Summary
This matter related to an appeal by the Second Defendant, who alleged that the Costs judge had failed to take account of the allegation of fundamental dishonesty when considering proportionality, specifically conduct under CPR 44.11.
The Court ultimately found that Proportionality arguments are not intended to be a tool where the Court can consider further reductions that the Paying Party never raised. The Paying Party were asking the Court to carry out a quasi-finding of fundamental dishonesty, which it refused to do.
Background
The underlying claim related to an RTA, where the Second Claimant was struck by a vehicle driven by the First Defendant. It was considered that the First Defendant was at least primary liable for the incident.
The Second Claimant suffered significant injuries, requiring surgery. This was exacerbated by the COVID-19 pandemic. However, the Second Defendant disclosed surveillance evidence that showed that the Second Claimant’s recovery had advanced more than she reported when examined. The Second Defendant alluded to an intention to argue fundamental dishonesty. However, the claim ultimately concluded at a Joint Settlement Meeting for the sum of £149,000, against a pleaded sum of £2.5 million.
The Claimant’s Bill of Costs was claimed at £517,000. During assessment, this was reduced to £339,565.16. It was then subject to a further reduction to £324,029.77 to reflect proportionality. The Second Defendant filed an application to appeal this judgement to seek further reductions to the Bill of Costs.
The appeal
The Paying Party submitted that the surveillance evidence they had was so strong, that if a reduction under CPR 44.11 in relation to conduct is not made, then one never will be made. It was suggested that a Paying Party would need to run all matters to trial to obtain a finding of fundamental dishonesty to run a CPR 44.11 argument. It was also suggested that the Second Claimant filed no evidence or explanation for the inconsistencies identified on the CCTV footage.
An appeal was requested due to the assistance an appeal may provide to future cases where a defendant has to proceed to trial to achieve a finding of fundamental dishonesty or proceed to detailed assessment and seek a CPR 44.11 finding of misconduct.
The Court’s initial considerations
When considering the points raised by the Second Defendant, Costs Judge Nagalingam clarified that proportionality is not to be used to ‘rescue’ a poor set of Points of Dispute. Proportionality cannot be used for further areas of reductions the Paying Party had not argued for.
Consideration was given to the settlement sum and it was noted that this was net of contributory negligence, as both parties had accepted the litigation risk regarding liability. It was also considered that the Second Claimant did prove her claim by achieving settlement of £149,000. It was considered that an insurer would not have parted with such a sum of money had the Second Claimant not proven their case. In relation to surveillance evidence, it was rejected that the Second Claimant should be compelled to respond without the Second Defendant being granted permission to rely on this evidence, as there was no deadline for a response.
The conduct issues raised
The Second Defendant alleged that the conduct of the Second Claimant was unreasonable or improper under CPR 44.11(1)(b), not her legal representatives. The disallowance of part of the costs which are being assessed were sought.
Costs Judge Nagalingam rejected that consideration should be given to the date the Second Defendant suggested the Second Claimant should have made a full recovery. It was not considered appropriate to find during a detailed assessment hearing and it would have been manifestly unjust to make a finding without a separate hearing.
It was suggested that the Second Defendant ought to have sought a limited costs order to protect their position or use the alleged fundamental dishonesty as leverage to obtain a suitable costs order, rather than argue at the detailed assessment hearing. It was rejected that the Second Defendant could now, long after the conclusion of the claim, seek a time-limited costs order.
It was also suggested that if the Second Defendant wished for work in relation to specific heads of loss be excluded from the costs awarded, it was within their gift to attempt to secure an agreement to an issues-based costs order. Their failure to do so was not something that could be rectified at detailed assessment.
Conduct had already been adequately considered by Costs Judge Nagalingam in the reductions applied to the original detailed assessment, where a 44% reduction was applied to work done on documents, and a reduction of 38% was carried out to the level of profit costs claimed. While the Second Defendant may not have liked the final assessed sum, their disagreement was not considered a basis for appeal.
Costs Judge Nagalingam found it impossible to make the sorts of findings raised by the Second Defendant under CPR 44.11 without applying principles that would apply to the finding of fundamental dishonesty. It is for the parties to resolve disputes on the terms that reflects the agreement between the parties, rather than expecting a costs judge to make a quasi-finding of fundamental dishonesty. The appeal was dismissed, and no order was made as to costs, as it was not considered just to award the costs of the hearing to the Second Claimant.
Analysis
This claim highlights the importance of the wording of a costs order, and the need for parties to greatly consider the terms of the agreement. The suite of available costs orders should be utilised to protect the position of a partially successful party, as the Court are unwilling to rectify any poorly worded order or an order that one party is no longer content to be bound by during an assessment.
Percentage, time-based and issues-based costs orders are available to ensure that partially successful parties can reflect the terms of settlement where a party has not been entirely successful, and it is not the function of the Court to resolve this after the fact if one party is unhappy with the outcome.
Comments