Court of Appeal determines costs budgeting issue in personal injury claims - Hadley v Przybylo

The Court of Appeal has decided that in principle, the Claimant’s solicitors’ costs of attending rehabilitation case management meetings are recoverable as costs of an action.

This judgment is significant to anyone handling catastrophic injury claims (including med mal), in particular, where lawyers are attending multi-disciplinary team meetings and costs budgeting applies.

In summary, this case questioned the recoverability of legal costs for lawyers to attend case management meetings with medical and other professionals whilst supporting a personal injury Claimant’s rehabilitation, and meeting with financial and Court of protection deputies which was said to assist in updating a Schedule of Loss.

At the Costs and Case Management Conference (CCMC), the Court found that such attendance and contact did not ‘materially progress the case’ and could not therefore be included in the costs budget. However, the Court of Appeal overturned that conclusion, finding for the Claimant on both grounds of appeal: that the test applied was incorrect; and that this element of costs is recoverable in principle.

Background

The underlying case involved a very complex catastrophic injury claim. The Claimant had been injured in a road traffic accident and a comprehensive rehabilitation package had been arranged. Both parties attended case management meetings, although the Defendant’s solicitors to a lesser extent.

Proceedings were issued and a CCMC was held. The Claimant’s solicitors included incurred and future estimated costs for attending case management meetings in the Issues and Statements of Case phase. In summary, the Claimant’s budget was over £1.1m, amounting to incurred costs of nearly £164,000 and estimated costs of just over £68,000 for that phase. Initially the Claimant objected to costs budgeting on the basis of the value of the claim, but the Court disagreed.

As the Claimant’s budget exceeded £1m, the parties were ordered to engage in ADR to resolve the cost issues before the Court would budget any outstanding phases. Although most cost issues were agreed between the parties, the following issues remained outstanding, whether:

1. solicitor attendance time for regularly attending case management meetings with medical and other professionals (in the course of management of the Claimant's rehabilitation needs) and time for attending meetings with Court of Protection deputies were in principle costs which could be included in a costs budget; and 
2. if so, whether it was appropriate to include those costs in the "Issues and Statements of Case" phase of the budget on Form H.

Are these in principle claimable at all as costs?

To determine if this category of expense challenged by the Defendant, could be budgetable or a recoverable head of cost in principle, the Court asked, “Does an item of a specific type in a budget materially progress the case?”^[1].

The Claimant argued that it was common for such charges to be included in costs budgets and that fee earner attendance at case management meetings was ‘reasonably necessary’ to progress the case because such meetings assisted in maintaining the Schedule of Loss.

However, the Defendant argued that such attendance was not progressive of litigation and the costs should therefore be inadmissible in a budget, and that such costs, in any event, did not fall within the guidance as to the categories of matter to be included in the Issues and Statements of Case phase.

In making its decision, the Court asked, “are these in principle claimable at all as costs?” – a question which is usually “lurking in any costs decision as to quantum whether in budgeting or assessment of costs. It has raised its head in this case”^[2].

In the Court’s judgment a fee earner attending rehabilitation case management meetings is not ‘progressive’ and does not fall within the notion of “costs”. Likewise, the Court found, that a fee earner meeting with deputies to update the Schedule of Loss, when deputies do not “properly pay a part in such work”[3] is also not ‘progressive’.  Simply arguing that such attendance is an ‘integral part’ of producing the Schedule of Loss (and therefore allowable as an inclusion in a budget) is weak. It was also the significant number of meetings for the purpose of input into a Schedule of Loss that was ‘qualitatively’ different here. However, the Court was careful not to say that these costs were ‘unreasonable’ or ‘disproportionate’ as those would be the test applied if they were accepted in principle as costs for the purposes of a budget in the first place^[4]. As such, the Court disallowed some £52,000 worth of future costs.

Importantly, the Court made clear that in principle some phases in a budget can include engagement with case managers and / or deputies, such as for disclosure or witness statements and occasional letters.

The Court reminded that it is for the Claimant to decide whether such costs are claimable as damages at trial.

Given that the Court decided as a matter of principle, that a fee earner's attendance at rehabilitation case management meetings is an irrecoverable cost in the litigation, permission to ‘leap frog’ straight to the Court of Appeal was granted.

