Kerry Underwood

Archive for August 2017


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I deal with this matter at length in my book Personal Injury Small Claims, Portals and Fixed Costs running to 1,300 pages and three volumes, available for £80.00 including P&P from Amazon here or me here.

You can now book onto my Fixed Costs Autumn Tour – here

In Skowron V Rollers Roller Disco Limited, Truro County Court, 8 June 2017, Claim Number C00EX746

a District Judge considered the level of fixed costs on an application for pre-action disclosures in a personal injury claim.

Such applications are covered by the fixed costs regime as interim hearings – see Sharp v Leeds City Council [2017] EWCA Civ 33.

Thus the issue here was the level of such costs. The original application for pre-action disclosure was dealt with on the papers, that is with no advocate attending.


The relevant law is CPR 45.29H which reads:

“(1) Where the court makes an order for costs of an interim application to be paid by one party in a case to which this Section applies, the order shall be for a sum equivalent to one half of the applicable Type A and Type B costs in Table 6 or 6A.”


Table 6 and Table 6A form part of CPR 45.18 and by virtue of CPR 45.18(2) Type A fixed costs means the legal representative’s costs and Type B fixed costs means the advocates costs.

CPR 45.18(4) provides that subject to CPR 45.24(2) the court will not award more or less than the amounts shown in Table 6 or 6A, that is the costs are fixed.

CPR 45.24 deals with failure to comply with the relevant protocol and the costs consequences and is not relevant here.

Type A fixed costs are – £250.00.

Type B fixed costs are – £250.00.

Half of £250.00 is –       £125.00.

As there was no advocate’s costs in this case, then it is obvious that the correct fee was £125.00.

Bizarrely, the judge held that even where there was no advocacy the Type A and Type B costs had to be added together to form £500.00 and then halved, meaning that the fee payable was £250.00.


I report this decision as it has been reported elsewhere as important.

It is as wrong and illogical a decision as I have ever seen.

Very obviously had it been the intention that a fee of £250.00 should be awarded then the rule would simply refer to Type A costs, which are £250.00, or Type B costs, which are also £250.00.

This judge apparently believed that the rules intended you to add two things together and then halve them to arrive at the original figure.

Why not do that for all fixed costs?

Thus instead of having a road traffic portal fee of £500.00 let’s have a rule which says:

“The portal fee in a road traffic accident case shall be one tenth of the fixed fee multiplied by 10.”

A flavour of the quality of this decision can be gained by this sentence from the judgment:

“In so doing, I think he overlooked, and his attention was not drawn to, the decision of Sharp v Leeds, the judgment given, I believe, by Lord Justice Jackson in the Court of Appeal….”

Given that this is a Court of Appeal judgment directly on point, one would have thought that the judge would have looked at it, read it, given the correct citation, and applied the law.

This decision should be ignored. It will not be followed.

Written by kerryunderwood

August 31, 2017 at 11:54 am

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By Robert Males, Managing Partner, Underwoods Solicitors

In Harrison v University Hospitals Coventry and Warwickshire NHS Trust (2017) EWCA Civ 792 (21 June 2017)

the Court of Appeal dealt with the important issue of when a party’s costs claimed in an action can vary from the costs budget in a situation where the costs were in fact less than the cost set out in a particular phase in the budget.

The first issue concerned a situation where a costs management order approving a cost budget has been made and whether on a subsequent detailed assessment the costs judge is precluded from going below the budgeted amount unless satisfied there is a good reason to do so. Alternatively, can the costs judge go below the budgeted amount without any prior requirement for a good reason?

The second issue is whether regarding the incurred costs there is a similar requirement of a Mr Justice good reason if a costs judge on assessment wishes to depart from the amount put forward in that section of the costs budget.

The court was aware of the decision of Carr in the case of Merrix v Heart of England NHS Foundation Trust (2017) EWHC 346 (QB) where on the first of these issues the judge reached the decision that a good reason is required to go below the budgeted amount on assessment.

The case involved a clinical negligence matter following a caesarean section operation undertaken at the defendant’s hospital where proceedings were issued on 9th April 2013.

