8.46Summary assessment - assisted persons and LSC funded clients

As with children and patients summary assessment can be ordered against an assisted person or LSC funded client, but not in her or his favour. An assessment against a funded paying party is not of itself a determination of liability to pay those costs (see Practice Direction, paragraphs 13.9-10).

The procedure in relation to recovery from publicly funded parties had been substantially altered from that previously in force, and one may wonder at the apparent incessant desire for radical change. This section of the chapter may need revision within the next few months.

If the receiving party desires to enforce the costs order it will be necessary to make an application under section 11 of the Access to Justice Act 1999 and regulation 5 of the Community Legal Services (Costs) Regulations 2000 for a determination of what is reasonable for the paying party to be required to pay. The Regulations are far from easy to follow, and are currently being considered for amendment. Reference should also be made to Practice Direction, paragraph 22.1.

Only relatively infrequently is it likely that a trial judge will need to consider the matter in detail, for many of the functions are delegated to costs officers, i.e. costs judges and district judges.

Section 11(1) of Access to Justice Act 1999 reads:

'Except in prescribed circumstances, costs ordered against an individual in relation to any proceedings or part of proceedings funded for him shall not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances including:

a) the financial resources of all the parties to the proceedings, and
b) their conduct in connection with the dispute to which the proceedings relate;

and for this purpose proceedings, or a part of proceedings, are funded for an individual if services relating to the proceedings or part are funded for him by the Commission as part of the Community Legal Service.'

Even despite the changes in relation to ordering recovery of costs from an assisted person or LSC funded client the court may still find it practical to consider making an order along the lines of a Lockley Order (Lockley v National Blood Transfusion Service [1992] 2 All ER 589), that is:

to be enforced without leave of the court save by way of set off against any damages (or monies) or costs to which the (assisted person/funded client) is or may become entitled.'

or possibly a Parr v Smith Order (Parr v Smith [1995] 2 All ER 1031), that is:

'and that determination of the (party's) liability for costs to be postponed until further order.'

It should be noted that whilst the Civil Legal Aid (General) Regulations 1989 enabled determination of an assisted person's liability to be postponed beyond a period of six years; the Community Legal Services (Costs) Regulations 2000 do not allow for applications once that period has expired.

Practice Direction, sections 21 - 23 contain no less than 46 paragraphs of information and guidance.

8.47 Might it be an idea to adjourn summary assessment to a costs officer?

In a word, no. Although possibly tempting on occasion to consider ordering that the summary assessment be remitted to be dealt with by a costs judge or district judge, this is not an available option (see Practice Direction, paragraph 13.8). The judge who dealt with the hearing is required to carry out the exercise himself, and although want of time on the day might just possibly justify ordering a detailed assessment, this is generally unacceptable, and should happen infrequently. The timetable for a fast track trial should include time for dealing with costs, as will interim application hearing times. If the matter has gone beyond its anticipated time, the summary assessment of costs should be adjourned to another day, despite the fact that for a fast track trial, no additional costs for attendance can be claimed. Nor generally should they be allowed in respect of interim hearings if an adjournment is necessary to deal with costs, it being the responsibility of practitioners to ensure time estimates capable of being adhered to are given. Particularly at district judge level, practitioners are given to providing short time estimates so as to get an application listed earlier than it would otherwise. The court should ensure the time allowed for the hearing is adhered to, an appropriate proportion being dedicated to summary assessment of costs.

If a judge remits a summary assessment to be dealt with by a district judge, the recipient should not resort to the fiction that detailed assessment has been ordered, but instead prepare a note for the trial judge, which includes the text of the paragraph in the Practice Direction. That the trial judge sits at a higher level should not be in any way a deterrent, and this should be recognised and accepted.

The Guide to the Summary Assessment of Costs published by the Supreme Court Costs Office summarises the general principles of solicitors’ charging rates, known variously as the ‘going rate’ or ‘guideline rates’, and gives some indication as to counsel’s fees.

As regards solicitors, different charging rates will apply according to the category of fee earner appropriate to the matter. Following discussion in April 1999 between representatives of the Supreme Court Costs Office, the Association of District Judges and the Law Society, three grades of fee earner were agreed by the Vice-Chancellor and Senior Costs Judge and notified to practitioners by the Law Society:

a)solicitors with over 4 years’ post-qualification experience;
b)other solicitors and legal executives and fee earners of equivalent experience;
c) trainee solicitors and fee earners of equivalent experience.

These categories apply throughout the country, save Manchester, which has operated a pilot with four grades of fee earner with the approval of the Head of Civil Justice. By letter dated 22 January 2001, the Senior Costs Judge informed all designated civil judges that the revised Guide to the Summary Assessment of Costs was in the course of being printed for circulation, and that as well as being updated to cover litigation funding, it will contain up to date guidelines figures for three grades of fee earner, and also for counsel. It is likely to be felt by many that the guidelines fees for counsel are significantly high.

The same letter announces that after extended consultation with the profession, the Law Society has asked Lord Justice May, as Deputy Head of Civil Justice, to approve guidelines figures for four grades of fee earner. The Association of District Judges was neither party to nor aware of the consultation. The grades are as follows:

A Solicitors with over eight years' post qualification experience including at least eight years' litigation experience.

