Manning & Anor v King's College Hospital NHS Trust

When deciding the costs consequences of late relief from sanctions, the court must assess the actual prejudice caused by the delay and balance it against the defaulting party’s conduct and all other circumstances. A costs sanction must be proportionate to both the breach and the prejudice. Tactical uncertainty about settlement offers may justify a reduction, but ordinarily will not justify depriving a successful party of most or all assessment costs. The court may also make a separate, proportionate order for costs caused by a late fresh-evidence application.

The claimants appealed from decisions of Master Gordon-Saker in detailed assessment proceedings concerning High Court and Court of Appeal costs bills. The underlying appeal had allowed relief from sanctions for a 17-month period, restoring recoverability of success fees and an ATE premium. The court then heard further submissions on the appropriate costs sanction for the delay, the costs of the appeal and cross-appeal, and the costs of a late application to admit fresh evidence.

The central issues were how prejudice arising from uncertainty over settlement offers should be evaluated under the costs rules, how the parties’ conduct should affect the order, and what proportionate order should be made.

1. The appeal was allowed and the cross-appeal dismissed. Relief from sanctions was granted for the 17-month period, so the additional liabilities became recoverable.

2. In assessing relief from sanctions, prejudice caused by delay in making the application may be considered under paragraph (i) of CPR 3.9(1). The Master had also to consider the effect of relief on each party. Any difficulty caused to the defendants in formulating settlement offers was relevant, but it was only one factor.

3. Under CPR 47.18, the receiving party is presumed to be entitled to the costs of detailed assessment unless the court orders otherwise. The court must consider all the circumstances, including the parties’ conduct. The general costs discretion in CPR 44.3 likewise permits consideration of conduct before and during proceedings, and of the reasonableness of raising or pursuing issues.

4. The defendants had experienced some uncertainty, but their tactical decision not to make a further or conditional offer materially reduced the weight of that prejudice. The claimants’ failure to make or intimate an application for relief promptly was serious. A proportionate balance was achieved by allowing the claimants 75% of their assessed costs of the High Court and Court of Appeal bills, rather than depriving them of most of those costs.

5. The fresh-evidence application was reasonably made but late and arose from the claimants’ solicitors’ own default. The claimants therefore recovered neither the costs of that application nor 10% of the costs of the cross-appeal, reflecting the issue’s prominence.

6. The claimants recovered their appeal and cross-appeal costs on the standard basis, subject to the 10% deduction. The post-offer assessment costs and the appeal and cross-appeal costs were remitted to Master Campbell for detailed assessment.

• Senior Court Costs Office: Master Gordon-Saker refused relief from sanctions for the 17-month period and made costs orders concerning the detailed assessment of the High Court and Court of Appeal bills.
• High Court (Queen's Bench Division): On the earlier appeal, reported at [2011] EWHC 2954 (QB), relief from sanctions was allowed. The present judgment varied the consequential costs orders, dismissed the cross-appeal, and remitted detailed assessment issues to Master Campbell.