In the case of Mitchell v Gilling-Smith  EWHC B18 (Costs), Master Leonard has allowed an ATE insurance premium of £10,000.00 in a case that settled for £200,000.00.
The Defendant had argued that the Claimant should not have taken out ATE insurance at all as Qualified One Way Costs Shifting provided adequate protection. In the alternative, the Defendant argued that a bespoke policy rather than a block rated policy should have been taken out by the Claimant.
The Master rejected the Defendant's arguments on the basis that the Claimant was always going to require medical evidence and that the Claimant could not have known that the claim would ultimately settle. To consider that argument would be to apply the benefit of hindsight.
The Master also confirmed that it was reasonable to take out a block rated policy as the alternative would result in some cases being rejected and others accepted with increased premiums.
The Defendant invited Master Leonard to give his considered view as to the inclusion of additional liabilities in relation to the new proportionality test. The Master refused to do so on the basis that this point will shortly be considered by the Court of Appeal in the case of BNM v Mirror Group Newspapers.
Comment: The Defendant raises points that seem to cover old ground. The issues of the early uptake of ATE insurance and the application of a block rated policy have been considered many years ago in cases such as Callery v Gray and Rogers v Myrthyr Tydfil County Borough Council with those decisions confirming that an ATE policy can be taken out at an early stage and that a block rated policy is reasonable. In my view, the fact that this relates to the recoverable element of a policy covering the obtaining of medical evidence is not good reason for such issues to be reconsidered.
The appeal in BNM will no doubt give us some guidance on the issue with regard to the inclusion of additional liabilities in the new proportionality test. Watch this space!
Focus on Relief from Sanctions
Following the judgment in the case of Denton v TH White  EWCA Civ 906, guidance was given by the Court of Appeal in relation to relief from sanctions.
The hard line taken in Mitchell v Newsgroup Newspapers Ltd  EWCA Civ 1537 was watered down into a new test which can be briefly summarised as the three stage test below:
1. Was the breach serious or significant?
2. Was there good reason for the breach?
3. Considering all the facts of the case, is it just to allow relief?
The Court of Appeal in Denton maintained that the guidance given in Mitchell remained "substantially sound".
Since then, many cases have been reported in relation to applications for relief.
This week, there has been the case of Mott v Long  EWHC 2130 (TCC) in which the Defendant was 10 days late in filing a Costs Budget. The Defendant blamed unspecified IT issues for the delay but provided no evidence of such issues.
The judge considered that the breach was "serious or significant" and that the lack of any detail provided with regard to the IT issues led him to doubt that there were any such issues. The Defendant therefore failed on stages 1 and 2 but relief was allowed under stage 3 as the judge considered that the Defendant would have had to revise their Costs Budget in any event due to case management decisions taken earlier in the CMC process.
Given that Denton states that greater weight should be given to stages 1 and 2, it seems to be a fairly generous decision to me.
Another recent decision is in the case of Rotronic Instruments (UK) Ltd v A One Distribution (UK) Ltd  EWHC 1833 (TCC) where the Defendant failed to file and serve either an acknowledgement or a Defence to the claim. The Defendant, over three months later, made an application for relief from sanctions and an extension of time for filing their Defence.
The judge considered that the breach was serious or significant and that there was no good reason for the breach. However, the Defendant was allowed relief on the basis that their conduct had no material impact upon the proceedings as the Particulars of Claim had been revised and no costs had been incurred as a result of their conduct.
What I found interesting about this case was that the judge described relief from sanctions in a case where it was concluded that the Defendant had failed stages 1 and 2 was "relatively rare". I wondered whether this was borne out in recent case law, so I decided to have a look through the cases that have been heard this year and on a quick trawl through Bailii, I noted the following applications where stages 1 and 2 were failed yet relief was granted:
Mott v Long  EWHC 2130 (TCC)
Rotronic Instruments (UK) Ltd v A One Distribution (UK) Ltd  EWHC 1833 (TCC)
Newland Shipping and Forwarding Ltd v Mr Ahmed Sakr Mohammed Salem Al Qassimi  EWHC 1416 (Comm)
And the following where relief from sanctions was denied:
Gladwin v Bogescu  EWHC 1287 (QB)
Redbourn Group Limited v Fairgate Development Ltd  EWHC 1223 (TCC)
Kimathi and Ors v The Foreign and Commonwealth Office  EWHC 939 (QBD)
Michael and Ors v Phillips and Ors  EWHC 142 (QB)
Elbrook Cash and Carry Ltd v The Commissioners for Her Majesty's Revenue and Customs  UKFTT 143 (TC)
Couper and Ors v Albion Properties Ltd and Ors  EWHC 22 (Ch)
It seems that it remains difficult to obtain relief from sanctions where the breach is "serious or significant" and the Court considers that there was no good reason for the breach, though not impossible as the recent cases highlighted above show.
Of course, the best approach remains to be vigilant on compliance with Court Orders and Directions to avoid being in the position where relief is required in the first place!
Following the last few years of speculation and uncertainty on the subject of fixed costs, Lord Justice Jackson finalised his report on the issue this week and provided some much needed clarity on the subject.
As has been widely reported in recent times, the recommendations made included the addition of a new track (the intermediate track) for cases between £25,000 and £100,000. This will not, however, apply to clinical negligence cases where fixed costs will only apply to claims for damages under £25,000 and even then only where both breach of duty and causation have been admitted in the letter of response.
The proposals also suggest that there be no provision for indemnity costs. In its place would be an enhancement of the appropriate fixed costs figure of 30% or 40%.
The parties will be expected to agree a band of complexity and the appropriate figures will be calculated on the basis of that band with a fixed amount plus a percentage of the damages being awarded. If the parties are unable to agree the appropriate band, then the judge will deal with that on allocation. Either party may challenge the band but will be ordered to pay fixed costs of £150 if unsuccessful.
Where the Claimant is successful, the damages for the purpose of the calculations are the damages recovered. Where the Defendant is successful, reference to damages means the claim defeated, so the amount as valued in the particulars of claim.
There is also a matrix of fixed trial costs. Provision is made within both fixed fee matrix for instructions to Counsel or a specialist lawyer to draft statements of case and advise at that stage, to advise in conference prior to trial and to attend the trial. There is also provision for fixed fees to be recovered for the attendance of both Solicitor and Counsel at any JSM.
These proposals are now to be the subject of a government consultation with further review as to their implementation by the Civil Procedure Rules committee sometime next year. The earliest we are likely to see any implementation is around October 2018.