“Dispiriting” how much public money is spent on unnecessary costs disputes

It is “dispiriting” how much public money is spent by public authorities arguing “unnecessarily” about costs, a deputy costs judge has said.

Deputy Master Campbell made the comments in R (On the application of TT) v Secretary of State for the Home Department [2021] EWHC B21 (Costs), a judicial review in an immigration case where the defendant argued it would be unjust to have to pay the 10% part 36 uplift because the money was coming out of the public purse.

By consent order in 2014, the defendant secretary of state agreed that the claimant had been unlawfully detained. Costs proceedings were delayed for six years because the claimant’s solicitors went out of business.

A bill for £89,000 was served last year and the parties agreed that interest at 8% would run only from 12 March 2014 to 11 June 2014 and thereafter only from 17 July 2020 until payment, credit being given for £49,867 paid on account on 1 December 2020.

On assessment, the deputy master allowed £70,807, with agreed interest of £3,870. The claimant thus beat its part 36 offer by £1,928.

The defendant argued that it would be unjust for the 10% additional sum to be added to the costs due, increasing the amount payable by the secretary of state by £7,000.

It said the offer was only beaten because of the interest and it was unjust to take this into account because it only arose due to the claimant’s delay in bringing the proceedings, and that in any case the additional sum should not be ordered bearing in mind that the funds would come out of the public purse.

The judge disagreed, favouring arguments of the claimant’s counsel. The defendant could and should have mitigated its liability to pay interest by making a payment on account, he said.

“Whilst it is right that there was no obligation to do so until 28 days after service of the bill, paragraph 7 of the consent order took effect on 14 August 2020 but no payment was made until 1 December 2020.

“Had the payment been made on time, the interest saved would have been about £1,160. Omitting to do so and failing to comply with an order to which the defendant had itself given its consent is not a promising start when it comes to seeking a discretionary remedy, as here.

“Nor is the fact that the defendant made no attempt to mitigate its liability for interest by making a payment earlier than the date it did, albeit that there is no obligation to do so: it just makes commercial sense that it should be done, irrespective of any delay by a receiving party in serving their bill.”

Deputy Master Campbell also agreed that it was permissible to take interest into account when working out whether a part 36 offer has been beaten.

He was unaware of any binding authority that it would be unjust to order payment of the additional sum where the public purse was paying.

He added that, having carried out “numerous” assessments involving paying parties where payment of the costs is coming out of public funds – predominantly judicial review and clinical negligence cases – “it is dispiriting how much public money is expended unnecessarily in arguing about those costs at assessment”.

Deputy Master Campbell continued: “Many such matters will have been capable of settlement much earlier, either through effective part 36 offers being made at an early stage or through a costs mediation before the fee for the assessment has been incurred.

“Of course, there are occasions when that is not possible such as where there are points of principle involved in a group action but, in the present case, the public purse was put to unnecessary expense by the defendant’s failure to make a part 36 offer at a level sufficient to give it costs protection had it been rejected, and in a sufficient sum so as to be attractive to the claimant and thus to make it acceptable.

“Not only that, but here, the defendant’s shortcomings were compounded by the fact that a realistic part 36 offer was turned down, comprising, as it did, interest to date, as well as the amount which the claimant was willing to accept for his costs – see CPR 36.5(5).”

Andrew Tollitt (instructed by NWL Costs Lawyers) for the claimant. Patrick Herhily (instructed by Government Legal Department) for the defendant.

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Costs News
Published date
27 Oct 2021

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