Costs Capping on MRN

A tool used by the parties and (sometimes even of its own motion) the Courts is the cost capping order. This is where the Court will set an upper limit upon the amount of costs claimed by a party. In Group Litigation Order (GLO) cases, the Court does not require exceptional circumstances to be shown. In other substantial litigation, the parties can apply for a costs cap and the Court will give consideration to the same where possible. The court will only consider making a costs capping order where it was established on evidence that there was a real risk of disproportionate or unreasonable costs being incurred. Further, the court should consider making a costs cap order where the applicant showed by evidence that: (i) there was a real and substantial risk that without such an order costs would be disproportionately or unreasonably incurred; (ii) the risk could not be managed by conventional case management and a detailed assessment of costs after trial; and (iii) it was just to make such an order. (see))

Smart -v- East Cheshire Trust | The Claimants -v- Corby Borough Council

SMART -v- EAST CHESHIRE NHS TRUST

In this case, guidance was given on applications for a costs cap order in non-group litigation cases. An application by the defendant was made for an order capping the costs of the claimant in a clinical negligence claim. The claimant, at the age of two months old, was admitted with a non-accidental injury to a hospital run by the trust and was released home where he suffered a second non-accidental injury at the hands of his father. The claimant suffered extensive brain damage and as a result of the injuries he suffered from spastic quadriplegia. It was agreed that the trust would pay 52.5 per cent of the value of S's claim, although damages were expected to be in the region of £2-3 million. The defendant sought an order that costs be capped as the costs in the case might become excessive or disproportionate. It was found that the court had jurisdiction to make costs cap orders on the basis that there was a real and substantial risk that without such an order costs would be disproportionately or unreasonably incurred. It was very unlikely that it would be appropriate for the court to adopt a practice of capping costs in the majority of clinical negligence cases, and these observations were confined to cases other than where group litigation was involved. This was not a case where a costs cap order should be made. As the claimant's solicitors were experienced in this field, there was not a real and substantial risk that costs would be disproportionately or unreasonably incurred. The application was dismissed.

THE CLAIMANTS -v- CORBY BOROUGH COUNCIL

This is a group litigation case in which the parties applied for cost capping orders and the primary issue was as to the amount of the capping.

The claims are brought by children born to mothers who lived in or close to Corby in the 1980's and 1990's. At that time Corby Borough Council undertook regeneration work on the former site of the British Steel Corporation and it is alleged that they did so negligently, causing various chemicals to be transported so that pregnant mothers became affected. Such materials caused their babies to be born with physical deficiencies.

The litigation was started in 2006 and the case had reached the evidence gathering stage when the present hearing took place. The trial is listed for a hearing on liability and causation on 16 February 2009 with an estimated length of hearing of 38 working days. This trial will not deal with the claims individually but will address the generic issues only.

At an earlier case management conference the parties agreed that in principle there should be cost capping orders. Written submissions were made and the issue of cost capping was listed to be heard.

Mr Justice Akenhead considered the issue of cost capping and noted that various cases suggested a detailed exercise could be done in assessing the level of costs to be capped, akin to a costs assessment, and that costs could be capped not only overall but by reference to individual costs centres.

The parties in the present case accepted that an overall cost cap be fixed, which allowed some flexibility as some costs heads may go up or down in practice, though the cost cap would apply only to the costs up to and including the trial of the generic issues. Furthermore, the cost cap would not include any success fee which may be recoverable.

Mr Justice Akenhead considered the parties earlier cost estimates and noted various areas of concern with both. As regards the Claimants' estimate, he noted that the partner's time claimed was largely estimated and for this reason he applied a cap of 5% on the estimate provided. This resulted in a figure of £855,000.00. In respect of the Defendant's estimate he noted various concerns and accordingly applied a greater cap of 20% which resulted in a figure of £1,175,000.00.

A contingency of 5% was added to these figures in order to allow for matters which could not be foreseen at the present time. Thus the cost caps imposed were £900,000.00 for the Claimants and £1,250,000.00 for the Defendant.