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.

 

UPDATES – What is a good reason to depart from a budget??

Since Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] EWCA Civ 792 and the ruling that a budget will only be departed from (up or down) if there is good reason to do so, there has existed the issue of what a good reason to depart from a budget upon detailed assessment is. Case law provides authority for what does and does not amount to a good reason, and there has now been time to reflect on this.

The matter of what constitutes a good reason is still subject to much questioning and debate, as there is no distinct definition of what amounts to ‘a good reason’.

The case of RNB v London Borough of Newham [2017] EWHC B15 (Costs), which followed that of Harrison and Deputy Master Campbell, decided that departing from the hourly rates was a good reason to depart from the budget. However, this decision faced criticism, in that the Judges’ role in the budgeting process is to set a total for each phase in the budget and is not to approve or fix the hourly rates.

Therefore, for all intents and purposes, it is irrelevant what the hourly rate is for those budgeted costs, at the time that the budget is set. A Judge may look at it like this: whether a party spends 15 hours at £200.00 per hour, or 20 hours at £150.00, for a total phase of £3,000.00 – the figure is still the same. The total phase is just that: a total amount which the Court believes is appropriate for the work required.

The issue of hourly rates – and a good reason to depart from a budget – was revisited in Bains v Royal Wolverhampton NHS Trust. This decision went against RNB, as it ruled that to reduce the hourly rates in line with reductions made to those of the incurred costs would be to second guess what the Judge was thinking at the point of costs management.

Nash v Ministry of Defence [2018] EWHC B4 (Costs), a high court decision following the decision of Bains, ruled that, if the change in hourly rate for incurred costs was a good reason to depart from the budgeted figures, it would bring about a case of double jeopardy. Thus, the only way to combat this, would be to undertake an assessment of the incurred costs at the costs case management hearing.

Jallow v Ministry of Defence [2018] EWHC B7 (Costs) highlighted matters that do not amount to a good reason to depart from the budget, and how the costs management order (CMO) can impact the detailed assessment. Master Rowley commented that the two factors brought in front of him, namely the settlement figure in comparison to the pleaded value, and the reduction in the hourly rates, do not amount to good reasons for departing from the budget.

The Master concluded that a reduction to rates for incurred costs do not amount to a good reason to depart. To amount to a good reason, something specific is needed to have happened. The change in the hourly rates did not amount to something specific and had it done so, it would have set a precedent for parties to argue good reason every time rates have been reduced, as it is in many cases.

A more recent decision of an appeal case, Barts Health NHS Trust v Salmon (unreported) (2019)delves further into the matter of good reason and provides authority on departing down from the budget where the phase has not yet been completed. HHJ Dight concluded that, where the phase has not been completed, and the receiving party has claimed less than the total figure for that phase, then this amounts to a good reason to depart from the budgeted figure, in order that the indemnity principle not be breached. Interestingly, HHJ Dight then went on to say that once good reason has been established, then the paying party need not put forward any further good reason when additionally challenging the level of the total figure claimed and attempting to reduce the phase.

This raises some significant questions about the importance of the assumptions of the budget, following approval of the figures at the costs case management conference. The only page required for filing is the front page of the approved budget. However, should it now be required to submit updated assumptions, to reflect what the figures are based on, should any part argue a good reason to depart in relation to whether a phase has been completed. I suspect, as further good reasons become apparent, the use of the assumptions to show what the phase total was based on will become a much more widely used tool, in proving good reasons to depart, where assumptions widely differ from the actual outcome, and could come to benefit both receiving and paying parties, For example, where there has been more work assumed than has actually been undertaken, regardless of a party is claiming the total of the phase, or where the total of the phase is much lower than budgeted, regardless of whether the number of witnesses was much lower than the number anticipated.

There remains uncertainty as to what does amount to a good reason. With some guidance, I suspect there will be many more cases to come; however, will reluctance be shown by Judges to make those decisions given the gravity of those rulings?

A PART 36 OFFER WHICH EXCLUDES INTEREST MAY BE VALID

A Part 36 offer in detailed assessment proceedings may be valid where it excludes interest under the Judgments Act 1838.

In Horne -v- Prescot (No.1) Ltd [2019] EWHC 1322 (QB) the Court held that a Part 36 offer on costs which excludes interest is a valid Part 36 offer, contrary to Ngassa -v- The Home Office [2018] EWHC B21.

