Tag: #civilcosts

When High-Value Claims Still Require Budgeting: Garry White & Ors v Uber London Limited & Ors

Katie SpencerLeave a comment

The Claim

In the case of Garry White & Ors v Uber London Limited & Ors, approximately 13,000 London black cab drivers issued group proceedings against companies within the Uber group, claiming losses of around £199 million. A further claim, valued at approximately £141 million, was brought by the assignee of two private hire operators, Kabbee and Iride.

Although the total value of the litigation is around £340 million, each driver’s individual claim is relatively modest (circa £15,000), making group litigation a proportionate approach.

The claims arise from allegations that Uber unlawfully obtained a private hire vehicle operator licence by misrepresenting its operating model. It is said that this enabled Uber to compete directly with licensed black cab drivers while undercutting regulated fares, causing substantial financial loss between 2012 and March 2018.

The Preliminary Limitation Issue

Uber denies liability and argues that the claims were issued outside the six-year limitation period.

The Claimants rely on Section 32 of the Limitation Act 1980, arguing that time did not begin to run until they could reasonably have discovered the relevant facts, which they say occurred in June 2018 following a licensing appeal hearing.

The court has ordered that limitation be determined at a standalone five-day preliminary trial. A representative sample of 20 Claimants (10 chosen by each side) will be used to assess when sufficient knowledge arose. If the Defendants succeed, the litigation may conclude at that stage.

The Costs Budgeting Decision

A significant procedural issue to be determined was whether costs budgeting should apply.

Although claims valued at £10 million or more are ordinarily excluded from the costs management regime, the court retains discretion. The Defendants sought to disapply budgeting, relying on the overall high value of the claim, the existence of litigation funding and ATE insurance, and the alleged additional burden budgeting would impose.

The Claimants argued that, despite the aggregate value, the case is fundamentally a mass claim by individuals of limited means. They required clarity regarding potential adverse costs exposure and future funding requirements.

The Court agreed with the Claimants. While acknowledging that very high-value claims are generally unsuitable for costs management, this case was considered materially different. The modest individual claims and group structure justified greater costs oversight and transparency.

Why This Matters

This decision reinforces that the £10 million threshold is not decisive. Courts will look beyond the headline value of proceedings and consider the nature of the parties and the practical impact of costs exposure.

In large-scale group actions involving individuals with limited financial resources, costs budgeting may be viewed as an important tool to promote fairness, proportionality and effective case management and there are steps you can take ahead of the first CMC if you consider a CMO to be useful in your case.

Katie Spencer is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors and can be contacted on 07741 988 925 or at Katie.Spencer@clarionsolicitors.com.

The Government’s measures to clarify the uncertainties surrounding LFAs following the 2023 PACCAR ruling

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The Minister of State for Justice, Sarah Sackman KC MP, announced that the government will take action to limit uncertainties surrounding third-party litigation funding agreements (LFAs) following the 2023 Supreme Court ruling in PACCAR. The government will also implement proportionate regulation of LFAs, in line with the Civil Justice Council’s (CJC) recommendations.

Further background information regarding the ruling in PACCAR can be found in Anna Lockyer’s blog post here.

The Government’s next steps

The Supreme Court Judgment in PACCAR created uncertainty around the validity and enforceability of LFAs. The government has now announced that legislation will be introduced to clarify that LFAs are not damages based agreements. They have said this will be implemented with “prospective effect” (the CJC recommendation was for prospective and retrospective effect). In doing so the government hopes this will reassure funders that LFAs can continue to be used to fund cases, the government recognising that LFAs can enable individuals to bring complex claims against better-resourced organisations and that the uncertainty post-PACCAR might be preventing claimants from pursuing claims.

In addition, proportionate regulation of LFAs will be introduced, to improve transparency and fairness for claimants. Legislation will be introduced when “parliamentary time allows”. Once these two changes have been implemented, the Civil Justice Council’s wider litigation funding recommendations will be considered, and further changes will be announced.

Conclusion

When it came into office the new government made clear it would wait for the CJC report before taking decisions on any legislation concerning litigation funding. While we must still wait to see the government’s proposed timetable and the text of draft legislation, the government has said its priority is to remove the uncertainty introduced by PACCAR and ensure the litigation funding sector works fairly and efficiently for all.