B Solicitors and legal executives with over four years' post qualification experience including at least four years' litigation experience.

C Other solicitors and legal executives and fee earners of equivalent experience.

D Trainee solicitors, para legals and other fee earners.

Designated civil judges have been asked to consult, and provide details of rates for the four grades of fee earner by 1 May 2001.

Note that ‘Legal executive’ means only Fellows of the Institute of Legal Executives (see Practice Direction, paragraph 4.5(2)).

Guideline Rates

8.48 Introduction

The concept of ‘going rate’, now described as guideline rate, has existed for a long time. To obtain an introduction to understanding ‘going rates’, and the principles, consideration of a number of the more recent authorities may suffice. These include Johnson v Reed Corrugated Cases Ltd [1992] 1 All ER 169; KPMG Peat Marwick Mclintock v The HLT Group [1995] 2 All ER 180. See also articles in the Law Society’s Gazette, 30 November 1994, page 15 and Solicitors’ Journal, 2 December 1994, page 1237.

Costs officers were required to calculate the allowable costs by reference to the average cost of an average solicitor in the relevant area at the relevant time. In most county court districts of England and Wales it was customary for district judges to consult with local law societies on an annual basis, and then apply their knowledge and experience in reaching a decision as to appropriate figures. As a result of the civil justice reforms the responsibility for ascertaining appropriate ‘rates’ has been transferred to the designated civil judges, who will carry out the consultation exercise, and analyse submitted data.S

Although described as ‘rates’ the figures indicated by designated civil judges represent the amounts which will be allowed by judges, either at summary assessment, or when dealing with a detailed assessment, without the solicitor being required to produce evidence to justify the amount claimed. They are not a firmly-defined tariff, and are capable of increase or reduction as the circumstances dictate.

If the retainer letter written by the receiving party’s solicitor to the client contains a charging rate lower than the guideline rate being used in the bill, the contractual rate prevails. If exaggerated charging is established you will be able to reduce the payable costs because of the receiving party’s conduct.

8.49 The receiving party’s solicitor is from another area

Wraith v Sheffield Forgemasters>; Truscott v Truscott [1988] 1 WLR 132, the Court of Appeal held that ‘when the charging rates of non-local solicitors are challenged on the basis that the receiving party ought to have instructed solicitors local to the court in which the cases proceeded, the costs officer must consider whether it was reasonable, having regard to all the relevant considerations, for the lay client to have instructed this particular solicitor?’ If it appears logical, practical and sensible, the court will allow the rate applying for that area; if not, the local rate will apply.

Keep the Guide to the Summary Assessment of Costs by you at all times, and ensure it is updated as rates change, for they are likely to do so quite regularly. If uncertain as to the guideline rates in any particular area judges need only telephone or e-mail a district judge at the appropriate court for the information to be made available.

Deciding how much to Award

8.50 Rule 44.5

Having considered Rule 44.3 in whether there should be an order for costs, and if so, its terms, Rule 44.5 sets out the factors to be taken into account in relation to quantum of costs. It says:

(1) The court is to have regard to all the circumstances in deciding whether costs were -

(a) if it is assessing costs on the standard basis -

• proportionately and reasonably incurred;
• were proportionate and reasonable in amount,  or

b) if it is assessing costs on the indemnity basis -

• unreasonably incurred;
• unreasonable in amount.

(2) In particular the court must give effect to any orders which have already been made.

(3) The court must also have regard to -

a) the conduct of all the parties, including in particular -<

• conduct before, as well as during, the proceedings; and
• the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;

b) the amount or value of any money or property involved;

c) the importance of the matter to all the parties;

d) the particular complexity of the matter or the difficulty or novelty of the questions raised;

e) the skill, effort, specialised knowledge and responsibility involved;

f) the time spent on the case; and

g) the place where and the circumstances in which work or any part of it was done.’

8.51 The statement of costs: Form N260

If no statement of costs has been filed in advance of the hearing, before drawing the attention on the parties or advocates to the apparent default, make sure the receiving party is not an assisted person or LSC funded client, for you are not permitted to make a summary assessment of costs where this applies.

You need to see the costs statements of all parties, paying as well as receiving and they should be retained on the court file, not discarded or returned to the advocate or party. Ideally costs statements will be accumulated in a separate part of the file.

First, satisfy yourself that a costs statement lodged by a receiving party has been signed by a partner in the firm of solicitors whose statement it is, and that it includes a certificate that the contents are accurate, no item being claimed exceeding what the receiving party is required to pay the solicitor. This is not a mere formality. In Bailey v IBC Vehicles Ltd [1998] 3 All ER 570, the Court of Appeal held that the signature on the bill of costs is effectively the certificate of an officer of the court. If the partner is present, he or she can be asked to sign the certificate, but if this is not feasible you will need to consider an adjournment at the expense of the receiving party’s solicitors.

The grade of fee earner who carried out the work must be included in the completed form. A description such as senior legal clerk, experienced litigation executive or para-legal will require more information as to the status and experience of the person concerned, so as to be satisfied the charging rate sought is being applied to the correct level of fee earner. It is sometimes the case that a person who has been employed by solicitors for several years but has failed to progress, will be granted a designation by his employers that is largely cosmetic, and you will have to decide if the person qualifies as a Grade 2 or Grade 3 fee earner.

