforms is that the first case management conference should be a real event at which the court takes hold of the case and gives directions which will focus the factual evidence, the expert evidence and the disclosed documents on the real issues between the parties.” (my emphasis)

  • Docketing of judges: The introduction of a system of docketing of judges in appropriate cases is to be welcomed as it is likely to bring with it an element of continuity and consistency in dealing with the administrative matters required to bring a case to trial. There has been a similar system in other jurisdictions such as the US for some time and the studies tend to show that this is the result. I was struck by how similar these proposals are to the regime which used to operate some years ago in the Official Referees’ Court, the precursor of the TCC. My experience of those courts was that the system of assigning a judge to hear not only the trial but also all aspects of the matter from the old Summons for Directions onwards, worked pretty well. The parties knew what they were getting and the Judge was able to keep an eye on progress in the cases assigned to him.
  • Lord Neuberger: 15th lecture – Proportionate Costs. The lecture concerns costs management. It concentrates on proportionate costs. It is claimed that one of the reasons for the ineffectiveness of the Woolf reforms in the area of costs was the failure to implement proportionality as a test in costs assessments. The new order will proceed on the basis that proportionate costs are not costs which are thought to be reasonable and necessary in the litigation “without regard to the ultimate value of what was at stake in the proceedings.”
  • A new CPR rule 44.4(5) is to be introduced. This rule will state as follows,
    44.4(5) Costs incurred are proportionate if they bear a reasonable relationship to:

(a) the sums in issue in the proceedings;

(b) the value of any non-monetary relief in issue in the proceedings;

(c) the complexity of the litigation;

(d) any additional work generated by the conduct of the paying party; and

(e) any wider factors involved in the proceedings, such as reputation or public importance.’

Possibly the most eye catching idea is that the Master of the Rolls has agreed that two designated members of the Court of Appeal are to sit on all appeals arising out of the Jackson reforms in order to ensure consistency of approach to such matters and to bear down on unnecessary satellite litigation.

The details are as follows:

(A) Additions to CPR 3

II. Costs Management

“3.12 (1) This Section and Practice Direction 3E apply to all multi-track cases commenced on or after 1st April 2013 in:

(a) a county court or

(b) the Chancery Division or Queen’s Bench Division of the High Court (except the Admiralty and Commercial Courts) unless the proceedings are the subject of fixed costs or scale costs or the court otherwise orders. This Section and Practice Direction 3E shall apply to any other proceedings (including applications) where the court so orders.

(2) The purpose of costs management is that the court should manage both the steps to be taken and the costs to be incurred by the parties to any proceedings so as to further the overriding objective.

3.13 Unless the court otherwise orders, all parties except litigants in person must file and exchange budgets as required by the rules or as the court shall otherwise direct. Each party must do so within 28 days after service of any defence.

3.14 Unless the court otherwise orders, any party which fails to file a budget despite being required to do so shall be treated as having filed a budget comprising only the applicable court fees.

3.15(1) In addition to exercising its other powers, the court may manage the costs to be incurred by any party in any proceedings.

(2) The court may at any time make a “costs management order”. By such order the court will:

(a) record the extent to which the budgets are agreed between the parties;

(b) in respect of budgets or parts of budgets which are not agreed, record the court’s approval after making appropriate revisions.

(3) If a costs management order has been made, the court will thereafter control the parties’ budgets in respect of recoverable costs.

3.16 (1) Any hearing which is convened solely for the purpose of costs management (for example, to approve a revised budget) is referred to as a “costs management conference”.

(2) Where practicable, costs management conferences should be conducted by telephone or in writing.

3.17 (1) When making any case management decision, the court will have regard to any available budgets of the parties and will take into account the costs involved in each procedural step.

(2) Paragraph (1) applies whether or not the court has made a costs management order.

3.18 In any case where a costs management order has been made, when assessing costs on the standard basis, the court will –

(a) have regard to the receiving party’s last approved or agreed budget for each phase of the proceedings; and

(b) not depart from such approved or agreed budget unless satisfied that there is good reason to do so.”

