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

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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!

Costs of Attending Inquests: Looking at more than just the financial value of the claim

Fullick & Ors v The Commissioner of Police for the Metropolis [2019] EWHC 1941 (QB)

This case, which was before The Honourable Mrs Justice Slade BDE, related to an appeal from the Judgment of Deputy Master Keens from October 2018, wherein the costs were assessed at circa £88,000.00; reduced from just over £122,000.00. The Claimant’s Bill of Costs included costs of attending two Pre-Inquest Reviews as well as the Inquest itself.

The claim was for damages for breach of Article 2 of the ECHR, negligence and misfeasance in public office following the death of a relative of the Claimants. The claim was settled for just over £18,000.00 prior to any Letter of Claim.

In respect of the costs litigation aspect of the claim, the Defendant appealed the Judgment of Master Keen on two grounds:

  1. Deputy Master Keen erred in law in concluding that the £88,356.22 ordered to be paid by the Defendant was proportionate within the meaning on CPR 44.3(5) and that Deputy Master Keen failed to take into account CPR 44.3(2).
  2. Deputy Master Keen wrongly accepted the Claimants’ argument that the ‘general costs of the inquest’ were recoverable costs of the action. By wrongly holding that the Inquest was ‘the battleground’ for the claim, Deputy Master Keen was led into the error of allowing the vast majority of the Inquest costs as costs of the claim.

The Defendant contended that the costs were to be assessed by reference to Kazakhstan Kagazy Plc v Zhunus [2015] EWHHC 404, wherein it is provided that the costs payable are;

“the lowest amount which [the receiving party] could reasonably be expected to spend in order to have the case conducted and presented proficiently having regard to all the circumstances”

The  Defendant also contended that the court was not bound by decisions made prior to the introduction of the Jackson reforms, Mrs Justice Slade disagreed at paragraph 44.  

“I disagree. In my judgement there is no reason to disregard previous authorities where and insofar as they deal with considerations in the current rules of court which are to be applied when assessing costs”

At Paragraph 46 Mrs Justice Slade referred to guidance provided in Roach and Anor v Home Office [2010] 2 WLR 746 and Re Gibson’s Settlement Trusts [1981] Ch 179.

“These authorities emphasise the need to identify the issues raised in the civil claim and the relevance of matters in other proceedings, the inquest in Roach, or procedures, in Gibson, to determine as a first question, whether any of those costs can in principle be claimed in the civil proceedings. Once the threshold of relevance has been passed, the costs judge will decide whether the costs claimed in respect of, in this case, the Inquest, were proportionate to the matters in issue in the civil proceedings. As for the amount of those costs, those which are disproportionate may be disallowed or reduced even if they were reasonably and necessarily incurred.”

This confirmed that the cost of attending an Inquest had to be relevant to the civil claim before the issue of proportionality was considered. Rather than the costs as a whole being assessed under the proportionality test.

Further, it was confirmed that no two cases are the same when assessing the recoverability of the costs of an Inquest in a civil claim, “It is trite but important to emphasise that each application for costs in a civil claim and related to an Inquest must be determined on its own facts”. This is as per Roach.

Mrs Justice Slade later differentiated the current claim from that of Kazakhstan Kagazy, due to this claim being about more than money.

When providing her Judgment, Mrs Justice Slade allowed ground 2 of the appeal in so far as two specific items within the Claimant’s Bill of Costs (items 68 and 69, which were documents time), where Deputy Master Keen had undertaken a broad-brush assessment rather than assessing the relevance of each cost ( the documents time claimed at items 68 and 69 had not been split into categories or subjects).

In relation to ground 1 of the appeal, Mrs Justice Slade confirmed “Deputy Master Keen did not err in taking into account the issues raised in the civil claim were not only financial but were of important to the deceased family”. The Defendant themselves acknowledged this claim was not just about the money,

By virtue of allowing ground 2 of the appeal, ground 1 of the appeal was also allowed in so far as the total costs awarded following re-assessment of items 68 and 69 were to be assessed.