Fellows of the Institute of Legal Executives are the only persons entitled to describe themselves as ‘legal executives’, although there may have been a tendency for others to do so. Practice Direction, paragraph 4.5(2) explains that Fellows will have spent approximately six years in practice, and taken both general and specialist examinations. Clerks without this experience will normally be treated as trainee solicitors or para-legals, i.e. Grade 3 fee earners.

Unqualified staff in solicitors’ offices may be able to achieve Grade 2 status if their knowledge and experience justifies it, but do not be misled by length of employment. Academic achievement coupled with experience, as in the case of a professionally qualified Fellow of the Institute of Legal Executives, will often outweigh experience on its own.

A partner does not automatically have Grade 1 status, for if the person concerned has not been qualified for more than four years the grade to be applied is Grade 2.

As well as ascertaining the grade of the fee earner who dealt with the work, you will also have to consider whether the case was appropriately assigned. Remember that paying party having an obligation to pay for time reasonably spent by the grade of fee earner reasonably employed in carrying out the particular item of work. At first sight this may appear to operate unfairly against a receiving party represented by a sole practitioner, who may be very experienced, or by a senior solicitor he has know for years, but in fact unfairness only arises if the paying party is expected to pay at a higher rate than the case reasonably justified.

Very heavy litigation may be conducted with great competence by a Grade 2 fee earner who specialises in the particular field, and you should be receptive to argument that in such circumstances a charging rate beyond the norm should be allowed.

8.52 Guideline rates and counsel

Similar principles will apply to assessing the appropriate level of fee earner. The fact counsel has been called for fifteen years will not necessarily justify allowing a fee from the highest band if the matter was capable of being dealt with by a barrister called for a year or two.

8.53 Costs are agreed, or appear high, but the paying party does not object

Parties often agree costs, and ask the court to make an order for payment of the agreed sum, or the paying party is passive when asked if any points are taken, tacitly agreeing to the amount sought, and the question will sometimes arise as to whether the amounts agreed are in fact reasonable and proportionate. When this happens it may be unrealistic to expect much assistance from the advocates. The Practice Direction purports to address the matter at paragraph 13.13, which reads:

‘The court will not give its approval to disproportionate and unreasonable costs. Accordingly:

(a) When the amount of the costs to be paid has been agreed between the parties the order for costs must state that the order is by consent;

(b) If the judge is to make an order which is not by consent, the judge will, so far as possible, ensure that the final figure is not disproportionate and/or unreasonable having regard to Part 1 of the CPR. The judge will retain this responsibility notwithstanding the absence of challenge to individual items in the make-up of the figure sought. The fact that the paying party is not disputing the amount of costs can however be taken as some indication that the amount is proportionate and reasonable. The judge will therefore intervene only if satisfied that the costs are so disproportionate that it is right to do so.’

You should require the advocates to provide you with details of any earlier costs orders in the case, and the amounts involved, or you can go through the court file so as to look at costs statements filed on previous occasions, but they may not always be readily to hand, so it is preferable to place the onus upon the advocates, whose job it is to have all relevant information available. If it seems clear that the costs have reached a level so obviously disproportionate to what is in issue that it would be wrong to add to them you should indicate this to the advocates, and require them to justify the situation appearing to have been created. If unable to do so you should decline costs.

However, you ought not to assume that the fact costs have been agreed means something inappropriate is happening, and in the case of a paying party failing to raise objection to a costs item, if legally represented, as a general rule it is for him, and not the judge, to decide what aspects of the claim for costs should be challenged.

In circumstances where the paying party is unrepresented you should be prepared to assist by explaining what may or may not be allowed, and describing the process of assessment, drawing attention to matters that would or might benefit from further explanation from the receiving party. Litigants in person cannot be expected to know about guideline rates, or items routinely excluded from claim, for example letters in, which do not attract a separate charge, or ‘local’ travel expenses. Although you must be careful not to become the paying party’s advocate, it would not be justifiable to criticise carefully measured assistance, which will accord with Article 6 of the European Convention of Human Rights.

The court should be watchful, and if necessary interventionist in matters involving persons under a disability even if represented, and in all situations should not remain silent if it perceives a potential breach of the indemnity principle, as for example where the receiving party is registered for VAT, and able to recover the VAT paid his solicitors as input tax, yet the paying party fails to notice or take the point. If you register this is about to happen the position should be queried with the receiving party’s advocate. You must not make an order including non-allowable costs items, as for example where the parties agree the base trial costs of a fast track trial at a sum in excess of the amount allowed by Rule 46.2.

The court cannot very effectively control what parties may agree between themselves, but must not make orders that are inappropriate.

If there is uncertainty or a dispute as to whether the receiving party is able to effect recovery of the VAT element there is no need to postpone dealing with the assessment of costs, for the matter can be concluded subject to the receiving party filing and serving by a specified date and time a certificate signed by the solicitors or auditors of the receiving party substantially in the form illustrated in Precedent F in the Schedule of Costs Precedents annexed to the Practice Direction. If the receiving party is unrepresented and unable to arrange for an auditor’s certificate to be provided you should suggest that he contact HM Customs and Excise for assistance. If the certificate is not provided as ordered the costs order will take effect net of VAT (see Practice Direction, paragraphs 5.1-5.20).

