Kerry Underwood

LATEST COSTS ROUND-UP

leave a comment »


This piece, in slightly different form, first appeared on the Practical Law Dispute Resolution Blog.

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.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

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

 

Wasted Costs Against Expert

In

Thimmaya v Lancashire NHS Foundation Trust and another, Manchester County Court, 30 January 2020, Claim No: B57YP861

a Circuit Judge made a third party costs order against an expert in the sum of £88,801.68 under section 51 Senior Courts Act 1981.

The expert who appeared for the claimant at trial “was wholly unable to articulate the test to be applied in determining breach of duty in a clinical negligence case”.

As a result the claimant had to discontinue the case, and the defendant successfully obtained a third party costs order against him.

The parties agreed, and the court accepted, that the court’s jurisdiction in such a matter is to be exercised on the same basis as a wasted costs order.

 

Conditional Fee Agreement Void as Condition Precedent Not Met Re After-The-Event Insurance

In

Anthony v Collins [2020] EWHC B14 (Costs)

the Senior Courts Costs Office ruled that an apparent Conditional Fee Agreement had never come into being as it contained a condition precedent in relation to After-the-Event insurance which was not satisfied.

The condition precedent read:

“Our agreement is conditional upon you getting insurance cover to cover the risk that you may need to pay the legal costs of the other side, and we must approve the terms of the cover.”

As no insurance was ever taken out, there was no valid Conditional Fee Agreement and no other valid retainer and so the successful claimant here could not recover costs from the unsuccessful defendant.

 

Comment

A poor and unfair decision.

Had the retainer been an hourly rate win or lose one, then any court would have found that by the solicitor continuing to deliver services and the client accepting them, there had been a waiver, or mutual variation, concerning the lack of After-the-Event cover.

Why is it any different with a Conditional Fee Agreement?

 

No Protective Costs Order In Private Claim: Another Court Of Appeal Disgrace

In

Swift v Carpenter [2020] EWCA Civ 165

the Court of Appeal considered the issue of the scope of Protective Costs Orders and the exercise of the court’s discretion and the need for speed in making an application, and the scope of the new CPR 52.19.

Here, the claimant sought a Protective Costs Order in relation to her appeal concerning the method of assessment of accommodation costs following a serious personal injury.

It was common ground that the claimant enjoyed Qualified One-Way Costs Shifting protection on the appeal, as in the proceedings at first instance.

The effect of QOCS is that no order for costs made against the claimant may be enforced without the permission of the court to the extent that the costs payable exceed the amount of damages and interest awarded.

The claimant argued that QOCS did not give her adequate protection and for all intents and purposes was meaningless as it still allowed her damages to be wiped out, even though there was no dispute on liability.

The Court of Appeal held that it was not appropriate to make a Protective Costs Order in a private case, but even if there was such a discretion, it would not have exercised it here.

The general purpose of a Protective Costs Order is to allow a claimant of limited means access to the court in order to advance their case without the fear of an order for substantial costs being made against them, a fear which would inhibit them from continuing with the case

 – see R (Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192.

In spite of the breadth of the court’s discretion under section 51 of Senior Courts Act 1981 and CPR 44, which the court here accepted gave it jurisdiction to make such an order “case law establishes that, as a matter of judicial policy and practice, we should not do so in the present case.”

 

Comment

Same old, same old right wing Court of Appeal, a serious blot now on the legal landscape.

The above quoted passage could have read:

“Parliament has told us in primary legislation that we can make Protective Costs Orders in private cases. The Civil Procedure Rules, approved by Parliament in secondary legislation, also say so.

But we do not like them because they give equality to individuals against massive multi-billion pound multi-national companies.

Cannot have that old boy can we?”

It really is a sickening judgment, parroting its own previous decisions in various cases, defying the will of Parliament to justify yet again defying the will of Parliament, and very obviously in this case depriving a very seriously injured person of access to justice.

 

Aarhus Convention Costs Liability Of Interested Party Clarified

In

R (Kent) v Teesside Magistrates’ Court and another [2020] EWHC 304 (Admin)

the claimant succeeded in arguing that a judicial review claim was an Aarhus Convention claim, and so had costs protection under Civil Procedure Rules 45.41-45.

This was despite an earlier direction it was not an Aarhus claim and the defendant initially stating that in its acknowledgment of service.

Concerning liability for the costs of that hearing, the interested party argued that the reference to “the defendant” in CPR 45.45(3)(b) means that in the event the court holds that it is an Aarhus Convention claim, the starting point is that the costs should be paid by the defendant.

This was partly because there is no reference in CPR 45 to the interested party.

