THERE IS NO RIGHT TO AN IMMEDIATE ASSESSMENT OF COSTS AFTER A SPLIT TRIAL: HOWEVER THERE IS AN (8%) STING IN THE TAIL

The judgment of Costs Judge Leonard in  ABA v University Hospitals Coventry and Warwickshire NHS Trust [2022] EWHC B4 (Costs) highlights a point of costs and practice that is easily overlooked.  A successful party who is awarded costs in a split trial, has no right to immediate assessment of those costs.  They have to wait to the end of the action.  This is a point that is often overlooked by both parties.  (Further it could probably have been remedied if the order in question had included the words “to be assessed immediately”.  There is, however, as the judge observed some incentive for a paying party to resolve the issue of costs fairly promptly.

“…the position both under the CPR (and, previously, under the Rules of the Supreme Court) is that, absent an order for immediate detailed assessment, the costs of a preliminary issue cannot be assessed until the proceedings as a whole have concluded…. It is, nonetheless, not uncommon for receiving parties in such cases to commence detailed assessment proceedings, or even for paying parties to serve Points of Dispute, without realising that under CPR 47.1, detailed assessment is premature because all the matters in issue in the proceedings have not yet been determined.”

 

 

THE CASE

The claimant had obtained an order for judgment against the defendant on the basis of 65% of the damages.  The order, made by consent,

provided for costs:-

“the Defendant do pay the Claimant’s costs of and incidental to the issue of liability on the standard basis such costs to be the subject of a detailed assessment, if not agreed…”

The claimant commenced detailed assessment proceedings. The defendant applied for an order that the notice of commencement be set aside on the grounds that it was premature.

THE JUDGE’S FINDINGS

The judge found in favour of the defendant on this issue.

    1. I am unable to accept the Claimant’s submissions, for the following reasons.
    2. The first is that a review of pre-CPR authority demonstrates that even if RSC Order 62, rule 8 still applied, the Claimant would not have been in a position to rely upon Molnycke to justify starting detailed assessment proceedings at this point.
    3. Mr McPherson for the Claimant has very properly included in a bundle prepared for the hearing of this application a case report which is not helpful to the Claimant, but which is of assistance to this court. That is the judgment of Master Campbell in Bottin (International) Investments Ltd v Venson Group Plc [2005] EWHC 90005 (Costs), in which he concluded that under the CPR, the costs of preliminary issues could not be assessed immediately absent an order to that effect.
    4. At paragraph 21 of his judgment Master Campbell contrasted Molnycke with general pre-CPR practice exemplified by the judgment of the Court of Appeal in Industrie Chimiche Italia Centrale & Anor v Alexandra G. Tsavliris Maritime Co. & Ors [1992] 7 WLUK 182 (“Industrie”). Master Campbell cited Industrie as authority for the proposition that under Order 62 rule 8(1), absent a specific order for an earlier assessment, the costs on a trial of preliminary issues did not fall to be assessed until “the conclusion of the cause or matter” as a whole.
    5. I entirely agree with Master Campbell in that respect. In Industrie, as to the appropriate application of RSC Order 62, rule 8, Lord Justice Parker said this:

“On the face of… “(RSC Order 62, rule 8) “… it appears to me that in the case of a preliminary issue it is a proceeding in the course of a cause or matter and accordingly that, absent a specific order for an earlier taxation, taxation does not take place until the conclusion of the cause or matter.”

 

    1. Unlike Molnycke (which seems to have turned on its particular facts, including the nature of the proceedings and the remedies ordered), if it were not a pre-CPR case Industrie would, on the facts of this case, be directly on point and unlike Molnycke it bears the authority of the Court of Appeal. To my mind it demonstrates that the doctrine of merger has never determined the timing of the assessment of the costs of a preliminary issue. On the contrary, under RSC Order 62, rule 8 the Claimant’s position would have been untenable.
    2. This takes me to my second reason for rejecting the Claimant’s submissions. Molnycke is a pre-CPR case. CPR 47.1 and paragraph 1 of Practice Direction 47 are worded differently from RSC Order 62, rule 8, in particular in referring to “the claim” rather than “the cause or matter”, the wording considered Morritt J in Molnycke.
    3. I do not believe that I have heard any submissions on the definition of the word “claim” under the CPR. Generally, the term appears to encompass a claim (or counterclaim) for any remedy. As far as I can see, the most useful definitions for present purposes are at CPR 2.3:

“‘claimant’ means a person who makes a claim…

‘claim for personal injuries’ means proceedings in which there is a claim for damages in respect of personal injuries to the claimant or any other person or in respect of a person’s death, and ‘personal injuries’ includes any disease and any impairment of a person’s physical or mental condition.”

