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Smart v East Cheshire NHS Trust, High Court, 26 November 2003

1 December 2003
The issues

Costs – costs capping.

The facts

The Claimant aged 10 brought a claim for personal injuries against the Defendant Trust, alleging that following his admission to hospital after an incident of non-accidental injury, the hospital failed to make such investigations and tests as would have led to a diagnosis of non-accidental injury. After release home, he suffered another and serious non-accidental injury at the hands of his father and was re-admitted. As a result of the injuries he suffered extensive brain damage. The injuries occurred within the first two months of the Claimant’s life. The claim reached a negotiated settlement on the issues of liability and causation, which was approved by the High Court Judge who subsequently gave Directions for Trial for the quantum issues. Application was made for a Costs Cap Order. Additional Directions were given by the Judge in respect of that Application. There were three issues to be decided:-

(i) Whether the Court had jurisdiction to make a Costs Cap Order;
(ii) If jurisdiction existed, what the test that the Court should adopt should be;
(iii) Whether the Court should make an Order in this case.

The decision

1. The First Issue: Whether the Court had jurisdiction to make a Costs Cap Order.

It was not disputed by the Claimant that the Court had the necessary jurisdiction. The Claimant had however endeavoured to distinguish group litigation from litigation involving no more than one or two Claimants. However, having heard submissions on this point, the Judge saw no reason to depart from his previous decision in AB and Others -v- Leeds Teaching Hospitals NHS Trust to the effect that the Court had jurisdiction to make such Orders.

2. The Second Issue: If jurisdiction existed, what test should the Court adopt?

Costs Cap Orders could have a significantly beneficial effect in keeping costs within bounds and concentrating on keeping costs proportionate throughout litigation. Provided liberty to review the Cap is given in a Costs Cap Order, the danger of the Cap being set too low could be avoided. There was no reason why where unforeseen circumstances had led to unforeseen costs or where the Cap was set so low that further necessary costs could not be incurred without breaching it, either side should not be entitled to apply.

Each case must be dealt with on its own facts, but in general terms a Court should only consider making a Costs Order where the applicant showed by evidence that there was real and substantial risk that without such an Order, costs would be disproportionately or unreasonably incurred and that that risk might not be managed by conventional Case Management and a Detailed Assessment of Costs after Trial. In addition, it had to be just to make such an Order. It was unnecessary to describe such a test as one of requiring exceptional circumstances. It would be quite wrong to attempt to set a specified ratio of costs to value for any particular type or class of case.

These observations applied to non-group litigation. In group litigation, the Court had a clear duty to manage the litigation from an early stage in such a way that one or other party did not allow costs to spiral out of control]

3. The Third Issue: Whether or not the Court should make an Order in this case?

This was not a case where a Costs Cap Order should be made. Whilst there was a wide discrepancy between the Defendant’s estimate of its costs and that of the Claimant and that on a worst case basis the Claimant’s estimate was very high, it had to be borne in mind that Solicitors acting for Claimants in such a case as this would inevitably have to do far more work in preparing and presenting the case than the Defendant. The Claimant’s Solicitors were experienced and the Judge was not prepared to hold that there was a real and substantial risk that costs would be disproportionately or unreasonably incurred.

Comments

Any Application made in such a case should be supported by evidence showing a prima facie case that the test above could be satisfied. A general assertion that in such a type of case costs could spiral out of control, would not be sufficient. This would be supported by an appropriately completed Allocation and/or Listing Questionnaire, which would have an attached estimate of costs incurred to date and likely overall costs. In substantial cases, these should be provided in accordance with the Practice Direction to Part 43 (CBD Section 6 Estimate of Costs 6.1 and 6.6). Satellite litigation should be avoided and it should be possible to deal with Costs Capping Applications at comparatively short hearings. The benefit of doubt in respect of the reasonableness of a prospective costs cap should be resolved in favour of the party being capped.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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