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Issues based orders or percentage based orders: the approach the Court adopted in Aderounmu v Colvin

Issues based orders or percentage based orders was one of the points the Court was asked to address in the case of Aderounmu v Colvin (Costs) [2022] EWHC 637 (QB) (22 March 2022). This was a contested clinical negligence claim where there was a preliminary issue trial regarding the Claimant’s capacity to litigate, as well as arguments regarding limitation. Following the trial, the Court found that the Claimant did have capacity and that it was equitable to allow the action to proceed.

When determining what costs order to make regarding the preliminary issue, the Court heard submissions from both parties. The Claimant requested 70% of their costs of the preliminary issue on an indemnity basis, the 30% reduction was to take into account the costs that would have been incurred when deciding whether or not the Claimant had capacity irrespective of limitation. The Defendant disagreed and sought an issue-based costs order.

CPR 44.2 (6) requires the Court to consider whether it would be practicable to make a percentage order or an order from or down to a certain date before making an issue-based costs order. The Court considered this point as well as several caselaw. The Court rejected the Defendant’s submission that this was a suitable case for an issue-based costs order and commented:

“The preliminary issue in this case was defined as one of “limitation” and as Kerr LJ pointed out in the case of Eastman there is a single statutory regime governing limitation in claims for personal injury and death. In any event the issue of the Claimant’s capacity in this case was inextricably linked to the issues of date of knowledge and the exercise of the Court’s discretion under s. 33 LA such that it would not be appropriate to describe them as discreet or distinct issues.”

Consequently, the Court ordered that the Claimant should receive 70% of his costs of the preliminary issue on the standard basis if not agreed.

The Claimant contended that the costs should be on an indemnity basis to reflect that the Defendant had no reasonable grounds to resist relief under s. 33 of the Limitation Act. This was rejected by the Court on the basis that there was nothing out of the ordinary or unreasonable about the conduct of the Defendant in resisting the s.33 Limitation Act issue.

The case had been the subject of a costs management order and therefore the Court referred to Thomas Pink Ltd v Victoria’s Secret UK Ltd [2014] EWHC 3258 (Ch) when deciding the amount of an interim payment on account and therefore 90% of the budgeted costs was allowed. However, in terms of incurred costs, the Court was not satisfied that the costs related to the preliminary issue only. Taking that into account, as well as the hours and the hourly rates claimed, the Court considered that there would be very substantial reductions to the £309,766.08 of incurred costs claimed and awarded a sum of £23,000.00. Once the budgeted costs were added, the amount awarded was £100,000. The 70% reduction was applied to reflect the costs order that had been made and therefore an interim payment on account of costs was awarded in the sum of £70,000 plus VAT (if applicable).

This case highlights the importance of providing the Court with sufficient detail to enable a clear determination of the amount of a payment on account to allow. Care needs to be taken in terms of ensuring that only those costs applicable to the costs award being sought are included in any request for a payment on account.

In terms of issues based orders versus percentage-based costs awards, where appropriate, a percentage-based order should be sought, to do otherwise may result in a costly exercise in determining the amount of costs that relate to each specific issue.

If you require any assistance with your legal costs requirements, please do get in touch with the team on 01733 350 880, or by email mail@aandmbacon.co.uk. For more information please do visit our website www.aandmbacon.co.uk.

Published 20 April 2022

Author – Sue Fox

 

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