Kutsi v North Middlesex University Hospital NHS Trust, Court of Appeal - Supreme Court Cost Office, December 09, 2008, [2008] EWHC 90119 (Costs)

Resolution Date:December 09, 2008
Issuing Organization:Supreme Court Cost Office
Actores:Kutsi v North Middlesex University Hospital NHS Trust

Neutral Citation Number: [2008] EWHC 90119 (Costs)Case No: HQ 06X01064IN THE HIGH COURT OF JUSTICE SCCO ref 08.A.1901SUPREME COURT COSTS OFFICEClifford's Inn, Fetter LaneLondon, EC4A 1DQDate: Tuesday 9 December 2008Before :MASTER CAMPBELL- - - - - - - - - - - - - - - - - - - - -Between :- - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - -Mr Roger Mallalieu (instructed by Stewarts Law LLP) for the ClaimantMr Benjamin Williams (instructed by Capsticks) for the DefendantHearing dates: 10 November 2008- - - - - - - - - - - - - - - - - - - - -JudgmentMaster Campbell: 1. This judgment sets out my reasons for dismissing the application of the claimant for relief from sanctions under CPR 3.9. The application notice was issued out of this court on 23 July 2008 and sought an order that the claimant be permitted to recover from the defendant the cost of an insurance premium she had paid in respect of a policy of an insurance taken out on 4 April 2007. The purpose of the policy was to insure against the risk of incurring a costs liability in clinical negligence proceedings the claimant had brought against the Defendant. Contrary to CPR 44.15 and CPR 44.3B, the defendant had not been notified of the existence of the policy until after the claim was settled, as a result of which the claimant needed the court to grant relief from sanctions before she could attempt to recover the premium from the defendant on detailed assessment. Her application was supported by two witness statements made by her legal representative Alexandra Bennett dated 18 September and 5 October 2008 respectively and opposed by a witness statement made by her opposite number, Philip John Hatherall, dated 21 October 2008. At the conclusion of the hearing on 10 November 2008, I informed the parties that the application had failed and that my reasons would follow in writing. Facts2. The claimant is the widow of the late Mr Engin Kutsi who died at the Middlesex Hospital on 13 April 2003 following allegedly negligent treatment at the hospital for severe gastrointestinal bleeding. Messrs Stewarts solicitors were instructed by the claimant on whose behalf a letter of claim was written on 16 May 2006. On 11 April 2006 a protective claim was issued and the claim form was served on the defendant on 7 August 2006. On 1 November 2006, the claimant signed a Conditional Fee Agreement (``CFA'') with Stewarts and Notice of Funding in form N251 was served on that date on Messrs Capsticks, the solicitors instructed by the defendant. On 14 March 2007, Stewarts served particulars of claim together with a further Notice of Funding. On 4 April 2007 the claimant took out the insurance policy with Law Assist to protect her against her liability for the defendant's costs should the proceedings have failed. On 8 May 2007 the defendant served its defence; on 18 May 2007 the claimant served her Allocation Questionnaire and on 25 May 2007 the defendant served its Questionnaire. Witness statements were exchanged by the parties on 14 November 2007 and a settlement was agreed on 28 November 2007 on terms that the defendant would pay agreed damages of £150,000.00, subject to court approval, to the claimant plus her legal costs. On 18 December 2007, the court approved the settlement bringing the proceedings to an end save for the quantification of the claimant's costs. Costs Chronology3. On 5 February 2008 Stewarts sent Capsticks a breakdown of costs marked ``without prejudice'' for possible agreement. That breakdown sought overall costs (including VAT and disbursements) of £220,064.86 of which £140,816.75 related to the period covered by the CFA. Of that sum, £55,965.00 was attributable to the success fee claimed at 100% of base costs. On 7 March 2008 the defendant served objections to the breakdown and on 18 March 2008 the court ordered that a payment be made of £100,000.00 to the claimant on account of the costs sought. Ongoing negotiations led to the parties coming ``very close to agreement'' (Bennett 1 paragraph 17) being then ``only £5,000.00 apart'' (Hatherall 1 paragraph 19.)4. On 2 June 2008 Stewarts wrote to Kain Knight (costs draughtsman for the defendant) in the following terms:-``Dear SirsRE Engin Kutsi (deceased) without prejudice save as to costsFurther to our previous correspondence in this matter we note your offer to put forward in full and final settlement of our client's claim for costs including interest the sum £175,000.00. Unfortunately it has become apparent to us on further investigation that the position that the premium for the insurance cover in respect of our client's conditional fee agreement which our client is liable was, by oversight, omitted from the breakdown of costs with which we previously sent you. The amount of the premium is £80,325.00. In all the circumstances, we are prepared to accept in full and final satisfaction of our client's claim in respect of costs, the sum of £180,000.00 plus the amount of the premium making a total of £260,325.00.If we do not have your confirmation within the next 7 days that this offer is acceptable to you, then we feel that we shall have no further alternative but to request our costs draughtsman to finalise our bill of costs for service upon you as soon as possible so that the detailed assessment procedure can be invoked.We apologise for having overlooked including the amount of the insurance premium in our figure, but we anticipate that you would have been expecting to see such an item in our breakdown in any event.We look forward to hearing from you Yours faithfullyStewarts Law LLP''5. Kain Knight responded by email on 23 June 2008 in the following terms:-``Thank you for your letter dated 20 June 2008 which arrived by fax late on Friday afternoon.To enable me to take instructions with regard to the ATE premium that you now seek to recover, I would be grateful if you would provide a breakdown showing exactly how the premium was calculated together with a copy of the relevant policy schedule. At the same time I would be grateful if you could provide disclosure of the CFA and risk assessment for your firm and counsel as previously requested.Generally, the premium claimed appears extraordinarily high and far in excess of what I would normally expect to see for a clinical negligence case. In any event, so far as I can see, the defendant was never notified that an ATE policy had been taken out and non-notification prevents you from recovering this premium as an additional liability. We look forward to hearing from you...''6. On 26 September 2008, the claimant served a bill of costs under CPR 47.6 together with the policy schedule for the Law Assist policy. The policy document said this:- ``Premium Pre-issue contingent Premium £3750.00Insurance premium tax (IPT) £187.50...

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