ISSUE-BASED COSTS ORDER? Departing from the usual rule in r.44.2 CPR

In Welsh v Walsall Healthcare NHS Trust [2018] EWHC 2491 QB, Mrs Justice Yip DBE considered whether it was reasonable to depart from the usual rule in r.44.2 that the

winner recovers their costs in full. This is a useful example of how a Court approached the principle of costs when the overall winning party was unsuccessful on a particular issue.

Following a complex clinical negligence action, the Claimant was undoubtedly the successful party. She had suffered serious complications following bariatric surgery. She set out to prove that she should be compensated both for those complications and for the loss of the benefits that would have resulted from successful surgery, including substantial weight loss and a significant improvement in her physical condition compared to the pre-surgery position. That was the outcome of the trial.

A number of issues were pleaded and some were withdrawn at trial, and in particular the issue of consent. The Claimant was also then unsuccessful on a number of issues relating to quantum. Mrs Justice Yip though recognised that this was nothing out of the ordinary in a clinical negligence claim and ‘it would be wholly inappropriate for the court to be asked to look at the costs referable to each issue on which the Claimant was unsuccessful.’

The Defendant though maintained that the position was different in relation to the consent allegations. It was argued that they constituted a discrete and major part of the case, which added significantly to the costs, and which it was not reasonable for the Claimant to pursue. Four days of the trial passed, with all the non-expert evidence having been called for both parties, when the Claimant made the concession about consent and this allegation was withdrawn.

The Claimant’s case on consent was vague and even at trial was not put clearly such that the Judge commented she still had not understood it, even after attempts by the Claimant’s Counsel to elaborate further. The Claimant’s own evidence did not in fact support her allegations and there were issues about whether, even if there was negligence in relation to the consent issue, this would have taken the Claimant’s claim anywhere for reasons related to the final outcome of the surgery.

Mrs Justice Yip added at paragraph 24:

‘The overwhelming impression I had was that proper consideration had not been given on the Claimant’s side as to how the consent allegations could be maintained on the evidence (taken at its highest) within the correct legal framework. This part of the case was not just weak; it was not properly arguable.’

So the Claimant should never have maintained the issue through to trial but Mrs Justice Yip did comment that: ‘I do not think it can be said that this issue should have been discounted without investigation from the outset. The response to the letter of claim did not fully explain the Defendant’s position on this issue. However, this did clearly emerge from the pleadings (including the Defence and a Reply to a Part 18 Request). Once witness statements had been exchanged in February 2017, the position had crystallised. In my judgment, it was unreasonable to continue to press on with this issue thereafter. It ought to have been obvious that a case on consent could not be made out and that persisting with that aspect would add significantly to the length of trial.’

‘For the reasons set out above, I do consider that the way in which the consent issue was pursued on the Claimant’s side was unreasonable. In saying this, I do not suggest any form of professional misconduct or impropriety but the reference to “conduct” in the rules is wider than this. CPR 44.2(5)(b) requires consideration of whether it was reasonable to pursue a particular allegation or issue. I have concluded that it was not reasonable to persist with the consent issue.’

The Claimant’s conduct was not the only relevant consideration of course as rule 44.2 CPR sets out:

(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –

(a) the conduct of all the parties;

(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and

(c) any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.

(5) The conduct of the parties includes –

(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol;

(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(c) the manner in which a party has pursued or defended its case or a particular allegation or issue; and

(d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.”

(6) The orders which the court may make under this rule include an order that a party must pay –

(a) a proportion of another party’s costs;

(b) a stated amount in respect of another party’s costs;

(c) costs from or until a certain date only;

(d) costs incurred before proceedings have begun;

(e) costs relating to particular steps taken in the proceedings ;

(f) costs relating only to a distinct part of the proceedings; and

(g) interest on costs from or until a certain date, including a date before judgment.

(7) Before the court considers making an order under paragraph (6)(f), it will consider whether it is practicable to make an order under paragraph (6)(a) or (c) instead.

In consideration of the above, Mrs Justice Yip took into account the following factors also:

(i) The Claimant was effectively the winner on a full liability basis;

(ii) The consent issue, even if successful, was never going to have a substantial impact on the monetary value of the claim;

(iii) The Defendant could have protected itself on costs as a whole, including the costs referable to the consent issue, by making a sufficient monetary offer.

Mrs Justice Yip then decided as follows:

’40. In the circumstances, I do not consider it appropriate to attempt to divide up the costs relating to the consent issue and to make the Claimant liable for all such costs, as the Defendant invites me to. The Defendant suggests that approximately 30% of its costs relate to the consent allegations and that I should make an order that effectively provides for the Claimant to be responsible for 30% of the costs on both sides. I accept that the calculation put forward by the Defendant is put forward in good faith and represents a genuine attempt to split out the costs of the consent issue. However, I do not accept that is the appropriate approach.

41. Equally, I do not accept the Claimant’s suggestion that I should limit any costs for which she is liable to at most 10% of the ‘time costs’ relating to trial and trial preparation. That would represent a very modest sum. If I thought that was the extent of the costs wasted by the Claimant’s conduct on the consent issue, I would probably be persuaded not to depart from the usual order.

42. My approach in exercising my discretion is to say that the Claimant has overwhelmingly been the winner in the litigation. This was a claim for damages and the Defendant could have secured costs protection by making a sufficient Part 36 money offer and/or by admitting that it was liable to compensate the Claimant including for the loss of the benefits of successful surgery. The Claimant’s offer provided a further opportunity to save costs, particularly trial costs relating to liability. That encompassed the costs of the consent issue. On the other hand, pursuing the consent issue without proper consideration of the available evidence within the correct legal framework, added unnecessarily to the total costs expended on both sides. The Claimant must bear responsibility for that. I consider that it would be unjust to ignore this in the costs order I make.

43. The starting point that the unsuccessful party pays the successful party’s costs remains strong. However, the circumstances I have identified lead me to a limited departure from the general rule. Having weighed all the circumstances, I have decided that the appropriate order is that the Defendant should pay 85% of the Claimant’s costs, to be agreed or assessed.’

The reduction reflects what Mrs Justice Yip called ‘a meaningful proportion’ of the overall costs to reflect the wasted expenditure on both sides in relation to the consent issue.

Comment:

The Court in the end declined to make an issue-based costs order which would have provided the Defendant with their costs of that issue. Instead, the Court made an order under rule 44.2(6)(a) CPR allowing only a proportion of the Claimant’s costs. There was no mathematical approach adopted here but a value judgement taken overall as is envisaged by rule 44.2 in that it allows a variety of costs orders to be made when departing from the usual rule.

Even though the issue of consent took up two days of the trial and was only abandoned on the fourth day, requiring a number of non-expert witnesses to give evidence on both sides, and it being unreasonable to have pursued the issue up to trial, the Court still declined to award the Defendant its costs of that issue. One of the main reasons, it would seem to me, for this decision was the Defendant’s failure to protect its position by making an offer which could have acknowledged the risks on the stronger parts of the Claimant’s case and disregarded the issue of consent which was bound to fail.

This is an obvious lesson, but one that is perhaps worth reiterating to both claimants and defendants, about the value and protection afforded by making offers which adequately take into account all the litigation risks.

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