Angela Nako is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Actor ordered to pay Guardian News indemnity costs and a £3 million payment on account of costs

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Mrs Justice Steyn in Clarke v Guardian News & Media Ltd [2025] EWHC 2575 (KB) examined the issue of costs following the dismissal of actor, Noel Clarke’s, defamation and data protection claims against the Defendant newspaper. To determine the appropriate costs, the judgment addressed the Claimant’s conduct, the costs approved in the costs budget and the various “costs reserved” orders made during the proceedings. Whether the Claimant should make a payment on account of the costs pending detailed assessment and the amount of the payment is also considered in detail.

Background

The Defendant in this case had succeeded on the defences to defamation and the issue of serious harm in respect of 8 articles published about the Claimant actor. The Court determined that the Defendant had been wholly successful and therefore entitled to an order that the Claimant pays costs subject to detailed assessment.

Indemnity Basis Costs

With regards to the basis of assessment, the Judge referred to the legal principles in relation to exercising the court’s discretion to award costs on the indemnity basis summarised within the White Book at 44.3.8 to 44.3.10. The Judge cited the importance of the Court having regard to all the circumstances of the case and the conduct of the Claimant being a key element of this.

The Judge found that the Claimant’s pleaded case and the evidence at trial contained many statements that the Judge found to be untrue and dishonest. Mrs Justice Steyn referred to Esure Services Limited v Quarcoo [2009] EWCA Civ 595, which concluded that if a court finds a claim to have been brought or maintained dishonestly then “it will be normal for a court to seek to mark its disapproval” by making an order for indemnity costs.

Further, the Judge made reference to the Claimant making “wholly unfounded allegations of dishonesty against three professional journalists” and aired those publicly.

It was also highlighted that an order for indemnity costs does not require the Defendant to show that the Claimant’s unreasonable conduct increased its costs. Consequently, the Judge ordered the Claimant to pay the Defendant’s costs of the claim to be subject to detailed assessment on the indemnity basis, if not agreed.

Payment on Account of Costs

When addressing the issue regarding a payment on account of costs, the Judge referred to CPR 44.2(8) which states: “Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs unless there is good reason not to do so.”

The Judge had regard for the way the claim had been pursued by the Claimant and the fact that costs would be assessed on an indemnity basis. The Judge also took into account the Defendant’s Precedent H of July 2024 where the total of the Defendant’s budgeted costs and incurred costs were £3,184,519.98, not including the estimated costs of disclosure, which were left to be agreed or subject to detailed assessment. This figure also did not include costs in respect of the Trial Preparation and Trial phases.

The Judge concluded that it was reasonable for a payment in the sum of £3 million to be sought by the Defendant.

Additional Costs Points

“Costs reserved” orders were made during the proceedings, regarding the Defendant’s application for an interim non-disclosure order and an Amendment and Joinder Application. The Judge concluded that the Defendant was entitled to these costs.

The Claimant asked the Judge to stay the costs order pending a potential application for permission to appeal. This was rejected as the Claimant already had more than the usual time to consider any grounds to seek leave to appeal and the Judge was not prepared to provide an extension of time to seek permission to appeal.

Conclusion

At paragraph 39 of the judgment, Mrs Justice Steyn articulates the reasoning behind her decision as she states: “Bearing in mind that the sum claimed by the Defendant on detailed assessment will be in excess of £6 million and having regard to the nature of the claim and the way in which it has been pursued by the Claimant and his lawyers; bearing in mind also the Defendant’s rates as they appear on the Precedent H forms and what appears, on the face of it at least, to be a reasonable use of more junior solicitors where appropriate; and also bearing in mind that I have ordered that costs will be assessed on an indemnity basis; it seems to me that the sum of £3 million sought by the Defendant is appropriate and no more than ought reasonably to be ordered in this case. It is a “reasonable sum” to require the Claimant to pay on account. It is substantially lower than the Defendant’s likely level of recovery on detailed assessment and so, in my judgment, it does allow for a suitably wide margin of error. Accordingly, I shall order the Claimant to make a payment on account in the sum of £3 million within 28 days.”

Angela Nako is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com

An Insight into the Court’s Approach to Disproportionate Costs following a line-by-line assessment

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Introduction

The judgment of Costs Judge Nagalingam in XX & Anor v Young & Anor [2025] EWHC 2073 (SCCO), provides a useful breakdown on how a bill might be reduced after a line-by-line assessment to yield a proportionate figure by taking into account the factors in CPR 44.3(5) and the Court of Appeal’s approach in West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220.

Background

Costs Judge Nagalingam, undertook a three-day line-by-line assessment of the costs in XX v Young as the Defendant had raised the issue of proportionality. He held that the costs were disproportionate and therefore the bill of costs total was reduced from £517,985.00 to £339,565.16, a reduction of almost 35%. Despite this reduction, the Judge held that the total sum remained disproportionate and subsequently further reduced the bill following the line-by-line assessment.

