News in brief – 16.01.2020

Capped costs pilot plea

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Bid to get round cost-shifting opt-out fails

A party that opted out of cost shifting under rule 10 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 has failed in its attempt to “obtain its costs through the backdoor” by arguing unreasonable behavior.

In London Luton Hotel BPRA Property Fund LLP v Revenue and Customs (PROCEDURE : application for costs) [2019] UKFTT 746 (TC), Judge John Brooks in the First-tier Tribunal had allowed, in part, the appeal of the LLP against a decision of HM Revenue and Customs (HMRC) to reduce the LLP’s business premises renovation allowances claim of £12.5m by £5.3m. The LLP sought costs of £809,000 which it said were incurred as a result of HMRC’s unreasonable conduct of the proceedings.

The appeal was categorised as ‘complex’, allowing the LLP to opt out of the cost-shifting regime in accordance with rule 10(1)(c)(ii). Its application was then made under rule 10(1)(b), dealing with unreasonable conduct. The LLP accused HMRC of raising a “substantial number of irrelevant and unnecessary matters” that meant the hearing took longer than it should have done.

Judge Brooks said that, having opted out, “it would seem that the LLP… is now, by its allegations of unreasonable conduct on the part of HMRC, seeking to obtain its costs through the backdoor”. But he concluded that HMRC did not act unreasonably.


LAA introduces weekly case update

Weekly reports are now being emailed to providers showing the status of all live cases in the Client and Cost Management System (CCMS), the Legal Aid Agency has confirmed.

The new service, which began last week, has been introduced following feedback from providers. The reports will tell providers whether they need to take any action within the CCMS or if the application is being processed.

The reports are sent to firms’ ‘primary contact liaison manager’ as specified in Contracted Work and Administration (CWA). If firms are not receiving their report, they should check the correct details are in CWA before contacting their contract manager.


Disclosure costs “disproportionate”

Costs claimed by defendants who used a disclosure application in part to point at weaknesses in the claimant’s case, using a “money was no object” approach, were disproportionate, the High Court has ruled.

Centenary Home Ltd v Liddell and Anor was a dispute over the actions of receivers of a company in debt to its bank. The defendants applied for specific disclosure, but – according to a report of the case on Lawtel – initially there was no real attempt to narrow the issue so as to find a cost-effective solution. Instead large costs accrued. In due course, a disclosure order was agreed and the defendants largely accepted that its disclosure application had been complied with. The question was then the costs of disclosure.

Mrs Justice Yip found that the defendants’ application had succeeded in part, but not to its full extent. The Lawtel report recorded: “Disclosure should be conducted proportionately. The defendants’ costs schedule claimed over £62,000. The claimant sought £35,000. The claim had a likely value of under £1m; £62,000 of costs spent on disclosure did not suggest that any attempt had been made to manage the case in a cost-effective way.

“There had been a war of attrition. The defendants had used the disclosure application in part to point at weaknesses in the claimant’s case, using a ‘money was no object’ approach. The costs sought were not reasonable. However, the defendants were entitled to recover a reasonable and proportionate fixed sum from the claimant reflecting the fact that they had succeeded in part.”

A reasonable and proportionate fixed sum represented the lowest amount which the defendants could reasonably have been expected to spend in order to have their case conducted and presented proficiently.

“The figure of £62,000 was not taken as a starting point. Much of the costs spent had been the defendants’ own choice, and such costs were not recoverable from the claimant. The court was also aware that the claimant was shouldering the burden of its own costs. Taking a broad-brush approach, in the interests of justice, considering that the defendants’ costs were wholly disproportionate and that the conduct of both parties could be criticised, the claimant was to pay the defendants £18,000 in costs.”

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Costs News
Published date
16 Jan 2020

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