Costs Litigation Blog

This blog was written by Andy Roy, Deputy Costs Judge & Head of 12KBW’s Costs Team.

ABA v University Hospitals Coventry and Warwickshire NHS Trust [2022] EWHC B4 (Costs) concerned a single simple question; is a claimant, who wins a preliminary issue trial on liability and obtains a ‘vanilla’ order for liability costs, entitled to have those costs assessed before quantum has been determined?

Costs Judge Leonard held that the answer to this was a clear no. However, he also highlighted that this is not necessarily unadulterated good news for defendants.

The Case

This was a claim for clinical negligence. Liability and causation were tried as preliminary issues in January 2021. The claimant won.

As result the claimant obtained an order that “the Defendant do pay the Claimant’s costs of and incidental to the issue of liability on the standard basis such costs to be the subject of a detailed assessment, if not agreed”.

This might be described a standard vanilla order. It is evidence that the claimant did not seek an order permitting immediate assessment of these costs, commonly known as a “forthwith order”.

The quantum trial was set down for between February and May 2023. In the meantime, the claimant commenced detailed assessment proceedings in respect of the costs from the preliminary trial on liability. The defendant argued that there was no jurisdiction to assesses these before the conclusion of the claim in its entirety (i.e., until quantum was agreed or determined).

The Judgment

The judge identified the starting point as CPR 47.1. This provides:

The general rule is that the costs of any proceedings or any part of the proceedings are not to be assessed by the detailed procedure until the conclusion of the proceedings, but the court may order them to be assessed immediately.

(Practice Direction 47 gives further guidance about when proceedings are concluded for the purpose of this rule.)

PD 47 provides:

1.1 For the purposes of rule 47.1, proceedings are concluded when the court has finally determined the matters in issue in the claim, whether or not there is an appeal, or made an award of provisional damages under Part 41.

1.2 The court may order or the parties may agree in writing that, although the proceedings are continuing, they will nevertheless be treated as concluded.

1.3 A party who is served with a notice of commencement (see paragraph 5.2 below) may apply to a costs judge or a District Judge to determine whether the party who served it is entitled to commence detailed assessment proceedings. On hearing such an application the orders which the court may make include: an order allowing the detailed assessment proceedings to continue, or an order setting aside the notice of commencement.

1.4 A costs judge or a District Judge may make an order allowing detailed assessment proceedings to be commenced where there is no realistic prospect of the claim continuing.

The claimant argued that the order following the conclusion of the preliminary issue trial was a final order determining the matters in issue in the claim, thus entitling him to seek assessment.

The judge had little difficulty rejecting this. He found that the authorities; Industrie Chimiche Italia Centrale & Anor v Alexandra G. Tsavliris Maritime Co. & Ors [1992] 7 WLUK 182, Bottin (International) Investments Ltd v (Venson Group Plc & Ors [2005] EWHC 90005 (Costs), Crystal Decisions (UK) Ltd v Vedatech Corporation [2007] EWHC 1062 (Ch) and Khaira & Ors v Shergill & Ors [2017] EWCA Civ 1687; [2018] 3 All ER 44, were conclusively against it.

He further observed that the claimant’s arguments were flawed as a matter of plain construction. The claimant had been pursuing one personal injury claim, not two different ones. In a personal injury claim breach of duty, causation and the quantification of damages are all essential elements. The order of 21 January 2021 determined some of the matters in issue in this claim, but not all of them.

This is clearly correct. The claimant’s arguments were irreconcilable with (a) the plain wording of the rules; (b) authority; and (c) long established practice.

However, the judge concluded at [49] with the following highly pertinent observation:

I will only say, with apologies for perhaps stating the obvious, that the default position being that interest will accrue upon the Claimant’s unpaid liability costs at 8% per annum, it might be to the parties’ mutual advantage to use the work done to date in an effort to settle what would appear to be a substantial claim for costs.

With apologies for stating the even more obvious, interest accruing at a non-discretionary rate of 8% (Simcoe v Jacuzzi UK Group PLC [2012] EWCA Civ 137; [2012] 1 W.L.R. 2393) is likely to add significantly to a defendant’s overall outlay. In circumstances where a defendant has successfully resisted immediate assessment it would be difficult to say there is any basis for curtailing the period of interest.

Thus, taking ABA as an example, the following scenario is entirely plausible: (a) quantum trial in April 2023; (b) judgment in July 2023; (c) assessment proceedings commence in October 2023; (d) assessment proceedings concluded in October 2024. On that basis interest on the liability would run for 3.75 years from January 2021, adding an eye-watering 30%.

Takeaway Practice Points

• Claimants who wish to obtain immediate assessment of their costs should seek, where appropriate, either (a) a summary assessment; or (b) an order for detailed assessment forthwith;
• Failing that, they should seek a substantial payment on account of costs.
• Given the punitive rate at which interest runs on outstanding unassessed costs, defendants should give serious consideration to agreeing (or indeed themselves seeking) a forthwith order or failing that a substantial payment on account.
• These points are not limited to costs following a preliminary issue trial (be it of liability, limitation etc.). They apply whenever the court makes or is considering making an order for detailed assessment before the conclusion of the claim (e.g. following an interim application).