The Judgment

CPR 44.3(5)

In order to assess proportionality, the Judge relied on several factors outlined in CPR 44.3(5) which states that “Costs incurred are proportionate if they bear a reasonable relationship to:

  • the sums in issue in the proceedings;

In this case the Judge considered the realistic range of possible outcomes in the case to be £149,000 (the settlement sum) to £2.5million (the pleaded sum). The likely value of the claim was determined by considering the accident circumstances, the factor of contributory negligence and the complexity of the case. The Judge concluded that the sums in issue would realistically have been closer to £149,000 than the £2.5million fully pleaded claim.

(c) the complexity of the litigation;

The Judge made clear that whilst the litigation was not complex it was also not straightforward. Liability was in dispute, significant injuries were sustained and the medical complexity created legal complexity in quantifying the general damages and past and future losses. Liability also remained a factor under consideration.

(d) any additional work generated by the conduct of the paying party; and

In this case, the Defendant disputed liability until the joint settlement meeting and did not make a good and early Part 36 offer or protective settlement proposals prior to the joint settlement meeting. Therefore, it was determined that the Claimant could not be criticised for continuing with the litigation.

(f) any additional work undertaken or expense incurred due to the vulnerability of a party or any witness.

The Judge concluded that the receiving party’s solicitors were at times dealing with a vulnerable client due to factors such as injury recovery, isolation, the Claimant’s age and language barriers.

Surveillance / Exaggeration

In West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220 (17 July 2019) it was outlined that the factors in CPR 44.3(5) are not an exhaustive list. Surveillance evidence and the Defendant’s attempts to seek findings of misconduct and exaggeration were also considered.

The allegation based on surveillance evidence was that that the Claimant had recovered more than reported to the experts and consequently the claim settled at a sum far less than pleaded. However, the Judge declined to engage in a de facto retroactive trial of exaggeration as an issue and noted that if the Defendant had wished to pursue this factor of exaggeration, then they should not have settled or should have negotiated settlement terms which included a percentage based costs order.

Internal Communications

The Judge referred to West in XX v Young, opining that a line-by-line assessment must be completed first and that “one must be careful not to facilitate a result which would amount to double-counting of deductions”. Therefore, reductions were only applied where it was considered that costs were unreasonably incurred or unreasonable in amount. Although concerns were raised regarding the internal time claimed, this did not mean that internal communications were to be reduced irrespective of the circumstances.

Whilst the costs of internal communications had already been reduced from £27,724.50 plus VAT to £22,946.15 plus VAT following a line-by-line assessment, it was later concluded that the costs for internal communications were to be further reduced to £10,000 plus VAT using a broad-brush approach based on the facts and circumstances in the case. The bill total was therefore reduced to £324,029.77.

Conclusion

Overall, the Judge concluded that the assessed sum was “disproportionate in all the circumstances” through considering the factors within CPR 44.3(5) as well as the points of dispute, replies, skeleton arguments and submissions.

Angela Nako is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors.
You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Part 36 consequences following judgment, where judgment is given in a sum other than sterling

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The Claim

It is not unusual for claims in the Commercial Courts to be denominated in currencies other than sterling. However, that gives rise to challenges where an effective Part 36 offer has been made by a Claimant, as Part 36 of the Civil Procedure Rules assumes that judgment will be given in sterling. Recent case law has given an indication of how the Court may exercise its discretion whilst respecting the importance and intention behind Part 36 offers.

In the recent case of Sanlam General Insurance Ghana Ltd v Sustainable Growth Fund II SCSP SICAV-SIF [2025] EWHC 559 (Comm) (14 February 2025), a claim was made for $1 million said to be due under a promissory note or corporate counter guarantee governed by English law.

On behalf of the Defendant, Ms Wick acknowledged the debt through a series of letters, either explicitly or implicitly confirming the obligation to repay the claimed sums. Despite repeated promises to pay, the Defendant failed to do so, prompting the Claimant to initiate legal proceedings.

Jurisdiction and Defence

The proceedings were served in Luxembourg in accordance with local law. The Defendant filed an Acknowledgment of Service, indicating an intention to defend the claim and contest jurisdiction. However, no formal application to challenge jurisdiction was made.

Claimant’s Application for Summary Judgment

The claimant sought summary judgment on multiple grounds:

  1. Entry of default judgment against the Defendant,
  2. Striking out the Defendant’s Defence,
  3. Summary judgment on the basis that the Defendant had no real prospect of successfully defending the claim.

