Louise Satterthwaite & Sarah Picken
There have been a number of interesting cases handed down this year affecting all areas of litigation. Here are some of the key cases that have been handed down affecting costs orders and assessment.
As many personal injury litigators will be aware, Qualified one way costs shifting, also known as QOCS is a rule which limits the Defendant’s ability to recover costs from the Claimant in personal injury cases as per CPR 44.13 – 14. You may recall, the rules on QOCS changed in April 2023 (and applies to cases which are issued on or after the 6th April 2023) in an attempt to overturn the Supreme Court judgement in Ho v Adelekun [2021]. In this case, it was held that costs orders made in favour of the receiving party, should not be taken into account when determining the limit in which the Defendant can enforce an order for their own costs. In short, the Claimant’s costs did not form part of the ‘pot’ which the Defendant can enforce their own costs against.
Clark & Ors v Adams & Anor [2024] EWHC 62 (KB
In this case, the Claimant brought proceedings against the Provisional Irish Republican Army (PIRA) for damages arising from the 1973, 1996 and 2002 bombings. Proceeding was issued in 2022, before the implementation of the new QOCS rules. The Claimant claimed a mere £1 in damages for ‘vindicatory purposes’. Proceedings failed against both Defendant on the basis that Mr Adams was not an appropriate representative of a class and PIRA was not an incorporated association and could not be sued in any event. The claim against Mr Adams as an individual was allowed to continue. QOCS and whether they apply, came in to question.
As you can imagine, given the nominal amount of damages sought by the Claimant and the nature of the claim, the Defendant argued QOCS protection could not apply.
Mr Justice Soole confirmed that despite the low value of the pleaded claim, it did not diminish the status of the claim and whether it still fell within the scope of personal injury. He added that the reason for bringing the claim is irrelevant, as was the amount of damages sought as long as there has not been an abuse of process. He concluded therefore that the Claimant could still enjoy the protection of QOCS.
Challis v Bradpiece [2024] EWHC 1124 (SCCO)
Keeping with the theme of QOCS, this case questioned whether QOCS protection could apply to detailed assessment.
This was a clinical negligence claim, and damages settled by Tomlin Order with the usual provision to allow for costs to be assessed. The Claimant failed to beat the Defendant’s Part 36 Offer in respect of costs and the Defendant rightfully sought their costs for the detailed assessment.
Following submissions made by both parties, Deputy Costs Judge Roy KC, favoured the Claimant’s arguments. He found that if QOCS did not apply to detailed assessment proceedings, the Claimant would be liable for the Defendant’s costs, which would defeat the purpose of the rule and on this basis, the Claimant should be protected by QOCS.
It is important to note, the Defendant was granted permission to appeal this decision and it will be interesting to see if the Court changes its stance in this regard.
South Tees Development Corporation & Anor v PD Teesport Ltd [2024] EWHC 842 (Ch)
The Judgment from this case arose from a Trial to determine whether the Defendant had, and to what extent they had, several rights of way over the Claimant’s property. The Defendant abandoned some of the claims for potential rights of way over several other routes prior to the trial commencing. However, the Defendant was the successful party and was able to demonstrate that they had three rights of way of significant routes of the Claimant’s land.
The trial initially took place in late 2023 however, Mr Justice Rajah ordered a further hearing to deal with consequential matters. The Claimant’s counsel argued that as the Defendant abandoned some of the claims, they were successful before the Trial even began. Mr Justice Rajah disagreed and confirmed that the abandoned claims did not impact his view that the Defendant was the overall winner and should therefore recover his costs from the Claimant and third party. He did, however, agree that the claims should have been abandoned sooner and additional costs had been incurred as a consequence of those claims not having been abandoned earlier, mainly in relation to expert evidence and preparation for Trial. Considering this, he found a 20% deduction should be allowed in respect of the costs sought.
After establishing the deduction in respect of the costs payable, Mr Justice Rajah turned to the conduct of the parties. On the 19th September 2023, the Defendant made a Calderbank offer to settle. Within their offer, they offered to agree that they had no right of way over certain areas of land in dispute, and in return, the Claimant would allow access over certain other routes. The Defendant’s offer stipulated that each party would bear their own costs. The offer was rejected on the 21st September 2023. The judge confirmed that the Defendant had beaten this offer as he was awarded access to the routes sought and if his offer had been accepted, costs of the Trial would have avoided, which the Defendant estimated at circa £1.5 to £2 million for all parties.
Despite the fact that this offer was not a Part 36 offer and was only made two weeks before Trial, he awarded the Defendant its costs at 80% until the rejection of the offer on 21st September 2023 and 100% of their costs thereafter.
