The latest Precedent H guidance notes

The precedent H guidance notes have never aligned with the precedent S guidance notes (Phases and Tasks Reference and Lookup table in Precedent S (bill of costs)) until the update to the precedent H guidance notes which was made last month, this update has addressed some of those discrepancies.

Please find below the amendments that have been made to the guidance notes:

Pre-action: The precedent H guidance notes states that settlement discussions, advising on settlement and Part 36 offers before proceedings were issued are to be included in the Preaction phase. However, in the Precedent S guidance these discussions are included in the ADR/Settlement phase (task “Other Settlement Matters”) . The precedent H guidance notes must be followed therefore any preaction settlement discussions should be included in the preaction phase. 

Issue/statements of case: The precedent H guidance notes have been amended to include “amendments to statements of case” in this phase, the previous guidance stated that these should be excluded from this phase. This amendment has resulted in alignment with the Precedent S guidance. 

CMC: The precedent H guidance notes have been amended to include any further CMCs that have been built into the proposed directions order whereas previously the notes stated that any additional CMCs were not to be included in this phase. The position remains regarding any estimated CMCs that have not been proposed in the directions order, these are to be included as a contingent cost. Any disclosure work, i.e. list of disclosure issues, EDQ  should be included in the disclosure phase.  

Budget – The costs in relation to this phase includes inconsistencies which present numerous difficulties. The Precedent H Guidance Notes includes “correspondence with opponent to agree directions and budgets, where possible”, and “preparation for, and attendance at, the CMC”. The same applies in relation to the PTR phase, which includes “preparation of updated costs budgets and reviewing opponent’s budget”, “correspondence with opponent to agree directions and costs budgets, if possible” and “preparation for and attendance at the PTR”. While the precedent H guidance note specifically excludes preparation of the costs budget for the first CMC, it doesn’t specifically exclude preparation of Precedent R. The Precedent S description of this task is “work on budgeting between the parties following initial completion of the first budget, including the monitoring of costs incurred against the budget and any applications for variation of the budget” –  it doesn’t mention the drafting of Precedent R and seems to relate to work post CMC.

Furthermore, in para 7.2 of PD3E the 2% cap relates to all recoverable costs of the budgeting and costs management process other than the recoverable costs of initially completing the Precedent H. If some costs budgeting items are included in the CMC and PTR phases (i.e. following the Precedent H Guidance Note), practically how is the 2% figure on the front page of Precedent H calculated? Should it include the budgeting items which appear in the CMC and PTR phases of Precedent H, or is it exclusive of them? And, what exactly is meant by “budget process” in relation to this 2% cap?

Unfortunately there is no guidance regarding the budget process or “associated material” that is referred to in the guidance notes – does this include composite summaries, breakdowns of costs?

One solution for this phase is to time record in line with the precedent S guidance notes and then when it comes to preparing the budget assess what aspects of the % cap belongs in the CCMC stage. If the time is recorded as CCMC it is a more onerous task to ascertain what element of the CCMC phase is relevant to the % cap.

Trial: The guidance note has been amended to now include counsel’s brief fee in the trial preparation phase rather than the trial phase. 

Settlement phase: The precedent H guidance note previously excluded mediation from this phase, this has now been amended to include mediation. 

Definition of budgeted and incurred costs – CPR 3.15 and PD 3E para 7.4 Incurred costs are now all costs incurred up to and including the date of the first costs management order, unless otherwise ordered. Budgeted costs are all costs to be incurred after the date of the first costs management order.

Sue Fox is a Senior Associate and the Head of Costs Management in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact her at sue.fox@clarionsolicitors.com and 0113 336 3389, or the Clarion Costs Team on 0113 246 0622.

 

 

 

 

Interesting comments from the MXX v United Lincolnshire NHS Trust case

I posted a blog at the end of June about the case of MXX v United Lincolnshire NHS Trust (2018) (please follow this link to read the blog https://clarionlegalcosts.com/2019/06/25/ensure-consistency-between-your-costs-budget-and-bill-of-costs/).