In the claim form the damages were limited to £50,000.00 and liability was disputed. A Costs Management Conference took place on 18th August 2014 and the parties were given permission to rely upon their updated costs budget as modified at that hearing. The total of the claimant’s costs, including both incurred and estimated future costs, amounted to approximately £197,000.00. The success fee and ATE insurance premium were not included in that sum. There was no comment recorded by the judge in relation to incurred costs which amounted to approximately £108,000.00 of the total figure.

In July 2015 the case was settled shortly before trial on the basis that the defendant agreed to pay £20,000.00 plus costs on the standard basis. The claimants subsequently put forward a bill of costs in excess of £467,000.00 including the success fee and ATE premium.

The court set out the relevant rules including CPR 44.3 which provided, among other things, as follows:

“(2) Where the amount of costs is to be assessed on the standard basis, the court will –

(a) only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and

(b) resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party.

The court went on to set out the factors to be taken into account when deciding the amount of costs under CPR 44.4 including all of the factors to be taken into account by the court set out at CPR 44.4(3) which include under CPR 44.(3)(h) “the receiving party’s last approved or agreed budget.”

Rules relating to costs management and costs budgeting are contained in CPR 3.12 to CPR 3.18 which include the important requirement to file costs budgets which provide that the court may make a costs management order where costs budgets have been filed and exchanged unless it is satisfied that the litigation can be conducted justly and at proportionate cost in accordance with the overriding objective without such an order being made.

Such a costs management order will:

(a) record the extent to which the budgeted costs are agreed between the parties;

(b) in respect of budgets or parts of budgets which are not agreed, record the court’s approval after making appropriate revisions;

(3) if a costs management order has been made, the court will thereafter control the parties’ budgets in respect of recoverable costs.

The key aspect for the purposes of this case was CPR 3.18 which provided as follows:

“In any case where a costs management order has been made, when assessing costs on the standard basis, the court will –

(a)  have regard to the receiving party’s last approved or agreed budget for each phase of the proceedings;

(b) not depart from such approved or agreed budget unless satisfied that there is a good reason to do so.

(attention is drawn to rules 44.3(20)(a) and 44.3(5), which concern proportionally of costs.)”

The court was also directed to the relevant sections of the Practice Directions relating to costs management and costs budgeting, in particular paragraph 7.3 and 7.4 of Practice Direction 3E which provided as follows:

“7.3 If the budgets or parts of the budgets are agreed between all parties, the court will record the extent of such agreement. In so far as the budgets are not agreed, the court will review them and, after making any appropriate revisions, record its approval of those budgets. The court’s approval will relate only to the total figures for each phase of the proceedings, although in the course of its review, the court may have regard to the constituent elements of each total figure. When reviewing budgets, the court will not undertake a detailed assessment in advance, but rather will consider whether the budgeted costs fall within the range of reasonable and proportionate costs.

7.4 As part of the costs management process the court may not approve costs incurred before the date of any budget. The court may, however, record its comments on those costs and will take those costs into account when considering the reasonableness and proportionality of all subsequent costs.”

Counsel for the appellant argued that the word budget as set out in the CPR 3.18(b) connoted a fund and if the figure for costs claimed fell within that amount then there was no departure from it. This meant that CPR 3.18(b) effectively set a cap on the amount upon which the paying party could expect to pay unless of course the court was satisfied there was a good reason to depart from that budget. Counsel submitted that there was no good reason required if the costs claimed fell below the budgeted amount because there was no departure from the budget.

Counsel went on to submit that it was appropriate for the court to consider the costs on a detailed assessment with the benefit of hindsight and conduct a thorough reappraisal of the costs which had actually been incurred rather than considering an estimate of what might in the future be incurred which occurs during the cost budgeting process. Counsel also noted that cost budgeting did not concern itself with issues such as hourly rates and furthermore, that a proper assessment of proportionally could only be made at the conclusion of the proceedings and that was better suited to a detailed assessment.

Counsel for the respondent submitted that the original costs judge’s interpretation of CPR 3.18(b) was correct.

The court considered the construction of wording CPR 3.12 and concluded that the Master had reached the correct conclusion that a good reason was required to depart from the costs budget and endorsed the reasoning of Carr J in Merrix v Heart of England NHS Foundation Trust (2017) EWHC 346 (QB).