The court disagreed and relied on the judgment of Coulson LJ in the Court of Appeal in

R (Campaign for the Protection of the Rural Environment Kent Branch) v Secretary of State for Communities and Local Government [2019] EWCA Civ 1230 ,

which decided that the reference only to a defendant in CPR 45.41-45.44 was not material.

The fact that the Campaign to Protect Rural England case concerned the opposite scenario, of the claimant being liable for the interested party’s costs, was not relevant.

 

Fundamental Dishonesty: £83,000 Damages Thrown Away

In

Grant v Newport City Council County Court, 18 December 2019

the County Court found that the claimant had been fundamentally dishonest within the meaning of Section 57 of the Criminal Justice and Courts Act 2015 and thus dismissed her claim.

There was no doubt that the claimant had suffered a serious injury, but surveillance evidence showed that she exaggerated her symptoms to a significant extent.

The judge found for the claimant on liability and held that had an honest claim been presented, she would have been awarded £83,000 in damages.

However, because of the dishonesty, the entire claim was dismissed, as required by Section 57.

“104. Having accepted that the claimant suffered real and significant injuries in this accident, I find that had she honestly presented her claim she would have been entitled to damages, and I will set out later what those would have been. However, she chose not to honestly present her claim. She pursued her claim, contending that she was significantly disabled, as set out in the medical evidence, which she voluntarily provided to the court. The fact that she loses her entitlement to honest damages is a consequence of this section: it is a consequence of her dishonesty.

105. Whilst this is a draconian step, it was made clear in the case of Sinfield that the creators of this section intended to use it to act as a deterrent to dishonest claimants who wanted to dishonestly exaggerate their claim. It is as a result of the claimant’s dishonesty that she loses her honest damages. There has been no suggestion to me that there would be any injustice in itself for section 57 not to be applied. In all of the circumstances, I dismiss the claimant’s claim in its entirety, recognising that she loses, not only the dishonestly sought damages, but her honestly sought damages too.”

 

Qualified One-Way Costs Shifting: Defendant Can Set Off Against Costs Awarded To Claimant

In

Faulkner v Secretary of State for Business, Energy And Industrial Strategy [2020] EWHC 296 (QB)

the Queen’s Bench Division of the High Court considered the Kafkaesque issue of whether a defendant failing to set aside a notice of discontinuance could then rely on that discontinuance to set off its costs – automatic on discontinuance – against the costs order made against it on its failed application.

I strongly suggest an ice-band around your head before you read on, or you could limber up with something comparatively simple, like TS Eliot’s The Waste Land.

In a classic understatement the High Court Judge here said:

“It is not without irony that the defendant sought to set aside a notice of discontinuance which, albeit served late in the day, had had the effect of saving it money”.

Here, the claimant in a personal injury case, protected by Qualified One-Way Costs Shifting, discontinued shortly before trial and the defendant applied to set aside the notice of discontinuance and to have QOCS protection set aside.

The application was dismissed and the unsuccessful applicant, that is the defendant, was ordered to pay the costs of the application to the claimant, who by virtue of discontinuing was of course the loser in the litigation with an automatic, but on the face it unenforceable, costs order against him.

That was the reason for the defendant’s application to have the discontinuance disapplied, and rather have the claim struck out.

This could only happen in a QOCS case. Bizarre hardly begins to do the process justice. It is the equivalent of a winning football team demanding a replay, or indeed a wholly successful litigant launching an appeal.

 

The judge here put it elegantly:

 

4. As it happens, the preliminary hearing never took place because the claimant served pre-emptive notice of the discontinuance of his claim. The defendant, however, applied, in response, to set aside the notice of discontinuance in the hope that, following the exhumation of the claimant’s claim, it could forthwith apply to extinguish it once more by striking it out. On the face of it, this might appear to amount to no more than an arbitrary procedural act of wanton posthumous desecration followed by a prompt and unceremonious reinterment. However, there was method in the madness of this procedural manoeuvre.

5. In short, the claimant enjoyed the protection afforded by the QOCS regime against the enforcement by the defendant of any costs orders against him. The service of a notice of discontinuance does not, of itself, remove such protection. Under CPR 44.15, however, the protection of the QOCS regime is stripped away where proceedings have been struck out on one or more of the grounds therein identified. Accordingly, the defendant hoped to reanimate the claim solely for the purpose of striking it out in such a way that it could proceed thereafter to enforce an order for costs against the claimant.

 

Initially the defendant argued that its liability to pay costs of the failed application – £7,000 – should be reduced by £3,500, being the sum awarded to the defendant in costs in any event in relation to an earlier application.