In the Judgment of Master Rowley, there are some interesting points which I felt were appropriate to cite and share through this separate blog. Those points are as follows:

Master Rowley found that the inflated incurred costs amounted to improper conduct and said the following at paragraphs 57 and 58:

57.      The need to comply with the indemnity principle must be on page 1 of any introduction to the law of costs. It is fundamental throughout the issues regarding what sums can be claimed from one party by another. It is, or should be, engrained in everyone dealing with solicitor’s costs. Whether it is a detailed bill of costs that is being produced, a summary assessment schedule or even simply a breakdown in a letter being provided to the opponent, it is imperative that the costs set out as being payable by the opponent do not exceed the sums payable by the client to their solicitor. The case of Harold v Smith (1850) 5 H. & N. 381 is more than 150 years old but it remains correct that the sum claimed should not be a punishment to an opponent nor a bonus to the client (or solicitor) which is the effect of claiming more costs from the opponent than are payable by the client.

  1. I do not accept that the statement of truth for Precedent H is intended to be a composite statement or one akin to signing an estimate. If that was so, in my Judgement, the Statement would simply say that the document was a fair and accurate estimate of the costs which it would be reasonable and proportionate for the client to incur in litigation. But that is not what it says. It specifically refers to incurred and estimated costs separately and it seems to me that a solicitor signing a Statement of Truth has to consider whether the incurred costs figure is fair and accurate separately from whether the figures for estimated costs are fair and accurate. There is absolutely no reason why the incurred costs figure should not be accurate. There are many reasons to understand that the estimated costs figure is no more than educated guesswork. The change in the hourly rates for future work identified by Irwin Mitchell is one of those reasons.

    The importance of the indemnity principle (which I have blogged on previously and you can find here https://clarionlegalcosts.com/2019/02/12/the-indemnity-principle-what-is-it-is-it-important/) is clearly set out above at paragraph 57 of the Judgment.

    At paragraph 58, it is clear that the signature of a Precedent H should not be taken lightly, it is a statement of truth and is not akin to signing an estimate, the signature on the Precedent H is not intended to be a composite statement. Paragraph 58 also indicates that the courts do not expect the incurred costs to be calculated incorrectly because of the inclusion of any incorrect hourly rate/s. However, the courts would be open to the use of composite rates for estimated costs given that hourly rates could clearly change (both upwards and downwards) over time. If you consider this applies to any budget that you are preparing, then make this clear in the assumptions to your budget, this will provide you with protection on detailed assessment and ensure transparency with the court and your opponent.

In the Judgment, Master Rowley did not find that the significant difference between the costs claimed in the bill and those in the costs budget (144-147 hours) amounted to improper conduct. Master Rowley said the following:

61.      Similarly, I do not think that the claimant’s approach to the amount of hours claimed in the budget and subsequently in the bill founds any significant criticism. My understanding of the limit of 1% of the total budget for the preparation of the precedent H was originally allowed for on the basis that clients would have been billed for the incurred costs by that point and so relatively little work would be needed to consider the incurred costs. If that is correct, it takes no account of matters dealt with under contingency arrangements such as a CFA when no bill will have been rendered by the time the Precedent H is prepared.

  1. It seems to me to be unrealistic to expect a party to vet the time recorded on a line by line basis in the manner suggested by the Defendant here. The bill of costs has taken nearly 100 hours to prepare and that involves a considerable greater sum than would be allowed by 1% of the budget. Whilst I accept Mr Bacon’s comment that the extent of the remuneration is not the touchstone for the effort that should be involved, it does seem to me to be a pointer as to the expectation of the time to be spent in preparing a budget. Most of the time will be spent in the estimation of future costs and much less will be spent in relation to incurred costs. Including items which are unlikely to be recoverable between the parties’ assessment runs a risk of the budgeting judge concluding that those costs are high and commenting about this in the CMO.

  2. I do not think that it can be said to be unreasonable for a solicitor to include in the budget, the time that the various fee earners have recorded on their system as being sums which the client is potentially liable to pay.

  3. Similarly, having considered that time to be vulnerable to challenge on a between the parties’ assessment, it can only be reasonable for the drafter of the bill of costs to exclude such time. Where, as here, the time is extensive, the incurred costs actually claimed between the parties will be significantly reduced. But that does not necessarily mean that something improper has occurred when the budget was prepared, in my view.