(B) New Practice Direction 3E

PRACTICE DIRECTION 3E – COSTS MANAGEMENT

  1. Unless the court otherwise orders, a budget must be in the form of Precedent H annexed to this Practice Direction. It must be in landscape format with at least 12 point typeface. In substantial cases, the court may direct that budgets be limited initially to part only of the proceedings and subsequently extended to cover the whole proceedings. A budget must be dated and verified by a statement of truth signed by a senior legal representative of the party. In cases where a party’s budgeted costs do not exceed £25,000, there is no obligation on that party to complete more than the first page of Precedent H.
  2. If the court makes a costs management order under rule 3.15, the following paragraphs shall apply.
  3. Save in exceptional circumstances:
    (a) The recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% of the approved budget.
    (b) All other recoverable costs of the budgeting and costs management process shall not exceed 2% of the approved budget.
  4. If the budgets or parts of the budgets are agreed between all parties, the court will record the extent of such agreement. In so far as the budgets are not agreed, the court will review them and, after making any appropriate revisions, record its approval of those budgets. The court’s approval will relate only to the total figures for each phase of the proceedings, although in the course of its review the court may have regard to the constituent elements of each total figure. When reviewing budgets, the court will not undertake a detailed assessment in advance, but rather will consider whether the budgeted costs fall within the range of reasonable and proportionate costs.
  5. As part of the costs management process the court may not approve costs incurred before the date of any budget. The court may, however, record its comments on those costs and should take those costs into account when considering the reasonableness and proportionality of all subsequent costs.
  6. The court may set a timetable or give other directions for future reviews of budgets.
  7. Each party shall revise its budget in respect of future costs upwards or downwards, if significant developments in the litigation warrant such revisions. Such amended budgets shall be submitted to the other parties for agreement. In default of agreement, the amended budgets shall be submitted to the court, together with a note of (a) the changes made and the reasons for those changes and (b) the objections of any other party. The court may approve, vary or disapprove the revisions, having regard to any significant developments which have occurred since the date when the previous budget was approved or agreed.
  8. After its budget has been approved, each party shall re-file the budget in the form approved with re-cast figures, annexed to the order approving it.
  9. A litigant in person, even though not required to prepare a budget, shall nevertheless be provided with a copy of the budget of any other party.
  10. If interim applications are made which, reasonably, were not included in a budget, then the costs of such interim applications shall be treated as additional to the approved budgets.

(C) Amendment to Costs Practice Direction, Section 6

Section 6 Costs Budgets

6.1 In any case where the parties have filed budgets in accordance with Practice Direction 3E but the court has not made a costs management order under rule 3.15, the provisions of this Section shall apply.

6.2 If there is a difference of 20% or more between the costs claimed by a receiving party on detailed assessment and the costs shown in a budget filed by that party, the receiving party must provide a statement of the reasons for the difference with his bill of costs.

6.3 If a paying party –

(a) claims that he reasonably relied on a budget filed by a receiving party; or

(b) wishes to rely upon the costs shown in the budget in order to dispute the reasonableness or proportionality of the costs claimed;

the paying party must serve a statement setting out his case in this regard in his points of dispute.

6.4 On an assessment of the costs of a party, the court may have regard to any budget previously filed by that party, or by any other party in the same proceedings. Such a budget may be taken into account when assessing the reasonableness and proportionality of any costs claimed.

6.5 (a) Without prejudice to paragraph 6.4, this paragraph applies where there is a difference of 20% or more between the costs claimed by a receiving party and the costs shown in a budget filed by that party.

(b) Where it appears to the court that the paying party reasonably relied on the budget, the court may restrict the recoverable costs to such sum as is reasonable for the paying party to pay in the light of that reliance, notwithstanding that such sum is less than the amount of costs reasonably and proportionately incurred by the receiving party.

(c) Where it appears to the court that the receiving party has not provided a satisfactory explanation for that difference, the court may regard the difference between the costs claimed and the costs shown in the budget as evidence that the costs claimed are unreasonable or disproportionate.

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About Charles Holloway

Charles Holloway is a lawyer and accredited mediator. Formerly a senior litigation partner with Eversheds LLP and Head of Litigation in the East of England, Charles has been a director of Millnet Ltd since 2006. His interest in electronic document management arises from his wide experience of document intensive cases and his prominent involvement in investigations in the public and private sectors, notably both the Bloody Sunday and Harold Shipman inquiries. [View Charles Holloway's profile on LinkedIn.]