The Court of Appeal has refused a defendant’s application for permission for a second appeal, and to stay execution of interim quantum costs payment. The Court recognises the cashflow pressures of funding complex litigation. Without this decision, it’s very likely that specialist law firms could have been deterred from taking on such cases in the first place.
The Court of Appeal has firmly rejected an application by the Defendant Trust, represented by DAC Beachcroft, for permission to appeal the judgment of his Honour Judge Robinson in the case of HI v. Hull and East Yorkshire Hospitals NHS Trust. HHJ Robinson had overturned the decision of the court below, which had refused to order a further £150,000 interim costs payment to the Claimant’s solicitors, Switalskis.
The case is of importance to all specialist firms representing claimants in long-running, high-value claims where significant disbursements and costs will be incurred over many years prior to trial. Both HHJ Robinson and Lord Justice Irwin acknowledge the cash flow pressure on firms conducting such complex litigation. In his judgment granting the Claimant’s appeal in February 2019, HHJ Robinson confirmed that “failure to ensure adequate cash flow during the period of inevitable delay” between determination of liability and quantum “may lead to the perverse and undesirable consequence that solicitors are unwilling to take on cases such as this at an early stage”. In his written refusal of permission to appeal (21/06/19) Lord Justice Irwin said that it was “entirely proper…to order interim costs payments with a view to the cash flow of solicitors in very long-lasting litigation where very significant liability has been conceded subject to the key consideration of preserving security for a Defendant so there is “no appreciable risk of a need to repay costs paid on an interim basis…”. That must be particularly so in the case of specialist solicitors who may be facing such problems in a range of cases”.
He rejected the Defendant’s suggestion that the Court had no jurisdiction to make such orders – finding that in such a case the term “successful” or “unsuccessful” party “may readily be defined to mean ‘will succeed sufficiently to justify the further costs sought’ ”.
He also rejected the second ground of appeal proposing an exceptionality test before the Court should exercise its discretion in making interim costs payments.
The Defendant also unsuccessfully argued that the absence of any Part 36 Offers should not have been brought to the attention of the Judge below. Lord Justice Irwin accepted the Claimant’s argument that the existence or absence of any Part 36 Offer was a “highly relevant circumstance” in exercising the discretion to make a further interim payment in respect of costs.
The background to this case is of a catastrophically brain damaged claimant, with a life expectancy to about age 70. Our Director and Solicitor, Suzanne Munroe took on this case when the Claimant was just ten weeks old. In December 2012, when he was still only five, a liability settlement was approved. Experts in both neuropsychology and educational psychology advised that they could not provide Condition and Prognosis evidence until the Claimant was at least 12 years old and so the case was stayed until early 2020 with a likely trial date in 2022.
The claim was funded by Legal Aid until March 2017 and when the Legal Aid limit had been reached and a Conditional Fee Agreement was entered into, with After the Event insurance.
Interim damages payments totalling £1.34million had been made by the hearing of the Claimant’s application for further interim damages and costs in September 2017. The interim damages and costs application before the District Judge in September 2017 was the third substantial application for an interim payment. Only two days before the hearing the Defendant agreed to pay a further £200,000 by way of interim damages, bringing the total to £1.54 million. The Defendant refused to make any further interim costs payment hence the subject of the appeal to HHJ Robinson and the Defendant’s recent application for permission to appeal further.
This decision is one of real importance to claimant firms who are dealing with complex cases of this nature. Although Legal Aid is available to fund the earlier part of the investigation, the cap on the amount of Legal Aid available inevitably means that firms find themselves in the position where they are essentially funding the litigation themselves. In specialist firms such as ours, we have anywhere between 50 and 100 of these cases being litigated at any one time. This affirmation by the Court of Appeal of His Honour Judge Robinson’s judgment is to be welcomed by all of us who are acting for vulnerable, seriously injured claimants – and it means we can continue to conduct this complex and vital litigation on an equal footing with defendant firms.
Suzanne Munroe of Switalskis instructed Michael Mylonas QC of Serjeants’ Inn Chambers
You can see the Judgment of HHJ Robinson (in the County Court of Sheffield, 25th February 2019) here and also see the Court of Appeal Judgment of 21st June 2019.