The court was critical of the complaints raised by counsel for the appellant about the current cost budgeting process. The court referred to the latest edition of Cook on Costs which commented that to sanction a departure from the budget at detailed assessment, without good reason, would overlook that budgeted costs are already required to have regard to both reasonableness and proportionality. The aims of cost budgeting include a reduction in detailed assessment and of the issues raised in points of dispute and that the element of certainty to clients would be removed.

Furthermore, the court noted the requirement that a cost budget has to be signed and certified as being a fair and accurate estimate of the costs which it would be reasonable and proportionate for the client to receive. Any revision of those budgets has to be filed and approved where the estimates change. The judge who is being asked to approve a budget at a Costs Management Hearing must take into account considerations of both reasonableness and of proportionality.

The court did not consider there was any ambiguity in the words of CPR 3.18(b). It did not mean that a receiving party may only seek to recover more than the approved or agreed budget if good reason is shown whereas a paying party would seek to pay less than the approved or agreed budget without a good reason being required. There is no sense of fairness in that. Both the prospective paying party and the prospective receiving party need to know where they stand in relation to costs at an early stage of the litigation.

Had the intention of the rule been that a good reason is only required in the instances where the sum claimed exceeds the approved budgets then no doubt the rule could have easily and explicitly had said so. In any event, the rules provide elsewhere for costs capping cases.

The natural and ordinary meaning of CPR 3.18 is wholly consistent with the purposes behind and importance attributed to costs budgeting and costs management orders.

The court went on to identify further weaknesses in counsel for the claimant’s argument. Counsel submitted that unless the rules were interpreted as he had argued, a Case Management Order approving a budget would operate in effect to replace detailed assessment. That clearly cannot be correct. The effect of a CMO effects how the detailed assessment is conducted. Where there is a proposed departure from a cost budget, be it upwards or downwards, the court on a detailed assessment has the power to sanction a departure from the budget if it is satisfied that there is a good reason for doing so. That qualification is a significant fetter on the court’s discretion. Costs judges should not be expected to adopt a lax or overindulgent approach to the need to find a good reason. To do so would subvert one of the principle purposes of costs budgeting and the overriding objective.

The existence of the “good reason” provision provides a valuable and important safeguard in order to prevent a real risk of injustice. What will constitute a “good reason” in any given case will depend upon the circumstances and if the court decides that it was not sensible to give guidance or examples. The matter can safely be left to the individual assessment by costs judges.

CPR 3.18(b) relates to a departure from “the approved or agreed budget” however, the costs incurred before the date of the budget were never agreed nor were they ever approved by the CMO. The focus of a judge making a CMO is on estimating costs reasonably and proportionately to be incurred in the future. In carrying out this task, the court may have regard to costs already incurred and that may, in turn, impact on the assessment of what may be reasonable and proportionate for the future. However, paragraph 7.4 of Practice Direction 3E is quite specific. As part of the Cost Management process, the court may not approve costs incurred before the date of a Costs Management Conference. It can record in the CMO its comments on incurred costs (if any) and those can then be taken into account when considering reasonableness and proportionally. (See CPR 3.15(4) and CPR 3.18(c))

The court confirmed that incurred costs are not within the ambit of CPR 3.18 at all and that such incurred costs are subject to detailed assessment in the usual way without any added requirement of a “good reason” for departure from the approved budget.

Despite counsel for the claimant submitting a somewhat subtle argument saying that the incurred costs will have acquired a special status because they are considered when the court looks at each phase of the budget and takes into account incurred costs when assessing reasonableness and proportionality of future costs. This did not seek favour with the court. Incurred costs are either within the ambit of CPR 3.18(b) or they are not and the court concluded that as they are not approved budgeted costs then they are not within that sub-rule.

Furthermore, the judge conducting the Costs Management hearing is entitled, but not obliged, to record comments on incurred costs which, if made, will be taken into account when considering reasonableness and proportionality.

A costs judge on detailed assessment will be assessing incurred costs in the usual way and will also be considering budgeted costs, and not departing from those costs in the absence of a good reason, so the costs judge will be looking at matters in the round and consider whether the resulting total figure is proportionate, having regard to CPR 44.3(2)(a) and (5).

