Valerie Elsie May Merrix v Heart of England NHS Foundation Trust
| Jurisdiction | England & Wales |
| Judge | District Judge Lumb |
| Judgment Date | 13 October 2016 |
| Neutral Citation | [2016] EWHC B28 QB |
| Docket Number | Case No: A90BM096 |
| Court | Queen's Bench Division |
| Date | 13 October 2016 |
[2016] EWHC B28 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
BIRMINGHAM DISTRICT REGISTRY
Birmingham Civil Justice Centre
33 Bull Street
Birmingham
District Judge Lumb
SITTING AS A REGIONAL COSTS JUDGE
Case No: A90BM096
Daniel Frieze (instructed by Irwin Mitchell) for the Claimant
Richard Wilcock (instructed by Acumension) for the Defendant
Hearing dates: 21 September & 13 October 2016
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.
Introduction
This judgment concerns a preliminary issue that has arisen in the detailed assessment of the Claimant's costs following her successful claim for damages arising from the clinical negligence of the Defendants.
The preliminary issue may be phrased as "to what extent, if at all, does the costs budgeting regime under CPR Part 3 fetter the powers and discretion of the costs judge at a detailed assessment of costs under CPR part 47."
To answer this question it is necessary to consider the inter-relationship between costs budgeting at the start and throughout a case and the assessment of costs at the conclusion of the claim. In particular there is a need to carry out a detailed analysis of the perceived tension between the wording in the rules for cost budgeting and assessment. This includes a consideration of the meaning of the wording in CPR 3.18 which has been at the heart of the debate.
Both processes share a common objective to identify reasonable and proportionate costs. However, looking from opposite ends of a procedural timeline they are not necessarily focussed on exactly the same thing.
Cost budgeting has been in existence for all multitrack claims issued after 1 April 2013 and prior to that in pilot schemes for defamation cases and in the specialist Technology and Construction and Mercantile Courts.
Although aspects of costs budgeting have been considered in a number of authorities there appears to be no direct case authority on the relationship between costs budgeting and costs assessment. The debate in the legal profession concerning this issue reflects wide-ranging views and interpretations and the parties in the present case have taken entrenched positions which can only be described as polar opposites.
In summary, the Claimant receiving party submits that if her costs are claimed at or less than the figure approved or agreed for that phase of the budget then they should be assessed as claimed without further consideration. The budget fixes the amount of costs recoverable and the costs can only be reduced if the Defendant paying party satisfies an evidential burden that there is a good reason to depart from the figure in the budget. The Defendant paying party's position is that the Costs Judge's powers and discretion are not fettered by the budgeted figure for the phase but that the budget is but one factor to be considered in determining reasonable and proportionate costs on assessment.
Without a ruling on the appropriate approach to detailed assessment both parties agreed that, save for certain stand-alone items which fall outside the budgeting process, such as an after the event insurance premium and perhaps the success fee, the detailed assessment could not proceed until this was determined as a preliminary issue.
The Civil Procedure Rules and Practice Directions
Detailed assessment is defined in CPR 44.1 as follows:
In Parts 44 to 47, unless the context otherwise requires – detailed assessment means the procedure by which the amount of costs is decided by a costs officer in accordance with Part 47.
CPR 44.3 sets out the test to be applied when carrying out a costs assessment:
(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 reasonable and proportionate amount in favour of the paying party
CPR 44.4 describes the factors to be taken into account by the Court when deciding the amount of costs:
(1) the Court will have regard to all the circumstances it 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
(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 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 the circumstances in which work or any part of it was done and
(h) the receiving party's last approved or agreed budget
CPR 47 sets out the procedure for detailed assessment including provisional assessment cases and provides that the parties must comply with the procedure set out in that part.
The purpose of costs management is provided in CPR 3.12 (2) as follows:
(2) the purpose of costs management is that the Court should manage both the steps to be taken and the costs to be incurred by the parties to any proceedings so as to further the overriding objective
CPR 3.15 provides that the Court may manage costs to be incurred by any party and for that purpose may make a costs management order. A costs management order is a recording of the extent to which budgets are agreed between the parties or in respect of budgets of parts of budgets which are not agreed, a record of the Court approval after making appropriate revisions. Once a costs management order has been made the Court will thereafter control the parties' budgets in respect of recoverable costs.
CPR 3.17 provides that when making any case management decision the Court will have regard to any available budgets of the parties and will take into account the costs involved in each procedural step, irrespective of whether any costs management order has been made.
CPR 3.18 states:
In any case where a costs management order has been made, when assessing costs on the standard basis, the Court will –
(a) have regard to the receiving party's last approved or agreed budget for each phase of the proceedings; and
(b) not depart from such approved or agreed budget unless satisfied that there is good reason to do so.
CPR 3 PD 3E provides a useful supplement to the costs management rules and includes:
7.3 If the budgets or parts of the budgets are agreed between all parties, the Court will record the extent of such agreement, in so far as the budgets are not agreed, the Court will review them and, after making any appropriate revisions, record approval of those budgets. The Court's approval will relate only to the total figures for each phase of the proceedings, although the course of its review the Court may have regard to the constituent elements of each total figure. When reviewing budgets, the Court will not undertake a detailed assessment in advance, but rather will consider whether the budgeted costs fall within the range of reasonable and proportionate costs.
7.4 As part of the costs management process the Court may not approve costs incurred before the date of any budget. The Court may, however, record its comments of those costs and will take those costs into account when considering the reasonableness and proportionality of all subsequent costs.
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 costs 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 claim is provided for reference purposes only to assist the Court in fixing a budget.
Defendant's arguments
The Defendant's primary position is that regardless of any approved or agreed costs budget the Court is obliged by the mandatory terms of CPR 47 to carry out a detailed assessment in accordance with the rules and that such an assessment includes both the incurred and estimated future costs contained in the budget in precedent H.
They contend that the appropriate test and procedure for detailed assessment is and always has been set out in CPR 44 and 47 respectively. On detailed assessment the Court will make an individual, line by line assessment of reasonable costs and then decide on any issues of proportionality, applying the appropriate test factors contained in CPR 44.3 and CPR 44.4. Any doubt as to whether any item of costs was reasonably or proportionately incurred or reasonable and proportionate in amount will be resolved in favour of the paying party on a detailed assessment on the standard basis.
Nowhere in CPR 44 or 47 is the Court directed that on a detailed assessment the paying party is required to show good reason why any item of costs should be reduced or disallowed where there is an approved or agreed cost budget.
The nearest to a tension between the rules...
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Mrs Valerie Elsie May Merrix v Heart of England NHS Foundation Trust
...of District Judge Lumb sitting as a Regional Costs Judge ("the Costs Judge") in Birmingham District Registry on 13 th October 2016 ( [2016] EWHC B28 (QB)). It raises a point of considerable importance arising out of the interplay between the costs budgeting regime under Part 3 of the Civil......