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Unreasonable and Improper Conduct – Solicitor Remains Responsible for the Detailed Assessment Process

Richie Young – Costs Lawyer

Gempride Ltd -v Bamrah [2018] EWCA Civ 1367

The Court of Appeal handed down a ruling on the conduct of detailed assessment proceedings, which one of the lawyers involved described as a ‘watershed’ moment.

The Claimant (who was a personal injury solicitor herself) tripped over a doorstep while visiting a client.  The Claimant’s own firm of solicitors acted for her in the litigation.  A bill of costs was subsequently drawn and certified by the solicitor.  It was found that the bill of costs was claiming rates in excess of those that had been agreed in the funding documentation.  In the Replies to the Points of Dispute, the Claimant averred that there was no BTE Insurance available, however it was found there was in fact BTE available.

The Court of Appeal ruled that even though the Claimant was not found to be acting dishonestly, the conduct was regarded as something more than an honest mistake.  The salient point of this judgment was that the authorised persons certifying the bill of costs has ultimate responsibility for the acts and omissions of those to whom they delegate parts of the conduct of litigation.  Consequently, the Court disallowed half of the profit costs within Part 1 of the bill.

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Interim Payments on Account of Budgeted Costs – Case Update

Richie Young – Costs Lawyer

Cleveland Bridge UK Ltd v Sarens (UK) Ltd [2018] EWHC

In this case the Court allowed a 90% interim payment upon the budgeted costs but made a final decision of 70% for an interim payment overall when taking into account the incurred costs element of the matter. The Judge went on to say that, “Accordingly in my Judgment, a reasonable sum in respect of incurred costs will often be one that is an estimate of the likely level of recovery, subject to an appropriate margin to allow for error”.

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Costs on Discontinuance – Case Update

Richie Young – Costs Lawyer

Harrap v Brighton and Sussex University Hospitals NHS Trust [2018] EWHC 1063 (QB) (9 May 2018)

The Court held that a failure to properly deal with witness evidence was a justifiable departure from the normal rule on discontinuance (CPR 38.6(1)).  The Defendant in the clinical negligence matter provided new evidence after a cross examination of their witness. Following the cross examination, the Claimant discontinued its claim. The evidence was not in the Defendant’s witness statement and, as a consequence of this, the Court held that this amounted to unreasonable conduct by the Defendant and was a good reason to depart from the general rule that the discontinuing party pays the other party’s costs.

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Electronic Bills – Update

Richie Young – Costs Lawyer

Filing of the new electronic bill

There has been some tension between paragraphs 5.A4 and 5.1A of Practice Direction 47 which has led to confusion on when it is necessary to file/serve a bill of costs.  As a quick overview, the confusion was whether it was necessary to file an electronic bill at Court at the N252 commencement stage (when the bill is served upon the paying party), or when a hearing is requested, as is currently the case.  Master Gordon-Saker has quashed any confusion by noting that in his personal view, ‘Electronic copies of the bill should not be filed at Court when notice of commencement is served on the paying party’.

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Fixed Fees – Case Updates

Richie Young – Costs Lawyer

Clinical negligence cases

The government is proceeding with its plans to cap recoverable costs in clinical negligence cases by setting up a working group with a view to cutting costs on claims worth less than £25,000.00. It is anticipated that the working group will be in a position to publish its recommendations in the Autumn of 2018. The group, which at the time of writing consists of representatives from the legal profession and the NHS, will consider Jackson’s proposals on fixed costs.  An announcement will be made in due course.

Holiday claims

Following the 97th CPR update, the pre-action protocol for resolution of package travel claims came into force on 7th May 2018.  Since 2013, statistics have shown that there has been a 500% rise in travel claims and over £240 million was spent by the travel industry in defending gastric illness claims.  Actual recorded cases of sickness claims have reduced over the years however – even though some cases will be genuine, the massive increase in claims does not compare with the sliding figures on recorded claims.

The update to CPR 45 includes fixed fees for travel claims in order to curb the spiralling costs of litigation. CPR 45.29E Table 6D denotes the amount of fixed fees allowed within travel claims:

  • settlement between £1,000 and £5,000 – fixed costs £950 and 17.5% of the damages
  • claims worth up to £10,000 – fixed costs £1,855 and 10% of the damages over £5,000
  • claims exceeding £10,000 – fixed costs £2,370 and 10% of damages over £10,000.

