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Manning & Anor v King's College Hospital NHS Trust

[2011] EWHC 3054 (QB)

Case No: 2010/0766

SCCO Ref. AGS 0904590

Claim No: HQ05X01346

Neutral Citation Number: [2011] EWHC 3054 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

On appeal from the Senior Court Costs Office

(Master Gordon-Saker, Costs Judge)

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 21st November 2011

Before:

THE HONOURABLE MR JUSTICE SPENCER

(sitting with Master Campbell and Mr Gregory Cox as assessors)

Between:

(1) NICHOLAS ANDREW MANNING

(2) MICHAEL JOHN BEGGS

(suing as Personal Representatives of the Estate of GARY RICHARD MANNING deceased (himself previously suing as Executor of the estate of JANE LOUISE MANNING deceased))

Claimants/

Appellants

- and -

KING’S COLLEGE HOSPITAL NHS TRUST

Defendant/

Respondent

Mr Benjamin Williams (instructed by Leigh Day and Co) for the Appellants

Mr Alexander Hutton (instructed by Barlow Lyde and Gilbert) for the Respondent

Hearing date: 10th November 2011

JUDGMENT

Mr Justice Spencer:

1. On 10 th November 2011 judgment was handed down on the appeal and cross-appeal [2011] EWHC 2954 (QB). At paragraphs 161-163 I indicated that the court wished to hear further argument on the question of what costs sanction, if any, is appropriate to meet any prejudice the defendants suffered through the uncertainty surrounding the claimants’ late application for relief from sanctions, the subject of the first ground of appeal. Sitting again with my assessors, I heard those submissions immediately after judgment was handed down.

2. The court is grateful to counsel for their written submissions which, as ever, were clearly and robustly formulated. They illustrate, once again, the polarised positions taken by the parties even when the issues have substantially narrowed.

3. This judgment addresses the following three matters:

(a) whether there should be any variation of Master Gordon-Saker’s costs orders below in the detailed assessment proceedings for the High Court bill and the Court of Appeal bill, in lieu of the Master’s refusal of relief from sanctions for the 17 month period, as explained in paragraph 161 of my judgment;

(b) the costs of the appeal and the cross-appeal;

(c) in relation to the costs of the cross-appeal, whether the claimants should have their costs of the fresh evidence issue.

It became clear that summary assessment of the costs of the appeal and cross-appeal would be inappropriate. The hearing of the appeal has now spanned three days in total and the costs claimed in the claimants’ schedule exceed £125,000. The parties are in agreement with my decision that a detailed assessment of the costs of the appeal and cross-appeal will be undertaken by Master Campbell, who has sat on this case as one of my assessors, and who is therefore particularly well placed to deal with the matter.

Should there be a costs sanction in lieu of the Master’s refusal of relief for 17 month period?

4. On behalf of the claimants, Mr Williams submits that no costs sanction is appropriate. Although the application for relief for sanctions was made very late indeed, on proper analysis the defendants were not thereby prejudiced in making of offers. Even after the refusal of relief for the 17 month period, the claimants still recovered more on the High Court bill than the defendants had offered. In the light of my judgment, the claimants would now have beaten the defendants’ offer on the Court of Appeal bill as well. There is no good reason to deprive the claimants of their full costs of the assessment of both bills. Arguably the claimants are entitled to indemnity costs for the High Court bill because the defendants refused a very early offer by the claimants to settle for a lower sum. Foregoing indemnity costs, coupled with the Master’s order below that the claimants pay the defendants’ costs of the application for relief in any event (in the sum of £10,000), provides ample compensation for any supposed prejudice the defendants suffered as a result of the late application for relief.

