Agency Fees Recoverable in Principle in Fixed Costs Cases
Posted on 27th January 2023 at 10:14
By Sean Linley, Costs Draftsman
The decision in Ms Clair Wilkinson-Mulvanny v UK Insurance Limited (County Court at Cardiff) (19 January 2023) (reported via CivilLitigationBrief) will be welcome to Claimant solicitors who deal with fixed costs cases. Though not binding, DJ Phillips determined that no where in the rules is the agency element of a medical report fee said to be non-recoverable and on this basis, subject to reasonableness, it would be recoverable in principle.
There has been uncertainty as to the recoverability of the agency element of medical expert fees for some time. Paying Parties had pointed to the decision in In Powles v Hemmings (another County Court decision) where it was found that the fees of the medical agency were allowed for in the recoverable fixed costs, reflecting the principle in the Court of Appeal case of Aldred v Cham.
Although a non-binding decision, Powles has given rise to frequent disputes as to the recoverability of agency fees. Many Paying Parties were requesting break-downs of expert fees and stoically arguing that any agency element should not be recoverable at all. This has led to stand-offs with many agencies unwilling to provide such a break-down, leading solicitors to take the decision as to whether to expend time on fixed costs applications or simply swallow the shortfall.
The case of Wilkinson-Mulvanny muddies the waters in a way that assists Claimants though it does not give carte blanche to recover such fees.
At paragraph 55, DJ Phillips stated that "I come to the conclusion that when drafting this particular Rule, "the cost of obtaining a medical report" does include the cost of any medical agency fees incurred in the obtaining of such report. It appears to have been common practice for many claimant firms of solicitors to instruct medical agency companies to obtain such evidence, and for defendant insurers to pay such fees. I remind myself that had claimant solicitors not done so, they would have course incurred the costs of themselves undertaking such work."
Whilst the last line is true, DJ Phillips ignores the fact that if the time was spent by the solicitor then it would be subsumed by the fixed costs element and would not be allowed in addition. DJ Phillips reasoning highlights a tension and how the position in Powles was arrived at.
Further at paragraph 56 "had the drafters of the Rule and the Rule Committee wanted to limit the fees recoverable to those only paid to the doctor, they could have quite easily made this clear in the Rule. They chose not do so, despite the decision of Master Hurst in Woolard v Fowler in 2006, the Final Report of Jackson LJ published in January 2010 when His Lordship specifically said he did not at any time recommend any change in the Rules so as to reverse the effect of Woolard v Fowler, and also the MRO Agreement initially signed as I understand it in April 2010 (as subsequently reviewed). Instead, they chose to use the same wording "the cost of obtaining a medical report" as was contained in CPR 45.10 the meaning of which was considered by Master Hurst and referred to by Jackson LJ in his Final Report."
Concluding the Court stated that "my conclusion is that the medical agency fees are recoverable as a disbursement, but if I am wrong in respect of that conclusion, the Court is still able in my judgment to allow what it considers to be a reasonable and proportionate sum in respect of the three medical reports in dispute. I agree that it would have been helpful to the Court to obtain a breakdown of the invoices, showing clearly the fees paid to the doctor, and those charged by the medical agency. I would encourage such a breakdown to be given. It would also have been helpful if the invoices provided information as to for example, the amount of time spent by the doctor in seeing the claimant and in preparing the report, the time spent in reading any documentation sent to the doctor, including the number of pages of medical records perused and so on. However, the absence of such information does not prevent the Court from assessing what it considers to be a reasonable and proportionate sum, the Court having had the benefit of reading the reports (and the invoices in support), and taking into account the guidance in CPR 44.3 and 44.4. This of course is a standard basis assessment, and any costs allowed need to be proportionate with the Court resolving any doubt in favour of the paying party."
There are a few points to unpack here in the Court's concluding remark. The benefit of providing a breakdown for the agency element and additional details around the work undertaken by an expert may be assistive, though crucially are not necessary. This approach is in line with non-fixed costs cases. Patently the more supportive evidence which can be provided then this will lead to better outcomes with enhanced risks where such evidence is not available. Also having regard to such evidence and detail may aide receiving parties in determining the risks around any application.
It should also be stated that where an amount for a report is fixed under a rule then it will remain so, even if there is an agency uplift. The other point to stress is that this remains an unbinding decision. Both this case and Powles can be persuasive but there are clear risks as some Judges may prefer one approach over the other.
We will not see an end to challenges to agency fees and Wilkinson-Mulvany adds to the uncertainties over the approach to agency fees in fixed costs cases, though it is an uncertainty to which receiving parties will benefit from. We may begin to see a more flexible and pragmatic approach from some Paying Parties.
What can also assist is to provide evidence of fees from similar cases (particularly if invoices for experts instructed directly are available). Such evidence may support the preposition that the agency instructed expert fee sits within a reasonable and proportionate range (i.e. the use of an agency hasn't contributed to excessive additional expense).
In the current case the Court allowed £800 plus VAT for the Maxillofacial Report which costed £1,125.00 plus VAT (given the report was only 4 pages), the second Maxillofacial Report of £1,255.00 plus VAT was reduced to £550 plus VAT. It was noted that there was a re-examination but the report remained short, again at only 4-pages. The Psychologist report of £725.00 plus VAT was allowed at £650.00 plus VAT, the Court cited the lack of clarity as to the extent of the records considered was not helpful. What can be gleamed from this is that of the three expert fees in dispute, all of them were reduced. Further information like the time spent by the experts, agency breakdowns and the number of records may have led to better outcomes. This is something paying parties should have regard to.
The decision is ultimately helpful for receiving parties, though ultimately we are still bereft of an actual binding answer to the question of recoverability of medical agency fees in fixed costs cases. This means that such arguments will not go away but receiving parties will now have a stronger arsenal where paying parties refuse to meet the agency cost at all.
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