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!