This decision makes sense, as the relevance of the costs of attending the inquests are to be considered; this is established law. However, this was not undertaken as Deputy Master Keen adopted a broad-brush approach in relation to items 68 and 69 of the Bill of Costs without considering the relevance of the time claimed within the documents schedule.

Furthermore, the Court recognised that the claim was much more than just a financial claim to the Claimants. This will be welcome news to Claimant lawyers dealing with low value matters; which carry  that element of importance or justice for the Claimant which cannot be truly quantified in monetary terms.  

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

A Complete Chronological guide to budgeting case law

There are many case authorities in relation to budgeting since the process was implemented, it is hard to keep track of them all. Here is a complete list of cases.

 

2014

Appeals

Havenga -v- Gateshead NHS Foundation Trust [2014] EWHC B25(QB)

General guidance

A & B (Court of Protection: Delay & Costs) [2014] EWCOP 8)

Hegglin -v- Persons Unknown & Google Inc [2014] EWHC 3793 (QB)

Thomas Pink Ltd -v-Victoria’s Secret UK Limited [2014]

Yeo-v-Times Newspapers Ltd  [2014] EWHC 2853 (QB)

 

2015

General guidance

BP -v- Cardiff & Vale University Local Health Board [2015] EWHC B13 (Costs)

(GSK Project Management Ltd -v- QPR Holdings Ltd [2015] EWHC 2274 (TCC)

Stocker -v- Stocker [2015] EWHC 1634 (QB))

Tim Yeo MP -v- Times Newspapers Limited [2015] EWHC 209 (QB))

Various Claimants -v- Sir Robert McAlpine & others [2015] EWHC 3543 (QB)

Judicial guidance cases

GSK Project Management Ltd -v- QPR Holdings Ltd [2015] EWHC 2274 (TCC)

Tim Yeo MP -v- Times Newspapers Limited [2015] EWHC 209 (QB)

Late filing of a budget

Simpson -v- MGN Limited [2015] EWHC 126 (QB)

Overspending on the budget

CIP Properties (AIPT) Limited -v- Galliford Try Infrastructure Ltd [2015] EWHC 481 (TCC)

Excelerate Technology Ltd -v- Cumberbatch [2015] EWHC B1 Mercantile)

Parish -v- The Danwood Group Ltd [2015] EWHC 940(QB)

Simpson -v- MGN Limited [2015] EWHC 126 (QB)

Proportionality in budgeting

(BP -v- Cardiff & Vale University Local Health Board [2015] EWHC B13 (Costs)

Various Claimants -v- Sir Robert McAlpine & others [2015] EWHC 3543 (QB)

 

2016

General guidance

Agents’ Mutual Limited -v- Gascoigne Halman [2016] CAT 21

Campbell -v- Campbell [2016] EWHC 2237 (Ch)

Group Seven Limited -v- Nasir [2016] EWHC 629 (Ch)

Merrix -v- Heart of England NHS Foundation Trust [2016] EWHC B28 (QB)

Signia Wealth Limited -v- Marlborough Trust Company Limited [2016] EWHC 2141 (Ch) –

Agents’ Mutual Limited -v- Gascoigne Halman [2016] CAT 21

Late filing of a budget

Jamadar -v- Bradford Teaching Hospitals NHS Trust [2016] EWCA Civ 1001

Murray -v-BAE Systems PLC (Liverpool County Court, 1st April 2016)

Outcome of budgets and costs of assessment

Sony Communications International AB -v- SSH Communications Security Corporation [2016] EWHC 2985 (Pat)

Proportionality in budgeting

(Considers Agents’ Mutual Limited -v- Gascoigne Halman [2016] CAT 21

Group Seven Limited -v- Nasir [2016] EWHC 629 (Ch)

Revising the budget

Warner -v- The Pennine Acute Hospital NHS Trust (Manchester County Court 23rd September 2016)

The budgeting procedure

Agents’ Mutual Limited -v- Gascoigne Halman [2016] CAT 21

Merrix -v- Heart of England NHS Foundation Trust [2016] EWHC B28 (QB)

 

2017

Departing from the budget on detailed assessment

RNB v London Borough of Newham [2017] EWHC B15 (Costs)

