Kerry Underwood

FIXED COSTS, PRE-ACTION CONDUCT: DEFENDANT ORDERED TO PAY DISCONTINUING CLAIMANT’S COSTS

with 11 comments


In Nicole Chapman v Tameside Hospital NHS Foundation Trust, Bolton County Court, 15 June 2016, Case number B74YM281

 

the defendant was ordered to pay all of the claimant’s costs where the claimant discontinued shortly before trial following disclosure by the defendant of documents which it should have disclosed during the portal process.

 

The matter was an Occupiers’  Liability slipping case. The defendant denied liability and stated that it had no documents to disclose.

 

Proceedings were issued. The defendant then disclosed documents showing that it had a reasonable cleaning and inspection system.

 

The claimant discontinued.

 

The claimant was awarded fixed costs up to the post-listing, pre-trial stage less the fixed recoverable costs sum applicable had the matter settled pre-issue.

 

The court described the defendant’s conduct as “entirely unacceptable” and was critical of the National Health Service Litigation Authority.

 

The Pre-Action Protocol for Personal Injury Claims provides that:-

 

“The Defendant should also enclose with the response, documents in their possession which are material to the issues between the parties, and which would be likely to be ordered to be disclosed by the court, either on an application for pre-action disclosure, or on disclosure during proceedings.”

 

CPR 44.2(1) provides:-

 

“(1)        The court has a discretion as to –

 

  • whether costs are payable by one party to another;

 

  • the amount of those costs; and

 

  • when they are to be paid.”

 

CPR 44.2(4) states:-

 

“(4)        In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –

 

  • the conduct of all the parties;”

 

CPR 44.2(5) says:-

 

“(5) The conduct of the parties includes –

 

  • conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol;

 

  • whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

 

  • the manner in which a party has pursued or defended its case or a particular allegation or issue; and

 

  • whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.

 

The court awarded costs on the basis of the stage costs of £3,790.00 without the added 20% of damages as no damages were recovered.

 

It then set-off the stage costs of £950.00 which the claimant would have incurred anyway, representing the point where the matter would have been stopped had the NHSLA disclosed its evidence when it should have done so.

 

Consequently the defendant was ordered to pay the claimant £2,840.00 plus VAT and disbursements.

 

Of course in a Conditional Fee Agreement case, as this was, a claimant would normally be prevented from recovering costs due to the indemnity principle. However that principle does not apply in fixed costs cases – see Nizami v Butt [2006] EWHC 159 (QB).

 

The court also recognized the extra danger involved of defendants behaving badly in fixed costs cases:-

 

“15. The Defendant’s behaviour in the conduct of this litigation was entirely unacceptable. It’s exactly the type of conduct which Part 44.2 is designed to address. Under the modern costs provisions, of course, the costs sanctions become increasingly important. The Claimant’s solicitors are pursuing these matters, PI claims, and at the end of the claim are recovering costs which are fixed and which are not by any stretch of the imagination, generous. There is a danger of — I am not saying it has happened in this case — this is a pure inadequacy of approach by the Litigation Authority and the Trust, but there is a danger that defendants and their representatives will cause difficulties in the course of litigation, so as to run up the work which claimant’s solicitors are having to do in the knowledge that those solicitors cannot recover costs reflecting that work. And of course, it always has to be borne in mind the provisions of CPR 1.3, that the parties to litigation have an obligation to assist the Court to further the overriding objective. The overriding objective firstly being to try and avoid costs and the issue of proceedings if at all possible, which is the whole purpose of the pre-action protocol, of course and secondly, when such claims are brought that they be dealt with in an efficient manner, in a proper manner so as to avoid excessive costs, involving public resources, delay and so on.”

 

The court rejected any suggestion that CPR 44.2 did not apply to fixed costs cases:-

 

“18. I am satisfied that the provisions of Rule 44.2 can be applied. It would be a nonsensical situation if the rules which are provided by Rule 44.2 to give the Court the power to impose sanctions to penalise those who abuse the system, and clearly there has been abuse here by the Trust and possibly by the Litigation Authority initially representing them. I am certainly not suggesting that Weightmans have been dealing with it improperly, they are obviously having to deal with what information they are supplied. But it would be a nonsensical situation if the rules, in an appropriate case where the fixed costs regime did apply, precluded the Court from imposing the sanctions provided under Rule 44.2 and 44.2, of course, gives the Court an unqualified discretion. I do not accept that I am bound by the Part 45 scales, but I clearly have to bear them in mind. It would be nonsensical if the Claimant’s solicitors could achieve a windfall and recover more costs than they would have done had the matter gone to trial or settled in favour of the Claimant at the stage that it was discontinued. That would be absolutely nonsensical.”