In other words the £3,500 should be set off against the £7,000, reducing the defendant’s liability to £3,500, coincidentally the same sum as the original costs order.

The judge raised the issue of whether the entire costs of the successful defendant came into play due to the automatic liability of a discontinuing claimant for the defendant’s costs.

The effect would be to extinguish any liability on the defendant’s part, which would mean that the effect of the claimant winning the application would be that it had, by virtue of the set-off, to pay its own costs of winning the application.

It should be noted that the QOCS rules, contained at CPR 44.13 onwards, allow enforcement of a costs order against a personal injury client “only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the client”.(CPR 44.14(1)).

The costs awarded to the claimant do not come into play as part of the fund to be enforced against.

However CPR 44.12, appearing immediately before the QOCS rules, does allow set-off against costs awarded to a claimant, or indeed a defendant.

CPR 44.12(1) reads:

 

“Where a party entitled to costs is also liable to pay costs, the court may assess the costs which that party is liable to pay and …

 

(a) set off the amount assessed against the amount the party is entitled to be paid and direct that party to pay any balance…”

 

The facts here were, for all intents and purposes, identical to those in

Darini v Markerstudy Group, 24 April 2017, Unreported

where the Circuit Judge, on appeal, rejected the defendant’s argument and refused to allow set-off, although in that case the District Judge, correctly as it will now be seen, had allowed the set-off.

However in

Howe v Motor Insurers’ Bureau [2017] EWCA Civ 932

the Court of Appeal found the opposite and held that set-off was not a form of enforcement and pointed out that CPR 44.14 enables enforcement without the permission of the court, whereas CPR 44.12 requires a court order before one set of costs can be set off against another.

Consequently, Darini was wrongly decided and the defendant here succeeded in its argument that the costs order in its favour could be set off against the costs order in favour of a QOCS protected claimant.

However, the court here also held that the Circuit Judge had been correct in Darini in saying that set-off was at the discretion of the court, and, as in Darini, the High Court here exercised its discretion against allowing set-off by the defendant.

 

23. There is an obvious danger in attempting to lay down general rules concerning the exercise of a pure discretion. The whole purpose of affording the court a procedural discretion is to provide for the flexibility necessary to achieve the overriding objective in circumstances of infinite potential permutation. I would not, therefore, conclude that the discretion to set off costs against costs is to be exercised against the defendant in every case in which it unsuccessfully applies to set aside notice of discontinuance of a claim falling within the QOCS regime – as the logic of Mr Mallalieu’s argument might otherwise appear to mandate. Each case must be decided on its own facts.

24. In this case, however, it became readily apparent that the application to set aside the notice of discontinuance was very weak. Indeed, the bid to strike out the resurrected claim under CPR 44.15 was doomed to failure. If the defendant had ever considered that such a strike out application had realistic prospects of success then it could and should have made it whilst the claim was still proceeding and weeks before the notice of discontinuance had been served. It was entirely inconsistent for the defendant to proceed towards the hearing of a preliminary issue in a case in which, as they were later to argue, the claimant’s case was so weak that it could have been struck out without the need for any such issue to be heard. One can understand the tactical reasons behind the defendant’s application but it was deeply flawed. There were, indeed, grounds upon which the claimant’s evidence was vulnerable. Doubtless, the defendant was fairly confident that the preliminary issue would be determined in its favour. Nevertheless, the strength of its case was never such as to justify a strike out application falling within one of the narrowly defined circumstances set out in CPR 44.15 and that is why one was never made until after the claim had already been discontinued.

25. Furthermore, if the claimant had not served notice to discontinue, the hearing of the preliminary issue would have gone ahead. The defendant would have incurred yet more costs. The claimant, however, even had it lost the issue, would still have enjoyed the full protection of the QOCS regime. It is not without irony that the defendant sought to set aside a notice of discontinuance which, albeit served late in the day, had had the effect of saving it money. I can well understand the defendant’s frustration that the notice was not served earlier but the resilience of the QOCS regime is such as to limit very strictly the inroads which can be made into the scope of its application.

26. I was told that the defendant would, in the event of success on the preliminary issue, have wanted to deploy the decision against claimants in later similar cases. But this was not a “lead case” in a GLO in which there was any court imposed restriction on settlement or discontinuance. I have suggested that, if the defendant remains eager to pursue such a procedural path in future, then suitable lead cases must be selected for that purpose.

