Arguably the two biggest issues in the costs world right now – the relationships between budgeting and detailed assessment, and between proportionality and additional liabilities – have continued to bubble with rulings from regional costs judges.
District Judge Hale in Nottingham explicitly agreed with the ruling last October made by District Judge Lumb in Merrix that budgeting does not stop detailed assessment.
In Bhojani v University Hospitals of Leicester NHS Trust, DJ Hale said: “Like Judge Lumb, I think the answer… has to be more nuanced than the claimant’s contention for a fixed figure and the defendant’s contention for an entirely unfettered entitlement to attack a bill on detailed assessment.
“The budget will be a strong guide to what will be allowed on a detailed assessment and, because the receiving party’s costs have already passed scrutiny once, the scope for further reduction might prove to be limited.”
Describing the budgeting stage as involving “a consideration of the landscape and assessment as a more detailed survey of the terrain”, he said budgeting was not intended to replace detailed assessment: “Had that been the intention of the rule committee, they would have made the appropriate and specific changes to CPR parts 44 and 47 and they did not.”
DJ Hale said: “It seems clear to me that, without an authoritative and binding ruling from the higher courts or a clear and unequivocal change to the Civil Procedure Rules, parties and judges alike will continue to operate in an atmosphere of uncertainty.
“Clarification and guidance is required urgently and, while I have reached a conclusion, I have not done so without significant hesitation. For those reasons, I have indicated to counsel that I shall readily grant permission to appeal and would hope that any appeal would be dealt with as speedily as possible.”
The judge said the budget would still be an important factor on detailed assessment – once a budget has been approved, he would be reluctant to reduce the receiving party’s costs on grounds of proportionality.
Meanwhile, District Judge Besford (pictured) in Hull, an honorary vice-president of the ACL, was faced with a bill split between pre- and post-1 April 2013 work, and recoverable additional liabilities.
The costs in Mather v Doncaster & Bassetlaw Hospitals NHS Foundation Trust had not been subject to budgeting. The total bill, including additional liabilities, disbursements, VAT and assessment costs, was £514,700, which on assessment DJ Besford reduced to £332,229. He then had to consider proportionality.
He agreed with Master O’Hare’s 2015 ruling in Hobbs that the relevant figure to consider was the total figure as assessed. “It would be a selective exercise if the court was to ignore what could be a significant pre-April 2013 amount of costs. This is particularly pertinent given that there are likely to be ‘split’ bills going forward for a number of years.”
It would also be inconsistent with the way the court considers incurred costs, including those from before 1 April 2013, when assessing a budget.
He decided that the total figure for these purposes should not include the additional liabilities, in line with Master Rowley’s ruling in King late last year.
“If, when considering what is a proportionate figure, the success fee was included, the costs, as in this case, may well appear disproportionate. If reduced on a global basis, that would amount to a reduction simply on the grounds that, when added to the base costs, the total appears unreasonable. Such an action would be contrary to the rules.
“Further, the amended definition of ‘costs’ by excluding additional liabilities implies that they are no longer relevant when considering ‘proportionate costs’. To include them would be ignoring the new definition and would penalise a party solely on the basis that they acted under a CFA.”
The ATE premium, though different in nature to the success fee, should be treated the same as otherwise the court would introduce “a degree of inconsistency”.
As a result, he found the base costs of £72,253 plus counsel’s fees of £25,181, a total of £97,434, proportionate where £60,000 was paid out in damages.
DJ Besford granted leave to appeal, and was told that leave had also been granted in King.
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