Costs Update

1. It’s a bill of costs, but not as you know it…

After much delay, electronic Bills of Costs finally become mandatory for work done from 6 April 2018.  This applies to Part 7, multi-track claims where the bill relates to any work undertaken after 6 April 2018. It applies to detailed and provisional assessment but will not apply where proceedings are subject to fixed or scaled costs, where the receiving party is a litigant in person or where the Court has made an alternative Order.

In theory, the introduction of an electronic Bill of Costs should save time and costs but it remains to be seen whether it will achieve that aim.

What is the impact?

Expect to see an electronic bill for any work undertaken after 6 April 2018, even if the majority of the work was undertaken before the cut-off date. The Supreme Court Costs Office anticipates and expects practitioners to adopt the new electronic bill for all time in such hybrid cases but there is no guarantee that will be the approach adopted.

What’s new?

Electronic bills of costs must be in a defined spreadsheet format known as Precedent S or an excel spreadsheet format in with defined phases, tasks, activities and expenses.

We hope that the electronic bill of costs will lead to greater transparency of costs claimed and reduce time in recalculating bills where items are disputed.

2. The end of excessive costs for holiday sickness claims?

Many insurers and tour operators will have welcomed the news that the Civil Procedure Fixed Cost regime has been extended to cover holiday sickness claims abroad. Previously, these types of claims were excluded from the Low Value Fixed Cost Regime when the “damage” occurred outside of the jurisdiction. This was considered a legal loophole and the package holiday industry has seen a huge surge in the number of claims for gastric illness allegedly contracted in foreign hotels in recent years.

The industry has been fighting back with several recent high profile cases where fraudulent dishonesty was established and resulted in prison sentences for some unfortunate holidaymakers.

A new Pre-Action Protocol for Resolution of Package Travel claims has been included in the most recent update to the CPR. This sets out that gastric illnesses contracted during a package holiday abroad will be subject to the fixed costs regime.

A point to note is that the Protocol defines a “package travel claim” as

  • a claim for damages for gastric illness contracted during a package holiday, and
  • may include a claim for diminution in value or loss of enjoyment suffered by the same claimant, but
  • excludes a claim under the Athens convention or the Montréal Convention;

This means that gastric illnesses contracted on a cruise ship, for example, would specifically be excluded from the fixed cost regime. It remains to be seen whether this new “loophole” will be exploited.

The aim of the changes is to prevent excessive legal costs associated with this type of claim. What may happen is that Claimant lawyers will lose their appetite for these types of claims if there are reduced fees to recover.

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