Bratek v Clark-Drain Ltd 2018 (Cambridge County Court 2018)

The parties had settled a personal injury matter by consent with the Defendant paying the Claimant’s damages in the sum of £10,000.  In terms of costs, the consent order noted that “the Defendant pay the Claimant’s solicitor’s costs of the action, inclusive of VAT and disbursements on the standard basis, to be assessed if not agreed”.

The Claimant argued that the consent order superseded the fixed costs set out in CPR 45.29A due to the agreement made with the Defendant.  Of course, the Defendant disagreed and argued that the order did not supersede CPR 45.29A.

The first instance Judge had agreed with the Claimant, however the Appeal Judge overruled the decision and confirmed that in accordance with the principles in Sharp v Leeds City Council [2017],  the “plain object of intent of the fixed costs regime for claims started but not continuing under the protocol was that from the moment of entry into the portal pursuant to the protocol recovery of the costs of pursuing or defending that claim and all subsequent stages was intended to be limited to the fixed rates of recoverable costs subject only to a very small category of clearly stated exceptions” (para 8).

Williams v The Secretary of State for Business, Energy & Industrial Strategy [2018] EWCA

This employment liability claim was conducted without the use of the portal.  It was the Claimant’s argument that because there were two Defendants being pursued at the outset then it was a claim outside the EL/PL portal.  However, the Court held that it was evident that the claim was clearly a one Defendant claim and it concluded that the matter should have gone through the portal at the outset.  The Court regarded the Claimant’s behaviour as unreasonable and awarded fixed costs using the sufficient width of discretion under CPR 44.

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Budgets – Case Updates

Richie Young – Costs Lawyer

Sharp v Blank Ors [2017] EWHC

This significant case involved nearly 6,000 Claimants in an action against former directors of TSB and Lloyds Bank.  One of the key areas considered related to establishing what was deemed a ‘significant development’ to justify a revision to an agreed budget.  The Judge considered that there were 7 relevant issues in this case:

(1) Extension to trial timetable – there is ‘no doubt that the extension to the trial timetable is a significant development’ (para 79).  Further, he noted that ‘the mere fact of a longer trial timetable, with a delayed start date and longer breaks is not, of itself, a sufficient basis upon which to approve an increase to the budget’.

(2) Disclosure – ‘if an application for specific disclosure results in a large number of documents (in this case 984 additional documents) that must be reviewed and assimilated, this may be a significant development in litigation’.

(3) and (4) Expert related work – The Defendants sought an increase to their budget phase of £212,956 due to the service of the Claimants’ expert report which consisted of 74 pages and 676 pages of exhibits and appendices. The Claimants served the expert report without permission from the Court.  The Judge confirmed that this was a significant development (paras 87-88).

(5) Third Party Disclosure – due to the Defendant’s limited involvement in the application, this did not suffice as a significant development.

(6) Additional questions to experts – there must be more than merely a modest increase in the anticipated cost of work within a phase to amount to a significant development.

(7) Expert witness relied upon by Claimants – The Defendant argued that an additional tranche of expert evidence within the Claimants’ expert witness report, which did not appear in the first report, amounted to a significant development.  The Judge averred that it was a development, but not one which was substantial.

There are some important points to take away from this case in terms of what is deemed a significant development (dependant on the facts of each case).

Ali & Anor v Channel 5 Broadcast Ltd [2018] EWHC 840

This case emphasises the importance of filing a costs budget.  The Claimant failed to beat a Defendant’s Part 36 offer at trial and the Defendant was awarded 50% of their costs in accordance with CPR 36.23 (2).  The Defendant had failed to file a costs budget – had they done so they would have been awarded their costs in full.

RNB v London Borough of Newham/Nash v Ministry of Defence [2018]/Jallow v Ministry of Defence [2018] EWHC

The Appeal case in RNB v London Borough of Newham, which was due to be heard, has now been settled.  As a quick summary, Master Campbell reduced hourly rates for incurred costs and then found that it was a ‘good reason’ to reduce budgeted costs also.

However, two further cases have come to light on this point.  In Nash v Ministry of Defence [2018] EWHC B4 (Costs) Master Nagalingam noted that non-budgeted rates were not a good reason to depart from the approved budget.  He went on to say that ‘hourly rates hold no special status and are not to be given any elevated status on an assessment of costs with regards to estimated costs subject to a costs management order’. This case will prove to be a useful tool for Claimant practitioners.

