Costs in the Multi- track are now significantly different to those in the other tracks utilised by the courts. The purpose of this article is to provide a brief outline of such costs, the approach to which can vary dependant upon your matter.
The Multi-Track
The Multi-Track is usually associated with the most complex or high value cases. This is however not always entirely correct, and you may find yourself in the Multi-Track for matters which are not complex; but which fall into this category due to the manner in which they were issued. This can have significant costs consequences for you, as this means that all time spent by each parties’ solicitor, barrister and experts becomes available for recovery; together with any disbursements which are incurred. For the purpose of this article, all references to costs, include all of the above categories.
How Costs are Attended To
Costs are attended to in two ways. As all reasonable costs are recoverable in Multi-Track proceedings, costs can escalate quickly, and the processes utilised are designed to inform parties as to the value of those costs as soon as possible, to assist them in making informed decisions as to settlement.
The two processes utilised are Budgeting (looking at costs moving forward) and Assessment (looking at costs moving backwards).
Budgeting
Budgeting occurs at the case management stage of proceedings. Case management occurs after the parties have filed their ‘pleadings’ which can include the Claim Form and Particulars of Claim, the Defence, any Counterclaim, and any Replies to any of the above documents.
The costs which occur up to Case Management are excluded from Budgeting, as this process is designed to predict what the costs will be in the future, as opposed to considering whether those already incurred are reasonable.
The purpose of Budgeting is for the parties to advise each other of what their costs will be if the matter ends at trial. In the first instance, whilst past costs are excluded from Budgeting, the parties must still inform each other of the costs incurred, to enable the parties to know what costs will be incurred in total. The parties are not however strictly held to these figures.
The parties however do provide a summary of what their costs will be for all stages from case management to trial. Such steps will include disclosure of documents, witness statements and expert evidence. This summary must be more than an estimate, as the costs once approved by the Court, are binding, and can only be exceeded the Budget with the permission of the Court. The budgeting process is therefore an important stage in any proceedings, and will require any examination of the expected issues to be considered and how long this will take to complete. Budgets may therefore be prepared by your solicitor, but may be produced by a Costs Draftsman (the latter being more commonly used if the proceedings involve multiple parties, or complex expert or financial evidence.
The Budget largely considers the amount of time which is to be expended by a party’s legal representatives during the court process, as opposed to the hourly rate charged (which is a subject for Assessment). Whilst a Budget will have a monetary value assigned to it which takes into account the charge rate of a solicitor, if that charge rate is reduced on Assessment, the amount recoverable will be reduced at Assessment in like manner. The Budget is not therefore definitive.
If conducted incorrectly, the Budget can result in a party’s recoverable costs being significantly limited. It is therefore expected in the first instance that a Budget will be valued slightly higher than the costs expected, to allow for uncertainties in the proceedings. A Budget cannot however predict all eventualities, and on some occasions it may be necessary for the Court to be asked to vary the Budget as a result. Such a variation is likely only when both parties did not foresee an even occurring, as opposed to one party simply failing to take into account the possibility of an event.
If Budgeting is not adhered to correct, particularly in relation to time limits, the ability to recover costs can be entirely eradicated, and therefore strict compliance is necessary.
The Budget, once approved, becomes binding on the parties to the proceedings, and will be used to make an interim award of costs, following determination of the proceedings.
Assessment
There are two types of assessment, Summary and Detailed. Summary assessment occurs when a Judge considers the costs information provided by a party following trial or any final hearing, and determines the costs without an examination of the file. Whilst this process is the most widely used, it is not commonly used in Multi-Track proceedings.
Detailed Assessment is significantly more common, largely due to the value of costs being higher in Multi-Track Proceedings. The purpose of detailed assessment is to consider the reasonableness of costs, and whether they should be paid by the loosing party. In doing to, a Court will consider:
- The charge rates of any fee earners working on the file – this will apply to all costs, even those budgeted.
- The costs incurred for any matters from the initial correspondence sent in relation to the dispute to case management; and any matters following trial (such as disposal or enforcement proceedings).
- Whether the costs incurred fall within the Budget produced.
- Where those costs reasonably incurred for this type of matter – i.e. was an expert report necessary to determine the proceedings for example.
- Was the grade of fee earner or use of a barrister reasonable.
- Were disbursements (or expenses) appropriately utilised and incurred.
The process begins with the preparation of a bill of costs by a specialist Costs Draftsman. Such Bill is then served on the opposing party, who have the opportunity to have the file examined by their own Draftsman, and for any challenges on costs to be raised. If the parties cannot agree the outcome of any challenge, then the matter is referred to the Court where a Judge will consider each parties arguments on costs, with reference to the Bill, and make a determination as to the amount of costs which are recoverable. Once this determination is made, the loosing party will be required to pay the assessed value of costs to the winning party.
Costs can be reduced at Assessment; either because the costs incurred were not reasonable, the charge rates of solicitors were too high or there was duplication of work. It is usually expected that around 65% to 75% of costs will be approved, with the remainder being discounted or refused.
There will therefore always be costs which cannot be recovered during this process.
Should you have any questions in relation to the costs process, please contact our Dispute Resolution Team below or call us on 01702 338338.