8.54 Deciding what should be allowed

In deciding what may be reasonable for costs in the particular circumstances of the case you will consider the ‘checklist’ comprised by Rule 44.5(3) set out above, summarised as:

a) conduct of the parties, both before and during the proceedings;

b) amount or value of any money or property involved;

c) particularly complexity of the matter or difficulty or novelty of the questions raised;

d) skill, effort, specialised knowledge and complexity involved;

e) the time spent on the case;

f) the place where and the circumstances in which work or any part of it was done.

Practice Direction, paragraph 4.16 is important and useful, for it explains in clear terms how the court should approach relatively routine matters, eg charging for routine letters, telephone calls, e-mails and preparing copy documents.

In general routine letters out and telephone calls, whether made or received, will be chargeable on a unit basis of six minutes, ie one tenth of the hourly rate. Occasionally bills provide for routine letters and telephone calls to be charged as 10 minute units, and the paying party is likely to have a valid objection unless the receiving party can demonstrate why. If a letter written or telephone call made or received is beyond routine in length or duration it should be charged on the basis of the time actually expended, but you may sometimes wish to glance at two or three of the items in issue, as extravagant claims are not unknown. Unfortunately the Form N260 facilitates covert charging of non-standard rates for routine letters and telephone calls, and if you discern this is being attempted, it is appropriate to draw the matter to the attention of the paying party.

No separate charge is to be made for letters or e-mails received, and the court will not allow as a matter of course routine e-mails transmitted, but has a discretion to do so, and as with letters out charging will be on a unit basis of 6 minutes. If it is suggested by a paying party that incoming telephone calls should be treated in the same way as incoming letters by no separate charge being made, you should expect the other side to submit that there is no similarity, telephone calls involving immediate input in the form of dialogue, whoever may have been the originator.

Local travelling expenses incurred by solicitors will not be allowed, but what is meant by ‘local’ has not been defined, and is a matter for discretion of each court. However the Practice Direction gives clear guidance, remarking that in general ‘local’ will be taken to mean within a radius of 10 miles of the court in question. Travel expenses and travel time are entirely separate, and a solicitor is entitled to claim for the time taken in travelling to and from the court, even if the time involved is but a few minutes.

Travel time is not generally charged at a lower hourly rate, unless this is what has been agreed with the client, and suggestion by a paying party that there is a general rule that travel time is remunerated at a proportion of the hourly rate should be rejected. Travel time and the costs of travel to and from court can however be overstated, and particularly when dealing with provisional assessments in legal aid/publicly funded matters, district judges and deputy district judges will need to scrutinise carefully times claimed, travel and parking expenses.

It is not customary for the cost of copy documents to be recoverable, unless exceptional or unusual, and similar provisions apply as regards the cost of postage, couriers, fax and telex. Assertions are frequently made that the documents in a case were unusually numerous, but you should be wary of such claims. Frequently bundles include many unnecessary documents, little effort having been made to identify essential material. If copying charges are allowed, they should be charged at a commercial rate, ie around 4p or 5p a page.

8.55 Six step guide to summary assessment

To assist judges in dealing with summary assessment of costs, Senior Costs Judge Peter Hurst devised a six step guide, which will go a long way towards simplifying the process of summary assessment.

a) Award costs to one part (‘the receiving party’) against other parties (‘the paying party’), and indicate which parts of the case are covered by an order and/or specify the percentage or fraction of costs you will allow.

b) Invite the paying party to make submissions on the receiving party’s statement of costs;

• whether the case is suitable for summary assessment;
• if it is not, what sum should be ordered for payment on account of costs;
• if it is suitable for summary assessment, whether the amounts set out in the statement are reasonable in all the circumstances, and
• to comment upon the statement of costs lodged by the paying party.

c) Invite the receiving party to respond on each of the points listed (a) to (d) above;

d) Take a provisional view whether to make a summary assessment of the costs and, if so, take a provisional view of:

• the appropriate fee for the advocate [save after a fast track trial] (to cover preparation and attendance at court);
• the appropriate fee for the litigator;
• the appropriate sum in respect of expenses (eg witnesses, including any expert witnesses and court fees for this hearing, and any previous hearings which are relevant);
• consider if VAT should be added to the sum allowed [for provisions relating to VAT see Practice Direction, paragraphs 5.1 - 5.20]

· add up the sums allowed, and then step back and consider the totality of the sum provisionally allowed in comparison with the sums claimed by the receiving party and the paying party.

e) Give the final word to the paying party.

f) Specify the amounts you allow, plus VAT if allowed. If appropriate make the order as to VAT conditional upon the receiving party filing a certificate regarding the recoverability of VAT by a stated date, and where necessary consider whether to order payment of the costs by instalments. Alternatively, state your refusal to make a summary assessment, and state what sum, if any, you award on account of costs (see Rule 44.3(8)).

The ‘Six Step Guide’ was compiled prior to additional liabilities becoming recoverable. You will also have to consider whether the additional liability can be dealt with with the summary assessment of the base costs, or if they should be the subject of detailed assessment.