The rules and Practice Direction clearly distinguish between incurred costs and estimated budgeted costs and it is important to keep that distinction. It is only the budgeted costs which are subject to variation for good reason.


This case along with Merrix will hopefully put to bed the argument about when a Costs Budget can be varied whether up or down and help practitioners understand what is “a good reason”.

We have seen cases since this decision involving hourly rates but this decision is very important in understanding when and how a Costs Budget can be varied on assessment.

Lord Justice Jackson’s recent report on the Extension of Fixed Costs makes numerous references to the costs budgeting process and the general view that after a difficult start it is now working well and that decisions such as this will assist in the development of the costs budgeting process until such time as fixed costs enter the picture.


See Also:



Written by kerryunderwood

August 30, 2017 at 8:40 am

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I deal with this matter at length in my book Personal Injury Small Claims, Portals and Fixed Costs running to 1,300 pages and three volumes, available for £80.00 including P&P from Amazon here or me here.

You can now book onto my Fixed Costs Autumn Tour – here

In Kupeli and others v Atlasjet Havacilik Anonim Sirketi [2017] EWCA Civ 1037

the Court of Appeal upheld a High Court ruling that consumers who had entered into conditional fee agreements with solicitors in a community centre had not done so “during or after an excursion organised by the trader away from business premises”.

Here the Court of Appeal considered that the committee that had initiated and organised the meeting were representing the consumers/clients and were not acting as agents for the solicitors.

Consequently the solicitors had not organised an excursion away from business premises.

This decision was under the 2008 Regulations, which have since been replaced by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

Those new regulations apply in relation to any contract made on or after 13 June 2014.

I reported the High Court decision in my post CANCELLATION OF CONTRACTS AND ADR REGULATIONS – UNIFIED.

It is important to note that the new regulations give clients/consumers protection whenever a contract is not signed on business premises.

Under the 2013 regulations the definition of an “off-premises contract” is a contract “concluded in the simultaneous physical presence of the trader and the consumer in a place which is not the business premises of the trader.

The 2013 Regulations do preserve the concept of a contract concluded during an excursion organised by the trader with the aim or effect of promoting and selling goods or services to the consumer.

Thus this decision on the actual point of excursions is only of relevance in relation to contracts still governed by the 2008 Regulations.

However the Court of Appeal confirmed that had Atlasjet been right, in what the Court of Appeal refer to as “their technical point” they would not have had to pay any costs whatsoever.

However, as an Off-Premises Contract now includes any contract included in the simultaneous physical presence of the trader and the consumer in a place which is not the business premises of the trader, I am not sure what the concept of an excursion adds.

Thus the decision reinforces the crucial importance of complying with what are now the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

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August 29, 2017 at 8:17 am

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In JSC Mezhdunarodniy Promyshlenniy Bank and Another v Pugachev and Others [2017] EWHC 1853 (Ch)

the Chancery Division of the High Court dealt with an application to increase the costs budget of the defendant children who were beneficiaries of a trust.

The judge had to consider that the estimate for the length of the original trial was 8.5 days but in fact it would take a total of ten days.

In addition, the estimate of additional costs on behalf of the children’s representative included preparation time along with closing arguments and additional work by the solicitors.

The total of these additional costs came to £84,000.00.

That figure caused somewhat of a surprise to the judge but bearing in mind that the cost budget for the children in defending this action was £1.8 million, then although the £84,000.00 was still a lot of money, it was not as much, in proportionate terms, as might have seemed at first glance.

The claimant submitted that the work which needed to be done should be covered by the existing budget but the judge did not agree.

He said it was clear that more work will need to be done than had been originally budgeted for and that the extra work, in particular the closing submissions, would assist the court in dealing with the proceedings.

As a result, the judge approved the increase in the children’s budget.

The judge was satisfied that the hourly rates charged by solicitors and the rates charged by counsel were reasonable and proportionate in the circumstances.

This is a relatively rare decision of an increase on a costs budget being allowed and therefore is of interest.

Also see:




Written by kerryunderwood

August 25, 2017 at 10:17 am

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Lord Neuberger, President of the Supreme Court, addressed the Australia Bar Association Conference in London last month.