 

CONCLUSION

27. It follows that, in the circumstances of this case, I exercise my discretion against allowing the defendant to set off any sum against the claimant’s costs of successfully resisting the application to set aside the notice to discontinue. The claimant is, therefore, entitled to a costs order in his favour in the sum of £7,000.”

 

At paragraph 21 of the judgment here, the court quoted Darini, with approval, in relation to the discretion issue.

“But for the defendant’s application, the position would have been simple. The claim had been discontinued, the defendant’s ability to enforce the deemed costs order in its favour by virtue of CPR 38.6 would have been effectively nil.

There were no damages, none of the exceptions in CPR 44.15 or 44.16 applied, and therefore 44.14(1) applied. From the claimants’ perspective, they would have incurred such costs as they incurred in bringing their claim unsuccessfully but would have no further liability. The QOCS regime would have operated as intended.

It cannot be correct that a defendant is able thereafter to bring an unsuccessful application which is dismissed with costs but, as a result, places the claimants in a worse position than they would have been but for that application. But for the application, the position would have been as set out above. The application has been brought and has caused the claimants to incur additional costs. The court has held that the claimants should be entitled to those costs in principle, thereby placing the claimants back in the position they would have been but for the application. However, the effect of the set-off is then to prevent the claimants from being placed back in that same position, but rather to leave them effectively paying their own costs for the defendant’s failed application.”

 

Comment

A correct decision and a helpful analysis of an incredibly badly written section of the Civil Procedure Rules, not that that narrows it down much.

 

Fixed Costs Ousted by Agreement

In

Turner v Cole, Liverpool County Court, 16 December 2019, Case No: F04LV884

a Regional Costs Judge held that an agreement between the parties ousted the fixed costs regime.

This was a road traffic accident which commenced in the portal but dropped out and it then became apparent that the value was over £25,000.

The defendant made an offer of £60,000 stating:

“In addition we will pay your reasonable costs, to be assed if these cannot be agreed”.

The claimant accept this offer on the basis that:

“…the Defendants will pay the Claimant’s legal costs to be (sic) detailed assessment if not agreed on the standard basis (and it is strictly accepted by the Defendants that costs will be paid on the standard basis and not in accordance with any portal, fixed costs or predictive costs basis).”

The claimant then served an informal costs schedule and bill of costs and the defendant then submitted that its insurer client – Tesco –  had not agreed any other basis than fixed costs.

Thus, here the court had to rule on the issue of contracting out of fixed costs.

The defendant, effectively Tesco Insurance Company, argued that it was not open to the parties to contract out of fixed costs and here the court considered the cases of

Solomon v Cromwell [2011] EWCA Civ 1584

and

Ho v Adelekun [2019] EWCA Civ 1988 .

The judge here held that, despite the intentions lying behind fixed cost regimes in terms of certainty, that following those two Court of Appeal cases, it is open to parties to contract out of the fixed costs by specific agreements.

On the facts here, the judge had “no hesitation” in concluding that the parties had, by concluded agreement, contracted out of the fixed cost regime and therefore that the claimant was entitled to her costs to be determined by detailed assessment on the standard basis.

 

No Detailed Assessment in Fixed Costs Cases

In

Nema v Kirkland [2019] EWHC B15(Costs)

a High Court Master struck out a claimant’s bill of costs as it was a fixed costs matter and should have been dealt with under the provision dealing with disputes relating to disbursements in fixed costs cases, contained in CPR 36.20(11), where a Part 36 offer has been accepted, as here.

Here, in a fixed costs case, the claimant accepted the defendant’s Part 36 offer but there arose a dispute as to disbursements, being counsel’s fees and engineers’ fees, resulting in the claimant issuing detailed assessment proceedings.

The court held at paragraph 29 that:

“By unambiguously limiting a claimant to fixed recoverable costs and permitted disbursements, CPR 36.20 is intended to eliminate the need for detailed assessment proceedings. The language of the rules indicates that cases subject to fixed recoverable costs fall within self-contained provisions of CPR 45 and generally outside the scope of detailed assessment.”

 

In

Mughal v Samuel Higgs & EUI Limited (Senior Courts Costs Office unreported, 6 October 2017)

a Master struck out a Notice of Commencement for the same reason.

“52. It also seems to me that, where following acceptance of a Part 36 offer, fixed costs are recoverable under CPR 45 Section IIIA, there can be no deemed order for costs under CPR 44.9. CPR 44.9 applies where a right to costs arises under CPR 36.13(1), but CPR 36.13(1) is expressly subject to CPR 36.20. CPR 36.20 provides that a claimant’s entitlement to costs and disbursements, following acceptance of a Part 36 offer, is dictated by Section IIIA of Part 45. That is quite inconsistent with the existence of a deemed order for costs on the standard basis, as is the requirement that any dispute be resolved by an order under CPR 36.20(11). The logical conclusion is that where CPR 36.20 applies, CPR 36.13(1) is disapplied.