In response, the Defendant submitted another document incorrectly labelled a ‘Defence’ despite having already filed one.

The Defendant raised various points, including an assertion that it was not a legal “person” and therefore could not be sued, and that Ms Wick lacked authority to sign legal documents alone.

The Court considered these arguments but was ultimately satisfied that the Defendant had no real prospect of success.

 Court’s Ruling on Costs and Interest

The Claimant had made a Part 36 offer to settle the claim for $1 million, inclusive of interest, plus costs. The Defendant did not accept the offer, which was subsequently beaten.

Although the Court declined to order that all the Claimant’s costs should be assessed on the indemnity basis, it did award the usual Part 36 consequences following judgment, including costs on the indemnity basis following expiry of the offer, enhanced interest on costs and the judgment sum, and an uplift on damages capped at £75,000.

However, the claim was denominated in US dollars and Part 36 of the Civil Procedure Rules assumes that a judgment will be given in sterling. To quantify interest on the judgment sum, the Court therefore used the US dollar prime rate as the starting point, rather than the Bank of England base rate, and awarded an uplift of 7.5%. In doing so, the Court followed the guidance given in OMV Petrom SA v Glencore International AG [2017] 1WLR 3465, where it was recognised that the Court has a discretion as to interest, but it was nevertheless important to incentivise Defendants to engage in reasonable settlement negotiations.

There were fewer difficulties regarding interest on costs, which were denominated in sterling, and a 10% uplift was awarded. However, the uplift on the judgment sum presented the same difficulties as interest on the judgment amount as it was denominated in dollars. The Court rejected a submission that the uplift could not be awarded where the judgment was denominated in a currency other than sterling, as that would defeat the purpose and intention of Part 36; the approach adopted therefore was to notionally convert the judgment sum into sterling at the applicable exchange rate on the date of judgment and to calculate the uplift on those sums.

Costs Assessment for the Summary Judgment Application

Costs were assessed on the indemnity basis following expiry of the Part 36 offer and on the standard basis up to expiry of that offer . The Court therefore had to take both bases of assessment into account in the summary assessment of the Claimant’s costs:

  • Hourly rates: The Claimant claimed £700/hr for a Grade A fee earner, £528/hr for a Grade C fee earner, and £260/hr for a Grade D fee earner. The Grade A hourly rate was assessed at the London 1 rate (£566). The Defendant’s delay and the cross-border aspect involving Luxembourg law supported this rate. Other fee earners were compensated at London 2 rates (£269/hr for a Grade C and £153/hr for a Grade D).
  • Work done on documents: Document preparation costs were reduced by £3,000 to reflect that the Witness Statement and Application Notice were prepared at a time when the assessment should technically have been on the standard, not indemnity, basis. All other document-related costs were allowed as claimed. Additionally, a £7,000 brief fee was found to be reasonable as it included work on documents.
  • Attendance at the hearing: Only the Grade A fee earner’s attendance at the hearing was deemed reasonable. The Grade C fee earner’s attendance time was disallowed as it was unreasonable, even where costs were being assessed on the indemnity basis.

Katie Spencer is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors and can be contacted on 07741 988925 or at katie.spencer@clarionsolicitors.com.

Defendant Barred from Arguing Costs – Except Wasted Costs

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In the recent judicial review case of Ayinde, R (On the Application of) v The London Borough of Haringey, the Defendant was barred from making submissions on general costs after failing to comply with key procedural requirements.

Background

Following the Claimant’s issuance of judicial review proceedings, the Defendant failed to acknowledge service and did not file a statement of facts and grounds of defence. As a result, the Defendant applied for relief from sanctions in an attempt to participate in arguments on costs.

Costs consequences for the Defendant

The Court refused the application, underlining the importance of strict compliance with procedural rules. Consequently, the Defendant was barred from making submissions on general costs.

Wasted Costs

However, the Court did allow the Defendant to make submissions on wasted costs. This exception arose due to the Claimant’s legal representatives citing five fictional legal authorities in their application. In response, the Court issued a wasted costs order, describing the actions as professional misconduct.

Despite being restricted from general cost arguments, the Defendant was still permitted to address the issue of wasted costs—a distinct category aimed at compensating parties for costs incurred due to improper or negligent conduct by legal professionals.

Summary

This ruling serves as a strong reminder that non-compliance with court orders or procedures can lead to severe consequences, including the loss of the right to contest key aspects of a case, particularly on costs.

