Unravelling the assessment of costs in concurrently heard proceedings

This blog is written by Lois Aldred, a member of 12KBW’s costs team.

In R v Barts Health NHS Trust [2022] EWHC B3 (Costs), as part of detailed assessment proceedings, Costs Master Rowley dealt with several preliminary issues. The two central issues were:
1) How will a court determine the recoverable costs in proceedings A against the irrecoverable costs of proceedings B when both proceed concurrently, and share some common costs?
2) When will specialised solicitor hourly rates be recoverable?

This is the first of a two-part blog and considers issue (1).

Background

A little girl, Tafida (the receiving party and claimant) was at the centre of this case. Sadly in 2019 she sustained a brain injury, thereafter she required full time paediatric intensive care. Her treating physicians at the Defendant Trust believed active treatment being withdrawn would be in Tafida’s best interests. Tafida’s family opposed this and unsuccessfully applied to the Trust to transfer Tafida to an Italian hospital for alternative treatment. The family brought a challenge by way of judicial review. The Trust concurrently brought proceedings under the Children Act 1989 for a best-interests determination.


At the conclusion of the hearing Macdonald J ordered the Defendant to pay 80% of the Claimant’s costs in the Judicial Review proceedings with no order as to costs in the Children Act Proceedings (save for detailed assessment of the publicly funded parties).


Separating the recoverable from non-recoverable costs in concurrent proceedings


The detailed assessment proceedings before Master Rowley primarily related to the order the Defendant pay 80% of the claimant’s costs in the Judicial Review proceedings. Master Rowley had to consider whether any of the costs claimed fell outside that costs order and instead came within the order following the Children Act proceedings, for which the claimant had no entitlement to costs.


The Defendant, as the paying party, argued that the Children Act application was the central application. Accordingly, the Defendant submitted that Medway Oil and Storage Co Ltd v Continental Contractors Ltd [1929] AC 88 should be applied, with the effect that only the costs which were over and above those which would be incurred in the Children Act proceedings could be recovered.

Master Rowley rejected “the harshness of the Medway Oil approach”. Medway Oil required the same parties to be involved in a claim, counterclaim or possibly more than one set of proceedings. He distinguished Medway Oil as the Litigation Friend for the Claimant (XX) acted in a different capacity in the two sets of proceedings before Macdonald J. In the Judicial Review proceedings, the litigation friend acted for Tafida but in the Children Act proceedings the Court Appointed Guardian advanced Tafida’s interests. Consequently, it was found Medway Oil did not apply as it would be wrong to characterise one of the proceedings as the “more central proceedings.”


But how is the assessing judge to handle the division of the costs common to both proceedings, given some work would be recoverable and some not?

In rejecting the Defendant’s contention that Medway Oil applied Master Rowley gave short shrift to the contention that indivisible common costs are irrecoverable. He held [@ 24]:

“It is my experience that common costs are rarely non-divisible in any event. Almost all work which is common between two issues or two parties et cetera can properly be divided between the recoverable and unrecoverable element. Even the level of some court fees will depend on the extent of the claims brought and may be divided between successful and unsuccessful claims or parties. The only problem is a practical one. It is extremely time consuming to contemplate each attendance note or other documentation in order to come to a conclusion on where to divide each piece of work. The authorities are keen to stress that a blanket approach to the percentage that is recoverable is not the way the court should proceed. This approach was taken by Master Simons in Jean Mary Doris Haynes (personal representative of the estate of Brian Haynes deceased) v Department for Business Innovation and Skills [2014] EWHC 643 (QB) and was only upheld by Jay J in the absence of any other option. In practice, the allowance of the same percentage may become the de facto approach when a similar proportion appears to be appropriate on reviewing a number of items of work.”

He further held [@ 37]:
“To the extent that there are any non-divisible items however, then it seems to me that the receiving party is correct in saying that they are recoverable in full. That is the tenor of the authorities in cases such as Haynes.”
While Master Rowley rejected the Defendant’s high-impact points he left no doubt that the onus is on the receiving party to attempt to attempt a reasoned division in its bill.

What level of scrutiny will be expected by the assessing judge at a detailed assessment?

The clue is in the name. The answer (it seems): is “Detailed scrutiny”.
Although, if there is a group of pieces of work that appear to have a similar allowable percentage a more broad-brush percentage allocation to those grouped items could be appropriate. However, it was held [@ 34-35]:

“detailed assessment hearings where division is, or may be, required are time-consuming affairs. There is little for it but to consider each item that is claimed….”
“It is, and always has been, for the receiving party to draft the bill of costs to reflect any necessary division of the work that has been done. There is no realistic way, absent the receiving party’s file, for the paying party to be able to interpret the time claimed in order to be able to challenge items in the bill in the fashion contended for by the claimant. If that division has not been carried out, bills are regularly returned in order for them to be redrawn.”

This should be a warning to strike fear in all but the most bullish of receiving party’s Cost Draftsperson. Master Rowley went on:

“Where, as here, the receiving party argues that it is not required, then it will have the effect of the court receiving more speculative arguments from the paying party and being required to spend longer on each entry before reaching a decision.”

An interesting example where caution is required was where Counsel’s brief fee covers both recoverable and irrecoverable work. When this is the case, a division needs to be undertaken so that the non-recoverable costs can be removed. This is even the case where Counsel’s fee would have been judged reasonable if it only covered the recoverable costs.

Practical Takeaways

  • The harsh Medway Oil approach may be distinguishable where an individual acts in different capacities in concurrent proceedings and where it would be wrong to characterise one of the proceedings as the “more central proceedings.”
  • Determining the costs recoverable under a costs order in concurrent proceedings requires careful (and sometimes time-consuming apportionment).
  • Receiving parties who decline to attempt a division of common costs do so at their peril.
  • The Costs Judge will, in the main, expect to scrutinise each item that is a potential common cost so it’s worth the receiving party doing the work to get it right in the bill.
  • Time may be wasted if the receiving party’s bill has to be re-drawn or fails to make a decent attempt at division. The receiving party should not be surprised if they foot the bill for any delay or associated costs.
  • If the receiving party either declines to re-draw their bill or otherwise does not properly attempt to divide common costs they can expect the assessing judge to be more receptive to some of the paying party’s arguments as to why particular items are irrecoverable.