Jacqueline Dawn Harrison (Respondent/Claimant) v University Hospitals Coventry & Warwickshire NHS Trust
| Jurisdiction | England & Wales |
| Judge | Lord Justice Davis,Lady Justice Black,Sir Terence Etherton Mr |
| Judgment Date | 21 June 2017 |
| Neutral Citation | [2017] EWCA Civ 792 |
| Docket Number | Case No: A2/2016/4547 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 June 2017 |
[2017] EWCA Civ 792
Sir Terence Etherton (MASTER OF THE ROLLS)
Lady Justice Black
Lord Justice Davis
(SITTING WITH MASTER GORDON-SAKER AS AN ASSESSOR)
Case No: A2/2016/4547
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SENIOR COURT COSTS OFFICE
MASTER WHALAN
SCCO REF: MAW/1601086
Royal Courts of Justice
Strand, London, WC2A 2LL
Alexander Hutton QC and Roger Mallalieu (instructed by Acumension Ltd) for the Appellant
Kevin Latham (instructed by Shoosmiths Access Legal) for the Respondent
Hearing date: 10 May 2017
Introduction
This appeal raises issues of some general importance in the context of costs. In particular, the two principal issues are ones which concern the relationship between costs budgeting and detailed assessment and which appear to have attracted sharply divided views among those specialising in this area. Ultimately, they are to be resolved by a process of interpretation of the relevant Rules and related Practice Directions.
The first issue can be summarised in this way. Where a Costs Management Order ("CMO") approving a costs budget has been made in the course of civil proceedings is a costs judge on a subsequent detailed assessment precluded from going below the budgeted amount unless satisfied that there is good reason for doing so? Or is there an entitlement to do so without any prior requirement of good reason for going below the budgeted amount?
The second issue is whether, with regard to costs incurred prior to the budget ("incurred costs"), there is or is not a like requirement of good reason if a costs judge on a subsequent detailed assessment is to depart from the amount put forward at the relevant costs management hearing.
A third, and entirely discrete, point is also raised. This is as to when, for the purposes of the transitional provisions relating to proportionality contained in CPR 44.3 (7), a case is to be treated as "commenced".
The appeal is by the defendant NHS Trust from a decision of Master Whalan, sitting as a district judge of the County Court, pronounced on 16 August 2016. Because of the wider importance of the first two issues raised leave was given on 2 December 2016 for this appeal to come directly to this court. We were, in fact, told that a number of detailed assessments are currently on hold pending the outcome of this appeal. In addition, since the decision of Master Whalan there has been handed down the decision of Carr J in the case of Merrix v Heart of England NHS Foundation Trust [2017] EWHC 346 (QB), [2017] 1 Costs LR 91. On the first issue, she reached the same decision as Master Whalan reached in the present case: that is, that good reason is required. Although there is no appeal before this court from the decision in Merrix, it is necessary to consider whether or not that case was correctly decided on this point.
At the outset of the appeal hearing before us an application was made on behalf of the appellant to adduce further evidence. We refused that application for reasons given at the time.
The appellant was represented before us by Mr Alexander Hutton QC and Mr Roger Mallalieu. The respondent was represented by Mr Kevin Latham. The arguments, both written and oral, were carefully and thoroughly presented. In addition, this court had the benefit of sitting with Master Gordon-Saker (the Senior Costs Judge) as an assessor. Nevertheless, I should make clear that the conclusions I reach are my own.
Background facts
The respondent (claimant) had undergone a caesarean section at a hospital operated by the appellant (defendant) in April 2011. Complications arose. In due course the respondent brought clinical negligence proceedings against the appellant in the Northampton County Court. The claim form, with issuing fee, was sent to the court through the DX under cover of a letter dated 27 March 2013. The documents were stamped as received by the court on 2 April 2013 and the claim form itself was formally issued on 9 April 2013.
At all stages the claim for damages was expressly limited in value to £50,000. Liability was disputed. There was a costs management conference before HHJ Hampton sitting in the Northampton County Court on 18 August 2014. Amongst other things the parties were, by the judge's Order, given permission to rely upon their updated costs budgets (in Precedent H form) as presented and modified at the hearing. The total, including both incurred costs and estimated future costs, being put forward by the respondent's solicitors by way of time costs and disbursements came to some £197,000. Success fees and ATE insurance premium were not included. The judge recorded no comment on the figure relating to incurred costs: that amounted to some £108,000 of the figure of £197,000 then being put forward. No appeal was sought to be made against the judge's Order.
Shortly before trial fixed for July 2015 the case was settled. The appellant agreed to pay the respondent £20,000, together with costs on the standard basis. Mr Hutton — who had not acted below – was not able to enlighten us as to why a claim always limited to £50,000 and in due course assessed as sufficiently meritorious to justify payment to the respondent of £20,000 was not capable of settlement at a much, much earlier date. At all events, the respondent's solicitors then put forward in October 2015 a bill of costs of over £467,000 (including success fee and ATE premium). It was that Bill of Costs which eventually came before Master Whalan on detailed assessment.
The legislative scheme
Since, for present purposes, the outcome of this appeal depends on the application and interpretation of the relevant Rules (and associated Practice Directions) it is convenient to set them out at this stage. I do so in the form applicable at the relevant time.
By CPR 44.3 it is, among other things, provided 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.
…..
(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."
CPR 44.4 relates to factors to be taken into account in deciding the amount of costs. It provides in the relevant respects as follows:
"(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
(b) if it is assessing costs on the indemnity basis –
(i) unreasonably incurred; or
(ii) unreasonable in amount.
(2) In particular, the court will give effect to any orders which have already been made.
(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."
Rules as to costs management and costs budgeting are contained in CPR 3.12 – CPR 3.18. They have been amended from time to time, most recently with effect from 6 April 2017. The importance evidently being attached to the requirement to file budgets is illustrated by the provisions of CPR 3. CPR 3.15 relates to CMOs made by the court. That provided at the relevant time as follows:
"(1) In addition to exercising its other powers, the court may manage the costs to be incurred by any party in any proceedings.
(2) The court may at any time make a 'costs management order'. Where costs budgets have been filed and exchanged the court will make a costs management order 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. By a costs management order the court 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."
By CPR 3.17 it was provided:
"(1) When making any case management decision, the court will have regard to any...
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