5. On behalf of the defendants, Mr Hutton submits that the delay in applying for relief caused uncertainty which made it difficult for the defendants accurately to pitch their offer of settlement on the High Court bill or the Court of Appeal bill. This was prejudice which Master Gordon-Saker recognised, albeit that (in the light of my judgment) it was prejudice to be reflected in the costs of the assessment rather than in depriving the claimants of any costs of the substantive proceedings. Mr Hutton submits that Mr Williams should be held to the concession in the notice of appeal that the Master could have protected the defendants by giving them their costs of the assessment proceedings from 21 days after the offer. Alternatively the prejudice could be compensated by this court making no order for costs on either the High Court bill or the Court of Appeal bill. A further option would be to allow the claimants only 50% of their costs of assessment of the High Court bill, and to leave the orders of the Master on the Court of Appeal bill undisturbed.

The costs of assessment and the offers

6. The claimants served the bill for the High Court proceedings on 1st July 2009. The total sum claimed was £1,779,740. That sum included success fees for solicitors and counsel totalling £764,901. Without the success fees, the total sum claimed was £1,014,838.

7. On the day the bill was served, 1st July 2009, the claimants’ solicitors made an offer of settlement for all the costs in the High Court and the Court of Appeal. This was a few days before the Court of Appeal hearing was due to begin. The claimants offered to accept the sum of £1,750,000 in full and final settlement of costs. The offer was to remain open only until 4pm the following day, 2nd July 2009.

8. On 18th August 2009 the defendants’ solicitors offered the sum of £1,050,000 in settlement of the costs claimed in the High Court bill. The offer was made pursuant to CPR part 47.19, and remained open for 21 days. Before Master Gordon-Saker, the defendants’ costs draftsman, Mr Vinsen, explained that this offer was a “protective offer”, slightly in excess of the base costs and the ATE premiums, and was made on the basis that no additional liability (i.e. success fees) would be recovered, given the failures to comply with the rules. In other words it was an offer based on the assumption that no relief from sanctions would be granted. It was pitched at a level that ensured that, absent an application for relief, the claimants could not beat it because it exceeded the sum claimed by more than £35,000. The defendants never made a further offer of settlement in respect of the High Court bill.

9. The Master assessed the High Court bill at £1,343,443, after deducting the success fees of solicitors and counsel for the 17 month period. The sum assessed included, therefore, success fees outside the 17 month period. They were allowed at £525,621. Had the Master allowed no success fees at all, i.e. had he refused relief from sanctions altogether, the sum recovered on the High Court bill as assessed, would have been £817,840. It follows that the claimants comfortably beat the defendants’ offer of £1,050,000, even with the refusal of relief for the 17 month period. Had relief been refused altogether (which was the premise of their offer), the claimants would have failed to beat the offer.

10. Master Gordon-Saker allowed the claimants their costs of the assessment of the High Court bill in full because they had beaten the offer. It would be wrong to do otherwise, he held, because the claimants had already been penalised by his refusal of relief for the 17 month period. That refusal generated a reduction of £132,125 ( on both bills together). The Master assessed the costs of assessment of the High Court bill at £93,207.

11. The Court of Appeal bill was served on 25th January 2010. The total sum claimed was £563,463. That sum included success fees for solicitors and counsel in the total sum of £246,261. Without the success fees, the sum claimed was £317,200. Without the ATE premium as well, the sum claimed was £246,325.

12. On 4th February 2010 the defendants made an offer to settle the Court of Appeal bill in the sum of £300,000. The offer was rejected by return. There was no counter-offer.

13. The Master assessed the Court of Appeal bill in the total sum of £275,014, having excluded solicitors’ and counsel’s success fees for the 17 month period and the ATE insurance premium. The claimants therefore failed to beat the defendants’ offer of £300,000.

14. Accordingly the Master awarded the claimants their costs of the assessment of the Court of Appeal bill only up to the date of the defendants’ offer (assessed at £1,000). He ordered the claimants to pay the defendants’ costs of the assessment from 21 days after the date of the offer onwards, which he assessed at £8,000.

15. Because the claimants did not recover their costs of the assessment of the Court of Appeal bill after the date of the offer, those costs were not assessed. They have, however, been estimated at £22,500.

