Richie Young, Costs Lawyer
Harrison v University Hospitals Coventry & Warwickshire NHS Trust  EWCA/Merrix v Heart of England NHS Foundation Trust  EWHC
The Harrison decision was arguably one of the major decisions of 2017, particularly for receiving parties with regard to the effect of approved or agreed budgets on detailed assessment. One of the main points of the decision (which had followed Carr J in Merrix) concluded that, in applying CPR 3.18, the court cannot depart from the agreed figure within the phase, either upwards or downwards, without a good reason. Consequently, if no good reason is provided only the approved/agreed figures in the budgeted phases are to be allowed.
Another important point made within the Harrison judgment which may be overlooked is the effect upon proportionality. Proportionality will still apply to the matter at assessment. The Judge will undertake a global approach on proportionality once an item by item assessment has been conducted, therefore there may remain some vulnerability within the bill at that stage.
Another major decision in 2017 which will have a huge impact upon the profession was Jackson’s report in July 2017 which recommended an extension to the fixed recoverable cost regime for personal injury claims between £25,000.00 and £100,000.00, namely, the intermediate track. The fixed costs would range from around £19k for ‘straightforward’ claims and around £68k for the upper end claims. It includes a table with 4 bands which would be applied to the individual matter depending on the specific circumstances and at which point of the proceedings it settled.
Jackson’s proposals also include fixed fees upon all matters within the fast track. With regard to clinical negligence claims, the fight goes on.
The report is still awaiting government approval and it is anticipated it will be agreed in accordance with Jackson’s proposals – the only question is when. At the time of writing, we are potentially looking at April 2019 but that could easily be changed.
Late Filing of Budgets
Budgets are always a prominent feature and 2017 had a number of cases on late filing of budgets.
– Lakhani v Mahmud  EWHC – The defendant was one day late in filing their budget and at first instance the Judge refused relief from sanctions on the basis that the breach was ‘not a trivial breach’. This case was fact specific and other factors were involved within the decision made by the Judge. However it does prove a stark warning to ensure budgets are filed on time!
– Mott v Long  EWHC – The defendant filed their budget 10 days late with the Judge noting that the delay was serious/significant (in accordance with the principles laid out in Denton). The defendant pleaded that there were IT issues which would have amounted to a good reason to allow relief from sanctions however no witness statement was provided by the IT department. The Judge awarded relief from sanction due to other circumstances within the case – at the end of the CMC both parties would have been in the same position following the outcome of the CMC even if the budget had been filed in accordance with the CPR.
– Hewitt v Smith  – The claimant filed the budget 2 months late and 8 days before the CMC. This was a County Court decision but I believe that this is a good example to show that every case is fact specific. The Judge noted that where there is a significant delay in complying with an order it may not amount to a serious breach where the consequences in terms of the progress of the litigation are not substantial. A commonsense approach was used by the Judge in this case. Relief was granted.
– Intellimedia Systems Ltd v Richards & Ors  UKSC – The Judge granted the claimant relief from sanction in this case because, even though the delay had disrupted the parties CMC, imposing a sanction would have been disproportionate. The key point in this matter was that when the claimant was aware of the breach they acted in a timely fashion in applying for relief (on that day.
In light of the above it is clear that with regard to the late filing of budgets, relief from sanction tends to be fact specific. What is also clear is that Denton is still a formidable stand point to refer to when sanctions are being considered for late budgets
It is always in the parties’ best interests to file the cost budget within time to avoid additional work. It appeared that 2017 showed that the courts tended to be reasonable in their approach – however Lakhani shows how even 1 day can be seen as a serious breach.
There were some interesting cases formulated in 2017 with regard to conduct/misconduct.
– Times v Flood and others  UKSC – In this matter the Supreme Court looked at aggressive correspondence and gave an unanimous ruling. The Court commented that the claimant’s conduct was improper and contained unsubtle threats, with the claimant suggesting that the defendant would be financially ruined if they carried the case on.
– Harrath v Stand for Peace  EWHC – Delivering judgment, Justice Eady commented on the defendant’s conduct as unnecessarily combative, dismissive and aggressive.