General guidance

Harrison -v- University Hospitals Coventry & Warwickshire Hospital NHS Trust [2017]  EWCA Civ 792

MacInnes -v- Gross [2017] EWHC 127 (QB)

Napp Pharmaceutical Holdings Ltd v Dr Reddy’s Laboratories (UK) Ltd & Ors [2017] EWHC 1433 (Pat)

Judicial Guidance cases

Findcharm Ltd -v- Churchill Group Ltd [2017] EWHC 1109 (TCC)

Woodburn v Thomas (Costs budgeting) [2017] EWHC B16 (Costs)

Late filing of a budget

Asghar -v- Bhatti [ 2017] EWHC 1702 (QB)

Mott & Anor v Long & Anor [2017] EWHC 2130 (TCC)

Outcome of budgets and costs of assessment

Harrison -v- University Hospitals Coventry & Warwickshire Hospital NHS Trust [2017] EWCA Civ 792)

Merrix -v- Heart of England NHS Foundation Trust [2017] EWHC 346 (QB)

Part 36 in budgeting

Car Giant Limited -v- the Mayor and Burgesses of the London Borough of Hammersmith [2017] EWHC 197 (TCC)

Proportionality in budgeting

Rezek-Clarke -v- Moorfields Eye Hospital NHS Foundation Trust [2017] EWHC B5 (Costs)

Revising the budget

Asghar -v- Bhatti [2017] EWHC 1702 (QB)

Sharp v Blank & Ors [2017] EWHC 3390 (Ch)

Sir Cliff Richard OBE -v- The BBC & Chief Constable of South Yorkshire Police [2017] EWHC 1666

 

2018

Departing from the budget on detailed assessment

Jallow v Ministry of Defence [2018] EWHC B7 (Costs)

Nash v Ministry of Defence [2018] EWHC B4 (Costs)

General guidance

Yirenki v Ministry of Defence, [2018] 5 Costs LR 1177

 

 

THIRD PARTY FUNDING – A VIABLE OPTION FOR 21ST CENTURY LITIGATION (Part 3)

This series of blog articles will address the increasing viability of third party funding as an alternative to traditional litigation funding methods. It will look at how the law has developed historically and how the Court now approaches third party funding and the potential liability of third party funders.

The third part of this series will explore the liability of third party funders in the matter of Arkin v Borchard Lines Ltd (Nos 2 and 3) [2005] 1 WLR 3055.

Background

This matter related to an unsuccessful action in respect of anti-competitive practices which resulted in the collapse of the Claimant’s company, and which severely affected his finances. The Claimant entered into an agreement with a professional litigation funding company (MPC) to provide funding for the expert evidence and litigation support services for the expert. MPC did not agree to pay any of the Defendants’ costs or to provide finances for an ATE premium due to the significant amount of the premiums available.

The claim was unsuccessful at Trial and the Claimant was ordered to pay the Defendants’ costs. The Defendants’ then sought a non-party cost order against MPC for the entirety of the Defendants’ entitlement to costs. However, this was refused at first instance.

The Defendants subsequently appealed the decision.

Decision

The Court of Appeal considered the balance that needed to be struck between the access to justice provided by third party funding and the general rule that costs should follow the event. It was considered that a funder who purchased a stake in an action should then be protected from all liability of the opposing party’s costs in the event the claim fails.

The Court of Appeal commended the following approach:

‘a professional funder, who finances part of a Claimant’s costs of litigation, should be potentially liable for the costs of the opposing party to the extent of the funding provided’

This has become known as the Arkin cap. This approach has provided clarity and transparency to funders as they can now quantify their liability should the matter fail.

Whilst the cap has been readily adopted by the funding industry, it has also not been without criticism. The main criticism being that the cap creates an uneven playing field in favour of the third party funder as they will only ever be liable for the amount of their investment, whilst the opposing party would be liable for all of the costs of the funded party.

In the next part of the series…

The next blog in this series will take a look at the recent decision which has built upon the ‘Arkin cap’ in the matter of Davey v Money [2019] EWHC 997 (Ch).