16. In the light of my conclusion, in allowing the appeal, that the success fees of solicitors and counsel should not have been disallowed for the 17 month period, it is common ground that the claimants would now comfortably have beaten the offer of £300,000 for the Court of Appeal bill.

The claimants’ potential recovery (on appeal) and net recovery (under existing orders)

17. It is helpful at the outset to identify the maximum the claimants could recover for their costs of the assessments of both bills in the light of my judgment, now they have beaten the offer on each. This can be compared with the net recovery of the claimants on the orders made by Master Gordon-Saker below.

18. The maximum the claimants can possibly recover now for their costs of the assessment of the High Court bill and the Court of Appeal bill is as follows:

High Court bill:

£93,207 (as assessed)

Court of Appeal bill:

£1,000 (pre-offer, as assessed)

£22,500 (post-offer, estimated)

Total:

£116,707

19. The claimants’ position under the orders made by Master Gordon-Saker is as follows:

Claimants’ recovery:

£93,207 (High Court assessment)

£1,000 (Court of Appeal assessment)

Claimants’ liability:

£8,000 (Court of Appeal assessment)

Claimants’ net recovery:

£86,207

Thus the claimants’ net recovery of £86,207 under the orders made by the Master’s below represents 74% of the maximum costs they could now recover for the assessment of both bills (£116,707). This assumes that the estimate of the claimants’ costs of the assessment of the Court of Appeal bill (post offer) in the sum of £22,500 is accurate.

The test to be applied

20. As I emphasised in my judgment (at paragraph 70), in deciding whether to grant relief from sanctions, and if so to what extent, the Master was entitled to have regard to any prejudice the defendants suffered in formulating their offer on costs in the detailed assessment proceedings which was caused by the claimants’ delay in making the application for relief. He was required to have regard to that prejudice in considering “the effect which the granting of relief would have on each party”, under paragraph (i) of CPR 3.9 (1). Before the Master Mr Hutton had properly conceded that any prejudice resulting from difficulty in formulating an offer was prejudice that could be compensated in costs. The Master, despite this concession, found at paragraph 78 of his reserved judgment (set out at paragraph 62 of my judgment) that any such prejudice could not accurately be compensated in costs because it was impossible for the court to predict how the defendants would have approached detailed assessment (and the making of further offers) had there been no failures to comply with the rules, or had the application for relief been made earlier.

21. For the reasons explained at paragraph 66 of my judgment, the Master’s view of this potential prejudice seemed to change in his later oral judgment, following the handing down of his reserved judgment. On that occasion he noted that the defendants seemed to have had no difficulty in making an offer in excess of the aggregate of the base costs and ATE insurance premium. He thought the defendants could have “taken a view” of the likely application for relief which would inevitably be made. It follows that there is no consistent finding by the Master of prejudice suffered by the defendants in making an offer caused by the uncertainty surrounding any late application for relief. I have to assess that prejudice myself in the light of the detailed submissions that have been made.

22. However, any such prejudice is only one of the relevant matters to be considered. It is common ground between counsel that I also have to have regard to CPR 47.18. Paragraph (1) of that rule creates a presumption that the receiving party is entitled to the costs of the assessment proceedings unless (inter alia) the court makes some other order in relation to all or part of the costs. Paragraph (2) provides that in deciding whether to make some other order, the court must have regard to all the circumstances, including the conduct of the parties. This entitles me to look at the conduct of both parties as a separate matter from the prejudice to which I have referred.

23. This provision echoes, of course, the general discretion on costs in CPR 44.3. The conduct of the parties is there spelt out as including conduct before, as well as during, the proceedings. It includes whether it is reasonable for a party to raise and pursue or contest a particular issue and the manner in which a party has pursued or defended a particular issue.

24. Against that background, I turn to examine in a little more detail the stance taken by each party in relation to the undoubted breaches of the relevant rules, and the offers of settlement, as disclosed by the correspondence.

