“Onus on defendants” to object to interim costs orders

It should be for defendants to explain why interim costs payments should not be made in part 8 proceedings, a regional costs judge has ruled.

District Judge Baldwin was ruling in Travers v Poole Hospital NHS Foundation Trust (case no. C00LV184), in which the claimant sought guidance on the application of rule 44.2(8) which states that, where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs unless there is a good reason not to do so.

The claimant argued that defendants, often NHS bodies, seek to “throw any obstacle in the way of any early payment of an ‘in principle’ admitted costs liability” in low-value claims.

Examining the interplay of rule 44.2(8) and rule 46.14(5), DJ Baldwin said: “I am satisfied on a proper reading of rule 46.14(5), in the context of the rule change to rule 44.2(8), the court is, when exercising that power, making an order for costs of the type envisaged by rule 44.2(8) and that rule is accordingly engaged.”

He went on to describe as an “attractive proposition” a procedure in which the claimant states the amount of interim costs sought in the claim form, supported by a statement of truth, and the burden then shifts to the defendant to show unreasonableness and/or a good reason not to make the order.

He said this “both chimes neatly with the part 8 procedure and deals with the ‘satellite litigation’ and disproportionality objections”.

The judge continued: “Whilst not wishing to discourage some expansion within the claim form as to what the amount sought is said to be reasonable, perhaps in terms of the percentage sought and annexing any other helpful evidence, once the issue of a reasonable interim payment is raised by means of a specified reasonable amount in the claim form, then the defendant is at liberty, by means of annexing written evidence to the N210A acknowledgment of service, to set out the basis upon which any objection is taken, either to the amount or the order in principle.

“It would then ordinarily, it seems to me, be a matter for the district judge when considering the part 8 claim on paper to decide whether there is a good reason for not ordering an interim payment, which might, for example, be lack of sufficient information from either side, in default of which an interim payment for a reasonable amount should be ordered, with an opportunity for the parties to apply to vary or set aside, if dissatisfied.

“Finally, should there be a concern that every judge on paper would have to give prolonged thought to ordering an interim payment in every ‘costs only’ claim even when the issue is not raised, this would seem to me to fit clearly within the ‘insufficient information’ situation envisaged by the editors of the White Book.”

Travers was a medical negligence claim which settled for £1,500 in October 2015. The claimant sent an informal bill for £14,164 the following month, but agreement was not reached. An application was made for an interim costs payment of £7,780 in December, amounting to just under 55% of the final bill.

He concluded that there was no good reason not to exercise the court’s power under rule 44.2(8) and was satisfied on the information before him that £7,780 was “prima facie no more than a reasonable amount, not being an excessive or unrealistic proportion of the bill as claimed”.

The claimant’s solicitors, Southport firm Fletchers, described the ruling as a “major victory” and would be used throughout the personal injury sector by claimants seeking interim payments.

Benjamin Moody, advocacy manager at Fletchers’ in-house costs firm, Ultimate Costs, said: “For too long, defendants have strenuously objected to providing interim payments, putting off that dreaded day when costs must be paid.

“The court has now sent a very clear message that the rule change is to be interpreted in the claimant’s favour. The defendants should now have to prove that there is a genuine reason not to provide an interim payment at an early stage, which will no doubt prove difficult in the majority of cases.”

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Costs News
Published date
22 Aug 2016

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