B e f o r e :
COSTS JUDGE NAGALINGAM ____________________
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Mr Mason and Mr Scott (instructed by Leigh Day) for the Second Claimant Ms McDonald (instructed by DWF Law LLP) for the Defendants Hearing dates: 16-18/06/2025 ____________________
HTML VERSION OF JUDGMENT APPROVED ____________________
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COSTS JUDGE NAGALINGAM:
The bill of costs in this matter is subject to a notice of commencement bearing a total claim for £517,985. This is broken down as profit costs of £349,826.92, counsel's fees of £39,638.54, other disbursements of £43,783.05 and VAT of £84,736.49.
The claimed profit costs element excluding costs of assessment (i.e. the costs of having a bill drawn and checked) amount to £294,237.92.
Following the line by line assessment, the bill total has been reduced to £339,565.16, a reduction of some 34.4%. The profit costs element has been reduced from £349,826.92 to £222,519.05, a reduction of some 36.4%.
The profit costs exclusive of costs of assessment has been reduced from £294,237.92 to £182,481.15, reduction of some 38%.
Reductions of costs of around one third are not untypical following a full line by line detailed assessment of costs in the SCCO.
The objection marked "Point 4 General point – Proportionality" in the points of dispute broadly cites the claimed sums for base profit costs and counsel's fees, and contrasts these with the actual sum for damages recovered (as opposed to the damages sums pleaded).
The objection proceeds to reference the conduct points raised at "Point 3 General point – conduct" and thereafter quotes widely from Jackson LJ's final report on his review of civil litigation costs and the case of West (citation below).
In contrast to the proportionality arguments raised by Ms McDonald in oral submissions, the analysis in the written points of dispute rather vaguely plead:
Whilst making it clear to the parties that judgement as to proportionality is no longer a prospective exercise, the parties will recall that I elected to give an indication as to my views on proportionality based on the bill as drawn. That was largely in the context of such an indication, on occasion, being of use to the parties should they wish to explore settlement during the course of the assessment exercise.
Further, given many of the arguments relating to hourly rates bear some synergy with the arguments relating to proportionality, I felt able in this matter to give a preliminary view as to proportionality. That preliminary view was that the costs as claimed appeared to be disproportionate, based on the bill as drawn .
The parties will recall that at paragraph 15 of my judgment dated 19 March 2025 I recorded:
To be clear, that was not a precursor to reducing time in internal communications come what may. The points of dispute challenged the internal communications but following the line by line assessment the reductions applied fell well short of what the Defendant had argued, in part due to the quality of the objection itself.
Thus it ought to be clear that it is only where I first conclude that the assessed sum is disproportionate that I have indicated internal communications is at least one area in which further reductions might apply.
The Court of Appeal has given clear guidance as to the approach to be adopted, as per West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220 in that the line by line assessment must be completed first.
The Court of Appeal did not categorically rule out accounting for proportionality during the course of an assessment, but one must be careful not to facilitate a result which would amount to double-counting of deductions.
In this matter, I have consistently applied reductions only where I consider the costs were unreasonably incurred or unreasonable in amount, knowing at all times I would likely be addressed on proportionality following the conclusion of the line by line assessment.
In that regard, I am satisfied that I have already accounted for factors that might otherwise sit outside of those set out in CPR 44.3(5). For the sake of completeness, the notion of factors sitting outside of CPR 44.3(5) was considered in West in so far that the wording of the rule refers to "if", as opposed to "if, and only if..".
Thus one is reminded that "Costs incurred are proportionate if they bear a reasonable relationship to:-
(a) the sums in issue in the proceedings;
(b) the value of any non-monetary relief in issue in the proceedings;
(c) the complexity of the litigation;
(d) any additional work generated by the conduct of the paying party;
(e) any wider factors involved in the proceedings, such as reputation or public importance; and
(f) any additional work undertaken or expense incurred due to the vulnerability of a party or any witness."
These factors therefore require analysis in circumstances where the Defendant maintains their proportionality arguments.
(a) the sums in issue in the proceedings
Had it been the intention of the rules for the sums in issue to be the settlement sum then the rules would be drafted as such. In my view, the sums in issue in the proceedings is best represented by a notional bracket of possible outcomes without descending into the improbable.