The correspondence

25. The defendants made their one and only offer in respect of the costs of the High Court bill in their letter of 18th August 2009. The defendants had clearly spotted by then the claimants’ breach of the rules in failing to serve statements of reasons for the percentage increases/risk assessments in the CFAs for solicitors and counsel. This was point number 156 in the points of disputes served by the defendants on 16th September 2009. The consequence of that breach, as the defendants rightly asserted, was that the success fees were automatically disallowed, by operation CPR44.3B(1)(c), unless relief from that sanction was granted by the court. Similarly in point 157, the defendants correctly asserted that failure to serve notice of funding (N251) in respect of the second CFAs for solicitors and counsel led to the automatic disallowance of those success fees unless relief from that sanction was granted by the court. It is important to note that failure to comply with CPR 44.3B (1) (c) results in the immediate and automatic loss of the additional liability, unless the court orders otherwise. This is in sharp contrast to other provisions of the CPR where default is not met with such a draconian consequence and requires the party who is not in default to apply for an “unless” order in relation to the breach in question.

26. The omission to serve reasons for the success fees was remedied promptly. The relevant documentation was served by the claimants on 9th October 2009. It is true, however, that unless and until an application for relief from sanctions was made, the breach (although remedied) still led to automatic disallowance of the success fees (in both the first and the second CFAs). Nevertheless as Mr Hutton properly conceded, had that been the only breach of the rules, relief was bound to be granted by the court if the appropriate application were made.

27. It is, to my mind, an extraordinary feature of the correspondence thereafter that no express mention is made by either party of a prospective application for relief from sanctions. Mr Hutton submits that once the issue had been raised formally in the points of dispute, the defendants were under no obligation to remind the claimants of the need to make an application for relief. That, of course, is correct. Mr Williams submits, however, that it must have been blatantly obvious to the defendants that sooner or later such an application was bound to be made, and if the defendants wanted to protect themselves further on costs they should have “taken a view” on the claimants’ prospects of success in any application for relief.

28. In their letter dated 29th October 2009 the defendants’ solicitors acknowledged receipt of the documents containing the statements of reasons for the success fees, stating:

“ We shall reserve comment/further submissions as to recoverability and/or levels of success fees until we have seen the formal Replies to point numbers 156-159 inclusive of the Points of Dispute and are aware how you intend to proceed.” (emphasis added)

Mr Hutton submits that those last words, were (in effect) code for “whether and if so when you intend to make an application for relief from sanctions”. Recoverability of the success fees was clearly being raised as an issue. Furthermore, at the end of the same letter the defendants’ solicitors referred in terms to the possible need for “either party to make applications” in respect of recoverability and/or appropriate levels of success fees. This was further code, Mr Hutton submits.

29. The correspondence continued. Each party had a highly experienced costs draftsman. In a letter copied to the defendants, the claimants’ costs draftsman, Mr Bingham, wrote to the claimants’ solicitors on 25th November 2009, commenting on the relevant points of dispute. He singularly omitted to identify the need to apply for relief from sanctions as a prerequisite to recoverability. Indeed, he asserted in terms : “there is no point on recoverability of success fee”.

30. In a letter dated 2nd December 2009 the defendants’ solicitors indicated that on receipt of replies to their points of dispute they would “give more detailed consideration to the level of success fees for both your firm and for leading counsel under both retainers” and would put their submissions in writing. That never happened. The correspondence became bogged down in other technical points which, in the end, both parties agreed were not worth further time debating in correspondence.

31. On 25th January 2010 the claimants served their Court of Appeal bill of costs. On 5th February 2010 the defendants made their one and only offer of settlement, £300,000. It was not until 24th September 2010 that the defendants served their points of dispute in relation to the Court of Appeal bill. The same point was taken in respect of the failure to serve a form N251. There was also an assertion that the success fees claimed were excessive. This was only a fortnight before the detailed assessment hearing was due to start.