CPR 36.5(4) states that a “part 36 offer… [for] a sum of money will be treated as inclusive of all interest…” In Ngassa it was held that therefore an offer which purported to exclude interest was not a valid Part 36 offer and therefore would not attract the consequences of Part 36.

However, in Horne the judge found that in detailed assessment proceedings, interest accruing under section 17 of the Judgments Act 1838 does not form part of the claim for costs, as it is a statutory entitlement in respect of which the Court is not required to make any finding. Therefore, unlike interest which may form a part of substantive proceedings (for example interest under the Late Payment of Commercial Debts (Interest) Act 1988) which forms part of the claim and must be Ordered by the Court, Judgments Act interest does not form a part of the “claim” for costs, and is not required to be ordered by the Court (though it may be disallowed).

Whilst the judgment in Horne is both legally sound and eminently sensible, as CPR 36 was not drafted with detailed assessment proceedings in mind (indeed until 2013 it was not possible to make a Part 36 offer in costs proceedings and is only now applicable due to a modification to Part 47 specifically applying Part 36 to detailed assessment) practitioners should bear in mind that Horne is a first instance decision and a different court on a different day may find differently. It may be prudent for practitioners to continue to include interest in Part 36 offers on costs until further authority clarifies the position. It is however a useful judgment to deploy where there is any dispute as to the validity of an offer.

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.

Ensure consistency between your Costs Budget and Bill of Costs

Consistency and a true connection between Costs Management and Detailed Assessment is essential for the successful recovery of costs on Detailed Assessment.

If a costs budget is prepared incorrectly, which creates a disconnection between the costs budget and bill of costs, then you can expect a costs law obstacle course and a heavy migraine on detailed assessment.

The case of MXX -v- United Lincolnshire NHS Trust [2018] is a great example, which is summarised below:

Background, Retainer and Hourly Rates

The Claimant instructed her Solicitors in 2012 and the matter was funded by way of a Conditional Fee agreement with the rate for the conducting lawyer (Grade A) agreed at £335 per hour.

In August 2013 the rate for the conducting lawyer increased to £460 per hour (this was an error). In January 2015 the hourly rate was reduced to £350 (effective from May 2014). It was increased to £360 in 2015 and £365 in 2016.

The substantive proceedings related to a high value injury claim, with quantification being resolved in November 2016. The claim was subject to a Costs Management Order dated 2 March 2015.

Detailed Assessment Proceedings were commenced in March 2017 and the bill of costs totalled circa. £1.3 million.

Background to the Costs Management Order

At the CCMC, the District Judge dealt with estimated costs and correctly stated that the incurred costs were for detailed assessment. The hourly rate included in the costs budget for the conducting lawyer was £465 per hour.

In respect of the estimated costs, the Judge indicated a composite rate of £280 per hour, which the parties then used to agree the estimated costs for each phase.

Discrepancies between Budget and Bill

Following the commencement of detailed assessment proceedings, the Defendant compared the costs budget (Costs Management Order) with the bill of costs and noted the following discrepancies:

  • Substantial differences in relation to hourly rates.The hourly rate included in the costs budget for the conducting fee earner was £465.00 per hour, but in the bill of costs hourly rates of £335.00 and £350.00 were claimed; and
  • The bill of costs included roughly 144 to 147 hours less time for incurred costs than the costs budget.

The Defendant had legitimate concerns and made an Application for an Order pursuant to CPR 44.11, arising out of what the Defendant described as a mis-certification of the Claimant’s costs budget in the substantive proceedings.

Decision

It is well worthwhile reading the Judgment and the very articulate submissions advanced by both parties. This will help you to fully understand the decision, which was as follows:

  1. The Master did not find that the errors regarding the rates for the conducting fee earner (in respect of estimated costs) or the significant time discrepancies in relation to the time included in the costs budget and the bill of costs amounted to improper conduct.
  1. However, the Master did find that there was improper conduct in relation to the inflated rate/s claimed within the budget (as incurred costs).The Master had previously dealt with a case with some similar issues (Tucker v Griffiths & Hampshire Hospitals NHS Trust 2017) and decided to apply the same sanction in this case as he did in that case, which was to disallow the items claimed in the bill of costs which related to the Costs Management Order.The Defendant had submitted that the Claimant’s bill of costs should be reduced by 75% due to the errors, but the Master said:“Whilst those behind the Defendant in both cases may have considered the sanction in Tucker to be insufficient, it seemed to me to be the only appropriate sanction. There is nothing wrong with the Bill in terms of the indemnity principle. The problem lies with the budget. I consider it to be entirely appropriate to impose a sanction in respect of the work which caused the problem.That work is the non-phase time spent creating and maintaining the budget. It would be wrong in my view retrospectively to disallow some of the budget itself”.

