A look ahead to 2023 in the world of costs A Costsmas Carol

Marley was dead: to begin with. There is no doubt whatever, about that.

The register of his burial was signed by the clergyman, the clerk, the undertaker, and the chief mourner. Scrooge signed it; and Scrooge’s name was good upon ‘change, for anything he chose to put his hand to.

Just as Scoorge put his name to the burial register it comes as a timely reminder for all solicitors who are certifying their Bills of Costs must also make it clear who it is who has signed it pursuant to the decision in AKC v Barking, Havering & Redbridge University Hospitals NHS Trust [2021] EWHC 2607 (QB). To fail to do so could result in the striking out of the original Bill with an Order made for the filing of a CPR compliant Bill of Costs.

As the clock struck One, the ghost of Costsmas Past appeared. Looking young and yet old at the same time.

In October of this year there was the visit of the Ghost of Costsmas Past in the form of the handing down of the judgment in Coventry v UK by the European Court of Human Rights. The Coventry case had been a much anticipated case before it was heard by the Supreme Court in 2014. Dealing with the fundamental foundations of the ‘general rule’ of costs, that being that the losing party pays the winning party’s costs, the outcome could have significantly changed the landscape of costs. In this case the costs and figures were extreme with the total amount of the success fee and ATE Premium amounting to some £500,000.00 when the damages that were awarded amounted to £10,325 and the value of the property at the heart of the dispute valued at £300,000.00. However, the Supreme Court back in 2014 held that the recoverability of additional liabilities did not impinge upon the paying parties basic human rights to a fair trial.

This has subsequently been challenged by the judgment handed down earlier this year with the ECtHR. on Article 6, the ECtHR held that:

‘…the Court considers that in respect of uninsured defendants, who bore an excessive and arbitrary burden in CFA litigation, the impugned scheme, when viewed as a whole, infringed the very essence of the principle of equality of arms as guaranteed by Article 6 § 1 of the Convention.

On Article 1 of Protocol 1, the ECtHR held:

Although the Court has, in the context of costs in civil proceedings, acknowledged the legitimate aim behind the “loser pays” rule, it has found that the imposition of a disproportionate costs burden on a losing party may violate Article 1 of Protocol No. 1 to the Convention (see Cindric and Bealic v. Croatia, no. 72152/13, §§ 94-111, 6 September 2016)‘.

Whilst the outcome of this case has clearly come far too late to make any significant impact on the costs world in the future it is something of an interesting note.

The clock struck Two and Scrooge was back in his bed waiting for the appearance of the second spirit. There was a moment of pause before Scrooge heard the sound of music and smelt the scents of a festive feast coming from down the hall. As Scrooge wandered down the hallway and entered the living room he was greeted by the larger than life Ghost of Costsmas Present.

“Come in, and know your retainer better, man!” boomed the Ghost of Costsmas Present.

The Ghost of Costsmas Present was of course referring to the decision of the Court of Appeal in Belsner and the challenges that were brought with solicitor/own client dispute. This claim graced the Court of Appeal and their Lordships could not hide their bemusement that such a case was before them when the total amount that was ultimately in dispute was a Tiny Tim-sized sum of £350-odd. The outcome of the decision was that claims which settle at Stage 1 or Stage 2 of the RTA Portal were to be considered non-contentious costs and as a result s.74(3) of the Solicitors Act did not apply. Furthermore, the Court of Appeal held that solicitors did not owe a fiduciary duty to a client when negotiating the retainer. However, it is a solicitor’s professional duty to ensure that clients ‘receive the best possible information about pricing and the likely overall cost of the case’.

It is clear from the outcome of Belsner that Solicitors will need to go back and conduct a detailed review of their current retainers to ensure that all relevant information and advice is properly accounted for both in respect of the likely costs to be charged and recovered but also the means available for clients to challenge bills. Furthermore, a review of billing practices will also likely be necessary to ensure that bills for shortfalls and additional liabilities are compliant.

This is something that should be at the top of all solicitors New Year Resolutions lists.

The Ghost of Costsmas Future stood hooded against the wintry weather. From beneath his billowing robe a long bony finger raised and pointed towards a neglected grave.

Scrooge crept towards it, trembling as he went; and following the finger, read upon the stone of the neglected grave, ‘FRCs’.

“Am I that man who lay upon the bed?” he cried, upon his knees.

The finger pointed from the grave to him, and back again.

“No, Spirit! Oh no, no!”

Now with a look to the future and what is on the horizon. Many firms may believe that the extension of fixed costs may be a gravestone for the future of their firm, but, like Scrooge’s future, it is not carved in stone.

At the time of writing this piece the CPRC have yet to disclose their proposed draft rules and overhaul of the CPR in respect of the proposed extension of Fixed Recoverable Costs. The original timescale had been for a draft to be published before Christmas with a view to implementation in April 2023. This was overly ambitious given that the extension arguably necessitates the biggest overhaul of the CPR in respect of costs. Furthermore, the implications of the rules may necessitate further reviews of other aspects of the CPR to ensure that the rules themselves do not require unreasonable or disproportionate action when compared to the likely fixed costs that will ultimately be recovered at the end of these claims.

The date on the gravestone instead is currently etched shallowly as October 2023 instead. Again, this may need to be changed if the draft rules require comprehensive revisions but October 2023 is the deadline for solicitors and costs professionals to begin to work towards in any event.

There are many aspects to consider if and when the extension of FRCs comes into force. I have prepared a detailed article setting out the potential avenues to ‘escape fixed costs’ and these will no doubt become increasingly important as time progresses.

Furthermore, the outcome of the CJC Costs Consultation will be another important aspect for all civil litigators to consider in 2023. The CJC Costs Consultation was a wide ranging review of the costs in civil litigation with ‘nothing off the table’ when it came to consideration. There were no doubt wide ranging views and ideas submitted and the outcome will be something to keep an eye out for next year.