“Whole of split bill, less additional liabilities, subject to proportionality test, rules regional judge.”

This case related to a Bill of Costs prepared on behalf of the Claimant by MRN.

This was a matter that initially proceeded to a Detailed Assessment. The Bill had not been subjected to costs case management/budgeting but had been split to represent pre and post April 2013 for the purposes of proportionality. The Bill totalled £514,700.00, which was reduced to £332,229.00 during the assessment. Before the Detailed Assessment was concluded, the Defendant successfully argued that the Judge should take a step back and consider proportionality. Particularly given the fact that the Claimant had been awarded a 100% success fee and the premium was significant.

As such, the issues that DJ Besford had to consider were :-

a) Whether the relevant figure to consider on the issue of proportionality is the total figure as assessed, or whether the figure is just the post-April figure;

b) Whether the relevant figure, either in total or post-April should include the additional liabilities, whether limited to the success fee or ATE or both; and

c) What is a proportionate figure?

Whether the relevant figure to consider on the issue of proportionality is the total figure as assessed

With regards to the first point, DJ Besford commented…

“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.”

Whether the relevant figure, either in total or post-April should include the additional liabilities

With regards to the second point and the additional liabilities, it was found that both the success fee and ATE Premium ought to be ignored when assessing whether costs are proportionate on the basis that 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. It was also found that if base costs are deemed proportionate, then any additional success fee would also be proportionate.

What is a proportionate figure?

On the issue of was a proportionate figure, this particular case required 7 experts in total; both liability and causation was in dispute; the claim lasted in excess of four years and the pleaded claim was circa £170,000. As well as medical issues, there was also a factual dispute as to whether the fall from the commode caused a new fracture or was an earlier fracture. The Defendant throughout the proceedings denied liability and rejected Part 36 offers and a request for JSM. The Defendant did not make any offer until June 2014 which was on a ‘drop hands’ basis. Thereafter, the next offer was not until September 2015 for a figure of £10,000.00. Ultimately the Claimant recovered significantly in excess of this figure. However it only settled on the Friday before Trial was due to start on the Monday. The refusal to enter into meaningful talks subsequently meant settlement didn’t happen until the very last stage. It was therefore argued that all these factors had an impact on what was a proportionate sum.

DJ Besford found that the issues in this case had a complexity beyond a mere factual dispute regardless of the fact this matter settled for less than half of what was pleaded and found that the sum accepted was clearly a justified compromise and no doubt reflected the litigation risks.

The conduct of the Defendant was particularly highlighted given the robust nature of the way the case was ran i.e. refusing to enter into meaningful discussions and rejecting proposals to mediate. DJ Besford also took into consideration other factors in line with CPR 44.3(5) that states :-

Costs incurred are proportionate if they bear a reasonable relationship to-

a) the sums in issue in the proceedings;
b) the value of any non-monetary relief in issue in the proceedings;
c) the complexity of the litigation;
d) any additional work generated by the conduct of the paying party; and
e) any wider factors involved in the proceedings, such as reputation or public importance.
It was successfully argued that given the above factors the costs incurred were reasonable and proportionate.

Another issue raised by the Defendant was the fact that the ATE Premium was claimed within in the first part of the bill as this was the period when the ATE Premium was incepted. MRN’s decision to claim the ATE Premium in this part was intentional because that was when the Premium was incepted. The Defendant argued that this was wrong and should be claimed when it’s payable. DJ Besford threw this argument out and said other disbursements were to be claimed when they were incurred and it was no different for the ATE Premium.

As a result, it was found that the base costs of £72,253 plus counsel’s fees of £25,181, a total of £97,434, proportionate..

What does this mean going forward?

Whilst it does still remain necessary to split Bills pre and post April 2013, it now needs to be borne in mind that when assessing whether costs are proportionate, both the pre and post April 2013 costs will be considered and that ‘costs’ ought to exclude any additional liabilities in line with Master Rowley’s ruling in King late last year.