– GSD v Wardman  EWCA – This was a very interesting case on costs whereby the claimant’s misconduct in the detailed assessment process resulted in all costs being disallowed. This was due to the claimant solicitors certifying bills dishonestly.
– Thakkar v Patel  EWCA –The claimant took proactive steps to arrange mediation however the Defendants ‘dragged their feet’. Although the claimant failed to beat an offer made by the defendant, the Appeal Court made a costs order for the defendant to pay 75% of the costs of the claimant due to their unreasonable behaviour.
Part 36/late acceptance and indemnity costs
– Lowin v Portsmouth  EWCA – This was a significant decision with regard to the provisional assessment cap in accordance with CPR 47.15(5). The Judge averred that there was no reference within CPR 36 which dislodged the cap and therefore the claimant was limited to the cap even if they obtained a more advantageous offer following judgment.
– Whalley v Advantage Insurance [2017 ]- This case concerned whether or not indemnity costs would be awarded after a late acceptance of a Part 36 Offer. This was an interesting case because the Judge giving judgment was DJ Besford who had previously given judgment in Sutherland v Khan  in which he awarded indemnity costs from the date of expiry of the offer to the date of acceptance. However in Whalley, DJ Besford confirmed that his decision in Sutherland was not supported from a detailed analysis and therefore awarded no indemnity costs for the late acceptance of a Part 36 offer.
CFA – Assignment
– Budana v Leeds  EWCA – In a much anticipated decision, the Court held that pre-LASPO CFA’s can be transferred from one solicitor to another. This case was clear in that assignments are valid and success fees are recoverable when assigning.
– BNM v MGN  EWCA – Another eagerly anticipated decision of 2017 to resolve the issue on matters which carry additional liabilities from pre April 2013 to post April 2013 and whether they are subject to the old/new proportionality test. It was confirmed that the old test of proportionality would apply, contrary to the decision made by Master Gordon Saker who had noted that the new test applied.
2017 was a big year with some big decisions. So, what can we expect to happen in 2018?
Good reason to depart from budget
At the time of writing, there isn’t any clear guidance upon what is a good reason to depart from an agreed or approved budget. We may have to wait longer to receive some guidance from the courts on this, however, given the amount of case law in the area in 2017 (and decisions made in other fields) I believe we may see some light on this this year. We did see some guidance in RNB v London Borough of Newham  EWHC whereby the Judge confirmed that changes to hourly rates would be a good reason to depart however this decision is currently being appealed.
Hourly rates in the budget and the effect on assessment
This is in relation to the matter of RNB v London Borough of Newham  EWHC where the issue was whether any reduction in the hourly rates in the costs incurred before the case management order should be reflected in the costs incurred after the claimant’s future budgeted costs. The Judge ruled in favour of the defendant noting that the hourly rates set for the future budgeted costs should be reduced in line with the incurred section of the budget. The Judge also ruled that this was a good reason to depart from the budget.
Claimant practitioners were ‘out of pocket’ with this ruling because it is clear in CPR PD 3E para 7.10 that the making of a cost management order concerns the totals allowed for each phase of the budget. Whilst considering the proportionate amounts for each phase, there is no doubt the Judge had that in mind when setting the totals, therefore by reducing the hourly rates at assessment. Claimant practitioners feel that costs have been reduced unfairly.
This decision is being appealed and is one to watch out for.
New Bill of Costs
Upon the 92nd update of the CPR it was confirmed that the New Format Bill of Costs was made mandatory and is due to commence from 06/04/2018. There have been mixed reviews on the New Format Bill, with some of the view that it is unnecessarily complex and some considering that it will eventually streamline the costs process. Either way, the format will be introduced on 06/04/2018 and practitioners will need to be up to speed with its implications ahead of its introduction.
Proportionality is always a big issue, yet the profession still awaits clear guidance upon how to apply the new test. I believe it will continue to be a guessing game with regard to proportionality but we may see further case law giving an insight into it application.
We are likely to see fixed fees happen in respect of holiday sickness claims, maybe as early as October 2018.
It can be said that 2017 was filled with a variety of key decisions which have had a major impact upon the profession. It is unsurprising that cost budgets continue to dominate the legal news over any other area, and there is no doubt that this will continue into 2018.