Detailed assessment of costs of part of a claim cannot be commenced without a "forthwith" order for assessment

In ABA (by his Father & Litigation Friend, ABB) v University Hospitals Coventry & Warwickshire NHS Trust, the claimant pursued damages for personal injury based upon alleged clinical negligence. Breach of duty and causation were ordered to be tried as preliminary issues, but a compromise subsequently led to Mr Justice Saini entering judgment against the defendant on 11 January 2021 for 65% of damages to be assessed. By consent, he further ordered 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…”.

Notwithstanding the absence of any “forthwith” or “immediately” provision for assessment in the order, the receiving party commenced detailed assessment proceedings in respect of liability costs of £827,406.85 citing the order of 11 January 2021 as the authority for assessment. Keoghs, on behalf of the defendant, made an application for the notice of commencement to be set aside on grounds that, in the absence of an order for immediate detailed assessment, costs proceedings were premature.

The claimant contended that the order was a final order determining the matters in issue in the claim; that although an assessment of damages was still needed, the claimant was suing for the right to enter judgment against the defendant for damages rather than seeking an award of damages; the claimant’s legal rights in tort had merged with the judgment, thus the proceedings had concluded because the issues arising out of the original cause of action had been superseded by the judgment.

In a carefully written judgment, specialist costs judge Master Leonard analysed the pre and post CPR authorities and ordered the claimant’s Notice of Commencement be set aside. Of particular note was the learned master’s findings that:

• There had been no agreement in writing between the parties to the effect that although the substantive proceedings were continuing, they would nevertheless be treated as concluded (paragraph 9)
• The doctrine of merger has never determined the timing of the assessment of costs of a preliminary issue (paragraph 24)
• The doctrine of merger (the application of which seemed doubtful on the facts) cannot override the provisions of the CPR (paragraph 29)
• Breach of Duty, causation and quantification of damages will have been essential elements of the claimant’s pleaded case from the outset: consequently the order of 21 January 2021 determined some of the matters in issue in the claim, but not all of them (paragraph 28)
• CPR 47.1 lays down a general rule that costs of part of the proceedings are not to be assessed until the conclusion of the proceedings as a whole unless the court orders them to be assessed immediately (paragraph 38)
• Where a claimant succeeds on preliminary issues of liability and causation, for the purposes of CPR 47.1 the preliminary issue also represents one part of the overall proceedings (paragraph 40)

Keoghs Comment

All too often, receiving parties are overly keen to push claims into litigation or onto the next procedural stage without having allowed sufficient time for discussion and alternative dispute resolution. In costs cases, this behaviour often manifests with formal service of Notice of Commencement and a bill together with unreasonable demands for high interim payments and the threat of no extension being granted to the deadline for Points of Dispute.

Such conduct can lead to paying parties having to serve Points of Dispute; not because they are a significant aid to resolving quantum of costs, but because a receiving party will not compromise on their unreasonable demand for an unsustainable interim payment. On other occasions, paying parties find themselves in the situation, which occurred in this index case, namely a party has commenced costs proceedings when they are not entitled to.

Following this welcomed clarification from the Costs Office surrounding the scope and meaning of CPR 47.1, the timing of costs assessments may become a more prevalent issue in substantive proceedings as claimants push for “immediately” or “forthwith” provisions in orders for costs governing only part of the proceedings or preliminary issues. There are, however, a number of reasons why immediate assessment of only some of the costs partway through proceedings may not be viable or proportionate. Issues such as duplication of effort, avoiding the cost of two separate assessments and preserving allocation of precious court resource may justify deferring assessment of all costs until conclusion of proceedings.

Jurisprudence over recent years demonstrates a willingness to order substantial interim costs payments partway through a claim, thus mitigating the need for an immediate assessment, and although each case will turn on its own facts, there is a strong argument that costs are better dealt with conclusively at the end when all issues of conduct, proportionality and the other factors at CPR 44.4 can be put into proper context.

Keoghs will continue to work closely with their clients to ensure frictional cost and opportunistic behaviour is challenged and removed from the claims process.

For more information, please contact Howard Dean, Partner, or Ben Petrecz, Partner.