Claimant awarded costs of the assessment on the indemnity basis over Defendant's failure to respond to offer of ADR
In the Various Claimants v Mirror Group Newspapers litigation, Master Gordon-Saker has ruled that the Claimant should recover their costs of the assessment on the indemnity basis as a result of the Defendant's failure to respond to the offer of mediation.
The prospect of ADR was initially raised by the Defendant and the Claimant responded by proposing a potential mediator and requesting that the Defendant agree to cover the costs of the process.
The Defendant did not respond to the Claimant despite numerous chasers and Master Gordon-Saker considered that the Defendant had acted unreasonably in failing to engage in the process:
"it seems to me that there has been a blanket refusal by the Defendant to engage in any process of discussing ADR"
"I have no hesitation in concluding that the Defendant has behaved unreasonably in failing to engage in the process of discussing at least the possibility of ADR, and mediation in particular and given that the common costs base costs have been agreed, it seems to me that there was no reason for pessimism as to the outcome of any mediation"
Master Gordon-Saker went on to order that the Defendant pay the costs of the assessment of the common costs bill and the four individual claims on the indemnity basis.
This ruling is further evidence that any failure to engage in ADR, whether that be in the main action or during costs proceedings, is likely to lead to sanctions being imposed by the Courts against the defaulting party.
It has been reported that there has been a change of policy at the Department of Health with regard to the proposed introduction of fixed costs in Clinical Negligence cases.
Where the proposed limit had been mooted to be as much as £250,000.00, it is now proposed that there be consultation over fixed costs up to £25,000.00 (the limit of the Fast Track).
The Department of Health also confirmed that no final decision had been made over the limit, but it would seem eminently more workable up to the limit of the fast track than it would be within the multi track.
Previous plans for fixed costs had also been considered to apply to all of civil litigation. This consultation relates only to Clinical Negligence and it remains to be seen whether that is as a precursor to fixed costs being rolled out in other areas of civil litigation.
The limit of £25,000.00 is said to cover 60% of cases, so will still have significant implications for many Clinical Negligence practitioners. However, for many lawyers that will not represent 60% of their revenue.
This would seem to be a step in the right direction and comes on the back of more good news for the Claimant arm of the profession, following the announcement that the government was to reconsider the proposed legislation announced by George Osbourne with regard to whiplash claims.
There must be a balance struck between reducing legal costs and maintaining access to justice. It is essential that those that have been injured through no fault of their own are not denied access to justice because Solicitors are not prepared to take on their case. Any fixed fee must be realistic to avoid such an outcome.
A High Court judge has suggested that a detailed costs budget should be submitted with any application for security for costs.
The case of BNM v MGN Limited  EWHC B13 was decided in June of this year.
In BNM, Master Gordon-Saker assessed a bill of costs in the sum of £241,817.00 down to £167,389.45. He then went on to consider the proportionality arguments raised by the Defendant, applying the new proportionality test.
The damages were agreed in the sum of £20,000.00 in this matter and the Master considered the costs to remain disproportionate after the assessment. He therefore applied a further discount and came to the conclusion that the figure of £83,964.80 was reasonable and proportionate.
Upon applying the new proportionality test, the Master considered the ATE premium separately from the remainder of the costs. Both the costs in general and the ATE premium were found to be disproportionate.
The costs were reduced from £105,909.45 to £53,964.80 and the ATE premium was reduced from £61,480.00 to £30,000.00. Interestingly, and perhaps worryingly, the ATE premium was allowed in full following the original assessment and then reduced by more than 50% when applying the proportionality test.
Unsurprisingly, the Claimant appealed and the matter has been set down for a hearing on 5 December 2016. Watch this space!
We are delighted to welcome Lizzie Dudley to the Sextons team.
Lizzie has worked in legal costs for 8 years and has returned to work in costs following a few years working in the financial sector.
Lizzie has a particular specialism in Industrial Disease cases and she can be contacted at firstname.lastname@example.org.