Discussion

32. The “cat and mouse” approach adopted by the parties’ solicitors, and costs draftmen, to the resolution of the detailed assessment proceedings does no one credit. Mr Hutton frankly conceded that the defendants always expected that the claimants would make an application for relief against sanctions. For understandable tactical reasons it suited the defendants that the claimants made their application for relief as late as possible. The later it was made, the greater the hurdle the claimants would have to overcome on the question of delay. Mr Hutton submits that unless and until an application for relief was actually made, the defendants were at a serious disadvantage in evaluating the prospects of such an application succeeding.

33. As I put in argument, the unattractive feature of that approach is that the defendants were trying to have it both ways. Tactically it suited them to let sleeping dogs lie. But if they knew all the time that an application would eventually be made, they should have made an increased offer. Instead they made no further offer at all, even though the premise on which their one and only offer in the High Court proceedings had been made - that success fees for solicitors and counsel were disallowed - was ripe for review as soon as the statements of reasons were served. That made it almost inevitable that relief from sanctions would be granted to some extent at least.

34. I strongly suspect, although I make no such finding, that in reality, as matters drifted on towards the detailed assessment a year later, the defendants’ solicitors thought that the offer they had made (£1,050,000), representing 59% of the High Court bill as claimed, left enough “slack”to cover the risk of relief from sanctions being granted, because the bill was bound to be reduced substantially on assessment in any event.

35. As I explained at paragraph 63 of my judgment, if the defendants found themselves in genuine difficulty in formulating a further offer because of the uncertainty over the application for relief for sanctions, they could have framed an offer conditional on relief being granted. Alternatively they could have made an offer in respect of base costs, reserving their position on success fees. To have done so, however, would have alerted the claimants to the fact that an application for relief was still required and had not been made, and this would have reduced the defendants’ tactical advantage in resisting the application on the grounds of delay.

36. Mr Hutton submits that, on the authorities and as a matter of practice, there could be no certainty that relief from sanctions would be granted at all. That may be right, but this did not absolve the defendants from the responsibility of exercising their judgment in assessing the prospects of success, and increasing their offer accordingly.

37. For these reasons, whilst I accept (as the Master did) that the uncertainty made it more difficult for the defendants to pitch their offer at the right level, it would be wrong, in my judgment’ to conclude that they were so prejudiced by the uncertainty flowing from the claimants’ delay that the claimants should be deprived of all or most of their costs of the assessment of the High Court bill or the Court of Appeal bill. That would be disproportionate to the effect of the breach, and disproportionate to the extent of the prejudice.

38. Turning to the conduct of the claimants, their solicitors and their costs draftsmen were seriously at fault in not making, or at least intimating, an application for relief from sanctions as soon as the breaches of the rules were identified. As I pointed out at the end of my judgment these are solicitors who hold themselves out as leading specialists in this field of litigation. Their charging rates are commensurately high. The rules and the practice direction are quite clear. Any application for relief from sanctions must be made promptly. The solicitors had the expert advice of a specialist costs draftsman. As Mr Hutton pointed out, a letter inviting the defendants to consent to the granting of relief might well have been sufficient to protect their position, and if that prudent course were not taken, the application for relief should have been issued immediately. Instead, it was not until the end of the first week of the detailed assessment hearing that application was in fact made, more than 12 months after the points of dispute had first alerted them to the issue.

39. At paragraph 48 of my judgment I referred to the observation by Master Gordon-Saker that it was not unusual to find that arguments over additional liabilities (such as success fees) fall away at the assessment hearing. I also referred to the fact that my assessors were not surprised that in this particular case, in the light of the correspondence and the circumstances I have described, no application for leave from sanctions was pursued until it was raised in the detailed assessment hearing itself. That lack of surprise, however, is not to be taken in any way as condoning the failure of the claimants in this case to make a timely application for relief from sanctions. Mr Hutton submitted vigorously that this court would be sending out to the profession the wrong message altogether if it were thought that the rules could be ignored with impunity and that relief from sanctions would be granted however long the delay.

