Lord Justice Jackson in his ‘Review of Civil Litigation Costs: Final Report’ concluded that there are two objectives which have to be borne in mind in relation to clinical negligence litigation. First, patients who have been injured as a result of clinical negligence must have access to justice, so that they can receive proper compensation. Secondly, this huge area of public expenditure must be kept under proper control, so that the resources of the health service are not being squandered unnecessarily on litigation costs.
With these objectives in mind Lord Justice Jackson set out various recommendations to control costs and it is likely that on Tuesday 1 June 2010 his recommended two year clinical negligence (claimant) cost management pilot scheme will commence. The pilot start date for cases in the High Court London will depend upon a few things coming into place such as a third clinical negligence Master being appointed in April 2010 and details of the proposed pilot being agreed after consultation. However the indicators are that a start date of 1 June 2010 is feasible. (The pilot could be extended to other court centres, subject to consultation.)
Pre-issue costs
If the pilot follows LJ Jackson’s recommendation, courts will manage pre-issue and post-issue costs.
LJ Jackson proposed a pre-issue costs threshold figure of £15,000 for expenditure up to the date of the Letter of Claim and a further £15,000 up to the start of proceedings. The proposal is that the costs budgeting mechanism will not come into operation unless the claimant incurs £15,000 costs before sending a Letter of Claim or the claimant incurs a total of £30,000 costs before issuing proceedings. A claimant must apply to the court for authority to exceed these figures. The prospective defendant will not be given notice of that application, unless the court specifically directs.
Although specifically directed at Construction Litigation, LJ Jackson considered that any costs incurred by a claimant going beyond the requirements of the pre-action protocol should be disallowed even if that work subsequently proves to be of benefit in the litigation. He further suggested that at the first Case Management Conference (CMC) the parties should file costs estimates identifying costs incurred complying with the Protocol. If it is found that either party has gone substantially beyond the requirements of the protocol, the court should so certify at the first CMC and should decide the amount of costs to be disallowed.
However, until primary legislation empowers Masters to make binding pre-issue orders any pilot in respect of pre-issue costs management will be informal. The Master will simply be giving an indication of what costs he would be likely to approve or disapprove post-issue.
Post-issue costs
As for costs incurred after the commencement of proceedings, it is envisaged that the pilot will have teeth. Following the issue of proceedings the claimant is to complete a Costs Budget Questionnaire and statement. The court, with or without a budget hearing with the claimant, will make a Costs Budget Order setting a budget for the claimant’s costs and disbursements up to and including trial. The defendant will have an opportunity to vary the budget within seven days of the order, but such challenges are likely to be discouraged. The claimant’s costs budget can be varied up or down but the court will manage the case so that it proceeds within the set budget.
It is unclear if at the post settlement stage and at any Detailed Assessment of the claimant’s Bill of Costs a defendant will be able to challenge the reasonableness of costs incurred or the reasonableness of the amount of costs, if the overall total of costs claimed is less than the court previously approved budget.
However, based on the rules from one of the two existing (one year) costs management pilots, in the interests of certainty and for the avoidance of satellite litigation, it is unlikely that any such challenge will succeed (save for exceptional circumstances). In the pilot at the Birmingham Technology and Construction Court and Mercantile Court (ending 31 May 2010), the rules stipulate that a judge assessing costs ‘
will have regard to the budget estimates of the receiving party and will generally approve as reasonable and proportionate any costs claimed which fall within the previously approved total’.
Other costs management
LJ Jackson further recommended rules should set out a standard costs management procedure, which judges would have discretion to adopt if and when they see fit, either of their own motion or upon application by one of the parties. The rules would be similar to the Birmingham pilot where all parties, not just the claimant prepare litigation budgets; the court would state the extent to which the budget was approved and manage the case so that it proceeds within the approved budgets. The winning party’s costs would be assessed in accordance with the approved budget.
However, as defendants in clinical negligence are unlikely to be entitled in the future to recover their costs from losing claimants, management of defendant costs is unlikely to be part of the two year pilot. Lord Justice Jackson described his set of proposals as a 'coherent package of interlocking reforms'. One important 'interlocking' reform is that provided claimants in clinical negligence cases are prevented from recovering CFA success fees and after the event insurance premiums from losing defendants, winning defendants will be prevented from recovering their costs from losing claimants. Accordingly, there would be little point piloting a defendant cost management scheme.
It is hoped that the proposed pilot scheme will lead to closer judicial management of claimant costs and limit the excesses so evident in recent years. Judicial costs management and the implementation of Lord Justice Jackson's recommendations regarding the recoverability of success fees and premiums should not have an adverse impact upon access to justice and it should allow more health service resources to be used for what they were intended for - patient care.
For further information please contact David Froome on 020 7667 9121.