Referring to the United Kingdom’s exit from the European Union he said:

“… left, once again to our common law devices, we will in some respects be able to react more quickly and freely to developments in our fast changing world.”

Lord Neuberger continued

“… we have a serious problem with access to justice for ordinary citizens and small and medium sized businesses,” and that in England and Wales legal assistance services are increasingly under-resourced leaving millions without adequate access to quality legal advice and assistance and that whilst there is universal agreement that more funding is needed, there is little appetite by government to make this a priority.

Lord Neuberger said that lawyers and judges could not “get away with standing on the side lines and criticising; they have a heavy duty to do all they can to support and improve access to justice for ordinary citizens and small businesses.”

He also criticised the UK government’s “somewhat parsimonious funding of BAILII, which provides extraordinary value for money.” While praising the website for ensuring that new statutes are available reasonably quickly he said that “the updating service to deal with amendments and repeals is little short of lamentable with amendments and repeals sometimes not being recorded more than six years after the event. It should not cost much for the UK government to ensure that its legislation website is kept up to date, so that current legislation is freely available to everyone.”

Lord Neuberger said that access to legal advice and representation is “of course a fundamental ingredient of the rule of law, and the rule of law together with democracy is one of the two principal columns on which a civilised modern society is based.

It is simply wrong, and fundamentally wrong at that, if ordinary citizens and businesses are unable to obtain competent legal advice as to their legal rights and obligations, and competent legal representation to enforce those rights and test those obligations in court. Obtaining advice and representation does not merely mean that competent lawyers exist; it also must mean that their advice and representation are sensibly affordable to ordinary people and businesses: access to justice is a practical, not a hypothetical, requirement. And if it does not exist, society will eventually start to fragment. That is not merely a fragmentation in the sense of the gulf between rich and poor, which leads to real frictions and difficulties if it gets too wide. It is a fragmentation which arises when people lose faith in the legal system; they then lose faith in the rule of law, and that really does undermine society. The sad truth is that in countries with a long peaceful and democratic history such as the UK (and, I suspect, Australia), we face the serious risk that the rule of law is first taken for granted, is next consequently ignored, and is then lost, and only then does everyone realise how absolutely fundamental it was to society.”

He continued:

“It verges on the hypocritical for governments to bestow rights on citizens while doing very little to ensure that those rights are enforceable. It has faint echoes of the familiar and depressing sight of repressive totalitarian regimes producing wonderful constitutions and then ignoring them.”

The President of the Supreme Court went on to say that the complexity of legislation and the growth in regulation made it harder than ever for non-lawyers to establish their rights and duties and the need for access to legal advice is thus greater than it ever was.

He said that the “flag-wavingly” named Access to Justice Act 1999, by which the then Labour Government severely restricted civil legal aid, was “frankly very hard to defend.”

He went on severely to criticise the regime of recoverability of additional liabilities introduced by the same Act.

While welcoming the repeal of those provisions in the Legal Aid, Sentencing and Punishment of Offenders Act 2012, Lord Neuberger said that “it also confirmed a severe shrinking in the type of civil law cases for which legal aid could be available and severe shrinking of legal aid in most private family law cases.”

Lord Neuberger then considered in detail the problems occasioned by litigants in person and looked at the possibility of a contingency legal aid fund.

He criticised the closing of local courts stating that while that may improve efficiency it risks removing justice from the people “or maybe it would risk removing the people from justice.”

Written by kerryunderwood

August 25, 2017 at 7:22 am

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By Robert Males, Managing Partner, Underwoods Solicitors

In Mott v Long (2017) EWHC 2130 (TCC) 2 August 2017

the Technology and Construction Court, part of the High Court, considered an application for relief from sanctions from a defendant who had served a cost budget 10 days late.

The Case Management Conference was listed for 2 August 2017 and pursuant to CPR 3.13 costs budgets were due to be filed no later than 21 days before the CMC.

The claimant’s solicitors served their client’s cost budget on 11 July 2017 and the covering letter confirmed that the claimant’s solicitor awaited receipt of the defendant’s budget which was due that day.

A week later on 18 July 2017, no cost budget had been filed by the defendant and the claimant’s solicitor wrote to the defendant’s solicitor explaining that they believed an application for relief from sanctions would be required if the defendants were to provide a cost budget late.

