Hannah Buswell, an associate costs lawyer at Legal Futures Associate Express Solicitors, and Paul Hughes of Kings Chambers outline the many important costs issues that came out of a recent employer’s liability case they worked on.
The judgment of His Honour Judge Hassall in Stuart Moffat v Trafford Housing Trust Ltd covers a lot of ground, addressing success in the context of changing medical evidence on causation, liability-only part 36 offers, the appropriate procedure on re-allocation if advantageous costs orders are sought and (obiter) the application of CPR 45.29D on cases re-allocated to the fast-track.
It is one which may be of interest to personal injury practitioners and comprises a useful summary of some often (and some less often) encountered problems in the area.
History of the claim
This was an employer’s liability claim in which the claimant was using a stepladder provided by the defendant when it collapsed, causing the claimant to fall and scrape his shins on the rungs. The claimant suffered extensive grazing to his shins, which became infected and developed into cellulitis.
The symptoms developed and the claimant was diagnosed with deep vein thrombosis (DVT) and started on anticoagulation therapy. The claimant then developed severe post-thrombotic syndrome (PTS) and venous leg ulcers (VLU). As a result of his injuries, the claimant was unable to return to work as an electrician.
Liability for the accident was denied. The claimant was put to strict proof as to the accident circumstances and the defendant denied that they had supplied the stepladder, also denying any failure to inspect the ladders or that the stepladders were unsuitable.
Limitation was raised as a defence and was heard at a preliminary hearing on 20 January 2021 before His Honour Judge Sephton KC. The claim survived and the defendant was ordered to pay two-thirds of the claimant’s costs of the preliminary issue trial.
The case proceeded to a costs and case management conference on 8 July 2021; costs budgets were approved and the matter was allocated to the multi-track.
On 22 November 2021, the claimant made a part 36 offer to compromise liability on a 60/40 split basis in the claimant’s favour. The defendant did not respond.
The defendant filed an application on 1 March 2022 for summary judgment. On 12 April 2022, the claimant made a part 36 offer of £4,000.
On 20 April 2022, the defendant’s application was heard before District Judge Etherington; summary judgment was entered for the Defendant on the issue of the causation relating to the DVT and vascular injuries, which was no longer supported in the joint statement of the vascular surgeons.
The remainder of the Defendant’s application was dismissed; the matter was reallocated to the fast-track and the case was listed for trial on 4 May 2022. The claimant was ordered to pay the defendant’s costs of the summary judgment application and the costs relating to the issue of causation for the DVT/vascular injury.
The claimant’s substantial claim for future loss of earnings fell away as a result of the decision and quantum was uncontroversial, “never likely to be more than the £4,000 the claimant had offered” (at  of the judgment). On 25 April 2022, the defendant made an offer to discontinue to claim.
On 4 May 2022, the trial was heard before HHJ Hassall; the claimant was successful, with no findings of contributory negligence, and was awarded £3,800 in damages.
The issue of costs was reserved for a further hearing.
The defendant argued that, although the claimant had recovered damages, it did not constitute “success” as the claimant recovered less than 1% of the value of the claim (having pleaded a claim of £542,246 and recovering £3,800) – accordingly, the defendant argued, the most appropriate order was one of no order for costs.
The defendant went on to argue that, should the court order costs in favour of the claimant (insofar as those costs were not covered by existing orders), those costs should be fixed.
The defendant rejected the contention that part 36 consequences flowed from the claimant’s liability offer made 22 November 2021, arguing that the claimant had not achieved a result more advantageous then that which he offered to accept.
In the alternative, it argued that it would be unjust to visit some consequences on the defendant.
The claimant contended that he had been successful in being awarded damages and had satisfied part 36.17(b) in that he had, at trial, obtained a judgment against the defendant that was “at least as advantageous to the claimant as to the proposals contained in a claimant’s part 36 offer” (in that there had been no reduction for contributory negligence and the claimant had recovered 100% of his damages).
The claimant therefore contended that he was entitled to costs prior to re-allocation to the fast track on 20 April 2022 to be assessed on the standard basis (i.e. not fixed, relying on Broadhurst v Tan  EWCA Civ 94) and on the indemnity basis from 13 December 2021 in default of agreement.