Personally, whilst I cannot say that the discrepancy in time was improper, I struggle to accept the Master’s decision that there can be such a large discrepancy on detailed assessment (because the bill drafter excludes time when drafting the bill of costs). It is important that incurred costs are broadly correct in terms of time incurred and absolutely correct in terms of hourly rates. If not, it creates an incorrect starting point on detailed assessment and questions the signature of the costs budget. Furthermore, 1% can be a generous amount when preparing a high value costs budget (A £10 million budget would potentially allow a charge of £100,000 to prepare the costs budget).

The decision of the Master also troubles me for the following reasons:

  1. It is possible to prepare a budget as a bill of costs i.e. prepare a bill of costs which can be converted into a costs budget for the CCMC. Whilst this incurs greater cost, it effectively means that the costs are front-loaded so that the costs for drafting the bill at the conclusion of the matter are much lower.
  2. Lawyers have historically struggled with recording their time (and continue to struggle) in a way that reduces the time required to draft a bill of costs, not to mention time recording by using the phase, task and activity codes. It therefore surprises me that the Master seemed to accept an approach of calculating incurred costs by simply ‘lifting’ time from a time recording ledger. To my mind, time needs to be vetted correctly and incurred costs should not change significantly between those stated in the costs budget and those stated in the bill of costs.
  3. Where a costs management order has been made and the matter proceeds to a JSM or mediation, it can be possible for the parties to agree costs at the JSM or mediation based on the costs management order (Claimant providing some very basic updated figures). If the budget was not based on the accuracy expected within a bill of costs, then any breach of the indemnity principle would not be identified and there is a real risk that costs irrecoverable inter partes would potentially be recovered from the paying party.
  4. Furthermore, the Master’s approach is in real contradiction to the requirements of a document that contains a statement of truth, of which the budget is one of those documents.

    It is therefore imperative that the incurred costs figure is not only calculated correctly in terms of the hourly rate but is calculated correctly (with no significant errors) in relation to inter partes incurred costs. When litigating, each party should be able to proceed on the basis that the incurred costs included in the budget are correct and can be relied upon. Whilst the Claimant substantially reduced the incurred costs in the MXX case (which was to the benefit of the Defendant), it does raise a real question over the costs management process if a party can change their incurred costs figure, which in this instance was by nearly 150 hours.

The aim of this blog was to share some of the wider points which arise from the Judgment of Master Rowley. I would be interested to hear any other people’s views and opinions which can be shared through this blog.

Please note that the case was the subject of an Appeal and I will blog separately (and shortly) in relation to the outcome of the Appeal. The outcome does not impact the points raised in this blog.

This blog was prepared by Andrew McAulay who is a Partner at Clarion and the Head of the Costs Litigation Funding Team. He can be contacted at andrew.mcaulay@clarionsolicitors.com or on 0113 336 3334.

Revising Precedent H Costs Budgets – Don’t delay

Revising Precedent H Costs Budgets

Don’t delay in applying to revise your Costs Budget if a significant development has occurred in your litigation, and on those occasions where there may have been a delay don’t shy away from applying.

It is not left to a party to choose whether to revise its budget and to take its chances on a detailed assessment, parties must apply to revise their budget if there has been a significant development in the litigation – Sharp -v- Blank & Ors [2017] EWHC 3390 (Ch) (21 December 2017) (hereafter Sharp).

In the event that there has been a significant development in the litigation, parties are not able to defer the determination of additional incurred costs to detailed assessment – those incurred costs form part of the request for additional costs:

Master Marsh “I do not consider the rules and practice direction intended that only certain elements of the costs relating to significant developments must be dealt with as revisions with the other elements, those pre-dating the hearing or, on another view those pre-dating the application, being dealt with on a detailed assessment. This approach would run contrary to the purposes of costs management and lead to unnecessary fragmentation of the costs dealt with at a detailed assessment.