8.56 Upon making a summary assessment, will a lump sum do?

Upon dealing with a summary assessment of the costs you are not prohibited from making an order without identifying how the total is made up. However, you ought to help yourself and other judges who may have to be concerned with the matter at a later stage by identifying separately the amount allowed in respect of: (a) solicitors’ charges; (b) counsel’s fees, (c) other disbursements; (d) VAT (if appropriate), for upon any additional liability eventually being quantified the court will need to be made aware of the component parts of earlier orders, and as already remarked in these notes, the judge dealing with the final costs assessment must know of any percentage uplifts claimed and allowed. Even where no additional liability is sought, identifying the components will be helpful in case at some later stage it is argued that the total costs are disproportionate (see Practice Direction, paragraphs 9.2 and 14.6.). As drawn, these paragraphs may be thought neither firm nor precise, and it will be of advantage if a practice develops of providing a breakdown of costs whenever ordered, even if the amount of costs is agreed.

8.57 Summary assessment not practicable

Although you are required to have a pre-disposition towards summary assessment, there will be occasions when carrying out the exercise will not be practicable, and if the situation requires you can order detailed assessment instead. This power needs to be exercised sparingly, and you must be extremely cautious of entreaties by advocates that the matter justifies detailed assessment, for whilst there may have been a certain amount of criticism of the summary assessment procedure, many problems have been caused by practitioners failing to be fully prepared or neglecting to ensure they are aware of the provisions as to costs.

If there is a genuine issue as to whether there has been a breach of the indemnity principle, summary assessment becomes inappropriate, and detailed assessment should be ordered.

In R v Cardiff City Council, ex parte Brown (1999), unreported, 11 August, the paying party asserted that, as the work had been carried out by the receiving party’s own legal department, the actual cost would have been less than the hourly rate being sought.

8.58 Payments on account: Rule 44.3(8)

Detailed assessment may need to be ordered in other circumstances, and could be appropriate at conclusion of multi-track trials. Although failure to have a costs statement ready will be understandable, the parties ought to be in a position to provide a fair estimate of the likely costs, and may even be able to produce a reasonably accurate costs statement if allowed a short period.

Detailed assessment procedure is expensive, draftsmen’s fees often being incurred, and the solicitor having to carry out additional work at a time when it was hoped the case might have been finally concluded. The procedure can be prolonged, several months passing before the bill reaches the court, and the receiving party should not be kept out of his money any longer than is absolutely necessary. It is also to the paying party’s advantage to discharge his liability as soon as may be practicable, the interest payable being kept to a minimum. As the law stands, interest begins to accrue from the date on which the costs order is made, even if the figure is not quantified until some time later. In any event, do not overlook the general principle of ’pay as you go’, money being required to be produced and paid over at each stage in a case.

On deciding that summary assessment is not appropriate, you must ascertain, at least in general terms, the amount of costs being sought by the receiving party, and if a figure is not immediately available a short break will enable an adequate calculation. Having been informed of the figure, and how it has been calculated, the paying party should be asked to comment, and if the response is that the proposal is unacceptable, to specify and justify the amount considered appropriate. You may sense on occasion that the figure lacks a proper basis, and the paying party can be asked to provide details of his calculations, so you can check the arithmetic. Having considered both figures you must consider ordering an interim payment for costs, and it is important that you are pro-active in this regard (see Rule 44.3(8)).

8.59 Costs payments on account

Having decided the costs must be ascertained by detailed assessment, and that there should be a payment on account, you must exercise your discretion in deciding how much that should be. In doing so you are able to make a rough and ready calculation of the amount to be paid, taking into account all the circumstances; one of which might be the unsuccessful party’s wish to appeal; others, the relative financial position of each party and the court’s overriding objective to deal with cases justly. In Mars (UK) Ltd -v Teknowledge Ltd (No 2)[1999] TLR 510, an order was made that the interim costs order be discharged by instalments, but if sitting in the county court you must remember that instalment orders following a judgment or order to pay money are registered pursuant to the Register of County Court Judgments Regulations 1985. Registration is effective for six years, and can have a significant effect on the debtor’s ability to obtain credit, even beyond that time.

If a paying party is not able to pay the whole amount immediately or within fourteen days, it can be helpful to suggest to the parties that instalments be agreed between them, the court simply making a standard form of order, requiring payment within 14 days (see Rule 44.8). However, if there is no goodwill between the parties, an instalment order may be unavoidable.

High Court debts are not subject to registration, a valuable privilege and considerable advantage for the more substantial debtors.

8.60 Time for compliance with order for costs: Rule 44.8

A party must comply with an order for the payment of costs within 14 days of:

a) the date of the judgment or order if it states the amount of those costs; or

b) if the amount of those costs (or part of them) is decided later in accordance with Part 47 [detailed assessment procedure], the date of the certificate which states the amount.

Small Claims

8.61 Rule 26.6(1)

The small claims track is the normal track for any claim which has a financial value of not more than £5,000, with special provision for personal injury claims, and certain landlord and tenant claims. Allocation provisions generally, and the rules and procedure for the small claims track are dealt with in more detail elsewhere in the Bench Book, and these notes are confined to matters relating to costs. The small claims costs provisions are not found in the Costs Practice Direction, but in the Practice Direction for Part 27.

