Blog - Friday 22 July 2016

Jamadar and The Giant Breach

The latest example of a costs budget being limited to Court fees

The Court of Appeal in Jamadar v Bradford Teaching Hospitals NHS Foundation Trust [2016] EWCA Civ (21 July 2016) have given a further indication about embracing the spirit, as well as the law, of costs management and budgeting.

The appellant alleged he had received negligent treatment by the respondent that led to the amputation of one of his legs. As such, he brought a claim against the respondent hospital for approximately £3 million. The hospital denied liability and the Court subsequently sent the parties a form N149C, Notice of Proposed Allocation to the Multi-Track, pursuant to CPR r.26.3. Accordingly, CPR.r.3.13, as it was prior to 1 April 2016, applied which required the parties to file and exchange costs budgets either by the date in form N149C or, in the absence of such a date, no later than 7 days before the date of the first CMC. There was no date for filing and exchanging costs budgets in the form N149C.

Shortly after the service of form N149C by the Court, the respondent admitted liability. A judge then revoked form N149C and entered judgment against the trust for an amount to be determined. The parties received notice of a case management conference.

The respondent prepared, filed and served its costs budget. However, the appellant did not prepare a costs budget.

At the CMC the district judge gave case management directions, including the appointment of five experts on each side, leading towards a 5 day trial on quantum. In costs managing the case, the district judge approved the respondent’s costs budget. He noted, however that CPR.r.3.13(2) required the appellant to produce a costs budget no later than seven days before the CMC, but had not done so. He, therefore, ordered that the appellant’s recoverable costs be confined to court fees only, pursuant to CPR.r.3.14. The appellant applied unsuccessfully to either vary that order or obtain relief from sanctions. A circuit judge dismissed the appellant’s first appeal, finding that the claim was clearly a Multi-Track case. Accordingly, CPR.r.3.13 applied and that the appellant had been in breach resulting in the automatic sanction of the appellant’s costs budget being limited to Court fees only.

The appellant brought a second appeal to the Court of Appeal. The constitution, which included Lord Justice Jackson, found that the reason the form N149C, Notice of Proposed Allocation to the Multi-Track, had been withdrawn was merely because liability had been admitted. However, notwithstanding that, the case was clearly a Multi-Track case. Extensive expert evidence was required which would lead to a 5 day trial on quantum. The parties’ associated costs of the litigation were clearly going to be very expensive and the fact that the claim was for quantum only did not take it out of the costs management regime. Accordingly, the automatic sanction set out at CPR.r.3,14 was engaged and the circuit judge had been correct to uphold the district judge’s decision.

The circuit judge had properly applied the three stage test pursuant to Denton v TH White Ltd [2014] EWCA Civ 906, [2014] 1 W.L.R. 3926. The breach had been serious, the appellant’s reasons for the breach had been properly rejected by both the district and circuit judge and the circuit judge had properly considered all the circumstances with specific reference to the factors at CPR.r.3.9(1)(a) and (b). The test on appeal was whether the circuit judge had been wrong in that his discretion had been exercised beyond his broad and reasonable ambit. Whilst other judges may have been more lenient, the circuit judge’s decision fell within the reasonable ambit of his discretion.

Accordingly, the appellant’s appeal was dismissed.

Whilst we understand the claim for quantum settled before the second appeal, had the case had some way to go to trial, what would the appellant’s solicitors have done next? Would they have conducted this multi-million pound piece of litigation for free? Would the appellant have instructed another firm whose fees were funded by the first solicitor’s professional indemnity insurers? Would the appellant have been unable to find legal representation to bring the claim at all and be forced to bring a professional negligence claim against his solicitors for loss of chance?

In such circumstances there could be some ‘relief’ in the form of CPR.r.36.23 which would allow an affected party to recover 50% of their costs if their opponent fails to beat a Part 36 offer made by the appellant.

However, this case is a lesson that parties should not rely on technical reasons to disengage with the costs management process (such as the Court’s revocation here of the form N149C triggering costs management) but instead should embrace the spirit of what costs management is seeking to achieve in litigation; ensuring litigation is conducted at  proportionate cost.

By Nick McDonnell - Director & Costs Lawyer