Bernard Murrells (Executor of the Estate of Jill Murrells deceased) v Cambridge University NHS Foundation Trust
| Jurisdiction | England & Wales |
| Judge | Master Brown: |
| Judgment Date | 17 January 2017 |
| Neutral Citation | [2017] EWHC B2 (Costs) |
| Court | Senior Court Costs Office |
| Docket Number | Case No: 1604060 |
| Date | 17 January 2017 |
[2017] EWHC B2 (Costs)
IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE
Master Brown (sitting as a Judge of the County Court)
Case No: 1604060
Mr. Kapoor (instructed by Gadsby Wicks) for the Claimant
Mr. Wilcock (instructed by Acumension) for the Defendant
Hearing dates: 23, 24 November and 12 December 2016
Judgment Approved
Introduction
I am asked to rule in respect of an issue that arises in a detailed assessment of the Claimant's Bill of Costs. I have already made a number of determinations in the assessment. The issue that arises is whether the sums remaining after my earlier decisions are disproportionate pursuant to the provisions of CPR 44.3 (2) (a), and, if so, whether further reductions from the costs claimed are appropriate.
Background and relevant earlier decisions
The Claimant is the widower of Mrs. Jill Murrells, a nurse, who sadly died on 24 July 2012 in the course of operation at Addenbrooke's Hospital, Cambridge, aged 59. He sought damages from the Defendant alleging that his wife's death was caused by the negligence of the Defendant's clinical staff in the course of that operation. Proceedings were issued on 9 February 2015.
The claim settled and the Claimant's entitlement to costs arise out of his acceptance, on or about 2 September 2015, of an offer by the Defendant. That offer was made after a Defence had been filed denying liability and before any Cost and Case Management Conference. The offer was to pay damages of £9,650 plus costs on the standard basis.
In his Bill of Costs, the Claimant seeks the sum of £163,358.71 inclusive of VAT. Exclusive of VAT the costs are £140,539.05. I understood it to be common ground that VAT is to be ignored for the purposes of determining whether the costs claimed are proportionate; it would, in any event, seem unlikely that the determination of this issue can be affected by whether a party is registered for VAT. Accordingly, the figures provided below are net of VAT (except where indicated) and I have proceeded on the basis that the Court should assess proportionality on this basis.
The Bill of Costs has been divided into two parts: Part 1 is in the sum of £59,520.50 and deals with work carried out prior to 1 April 2013; Part 2 is in the sum of £81,048.55 and covers work after this date.
The Claimant's solicitors acted under a conditional fee agreement entered into with the Claimant on or about 4 September 2012. The Claimant also had the benefit of an ATE insurance policy taken out on 11 September 2012; the ATE premium was staged such that £5,506.80 was payable on settlement prior to issue, £22,737 following issue and £56,476.80 up to 45 days before trial or if the claim went to trial. The policy was self-insuring and the premium was payable on success only. As is commonly the case, the policy provided an indemnity in respect of adverse costs (i.e. costs payable to the Defendant pursuant to a costs order) and the Claimant's own disbursements. A success fee of 100% was claimed on all the profit costs.
It was agreed by the parties at the outset that I should determine whether the Part 1 base costs (i.e. excluding additional liabilities) amounting to some £32,000 were disproportionate pursuant to CPR 44.4 (2) as it was before the Legal Aid, Sentencing and Punishment of Offenders Act 2012 ('LASPO') came into force. This required me to apply the test in Home Office v Lownds [2002] EWCA Civ 365. It appeared to be common ground that the Claimant's claim was unlikely to exceed £25,000 and I determined that the Part 1 base costs were disproportionate. Applying the test of necessity to the line by line assessment, I determined that the profit costs in Part 1 of the bill should be allowed in the sum of £11,613.25. and disbursements should be allowed in the sum £4,440 giving a total for base costs of £16,053.25. I considered this sum to be necessarily incurred.
Thereafter, applying the test of reasonableness set out in new CPR 44.3(2) I reduced Part 2 base costs incurred up to and including the date of settlement to £11,366.25 in respect of profit costs and to £5,440.50 in respect of disbursements (including court fees), giving a total of £16,806.75. To this were added the costs of preparing the bill of £3,630. Thus the total figure for the Part 2 base costs which I determined to be reasonably incurred and reasonable in amount was £20,436.75.