Master Marsh found that the costs incurred from the costs management order and up to the application to revise the Cost Budget were not incurred costs for the purpose of the revision, they were future costs. Master Marsh focussed on the language of the CPR referring to the choice of the use of “future” rather than “budgeted costs”, as follows:

The language used in paragraph 7.6 is of critical importance because it provides the jurisdiction, on the defendants’ case to make the revisions they seek. It is notable that the language is at variance with the remainder of the rules and PD3E. It refers throughout to the revision of a “budget” (not, in accordance with the new wording, “budgeted costs”). It is explicit, however, that revision is in respect of future costs. The final sentence of this paragraph gives the court a discretion to approve, vary or disapprove the revisions “… having regard to any significant developments which have occurred since the date when the previous budget was approved or agreed”. On one view, such language points towards the last approved or agreed budget being the jumping off point for a revision because it is the budget that is being revised”.

Master Marsh concluded that the “Costs which have been incurred since the date of the last agreed or approved budget (or the antecedent date) that relate to significant developments are, for the purposes of revision, placed in the estimated columns of the revised Precedent H in one or more phase. In some cases, it may not be obvious where they go (for example a late application for security for costs) but I can see no reason why Precedent H may not be adapted as necessary to accommodate work that does not easily fit in”.

He also considered that there would be a degree of retrospectivity if the costs management regime was to work.

It is essential that you apply to revise your Costs Budget if a significant development has occurred in your litigation, to not do so puts you at risk of not being able to recover any costs that are in excess of your budget.

Sue Fox is a Senior Associate and the Head of Costs Management in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact her at sue.fox@clarionsolicitors.com and 0113 336 3389, or the Clarion Costs Team on 0113 246 0622.

 

 

Can you recover Counsel Fee’s for an Advice on Quantum in a £70,000 case?

Dover v Finsbury Food Group plc [2019] EWHC B11 (Costs)

What a terrible day for the Defendant to cut a long story short. This was an appeal from a Costs Officer’s decision which concerned a costs dispute stemming from an Employers Liability claim which was submitted via a Claims Notification Form “CNF” in 2015. As such the Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims “The Protocol” was to apply.

The Defendant did not respond to the CNF within the prescribed period under the Protocol and as such by automatic operation of 6.13 (2) of the Protocol the matter exited the Protocol. The Claim was later compromised for £70,000 pre-issue, as such Fixed Costs under Section IIIA of CPR 45 were to apply as the matter had not been allocated to the Multi Track.

Within their claim for costs, the Claimant sought a fee for Counsel advising in conference on the value of the Claimant’s claim; the Claimant sought a fee of £650.

The Defendant alleged the fee was not recoverable if the fee had been incurred after the claim had left the Protocol; or in the alternative, if the fee was allowed then it should be limited to £150 plus VAT.

As the matter had exited the Protocol it was agreed between the parties that the applicable section of the CPR which applied to this matter was Section IIIA of CPR 45.

The Rules

“CPR 45.29D

Subject to rules 45.29F, 45.29H and 45.29J, and for as long as the case is not allocated to the multi-track, in a claim started under the EL/PL Protocol  or in a claim to which the Pre-Action Protocol for Resolution of Package Travel Claims applies, the only costs allowed are—

(a) the fixed costs in rule 45.29C;

(b) disbursements in accordance with rule 45.29I.”

“CPR 45.29I

(1) Subject to paragraphs (2A) to (2E), the court—

(a) may allow a claim for a disbursement of a type mentioned in paragraphs (2) or (3); but

(b) will not allow a claim for any other type of disbursement.

(2) In a claim started under …. the EL/PL Protocol …, the disbursements referred to in paragraph (1) are—

(a) the cost of obtaining medical records and expert medical reports as provided for in the relevant Protocol;

(b) the cost of any non-medical expert reports as provided for in the relevant Protocol;

(c) the cost of any advice from a specialist solicitor or counsel as provided for in the relevant Protocol;

(d) court fees;

(e) any expert’s fee for attending the trial where the court has given permission for the expert to attend;

(f) expenses which a party or witness has reasonably incurred in travelling to and from a hearing or in staying away from home for the purposes of attending a hearing;

(g) a sum not exceeding the amount specified in Practice Direction 45 for any loss of earnings or loss of leave by a party or witness due to attending a hearing or to staying away from home for the purpose of attending a hearing; and,

(h) any other disbursement reasonably incurred due to a particular feature of the dispute.”

