A court faced with a bill of costs that straddles the Jackson reforms should consider both the pre and post April 2013 costs when deciding whether it is proportionate, but ignore any additional liabilities, a regional costs judge has ruled.
As a result, District Judge Besford in Hull held that assessed base costs of £97,434 were proportionate for a medical negligence case which settled for £60,000.
The costs in Mather v Doncaster & Bassetlaw Hospitals NHS Foundation Trust had not been subject to budgeting and the bill was a split assessment for work undertaken pre and post April 2013. The claim was funded throughout with a pre-April 2013 conditional fee agreement with after-the-event (ATE) insurance.
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…
“Further support for the proposition of looking at the total costs can be taken from the manner in which the court assesses a proportionate budget. When setting budgets, the court takes into account costs incurred before the date of the budget. Incurred costs does not distinguish between pre and post-April 2013 costs…
“It would in my judgment be inconsistent to have regard to pre-April costs on budgeting, only then to ignore them when considering proportionality on conclusion.”
Further, 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 ground 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…
“Finally, even though the success fee is excluded from consideration, I accept that if costs are reduced, that will inevitably reduce the amount allowed for the success fee which in turn reduces the total. If the base costs are proportionate, the addition of the success fee in whatever amount would also be proportionate.”
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.
“In my judgment, the costs incurred for the amount recovered, with the number of experts as to causation and the stage at which the matter settled, are proportionate. In reaching this conclusion I have had regard to the range of figures a similar case would be budgeted at.
“Whilst I accept that the action settled for less than half of the pleaded case, I do not accept that the claim was exaggerated. The amount accepted no doubt reflected litigation risk and that some aspects of the claim were more speculative than others. The acceptance of a lower amount was a justified compromise.
“The court whilst managing the claim was satisfied that seven experts were necessary. Again, this indicates that the issues had a complexity beyond a mere factual dispute. Having regard to all the factors, I find that the relevant costs are proportionate and I do not propose to make any further reduction.”
DJ Besford granted leave to appeal, and was told that leave had also been granted in King.