The Court of Appeal has recognised the cash flow pressures of funding complex litigation in rejecting an application to appeal a ruling granting a law firm an interim costs payment.
Lord Justice Irwin backed the first appeal decision in which His Honour Judge Robinson in Sheffield warned that solicitors may refuse to take on medical negligence cases at an early stage if courts fail to ensure adequate cash flow.
Suzanne Munroe, a director at head of clinical negligence at Yorkshire firm Switalskis, said that without this decision, “it’s very likely that specialist law firms could have been deterred from taking on such cases in the first place”.
HI v Hull and East Yorkshire Hospitals NHS Trust is a catastrophic birth injuries case where interim damages of £1.5m have been paid. Switalskis had received an interim costs payment of £50,000.
HHJ Robinson overturned the first instance decision refusing to order a further £150,000 interim costs payment, noting that the date of the final costs order was likely to be 10 years after liability was conceded.
The defendant applied for permission for a second appeal, and to stay execution of the interim costs payment.
In his written refusal of permission to appeal, Irwin LJ said 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”.
This was “particularly so” in the case of specialist solicitors who may be facing such problems in a range of cases.
This was subject to the “key consideration” of preserving security for a defendant so there was “no appreciable risk of a need to repay costs paid on an interim basis”.
Here, HHJ Robinson said it was “only a very modest payment on account of costs which are almost certain to be recovered”.
According to Switalskis, Irwin LJ 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 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.
The existence or absence of any part 36 offer was actually a “highly relevant circumstance” in exercising the discretion to make a further interim payment in respect of costs, Irwin LJ said.
Ms Munroe said: “This decision is one of real importance to claimant firms who are dealing with complex cases of this nature… We have anywhere between 50 and 100 of these cases being litigated at any one time [and the decision] means we can continue to conduct this complex and vital litigation on an equal footing with defendant firms.”
Switalskis instructed Michael Mylonas QC of Serjeants’ Inn Chambers.