Costs is not always the first thought on a clinical negligence practitioner’s mind, but the first 6 months of this year have been busy with relevant costs decisions. Here are the author’s top 10 useful costs decisions to keep in mind as you plan, practice, and seek to recover / oppose the maximum costs recovery in your claims.
Reductions to Successful Claimant Costs
A win will not necessarily equate to full costs recovery, as the following cases demonstrate.
Exaggerated claim = reduction of costs recovery
This is an interesting case where the Claimant was successful at trial, beat the Defendant’s Part 36 offer, was specifically found not to have been fundamentally dishonest, but nonetheless was penalized for exaggeration short of dishonesty. In Morrow v Shrewsbury Rugby Union Football Club [2020] EWHC 999 (QB) the successful personal injury Claimant, who had beaten the defendant’s Part 36 offer, nonetheless had his costs reduced by 15% across the board, for “engrained” exaggeration. We might anticipate that this case will be much produced in an attempt to obtain similar reductions in many cases where a recovery noticeably below the pleaded value has been achieved.
Disbursement funding / interest not recovered
On the same date, In Nosworthy v Royal Bournemouth & Christchurch Hospitals NHS Foundation Trust 2020 EWHC B19 (Costs) Master Brown in the Senior Court Costs Office decided that awards of interest on costs for the pre judgment period (in order to compensate for interest paid by a party on disbursement funding) should not as a general rule be recovered: “costs recovery is not intended to be a complete indemnity. Under the pre-LASPO costs regime the element of the success fees which was attributable to the delay in payment of fees was not recoverable inter partes: see rule 44.3B of the then applicable Civil Procedure Rules. Indeed, it seems to me that it might reasonably be thought that if Parliament had now intended there to be a recovery of the costs of funding or borrowing in litigation of this sort in the manner in which it is now claimed it would have provided an appropriate mechanism for its ascertainment.”
And the latest in the long running list of cases re change of funding is also a win for the Defendant
The vexed issue of a pre LASPO change from public funding to CFA continues to produce litigation. Despite 1 recent case finding such change to have been reasonable, the tide is very much the other way, with yet another example XDE v North Middlesex University Hospital NHS Trust [2020] EWCA Civ 543 holding once again that additional liabilities are irrecoverable. The Court of Appeal upheld on the particular facts of this case the decisions of the courts below that the reasons for the change from public funding to CFA were unreasonable, disallowing recovery of the success fee and the ATE premium.
Reductions to Successful Defendant Costs
It is not only successful Claimants who have seen their costs entitlement cut in principle.
Successful Defendant penalised in costs as a result of failure to engage in ADR
In Wales (t/a Selective Investment Services) v CBRE Managed Services Ltd & Anor [2020] EWHC 1050 (Comm), His Honour Judge Halliwell sitting as a Judge of the High Court held that such failure meant that the parties were denied the opportunity to fully canvass and engage with the underlying issues. Costs were denied to the tune of 50% from the date upon which the Defendant’s solicitors confirmed that their client would not take part in ADR, and disallowed to the tune of 20% for the final period prior to trial, once a further refusal to mediate was communicated.
The above case is in fact just 1 of a whole raft in the past 6 months where costs penalties against both Claimants and Defendants have been made, whether parties were ultimately successful or not, where there have been failures actively to engage in mediation / ADR/ negotiations. Attendance at JSM but making no offers is also penalized.
Refusal actively to engage in settlement negotiations = indemnity costs
Indemnity costs against unsuccessful Defendant from the date of unreasoned refusal to engage attend a JSM
In BXB v Watch Tower and Bible Tract Society of Pennsylvannia & Ors [2020] EWHC 656 (Admin) Chamberlain J considered an application by the successful Claimant, who had ‘beaten’ her first Part 36 offer (made on 9 July 2019) in respect of claim arising out of serious sexual abuse, that the Second Defendants should pay all of her costs on the indemnity basis, in view of the Defendants’ unreasonable conduct, in particular their refusal to engage in alternative dispute resolution (‘ADR’). Whilst not going that far, the learned judge did consider “that an order that the Claimant’s costs be assessed on the indemnity basis is, in my judgment, appropriate. But it should not apply to the whole of the Claimant’s costs – only those incurred after 25 February 2019, the date of the Defendants’ unreasoned refusal to engage with the invitation to attend a joint settlement meeting.”
Even a reasoned refusal to attend a settlement meeting however may not assist, as was held a week later.