The court heard the party’s costs submissions 8 July 2022 and listed a further hearing for oral judgment to be handed down on 22 September 2022.
The outcome on costs
HHJ Hassall confirmed that the effects of part 36 applied to the claimant’s liability offer, commenting that “convention follows mere logic to… an almost or perhaps even totally inescapable conclusion.”
The defendant’s “novel” proposition that an issues-based part 36 offer was of no effect was contrary to the express provisions of CPR 36 that permitted them. In addition, there were no grounds for holding it to be unjust to order the usual consequences.
As regards pre-allocation costs and what HHJ Hassall called the “1% argument”, he found that the claimant had pursued damages for medical conditions which were a matter of science by reference to medical advice in good faith. He was legally represented throughout and the matter followed the usual process of instruction of experts.
The claimant’s case remained one based on supportive medical evidence until the joint statement of the vascular surgeons. If the claimant was guilty of unreasonable behavior at all, the only criticism could be that he did not drop the vascular evidence prior to the summary judgment hearing.
However, he paid the price for this by being ordered to pay the defendant’s costs of the causation issue.
The correct approach was to consider the full range of issues and the parties’ success in relation to them before stepping back and considering fairness overall. Insofar as the higher courts have adopted different approaches to this exercise, HHJ Hassall preferred and followed the approach of Lord Justice Jackson in Fox v Foundation Piling Ltd  EWCA Civ 790.
There was no adjustment required to the usual order that the defendant pay the claimant’s costs. The defendant’s submissions were the same before HHJ Hassall as if the extant order of DJ Etherington did not exist.
The fairest order to be made was for the court to record that the orders already made by DJ Etherington and HHJ Sephton KC remained in force, save that the defendant pay the claimant’s costs of the claim to be subject to detailed assessment if not agreed with costs from 13 December 2021, to be assessed on the indemnity basis.
On whether the claimant should be restricted to fixed recoverable costs (FRCs) for any part of the proceedings in light of the matter having been re-allocated to the fast track, HHJ Hassall accepted that the words of CPR 45.29D – “for so long as the …[case] is not allocated to the multi-track” – were capable of diverse interpretations.
He considered the possibility of an order pursuant to CPR 46.13 was an important factor, addressed in Conlon v RSA Plc  EWCA Civ 92, in which the Court of Appeal affirmed that the court had power to backdate re-allocation for costs purposes when satisfied that there was a good reason to do so.
HHJ Hassall accepted the claimant’s submission that the defendant should have made the application for a Conlon order at the summary judgment hearing before DJ Etherington when re-allocation was ordered. This was because such retrospective re-allocations are capable of inflicting huge injustice upon the party bearing the brunt of it.
Accordingly, “the claimant is right to argue that where multi-track cases are reallocated to the fast track, the Conlon course of backdating for costs purposes should only follow where there is an express backdating for costs purposes within the reallocation order”.
Although he did not have to decide the issue. HHJ Hassall went on to confirm that, in an FRC case, once a case was allocated to the multi-track, FRCs could never directly apply again (even in circumstances in which a CPR 46.13 order was made), but a court might have “very close regard” to what those costs would be in an appropriate case.
He also concluded that, even if FRCs were re-applied, this would have been an appropriate case to find exceptional circumstances pursuant to CPR 45.29J.
The claimant was therefore successful on all points with the final order as follows:
- The court records that this order does not affect the costs orders already made by HHJ Sephton KC and DJ Etherington, which remain in force.
- The defendant shall pay the claimant’s costs of the claim, to include the costs of today and the hearing on 8 July 2022, save as noted at paragraph 1 above, to be subject to detailed assessment if not agreed.
- The costs ordered at paragraph 2 shall be assessed on the standard basis, save for such costs as were incurred from 13 December 2021 in relation to the issues of liability and or/contributory negligence, which pursuant to CPR 36 shall be assessed on the indemnity basis.
- Pursuant to CPR 36, the defendant shall pay interest on the claimant’s costs of the issues of liability and/or contributory negligence at the rate of 10% from 13 December 2021.
- The defendant’s application for permission to appeal is refused.
- By consent, the claimant’s Judgment shall be not enforced until costs have been assessed.