December 20, 2018

Costs: Claimant’s costs entitlement reduced by 75% despite award of damages

Court finds that Claimant and her representatives failed to acknowledge 'insurmountable difficulties' with causation for subtle brain injury claim

Earlier this year, Clyde & Co reported on the claim of Hibberd-Little v Carlton, where we achieved a significant success.  We obtained a substantial reduction on the claim which alleged the Claimant suffered a subtle brain injury as a result of a relatively minor road traffic accident.

We are pleased to report that we have achieved a similar success following submissions on the issue of costs entitlement in this matter.

Background

The Claimant was awarded personal injury damages of just over £41,000 against a claim of £4.4 million (less than 1% of her pleaded case).

The Court found that the Claimant had failed to prove that she had suffered a microscopic diffuse axonal injury (mDAI).  The damages awarded were significantly lower than the protective Part 36 offer of our client ("the Defendant").

Judge Saggerson found that the Claimant should pay the Defendant's costs on the standard basis, including the costs of the trial, from the date of expiry of the protective Part 36 offer ("date of expiry").

He went on to consider that the following further issues:

  • what costs order should be made for the period leading up to the date of expiry
  • the interest on the Defendant's costs from the date of expiry
  • the rate of interest
  • whether the costs awarded the Claimant should be set off against those of the Defendant

Outcome

The Court held that the Claimant was successful in obtaining personal injury damages for her injuries and was entitled to costs. However, it was held that the Claimant should not obtain 100% of her costs (pre-date of expiry) for a number of reasons.

The judge stated that CPR 44.2(6) provided him with authority to take into account the issues developed at trial, in order to decide what proportion the Claimant should recover of her pre-part 36 costs. 

Judge Saggerson observed that the Claimant had been justified in launching the action, and that a good part of her costs would have been incurred in commencing litigation. However, the judge went on to state, "there must have come a time, at a tolerably early stage of the proceedings …that it must have become clear to those advising the claimant (both legally and medically) that there were growing and, ultimately, insurmountable difficulties with this claimant’s brain injury claim on causation".

The Claimant had pressed on with her action, in circumstances where the medical case concerning the alleged brain injury had taken a disproportionate amount of time and effort. The Claimant had made it necessary to forcefully extract key information from her when giving evidence.

Judge Saggerson found that despite the Part 36 offer not being made until late in the proceedings was not determinative of whether the Claimant should be able to recover all of her costs up to the date of expiry. The Claimant was therefore awarded 25 per cent of her costs assessed on the standard basis up to the date of expiry. In terms of the interest rate applicable to the Defendant's costs from the effective date of the Part 36 offer, the judge decided to apply interest at 2.5%.

He also held that the Defendant was entitled in setting off the costs it had to pay against the damages awarded to the Claimant. In practice, this meant that the Claimant left empty-handed. The only issue left to decide therefore, was whether the costs entitlement of the Claimant should be set off against that of the Defendant.

The judgement in Howe acknowledged the jurisdiction of the court to make this kind of setoff. Judge Saggerson decided that the qualified one-way costs shifting ("QOCS") policy considerations outlined in Howe did not apply and ordered that the Claimant's costs should be set off against those of the Defendant.

The net effect of the decision was that:

  • The Claimant's damages were subsumed by the Defendant's post offer costs
  • Following set-off, the Claimant's pre-offer costs were also subsumed by the Defendant's post offer costs
  • As a result, no damages or costs were payable to the Claimant

What can we learn?

  • This case and the outcome were very unusual and highly dependent on the facts, and it must be noted these types of costs orders are unlikely to be ordinarily made
  • Although a Claimant might be successful to some extent in the claim, CPR 44.2(6) can act so as to prevent a Claimant who has spent a disproportionate amount of time and effort on a part of the claim which could not succeed from recovering 100% of their costs entitlement
  • The Court of Appeal's decision in Howe gives the judge a large discretion to determine whether the QOCS policy considerations apply in the individual case or not
  • Where a Claimant has spent a significant amount of time on a part of the action which is ultimately unsuccessful, the fact that a Part 36 offer is made relatively late in the day may be of less significance when determining the costs that the Claimant should recover prior to the effective date of the offer