Lizzie has already been out to attend a recent costs conference and has been busy getting up to speed with the various changes in costs since the introduction of the Jackson reforms.
Welcome to the team Lizzie, we are sure you will have a long and successful career with the firm.
Qualified One Way Costs Shifting was introduced as a part of the Jackson reforms back in April 2013. The principle being that a losing Claimant would not be held liable for the Defendant's costs save for in specified circumstances.
One of those circumstances was where the Claimant was found to be 'fundamentally dishonest'. Since the introduction of QOCS, there has been some doubt as to what constitutes 'fundamental dishonesty'.
The recent case of Nesham v Sunrich Clothing dealt with the allegation of fundamental dishonesty, with the Defendant arguing that the Claimant had been a liar in circumstances where he lost at trial.
District Judge Charnock-Neal held that "the Claimant gave me his version of events. I have preferred not to accept that version, but it does not necessarily follow that he was fundamentally dishonest".
The Defendant appealed and the judgment of DJ Charnock-Neal was upheld by HHJ Freeman. HHJ Freeman stated "Up and down the country on a daily basis, judges are being asked to decide whose account of a road traffic accident is more reliable. And it is the experience of everybody who litigates in this field that drivers' involved in an accident will give different and contrary versions of accidents to the extent of not just what lane they were in, but where they came from , the route they had taken and so forth.... which may not constitute dishonesty, far less fundamental dishonesty".
The appeal failed and the Defendant was ordered to pay costs of the appeal.
It is still unclear exactly what constitutes fundamental dishonesty, but this judgment is evidence that it must be something greater than simply losing at trial on the basis that the judge prefers the Defendant's version.
Following the ban on recoverability of success fees and ATE premiums on 1 April 2013, the issue of assignment of CFA’s has been firmly back in the spotlight.
Many firms have sought to assign a CFA from one to another in order to protect the recoverability of the additional liabilities from the losing party. But this has given rise to Defendant’s challenging the validity of such an assignment.
One recent case that dealt with this issue was Jones v Spire Healthcare Limited.
In Jones, the Claimant had instructed Barnetts Solicitors to pursue a claim for personal injury arising out of an accident at work. Barnetts went into administration and SGI LLP agreed with the administrators to acquire Barnetts’ book of work. The Claimant agreed for her case to be transferred to SGI and a deed of assignment was entered into between Barnetts and SGI and a separate deed of assignment was signed by the Claimant.
The claim settled for £17,500 with costs to be assessed if not agreed. The Defendant argued that there was no valid retainer and the Claimant had no entitlement to costs.
The Defendant's contention was that the CFA was not capable of assignment, as it amounted to a contract of personal service and did not come within the exception of trust and confidence which could be inferred from the decision in Jenkins v Young Brothers Transport Ltd  EWHC 151. In Jenkins, an assignment was found to be valid where the Claimant had followed a Solicitor to a new firm on the basis of trust and confidence in that Solicitor. Accordingly, the Defendant argued there was no entitlement to costs following the transfer of the case to SGI as no such trust and confidence existed.
This issue came before District Judge Jenkinson in September 2015.
The judge found that there was no reason to depart from the general rule that a contract for personal services could not be assigned as the facts did not fit with the Jenkins exception. There had been no relationship of trust and confidence with one fee earner an the retainer was therefore unenforceable.
The effect of this was that the costs incurred following the transfer of the case to SGI were irrecoverable.
The Claimant appealed that decision.
On appeal, HHJ Wood QC found the District Judge was wrong to find Jenkins was not binding upon him, even if the facts were distinguishable. It would be unduly restrictive and overly legalistic to deny the parties the effect of what they had intended. This was particularly the case where there was tripartite involvement and where the assignee (SGI) and the assignor (Barnetts) together with the recipient of the benefit (the Claimant) agreed to the shifting of the burdens and the benefits.
Accordingly, the appeal was allowed.
This decision will be welcomed by the Claimant arm of the profession, but it may not be the end of the matter as the Defendant may decide to refer the case to the Court of Appeal.