Clearly, the settlement sum may form the lower end of that bracket. Further, in a fully pleaded case (as was the case in the index matter), the sum pleaded for may be a potential upper bracket. In the index matter that would provide for a range of around £149,000 to £2.5m.
In so far as "the amount or value of any money or property involved" was a factor I took into account when deciding hourly rates, I am reminded the index accident concerned a road traffic collision between the Claimant pedestrian and a vehicle operated by the 1st Defendant.
This was not as straightforward a case as a car mounting the pavement and causing injury to pedestrians. The Claimant had seen the Defendant's car in the distance, elected to cross the road, and was struck by the Defendant. Whilst there was no formal agreement as to contributory negligence, I am satisfied that the accident circumstances played a role in the overall sums agreed. Indeed paragraph 1 of the order dated 9 January 2023, which was made "UPON THE PARTIES AGREEING TERMS", states that the settlement sum is net of contributory negligence (without explicitly setting out any percentages).
My conclusion when assessing hourly rates was that whilst I considered the true value of the claim to have been in excess of £149,000, the sums in issue would realistically have been closer to £149,000 than the £2.5m fully pleaded claim.
(b) the value of any non-monetary relief in issue in the proceedings
Not a factor present in the pleaded case or basis of settlement.
(c) the complexity of the litigation
The relevant conduct period spanned July 2017 to January 2023. Proceedings were issued in January 2020 and served in April 2020, with the defence following in June 2020. The case was allocated to the multi-track with CCMC's twice listed and twice adjourned.
Both parties obtained evidence from experts in care, orthopaedics, psychiatry, plus the Claimant obtained accommodation evidence.
Notwithstanding the absence of formal directions, the parties agreed to exchange medical evidence and lay witness evidence. This is the point at which the Defendant elected to disclose their obtained surveillance evidence.
A little over 3 weeks later the Claimant served her schedule of loss for a joint settlement meeting scheduled for 23 November 2022 and compromise was achieved.
It cannot be said that the litigation was complex but clearly it was not straightforward either. Liability was in dispute and even absent any arguments as to the speed and extent of the Claimant's recovery, the injuries sustained were significant. Medical complexity in this regard creates legal complexity in quantifying general damages and past losses, as well as the work required to establish what future heads of loss might be.
Further, absent a definitive position on liability or judgment being entered for the Claimant, liability remained a factor under consideration.
(d) any additional work generated by the conduct of the paying party
The rules reference "conduct" in natural and neutral language. There is no requirement to make findings of misconduct on the paying party, or even poor conduct. It is simply a consideration of whether the paying party conducted their opposition in a manner which caused additional work to be done.
In that regard, it was a choice by the Defendant to keep the issue of liability live until the matter compromised by way of a joint settlement meeting. It was also the Defendant's choice to not make a good and early Part 36 offer or otherwise protective settlement proposals prior to the joint settlement meeting.
Until a Claimant is in receipt of a proposal to settle then there is little by way of reasonable criticism that may be raised where they continue with the litigation until a suitable offer is made or the matter finally decided by a decision of the court.
(e) any wider factors involved in the proceedings, such as reputation or public importance
There are no wider factors involved in these proceedings save for the impact on the claims of the co-claimants. However, that bears no equivalence with public importance. Further, neither the Claimant nor Defendant driver could be said to be likely to suffer reputational damage arising out of the index accident to the point it would influence a decision as to proportionality.
(f) any additional work undertaken or expense incurred due to the vulnerability of a party or any witness
There is no automatic presumption that a Claimant of advanced years alone equates to vulnerability. However, there are a combination of factors in this matter which lead me to conclude that the vulnerability of the Claimant is a relevant factor.
As a matter of fact, the Claimant suffered significant physical injuries whilst also coming to terms with injury to a family member arising from the same index incident. A portion of the instruction period fell during nationally imposed lockdowns as a consequence of the Covid-19 pandemic which had an isolating effect on a previously sociable individual. The Claimant's grasp of English was such that interpreters were required, including for documentation, and her spoken native Turkish was a particular dialect.
In my view, the combination of the factors of isolation, injury recovery, the Claimant's age, and language barriers meant that at times the receiving party solicitors were dealing with a vulnerable client.
