PD1A and costs implications – a welcome change?
As I am sure many practitioners will already be aware, on 6th April 2021 Practice Direction 1A came into force, providing a welcome change to the CPR by giving special consideration to vulnerable clients. This means that there are likely to be implications on the costs of litigation in cases where this is engaged.
I aim to provide a short overview of the changes to the law, and specific observations of how these may in turn affect different aspects of the costs regime.
Changes to the CPR
The changes go to the root of the overriding objective, signalling the intent of the reform to be considered at the heart of proceedings where it is applicable.
Within CPR 1.1, the following can now be found:
“(2) Dealing with a case justly and at proportionate cost includes, so far as is practicable –
(a) ensuring that the parties are on an equal footing and can participate fully in proceedings, and that parties and witnesses can give their best evidence
Furthermore, CPR 1.6 now has been introduced which explicitly refers to the new practice direction and the Court’s consideration of vulnerable parties:
“Practice Direction 1A makes provision for how the court is to give effect to the overriding objective in relation to vulnerable parties or witnesses”
Practice Direction 1A
The PD itself is detailed guidance which details step by step how the Court should provide consideration to ‘vulnerable parties’ that can be found here.
Below is a summary of the definition of a ‘vulnerable person’
The definition of a vulnerable person for the purposes of this amendment is found at subsection (3):
“3. A person should be considered as vulnerable when a factor – which could be personal or situational, permanent or temporary – may adversely affect their participation in proceedings or the giving of evidence”
and subsection (4) provides a non-exhaustive list of factors that should be considered when assessing the vulnerability of a party in proceedings:
“4. Factors which may cause vulnerability in a party or witness include (but are not limited to)—
- Age, immaturity or lack of understanding;
- Communication or language difficulties (including literacy);
- Physical disability or impairment, or health condition;
- Mental health condition or significant impairment of any aspect of their intelligence or social functioning (including learning difficulties);
- The impact on them of the subject matter of, or facts relevant to, the case (an example being having witnessed a traumatic event relating to the case);
- Their relationship with a party or witness (examples being sexual assault, domestic abuse or intimidation (actual or perceived));
- Social, domestic or cultural circumstances”
And finally subsection (5) provides guidance to the Court as to how to apply the factors outlined above:
When considering whether a factor may adversely affect the ability of a party or witness to participate in proceedings and/or give evidence, the court should consider their ability to—
- understand the proceedings and their role in them;
- express themselves throughout the proceedings;
- put their evidence before the court;
- respond to or comply with any request of the court, or do so in a timely manner;
- instruct their representative/s (if any) before, during and after the hearing; and
- attend any hearing.
Impact on costs
As with most provisions within the CPR, the changes are, in effect, likely to have some implications on the costs process, particularly during the budgeting process or on assessment. Of course, the provision is relatively new and thus far there have not been any decisions showing how it is being interpreted in practice. Therefore we can only speculate at this point what can be done to ensure that this work is reflected in the costs element of a matter.
Perhaps the most notable change is within CPR 44.3(5) (rules on proportionality), which has been amended specifically to consider costs when there are vulnerable parties:
“(f) any additional work undertaken or expense incurred due to the vulnerability of a party or any witness”
This means that when dealing with bills or costs assessments, practitioners should identify specific costs where the vulnerability of a party has affected a particular element of work. For example, more costs than anticipated may have been incurred when obtaining evidence from the client, due to the nature of the claim. These costs should be brought to the Court’s attention during assessment to enable it to use its wide discretion to interpret costs and make provisions accordingly.
Another important aspect of the new practice direction to consider is within the budgeting process, as of course this is where a party shares their estimated costs for scrutiny by their opponent and the Court. An advantage of this is that a budget is usually served in tandem with a Directions Order, which gives a prime opportunity for a party to draw the courts attention to the vulnerability of a client or witness. However, there should also be clear indicators in a Precedent H that a party is vulnerable and draw the Court’s attention to specific costs which are incurred as a result. It would therefore arguably be a pragmatic solution to detail these (where possible!) within the assumptions spaces provided.
There is also a question to be asked about how this may work alongside CPR 3.15A (i.e. revising a costs budget upwards or downwards based upon a significant development within a case). It seems as if the changing in vulnerability of a party to the litigation may well constitute a ‘significant development’ and therefore it is wise to consider the implications on budgets and whether these need to be amended accordingly.
This is a continuously contentious matter throughout costs proceedings, often culminating in a decision made by a judge at an assessment hearing to review these against the ‘Pillars of wisdom’ set out in CPR 44.4. Notably, two of the factors may be relevant to the changes to the practice direction:
“(d) the particular complexity of the matter or the difficulty or novelty of the questions raised;
(e) the skill, effort, specialised knowledge and responsibility involved;”
Arguably both of these factors are relevant where consideration has been given to the vulnerability of a party throughout the litigation, particularly when it comes to costs assessments. It will therefore be important to draw the courts’ attention to specific issues raised that show how the vulnerability increased time and therefore costs for any part of the litigation it applies to. This may in turn cause the costs judge to take these factors into account when considering the appropriate hourly rates to impose.
A look to the future
I suspect that in the coming months we will see more decisions from judges that engage the above principles, which will shed further light on its applicability in costs proceedings. In the meantime however, a casting eye should be given to those matters where a vulnerable party may be involved and emphasis given to this from a costs perspective.