The year of costs in review

Bagnall: frenetic year ahead

Posted by Alex Bagnall, an associate and costs lawyer at Litigation Futures sponsor Just Costs

This year started well for personal injury lawyers with the Court of Appeal’s judgment in Broadhurst v Tan (February). Lord Dyson concluded that a claimant who beats their own part 36 offer at trial is not restricted to recovering fixed costs.

Broadhust was later applied by the High Court in Lowin v W Portsmouth & Co (June) to disapply the cap on the costs of provisional assessment; and by the Intellectual Property Enterprise Court in PPL v Hagan (November) where it was held that neither staged costs nor costs caps applied where a claimant beat its own part 36 offer.

Sales LJ inadvertently delivered a shockwave in SAPRD Oil v ADDAX Energy (March) by suggesting that a failure to obtain a recording at the first case and costs management conference that incurred costs in a budget were disproportionate meant those costs could not be challenged at a later date. As reported on Litigation Futures last week, the Civil Procedure Rule Committee is to reverse this decision by a rule change in early-2017.

A decision of the respected regional costs judge District Judge Besford (Sutherland v Khan (April)) reignited the question of whether late acceptance of a part 36 offer by a defendant entitles a claimant to indemnity costs. The judge concluded that it did, despite being referred to the line of binding authority which suggested this was wrong. Sutherland is not being appealed; but it would be no surprise if this issue appeared in the Court of Appeal in late-2017.

BNM v MGN (June) and May v Wavell Group (June) were the first well-publicised cases where courts applied the ‘stand back’ test to substitute assessed reasonable costs for a ‘proportionate’ figure. Both judgments are essential reading for any civil litigator. BNM is going to the Court of Appeal, but maybe not until October 2017.

The question of whether both the benefit and burden of a CFA are capable of assignment vexed many courts (e.g. Budana v Leeds University Hospitals (February), Webb v LB Bromley (February), Jones v Spire Healthcare (May), Azim v Tradewise (August) and Griffith v Paragon (November)). Budana has been leapfrogged to the Court of Appeal and is due to be heard in July 2017.

The blow of further impending personal injury reforms towards the end of the year was cushioned by some early Christmas presents for PI lawyers from Briggs LJ.

In Qader v Esure (November), he concluded that cases which fall out of the low-value PI protocols should not be subject to fixed costs if they are allocated to the multi-track. The judgment surprised many commentators as he essentially re-wrote the CPR in order to reach his conclusion. His suggested changes will be adopted in the next draft of the rules.

Briggs LJ came to a less controversial conclusion in Bird v Acorn Group (November), where he decided that a disposal hearing is a trial for the purposes of calculating the level of fixed costs.

The coming 12 months should see much-needed guidance from the Court of Appeal on proportionality, but the unusual nature of BNM and May may mean that these decisions are not the final word on the subject. The principle of whether CFAs can be assigned should also be resolved, but there is a possibility that the effectiveness of individual assignments will be fact-sensitive.

In short, 2017 has the potential to be every bit as frenetic as 2016.

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