Thomas Hadley (A Protected party by his Litigation Friend, Laura McCarry) v Mateusz Przybylo

Hearing date: 28 February 2024

Approved Judgment

This judgment was handed down remotely at 10.30am on 15 March by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Introduction

This is the judgment of the court, to which we have all contributed. For clarity, we shall refer to the appellant as “the claimant”, and the respondent as “the defendant”.

The first issue for us to decide is whether there is an issue for us to decide. Master McCloud (“the Master”) was confident that she had decided, as a matter of principle, that a fee earner's attendance at rehabilitation case management meetings was, as a matter of principle, an irrecoverable cost in the litigation 1. It is in respect of that principle that the Master gave ‘leapfrog’ permission to appeal to this court. However, on behalf of the defendant, Mr Davis KC argues that, on analysis, the Master decided no point of principle at all.

If the Master did decide a point of principle, it raises a potentially important issue in personal injury litigation: is the cost of a fee earner's attendance at rehabilitation case management meetings irrecoverable in law as costs in the litigation? In her judgment dated 22 June 2023, the Master disallowed some £52,000 worth of future costs at a costs budgeting hearing, because she concluded that these were not “incurred in the progression of litigation”.

We set out, in Section 2, a brief chronology and, at Section 3, the principal elements of the Master's judgment. At Section 4, we deal with a variety of tangential matters, raised by leading counsel on both sides, which we consider to be immaterial to the main issues we are required to decide. In Section 5, we analyse whether there is an issue of principle at all. Thereafter, having set out the law in Section 6, we set out our analysis of the two grounds of appeal in Sections 7 and 8. There is a short summary of our proposed disposal of this appeal in Section 9. We are grateful to both leading counsel for their written and oral submissions.

The Chronology

On 8 June 2020, the claimant, Tom Hadley, was waiting at a road junction in King's Lynn, in order to make a right-hand turn. The defendant, Mateusz Przybylo, drove into the back of the claimant's car, shunting it into the path of an oncoming vehicle.

The claimant suffered catastrophic injuries. In addition to numerous broken bones, and damage to his spleen, bladder, kidney and lungs, he suffered a traumatic brain injury, permanent brain damage and sub-arachnoid haemorrhaging. He was on a ventilator until 24 July 2020. On 9 September 2020, he was transferred from Addenbrooke's Hospital to the Central England rehabilitation unit in Leamington Spa. In March 2021, he was transferred to the Sue Ryder neuro-rehabilitation unit at the Chantry House in Ipswich. His next step-down facility was Askham village in Cambridgeshire. On 4 August 2022, following an order made by the Court of Protection, he was discharged into the community. He has a team of carers that provide 24 hour care, with one carer at all times, sleeping overnight. It appears that

These proceedings were commenced on 5 November 2020. In the defence dated 12 January 2021, paragraph 3 said: “For the purpose of this action only, but not further or otherwise, it is admitted that the road traffic accident on 8 June 2020 was caused by the negligence of the defendant”.

The relevant cost budgeting hearing before the Master took place on 29 March 2023. The Master's judgment was dated 22 June 2023. Since then, we are told that the case has been compromised subject to the approval of the court. The terms of the proposed settlement include the payment of an agreed lump sum of £5.6 million together with an annual sum of £170,000 for case and care management. When capitalised, this amounts to a total of around £14.5 million. If the costs are not agreed they will be the subject of a detailed assessment. In such circumstances, the issue about costs in this appeal is not academic, and remains ‘live’ between the parties.

The Master's Judgment

The cost budget put forward on behalf of the claimant sought £1.18 million in costs. Of that, about 50% (over £500,000) had already been incurred by the time of the hearing before the Master. These figures were, on any view, high: for example, in respect of the “Issue and Statements of Case” Phase in Precedent Form H, it was said that £163,185 had already been incurred. The Master ordered that the parties engage in ADR in respect of the future costs. They did so successfully, and leading counsel on both sides stressed the value and economy of that exercise.

Following ADR, only one item of future costs remained in dispute. That concerned the “Issues and Statements of Case” Phase. At Practice Direction 3D10, the assumptions for this phase are:

“

• Preparation of Claim Form

• Issue and service of proceedings

• Preparation of Particulars of Claim, Defence, Reply, including taking instructions, instructing counsel and any necessary investigation

• Considering opposing statements of case and advising client

• Part 18 requests (request and answer)

• Any conferences with counsel primarily relating to statements of case

• Updating schedules and counter schedules of loss

• Amendments to statements of case”

During the cost budgeting debate, the point was taken on behalf of the defendant that the estimated future costs identified in respect of this phase, namely £68,400, were too high. There is a dispute, which we address below, as to how this point arose and the precise nature of the defendant's challenge.

It was this which, in her judgment at [2023] EWHC 1392 (KB) the Master identified at [1] as being “something of interest legally”. She identified the issue in these terms:

“In particular that issue is where the inclusion of solicitor attendance time in the budget, for attending case management meetings with medical and other professionals in the course of management of the claimant's rehabilitation needs, and for meetings with financial and court of protection deputies said to be part of inputting into a Schedule of Loss, are in principle costs which may be included in a budget and whether, if so, it is appropriate to include those in the ‘Issues Statements of Case’ phase of the budget on Form H.”

The Master summarised the parties' respective arguments at [4] and [5] of her judgment and, at [6], noted there was no relevant authority which assisted. At [8], the Master noted that the costs already incurred under this section of Precedent Form H were £163,185. That was not, of course, what she was concerned with; she was concerned with the future costs of this phase only 2. The Master noted that “after ADR, the total claimed by way of future costs in the budget before me (as time costs) is 258 hours (£68,400)”. She said:

“…That breaks down to 48 hours on the schedule, counsel and so on (£12,900). The rest is expense of attending on the deputies for health and welfare and finance, and the case manager. Some 60% is for the case manager and 20% each for attendance on, effectively meetings with, deputies. All this was framed as being part of the maintenance of the Schedule of Loss.”

At [9] the Master also differentiated between those cases where some legal charges relating to case management/rehabilitation “in a medical sense” can be properly claimable in some parts of the cost budget, such as, say, time incurred liaising over a witness statement from the case or care manager; instead, she said, “this case focusses on the very different and specific question of the expense of lawyers actually attending case management meetings on a regular and in this case very extensive basis.”

The Master then turned to deal with what she described as “the concept of ‘costs’ in litigation.” She said:

“10. I accept the Defendant's argument at hearing that it is a general principle that ‘costs’ are legal costs which are incurred in the progression of litigation. They may be pre-action, for example, or they may be reasonably incurred but found in hindsight not to be useful, yet such costs can still be ‘progressive’ even if they rule out some things which are then not pursued. But costs which are inherently non-progressive are not in my judgment ‘costs’ properly claimable in a budget between the parties. It is not unusual in assessing a bill

of costs to disallow items with the brief statement ‘non-progressive’, for example and it seems to me that if costs fall into that category then they are not suitable for inclusion in a budget.

11. If costs are progressive, then for the purposes of budgeting one has to proceed to fix the reasonable budget sum as a best judicial estimate of future costs, doing the best one can without the assistance of actual material showing work done, such as a Costs Judge would have at a detailed assessment. But the question “are these in principle claimable at all as costs?” is a latent but usually uncontentious one lurking in any costs decision as to quantum whether in budgeting or assessment of costs. It has raised its head in this case.”

The...