Kerry Underwood

MISCONDUCT RE COSTS BUDGETS COVERED BY CPR 44.11 AND MAY PROVIDE GOOD REASON TO DEPART AT ASSESSMENT

with 2 comments


The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

MXX v United Lincolnshire NHS Trust [2019] EWHC 1624 (QB) (27 June 2019)

in detailed assessment proceedings, a High Court Judge partially allowed an appeal of a preliminary issue decision disallowing costs under CPR 44.11 by reason of mis-certification of rates in the claimant/receiving party’s costs budget.

The claimant had sought £465 an hour for a Grade 1 fee earner in the budget, but £350 in the bill of costs, which was the correct figure in the retainer at the relevant time, as a result of which the Master found improper conduct within the meaning of

Ridehalgh v Horsefield [1994] 1 WLR 462 ,

and there was no appeal against that finding.

The Master disallowed the costs in the bill of, and related to, the preparation of the budget and the defendant, the paying party here, appealed on the basis that that was too lenient a sanction, and that the Master had erred in failing to determine whether the improper conduct was a good reason under CPR 3.18 to depart from the budget.

The High Court confirmed that the principles regarding penalising misconduct in costs under CPR 44.11 set out in

Gempride v Bamrah and another [2018] EWCA Civ 1367 ,

which involved improper or unreasonable conduct in preparation of a bill of costs, apply equally to preparation of costs budgets.

The High Court disagreed with the Master on the effect of the conduct in this case, which contributed to his sanction. The Master’s finding that the misstatement of the rates in the budget did not affect the judge’s decision at the Case and Costs Management Conference was speculation not supported by evidence.

The Master had held that the District Judge had no intention of approving a budget containing an hourly rate of £465 for a Grade A fee earner, and would not have done so even if that had been reduced as £350.

Consequently the paying party had not been prejudiced.

That finding was unsupported by evidence and was an error of law.

The Master was also wrong in holding that the case here was indistinguishable from

Tucker v Griffiths and another [2017] 5 WLUK 461.

Whilst in both cases there was improper inflating of sums claimed as incurred costs in the budget, the conduct of the parties was different, as in Tucker the solicitors had used a “blended” rate, whereas here what the solicitor had done was to include an hourly rate for a Grade 1 fee earner which was greater than the claimant was obliged to pay under the terms of the retainer.

The High Court said that each case of penalty for breach of CPR 44.11 must be judged on its own facts.

The failure of the Master to decide whether the improper conduct in overstating the hourly rate beyond that in the retainer amounted to a good reason under CPR 3.18(b) to depart from the budget, was an error of law.

The High Court held that that issue remained to be determined on assessment and added that, without seeking to fetter the Master’s discretion, the court expected the Master to have regard to what was in this judgment.

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Written by kerryunderwood

July 8, 2019 at 10:41 am

Posted in Uncategorized

2 Responses

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  1. Have some thing similar, Budget Grade A and B Defendant claimed £400 and £296 both pre and post budget, then after winning served a Bill with Grade A and B bot at £400 pre and post approved Budget, tut tut

    John Davies

    July 8, 2019 at 3:22 pm


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