Indemnity costs against unsuccessful Defendant from the date when negotiations ought to have been considered
In DSN v Blackpool Football Club Ltd (Rev 1) [2020] EWHC 670 (QB) the reasons given for refusing to engage in mediation were found inadequate. They were, simply, and repeatedly, that the Defendant “continues to believe that it has a strong defence”. This was not considered reasonable by Griffiths J, “No defence, however strong, by itself justifies a failure to engage in any kind of alternative dispute resolution. Experience has shown that disputes may often be resolved in a way satisfactory to all parties, including parties who find themselves able to resolve claims against them which they consider not to be well founded. Settlement allows solutions which are potentially limitless in their ingenuity and flexibility, and they do not necessarily require any admission of liability, or even a payment of money. Even if they do involve payment of money, the amount may compare favourably (if the settlement is timely) with the irrecoverable costs, in money terms alone, of an action that has been successfully fought. The costs of an action will not always be limited to financial costs, however. A trial is likely to require a significant expenditure of time, including management time, and may take a heavy toll on witnesses even for successful parties which a settlement could spare them”.
Moreover, attendance at JSM must be meaningful and not just designed to tick the box of being able to say in respect of costs that a meeting was attended.
Indemnity costs against unsuccessful Defendant who attended JSM but makes no offers
EAXB v University Hospitals of Leicester NHS Trust will be of particular interest to all of us who have attended RTMs only to be told that the opposing side will be making no offers. The Claimant having succeeded on liability in a wrongful birth claim, was awarded indemnity costs largely as a result of the Defendant, which had itself requested a JSM, attending but making no offers.
And it is not only unsuccessful Defendants who are penalized in indemnity costs.
Indemnity Costs against unsuccessful Claimant who ought to have accepted an offer
In De Sena v Notaro [2020] EWHC 1366 the Claimant’s claims were dismissed in their entirety. In a spectacularly damning conclusion on costs, HHJ Matthews, sitting as a judge of the High Court, had this to say, “Overall, taking all these points together, I am entirely satisfied that this is an appropriate case to award indemnity costs in favour of the first and second defendants. The case was weak and thin to start with, it was met with reasonable – indeed, generous – offers that should have been accepted, and the litigation was poorly prepared, including the botched expert evidence. In my judgment, if her lawyers did not do this, this is a case where they should have stood up to the client and said “You have no case; it is a waste of time and money to go on.” Although I have no doubt that she would have been very unhappy, it would have been, objectively speaking, a kindness to her to do so.”
Any offer to settle would appear to be better than none. Part 36 provides, as usual, ongoing satellite litigation in this respect.
Part 36 Cases
Genuine offer to settle vs. tactical attempt at obtaining the enhancements
In Rawbank SA v Travelex Banknotes Ltd [2020] EWHC 1619 (Ch) Mr Justice Zacaroli considered whether the enhancements of Part 36 should apply when a successful claimant made an offer to settle a debt for a slightly reduced figure. The Part 36 offer was made at a discount of only 0.3% of the total amount claimed. The unsuccessful party, unsurprisingly, submitted that this was clearly not a genuine offer to settle, but was a tactical move, designed solely to engage the enhanced payments set out in Rule 36.17(4). The learned judge, whilst seeing the force of that submission, did not accept it, “The critical question is not a mathematical one – the proportion of the discount – but whether it is possible to infer from the size of the discount that there is no genuine attempt to settle the proceedings.” (From a mathematical perspective however avid followers of these reported offers will note that it seems that a no court is likely to strike down any such offer, see Huck v Robson [2002] EWCA Civ 398 where 95% was held to be a genuine offer to settle, and even with an offer to settle for 99.9% of the full value of the claim, at its highest the judge would still only “have a discretion to refuse indemnity costs”.)
A Defendant beating its own Part 36 offer has less entitlement to costs than a Claimant in the same situation
In Lejonvarn v Burgess & Anor [2020] Civ 114 the court considers the anomaly for successful Defendants where a Part 36 offer succeeds;- there is no presumed indemnity costs against the Claimant. This was a claim concerning complaints of negligence in respect of garden design. At trial the Claimant lost, hence failing to beat the Defendant’s part 36 offer of £25,000. This appeal concerned the discrete issue of whether or not the Defendant ought to have been awarded costs on the indemnity basis. Part 36 has always been designed to provide that a claimant who beats his or her offer has an automatic entitlement to indemnity costs (unless that can be shown to be unjust) whilst a defendant has no such automatic right. The court affirmed this anomaly and it remains that there is no automatic entitlement on the part of a defendant to indemnity costs if that defendant beats its own Part 36 offer.
Remember also, in principle, the assessment of costs on an indemnity basis is not constrained by the approved cost budget, and to the extent that Coulson LJ’s obiter comments in Elvanite or Bank of Ireland v Watts suggested the contrary, they should be disregarded. This means that indemnity costs can provide a useful means to get around the inability to depart (upwards) from budgeted costs on assessment without good reason.
(A very thorough consideration of caselaw on the issue of indemnity costs in general is given by the court in this decision (Lord Justice Coulson giving the leading judgment) and this decision merits a look for that reason alone.)
