This blog post is written by Angela Frost of 12 King’s Bench Walk.
Hadley v Przybylo [2024] EWCA Civ 250
A Court of Appeal judgment starting with “the first issue for us to decide is whether there is an issue for us to decide” at first blush may not appear to be a case worth your time reading, however this judgment clarifies an important point that comes up regularly at costs budgeting hearings in personal injury claims involving catastrophically injured Claimants. Master McCloud clearly thought it was an important point as ‘leapfrog’ permission to appeal was granted.
The key issue was whether Master McCloud had decided a point of principle, namely whether the costs of a fee earner’s attendance at rehabilitation case management meetings are irrecoverable in law as costs of the litigation.
Only if the Master had decided a point of principle could the Court of Appeal interfere.
At the budgeting hearing Master McCloud disallowed some £52,000 of future costs because she concluded that these were not “incurred in the progression of litigation.”
This was a case involving significant traumatic brain injury and subsequent to the costs budgeting hearing had settled for an agreed lump sum of £5.6 million with an annual sum of £170,000 for care and case management.
The costs budget put forward by the Claimant totalled £1.8 million and ‘on any view’ the incurred costs of over £500,000 were high. Following court-ordered ADR on costs, the only phase in dispute was ‘Issue and Statements of Case.’
The Master’s decision
The issue was identified by Master McCloud as:
Whether “the inclusion of solicitor attendance time in the budget, for attending case management meetings with medical and other professionals in the course of management of the claimant’s rehabilitation needs, and for meetings with financial and court of protection deputies said to be part of inputting into a Schedule of Loss, are in principle costs which may be included in a budget and whether, if so, it is appropriate to include those in the ‘Issues Statements of Case’ phase of the budget on Form H”
Master McCloud looked at the ‘concept of costs’ and asked herself whether the proposed costs in relation to attendance at rehabilitation case management meetings were, in principle, “progressive of the litigation.” The Master concluded that they were not.
Importantly at the Master said at para 16 – “Thus, the (numerous) attendances of the sorts proposed here do not in my judgment progress litigation in this case. Note that I am not here saying that these costs are ‘unreasonable’ or ‘disproportionate’: those would be the tests I would apply if I were accepting that in principle they were ‘costs’ for the purposes of a budget in the first place.”
The Court of Appeal decision
There were a number of matters raised in the Court of Appeal that were given relatively short shrift as ‘obscuring’ the primary issue before them. Of relevance to practitioners is perhaps the confirmation that costs such as those of attending rehabilitation case management meetings are properly to be included in the ‘issue statement of case’ phase. Furthermore, the Court took the view that practice direction 3D10 was a wide provision to cover the whole of civil litigation and the assumptions set out there do not have statutory force, thus the absence of mention of such categories of costs within a section is not determinative of their recoverability.
Did the Master Decide a Point of Principle?
The Defendants position was that she did not. They relied on the fact that the Master had allowed something in the phase, which can only have been for the attendance at case management meetings, and the fact that various comments in her judgment suggested her primary concern was the proportionality of such costs.
In finding that the Master did decide a point of principle the Court referred to various parts of the judgment which supported the view that this is what the Master thought she was doing. The Court of Appeal were cognisant of the fact that the Master’s decision would be capable of citation as support for the principle that such costs are not recoverable costs.
This opened the door for the Court of Appeal to intervene.
Was the Master right?
The court identified the starting point for recoverability of costs in s.51(1) of the Senior Court Act 1981 “costs of and incidental to the proceedings” and the case of In re Gibson’s Settlement Trusts [1981] Ch 179 at 184F-G which set out three criteria summarised as: Utility, Relevance and Attributability.
The Court took the view that use by the Master of the term ‘progressive of litigation’ although possibly meant as shorthand for the utility criterion, was not helpful as there may be costs that cannot be said to ‘materially progress’ the litigation that are nonetheless recoverable under the wide words of section 51 (the Court citing for example the costs of attendance at an inquest).
So whilst the Master may have applied the wrong test, the real issue was whether the Master was right to say that “having a fee earner attending rehabilitation case management meetings…does not fall within the notion of ‘costs’.”
In reality, given the Claimant’s acceptance that challenge as to reasonableness and proportionality was open to the Defendant on assessment and the Defendant’s concession that the role of a legal representative can reasonably include costs for the purpose of furthering the claimant’s rehabilitation, the Court found that there was little between the parties.
These costs were found to be recoverable in principle for three reasons:
- The Defendant had conceded that these costs could be recoverable subject to challenges on reasonableness and proportionality
- The Guide to the Conduct of Case Involving Serious Injury and the Rehabilitation Code envisage the involvement of a solicitor in rehabilitation meetings and therefore indicate that as a matter of principle, this was a recoverable category of costs.
- On the evidence, the Claimant’s solicitors’ involvement in rehabilitation has been beneficial to both parties and the Defendant has engaged in such meetings, thus suggesting that in principle this cost is recoverable.
“It would be wrong to decide that the costs of the solicitors’ attendance at rehabilitation case management meetings are always irrecoverable. Equally, it would be wrong for the claimant’s solicitor to assume that routine attendance at such meetings will always be recoverable. It will always depend on the facts [59]”
However the Claimant’s victory came with a large caveat. The Court of Appeal made it clear that the amounts claimed went well beyond the usual costs of reasonable liaison and warned that if the Claimant’s solicitor operated on the assumption that he was entitled to attend every routine rehabilitation case management meeting then he was wrong to do so.
The Court noted that a solicitor needs to keep an appropriate eye on the rehabilitation plans but that does not justify a default or blanket entitlement.
The Upshot
Although the appeal was allowed, the only real consequence was that the Defendant could take all the reasonableness and proportionality points it wanted to at the assessment stage, points with which the Court had sympathy.
The overall budget was ‘fair and reasonable’ and as such there was no need to send back for budgeting.
The judgment will be useful for Defendants in seeking to reduce budgeted costs for attendance at rehabilitation meetings, but it puts to bed any argument that such costs are not recoverable in law. Claimant solicitors can spend time progressing rehabilitation safe in the knowledge that such costs are recoverable as matter of principle, but they will need to be careful to ensure that such time can be justified on the facts of each case.
Costs Litigation Blog 