8.62 No special costs rules before allocation to track

Once a claim within the normal parameters as defined by Rule 26.6(1) is allocated to the small claims track, the inaccurately described ‘no costs’ rule applies, but before allocation has taken place, whatever the value of a claim, there is no special provision, and the general rules about costs apply. If a claimant is quickly off the mark with a successful application for summary judgment under Part 24 in respect of a claim for a few hundred pounds, you will have to decide whether fixed costs under Part 45 should apply, or having regard to the conduct of the parties and proportionality, some greater or lesser sum.

It is important to remember that the small claims costs rules do not apply until a case has become a small claim, and unlike under former county court procedure, there is no automatic reference to a small claims system upon a defence being filed, cases not being allocated to track save by judicial decision.

8.63 Parties consent to claim of greater value being allocated to the small claims track

The court has no power to allocate a case to a track lower than its financial value requires unless all the parties consent (see Rule 26.7(3)). If a case is allocated to the small claims track at the request of all parties, the restricted costs regime will not apply, the claim being treated, for the purposes of costs, as if it were proceedings in the fast track, although without fixed trial costs. As regards attendance of the advocate at trial the court can award the sum it deems appropriate, but not more than the Rule 46.2 fixed trial costs (see Rule 27.14(5)).

8.64 What may be awarded

Unless a party has behaved unreasonably, the only costs that can be awarded are:

a) commencement costs: see Part 45;

b) the court fees paid by the party in whose favour a costs order is made;

c) expenses which a party or witness has reasonably incurred in travelling to and from a hearing, or staying away from home for the purposes of attending a hearing;

d) a sum of money for loss of earnings of a party or witness not exceeding an amount specified by the Part 27 Practice Direction, paragraph 7.3(1), at present £50 a day;

e) a sum of money for an expert’s fees not exceeding an amount specified by Practice Direction. At present the maximum allowable against the paying party is £200 for each expert, which includes preparation of the report or reports, and attendance by the expert at the hearing if this is considered necessary Practice Direction, paragraph 7.3(2);

f) in proceedings which include a claim for an injunction or an order for specific performance, a sum of money paid for legal advice and assistance not exceeding an amount specified by Practice Direction, paragraph 7.2. At present the maximum figure specified is £260, which includes both disbursements and VAT.

8.65 Wage losses

The court cannot make an order for more than £50 in respect of wage losses claimed by a witness, and the rules do not allow any discretion to increase beyond that amount, however much the successful party or witness earns. If for example, a successful claimant who earns a net sum of £40 a day arranges for an eyewitness earning £200 a day to attend and give evidence at a small claims hearing, the claimant can be awarded £40 for himself, and £50 for the witness in respect of wages losses, plus travel expenses and parking charges where appropriate, any shortfall being a matter between the claimant and witness. Upon the witness asking you, as he sometimes will, what is to happen about the balance of his costs of attending the hearing, you are only able to suggest he speaks to the person who arranged for him to come to court. A witness served with a witness summons is entitled to his costs incurred in complying, and is not limited to receiving conduct money only (see JH Shannon v Country Casuals Holdings [1997] TLR 316).

The onus is on the receiving party to establish he has suffered financial loss attending the hearing, and the amount of the loss, but as with other evidence adduced in small claims matters, it is generally acceptable for the information to be provided orally. Some litigants are under the impression the £50 is allowable as a set sum, but this is not so.

Often the party claiming expenses will inform the court of his gross wage, or assert that although the hearing began at 10am and lasted an hour, an entire day’s wages have been lost. You need to make a rough and ready calculation of the net figure after tax and national insurance, and do what you can to ascertain whether it is practicable for the party or witness to return to work that day. That they can do so is not uncommon, but sometimes the situation is that a party or witness works many miles from home, and his employers’ transport leaves in the early morning, so getting to work that day cannot be achieved, or because of journey time it makes no sense to set off at the end of the hearing. Many however are able to return to work after a hearing has been concluded, or attend beforehand, so you should be cautious of accepting a statement, however firm, that going to work that day is impossible.

It may be urged upon you that a particular witness, being a professional person qualifies as an expert, enabling the court to award up to £200, but this argument must not succeed unless the witness was called to give evidence as an expert. High earners, whatever their professional qualifications, called as a witness of fact are able to recover from the paying party the maximum sum of £50 and no more.

8.66 Travel and accommodation expenses

Travel expenses can be high in small claims matters, and you will need to decide whether a receiving party who has travelled a considerable distance might have been able to make an adequate presentation by having exercising his right under Rule 27.9 by giving at least seven days notice to require the court to take into account his statement and other documents without personal attendance. However, you should not be too ready to accept a submission by a paying party where substantial distances are involved that his opponent ought to have had his case dealt with by a written statement, or that he could have travelled to court by coach, for journey times can be long, and schedules limited, requiring the person concerned to be away from home and work for more than one day.

Cases are often heard in a different area of the country from where a party or witness lives, and if listed to be heard at 10am, or even later in the morning, it is not reasonable to expect a person to travel leave home three or four hours earlier in order to make the journey to court. Instead it will have been both practical and sensible for a party or witness to travel the previous evening, staying at an hotel of reasonable quality. Experience has shown that the majority of litigants are sensible as regards arranging accommodation when it is necessary, staying overnight at a bed and breakfast establishment at a very modest cost.

