MXX (a protected party via her husband and litigation friend RXX) v United Lincolnshire NHS Trust
| Jurisdiction | England & Wales |
| Judge | MRS Justice Slade DBE,Mrs Justice Slade DBE |
| Judgment Date | 27 June 2019 |
| Neutral Citation | [2019] EWHC 1624 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: QB/2018/0285 |
| Date | 27 June 2019 |
[2019] EWHC 1624 (QB)
THE HONOURABLE Mrs Justice Slade DBE
SITTING WITH AN ASSESSOR
Case No: QB/2018/0285
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ON APPEAL FROM THE SENIOR COURTS COSTS OFFICE
Royal Courts of Justice
Strand, London, WC2A 2LL
Roger Mallalieu of counsel (instructed by Irwin Mitchell solicitors) for the Respondent/Claimant
Nicholas Bacon one of Her Majesty's counsel (instructed by Keoghs solicitors) for the Appellant/Defendant
Hearing date: 5 th March 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE MRS Justice Slade DBE
The Defendant to a claim for personal injury appeals from the decision of Master Rowley made on 4 July 2018 on a preliminary issue in a detailed assessment of costs to be paid to the Claimant, the Respondent to the appeal. The preliminary issue was the determination of the Defendant's application sealed on 12 December 2017 for an order pursuant to CPR 44.11 by reason of what they described as a mis certification on 6 January 2015 of the Claimant's costs budget in Form H for the substantive proceedings. The mis certification was basing profit costs on figures including an hourly rate of £465 for a Grade 1 fee earner when the actual hourly rate chargeable to the Claimant at the time of the costs budget was £350. The hourly rate for a Grade A fee earner in the CFA of 24 July 2012 entered into by the Claimant was £335. This was increased to £460 on 30 August 2013. By letter of 20 January 2015, two weeks after the certification of Form H, the Claimant was notified that the hourly rate was reduced to £350 with effect from 1 May 2014.
In his statement of 9 March 2018 Mr Steven Green, a partner in Irwin Mitchell LLP, solicitors for the Claimant, explained that in preparing the budget both the incurred and estimated time costs were calculated using a set of composite or ‘blended’ hourly rates. The composite rates which were used for the respective grades of fee earners were Grade A £465, Grade B £290, Grade C £230 and Grade D £140.
When the Bill of Costs was produced on 3 rd March 2017 the Defendant's solicitor saw that there was a large disparity between the profit costs claimed and those in the budget. On enquiry the Defendant's solicitors discovered that the hourly rate for a Grade A fee earner was £350 not £465 (the figure used on behalf of the Claimant in the budget). This disparity and a difference in the number of hours claimed led to the application under CPR 44.11.
The underlying facts are not in dispute and will be set out in summary form. The Claimant commenced proceedings on 14 October 2014 claiming damages arising from treatment she received when giving birth to her second child in a hospital for which the Defendant was responsible.
Judgment was entered for the Claimant by consent on 26 November 2014.
On 6 December 2014 the court ordered the parties to file and exchange costs budgets.
The Claimant's costs budget was filed and exchanged on 6 January 2015. The total amount included in the Budget for incurred time costs was £339,033 and for estimated time costs £229,894.
As the Claimant's costs budget was not agreed a Costs Case Management Conference (CCMC) was held by District Judge Thomson on 20 February 2015 (giving rise to the order made on 2 March 2015). Although the solicitor who had written the letter of 20 January 2015 reducing hourly Grade A rates from £460 to £350 attended the hearing, the court was not informed that the figure for time costs should be reduced. Nor was that figure in the Budget corrected in the year since its preparation.
The attendance notes of the CCMC made by solicitors of both parties substantially agree. The District Judge indicated that for budget purposes only £280 per hour would be used as a composite rate to calculate future time costs but that he was not making any decisions as to which Grade did what work.
In his statement of 9 March 2018 Mr Green explained why there was a reduction in the number of hours claimed in the Bill of Costs of 3 March 2017 from those in the Budget. He does not explain how and when it was realised that too high an hourly rate for a Grade A fee earner had been used for the Budget.