This blog was prepared by Kris Kilsby who is an Associate Costs Lawyer at Clarion and part of the Costs Litigation Funding Team.  Kris can be contacted at kris.kilsby@clarionsolicitors.com or on 0113 227 3628.

INTEREST IS NOT PAYABLE ON AN ADDITIONAL AMOUNT AWARDED UNDER CPR 36.17(4)(d)

Where the Court awards an “additional amount” under CPR 36.17(4)(d) as a claimant / receiving party beating its own Part 36 offer, the additional amount will not attract “enhanced” interest under CPR 36.17(4)(a).

In FZO -v- Adams & Anor [2019] EWHC 1286 (QB) the court allowed an additional amount under CPR 36.17(4)(d), but held that interest under CPR 36.17(4)(a) – enhanced interest at 10% above base rate – was not payable on that amount. Giving judgment, Mrs Justice Cutts found that the construction of CPR 36.17(4)(d) was that the “additional amount” was not a “sum awarded” and that the words “additional” and “amount” mean that the award is in addition to the enhanced interest at CPR 36.17(4)(a).

It should be noted that CPR 36.17(4) states that where the claimant has beaten their own offer the court “…must, unless it considers it unjust to do so, order that the claimant is entitled to…” and thereafter lists the consequences (enhanced interest, additional amount, etc). This does not appear to accord with the judge’s acceptance of the defendant’s submission that the additional amount is not a “sum awarded”. On the construction of CPR 36.17(4) it seems that those consequences are sums awarded by the court, albeit they are sums which the court is bound to award save where it considers it to be unjust.

Notwithstanding, the second strand of the judge’s reasoning appears wholly sound insofar as the “additional amount” is additional to the other consequences and therefore not itself subject to those consequences.

However, practitioners should be aware that this applies only to interest arising under CPR 36.17(4)(a). As the additional amount is a sum which a party is ordered to pay, and (as above) is a sum which the court orders that party to pay, it is a judgment debt and thus interest will, in the author’s opinion, arise under section 17 of the Judgments Act 1838 at the rate of 8% should payment not be made within the prescribed period (14 days pursuant to CPR 40.11 unless otherwise ordered)

Matthew Rose is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact him at matthew.rose@clarionsolicitors.com and 0113 222 3248. You can contact the Clarion Costs Team on 0113 246 0622.

Yirenki v Ministry of Defence [2018] 11 WLUK 53 – Are hourly rates a good reason to depart from the budget?

When budgeting cases, the Civil Procedures Rules (CPR) under Practice Direction (PD) 3E para.7.3 provides that, when the Court is approving figures, the approval should “only relate to the total figures for budgeted costs of each phase”.

In this claim, upon costs management, the Judge approved both a number of hours for each phase, as well as individual disbursements in the budget. This approach is clearly contrary to the CPR. Parties often reserve the position in relation to their incurred costs, and the hourly rates on the incurred costs, to be dealt with at detailed assessment. Interestingly, Master Davison reserved the issue of the hourly rates for the future costs to also be dealt with at detailed assessment.

Reduction to the hourly rates

Now, we know from the case of Jallow v Ministry of Defence [2018] EWHC B7 (Costs) that, where there has been a reduction to the hourly rates for the incurred work, this is not a good reason to depart from the budgeted costs. Master Davison clearly differs in his opinion, given that he has reserved the position of the hourly rates specifically for the estimated costs.

This decision has since been appealed and has, not surprisingly, been allowed. It was said by Mr Justice Jacobs QC that the approach of Master Davison was contrary to the CPR. Relying on rule CPR 3.15(2)(b) specifically, he provided that the correct approach is clearly that the approved figure is meant to be a final figure, rather than a provisional one which the other side could later attempt to reduce.

Mr Justice Jacobs QC advised that the cost budgeting process is not meant to be a detailed assessment in advance and that the job of the Court is to approve a proportionate figure which can be relied on. The principle of reserving the position as to the hourly rates of the budgeted figures weakens the reliance that can be placed on the budget itself, supporting the case of Jallow v Ministry of Defence  [2018] EWHC B7 (Costs), in that hourly rates are not a good reason to depart from the budgeted figures.