At the conclusion of a small claims hearing where a receiving party is unrepresented you should ask if witness expenses are sought, and not assume the party will realise he should make an application. Having been told the amount claimed you must seek the paying party’s reaction, and if he wishes to ask questions on the expenses claim permit him to do so, whilst ensuring the questions are directed to the amount of the expenses, and not the principle of liability for payment.

8.67 Injunction and/or specific performance

If the proceedings included a claim for an injunction or for specific performance, and the receiving party obtained legal advice and assistance, he is able to claim the amount he paid the adviser, up to the sum of at present £260, but if the paying party contests the reasonableness of the solicitor’s account you have no alternative but to go through it and conclude how much should be recoverable. The £260 is a maximum, not standard figure.

8.68 The cost of having photographs developed, plans drawn, police reports, etc.

Save where you have held the paying party has behaved unreasonably the small claims costs rules preclude you from allowing receiving party to recover expenses incurred in such as the taking and developing of photographs, having plans prepared, or other such charges. Even the fee paid to the police for a report upon a road traffic accident cannot be ordered against the paying party. This is a matter which may, and perhaps should be subject of future consideration, but in the meantime, you must not create your own version.

8.69 Interpreters’ fees

Article 6(3)(e) of the European Convention on Human Rights provides that everyone charged with a criminal offence is entitled to have the free assistance of an interpreter if he cannot understand or speak the language used in court. Although the paragraph is concerned specifically with criminal proceedings, the European Court has also held it to contain implicit requirements in respect of fairness in proceedings generally (see Albert and Le Compte v Belgium [1982] 5 EHRR 533, paragraph 30).

However, since December 2000 there have been no provisions concerning the expense of employing interpreters in small claims cases, and if a party is assisted by an interpreter, the fees involved cannot be awarded against the other party, although if the interpreter has been able to assist with some evidence, witness expenses may be recoverable.

8.70 The ‘no costs’ rule

Small claims enable parties to have their differences resolved with limited delay, and reduced formality, and also without the prospect of having to pay significant sums of money in respect of costs if the claim or defence does not succeed, and the relevant section of Rule 27.14(2)(d) reads:

‘(2) The court may not order a party to pay a sum to another party in respect of that other party’s costs except:

(d) such further costs as the court may assess by the summary procedure and order to be paid by a party who has behaved unreasonably.’

To date there has been little guidance as to what may be considered unreasonable behaviour justifying an award of costs, but it may be anticipated that the test will be held to be objective, and to pursue or defend a claim without any proper basis in law, even if on advice, may lead you to decide the party behaved unreasonably. In Bloomfield v Roberts [1989] CLY 2948, it was held to be unreasonable to pursue or defend a claim to which there was no arguable defence, whatever the defendant might have been advised, or believed.

Actual physical misbehaviour at a hearing will be relevant, as will be attending a hearing without having complied with any orders requiring documents to be filed and served, perhaps leading to an adjournment. However, in the small claims jurisdiction, probably more than any other, a proportion of litigants will be unfamiliar with reading detailed documents, and the notice of hearing is to many, extremely detailed. It will very often be necessary to be tolerant of non-observance of court orders and directions, for despite momentary irritation at an opponent’s failure to comply with an order, most litigants would much rather you got on and dealt with the subject matter of the claim, and you ought to do so.

If a party is represented by solicitors, who have failed or neglected to comply with an order relating to the filing of statements or other documents (and this is not uncommon), it will not be difficult to conclude there has been unreasonable behaviour, and a straightforward way of dealing with this where the defaulting party succeeds in a claim is to deny commencement costs or disbursements.

Before deciding that the failure of a party or parties to comply with an order requiring filing and serving statements and other documents justifies your declining to allow the case to proceed, pause for a moment, think of your duty to further the overriding objective, and whether anyone has really been disadvantaged. For years arbitration hearings in the county court were competently disposed of without statements, and save where a case is unusually difficult a judge ought to be able to discern and decide the issues on the oral evidence. Adjourning will involve the parties in additional expense, and whether employed or self-employed few people can afford to lose wages. The court staff will be involved in processing the order for adjournment, and allocating another date. By the time the case is finally disposed of a disproportionate amount of the court’s time and resources will have been taken up by a case which might have been dealt with within an hour or two.

8.71 Part 36 and small claims

The rules relating to small claims exclude a number of the CPR (see Rule 27.2) and one exclusion is Part 36. It is not possible to make a payment into court, so the costs consequences of offers and payments in cannot apply, but this does not inhibit a party in endeavouring to achieve settlement by suggesting a compromise, or offering a sum of money in settlement, and if the other party refuses, but the court ultimately decides the case in a way demonstrating the offer ought to have been accepted, a refusal to settle on a sensible basis is capable of being categorised as unreasonable behaviour, enabling an order for costs.

8.72 Small claims costs orders: summary or detailed assessment?

If costs are awarded in a small claims case they are to be determined by summary assessment, detailed assessment not being an option, and save in the most exceptional circumstances the assessment is to be dealt with immediately. That a costs statement has not been filed and served in a small claims case may be more understandable than in other situations, and the receiving party should be allowed a brief period to put together a summary of what is being claimed, although the time allowed should not exceed 10 minutes. You are likely to be able to calculate the reasonable costs upon hearing oral representations, ensuring the entire exchange is recorded, whether on tape or in your notes.