Paragraph 7.8 of the Protocol

“In most cases under this protocol, it is expected the claimant’s legal representative will be able to value the claim. In some cases, with a value of more than £10,000, an additional advice from a specialist solicitor or from counsel may be justified where it is reasonably required to value the claim.”

The Defendant sought to rely upon CPR 45.23B, which is in Section III of CPR 45

“CPR 45.23B

Additional advice on the value of the claim:

Where—

(a) the value of the claim for damages is more than £10,000;

(b) an additional advice has been obtained from a specialist solicitor or from counsel;

(c) that advice is reasonably required to value the claim,

the fixed costs may include an additional amount equivalent to the Stage 3 Type C fixed costs.”

For clarity, the Stage 3 Type C fixed costs referred to under CPR 45.23B is £150 plus VAT under Table 6A, this is where the Defendant got their ‘alternative’ provision from.

The Defendant’s Arguments

The Defendant had four arguments in relation to the recoverability of this Counsel fee.

  1. It was the Defendant’s contention that whilst CPR 45.29I applied for the recovery of the disbursements, 2 (c) of that section referred back to the Protocol and as such there was a restriction to the recoverability of the fee only where the fee had been incurred before the matter leaves the Protocol as 7.8 of the Protocol uses the phrase under this protocol; it was the Defendant’s case the matter was not under the Protocol as it had earlier exited the Protocol.
  2. If the recovery of the fee was not restricted as per point 1 above, then no fee was payable given the heading of Table 6A “Where the value of the claim for damages is more than £10,000, but not more than £25,000 which houses the Stage 3 Type C fixed costs referred to in CPR 45.23B. The Defendant contended that as the case settled for more than £25,000 no fee was payable.
  3. If the Defendant were wrong on the above 2 points, the Defendant submitted that there was an error in the drafting of the rules, particularly Table 6A, similar to Qadar and Ors v Esure Limited. That the heading of the table wrongly included an upper limit of damages of £25,000 and so by operation of CPR 45.23B the fee should be limited to £150 plus VAT
  4. Whether on a proper construction of CPR 45.29I (2) (c), CPR 45.29 (2) (h) permitted recovery of the fee.

The Decision

Master Brown did not agree with the Defendant on any of the above points.

  1. Master Brown was of the opinion that the Defendant’s reading of the rules on this argument was strained. As if the Defendant were to be correct then it would produce an anomaly to the other rules such CPR 45.29I (2) (a) and (b) which deal with the recoverability of medical evidence, the wording of these rules also contain the phrase in the relevant Protocol. Further the Master considered the legislative history and the intention to ring-fence the cost of obtaining an advice on quantum so as to ensure claims are not under-settled.
  2. Master Brown found that CPR 45.23B and Table 6A did not apply to claims which had exited the Protocol and if it were intended then CPR 45.29I (2) (c) would have included the limitation contained under Section III and it would have been included under Section IIIA.
  3. In relation to the drafting error argument of the Defendant, Master Brown found that as Table 6A did not apply to this claim he did not need to consider this argument. However there is an interesting comment from Master Brown at paragraph 49:

“I accept that in cases which have a value of less than £25,000 a judge might reasonably have regard to the sums provided for under CPR 45.23B even in cases which exit the protocol. However, in cases which exit the protocols on the grounds that the value exceeds £25,000 (see [39] of Qader on this point), it is difficult to see, given the likely added complexity associated with them that it must have been intended that costs of any independent advice required would be so limited.”

  • It was found that the fee was not covered by CPR 45.29I (2) (h) as this referred to any other disbursement, however the fee was already covered by CPR 45.29I (2) (c).

The Master therefore dismissed the Defendant’s appeal and allowed the Counsel fee at £500 plus VAT as per the original decision from the Costs Officer, as the fee was recoverable subject to reasonableness.