There are also other cases that may be referred to the Court of Appeal. Webb v Bromley London Borough Council and Budana v Leeds Teaching Hospitals NHS Trust are due to be heard shortly. The Defendant in Budana has sought that the matter be leapfrogged to the Court of Appeal.
It seems that a definitive answer is not far away on this issue.
The CPR is due to be amended as of 6 April 2016 to deal with changes to the costs budgeting regime. The changes apply to cases issued on or after 6 April 2016.
It is important that practitioners are aware of the changes to the time limits for filing costs budgets. In lower value claims (claim value of under £50,000.00), the budget must be filed with the directions questionnaire and in other claims, the budget must be filed not later than 21 days before the first CMC.
There is the requirement for a budget discussion report to be filed no later than 7 days before the CMC. This should be completed using the new precedent R that can be found on the Ministry of Justice website.
CPR Practice Direction 3E is also being amended to include the following updates:
1. The first page only will be required where the value of the claim is under £50,000.00 or the costs included in the budget come to less than £25,000.00.
2. Cases involving children are to be excluded from the costs management process.
3. Cases where the Claimant has limited or severely impaired life expectancy, costs management will 'ordinarily' be dispensed with.
The familiar penalty of restriction to court fees only remains, so it is important that the new time limits are noted to avoid any costly errors.
The Court of Appeal has recently ruled on an appeal against an application for Security for Costs in the case of Sarpd Oil International Limited v Addax Energy SA & ANR  EWCA Civ 120.
At first instance, the Court had regard to the amount of the Defendant's costs budget when considering an appropriate figure for security. The Claimant suggested that the Court had erred in taking such an approach and that the Judge should have considered whether the incurred costs were reasonable and proportionate.
Lord Justice Sales rejected that argument stating that "all the parties appreciated, or should have appreciated, that the first CMC was the appropriate occasion on which issues between them regarding the quantum of costs shown in their respective costs budgets should be debated". Lord Justice Sales went on to state that "parties must appreciate that if they wish to take issue with another's costs budget, they should do so at the first CMC".
The Court of Appeal refused to go behind the 'settled budget' and proceeded to use the costs budgets as a relevant reference point when considering the order to be made for Security for costs.
If this approach to incurred costs is adopted generally, then it is likely that many parties will have missed the chance to challenge incurred costs on detailed assessment. The Court does still have some discretion though as CPR 3.18 does state that the Court will "not depart from such approved or agreed budget unless satisfied that there is good reason to do so". It remains to be seen what might be considered a 'good reason' to depart from the agreed budget.
In news that is sure to be welcomed by the Claimant side of the profession, the Court of Appeal have confirmed that Fixed Costs do not apply where a Part 36 offer is beaten.
In the cases of Broadhurst v Tan & Taylor v Smith  EWCA Civ 94, The Master of the Rolls, Lord Dyson, confirmed that fixed costs and assessed costs are 'conceptually different'.
The appeal centred around the application of fixed costs in low value personal injury cases. Section IIIA of Part 45 of the CPR provides remuneration via a scheme of fixed costs. These rules were introduced on 31 July 2013 as part of the Jackson reforms.
Part 36 was also amended to include CPR 36.14A which confirmed that CPR 36.14 would apply subject to a number of amendments. The amendments did not refer to CPR 36.14(3), which provided the Claimant with their costs on the indemnity basis from the date on which the relevant period expired, enhanced interest and the additional 10% figure.
It was argued by the Defendant that CPR 45.29 should be preferred as it states that the only costs allowed are fixed costs save for in exceptional circumstances.
Lord Dyson confirmed that he preferred the Claimant's case that, where fixed costs are intended to prevail, Part 36 says so.
Lord Dyson referred to the differences between fixed costs and assessed costs describing fixed costs as 'awarded whether or not they were incurred and whether or not they represent reasonable and proportionate compensation for the effort actually expended' and describing assessed costs as 'costs that reflect the work actually done'.
With fixed costs very much in the headlines, Claimants will be hoping that this approach applies to any extension of the fixed costs regime in the future.