Practitioners must act promptly and diligently in complying with court directions. Failure to do so risks being excluded from critical elements of litigation, especially those with significant financial impact.

Katie Spencer is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors and can be contacted on 07741 988925 or at katie.spencer@clarionsolicitors.com.

An Insight into the General Principles and Rationale of the Costs Budgeting Process

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Introduction

The judgement of Master Brightwell in Atlantic Ways Holding SA v Freetown Terminal Holding Ltd [2025] EWHC 674 (Ch), provides an insight into the costs budgeting process and emphasises the importance of proportionality in the costs management process, regardless of whether costs in the first instance were reasonable in nature.

Background of the case

A cost management hearing took place on 25 February 2025, where there was a disparity between the budgets of the Claimant and the Defendant. The Claimant’s budget had been agreed at £449,000 and the Defendant’s budget was drawn at £808,000 and was disputed. Due to this disparity, Master Brightwell set out the general principles of each parties’ proposals, in comparison to the principles of costs management.

The Judgement

Master Brightwell made clear that a budget is set by the Court without undertaking a detailed assessment in advance. However once set, the Court would not depart from this without adequate reason, and it is the role of the Court to set the budget “with an eye to what would be permitted on a detailed assessment on the standard basis” meaning any doubt will be resolved in favour of the paying party. It was also highlighted that the Court is to avoid comparing parties’ budgets, whilst acknowledging that it remains impossible to fix one budget and ignore the other. The Master went on to confirm that the budgeted costs are still considered reasonable and proportionate if they fall at the outer end of the range.

In respect of hourly rates, Master Brightwell emphasised that it is not for the Court to set or approve the charging rates or the time spent by each level of fee-earner and Counsel. However, if the charging rates are not within a reasonable range, then this would affect the reasonableness and proportionality of the budget. The rates used in the Defendant’s costs budget significantly exceeded even the London 1 rates which are for “the heaviest corporate and commercial work,” and whilst the claim was not insignificant, it still was not the most substantial case type dealt with by the Court. Therefore, the London 1 guideline rates would be the maximum permitted.

Master Brightwell then explained his rationale for the budget set for the Defendant by applying the principles of reasonableness and proportionality to each phase.

Each phase of the budget was reduced. However, whilst the amount sought by the Defendant for the expert reports is unclear, the Master granted the Defendant’s budget for this phase at £55,000 in comparison to the Claimant’s budget at £40,000 to allow margin for error. This itself is another useful insight into the budgeting process and acknowledges that the Courts are willing on occasion, to allow variations during a hearing where developments justify it.

Duplication and involvement of multiple fee-earners was addressed by the Court, with reductions made due to fears regarding duplication. The Master noted Practice Direction 57AC, highlighting that witness detailed investigations of documents were not to be conducted and what was said in documents was not to be recited, rather the idea of the witness statement phase is to take the witness’ own evidence. Attendance at trial by multiple fee earners was also reduced by the Court, with attendance by two fee-earners and another present for assistance being provisioned, as opposed to four fee earners that were sought.

Despite DKH Retail Ltd and others v City Football Group Ltd [2024] EWHC 3231 (Ch) where the court ordered for mediation to occur before trial, Master Brightwell in this case reduced the budget for ADR to exclude the assumption of mediation. Master Brightwell explained that if mediation was to occur, then the budget could be revised on the basis of a substantial development.

Conclusion

Overall, the case provides a useful step by step approach to each phase of a costs budget during the cost management process and emphasises the application of the principle that proportionality trumps reasonableness, even at the cost budgeting stage.

 

Angela Nako is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors.  You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Lack of care with cost estimates, retainers and time recording leads to reductions on a solicitor/own client assessment

Robert PattersonLeave a comment

Although the sums in issue in this detailed assessment under the Solicitors Act 1974 were not significant (the bill totalled £3,841 plus VAT), Costs Judge Nagalingham’s judgment in Jennifer Underhill v Thackray Williams Solicitors [2024] EWHC 3206, gives a useful insight into the consequences of some common failings by solicitors with regard to cost estimates, hourly rates and time recording.

The Facts

The Claimant instructed the Defendant to advise in relation to an employment matter. The Defendant received three instructions from the Claimant. The first was on a fixed fee basis of £250 plus VAT for a meeting and a written advice. The second instruction related to the preparation of a letter before action and conduct of an employment tribunal matter. The third instruction concerned the negotiation of a settlement agreement following a settlement with the Claimant’s employer. The costs associated with the first and third instruction formed no part of the detailed assessment, which focussed solely on the bill delivered by the Defendant in connection with the second instruction, in the sum of £3,841 plus VAT.