I found that the success fee of 100% was too high and that the prospects of success were better than 50/50. I determined that there was nevertheless a significant risk of losing the claim assessed as at the time when the CFA was entered into, and that the appropriate success fee was 82%. There was no individual challenge to the reasonableness of the ATE premium claimed in Part 2 of Bill in the sum of £22,737.
For clarity I have set out the findings in tabulated form below:
| Part 1 | |
| Base profit costs | £12,761.25 |
| Success fee | £14,464.23 |
| VAT on profit costs | £4,645.1 |
| Disbursements | £4,400 |
| VAT on disbursements | £550 |
| Subtotal | £32,820.58 |
| Part 2 | |
| Base profit costs | £14,862.75 |
| Success fee | £12,187.46 |
| VAT on profit costs | £5,410.04 |
| Disbursements less ATE premium | £5,470.50 |
| ATE premium | £22,737 |
| VAT on disbursements | £683.35 |
| Subtotal | £61351.10 |
| Total | £94,076.68 |
I am now asked to determine whether the remaining Part 2 costs (after my earlier deductions) are disproportionate.
The provisions of new CPR 44.3 and CPR 44.4
CPR 44.3 provides inter alia:
….
(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
…
(5) Costs incurred are proportionate if they bear a reasonable relationship to —
(a) the sums in issue in the proceedings;
(b) the value of any non-monetary relief in issue in the proceedings;
(c) the complexity of the litigation;
(d) any additional work generated by the conduct of the paying party; and
(e) any wider factors involved in the proceedings, such as reputation or public importance.
…
(7) Paragraphs (2)(a) and (5) do not apply in relation to –
(a) cases commenced before 1st April 2013; or
(b) costs incurred in respect of work done before 1st April 2013,
and in relation to such cases or costs, rule 44.4.(2)(a) as it was in force immediately before 1st April 2013 will apply instead.
New CPR 44.4 provides, inter alia:
(1) The court will have regard to all the circumstances in deciding whether costs were—
(a) if it is assessing costs on the standard basis –
(i) proportionately and reasonably incurred; or
(ii) proportionate and reasonable in amount, or
….
(3) The court will also have regard to –
(a) the conduct of all the parties, including in particular –
(i) conduct before, as well as during, the proceedings; and
(ii) the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;
(b) the amount or value of any money or property involved;
(c) the importance of the matter to all the parties;
(d) the particular complexity of the matter or the difficulty or novelty of the questions raised;
(e) the skill, effort, specialised knowledge and responsibility involved;
(f) the time spent on the case;
(g) the place where and the circumstances in which work or any part of it was done; and
(h) the receiving party's last approved or agreed budget.
The Parties' Outline Submissions
Mr Wilcock, for the Defendant, contended that I should aggregate the base costs with additional liabilities and that the resulting total sum for Part 2 is disproportionate. In particular, he said that it does not bear a reasonable relationship to the sum in issue in the claim, which he puts at no more than £25,000. He did not accept that the litigation was complex either legally or factually and denied that there were any other relevant factors which might render the sums claimed proportionate. In support of his contention he relied upon the decision of Master Gordon-Saker in BNM v MGN Ltd [2016] EWHC B13, in particular paragraphs 25 to 32 of that decision.
Mr. Wilcock further contended that even if it were not appropriate to aggregate the sums in the way that he alleged that I should nevertheless reduce the base costs and the additional liabilities on the grounds that, considered individually, they remained disproportionate notwithstanding my earlier deductions.
When it became apparent towards the end of the second day of the detailed assessment (on 24 November 2016) that there was an issue as to whether or not I should follow the decision in BNM, my strong instinct was to adjourn this matter pending the outcome of the appeal in this case to the Court of Appeal. Mr. Kapoor however contended that the BNM decision could be readily distinguished on the grounds that the additional liabilities in this case related to funding arrangements which had been entered into before 1 April 2013, unlike those in BNM (which had been entered into after 1 April 2013) and that the new proportionality test cannot apply to these additional liabilities. Indeed, it was submitted by both parties that there were other issues not arising in BNM which needed to be determined so that I should proceed now and not wait. I, accordingly, set aside a further hearing to deal with the outstanding issues.
In the event, Master Rowley handed down judgment in the case of King v Basildon & Thurrock University Hospitals NHS Foundation Trust on 30...
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