 

Comment

 

Although this is a first instance decision it is of considerable importance as this type of scenario is not uncommon. The whole issue will become of much greater importance as and when fixed costs spread to much higher value claims and also to non-personal injury claims.

 

I am grateful to Emma Ireland of Scott Rees and Co both for bringing this matter to my attention and supplying me with the judgment and for pursuing the matter on behalf of the claimant in the first place.

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Written by kerryunderwood

August 22, 2016 at 8:03 am

Posted in Uncategorized

11 Responses

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  1. Did the claimant discontinue as soon as she got the documents or after witness statement exchange?

    Steven Peters

    August 22, 2016 at 8:24 am

    • The facts that I have are as set out in the judgment which is linked to this post.

      kerryunderwood

      August 22, 2016 at 8:38 am

      • Emma Ireland-can you assist? Looks to me that the claimant sol waited to see witness statements then discontinued hence the disclosure not being as important as suggested.

        Steven Peters

        August 22, 2016 at 9:25 am

  2. This serves to confirm what I have felt for a while, that making a PAD application is pointless in most cases. Would you agree, Kerry?

    • Tim

      Not only is it pointless to make an application for Pre-Action Disclosure in a portal matter, it is potentially positively harmful.

      The starting point, even in a successful application for pre-action disclosure, is that the claimant has to pay the costs of the application and such applications are specifically excluded from the protection of Qualified One-Way Costs Shifting – see CPR 44.13(1)…

      “but does not apply to applications pursuant to section 33 of the Senior Courts Act 1981 or section 52 of the County Courts Act 1984 (Applications for Pre-Action Disclosure)…”

      Thus I have no doubt that in a portal claim the best procedure is to put the matter on the portal, which involves no court fee as compared with an application for pre-action disclosure, and rely upon the requirement that the defendant disclose documents as required by the portal, which is a form of pre-action protocol.

      If the matter is clearly not a portal claim then different considerations may apply, but it should be noted that, as stated above, the starting point is that even a successful claimant’s application for Pre-Action Disclosure will generally result in the claimant being ordered to pay the costs of the application, which costs are not subject to QOCS protection.

      Kerry

      kerryunderwood

      August 31, 2016 at 2:46 pm

  3. I have found it useful to set out the required disclosure (if liability is not admitted) within the CNF. Notice has been given and if the case is issued, then that disclosure is provided, fixed costs should apply. I say should because we all understand the vagaries of the court system.

    H

    Hxyay

    September 5, 2016 at 8:33 am

    • If liability is not admitted then the matter automatically exits the portal, so why would there be any doubt about getting fixed costs, whether or not you had stated what disclosure was required?

      kerryunderwood

      September 7, 2016 at 4:32 pm

  4. Hi Kerry.

    Am I correct in reading this as effectively also saying that where the claim is funded with a CFA and it is NOT a fixed costs case, a discontinuing Claimant would have no entitlement to costs, otherwise the indemnity principle would be breached? That seems to be the logical outcome, but is wholly unfair – and leaves Defendant’s without a deterrent from being lax in their approach to disclosure.

    If, as I fear, my understanding of the situation with non-fixed costs cases is correct, what can a Claimant (or, more realistically, a Claimant’s solicitor) do to leave open an opportunity for payment for work which would not otherwise have been done were it not for the inappropriate conduct of the Defendant?

    Many thanks

    GJ

    Geoff Jeffington

    September 7, 2016 at 2:51 pm

  5. Geoff

    You are right. The key is in the wording of the conditional fee agreement. There are various situations in which the claimant may be liable to pay even in the event of a defeat and you need to make this one of them..

    Kerry

    kerryunderwood

    September 7, 2016 at 2:59 pm


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