The Issues

Due to the modest size of the bill, a formal breakdown was not ordered. Instead, the parties had agreed that the Defendant’s time ledger provided sufficient detail for the costs claimed to be assessed. However, the time ledger was not accurate. It totalled £5,863 plus VAT, but there was no explanation that could be reconciled with a bill figure of £3,841 plus VAT. In addition, the front of the ledger reported time of 26 hours 11 minutes, but the final page totalled the time 27 hours 24 minutes; neither were correct because the individual items amounted to 23 hours 36 minutes.

All work done on that instruction was subject to a conventional private fee-paying agreement. In their engagement letters, the Defendant provided a cost estimate which indicated that their fees should not exceed £1,470 plus VAT for pre-action and without prejudice letters but that if the matter proceeded to a final hearing, costs were estimated at £15,000 to £20,000 plus VAT. The Claimant believed that the cost estimate meant that her total bill would not exceed £1,470 plus VAT as a settlement was agreed before proceedings were issued.

The hourly rates claimed by the Defendant were also in dispute. The claim was conducted by a Grade C solicitor and the Claimant had agreed rates of £195 per hour and £210 per hour for him. However, although the engagement letters indicated that the Grade C would be supervised by a Partner, there was a dispute as to whether the Claimant had been advised of her hourly rate.

The Decision

As with all detailed assessments under the Solicitors Act 1974, the costs were assessed pursuant to CPR Rule 46.9(3), which provides that:

“…costs are to be assessed on the indemnity basis but are to be presumed –

(a) to have been reasonably incurred if they were incurred with the express or implied approval of the client;

(b) to be reasonable in amount if their amount was expressly or impliedly approved by the client;”

In respect of the cost estimate, the Costs Judge found in the Defendant’s favour. He found that, correctly interpreted, the cost estimate related only to the preparation of the letter before action and that the wording of the engagement letters was sufficient to conclude that the Claimant had either expressly or impliedly approved costs to be incurred beyond the initial estimate. However, the Costs Judge could not conclude that the costs beyond the estimate were reasonable in amount, because the Defendant failed provide an updated cost estimate until the conclusion of the matter.

As regards hourly rates, the engagement letters all indicated that the Grade C would be supervised by a Partner. However, none of the engagement letters mentioned the Partner’s hourly rate or that the Claimant would be charged £350 per hour. In the circumstances, all Partner time was removed from the bill.

The inaccuracies in the time ledger did not result in any significant reductions, as there had been a significant write off in the sum of £1,772 plus VAT. However, it was beyond doubt that there had been errors and that was taken into account in respect of costs of the assessment.

The bill was assessed in the sum of £3,150 plus VAT, a reduction of circa 15%. Pursuant to section 70(9) of the Solicitors Act 1974, a reduction to the bill of less than 20% would normally have resulted in the Claimant paying the costs of the assessment. However, the Costs Judge held that the errors in the time recording and the fact that an updated cost estimate was not provided until all the costs had been incurred (thus depriving the Claimant of an opportunity to approve the costs) were special circumstances which justified a different order. Consequently, the Costs Judge made no order as the costs of the assessment.

Robert Patterson is a Senior Associate in the Civil and Commercial Costs Team at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com

QOCS and Fundamental Dishonesty: where are we now?

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The rules surrounding qualified one-way costs shifting (QOCS) were first introduced in April 2013, with the general rule being that a Claimant who has suffered a personal injury cannot be ordered to pay the costs of a Defendant, even if they lose their claim. QOCS applies in all personal injury claims, apart from when the Claimant is found to be fundamentally dishonest.

Fundamental dishonesty is an argument that can be raised by a Defendant when they believe the Claimant has not been truthful when bringing a claim.

Howlett v Davies [2017] was the first Court of Appeal case where the exception to QOCS was considered, supporting the procedure that should take place when a Claimant has been fundamentally dishonest. In this case, the Claimants alleged that they were passengers in the vehicle at the time of a road traffic accident. However, this was disproven factually as they were found to be lying regarding their presence. The Claimants were found to be fundamentally dishonest within the meaning of CPR 44.16(1) and costs were awarded against the Claimants as an exception.

Changes to the rules on QOCS were introduced on 6 April 2023, applying to any cases issued thereafter.

A main effect this has had relates to Part 36 offers; Part 36 offers now have the added incentive that costs after the 21-day period can be enforced against damages, without an Order from the Court.

It has been over 10 years since the rules on QOCS were introduced and more than a year since the changes were implemented, so where are we now?

