Merrix v. Heart of England NHS Foundation Trust and its implications on YOUR cases

1.How do we approach quantum in light of the Merrix decision on cases subject to a Costs Management Order?

  • Quantum should be considered in two separate stages for both “incurred costs” and “future costs”.
  • Incurred costs are subject to assessment in the normal way since these are not usually addressed at a CCMC although may be commented upon.
  • Future costs should be assessed having reference to the approved/agreed budget.
  • “Where a costs management order has been made, when assessing costs on the standard basis, the costs judge will not depart from the receiving party’s last approved or agreed budget unless satisfied that there is good reason to do so. This applies as much where the receiving party claims a sum equal to or less than the sums budgeted as where the receiving party seeks to recover more than the sums budgeted”
  • Furthermore, at paragraph 68 of the judgment it provides “It is important to remember at the outset (and also in the context of the debate as to the meaning of the word “budget” addressed below) precisely what a judge is doing at the cost-budgeting stage. He/she is not identifying what is the maximum amount by way of future costs considered to be reasonable and proportionate. He/she is identifying what future costs are reasonable and proportionate.”
  • Therefore, when considering “future costs” provided a party is within budget per phase, the Court is unlikely to interfere with this. In accordance with BP v. Cardiff and Vale, this consideration needs to be made on a phase by phase basis and not merely across the entire budget.
  • The reasonableness of hourly rates must be considered however in the context of both incurred and future costs. It may well be these have already been dealt with at the CCMC.
  • Proportionality must also be considered whether considered at the CCMC or not particularly so in light of the ongoing debate as to whether additional liabilities should be considered when determining whether costs are proportionate.
  • “Significant developments” in the litigation should also be considered as to whether there is a good reason to depart from the budget.

2. Why do we still need a Bill of Costs/Detailed Assessment Hearing?

  • As per the above, incurred costs must still be assessed since these are not “budgeted” costs. The only way for a party to consider these is to be provided with a breakdown of such.
  • Furthermore, a costing of the file will still be required in order to comply with the indemnity principle.

3. How do we deal with cases in the system?

  • All live cases have to be re-visited in terms of our assessments as it may well be that our quantum assessments increase. Amended Replies will also need to be served to remind the Courts of the approach which should be taken upon Detailed Assessment.

 4. How to approach the increasingly critical CCMC?

  • It is clear from the reading of Merrix that the CCMC is critical. We envisage going forward these will take the form of a “Mini-Detailed Assessment”. It is therefore of the utmost importance that the Cost Draftsman attends on your behalf as the author of the Budget given their knowledge of the case to date and the exact workings of both the incurred and future costs.