The High Court has heavily reduced the sum a successful claimant sought as payment on account of costs on the grounds that the overall costs claim may well be reduced on the grounds of both proportionality and necessity.
Rallison v North West London Hospitals NHS [2015] EWHC 3255 (QB) concerned a negligence claim over a treatment delay that settled for £450,000.
The claimant – whose solicitors were Stewarts Law – made an overall costs claim of £1.13m, including success fees, and he sought an interim payment on account of costs of £574,000, including a £107,000 after-the-event (ATE) insurance premium.
The defendant offered £250,000, arguing that the costs claimed were disproportionate, and that “a substantial proportion” of the individual items could not be justified in any event.
The claimant’s pleaded case valued his claim at £3.9m and his skeleton argument put it at £3m while, in the settlement negotiations, he suggested that it was worth not less than £1.5m.
Mr Justice Garnham adopted the approach of Lord Justice Christopher Clarke in Excalibur Ventures LLC v Texas Keystone Inc [2015] EWHC 566 (Comm); that a reasonable sum for costs on account would often be one that was an estimate of the likely level of recovery subject to an appropriate margin of error.
Garnham J first looked at whether, viewed globally, the costs claims appeared to be disproportionate, while emphasising that he was “not expressing any final conclusion on the propriety of the claimed costs”.
“In my view, there is an argument of real substance here that the total costs claimed is not proportionate to the complexity of the case, to the amount which it might reasonably have been anticipated would be recovered and to the amount actually recovered.”
It was a “fairly typical clinical negligence case with significant, but not unusual, causation difficulties”, he found, and both £3.9m and £3m seemed, “at least at first blush, to have been substantially greater than the genuine value of the claim”.
Having decided that, the second stage was to consider, “adopting a fairly broad brush approach”, the necessity of the individual items claimed.
“In those circumstances, in my view, it is necessary to consider the actual sums claimed in a little more detail. In that regard, I accept the submissions of [counsel for the defence] that the hours allegedly devoted to the preparation of this case seem, at least at this stage, excessive.”
The claimant’s schedule of costs said that the senior solicitor at Stewarts Law working on this case spent 472 hours on preparatory work ahead of trial, while other solicitors spent 189 hours on documents and 107 hours on correspondence.
“That is the equivalent of a solicitor working almost every working hour of some 23 weeks exclusively on the preparation of this case before it even got to trial. Of incidental interest is that that preparation produced a trial bundle consisting of just three lever arch files. Those figures as to time spent by the solicitors preparing this case for trial are all the more remarkable given that it is evident that they relied heavily on counsel in preparing the case for trial. The costs schedule claims that 177 hours work was done by leading counsel and 199 by junior counsel (although presumably that includes a substantial allowance in respect of their brief fees).
“At least at this stage, it is not easy to see how all these figures can be justified. In those circumstances, I reject the claimant’s claim for an interim award of costs in the sum of £574,000.”
Though that made the defendant’s figure of £250,000 “much more realistic”, the judge said it was intended to cover the ATE premium, which was “highly likely” to be recovered in full. As a result, he increased the payment on account of costs to £307,000.