Surveillance / Exaggeration
As the Court of Appeal directed in West , the factors in CPR 44.3(5) are not necessarily taken to be an exhaustive list. In that regard, I am minded to address a particular feature of the index matter relating to surveillance evidence and attempts by the Defendant to seek findings of misconduct and exaggeration – not in the detailed assessment, but rather in the underlying action (notwithstanding settlement terms and a standard basis order for costs had been agreed between the parties).
I am also bound to re-address conduct because the order for costs include an agreed term that "neither party be precluded from raising issues in respect of conduct in the assessment of costs".
This is in fact a term I addressed when conducting the early stages of this assessment in that I pointed out that the parties did not need to agree to the inclusion of such a term in the order because any party preparing points of dispute or points of reply is entitled to raise the conduct of their opponent in any event.
During the course of the assessment it became clear the paying party was under the misapprehension that the inclusion of that term was a gateway to seek rulings on assessment as to misconduct and exaggeration in the main action.
I rejected the assertion that on an assessment of costs I could retroactively conduct a trial of an issue that the Defendant had alleged but neglected to run to trial as an argument.
To be clear, there was no dispute as to how the collision occurred or the injuries sustained. Those facts were contemporaneously and independently recorded as accepted facts.
The alleged exaggeration flowed from surveillance evidence which appeared to suggest the Claimant had made a physical recovery which was better than that reported to examining experts, and the drawing of inference by the Defendant that subsequent settlement at a sum much less than that pleaded was wholly attributable to the surveillance evidence obtained.
The fact that the agreed terms of settlement express damages as net of contributory negligence clearly demonstrate agreement that the gross value was in excess of £149,000 such that even if an exaggeration argument was made out, it would not extinguish the fact that the gross settlement sum must be in excess of £149,000.
Thereafter, having declined to engage in a de facto retroactive trial of exaggeration as an issue, I must be careful not to descend into speculation as to explanations that might be proffered for apparent inconsistencies with covertly observed symptoms and reported symptoms.
I need only recognise that in certain cases covertly observed behaviour may be capable of explanation which is not inconsistent with reported medical evidence, but most importantly had the Defendant wished to press their case they did not need to settle or otherwise could have explored settlement terms which included a percentage based costs order, for example.
Decision
Having taken into account all of the pleaded points of dispute and replies, the skeleton arguments, the oral submissions of Ms McDonald, Mr Mason and Mr Scott, and the factors in CPR 44.3(5) I have arrived at the conclusion that the assessed sum is disproportionate in all the circumstances.
Following West , the approach of the assessing court should not be to simply declare what the proportionate figure is, but rather consider where the bill might be reduced further and if such further reductions yield a proportionate figure.
I am grateful to the parties for providing me with an agreed version of the re-cast bill (following the line by line assessment) which has enabled me to consider whether there are phases or areas of the bill which ought to be reduced further.
I have settled upon one area of costs that invites further scrutiny, being internal communications. Importantly, this is a tranche of costs identified in the pleaded points of dispute.
Following the line by line assessment, this element of the bill has been reduced from £27,724.50 plus VAT down to £22,946.15 plus VAT (see column AU total at Tab 14 of the original bill and the assessed bill).
With reference to the concerns regarding internal communications previously expressed in this matter, highlighted both in my earlier written judgment and comments made during the course of this assessment, I conclude that a further reduction ought to apply to this portion of costs such that the allowed £22,946.16 plus VAT is reduced to £10,000 plus VAT on a broad brush basis which allows for a reasonable amount of internal communication taking into account the facts and circumstances this case.
The net effect of this reduction is that the base profit costs (excluding costs of drawing and checking the bill) are reduced to £169,534.99 (excluding VAT) and the assessed bill total is reduced to £324,029.77.
I consider these sums to represent the reasonable and proportionate amount.
Next steps
A consequential issues hearing has already been listed for 10.30am on 1 September 2025, via Teams, with a provisional time estimate if 1 to 2.5 hours. It is expected this hearing will be utilised to address any residual issues but primarily to hear submissions as to the principle of whom should pay the costs of assessment and in what amount.
The parties are directed to attempt to agree such unresolved matters and only proceed to attend the consequential issues hearing as a last resort.