Jaggards Hold Training Session at Haliwells

As part of a team of three, Stephen Hines recently provided training to some of the fee earning staff at Haliwells’ offices in Manchester. As well as giving an update and practical advice on issues arising from ATE Legal Expenses Insurance, and suggestions as to what to look out for on a summary of the costs of an interim application, Stephen provided the fee earners with some helpful tips on Pre-action Disclosure Applications and costs issues arising from them and a summary of topics discussed is set out below.

Pre-action Disclosure Applications

Hindsight is a wonderful thing. But it is not something that parties or the courts are entitled to use on an assessment of costs. However, hindsight can most definitely inform the way in which we act in the future.

In our experience, Pre-action Disclosure Applications are an area of litigation that is often overlooked, but we consider that there is much scope for not only avoiding them in the first instance but, if unavoidable (or not avoided), reducing the amount they cost the insurance industry.

Avoid them

These applications are seen by many claimant firms as a serious revenue stream but they are very often fully avoidable.

An application will frequently be made at the first available opportunity, much in the same way that substantive proceedings will be issued at the first available opportunity in a motor case that would, but for the issue of proceedings, be captured by the fixed recoverable costs regime in CPR 45 Section II.

Consequently, defendants should be proactive in providing the information and/or documentation requested. Many firms have adopted the practice of including requests for information and documentation in their standard letters of claim (the PIPAP template letter is the same) but because the letters are pro-forma, the request is often overlooked/not addressed or not taken seriously.

If there is a difficulty in providing the information, or if difficulty is anticipated, then a request should be made as soon as possible for an extension of the time for providing the information. That will stand a defendant in good stead when it comes to the costs of the application in the event one is made.

If not avoidable/avoided

If the application is not defended (some are – e.g. premature issue) then it will, most likely, settle by consent prior to any hearing. The costs of these applications are usually met during the claim and not, for example, left over to the end of the claim. If they cannot be agreed, then they will be summarily assessed by a district judge, usually at a telephone hearing.

The costs of such applications are, except on the rarest of occasions, agreed by the insurance company file handler. Because ‘Costs’ has been outsourced for so many years, file handlers have simply not had to deal costs assessments and, with appropriate respect to them, the approach which seems to be adopted to assessing those costs involves little more than reducing the sum claimed by a certain percentage and seeing if the claimant’s solicitors accept.

So, in order to assist those reading this article who do have to deal with these applications, we thought it would be useful to set out the things that you should look for when presented with a claim for costs of an application for Pre-action Disclosure:

• Was the application issued reasonably? Were you given notice of the intention to issue the application? If not, then you should not have to pay for the costs of it. If you were given notice, was the application issued after the expiry of any deadline you were given? If no deadline was given, did they wait a reasonable amount of time (usually 14-21 days’ notice would be appropriate, depending on the particular facts of the case);
• Proportionality: this is an indistinct concept of the CPR because it is not defined. However, it is a constituent part of the overriding objective of the Civil Procedure Rules and, therefore, as relevant to the costs of an application for Pre-action Disclosure as anything else. If the costs of the application are disproportionate, then they should be assessed by reference, not only  to what is reasonable but also to what was necessary (see Home Office v Lownds);
• The court fee is £75 (currently: the fee may change from year to year). You may also be asked to pay £40 to discharge a consent order fee. The order will usually be for the purposes of vacating any hearing that has been listed, giving directions for the disclosure of the evidence set out in the application notice (if you have not provided it in the mean time) and to enshrine an order for costs;
• Time spent: such application notices are pro-forma and if a pro-forma document has not been used, it should have been. Anticipate 18-30 minutes of time to draft the application plus a couple of letters. Also, you should allow for say 12-18 minutes for the preparation of the schedule of costs (if one has been prepared);
• Hourly rate: Who is dealing with the case at their offices? Is the category of fee-earner who drafted the notice the right category of fee-earner to deal with the claim? For example, a grade A fee-earner should not be dealing with a low value, rear end collision, RTA. Who in fact prepared the notice? Who is it signed by? Use the SCCO Guideline Rates for summary assessment. A grade C rate is usually appropriate. The rate to apply to the costs is the cheaper of either where the solicitors are based or the claimant’s local court (per the case of Wraith v Sheffield Forgemasters);
• Success fee:
  • CPR Rule 44.3A(1) provides that The court will not assess any additional liability until the conclusion of the proceedings, or the part of the proceedings, to which the funding arrangement relates;
  • Also, a success fee is only payable under a CFA or CCFA in the event that a ‘win’ is achieved, and ‘win’ is normally defined as being ‘an agreement or order to pay damages’;
  • Consequently, a success fee is not recoverable at the stage of an application for Pre-action Disclosure. So, you should not pay a success fee on the costs of an application for Pre-action Disclosure if one is claimed (although it may be claimed and paid at the end of the case if the claimant does ‘win’).

Double recovery

Something else to look out for in respect of the costs of these applications is an attempt to claim the costs again at the end of a claim. Keep an eye out for the court fee(s) appearing in a statement of costs for summary assessment as that will give you an indication as to whether the other costs have been included too.

In the event the claimant’s claim is funded by way of a CFA, then the success fee that you were not previously able to pay on the costs of the application by reason of CPR 44.3A(1) may be claimed at the conclusion of the claim by reason of CPR 44.3A(2).

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