On August 21, 2024, Master Thornett delivered a crucial judgment in the case of Mr. Nicholas Worcester v. Dr. Philip Hopley, which focused on the contentious issue of legal costs following a clinical negligence claim.

The case highlighted the complexities of legal costs management, and the importance of drafting a reasonable and proportionate costs budget.

Worcester v Hopley – Background

The case originated from a clinical negligence claim concerning the treatment of Mr. Worcester’s mental health by Dr. Philip Hopley in October 2014.

Proceedings were initiated in April 2023, with the defendants fully denying liability. During the cost management phase, significant disagreements arose between the parties, necessitating a Costs Management Conference (CMC). This was held on May 15, 2024. The primary issue revolved around the substantial differences in the estimated legal costs proposed by the claimant and the defendant.

Costs Management Hearing

The claimant, Mr. Worcester, represented by Mr. Robin Dunne, initially sought approval for a costs budget which amounted to £342,263. However, this amount was sharply reduced by 53.35% during the CMC, resulting in an approved sum of £159,675.

The defendant’s budget, on the other hand, had been agreed upon prior to the hearing, leaving the primary focus on the claimant’s disputed figures.

In his judgment, Master Thornett emphasised that “a party that resolutely proceeds to a separately listed costs management hearing with an overly ambitious budget should not readily assume that the court will be willing to see both its time and resources and those of opposing parties engaged without any potential consequence in costs.”

The core of the dispute lay in whether the claimant’s approach to budgeting was reasonable or overly ambitious. The court found that the claimant’s budget lacked proportionality, especially given the significant reductions made during the CMC.

Master Thornett noted that “the overall impression and conclusion I reached was that the Claimant’s Precedent H was unreasonable and unrealistic in terms of proportionality.

Despite the claimant’s argument that the reductions did not indicate any unreasonable behaviour or exaggeration, the court disagreed. They pointed out that the reductions were substantial enough to warrant a specific costs order against the claimant.

Costs Orders made

As a result, the court issued the following costs orders:

No Costs for the May 15, 2024 Hearing:

The court ruled that there would be no costs awarded for the CMC on May 15, 2024. This decision was made as the claimant’s budget was found to be unreasonably high, and the hearing primarily involved significant deconstruction of the claimant’s figures.

Claimant to Pay Defendant’s Costs for July 16, 2024:

The claimant was ordered to pay the defendant’s costs for the subsequent hearing on July 16, 2024, where the costs dispute was further examined.

Reduction in Claimant’s Costs Management Costs:

The court further ordered a 15% reduction in the claimant’s overall costs management costs due to the inflated budget initially proposed.

Conclusion

This judgment serves as a stern reminder of the importance of proportionality in legal cost management. Master Thornett’s ruling highlights that while the court recognises the fluid nature of costs management, it will not hesitate to impose specific costs orders when a party’s approach is deemed excessive or unrealistic.

As Master Thornett aptly concluded, “Parties must be prepared to account for not just what work justifies their estimated costs but why the figure claimed is also proportionate.”

Legal costs Management – An Overview

The legal costs management process is a vital part of litigation, particularly in civil cases. It is designed to control the costs of legal proceedings and ensure that they remain proportionate to the issues at stake. The process of costs management involves several key steps:

Preparation of Budgets (Precedent H)

Both parties must prepare and exchange detailed budgets using the Precedent H form. This outlines the estimated costs for each stage of the litigation. This budget includes fees for solicitors, barristers, expert witnesses, and other expenses.

After exchanging budgets, the parties typically review each other’s budgets and attempt to negotiate and agree on the costs using a Budget Discussion Report.

Case and Costs Management Conference (CMC)

The court holds a CMC to discuss case management issues and review the budgets submitted by both parties. At this conference, the court will make directions about how the case will proceed and may also approve, amend, or reject the budgets.

During the CMC, the judge will assess whether the proposed budgets are reasonable and proportionate. The judge may adjust the budgets to reflect the case’s complexity, importance, and value.

Budget Monitoring

As the case progresses, the parties must monitor their costs against the approved budgets. If there are significant changes in the case (e.g., unforeseen issues that increase costs), the parties may apply to the court to revise the budgets.

Depending on the case’s length and complexity, the court may conduct periodic reviews of the costs incurred to ensure they remain within the approved budget.

Costs Management Orders

Following the CMC, the court issues a Costs Management Order (CMO) that formalises the approved budgets. This order sets the limits on recoverable costs that can be claimed by the winning party at the end of the case.

If a party’s costs exceed the approved budget without proper justification or court approval, they may not be able to recover those excess costs from the opposing party, even if they win the case.

Detailed Assessment of Costs

At the end of the litigation, the successful party should serve their bill of costs alongside a Notice of Commencement upon the unsuccessful party. This initiates the process of detailed assessment, which is necessary for legal costs recovery. Parties should attempt to negotiate the level of costs recoverable using this process.

If the parties cannot agree on the final costs, the court conducts a Detailed Assessment Hearing to determine the exact amount of recoverable costs. This assessment compares the actual costs incurred with the approved budgets.

The court will consider the complexity of the case, the conduct of the parties, the outcomes achieved, and whether the costs were necessary and reasonable.

How Can ARC Costs Assist?

ARC Costs are a highly experienced team of Costs Lawyers and Draftsmen, providing a legal costs management service. We can assist by drafting your costs budget, ensuring they are reasonable and proportionate.

We can further assist in recovering legal costs by drafting your bill of costs, as well as points of reply and negotiating your bill of costs with the other side before advising on whether the claim should proceed to a Detailed Assessment Hearing.

We can be contacted via email at info@arccosts.co.uk, or by telephone on 01204 397302. For more information on legal costs, please find out more about our speciality areas of expertise and our services on our legal costs page.