MXX v United Lincolnshire NHS Trust

The principles governing unreasonable or improper conduct under CPR 44.11 apply equally to costs budgets and bills of costs. A signed Precedent H budget is an important court document, and deliberate inclusion of incurred costs exceeding the client’s contractual liability may constitute improper conduct. However, an alleged failure to correct an inaccurate budget requires evidence supporting the necessary finding of misconduct; speculation about the costs judge’s reasoning is insufficient. A sanction under CPR 44.11 must be assessed on the facts of the particular case. Separately, the detailed assessment court must determine whether a substantial overstatement gives good reason to depart from an approved budget under CPR 3.18.

The defendant appealed from Master Rowley’s decision of 4 July 2018 on a preliminary issue in the detailed assessment of the claimant’s personal injury costs. The claimant’s Precedent H budget used a Grade A hourly rate higher than the rate ultimately payable under the retainer and included substantially overstated incurred costs. Master Rowley found deliberate inclusion of excessive incurred costs to be improper conduct under CPR 44.11, but treated the failure to correct the budget before or at the costs and case management conference as neither misconduct nor prejudicial. He disallowed only the costs of preparing and dealing with the budget.

The appeal concerned the scope of CPR 44.11, the appropriate sanction, and whether the budgetary overstatement constituted good reason to depart from the approved budget under CPR 3.18.

1. Applicable principles. The Court of Appeal’s analysis in Gempride Ltd v Jagjit Bamrah [2018] EWCA Civ 1367, including the principles derived from Ridehalgh v Horsefield [1994] Ch 205, applies to improper or unreasonable conduct in preparing a costs budget as well as a bill of costs. The attestation to Precedent H is a certification by an officer of the court that the budget is fair and accurate.
2. The finding that the claimant’s solicitors had deliberately included incurred costs exceeding the client’s liability stood. But the evidence did not establish that failure to revise the Grade A rate before or during the CCMC was improper or unreasonable conduct. The fact that the solicitor who had notified the client of the reduced rate attended the CCMC was relevant, but did not justify the necessary finding without more.
3. Master Rowley had no proper evidential basis for speculating about what District Judge Thomson had taken into account when approving the budget. His conclusions on effect and prejudice therefore could not stand.
4. The sanction decision could not properly be based on Stephen Tucker v Dr Rosemary Griffiths and Hampshire Hospitals NHS Foundation Trust (Case No IR 1607217, 19 May 2017) as if the cases were indistinguishable. The conduct in the two cases differed, and each sanction under CPR 44.11 must be judged on its own facts.
5. The question whether the substantial overstatement of the Grade A rate was a good reason to depart from the approved budget under CPR 3.18 remained for the detailed assessment. The existing sanction under CPR 44.11(2)(a) was not shown to be legally erroneous or one which no properly directed Master could have imposed. The detailed assessment was referred back to Master Rowley.

• High Court (Queen’s Bench Division): allowed Grounds 3–8, dismissed Grounds 1, 2 and 9, upheld the existing CPR 44.11 sanction, and referred the detailed assessment back to Master Rowley.
• Senior Courts Costs Office: Master Rowley’s decision of 4 July 2018 found improper conduct in overstating incurred costs but limited the sanction to costs relating to costs management.