The defendant’s solicitors said that the budget had been sent on 11 July and that a copy would be sent the following day. However, no such cost budget had been received by the claimant’s solicitors nor by the court.

It then transpired that a cost budget had been drafted by the defendant on 6 July but it was not clear as to when, if at all, that budget had been served on the claimant’s solicitors or filed at court.

The defendant’s solicitor confirmed that she had started to draft the cost budget on 6 July but stated that she had experienced IT difficulties around this time which included problems with saving word documents and printing those documents.

She believed that the cost budget had been saved and printed correctly.

However, upon review, she realized that the claimant’s solicitors had not received the cost budget.

On receipt of the claimant’s email of 20 July, the defendant’s solicitor appreciated that there was likely to have been an error and therefore on 21 July she filed a correct version of the cost budget.

The court considered Denton v TH White Ltd [2014] EWCA Civ 906, and whether the breach was a trivial or minor breach.

The defendant submitted that this was a minor delay which had no material effect on the proceedings, and nor had it prejudiced the claimant in any material way.

The judge considered that the court should consider both the seriousness and significance of the breach of which relief from sanctions is sought, as per Denton.

The claimant’s position was that there was a prejudice suffered as a result of the delay of 10 days in filing the cost budget.

The purpose of exchanging 21 days in advance of the CMC is to allow parties sufficient time to consider those budgets and discuss them in time to file budget discussion reports which are due 7 days before the CMC.

The failure by the defendant to serve a cost budget in time meant there was very little time for consideration of the budgets and to produce a budget discussion report.

This, in turn, would have a significant impact on the preparation for the CMC and for discussion and potential agreement of budgets.

It would be more acute in this case because of the different approaches to the parties in relation to the issue of expert evidence which then impacted upon the length of trial.

The claimant’s submitted that the breach was both serious and significant and referred to the case of Lakhani v Mahmud and Others (2017) EWHC 1713 CH where the court refused an application for relief from sanctions in circumstances where a cost budget had been served one day late on 20 December 2016.

However, the defendant’s solicitor who had served the budget late knew that their office would be shut between 23 December 2016 and 3 January 2017, therefore limiting the time available for the agreement of costs to just a couple of days before Christmas and a few days in the new year. The court rejected an argument that it did not matter that the budgets were not agreed anyway.

In Lakhani, the court referred to a decision of the Court of Appeal in Clearway Drainage Systems Ltd v Miles Smith Ltd (2016) EWCA Civ 1258 including the following passage:-

“Denton made clear that the focus of the enquiry at the first stage should be on whether the breach was serious or significant. The court expressly rejected the notion that the sole test was whether a future hearing date was imperiled. It emphasized that, although there are many circumstances in which materiality in that sense would be the most useful measure of whether a breach has been serious or significant, it is deficient in leaving out of account those breaches which are incapable of affecting the efficient progress of the litigation, although they are serious.”

Thus there may be a breach which, on the face of it does not imperil the litigation, but may none the less affect the progress of that litigation.

The court in Lakhani had to evaluate the seriousness of a breach where a deadline is missed and held as follows:

“In considering the amount of time lost by failure to meet a deadline, it is legitimate for a court to take into account of the effective amount of time available and how much of that was lost as a result. Moreover, the amount of time lost can be more significant where a task involves a degree of cooperation, such as attempting to agree a matter, rather than the unilateral performance of an act, such as the service of witness statements, which does not involve coordination with an opposing party of availability to discuss matters or exchange correspondence.”

The judge went on as follows:

“While the impact on the ability to perform the task required by the order is very important and may be decisive in many cases, the authorities do not suggest that it is the overriding factor in every case. In my judgment, in evaluating the seriousness of breach, a court is entitled to consider the risk of difficulty that the failure to meet a deadline has created even if, in the event, it has been possible to perform the task required, notwithstanding the breach. That is particularly legitimate in the case orders whose performance requires a degree of cooperation because, in such cases, even though it may be possible for the non-defaulting party still to do what is required as well, it may make it more inconvenient and costly, since extra time may need to be made available…”

Here the court held that the filing of a cost budget 10 days late is not a modest order of time such as a few hours or even one or two days late.

