Preliminary Issue

This blog is written by Lois Aldred, a member of 12KBW’s costs team and is the second of a two-part blogpost looking at R v Barts Health NHS Trust [2022] EWHC B3 (Costs). This blog focuses on the second central issue considered by Master Rowley: when will specialised solicitor hourly rates be recoverable?

The background to this case is set out in our previous blog, see here. In short, it involved a severely brain-damaged little girl, Tafida, and whether her treatment ought to be withdrawn and only palliative care be given.

The hourly rates claimed were subject to challenge before Master Rowley. The Claimant lived in London but had instructed Irwin Mitchell in Manchester, the paying-party took issue with this. An obvious reminder was given that it is usually a bad point to suggest that it was unreasonable to instruct solicitors in a different area, if the area is cheaper than the claimant’s locality. It was held [@ 42]:

“There can hardly ever be any criticism of a receiving party who instructs solicitors in a less expensive area of the country.”

Once Manchester was accepted the Court found that the 2021 Guideline Hourly Rates were the preferred starting point for work undertaken in 2019, rather than the 2010 Guideline Hourly Rates. No great surprises there, you might say.

The need for the exercise of specialist skill once the baton has been passed to Counsel

The more interesting and central point made by the Defendant questioned the need for the exercise of specialist skill by the solicitors if the “baton of responsibility and importance to the claimant” had been passed to Leading and Junior Counsel and if the solicitors relied heavily upon counsel’s specialised knowledge and skill to take the case forward. As such, it was argued the claimant’s solicitors did not “have to exercise any more skill, effort and specialised knowledge than that of an un-specialised solicitor.”
Master Rowley reminded himself that in cases that do not require a specialist solicitor, the hourly rate will be reduced to a non-specialist firm rate or more junior solicitor rate. Nonetheless this was not apposite here. The Court held [@ 50]:

“it is hard to imagine any case involving more importance to the client or, given the need for urgent action, one which would score more heavily on the circumstances in which the work was done.”

The Defendant also argued that the claimant’s solicitors did not display their skill in this particular case, and rendered their own specialism redundant due to the choice of Counsel and the arguments run. This was resolutely rejected [@ 53]:

“It is in my view, a remarkable suggestion that a case whose own weight clearly justified using expertise to pursue it, can be downgraded in the choice of an appropriate solicitor by that solicitor’s choice of external assistance.”

Master Rowley no doubt was assisted by a perusal of the correspondence between Counsel and the Claimant’s Solicitors that lead him to the conclusion [@ 54] that:

“There is very much a team effort between solicitors and counsel”. He went on [@ 55]: “I therefore conclude that the solicitors not only had the requisite skill, effort and specialised knowledge and responsibility appropriate for this grave case but also demonstrated it in their dealings with counsel and other solicitors. There is no warrant in my view for there to be a reduction in the hourly rates claimed simply on the basis that counsel was also involved in dealing with matters.”

The hourly rates were awarded as claimed.

Practical Takeaways

Paying parties should take a realistic view as to whether the case merits a specialist firm with corresponding fees in formulating offers on costs.
In cases requiring specialism a whole team of specialist legal advisors, including Counsel may well be reasonable.
Receiving parties, be prepared for your file to come under scrutiny from the Costs Judge when determining whether the work your fee earners undertook merited any ‘specialist’ fee. The Costs Judge may not have a background in your specialism, so make it easy and show your worth.

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).

Costs Litigation Blog

Edited by Andy Roy & Cressida Mawdesley-Thomas

When will specialised solicitor hourly rates be recoverable?

Assessing Liability Costs when Quantum is ongoing