 

    1. On normal principles of interpretation, one would understand that by reference to those words that for the purposes of the CPR, before and after 11 January 2021 the Claimant has been pursuing one “claim”, not two different claims. Master Cook’s order of 11 November 2021 to the effect that “The Claim remains allocated to the Multi -Track”, is consistent with that. So for that matter is of use of the words “preliminary issues” in the order of 6 February 2019. Liability and causation could not properly be defined as “preliminary issues” if, once established, they necessarily brought the original claim to an end.
    2. As Mr Petrecz for the Defendant points out, this is a personal injury claim where breach of duty, causation and the quantification of damages will all have been essential elements of the Claimant’s pleaded case from the outset. The order of 21 January 2021 determined some of the matters in issue in this claim, but not all of them. There are still enough issues to be determined on the Claimant’s pleaded case to merit a 10-day trial estimate. They include the quantification of damages; the determination of whether the award should take the form of a single payment or periodical payments; and potentially, the approval of a settlement under the provisions of CPR 21.
    3. The alternative proposition, that the establishment of liability and the quantification of a claim for damages do not, for the purposes of the CPR, form part of the same “claim”, would accordingly be highly dubious even if there were not clear and unequivocal authority on the appropriate application of CPR 47.1 which, to my mind, shows that the Claimant’s position is unsustainable. The doctrine of merger (insofar as it might have any application to the determination of a preliminary issue, which for the reasons I have given seems doubtful) cannot override the provisions of the CPR, and the Claimant’s attempted use of that doctrine runs directly contrary, in my view, to that established authority.
    4. The Claimant submits that such authority as there is, is confined to the costs of interlocutory appeals. In my view, a full reading of the relevant authorities demonstrates that that is not correct. They do deal with the costs of interlocutory appeals, but only because of a tendency by receiving parties to treat such appeals as separate proceedings for assessment purposes. The principles which they espouse are however of general application.
    5. In Crystal Decisions (UK) Ltd v Vedatech Corporation [2007] EWHC 1062 (Ch) (“Crystal”) Mr Justice Patten (as he then was) addressed an appeal against an order of Master Campbell. The order concerned the costs of the defendants’ unsuccessful applications to the Court of Appeal for permission to appeal against orders made by Pumfrey J. The Court of Appeal had ordered the defendants to pay the costs of the applications but had not ordered an immediate assessment.
    6. The claimants applied to Master Campbell for an immediate assessment of those costs. He held that they were entitled to it, because the orders of Pumfrey J had directed an immediate assessment and the Court of Appeal had simply refused permission to appeal against those orders.
    7. Patten J, having considered the provisions of CPR 47.1 and paragraph 1 of Practice Direction 47 reproduced above, said this at paragraph 77 of his judgment (the emphasis in bold text is mine):

“It seems to me that the correct starting point is to look at the terms of the costs order made by the Court of Appeal. That was not an order for the immediate assessment of costs and the fact that it dealt with an application for permission from an order which did include a direction for immediate assessment, does not alter the terms of the Court of Appeal’s own order. The Master approached the matter on the basis that the Court of Appeal’s order brought to an end one aspect of the proceedings: i.e. the issue about the grant of the anti-suit injunction. This is also correct, but the purpose of CPR 47.1 is to lay down a general rule that the costs of part of the proceedings are not to be assessed until the conclusion of the proceedings as a whole unless the Court orders them to be assessed immediately, which the Court of Appeal did not. The order made by the Court of Appeal is therefore governed by this general rule and although it would have been open to the Court of Appeal to order an immediate assessment… it did not do so. Master Campbell’s decision on this point effectively re-writes CPR 47.1 and cannot stand.”

    1. In Khaira v Shergill [2017] EWCA Civ 1687 Lord Justice David Richards cited the above passage from the judgment of Patten J, along with the judgment of Mr Justice Hamblen in  GB Gas Holdings Ltd v Accenture (UK) Ltd  [2010] EWHC 2928 (Comm), in support of the Court of Appeal’s conclusion to the effect that  if no order is made for the immediate assessment of the costs of an interlocutory appeal, those costs cannot be assessed until the conclusion of the substantive proceedings.
    2. As to the appropriate reading of CPR 47.1 David Richards LJ said, at paragraph 39 of his judgment:

“It is necessary to look carefully at the terms of CPR 47.1, read with paragraph 1.1 of 47PD which is expressly incorporated as “further guidance about when proceedings are concluded for the purpose of this rule”. Read together, they provide that “the costs of any proceedings or any part of the proceedings are not to be assessed by the detailed procedure until the court has finally determined the matters in issue in the claim, whether or not there is an appeal”. The matters in issue in the claim are not finally determined until the court at first instance has finally ruled on them, but once it has done so the proceedings are for these purposes concluded even if there is an appeal.”