In the recent personal injury case of Hamed v Ministry of Justice [2024], the Judge found the Claimant to be dishonest when exaggerating the injuries sustained. Therefore, no damages were awarded and QOCS were disapplied pursuant to the provision of CPR 44.16.

Practice Direction 44, Paragraph 12.4 states:

“In a case to which rule 44.16(1) applies (fundamentally dishonest claims) –

(a) the court will normally direct that issues arising out of an allegation that the claim is fundamentally dishonest be determined at the trial;

(b) where the proceedings have been settled, the court will not, save in exceptional circumstances, order that issues arising out of an allegation that the claim was fundamentally dishonest be determined in those proceedings;

(c) where the claimant has served a notice of discontinuance, the court may direct that issues arising out of an allegation that the claim was fundamentally dishonest be determined notwithstanding that the notice has not been set aside pursuant to rule 38.4;

(d) the court may, as it thinks fair and just, determine the costs attributable to the claim having been found to be fundamentally dishonest.”

 

Different courts are therefore adopting a consistent approach to exceptions to QOCS, despite the rule change of April 2023. The same outcome was drawn in both Howlett v Davies [2017] and Hamed v Ministry of Justice [2024].

Similarly, in the case of Shaw v Wilde [2024], the Defendant raised the argument that the Claimant had been fundamentally dishonest where the Claimant had lied to experts and the Court about the extent of his injuries. It was found that the Claimant should pay the Defendant’s costs due to this dishonesty. Again, CPR 44.16(1) was used to support this decision.

In conclusion, despite the progression of time, the rules surrounding QOCS and Fundamental Dishonesty are applied consistently.

Rahman v Hassan & Ors: guidance from the High Court on the effects of Part 36 offer in non-monetary claims and applications to vary costs budgets after Trial

Katie SpencerLeave a comment

The recent case of Rahman v Hassan & Ors (Re Consequential Matters) [2024] EWHC 2038 provides a useful insight into what constitutes a ‘significant development’ for the purposes of cost budget variation and the application of Part 36 offers in non-monetary matters

The case concerned the beneficial ownership of significant assets of a deceased relating to transactions alleged to have taken place between the Claimant and the late Mr Al-Hasib Mian Muhammad Abdullah Al Mahmood. It was held that these transactions amounted to donationes mortis causa, or “gifts in contemplation of death”.

Application to vary Costs Budget after Trial dismissed

The Claimant sought to vary his costs budget, which had previously been approved in the sum of £320,648.50 in accordance with the procedure under CPR 3.15A, after the trial had concluded and judgment had been handed down.

The matter was proceeding to a consequential hearing following written submissions which were ordered following the final hearing, when an increase of £134,931.55 was sought by the Claimant.

Five significant developments in the litigation were advanced by the Claimant in support of his request.

CPR Rule 3.15A Explained

Under CPR rule 3.15A, “a party must revise its budgeted costs upwards or downwards if significant developments in the litigation warrant such revisions.”

If revisions cannot be agreed between the parties, “the revising party must submit the particulars of variation promptly to the court, together with the last approved or agreed budget, and with an explanation of the points of difference if they have not been agreed.” The effects of failing to submit variations promptly were considered at length in the decision in Persimmon Homes Ltd and Anor v Osborne Clarke LLP and Anor [2021] EWHC 831 (Ch) and are discussed here.

Claimant’s application

The Claimant contended that there were five significant developments which warranted the costs budget to be changed. These are summarised as:

(1) Involvement in a road accident after the close of evidence and before closing submissions in the trial. The latter were postponed by just under a week.

(2) The fact that the Claimant’s Particulars of Claim were amended during the trial and additional costs were incurred.

(3) Additional costs were incurred as a result of the order made for written submissions at the conclusion of the trial

(4) There was an interval of some 5 1/2 months between the end of the closing submissions of the circulation of the draft judgment, and additional costs were incurred by the Claimant once that draft judgment was circulated.

(5) Work on the judgment in the period 29 May 2024 to 14 June 2024 resulted in additional costs being incurred by the Claimant.

The Court’s decision

The Court refused the Claimant’s request to vary. It was acknowledged that each of the five grounds referenced by the Claimant could be considered a development, they were not significant.

HHJ Paul Matthews (sitting as a Judge of the High Court), confirmed, “I do not regard any of these five matters any of these five matters as a “significant” development in the litigation which should justify a variation of the budget. The use of the word “significant” in the rule is deliberate. It is not every development that requires variation in the budget. Otherwise large amounts of pre-trial preparation time would be taken up with making applications for budget variations.”

