Kevin Latham has achieved success in persuading the Court of Appeal that where a receiving party’s costs are claimed at a sum which is below the budgeted amount for that phase, a paying party must demonstrate a good reason to reduce the claimed sum further. 

In Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] EWCA Civ 792 Latham acted for the respondent/claimant/receiving party. In the Court of Appeal’s judgment handed down today Davis LJ, with whom Sir Terence Etherton MR and Black LJ agreed, concluded that the paying party’s contention involved, “a most unappealing lack of reciprocity.  It means that a receiving party may only seek to recover more than the approved or agreed budgeted amount if good reason is shown; whereas the paying party may seek to pay less than the approved or agreed budgeted amount without good reason being required to be shown.  It is difficult to see the sense or fairness in that.” 

He went on to say that, “As Mr Latham pointed out, had the intention really been that good reason is required only in instances where the sum claimed exceeds the approved budget then the Rule could easily and explicitly have said so.” 

On the second issue in the appeal, in explicitly disagreeing with the remarks of a differently composed Court of Appeal in Sarpd Oil International Limited v Addax Energy SA [2016] EWCA Civ 120, the Court concluded that costs incurred at the time of the Costs Management Order are not within the ambit of CPR r.3.18 such that a good reason is required to depart therefrom. Accordingly, incurred costs should be subject to a detailed assessment in the usual way, with the costs judge retaining a further “safeguard” in its ability to consider its assessment of both incurred and budgeted costs in the context of proportionality at the conclusion of the assessment. 

In a final point which is of limited application, the Court concluded that a claim is “commenced” for the purposes of CPR r.44.3(7)(a) on the date that proceedings are issued by the Court. This is relevant to which test of proportionality applies depending upon the date that proceedings were “commenced”. 

Kevin Latham acted on behalf of the Respondent/Claimant, instructed by Dr James Wright of Shoosmiths Access Legal.

To read the full Judgment, please click here.


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