53. As for the procedure to be followed under CPR 36.20(11), although CPR 36.20(12) refers expressly to costs payable to a defendant it is evident from that provision that the court is under CPR 36.20(11) required to make an order which determines the amount of costs due, whether to a claimant or a defendant. That is neither summary assessment nor detailed assessment. It is a different, self-contained procedure. CPR 44.6 (which excludes orders for fixed costs and is subject to “any rule, practice direction or other enactment”) and the provisions of Practice Direction 44, addressing the choice between summary and detailed assessment, have no application. Any issues will be limited, as will the amount in issue. There is no need for a judge who has dealt with the case to deal with the costs dispute: as Mr Hogan says, where settlement has taken place under Part 36, it is unlikely that a judge will have dealt with the case.

The only possible scenario in which there could be a detailed assessment in a fixed costs case is CPR 45.29J – the escape clause – where the whole point is that fixed costs should not apply.

 

“31. The only conceivable situation in which it would be appropriate for a claimant to commence detailed assessment proceedings following the acceptance of a defendant’s Part 36 offer in a case to which CPR 45, Section IIIA applies, would be where a claimant seeks costs exceeding fixed recoverable costs under CPR 45.29J. It is not suggested by either party that this is such a case.

 

Comment

Quite right.

 

In

Ivanov v Lubbe, Central London County Court 17th January 2020

the court, on appeal, held that where costs under the fixed costs regime could not be agreed following its acceptance of a Part 36 offer within the relevant period, the correct procedure was to issue a Part 23 application, rather than seeking detailed assessment.

Here, the claimant had accepted the defendant’s Part 36 offer in an RTA claim and, under CPR 36.20, the claimant was entitled to the fixed costs in Section IIIA of CPR 45.

The parties agreed costs except the issue fee, which the defendant questioned, contending that the claimant was, or might have been, entitled to fee remission and it was not reasonable for him to have incurred it.

The claimant issued a Part 23 application for an order that the defendant pay the fee.

The Deputy District Judge dismissed the application, finding that, where CPR 36.20 was engaged, a deemed costs order arose so that a dispute over recoverable disbursements could only be determined by serving a bill of costs and commencing detailed assessment proceedings.

The claimant appealed.

The Circuit Judge noted that CPR 36.20 created a regime in which the claimant was entitled to costs, and those costs were quantified using Tables 6B-6D.

Since the costs were fixed, there was no need for an assessment of costs or prerequisite for a deemed costs order.

Accordingly, he held that there was no deemed costs order made under CPR 36 in a fixed costs case, so a party seeking to invoke the court’s costs jurisdiction had to make a Part 23 application.

Regarding the court fee, the Circuit Judge considered several cases which held that the claimant could elect to make a claim against the tortfeasor rather than relying on alternative sources of funding such as the state or insurance.

He concluded that there were strong policy grounds for finding that it was not unreasonable for a claimant to preserve the public purse and direct the cost of wrongdoing onto the tortfeasor.

Accordingly, he ordered the defendant to pay the issue fee.

 

Road Traffic Accident Portal Conclusion

In

Bateman v Devon County Council, Plymouth County Court, 2 September 2019

a Circuit Judge held that the portal and fixed costs process did not apply to a case where a motorist was injured due to a defective road.

It was common ground that the road traffic accident portal did not apply as the defendant was not a highway user.

The issue was whether the Public Liability portal applied.

At page 593 of my book – Personal Injury Small Claims, Portals and Fixed Costs – I suggested that such claims were not covered as that portal excludes claims.

“…for damages arising out of a road traffic accident (as defined in paragraph 1.1(16) of the

Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents).”

 

Paragraph 1.1(16) reads:

 

“(16) ‘road traffic accident’ means an accident resulting in bodily injury to any person caused by, or arising out of, the use of a motor vehicle on a road or other public place in England and Wales unless the injury was caused wholly or in part by a breach by the defendant of one or more of the relevant statutory provisions as defined by section 53 of the Health and Safety at Work etc Act 1974.”

 

Here, the court held that such a matter does not go into either of the portals and is therefore not subject to fixed recoverable costs.

The court conducted a thorough examination of the case law in relation to the definition of a road traffic accident in other contexts.

There is no binding authority on this particular point.

Written by kerryunderwood

March 10, 2020 at 7:56 am

Posted in Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: