Javed v British Telecommunications Plc

On 7 July 2008 a vehicle being driven by the Claimant was in collision with a vehicle being driven by an employee of the Defendant. Proceedings were issued on behalf of the Claimant in the Stockport County Court on 30 November 2009, in which the Claimant claimed damages for personal injury, loss and damage limited to £3,000. On 6 October 2010, the Claimant accepted the Defendant’s Part 36 offer of £1,500 in final settlement of her claim. By then the matter had been transferred to the Brentford County Court, and on 6 October 2010 there was a sealed consent order confirming that the Defendant pay the Claimant the sum of £1,500 in settlement of her claim, and that the Defendant pay the Claimant’s costs of the claim on the standard basis, to be assessed if not agreed.

On 22 October 2010 the Claimant’s Solicitors commenced detailed assessment proceedings by serving a bill of costs amounting to £8,654.19. In Points of Dispute served by the Defendant, the Defendant submitted that the Claimant had issued proceedings prematurely and unreasonably, and that at the detailed assessment the Claimant’s costs should be limited to the fixed recoverable costs set out in Section II of CPR Part 45 (“fixed recoverable costs”), which would have been those sums that would have been allowed had proceedings not been issued.

The issues that I have to decide are:

Both parties have lodged clear and detailed skeleton arguments supported by various authorities. I have also heard oral submissions from Mr Marven, Counsel for the Defendant, and from Mr Dempsey the costs draftsman instructed on behalf of the Claimant. I have given consideration to all the submissions, both written and oral, but if I do not specifically refer to a particular written or oral submission, that must not be taken as my not having given consideration to such submission.

Civil Procedure Rules 1998

“44.4

- (1) Where the court is to assess the amount of costs (whether by summary or detailed assessment) it will assess those costs –

(a)

on the standard basis; or

(b)

on the indemnity basis,

but the court will not in either case allow costs which have been unreasonably incurred or are unreasonable in amount.

(2)

Where the amount of costs is to be assessed on the standard basis, the court will –

(a)

only allow costs which are proportionate to the matters in issue; and

(b)

resolve any doubt which it may have as to whether costs were reasonably incurred or reasonable and proportionate in amount in favour of the paying party.

44.5

– (1) The court is to have regard to all the circumstances in deciding whether costs were –

(a)

if it is assessing costs on the standard basis –

(i)

proportionately and reasonably incurred; or

(ii)

were proportionate and reasonable in amount, …

(2)

In particular the court must give effect to any orders which have already been made.

(3)

The court must also have regard to –

(a)

the conduct of all the parties, including in particular –

(i)

conduct before, as well as during, the proceedings; and

(ii)

the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;

(b)

the amount or value of any money or property involved;

(c)

the importance of the matter to all the parties;

(d)

the particular complexity of the matter or the difficulty or novelty of the questions raised;

(e)

the skill, effort, specialised knowledge and responsibility involved;

(f)

the time spent on the case; and

(g)

the place where and the circumstances in which work or any part of it was done.

II Road Traffic Accidents Fixed Recoverable Costs

45.7

– (1) This Section sets out the costs which are to be allowed in –

(a)

costs-only proceedings under the procedure set out in rule 44.12A; or

…

(2)

This Section applies where –

(a)

the dispute arises from a road traffic accident;

(b)

the agreed damages include damages in respect of personal injury, damage to property, or both;

(c)

the total value of the agreed damages does not exceed £10,000; and

(d)

if a claim had been issued for the amount of the agreed damages, the small claims track would not have been the normal track for that claim.

The Protocols

Practice Direction – Pre-Action Conduct

1.1

The aims of this Practice Direction are to –

(1)

enable parties to settle the issue between them without the need to start proceedings (that is, a court claim); and

(2)

support the efficient management by the court and the parties of proceedings that cannot be avoided.

8.1

Starting proceedings should usually be a step of last resort, and proceedings should not normally be started when a settlement is still actively being explored. …

Pre-Action Protocol for Personal Injury Claims

1.2

The aims of pre-action protocols are:

• more pre-action contact between the parties

• better and earlier exchange of information

• better pre-action investigation by both sides

• to put the parties in a position where they may be able to settle cases fairly and early without litigation

2.16

… The Courts take the view that litigation should be a last resort, and that claims should not be issued prematurely when a settlement is still actively being explored. Parties are warned that if the protocol is not followed (including this paragraph) then the Court must have regard to such conduct when determining costs.

5.1

Where the defendant admits liability in whole or in part, before proceedings are issued, any medical reports obtained under this protocol on which a party relies should be disclosed to the other party. The claimant should delay issuing proceedings for 21 days from disclosure of the report (unless such delay would cause his claim to become time-barred), to enable the parties to consider whether the claim is capable of settlement.”

I set out below a chronology of the relevant facts, which I have taken in part from the Defendants’ skeleton argument. Mr Dempsey did not challenge these facts:

The detail of those facts that are in italics, are facts elicited by me from the Claimant’s file of correspondence.

The Defendant submits that the Claimant issued the proceedings unreasonably and unnecessarily in complete disregard to the Personal Injury Protocols. The Protocols state that proceedings should be issued as a last resort, and that claims should not be issued prematurely when a settlement was still actively being explored. The Personal Injury Protocol required that medical reports should be sent at least 21 days before proceedings were issued, and that it was an undeniable fact that the proceedings were sent to the court for issue well before a full and complete copy of the medical report relating to the July 2008 accident had been served on the Defendant. Within three days of receipt of the medical evidence the Defendant requested further medical information relating to an earlier accident in April 2008 in which the Claimant had also suffered a personal injury, which, given the proximity of date of the earlier accident, was necessary in order to enable the Defendant to value the claim prior to making an offer on general damages. At no time did the Claimant suggest that the Defendant was not entitled to this further information, but nevertheless she still carried on with the issue of proceedings.

It was not until more than a month after the proceedings had been issued that a full copy of the medical report relating to the earlier accident was supplied.

The Defendant further submits that it was another eight months before full medical evidence, being the Claimant’s GP’s notes was supplied, and that within a day of this medical evidence being supplied, a Part 36 offer was made by it for a sum equal to half of what the Claimant had been claiming, and this Part 36 offer was accepted.

The Defendant also makes the point that, notwithstanding the fact that the Claimant had retained the same solicitors in respect of the earlier accident, information relating to the earlier accident had not been voluntarily supplied by the Claimant’s Solicitors. It was only as a result of the Defendant’s consideration of the medical evidence that it became clear that the Claimant had been involved in an earlier accident and it was reasonable and necessary to obtain this further information. Furthermore, although the Claimant did not object to supplying the further information, it was only provided very slowly over a number of months.

The Defendant submits that its actions in seeking all the medical information it required were necessary in order to protect its position, and by virtue of the overall result was justified, particularly bearing in mind that the earlier accident had occurred, and that the Claimant had had an earlier medical examination, and this information had not previously been revealed. This information should have been provided at an earlier stage, and certainly before proceedings were issued. Given that the limitation period did not expire until July 2011, there was no pressure on the Claimant to issue proceedings.

The Defendant submitted that the Claimant acted unreasonably by taking steps to issue proceedings when negotiations were clearly not at an end, and did not issue proceedings as a last resort. Furthermore, the Defendant submits that the Claimant gave little thought as to the reason for issuing proceedings, save that by doing so her solicitors would avoid being paid only fixed recoverable costs, and that was not a reasonable ground for issuing proceedings.

The Defendant, therefore, submits that as the Claimant issued proceedings unreasonably, the Defendant should only have to pay such costs that would have been allowed if the Claimant had acted reasonably, and those costs are fixed recoverable costs.

The Claimant submits that at the time of issue the Defendant had had sight of the orthopaedic report, and that that report had dealt with the earlier accident. The orthopaedic surgeon had considered the earlier medical report, and had provided a definite prognosis. A Part 36 offer had been made by the Claimant, and the Claimant had made it clear that proceedings would be issued, but in spite of this no offer was made by the Defendant until 20 August 2010, some ten months after the disclosure of the orthopaedic report.

The Claimant contends that the settlement was not being actively explored, since causation was in dispute, and no offers of settlement were forthcoming from the Defendant.

Mr Dempsey further submitted that the Defendant could have sought a stay of the proceedings pending the receipt of the full medical records, which they did not.

I am in no doubt that the Claimant was unreasonable in commencing proceedings when she did. By issuing the proceedings when she did, the Claimant was in breach of the pre-action protocols. It is clear from the correspondence that at the time proceedings were issued a settlement was still being actively explored by the Defendant. It is no answer for the Claimants to state that the lack of positive response to the Claimant’s Part 36 offer was a justification for issuing proceedings. No responsible advisors acting for the Defendant could have recommended any proper consideration of the Part 36 offer without the full disclosure of all the relevant medical evidence. The incomplete disclosure on 13 October 2009 of the medical report, on which the Claimant was relying, was the first indication given to the Defendant that the Claimant had been involved in a separate accident three months earlier. It was perfectly reasonable for the Defendant to request further information with regard to the previous accident. At no time did the Claimant’s Solicitors indicate that the Defendant was not entitled to the further information that was being requested. Furthermore, when the medical reports were disclosed, they were incomplete.

The Pre-Action Protocol states that the issue of proceedings is a last resort. It is noteworthy that the Solicitors’ file of correspondence shows that proceedings had been prepared at the beginning of September 2009, and had been signed by the Claimant on 9 September 2009, almost a month before any medical evidence was disclosed to the Defendant. This, in my judgment, shows an intention to issue proceedings, not as a last resort, but at the earliest opportunity. There was no necessity to issue proceedings as there was no danger of any limitation period expiring. The Defendant was actively engaging in settlement negotiations having already admitted liability and having already made a payment in respect of special damages. The Claimant’s solicitors were happy to incur the cost of preparing the proceedings even before they had disclosed any medical evidence or made any Part 36 offer.

In Schedule 2 to the Claimant’s bill of costs there are the following two entries:

“22/07/2009 perusing and considering orthopaedic medical reports. Noting opinion and prognosis. Valuing general damages and considering whether appropriate to make a Part 36 offer.- 54 minutes.

05/11/2009 reviewing and considering file of papers. Perusing specials and medical evidence, considering whether appropriate to issue proceedings. Checking all losses and issuing the claim. 1 hour 12 minutes.”

If the above entries are reliable, it must have been obvious to anyone who was reading the medical reports that the Claimant had been involved in an earlier accident on 13 April 2008. It must also have been obvious to the Claimant’s Solicitors that this was a matter that should have been disclosed to the Defendant, and that the Defendant would seek further information with regard to the earlier accident, as it would have a considerable bearing on the value of the general damages.

It is also clear that there had been no dilatoriness on the part of the Defendant. All the chasing was done by it. Within days of all the relevant medical evidence being disclosed, the Defendant made it’ own Part 36 offer of £1,500, which was duly accepted by the Claimant in settlement of the claim. It’s decision to wait for full disclosure of the medical evidence was entirely justified. The second paragraph of it’s letter to the Claimants’ Solicitors, dated 20 August 2010, reads as follows:

“Having reviewed the evidence, and in light of the fact that your client had pre-existing neck and back problems, together with the injury sustained approximately three months prior to the incident with the BT vehicle, I attach Part 36 offer in respect of her claim for general damages.”

This was a fairly standard, small road traffic accident claim. The only slight complication was the Claimant’s previous accident. Had the Claimant disclosed all the relevant medical evidence with her Part 36 offer, in accordance with the Pre-Accident Protocols, I have little doubt that this claim would have settled without the necessity for the issue of proceedings.

Therefore my decision on the first issue is that the Claimant acted unreasonably in issuing proceedings.

The Defendant submits that as the Claimant had issued proceedings prematurely, the Claimant’s costs ought to be assessed by reference to the sums that would have been allowed had the proceedings not been issued. These costs would have been calculated under the fixed recoverable costs regime set out in Section II of Part 45 of the CPR, which would have amounted to £1,190 plus additional liabilities, VAT and relevant disbursements.

It was the Defendant’s case that there were a number of authorities that supported their submission, namely O’Beirne v Hudson [2010] EWCA Civ 52, Drew v Whitbread [2010] EWCA Civ 53, Thatcher v Subedi (Liverpool County Court, 27 November 2007), and Smith v Wyatt (Cambridge County Court, 13 January 2011).

In oral submissions Mr Marven referred me to paragraph 32 of Drew v Whitbread, in which Lord Justice Waller referred to the judgment in Lownds v Home Office [2002] 1 WLR 2450, in which he stated at paragraph 31:

“If because of lack of planning or due to other causes, the global costs are disproportionately high, then the requirement that the costs should be proportionate means that no more should be payable than would have been payable if the litigation had been conducted in a proportionate manner.”

Mr Marven also referred to the test Lord Justice Waller set out in paragraph 19 of his judgment in O’Beirne v Hudson, which was:

“… whether it is reasonable for the paying party to pay more than would have been recoverable in a case that should have been allocated to the small claims track.”

Mr Marven submitted that the facts in this present case were analogous to the facts in Smith v Wyatt, and although that decision at County Court level was only persuasive, the decision was made with reference to the Court of Appeal decisions in Drew v Whitbread and in O’Beirne v Hudson.

Mr Dempsey’s main submission was that as the proceedings had settled by reference to the acceptance of a Part 36 offer made by the Defendant, there had to be a detailed assessment, and therefore there had to be a line by line assessment in order to ascertain which costs had been reasonably and proportionately incurred by the Claimant. Even if I was to find that proceedings had been issued unreasonably, then even if I did strike out all the costs claimed in the bill after the issue of proceedings, nevertheless, I had to carry out a line by line assessment in respect of all costs that were reasonably incurred prior to the issue of the proceedings. Mr Dempsey stated that fixed recoverable costs were costs that were fixed following negotiations within the industry. In some cases this would lead to the Claimant being better paid than in other cases. However, those costs were not “reasonable” costs, but were fixed costs. As the Claimant was entitled to reasonable costs, by reference to the deemed order following his acceptance of a Part 36 offer, there had to be a detailed assessment and a line by line assessment.

Mr Dempsey submitted that I could not carry out a detailed assessment of the costs by reference to Section ll of Part 45, as that section only applied to cases where proceedings have not been issued. He referred to a statement by Mr Justice Simon in Butt v Nizami [2006] EWHC 159 (QB), when he said:

“It seems to me clear that the intention underlying CPR 45.7-14 was to provide an agreed scheme of recovery which was certain and easily calculated. This was done by providing fixed levels of remuneration which might over-reward in some cases and under-reward in others, but which was regarded as fair when taken as a whole.”

In seeking to extend the scheme to cases where it was not intended to apply, the Defendant was trying to undermine the scheme, and also reduce the Claimant’s costs, not to an amount which was reasonable, but to an amount which was manifestly unreasonable, and this was evidenced by the fact that the amount of costs which would be allowed under the fixed recoverable costs regime would be less than all of the costs which would be allowed if all other matters raised in the Defendant’s points of dispute were upheld.

Mr Dempsey also referred me to an unreported decision in Lloyds TSB v Allen, in which His Honour Judge Cryan made clear that the court’s discretion in applying fixed recoverable costs was limited to those cases where CPR 45.7 was satisfied.

With reference to the decisions in Drew v Whitbread and O’Beirne v Hudson, Mr Dempsey submitted that those cases dealt with different situations, namely whether fast track costs should be allowed in cases which should have been allocated to the small claims track, whereby no legal fees were allowed. That was a different situation to the present case.

Pursuant to her acceptance of the Defendant’s Part 36 offer, the Claimant is entitled to her costs to be assessed on the standard basis, if the amount of costs is not agreed. Under the standard basis of assessment the court will not allow the Claimant costs which have been unreasonably incurred, or unreasonable in amount, and will only allow her costs which are proportionate to the matter in issue.

In reaching these conclusions I have had the opportunity of considering the Claimant’s Solicitors full file of papers, which includes the correspondence and the documentation drafted by them, and the reports received. I have therefore been able to form a view as to the extent of the work that was carried out.

It is clear that the costs claimed by the Claimant are unreasonable in amount, and have in the most part been unreasonably incurred. Furthermore, the costs claimed are disproportionate to the matters in issue. I make that finding not only as a result of the obvious appearance of disproportionality, of costs of £8,654.19 in respect of a simple claim that settled for £1,500, but also as a result of my review of the Claimant’s Solicitors’ file of papers.

In carrying out a detailed assessment I am obliged, pursuant to CPR 44.5(1), to have regard to all the circumstances, one of which is the fact that costs were unreasonably incurred by the premature issue of the proceedings. I must also have regard, pursuant to CPR 44.5(3), to the conduct of the parties, including in particular the efforts made, if any, before and during proceedings in order to try and resolve the dispute.

Smith v Wyatt was a case with strong similarities to the present case. A major difference was that in that case the claimant issued proceedings during negotiations, but shortly before the expiry of the three year limitation period. In this case the limitation period would not have expired until July 2011, some 22 months after proceedings were issued. In paragraph 13 of the judgment of His Honour Judge Maloney QC, the learned Judge stated:

“13.

the essential test that emerges from O’Beirne and Drew appears to me to have two elements, one of substance and one of process.

(a)

In substantive terms, the test to be applied on a detailed assessment when this problem arises is: whether it is reasonable for the paying party to pay more than would have been recoverable had the relevant alternative regime applied.

(b)

In process terms, what is important is the Costs Judge always bears in mind that he is both conducting a detailed assessment and applying the test at (a) above. If he does so, and having done so concludes that it was not reasonable to take the case out of the alternative regime and hence not reasonable to incur the extra costs that flowed from that unreasonable decision, he will have remained within his proper discretion. If he does not do so, but simply concludes that the case ought really to have been (say) a small claim and therefore that the regime automatically and comprehensively applies, regardless of reasonableness one way or the other, he will have stepped outside of his discretion and in effect re-written the costs order he is supposed to be applying.

As Waller LJ said in Drew at 42, this may in some cases be a distinction without a difference; but in other cases, an express consideration of reasonableness may lead to the conclusion that a particular item of costs is allowable even though it would not have been paid or even considered for payment under the alternative regime.”

Whilst the decision in Smith v Wyatt is not binding on me, it is a decision with which I respectfully concur.

In carrying out this detailed assessment the first decision that I have reached is that the Claimant’s costs have been unreasonably incurred as a result of the Claimant issuing proceedings prematurely. My second decision is that the costs claimed are disproportionate. The next step I have to take is to assess those costs to which the Claimant is reasonably entitled. To do this I must have regard to the factors set out in 44.5(3). Having regard to those factors I conclude that the Claimant should recover those costs that she would have recovered had she acted reasonably. I consider that it is within my discretion, if I consider it to be unnecessary, not to carry out a line by line assessment to enable me to decide what costs it is reasonable for the paying party to pay and whether it is reasonable for the paying party to have to pay more than would have recoverable if an alternative regime applied. I have not been referred to any requirement in CPR for a Costs Judge to carry out a line by line assessment in order to decide the amount of costs that it is reasonable for the paying party to have to pay.

In this case, I am satisfied that had the Claimant acted reasonably, then her Solicitors would not have been entitled to recover any more than fixed recoverable costs and it seems to me that it would create an injustice if they were to profit as a result of their unreasonable conduct. Having made that decision it is not necessary for me to carry out a line by line assessment.

In my judgement, the Court can limit the costs to fixed recoverable costs, and in this case the court should limit the Claimant’s costs to fixed recoverable costs and the court is not necessarily obliged to carry out a line by line assessment of the Claimant’s bill of costs.

I make the additional comment that had I accepted Mr Dempsey’s submissions, and carried out a line by line assessment of those costs that were incurred prior to the commencement of the proceedings, I would have made substantial reductions as a result of their disproportionality, and the unreliability of some of the times claimed.

Consequently, I assess the Claimant’s costs at an amount which is equal to those costs that would have been payable under Section II of Part 45 of CPR.