    The decision in this case (and in the case of Tucker) are both cases which were before Master Rowley at the Senior Courts Costs Office. Another Court/Judge could reach a different conclusion and I certainly expect to see this issue again before the Courts for the following reasons:

Lawyers do not time record consistently within their respective departments and firms, which means that discrepancies between budgets and bills will continue to regularly occur and a different Judge/Master may well adopt a more stringent approach;

Costs Budgets are regularly being prepared by non-specialists and prepared very “late in the day”, which leads to errors; and

There is a misconception that the costs budget is a more flexible document than a bill of costs i.e. the statement of truth to a bill of costs carries more weight than a statement of truth to a bill of costs.It is very important that all lawyers (and law firms) approach Costs Management consistently and understand the importance it has on detailed assessment. If that is done, then it leads to a consistent bill of costs, less obstacles on detailed assessment and no migraine – but maybe a headache!

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

NB There are some other interesting points and views in the Judgment which I will cover in a further blog.

CONSEQUENCES OF BEATING A PART 36 OFFER: INJUSTICE

There have been various cases recently on how the courts consider whether it would be “unjust” to apply the consequences of CPR 36.17.

In White -v- Wincott Galliford Limited [2019] EWHC B6 (Costs) it was held that it would be unjust to allow an additional amount (CPR 47.17(4)(d)) for the whole of a claim where the offer had only related to some of the issues.

In Invista Textiles & Anor -v- Adriana Botes & Ors (costs judgment unreported) it was held that there is a high bar to demonstrate injustice. The ratio of the judgment suggests that the amount by which an offer has been beaten is at least not the only criterion which the Court should consider. Where a defendant / paying party seeks to argue that it would be unjust to allow some of all of the consequences of CPR 36.17 claimants / receiving parties would do well to refer to this authority as an example of the threshold for “injustice” which must be met.

It should also be noted that the court has previously held that the amount of the additional amount itself cannot be taken into account when considering whether it would be “just” to award the consequences of Part 36.17 per Cashman -v- Mid Essex Hospital Services NHS Trust [2015] EWHC 1312 (QB). In that case, the court on appeal held that the assessing officer had erred in refusing to award the additional amount “not because he considered the making of such an award unjust, but because he thought it unjust to make an award of the required amount”.

There is currently some inconsistency in the judicial approach to the application of the test of injustice. In the opinion of the author, the test is a high bar (supported by White and Invista) and the mere fact that the additional amount of 10% may appear high does not of itself render the consequence “unjust”. The consequences of CPR 36.17 are intended to be punitive and the purpose of the exception for “injustice” is not to allow judges to “soften the blow” to a litigant which has failed to accept a Part 36 offer, but to avoid genuine injustice where there are “exceptional” circumstances.

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.

THIRD PARTY FUNDING – A VIABLE OPTION FOR 21ST CENTURY LITIGATION (Part 2)

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 second part of this series will explore the Court’s first acceptance of third party funding in the matter of Factortame Ltd v Secretary of State for Transport, Local Government and the Regions No.8 [2002].

Background

This matter related to a challenge brought by Spanish fisherman who sought to claim damages against the Secretary of State for the unlawful prohibition of fishing in UK territorial waters. A firm of accountants agreed with the Claimants to prepare and submit claims for loss or damage as a result of any losses suffered. The Accountants agreed to act in return for 8% of any damages recovered.

The Claimant’s succeeded in their challenge and were awarded damages and costs. On a preliminary issue the agreement was held to be not champertous and could be enforced against the Secretary of State.

The Defendant’s Challenge

The Defendant claimed that such an agreement was champertous and unlawful. It was argued that for an expert to act on a contingency fee basis would give the expert a significant financial interest in the case which is highly undesirable.

Decision

As stated in my previous blog, the tort of champerty had been abolished and the starting point for considering any arrangement was that it would be presumed enforceable unless there was a valid reason as a matter of public policy.

The Accountants had not acted as experts directly in this matter but had instead funded independent experts. Furthermore, by the time that they were instructed the issue of liability had already been decided.

Therefore, the Court held that such an agreement was not in the circumstances champertous or against public policy.

In the next part of the series…

The next blog will take a look at the liability of third party funders in litigation in the matter of Arkin v Borchard Lines Ltd (nos 2 and 3) [2005] 1 WLR 3055.


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.