Comment

To me this seems a very logical decision, Section IIIA of CPR 45 applies to claims which have left the Protocol and CPR 45.29I (2) (h) allows recovery of Counsel’s fee for advice so long as it is provided for in the Protocol, which it is. I have regularly conducted Fixed Recoverable Costs Proceedings which involve Counsel’s fees for an Advice on quantum and recovered them.  

The comment made by Master Brown at paragraph 49, detailed above, has also provided food for thought. As it appears that he feels that if a case has a value of less than £25,000, the cost of obtaining an advice from Counsel should be limited to £150 plus VAT even if the matter has left the portal.

This blog was written by Matthew Waring who is an Associate in the Costs and Litigation Funding Team at Clarion. Matthew can be contacted on 0113 288 5639 or at Matthew.Waring@clarionsolicitors.com

Electronic Filing – Court of Protection Cases

As of today, the pilot begins for voluntary electronic filing at the Senior Courts Costs Office. To request an assessment, the bill of costs, the N258B and the authority to assess are to be forwarded through e-filing. The papers are to be sent as normal in the post/DX for the current time. This process becomes mandatory on 20 January 2020.

This is a big change in costs and particularly regarding COP costs, whereby it was expected that electronic filing would not apply. We have had confirmation from the SCCO that this does apply to COP cases and we recommend that all practitioners begin doing this going forward before the process becomes mandatory.

 The portal link can be found here: https://efile.cefile-app.com/login

 Information about existing FAQ’s following the E-Filing in other Courts can be found here: https://leedslawsociety.org.uk/wp-content/uploads/2019/04/E-Filing-Frequently-Asked-Questions.pdf

The link to the government website regarding CE-Filing which includes step by step guides can be found here: https://www.gov.uk/guidance/ce-file-system-information-and-support-advice

 If you have any queries, please contact Stephanie Kaye on 0113 336 3402 or stephanie.kaye@clarionsolicitors.com

 

 

A multi-million pound portal claim?

Cable v Liverpool Victoria Insurance – Liverpool County Court (Appeal No 128 of 2018)

This was a case which should have been relatively straight forward, at least that’s what the Defendant thought upon receipt of a Claim Notification Form from the Claimant’s Solicitors.

The matter concerned a Road Traffic Accident which occurred in September 2014, after which the  Claimant instructed a firm of Solicitors to represent him and pursue a claim. A Claim Notification Form was sent to the Defendant, thus dealing with the matter under the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents from 31 July 2013 “portal process”, this is for cases with a value of £1,000.00 to £25,000.00.

The Defendant made an early admission of liability, and as such the Defendant thought that the  matter would be capable of resolution through the portal process.

The Claimant obtained medical evidence which provided details of the Claimant’s absences from work, no definitive prognosis had been provided and a deferral to a Neurologist had been made. An interim payment of £1,000.00 was obtained from the Defendant, however no further updates were provided to the Defendant as to the evidence which had been obtained.

As the limitation period was approaching, the Claimant later issued a Part 8 Claim Form under paragraph 16.1 of Practice Direction 8B to CPR 8. The Claimant was seeking a stay in order to comply with the RTA Protocol, however the loss of earnings at that point was in excess of £200,000.00; the  matter was therefore not suitable for the portal process.

An Order was made granting a stay until 20th August 2018 and the Claimant was ordered to provide a copy of the Claim Form to the Defendant by 20th August 2017; this direction was not complied with until February 2018.

In August 2018, and for the first time in the case, the Defendant was informed of the case it was being expected to meet. The  Claimant’s Solicitors informed the Defendant that the Claimant had lost his £130,000.00 per year job; it was suggested that the matter was not suitable for the RTA Protocol and a transfer to Part 7 was to be sought. The neurological medical evidence was disclosed, to which the Defendant raised concerns with the Claimant’s conduct.

The Claimant issued an Application to lift the stay and transfer the matter to Part 7. An Order was subsequently  made lifting the stay and requiring an amended Claim Form and Particulars of Claim to be served but the Claimant did not comply with this direction .

The Defendant sought to oppose the transfer to Part 7 and issued an Application in September 2018 seeking to set this Order aside (thereby keeping the stay in place) and to strike out the claim. The case came before DJ Campbell in October 2018 who granted the Defendant’s Application.

