A case in which costs and ATE premium in a clinical negligence matter were considerably reduced as a result of proportionality
We have considered proportionality a number of times and unfortunately the inconsistent application of the new proportionality test continued in the case of Andrew Rezek-Clarke v Moorfields Eye Hospital NHS Foundation Trust.
In this matter, a Bill of Costs totalling £72,320.85 was served in respect of a clinical negligence claim which had settled for £3,250.00. An after the event insurance premium was claimed in the sum of £31,976.49. The Costs were found to be disproportionate and as such were assessed in the sum of £24,604.40. The ATE Premium alone was reduced from 31,976.49 to £2,120.00.
The Law
When considering proportionality the ‘new test’ for post LASPO cases is as follows:
“CPR 44.3(2)
(2) Where the amount of costs is to be assessed on the standard basis, the Court will –
(a) only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and;
(b) resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the Paying Party.
(5) 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 pubic importance.”
Proportionality
One of the main reasons why Master Simons found the costs to be disproportionate was because it was clear from the Claimant’s file that no cost planning had taken place at the outset of the claim. He referenced Judge Alton as follows:
“In modern litigation, with the emphasis on proportionality, it is necessary for parties to make an assessment at the outset of the likely value of the claim and its importance and complexity, and then to plan in advance the necessary work, the appropriate level of person to carry out the work, the overall time which will be necessary and appropriate to spend on the various stages in bringing the action to trial, and the likely overall cost. While it is not unusual for costs to exceed the amount in issue, it is, in the context of modern litigation such as the present case, one reason for seeking to curb the amount of work done, and the cost by reference to the need for proportionality.”
With that as a start point, Master Simons went on to explain that although appropriate investigations into a claim are required, they must be still be proportionate even if they are reasonably incurred. He explained that once it was apparent that costs in a case would be modest, the investigations (particularly the medical evidence) needed to be considered from a proportionality point of view. Ultimately this was not done and the costs were therefore found to be disproportionate:
“They do not bear any reasonable relationship to the sums in issue in the proceedings. The litigation was not particularly complex, no additional work was generated by the conduct of the Paying Party and there were no wider factors involved in the proceedings such as reputation or public importance.”
ATE Premium
The actual reduction to the ATE premium was the result of particular features of the case (not least of all that the premium had been calculated incorrectly), as such any general conclusions drawn from the reduction should be treated with caution. In fact Master Simons specifically says in paragraph 70:
“I am not deciding that this type of policy is inappropriate for low value cases.”
While this limits the certainty of any conclusions which can be drawn regarding the reduction of the premium in financial terms, it should still be considered a warning to those claiming significant premiums in matter which likely have modest costs.
Notably, one of the relevant factors in determining the proportionality of the ATE premium is that the Claimant did not consider the appropriateness of invoking the policy in the circumstance of the case and giving heed to the proportionality of the premium at that stage.
Conclusion
Considering proportionality is one of the most important and difficult tasks which a fee earner has to undertake. It is no longer enough that a step is reasonable, if it is not proportionate with reference to the factors in CPR 44. 3(2) it may be heavily reduced or deemed unrecoverable. There is no straightforward answer to this and fee earners will need to rely on their own experience and discretion in determining how a matter can be bought to a successful conclusion in a proportionate way. Master Simons’ judgment places stress on the importance of such considerations being evidenced on the file of papers so as always preparing comprehensive attendance notes is a critical step. Having said that, it is difficult to know whether the disproportionality finding would have been any less severe if at the outset consideration to this effect had been given but conduct (and costs) had remained largely the same.
With respect to the ATE premium, the case highlights firstly the importance of undertaking and recording considerations regarding the alternate funding options available to the Claimant when taking out ATE insurance. Secondly the case is an example of the Court considering additional liabilities under the umbrella of proportionality. An approach which is still far from certain.