In RXK v Hampshire Hospitals NHS Foundation Trust , Master Cook explained the factors the Court will consider when considering an interim payment on account of costs when quantification of damages is not possible for a considerable length of time.
The Claimant suffered a neurological injury at the time of her birth, as a result of the negligent delay in her delivery. This injury lead to various physical and psychological difficulties. Proceedings were issued in November 2016 and Judgement was entered in July 2017 for Damages. The Claimant also received her liability costs to be assessed if not agreed. Quantification was expected to require an addition 3 to 4 years.
The Claimant had already received £100,000 for liability costs. The Claimant made an application for a £150,000 payment on account of quantum costs and submitted a Schedule of Costs totalling £410,136.88. The total payment on account requested was just over 60% of this schedule, including the sum which had already been paid.
The Court found that while they had wide reaching discretion in relation to costs, CPR 44.2 (8) specifically mentioned that it can only order a payment on account of costs if the Court had ordered a party to pay costs subject to a detailed assessment. In this matter, only liability costs were ordered subject to a detailed assessment and not quantum costs. The Claimant had provided a costs schedule but did not provide a breakdown as to which costs relate to liability and which were in relation to quantum.
Master Cook did not make a substantive decision and allowed the parties to re-list the application and provided guidance that the application should be made for a costs order to a specific date, and then a request for an interim payment on account of that costs order should follow. Master Cook stated that information in relation to CPR 44.2 (4) and (5) should be provided by the Claimant in order to allow the Court to consider the full circumstances of the matter.
Master Cook also gave guidance that consideration should be given to the Defendant and the risk of costs being repaid should be limited and the entire circumstances of the matter, including the anticipated trial date or Part 36 offers, should be considered when making an anticipatory costs order. The Court set out that the relevant considerations may include:
i) the type of funding agreement and details of any payments made under that agreement,
ii) whether any Part 36 or other admissible offer has been made, and if so, full details of the offer,
iii) details of any payments on account of damages made to date,
iv) a realistic valuation of the likely damages to be awarded at trial,
v) a realistic estimate of the quantum costs incurred to the date of the application,
vi) any other factor relevant to the final incidence of costs, such as the possibility of an issue-based costs order, arguments over rates or relevant conduct.
vii) the likely date of trial or trial window.
Comparison with I -v- Hull & East Yorkshire NHS Trust
In I v Hull & East Yorkshire Trust, the Claimant also secured an order for costs in relation to liability but not quantum. The Claimant was unable to quantify his claim for a further 10 years. Judge Robinson approved an interim payment for damages but refused to make a further payment on account of costs. The Claimant successfully appealed this and received an order for costs up to a specific date and an order for an interim payment.
The differences between this matter and RXK v Hampshire NHS foundation trust is that the Judge was provided with enough information to consider the conduct of the parties. He knew that no Part 36 had been made and considered the implications if one was made in the future that the Claimant failed to beat at trial. This allowed him to be confident that an overpayment would be very unlikely and that any costs owed to the Defendant by beating a Part 36 offer could be set off or, in the worst case scenario, the overpayment be deducted from the Claimant’s damages. This information was not provided by the Claimant which meant the judge had difficulty balancing the interests of the Claimant to receive funding for lengthy claims with the risks of an overpayment to the Defendant.
When issues such as these arise, it is important for the Claimant to be compensated for engaging in lengthy and typically complex litigation. Allowing an interim payment order to be made without a quantum order allows this type of litigation to be attractive and affordable to Claimants who have suffered catastrophic and life changing injuries. Without this, access to justice will be restricted to some of the most vulnerable individuals.
On the other hand, the Court also must take into consideration the Defendant’s costs and interests. A comprehensive view of both parties conduct is essential to ensure the prospects of there being an overpayment is minimised. These needs must be balanced with the Claimant’s cashflow needs. While more information is expected by the Court when the Claimant re-submits their application, it is likely that the size of the requested interim payment will be considered against both the parties conduct throughout and the expected lifetime of the claim. Claimant’s should not view lengthy litigation such as this as a blank cheque and therefore requesting a modest sum that is proportionate to the circumstances of the claim will increase the likelihood of the Court agreeing an interim payment on account which, in turn, will support the costs of the ongoing, lengthy litigation.
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Paragon Costs are frequently instructed to prepare application for interim payments and represent the receiving party at any relevant hearing. For further information please get in touch.