The fact it is late in the day is not good reason for adjourning summary assessment, but occasionally in small claims matters parties, particularly those who previously had a close relationship, become so incensed that postponement may be unavoidable. Even then adjourning should be an action of last resort, for bringing the parties back another day is very likely to exacerbate the position. If the costs claim is limited to witness expenses and travel costs, whatever the feelings of the parties in the immediate aftermath of the hearing, your duty is to dispose of all issues and not adjourn.

8.73 ‘Costs’ does not mean only solicitors’ costs

In small claims matters most litigants are in person, and if you decide a party has behaved unreasonably you can order that the other party recover costs as a litigant in person, the amount payable depending upon whether the receiving party can satisfy you he has suffered financial loss, and you may also order that the costs of a successful party’s lay representative be met by the other side.

8.74 Costs orders against fees-exempt parties

Depending upon their financial circumstances litigants may not be required to pay court fees on issuing a claim, and particularly in the small claims track a number believe this makes them immune to an order for costs. This is not so, and unlike where an order for costs is made against an LSC funded client there is no restriction upon immediate enforcement.

Litigants in person

8.75 Rule 48.6

Litigants in person are able to recover costs, and if unable to establish to the satisfaction of the court that they have suffered financial loss, at the rate (in December 2000) of £9.25 per hour for work reasonably carried out ‘financial loss’ although not defined, is generally understood to mean loss of earnings, rather than, for example, mere consumption of electricity to power a word processor or computer, or the cost of travelling to the local public library to research law and procedure, and it is essential that you do not attempt to widen the scope of interpretation. It is for the litigant asserting he has suffered financial loss to satisfy the court on the point, and the Practice Direction, paragraph 52.2 requires written evidence to be produced on the hearing, a copy having been served on the party against whom costs are sought at least 24 hours before the hearing. In many cases litigants in person, who may have carried out the most detailed research of the law relating to their claim or defence will be oblivious to the existence of the costs rules, and generally some latitude should be allowed.

Upon financial loss being established litigants in person may claim costs, but the amount awarded may not, save in the case of a disbursement, exceed two-thirds of what would have been allowed had the work been done by a legal representative. Litigants in person can recover payments reasonably made for legal services relating to the conduct of the proceedings, and also the costs of obtaining expert assistance in connection with assessing the claim for costs where allowed. ‘Experts’ in this context are defined in Practice Direction, paragraph 52.1 as barristers; solicitors; Fellows of the Institute of Legal Executives; Fellows of the Association of Law Costs Draftsmen; and law costs draftsmen who are members of the Academy of Experts and/or Expert Witness Institute.

In Morris v Wiltshire and Woodspring District Council (1998), unreported, 16 January, Mr Justice Jacob suggested the exercise to be carried out when assessing a litigant in person’s costs:

‘Find out in respect of the item what, at the litigant in person’s charging rate, the total is. Compare that with two thirds of the notional solicitor rate. Give the lower of the two items. That does mean the bill of costs drawn by the litigant in person must be gone through in some detail item by item’.

Some slight uncertainty may have been introduced by the Court of Appeal in HM Customs and Excise v Chitolie (2000), unreported, 30 November. Where Lord Justice Robert Walker describing the entitlement of a litigant in person ‘to whichever is the lowest of, first his actual loss of earnings or wages, as proved by his evidence; second; two thirds of what lawyers of appropriate standing would have charged; and, third, the sum of £9.25 per hour.’ That judgment might suggest that the Court of Appeal was not completely at home with the provisions as to litigant in person costs, and the passage quoted above is not apparent as part of the ratio, being instead a recital of what was understood to be the position. In any event, the judgment was confined to dealing with a procedural point, so may possibly be construed as amounting to guidance only. The successful appellant, Mr Chitolie, had been a serving prisoner with a weekly wage of £7 at the time he was engaged in preparing his case, and the Court of Appeal allowed him to recover costs at the rate of £9.25 per hour, rather than the £1,000 an hour being sought.

If a person represented himself in litigation, or a company was represented by one of its officers or employees, and was successful, you must ask yourself exactly the same questions as to entitlement to costs, as you would had the party been represented by solicitors and counsel, and because a litigant in person may not know of his right to costs, you should ask if he wishes to make a claim. This applies as much to interim as final hearings.

In deciding whether the amount of work carried out was reasonable, you must accept that a lay person may take longer than a solicitor to prepare a case for trial, but be careful not to allow excessive timings, for occasionally litigants acting for themselves become so absorbed by the case, and allow preparation to take up all their spare time for weeks, or even months, sometimes actually taking time from work to prepare.

In Mealing - McLeod v Common Professional Examinations Board [2000] All ER (D) 436, Mr Justice Buckley sitting with Assessors held that Rule 48.6(4) suggested that more time should be allowed to a litigant in person than to a solicitor doing the same task, remarking that the time allowed should reflect matters such as posting letters, taking files to court, and photocopying documents, which would not be allowed a solicitor, whose charges incorporate provision for support staff. the judgment does not give carte blanche to profligate expenditure of time, and costs allowed must still be reasonable in amount for work reasonably carried out.