A number of lessons have been learnt over the past year in relation to conduct of solicitors and cost lawyers in the costs proceedings arena, highlighting the requirement to ensure the rules are observed in these proceedings – at the very least a failure to do so at any juncture can lead to hefty sanctions on costs recovery.
Wazen -v- Khan (2024):
Starting at the front end of the assessment process, the case of Wazen -v- Khan (2024) looked at the requirements of Points of Dispute in terms of their form and content.
Compliance with CPD 47 8.3 is key here and has been previously raised by the case of Ainsworth -v- Stewarts Law (2020) which provided some guiding principles on the issue, but was a case involving a solicitor/own client assessment of costs as opposed to an inter partes assessment. In the case of Wazen, the Judge considered the applicability of Ainsworth, amongst other things, to inter partes assessments. The key findings were:
- There is a responsibility on the paying party to sufficiently explain and justify their objections.
- The principles from Ainsworth do apply to inter partes assessment, where judgment in that case specifically cited CPD 47 8.3 and noted that Points of Dispute must identify the item disputed and the nature or ground for the dispute.
- A paying party must provide specific item numbers that are challenged – a general challenge to work of a similar nature or relating to a certain issue is not sufficient unless item numbers are given. Reference to CPR 47.14(6) was made here, which confirms only items specified in the Points of Dispute can be raised at a hearing.
- When identifying the items in dispute, it is acceptable to group or ‘clump together’ items under challenge – however, taking this approach should be done with some causation to ensure the requirements identified at paragraph 38 of Ainsworth are observed.
Summarising, as a paying party it is important to take care and time to provide detail where possible to provide case specific disputes with a degree of particularisation to ensure your Points of Dispute are not considered to be non-compliant – if they are, a dispute could be struck out and the costs as claimed awarded to the receiving party without any further assessment of the same.
Christodoulides -v- Holbech (2024):
Moving further into the assessment process, the case of Christodoulides -v- Holbech (2024) looked at the requirements to be complied with when seeking an oral assessment following an initial decision at provisional assessment (the assessment of costs totalling £75,000.00 or under).
The paying party had, quite simply, failed to comply with the rules when seeking an oral review after the initial provisional assessment, specifically ignoring the requirements of CPR 47.15(8) which confirms that the items for which the review is sought must be identified. The request for an oral review must be filed and served within 21 days of receipt of the Order following the provisional assessment.
Compounding the issue for the paying party was their failure again, in a subsequent Application, to identify the items they wanted to be reviewed. The paying party was a Litigant in Person however the Judge could not ignore the failure to comply with the rule, or the fact the request for oral review consisted of points relating to conduct during the main claim rather that any of the specific decisions made about the costs claim.
The Judge found that issues of conduct in the main action did not disapply the requirements of CPR 47.15, that the rule here was not ‘inaccessible’ to a litigant in person and that no exceptional circumstances were presented that excused the failure to comply here.
An oral review must be conducted within identified parameters, in a fair manner and having regard to the overriding objective. CPR 47.15 is in place to ensure this can be done.
The provisional assessment system is a much-appreciated process which can minimise costs exposure of both parties in the costs assessment, allowing also for an optional oral challenge – an option available to both parties. However, the rules must be observed at all stages – overlooking any requirements can and will lead to sanctions. Take time to ensure all key dates and deadlines are properly diarised and the required information submitted in line with the same!
Kapoor -v- Johal (2024):
The final stage of the costs proceedings is an oral hearing, where the Bill of Costs is assessed in detail (at a Detailed Assessment Hearing for costs over £75,000.00) and scrutinised against the file of papers of the receiving party. We saw the case of Kapoor -v- Johal (2024) as a high importance warning here relating to conduct in the assessment proceedings and specifically the accuracy of the documentation served.
Quite simply in this case, on detailed assessment the Judge determined the Bill of Costs being assessed included fictitious costs and fabricated amounts which were not evidenced on the file of the solicitor.
The Bill was claimed at £260,000.00 but assessed at £0.00. In summary the following failures/concerns were identified:
- Failure to account for interim statutory invoices raised to the client, resulting in a clear breach of the indemnity principle.
- Claims for extensive hearing work by a Grade A Solicitor which were actually attended by a Grade D fee earner – again resulting in a breach of the indemnity principle.
- Failure to denote costs incurred under the old and new proportionality tests.
- Claim made for VAT when the receiving party was not VAT registered.
- Suspicion that file notes had been prepared retrospectively.
When endorsing a Bill, it must be accurate – this sounds like an obvious statement, but it is certainly worth a reminder from time to time given the Courts will not accept inaccurate documents with incorrect claims for what could be substantial costs. Breaching the indemnity principle will always be met with very significant sanctions – in this case a costs award of £0 and adverse costs of the assessment process.