The degree of lateness in every case is to be construed in the context of the particular circumstances of the case. Serving a cost budget late has the capacity to prejudice the process of cooperation cost budgeting, which the rules are designed to achieve.

In these circumstances, the delay in this case is serious or significant with a particular emphasis on the latter word.

As far as a good reason is concerned, the court concluded that the draft cost budget prepared by the defendant’s solicitor on 6 July was not saved to their IT system although it was not clear on the evidence exactly whose fault that was, whether it was an IT system error or a human error but it was noted on behalf of the claimant that should there have been IT problems, one would have expected a witness statement from someone in the IT department to explain this and no such evidence was provided.

As a result, the court determined that it was not satisfied that the defendant’s had established there was good reason for the default.

The court then turned to the third stage of the Denton criteria in considering all the circumstances of the case.

There was an important practical aspect to consider in that the first cost budget of the defendant prepared on 6 July amounted to just under £40,000.00 and the claimant’s solicitor believed that that was wholly unrealistic and artificially low and simply designed to make the claimant’s budget seem too high.

The second cost budget of the defendant was slightly higher at a figure of just over £47,000.00 and that is in contrast with the claimant’s budget in the sum of £281,000.00 in respect of which the defendant had offered a sum of £170,000.00.

The difference in these cost budgets was explained by the parties taking very different approaches to the case.

The claimant believed that the parties should be allowed to adduce expert evidence from two categories of expert whereas the defendant took the view that only one type of expert was necessary and, furthermore, a single joint expert could be instructed.

As a result of this, the claimant was estimating a four-day trial whereas the defendant a two-day trial.

It seemed to the court that in these circumstances, it is unlikely that during the discussion of cost budget an agreement would have been reached and that it is likely that a decision would have to have been made at the CMC and the court would have to decide on the cost budgets.

This would have led to revised costs budgets having been ordered to be provided at the CMC and in these circumstances, the cost budgeting process would not have been completed at the CMC.

The inability of the parties to discuss the defendant’s cost budget had to be viewed in that context.

So the court came to the overall conclusion that having regard to all the circumstances in the case, it was a case where the court should grant relief from sanctions.

A factor of considerable importance was that the parties were now in precisely the same procedural position as far as cost budgeting is concerned, had the defendant served its budget in time.

However, the court did order that the defendant was to pay the claimant’s costs of the application as a result of having to make the application for relief from sanctions.

Written by kerryunderwood

August 24, 2017 at 8:04 am

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You can now book onto my Fixed Costs Autumn Tour – here


I reported

RNB v London Borough of Newham [2017] EWHC B15 (Costs)

and concluded by saying that it was a poorly argued and illogical decision which should be treated with considerable caution as the logic of it was that an assessing court could simply avoid the Harrison and Merrix decisions altogether by cutting incurred costs and using that as a “good reason” to cut budgeted costs.

Michael Fletcher has now posted an article saying that at a detailed assessment in Birmingham on Friday 18 August 2017, District Judge Lumb, sitting as a Regional Costs Judge, expressly disagreed with the decision in RNB v London Borough of Newham.

District Judge Lumb held that to reduce hourly charging rates for budgeted costs to the same levels as those allowed for the incurred costs, thereby causing a potential departure from the budgeted phase totals, would be to second guess the Costs Managing Judge and would impute a risk of double jeopardy into the detailed assessment.

The Costs Managing Judge was not fixing hourly rates, but have had regard to them when setting a reasonable and proportionate allowance for each phase of the budget.

Without clear evidence the costs judge simply could not know what the position was.

District Judge Lumb held that the clear philosophy in guidance from the Court of Appeal in

Harrison v University Hospitals Coventry and Warwickshire Hospital NHS Trust (2017) 3 Costs LR424


Merrix v Heart of England Foundation NHS Trust [2017] 1 Costs LR91

was to simplify and reduce the scope of detailed assessments and the “good reason” bar was high.

Thus we now have two distinct lines of authority in relation to this issue, just as we do with the other vital costs issue of whether a Claimant gets indemnity costs on late acceptance by a Defendant of a Part 36 offer.

May we have all of these matters cleared up before next year’s October Revolution?

Written by kerryunderwood

August 23, 2017 at 10:35 am

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