The application of CPR Part 36 in non-monetary claims

HHJ Matthews also considered the application of CPR 36.17 to non-monetary claims. Initially the Court had determined that the Claimant had been the successful party in view of him taking beneficial ownership of significant assets of a deceased.

The claimant had made a Part 36 offer in January 2023 Part 36, in respect of the whole claim and counterclaim. The offer was that the Claimant would receive furniture and personal chattels of a property, as well as some bank accounts. At trial, the Claimant was awarded two properties, which were deemed to be significantly more valuable than the contents of the offer. The 21-day period applicable to the offer expired on 13 February 2023. The offer was not accepted, but the defendants agreed that this offer was a claimant’s Part 36 offer within CPR rule 36.17.

CPR 36.17 explained

The rule provides that where a Claimant obtains judgment against the Defendant is at least as advantageous to the Claimant as the proposals contained in a Claimant’s Part 36 offer, then the Court must, unless it considers it unjust to do so, order that the claimant is entitled to:

(a) interest on the whole or part of any sum of money (excluding interest) awarded, at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;

(b) costs (including any recoverable pre-action costs) on the indemnity basis from the date on which the relevant period expired;

(c) interest on those costs at a rate not exceeding 10% above base rate; and

(d) provided that the case has been decided and there has not been a previous order under this sub-paragraph, an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage set out below to an amount which is—

(i) the sum awarded to the claimant by the court; or

(ii) where there is no monetary award, the sum awarded to the claimant by the court in respect of costs—

Amount awarded by the court Prescribed percentage
Up to £500,000 10% of the amount awarded
Above £500,000 10% of the first £500,000 and (subject to the limit of £75,000) 5% of any amount above that figure.

 

CPR 36.17(2) states that, “in relation to any money claim or money element of a claim, “more advantageous” means better in money terms by any amount, however small, and “at least as advantageous” shall be construed accordingly.”

The decision

The Defendant had disputed the application of CPR 36.17(4)(a), on the basis that no monetary award had been made and the provisions of (2) restricted the application of the rule to money claims only.

The Court disagreed with this approach, and that they did not “read rule 36.17(2) as so restricting the scope of rule 36.17. I read that rule saying that, in the application of this rule to money claims, ‘more advantageous’ and ‘at least as advantageous’ have a money-based meaning, and no other. That is a far cry from saying that no other kinds of claims are within the rule. On the contrary, it means that, in non-money-based claims (such as this one) the phrases ‘more advantageous’ and ‘at least as advantageous’ do not have a money-based meaning but are to be construed in the ordinary sense of the words. Any other reading would mean that the words “or money element of a claim” were redundant.”

Assessment of costs on the indemnity basis, and the other benefits outlined in CPR 36.17 were subsequently agreed by the Defendants, save for a dispute on the amount of interest.

Conclusion and discussion

This case underpins the importance of demonstrating not just ‘developments’, but significant developments when seeking to vary a costs budget under CPR rule 3.15A, and the Court’s decision highlights the high bar for such applications. The Court did comment in this matter that, whilst no formal application to vary was required, the lack of evidence in support of the variation was troubling and suggests that parties seeking to vary in future cases, could prepare short witness statements in support of requests.

Comments were also made obiter dicta regarding the fact that costs budgets are not limits on costs being incurred, and there was nothing to prevent additional sums being sought at an assessment is which takes place later. This would be on the grounds of there being ‘good reason to depart’ from budgeted sums, pursuant to CPR 3.18 (b). Albeit it can be argued that the bar for seeking such departure is a high one to overcome.

The fact that the costs which were subject of the request for variation were to be assessed on the indemnity basis, brings into question the benefit to Claimant in making requests pursuant to CPR 3.15A after Trial. It should be remembered that prima facie, cost budgeting is only relevant when costs are to be assessed on the standard basis, and reference is made to the decisions in Lejonvarn v Burgess & Anor [2020] EWCA Civ 114 and Denton and Others v TH White Limited [2014] EWCA Civ 906.

This blog was co-written by Daniel Murray.

We are regularly instructed to advise on costs budgets and variations. Please contact us if you have any questions.

Katie Spencer is a Paralegal in Clarion’s Costs and Litigation Team and can be contacted on 07741 988 925 or at katie.spencer@clarionsolicitors.com.

Daniel Murray is a Senior Associate and Costs Lawyer in Clarion’s Costs and Litigation Funding Team and can be contacted on 07918 271 397 or at daniel.murray@clarionsolicitors.com.