The Judgment of Master Rowley
At paragraph 59 of his judgment Master Rowley held that to set out in Precedent H in respect of incurred costs anything other than sums calculated by the time spent to date multiplied by the rates agreed with the client and claiming more than the client was obliged to pay was improper. The Master concluded at paragraph 59 that:
“I do not think that it would even occur to solicitors in general to set out anything other than the sums calculated by the time spent to date multiplied by the rates agreed with the client as incurred costs. But if those solicitors were asked whether claiming more from an opponent than the client is obliged to pay was actually improper, I have no doubt the answer would be yes. To do so deliberately, as Irwin Mitchell have done, seems to me to have flouted the fundamental requirement to comply with the indemnity principle. In my judgment it should clearly carry the stigma of improper conduct, as required by Ridehalgh” [ Ridehalgh v Horsefield [1994] 1 WLR 462].
The Claimant does not appeal from that finding.
Master Rowley did not accept the contention on behalf of the Defendant that failure to revise the Precedent H before the CCMC on 20 February 2015 before District Judge Thomson or at the hearing itself were further acts of improper conduct within the meaning of CPR 44.11.
In paragraph 60 Master Rowley stated:
“It seems to me that District Judge Thomson had no intention of approving a budget based on the sort of rates set out in the claimant's budget and would not have done so even if the Grade A rate had been reduced to £350 per hour. He had clearly formed a view of what he considered to be a reasonable composite rate on which to allow reasonable and proportionate sums for each phase. …In my view it is much more likely that he either decided on a figure between the parties' submissions or he used a figure that he already had in mind which he considered to be reasonable and multiplied hours by that figure. Consequently, the error by the claimant in failing to correct the budget prior to the CCMC was in fact of no effect.”
Accordingly Master Rowley stated at paragraph 65:
“…I do not think the error regarding the Grade A rates has caused any prejudice given the District Judge's approach at the CCMC.”
Nor did Master Rowley consider that the fact that more hours were included in the budget than were claimed in the bill of costs was improper conduct or caused any prejudice to the Defendant. Master Rowley concluded:
“As such the only issue is the inflated sums claimed as incurred costs. That was the position in Tucker [ Stephen Tucker v (1) Dr Rosemary Griffiths (2) Hampshire Hospitals NHS Foundation Trust Master Rowley 19.5.17] and I am driven to the conclusion that the same situation applies here and that I should apply the same sanction as a result.”
The sanction applied was to disallow items in the Bill of Costs for the Claimant's costs of and related to the preparation of the Budget.
By order of 20 September 2018 Master Rowley gave the Defendant permission to appeal the order which limited the disallowed costs to those claimed for preparation of and related to the Budget. These amounted to £23,406.30 plus VAT and travel expenses to the CCMC.
The Relevant CPR Rules
44.11
(1) The court may make an order under this rule where –
…
(b) it appears to the court that the conduct of a party or that party's legal representative, before or during the proceedings or in the assessment proceedings, was unreasonable or improper.
(2) Where paragraph (1) applies, the court may –
(a) disallow all or part of the costs which are being assessed; or
(b) order the party at fault or that party's legal representative to pay costs which that party or legal representative has caused any other party to incur.
3EPD2
6 (a) Unless the court otherwise orders, a budget must be in the form of Precedent H annexed to this Practice Direction. ..A budget must be dated and verified by a statement of truth signed by a senior legal representative of the party.
(The wording for a statement of truth verifying a budget is set out in Practice Direction 22)
Precedent H has separate columns for costs incurred and for costs estimated. The cells on Precedent H allow for time costs for various stages in the litigation showing those which have been incurred and those estimated. Hourly Rates for each grade of fee earners are to be shown.
22PD 2
2.2A The form of the statement of truth verifying a costs budget should be as follows:
‘This budget is a fair and accurate statement of incurred and estimated costs which it would be reasonable and proportionate for my client to incur in this litigation.’
(2) The court may at any time make a ‘costs management order’.
CPR PD 3E7
7.10 The making of a costs management order under rule 3.15 concerns the totals allowed for each phase of the budget. It is not the role of the court in the cost management hearing to fix or approve the hourly rates claimed in the budget. The underlying detail in the budget for each phase used by the party to calculate the totals claimed is provided for reference purposes only to assist the court in fixing a budget.
3.18 In any case where a costs management order has been made, when assessing costs on the standard basis, the court...
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