REUTERS | Michaela Rehle

Practice Direction 51X: another two-year costs pilot scheme

“Pay as you go” was a Woolf recommendation when the Civil Procedure Rules were implemented on 1 April 1999, following the recommendations made by the former Lord Chief Justice in his eponymous report in 1998. By that was meant that costs would no longer be payable only at the conclusion of the litigation. Henceforth, whenever an order was to be made about costs (not being fixed costs), the court would consider whether to make a summary assessment at the conclusion of a fast track trial or at the end of the hearing completed within one day, unless there was good reason not to do so (see CPR 44.6 and PD 44.9.1-9.2). Where it was appropriate to make a summary assessment, that would be undertaken by the judge hearing the case or application (see CPR 44.1(1)).

The procedure was and is necessarily “rough and ready”. Where the rule applies, it is the duty of the parties and their legal representatives to assist the judge by providing a written statement of those costs in the form of a schedule showing the number of hours claimed, the hourly expense rate and grade of fee earner, disbursements, costs of attending the hearing, and so on in a statement of costs which “follows as closely as possible Form N260”. The statement must be filed at court and served on the opponent, not less than two days before a fast track trial and not less than 24 hours before any other hearing (see PD 44.9.5-9.6). Form N260 is a paper document which is unaffected by PD 47.5.1, which requires an electronic bill to be used for detailed assessment in the multi-track in relation to costs recoverable between the parties for work undertaken after 6 April 2018.

From 1 April 2019, that no longer necessarily will be the case. From that date, Practice Direction 51X – “New Statement of Costs For Summary Assessment Pilot” will operate until 31 March 2021. While the scheme is in force, parties will have the option to use a new Form N260A at the conclusion of an application or Form N260B when costs have been incurred “up to trial”.

The critical difference between these forms and their predecessor is that under paragraph 5 of the PD, the documents schedule can be:

“… created from electronic time records by filtering the time that is recovered under the activity described in Schedule 2 to PD 47 as”10-Plan, Prepare, Draft, Review”. This may then be sorted and presented first by grade of fee earner and then chronologically”.

Both forms are available in paper/PDF form, and in electronic spreadsheet format. Curiously, if the latter is used, the parties must still file and serve the paper/PDF format at the same time as providing the electronic spreadsheet (note the use of the word “providing” rather than “serving”). That begs the question: at the end of a busy court day, will the judge wish to be spending time in adjusting the figures in minute detail on his or her laptop, or will the current “rough justice” practice continue under which a judicial red pen is simply and quickly applied to the paper schedule?

There is a further requirement where Form N260B is being used at the end of the trial. Precedent Q (the form of breakdown of costs claimed in each phase of the proceedings, showing any departure, over or under, from the last approved or agreed budget), must be filed and served at the same time.

As to the forms themselves, Form N260 (A) (sic) bears a striking resemblance to a traditional form of paper bill without the narrative. At hourly expense rates set out in the form, it provides for time spent/attendances on the client, counsel, the opponent, “others” such as the court, travel and documents time, (now entitled “Plan, Prepare, Draft, Review”) which covers items such as briefing counsel and so on. The date that the work was undertaken is also required. Nowhere, however, is there any allowance in the model form annexed to the PD for the solicitor to attend the hearing of the application! Overall, the total time advanced in the form is £3,451 for the solicitor and £6,300 for counsel. Lucky counsel!

Form N 260(B) (sic) – Trial, follows a similar format (again without the narrative), but with the profit costs to be claimed by phase, as would be the case for an electronic bill. Those phases are pre-action work, issue, case management conference, disclosure, witness statements, experts, trial preparation, trial and alternative dispute resolution. After that follow counsel’s fees and other disbursements. Activity time (for example, pre-action time spent with the client) is then shown in detail in the documents schedule, together with the dates on which the work was undertaken. The model form annexed to the PD seeks a grand total of £36,279.04 including VAT. Of that sum, £17,517.60 excluding VAT is attributable to profit costs for the phases of work undertaken by the solicitors, including such questionable items as one hour sought at grade C for preparing notice of funding.

What is the rationale behind all this? Probably that the new world of costs envisages a situation where practitioners “export” their time records directly onto the new N260 format, with that to become mandatory from 1 April 2021, as has been the case with the electronic bill for detailed assessment from 6 April 2018 (see PD 47 paragraph 5.1). Both new forms are more complicated and contain additional detail than their predecessor. This poses the question: if summary assessment is supposed to be quick and proportionate, how will that be achieved where a new layer of detail has been added? At the end of a hard-fought court day, the temptation may simply be for the judge to order an interim payment and direct that there be a detailed assessment, rather than carry out a summary assessment. It is noteworthy, too, that Form N260B can be used at the end of any trial, so that the court in theory can be asked to carry out a summary assessment in a matter lasting days, as opposed to the one day at present.

Although the moment is gone, with hindsight, it might have been better if the new N260s had been the subject of a pilot scheme instead of the electronic bill, which was given a trial and extended trial at the Senior Courts Costs Office (SCCO) (and no other court) ending on 30 September 2017. The latter, as we know, ran for nearly three years and was avoided like the plague by the profession, to the extent that the Ministry of Justice’s response was to impose electronic billing from 6 April 2018 rather than abandon the project. Even now, almost a year on, not one electronic bill has gone the full distance at the SCCO. Had a pilot scheme for N260A and N260B been put in place first, the profession and the judiciary would have a chance in practice to see how electronic assessment could work. Now it is too late.

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