40. Mr Williams’ submissions, as I have explained, are founded firmly on the absence of prejudice and the flimsiness of the defendants’ case that they could not have made a proper offer. The decision not to increase their offer was, Mr Williams submitted, a “reckless gamble”. He submits that any prejudice on costs was amply compensated by the Master’s order that the claimants pay the costs of the relief application in any event, in the sum of £10,000. He also submits that the effect of my judgment is that the claimants would now have recovered more than they were prepared to accept in their offer of 1st July 2009, and that they would therefore be entitled to seek their costs of the assessment of both bills on the indemnity basis. By accepting that there should be assessment only on the standard basis, rather than the indemnity basis, the claimants have foregone their entitlement to substantially higher sums in costs.

41. On the issue of indemnity costs, as Mr Hutton pointed out, the “one day special” offer to settle for £1,750,000 does not begin to amount to the kind of offer which would generate entitlement to indemnity costs. The claimants have foregone nothing in that respect.

Conclusion

42. In my judgment it is entirely appropriate that there should be some significant reduction in the claimants’ costs of the detailed assessment for both bills, to reflect the limited prejudice I have identified, and to reflect the claimants’ conduct in disregarding the rules. It is common ground that I have a wide discretion under CPR 47.18. This cannot be a matter of precise calculation or arithmetic. In my judgment the proper balance of all the relevant factors will be achieved by allowing the claimants their costs of the assessment of the High Court bill and their costs of the assessment of the Court of Appeal bill, but reducing their costs in relation to each bill by 25%.

43. Because the Master assessed the claimants’ costs of assessing the High Court bill at £93,207.25, the 25% reduction produces a figure of £69,905.44.

44. The position is rather more complicated for the Court of Appeal bill, because the Master did not assess the claimants’ costs post-offer. With the agreement of the parties, as canvassed during the course of argument, there will be a detailed assessment by Master Campbell of those post-offer costs (estimated at £22,500) if the amount cannot be agreed. In view of the comparatively small sum involved, I would hope that on this occasion at least the parties can reach agreement to avoid the running up of yet further costs. The claimants will, therefore, recover 75% of whatever sum is assessed or agreed for the period post-offer, plus £750 in respect of the period pre-offer (assessed by Master Gordon-Saker at £1,000).

45. Subject to determination of the costs of the assessment of the Court of Appeal bill, it follows that the claimants’ net recovery for the costs of assessment of both bills will be close to their net recovery under the orders made by Master Gordon-Saker below. The important difference, of course, is that the claimants by my judgment on the appeal are also now entitled to recover the additional liabilities in full, namely the sum of £132,125 in respect of success fees, and the sum of £70,875 in respect of the ATE insurance premium.

The costs of the appeal and cross-appeal

46. Mr Hutton accepts that the defendants must pay the claimants’ costs of the appeal and the cross-appeal. However, he submits that there is good reason to reduce the costs, on both the appeal and the cross-appeal, by 25%.

47. In relation to the appeal Mr Hutton submits that a reduction is appropriate because the claimant has not succeeded in full. The effect of my judgment has merely been to re-arrange the financial terms upon which relief from sanctions, for that 17 month period, has been granted.

48. I reject that submission. For the reasons I have just explained in analysing the net effect of my order on appeal, the claimants have succeeded very considerably on appeal. They have now “recovered” the additional liabilities totalling £203,000 which the Master had disallowed. The claimants’ net recovery of the costs of the assessment of both bills is virtually the same as it was under the Master’s order. There is no justification for depriving the claimants of any of their costs of the appeal.

49. In relation to the cross-appeal, Mr Hutton submits that the claimants have succeeded on a rather different basis from that which underpinned Master Gordon-Saker’s decision. As I put I in my judgment, at paragraph 157, the Master’s instinctive view was that it was unrealistic to conclude that solicitors and counsel were not “at risk” (in the requisite sense). That ultimately is the conclusion I have reached by a somewhat different route. The defendants put the point before the Master and lost. They have taken the point before me, and have lost again. Furthermore, it is not without significance that the defendants clearly had no intention of bringing an appeal on the subject matter of the cross-appeal. The claimants’ appeal was lodged on the very last day. Had the defendants intended to appeal from the outset, they would have been out of time. They only appealed because the claimants had appealed.

