The issue of a costs budget found to be excessive and unrealistic required a further hearing in order to consider what costs order was to be made following the CMC held on 15 May 2024.
MASTER THORNETT – 21 August 2024
This was a clinical negligence claim concerning the Defendant’s treatment of the Claimant’s mental health during October 2014.
Proceedings were issued in April 2023 and the Defence denied liability in full.
By Order dated 13 February 2024 the court listed a sixty-minute Case Management Conference for 11 April 2024 including the direction that the parties were to serve and CE File respectively their Precedent H and R forms and then seek to negotiate and agree their respective estimated costs.
The direction stipulated that: In default of agreement, by e-mail to the Assigned Master’s clerk, a party may either: (a) Request that a Costs Management Hearing is listed. Such request shall provide a time estimate and preferred dates; or (b) Request a direction from the court that further costs management is dispensed with and that costs shall be subject to Detailed Assessment.
Thus, it was clear to the parties that Costs Management had been commenced but was subject to further directions and that budgeting – if it were further to proceed – would not be taking place in an active sense at the hearing on 11 April 2024.
On 11 April 2024 directions were given for the trial of defined preliminary issues and a Costs Management Conference was listed for 15 May 2024. The costs order for the hearing on 11 April 2024 was “in the case”, thus leaving open the question of what costs orders might be made at the Costs Management Conference.
The latter being a separately listed hearing at which discrete issues to case management were to be concluded.
The interim period saw agreement of the Defendant’s budget but unfortunately did not see agreement of the Claimant’s budget. The Costs Management Conference proceeded and saw substantial reductions to the Claimant’s budget.
Estimated costs as sought a total figure of £342,263 were instead approved in the sum of £159,675; a total budget of £316,110.29 recorded. The reduction in the claimant’s estimated costs was by 53.35%, being just 3.58% above that offered by the defendant.
In the Order sealed 11 June 2024 consequent to the hearing on 15 May, the court recorded certain observations and assumptions that had been expressed in the course of budgeting.
One was that the “Issue / Statements of Case” phase had not been managed owing to the defendant having indicated that an amendment was proposed to his Defence as well as possibly a revised Part 18 request to the claimant.
Owing to the substantial reductions in the claimant’s estimated costs as approved, the defendant indicated he would be seeking a specific costs order in its favour. Or at least other than “in the case”. Costs for that hearing were accordingly expressed as reserved.
The matter was listed for hearing 16 July 2024.
For the Defendant it was submitted that the court should exercise its discretion under CPR 44 by directing that (i) there should be no order for costs in respect of the hearing on 15 May 2024; (ii) the Claimant should pay the costs of the hearing on 16 July; and (iii) should the Claimant recover costs upon success, there should be a 50% reduction of such assessed costs of and occasioned by Costs Management.
The court referenced its wide discretion when making a costs order set out at CPR 44.2.
Following further discussion, the court agreed with the claimant’s submission that, in principle it would not be appropriate for the court regularly to depart from an “in the case” costs order following “ordinary” costs management just because a party has seen their budget reduced but did not agree with the claimant’s submission that t r.44.2 was not readily suited to justify a specific costs order if the circumstances of a particular case were justified. Especially when, as here, the court had listed a separate hearing for the exclusive purpose of costs management, with an expectation that the intervening period provided should prompt the parties to reconsider their respective positions.
The court went on (para 19):
…a party that resolutely proceeds to a separately listed costs management hearing with an overly ambitious budget should not readily assume that the court will be willing to see both its time and resources and those of opposing parties’ engaged without any potential consequence in costs.
Referring back to the claimant’s revised Precedent H and the defendant’s revised Precedent R and referencing submissions made at the hearing the court highlighted a number of factors that went to the question of proportionality during budgeting including but not limited to hourly rates sought; majority of the work to be undertaken at Grade A rate, limited delegation and the general time allocated to certain phases.
The court did add that
…the above factors are not intended as an exhaustive list of all that was explored during case management. Further, to iterate, hourly rates were not in themselves subject to approval, nor that approval of figures for estimated costs carried any implied direction as to who should carry out that work. The question of which fee earner the Claimant’s firm proposed to carry out the work was instead relevant only in considering the proportionality of the resultant figure sought.
The court, as required, focused upon that that was cost managed, standing back and considering the process as a whole.
On doing so the court was not persuaded by the claimant’s submission that the case was entirely routine and not out of the ordinary because the issues in contention typically touched upon hourly rates being said to be too high, proposed time excessive and the use of two counsel in conjunction with work at partnerial level disproportionate.
Whilst the court agreed that the considerations in themselves may well often be routine and ordinary in such hearings, the figures in question and the time and attention that had to be attended to them in this particular case marked a distinction.
Continuing the court said neither can the disproportionality of the Claimant’s budget and its reduction be simply excused away with comparisons between the Claimant’s assumptions during the preparation of his budget and alternative assumptions expressed by the court during costs management. It was, continued the court, important to distinguish between assumptions expressed as to the basis on which budgeting took place and the objective consequence of budgeting to a party.
In approving a sum, the court ultimately does not direct that a proposed aspect of work should not be carried out, neither does it direct how the approved sum should be spent. Instead, it applies an evaluative approach to proportionality if less obvious work (or at least justifiable expense) appears to have been factored into a party’s budget.
Having reached the overall impression and conclusion that the claimant’s Precedent H was “unreasonable and unrealistic” in terms of proportionality it was the parties that had adopted a polarised approach on budgeting that had prevented settlement and necessitated a further hearing.
In respect of costs the court ordered that there be:
- No costs for the hearing 15 May 2024;
- Claimant to pay defendant’s costs of 16 July 2024;
- 15% reduction to the claimant’s costs management costs (such as may come to be assessed).
Transcript – ewhc_kb_2024_2181.pdf (nationalarchives.gov.uk)