In Jallow v Ministry of Defence [2018] EWHC B7 (Costs) Master Rowley confirmed that ‘once the phase total has been approved the underlying figures are no longer relevant’.

So far it appears the Court is finding that a reduction to hourly rates on assessment is not a good reason to depart from an approved budget.

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Service – Case Update

Richie Young – Costs Lawyer

Barton v Wright Hassall [2018] UKSC

The Claimant, acting as litigant in person, had served a claim form upon the Defendant via email when that method of service was not accepted by the Defendant.  It was made clear by Lord Sumption, on a majority vote of three to two, that there is no special category for litigants in person and they should not be treated differently in the application of the CPR.

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Proportionality – Case Updates

Richie Young – Costs Lawyer

May v Wavell Group Plc [2016] EWHC (Appeal) (Proportionality)

To cast our minds back in this high profile contentious case, Master Rowley originally reduced the bill of costs on an item by item basis from £208,236.54 to £99,655.74.  He then further reduced it to £35,000 + VAT.

On Appeal HHJ Dight concluded that Master Rowley misapplied the new proportionality test and increased the costs to £75,000 + VAT.  What we can take away from this case is that the proportionality test, subject to the individual circumstances of the case, may not be used as a blunt instrument when the Court carries out their ‘stand back’ approach.

Marcura Equities FZE & Anor v Nisomar Ventures Ltd & Anor [2018] EWHC 523 (QB)

This case put another spin on the proportionality test.  The claim related to unlawful disclosure and use of confidential information where the Claimants sought injunctive relief to protect their information. The Claimants’ cost budget was approved at £449,929.00.   A 5-day Trial was listed but the parties were able to settle, with the Claimants agreeing damages of £35,000.00.

Giving Judgment upon ordering costs, Mr Vineall QC made points in respect of proportionality and stated (at paragraph 55):

“Accordingly I reject the suggestion that the fact that only £35,000 has been recovered displaces the starting point that the Claimants are the successful party for costs purposes.  Nor do I accept the contention that it demonstrates that the costs claimed are disproportionate”

Mr Vineall QC ordered the Defendants to pay the Claimants’ costs.  In respect of an interim payment on account of costs, Mr Vineall QC trod cautiously, and estimated that the total amount of costs recovered by the Claimants would be in the region of £330,000 therefore he ordered an interim payment of £231,000 (70% of the £330,000).

This case is more favourable for Claimants and the Court appears to be taking a more measured approach with proportionality.   Again, however, every case needs to be considered on its own merits.

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Case Updates – Part 36

Richie Young – Costs Lawyer

PART 36

Gamal v Synergy Lifestyle Ltd [2018] EWCA

This case gives another strong indication that Part 36 offers must be clear.

The Defendant made a Part 36 offer in the sum of £15,000 and shortly thereafter made a voluntary payment of £10,000. The Judge found that the voluntary payment, which was made after the date of the Part 36 offer, had the consequence of reducing the Part 36 offer by that sum. The Defendant did not make it clear that the voluntary payment was on account of costs and the Judge commented that the presumption of law is that the payment made was on account of the earlier Part 36 offer.  The voluntary payment would therefore reduce the Part 36 offer unless it was made clear that it was not intended to do so.  Had the Defendant noted this, they would have beaten their Part 36 offer.

A costly mistake made due to an unclear Part 36 offer.

Ballard v Sussex Partnership NHS [2018] EWHC

This case raised some important points about withdrawn Part 36 offers.

In January 2016 the Defendant made a Part 36 offer of £50,000. This offer was withdrawn by the Defendant in February 2017.  The Defendant then put forward a further Part 36 offer of £30,000.  At trial the Claimant was awarded damages of £23,315.13.  At first instance, following strong arguments made by the Defendant, the Judge ordered that the Claimant pay the Defendant’s costs from the date of expiry of the withdrawn offer. However, this decision was overturned due to the Defendant’s second offer stipulating that they would be liable for the Claimant’s costs up to 1st March 2017.  Accordingly, the Appeal Judge ordered the Defendant pay the Claimant’s costs up to 1st March 2017.

What makes for interesting reading is that had the Defendant not stipulated that they would pay costs up to 1st March 2017 then the Claimant may have had to pay costs from the date of the withdrawn offer.  Withdrawn offers therefore continue to be relevant for the purposes of costs proceedings.