50. In these circumstances there is no justification for reducing the claimants’ costs of the cross-appeal, subject only to the question of the fresh evidence.

51. Accordingly, the claimants are entitled to their costs of the appeal and (in substance) to their costs of the cross-appeal.

Costs relating to the application to admit fresh evidence

52. In support of the cross-appeal the claimants made a late application to admit fresh evidence. In the event the cross-appeal was decided in the claimants’ favour without reference to the fresh evidence, although I held that I would have admitted the evidence had it been necessary for the claimants to rely upon it.

53. Mr Hutton submits, with force, that the claimants should not recover their costs of the application to admit fresh evidence, or the costs of that issue in the cross-appeal. He points out that the application was made very late in the day. The cross-appeal was commenced by a respondents’ notice dated 21st February 2011. The application to admit fresh evidence was not issued until 27th September 2011, less than four weeks before the hearing of the appeal. Mr Hutton further submits that the supposed need for fresh evidence arose only as a result of the fault of the claimants’ solicitors in the drafting of the second CFAs. It would therefore be wrong to allow the claimants the costs of seeking to put right their own default. Had the claimants sought to rely upon the evidence before the Master, it is doubtful whether they would have recovered the costs involved. They certainly should not have those costs on appeal.

54. Mr Williams submits, correctly in the light of my judgment (at paragraph 152), that the claimants could not have been expected to file the evidence for the hearing before the Master. It was reasonable to adduce the evidence in responding to the cross-appeal, even though it was not required in the event.

55. In deciding this issue I have regard to the principles set out in CPR 44.3. Although it was reasonable for the claimants to raise the issue of fresh evidence, the need to raise it at all arose solely from the conduct of the claimants’ solicitors in failing to see that the second CFAs were drafted properly and accorded with the mutual expectation of the parties to the CFAs. The application to admit fresh evidence was very late, and added to the complexity and length of the cross-appeal.

56. In these circumstances, in the exercise of my discretion, my decision is that the claimants should not have their costs of and incidental to the application notice to admit fresh evidence. Those costs, Mr Williams confirmed, should be readily capable of identification at the detailed assessment of the costs of the appeal and cross-appeal. Furthermore, it would be just and proportionate in addition to deprive the claimants of one-tenth of their costs of the cross-appeal itself, which is a reasonable estimate, in my judgment, of the prominence in the cross-appeal of the fresh evidence issue.

The order

57. Counsel will draw up the order in the light of both my judgments. The appeal is allowed. Relief from sanctions is granted for the 17 month period and the additional liabilities are all recoverable. The cross-appeal is dismissed. The orders made by Master Gordon-Saker in relation to the costs of the detailed assessment proceedings of the High Court bill and the Court of Appeal bill are varied as indicated, so that the claimants will now recover 75% of their assessed costs of both bills. I remit to Master Campbell the assessment of the claimants’ post-offer costs of the Court of Appeal bill. The claimants will have their costs of the appeal and cross-appeal, assessed on the standard basis, but their costs of the cross-appeal will be subject to a deduction of 10%, and the claimants will not have their costs of and incidental to the application notice to admit fresh evidence. I remit to Master Campbell the detailed assessment of the claimants’ costs of the appeal and cross-appeal.

58. Mr Williams raised the issue of interest on costs. It was agreed by counsel that this too is best left to Master Campbell to determine in the light of the expected guidance from the Court of Appeal in Motto v Trafigura [2011] EWHC 90206 (Costs), which is to be heard at the end of January 2012.

59. I am very much indebted to both my assessors for their considerable assistance in a difficult and unusual case, although I stress that the decisions are mine. I also repeat my thanks to both counsel for the thoroughness and clarity of their submissions, which were of the highest calibre.

Manning & Anor v King's College Hospital NHS Trust

[2011] EWHC 3054 (QB)

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