The Claimant sought to appeal this decision.  The appeal came before HHJ Wood QC who confirmed that when coming to her decision DJ Campbell adopted the correct approach in relation to abuse of process and refused the appeal.

This case is important to Claimant practitioners, as it demonstrates  the importance of accurately valuing the case prior to submitting the claim to any of the Portal processes. Even if you do submit the matter in good faith (believing the matter is suitable for the portal process), you should actively consider if the matter remains suitable for the portal process and inform the Defendant if you believe if it is not (7.76 of the RTA Protocol and 7.59 of the EL/PL Protocol).

This blog was written by Matthew Waring who is an Associate in the Costs and Litigation Funding Team at Clarion. Matthew can be contacted on 0113 288 5639 or at Matthew.Waring@clarionsolicitors.com

Guidance on Proportionality… better late than never

West & Demouilpied v Stockport NHS Foundation Trust

This case provided guidance regarding two key areas, the recovery of block rated ATE Premiums and proportionality under the ‘new’ test of proportionality, which came in a mere 6 years ago.

Legal practitioners have had very little guidance on proportionality in the six years leading to this Judgment.

However, just a few weeks prior to this Judgment being given, guidance was received from Malmsten v Bohinc, which confirmed that the Court should  take a step back at the end of an assessment and weight is to be given to the relevant factors as contained within CPR 44.3; no mention of CPR 44.4 though and the ‘eight pillars of wisdom’.

The case of West & Demouilpied goes further than the guidance in Malmstem and provides that:

  • There are certain costs which are “unavoidable” / “inevitable” / “an irreducible minimum without which the litigation could not have been progressed” / “fixed”. These costs are to be excluded from the Court’s consideration on proportionality; the Court suggested Court Fees and reasonable block rated ATE Premiums would fall into this category. However, it was stated that the Court may account for these exclusions within the global figure by reducing other items which were included within the proportionality assessment. On a further note, the Court did expressly state that it was not re-introducing the test under Lownds.
  • The Court will undertake a line by line assessment of the Bill of Costs, assessing the reasonableness of each item. The Court may, if it is appropriate and convenient when undertaking the line by line assessment, address the proportionality of that item at the same time.
  • Following the line by line assessment on the Bill of Costs, the Court will have a global figure which it considers to be a reasonable sum. This assessment is to include an assessment of every item, even the costs which would fall under the category described in point 1.
  • Unlike Malmstem, the Court is to have regard to both CPR 44.3(5) and CPR 44.4(1) and assess the proportionality of the sum referred to in point 3. If that sum is found to be proportionate, then no further assessment is to be undertaken. However, if the Court finds that the sum is not proportionate then a further assessment is to be undertaken; this is not a further line by line assessment.
  • The Court will consider the various categories of costs incurred “such as disclosure or expert’s reports, or a specific period where particular costs were incurred, or particular parts of the profit costs”, the costs referred to in point 1 are to be excluded from this further assessment. The Court will consider the various categories and when considering a category, assessing whether the costs incurred were disproportionate, if they were then an appropriate reduction is to be made. Once these further reductions have been made the resulting sum will be final. The Court made clear that no further assessment or standing back approach was to be undertaken as this would amount to “double counting”.
  • In relation to the ATE Premiums, the Court provided guidance in relation to block rated ATE Premiums. The Court considered that reducing block rated ATE Premiums on proportionality grounds would be inappropriate and gave two reasons for the same. “Firstly, being a block-rated policy, the amount of the reasonable premium bears no relationship to the value of the claim, much less the amount for which the claim was settled. Secondly, ATE insurance is critical to access to justice in clinical negligence claims”.

Following this Judgment, challenges to  block rated ATE Premiums will decrease as the law is now very clear.

However, I do foresee some satellite litigation over what costs fall into the category described in point 1. The Court provided very little guidance on the costs which are not to be included within the assessment of proportionality, save for reasonable block rated ATE Premiums and Court Fees. Many Receiving Parties will now argue that items were “unavoidable”, and many paying parties will say they were “avoidable” – the fun continues!