 

  1. The claimant (the receiving party) in Khaira v Shergill submitted that, on the authority of Hawksford Trustees Jersey Ltd v Stella Global UK Ltd [2012] EWCA Civ 987, the appeal proceedings could be treated as separate from the proceedings at first instance, so that the effect of CPR 47.1 was to entitle the claimant to an immediate assessment of the appeal costs without any specific order to that effect.
  2. That submission was rejected, because (to paraphrase in rather broad terms the detailed analysis undertaken by David Richards LJ) the judgment in Hawksford did not address the appropriate reading of CPR 47.1; it established rather that the meaning of “proceedings” depends on the terms, context and purpose of the provision in which it appears; and CPR 47.1 refers to “proceedings” without qualification (other than to exclude an appeal from a final order determining the matters in issue in the claim).
  3. Crystal and Khaira v Shergill, both of which are binding on me, set out two clear principles. The first is that (as Patten J put it in Crystal) the purpose of CPR 47.1 is to lay down a general rule that the costs of part of the proceedings are not to be assessed until the conclusion of the proceedings as a whole (unless the Court orders them to be assessed immediately). As I have observed that principle is not confined to interlocutory appeals but is, expressly, of general application.
  4. The second principle (Khaira v Shergill) is that Hawksford notwithstanding, appeals are not separate proceedings for the purposes of CPR 47.1, and so do not furnish an exception to that general rule. For present purposes it is important to bear in mind that that particular finding of David Richards LJ is based upon the fact that CPR 47.1 refers to “proceedings” without qualification, so that even an interlocutory appeal before a different court merely represents one part of the overall proceedings for the purposes of that rule.
  5. It must follow that under CPR 47.1, where a claimant succeeds on preliminary issues of liability and causation and the claim then moves on to the quantification of damages, the preliminary issue, for the purposes of CPR 47.1, also represents one part of the overall proceedings, just as it would have done (on the authority of Industrie) under the old Rules of the Supreme Court.
  6. It also necessarily follows that as the proceedings between the Claimant and the Defendant in the Queen’s Bench Division are continuing (quite possibly into 2023), absent an order for immediate detailed assessment of the Claimant’s costs of establishing liability the Claimant cannot yet commence detailed assessment proceedings in respect of those costs.
  7. Tanfern Ltd. v Cameron-Macdonald and Anor has no bearing on any of this. The judgment of Brooke LJ in that case addressed the meaning of the word “final” in regulations that employed that term only for the purpose of determining routes of appeal. It cannot assist in the interpretation of CPR 47.1.
  8. I should add (although I believe that it is not in issue for present purposes) that in Kharia v Shergill David Richards LJ, again approving the line previously taken by Patten J and Hamblen J, found that paragraph 1.3 of Practice Direction 47 does not confer upon a Costs Judge the power to make an order for immediate assessment. That power lies with the court that makes the order for costs. Paragraphs 1.3 and 1.4 of Practice Direction 47 between them confer on a Cost Judge, as David Richards LJ put it, “only a very limited power to order the commencement of assessment proceedings where there is no realistic prospect of the claim continuing”.
  9. For those reasons, the Claimant’s notice of commencement dated 13 August 2021 must be set aside.

 

BUT THERE IS AN (8%) STING IN THE TAIL

 

    1. For the reasons I have given, the position both under the CPR (and, previously, under the Rules of the Supreme Court) is that, absent an order for immediate detailed assessment, the costs of a preliminary issue cannot be assessed until the proceedings as a whole have concluded.

 

    1. It is, nonetheless, not uncommon for receiving parties in such cases to commence detailed assessment proceedings, or even for paying parties to serve Points of Dispute, without realising that under CPR 47.1, detailed assessment is premature because all the matters in issue in the proceedings have not yet been determined.

 

    1. I am aware that both parties in this case corresponded over a period of months on the mutual understanding that the Claimant could proceed immediately to the detailed assessment of the costs of the liability issue. As I have said, such mutual misunderstandings are quite common.

 

    1. I will not restate here my reasons for concluding, on 27 October 2021, that the Claimant is not in a position to elevate that correspondence to the status of a written agreement meeting the requirements of Practice Direction 47 paragraph 1.2 (other than to observe that on the Claimant’s case, parties would be able to disapply CPR 47.1 simply by being unaware of it).

 

  1. I will only say, with apologies for perhaps stating the obvious, that the default position being that interest will accrue upon the Claimant’s unpaid liability costs at 8% per annum, it might be to the parties’ mutual advantage to use the work done to date in an effort to settle what would appear to be a substantial claim for costs.