Proposed Settlement and the Appeal

The parties have agreed a settlement, subject to the approval of the Court, of an agreed lump sum of £5.6 million together with an annual sum of £170,000 for case and care management (which will total around £14.5 million).

The Court of Appeal therefore noted that if costs are not agreed they will be the subject of a detailed assessment and as such, the issue about costs remained ‘live’ between the parties.^[5]

The Claimant reminded the Court that there was a point of principle in issue that it had to consider for a definitive ruling. The Defendant’s position was that this was a case management decision about what costs were reasonable and proportionate in this case, and although it agreed there should be some contact between the Claimant solicitor and the case manager and/or deputy; the question was the extent of that liaison given the large costs that has already been incurred or were included as future costs in particular, attendance at every routine rehabilitation management meeting.

In reaching its conclusions, the Court of Appeal asked two questions: 1) is this element of costs recoverable in principle? and 2) if it is, are there any limits that this Court should place on its recoverability at this stage, or should those be addressed on assessment?^[6]

The Court of Appeal confirmed that the applicable principles in this case are:

“(a) The recoverability of costs will depend on the application of the three criteria in Re Gibson's Settlement Trusts^[7];

(b) The reasonable and proportionate costs of the Claimant's rehabilitation which meet these criteria will generally be recoverable: see Brown v Alexander and both the Serious Injury Guide and the Rehabilitation Code;

(c) The precise amount of recoverable time spent by a solicitor in respect of rehabilitation will always depend on the facts of each individual case: see Roach. It is unwise to set out guidelines or rules that are intended to apply in every case: again, see Roach.

(d) Therefore, as a matter of common sense, it would be unusual to rule that any generic category of cost was irrecoverable in principle; by the same token, it would be wrong to assume that, even if the generic category is recoverable, every item that made up that category was automatically recoverable. In every case, it will depend on the facts.”^[8]

In overturning the conclusion reached at the CCMC, the Court found that the costs were recoverable in principle since the Defendant had conceded the relevance and importance of attending rehabilitation meetings (although questioned the proportionality), the Serious Injury Guide and the Rehabilitation Code clearly indicate that, as a matter of principle, this was a recoverable category of costs and it is clear in this case from the evidence that the Claimant's solicitor's involvement in the rehabilitation has generally been beneficial for both parties.^[9]

However, the Court made it clear that this did not mean that the costs of attending every case management meeting could be recovered, and that the Claimant’s solicitors played an important role in managing the proposed rehabilitation to avoid incurring irrecoverable costs, as well as a reduction in the claim for the costs of rehabilitation if it is found to have been poor quality or inadequate.^[10] The Court of Appeal also shared its sympathy with the Defendant’s reasonableness/proportionality arguments and encouraged the parties to seek a “realistic order as to the costs of this appeal”.^[11]

Further, the Court helpfully clarified that the 'Issues and Statements of Case' was the correct phase of the budget for these costs^[12], and confirmed its general reluctance to encourage the claiming of particular items of costs as damages in the same proceedings.^[13]

Comment

 The judgment will come as a big relief to Claimant solicitors and their clients as Defendants can no longer challenge costs related to rehabilitation management meetings on a point of principle. Additionally, the Court of Appeal reiterating the test in Re Gibson's Settlement Trusts firmly moved away from the narrower ‘progressive’ test which was applied at First Instance.

However, Claimant solicitors still need to pay careful attention that the costs of attending any rehabilitation management meetings must be reasonable and proportionate to the amount at stake and issues in the case. Not every meeting will require attendance, especially where these are routine with no progression being discussed, so any thought that this opens the door to significant costs irrespective of reasonableness and proportionality is not correct. 
 

^[1] Hadley v Przybylo [2023] EWHC 1392 (KB), para. 12.

^[2] Para. 11.

^[3] Para. 13.

^[4] Para. 16.

^[5] [2024] EWCA Civ 250.

^[6] Para. 55.

^[7] Summarised as: (i) utility, (ii) relevance and (iii) attributability.

^[8] Para. 47.

^[9] Para.52 – 58.

^[10] As happened in Loughlin v Singh & Ors [2013] EWHC 1641.

^[11] Para. 65.

^[12] Para. 25.

^[13] Para. 27.