The High Court has confirmed that law firms can apply for interim payments on account of costs in medical negligence cases where it may be many years until they conclude, and set out how they should approach them.
The decision by Master Cook explicitly followed on from the ruling of His Honour Judge Robinson in Sheffield, in which he warned that solicitors may refuse to take on such negligence cases at an early stage if courts failed to ensure adequate cash flow.
Refusing permission to appeal that decision, Lord Justice Irwin 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.
Master Cook said these applications have now “become common in high-value clinical negligence and personal injury claims where there is likely to be substantial delay before quantum can be determined by the court”.
He continued: “I am aware that there is no decision of the High Court on the principle of whether such applications are well founded and have an adequate juridical basis in the rules and/or authorities.
“I therefore indicated to the parties I would give a short written judgement in the hope that such applications would be better prepared in future.”
The claim in RXK v Hampshire Hospitals NHS Foundation Trust  EWHC 2751 (QB) followed a negligent baby delivery in November 2013. Judgment was entered for damages to be assessed in July 2017, which also awarded the claimant her liability costs, subject to assessment.
This order also provided for interim payments on £100,000 on account of damages and £50,000 on account of costs.
At the first case management conference in March 2019, Master Cook ordered reports primarily so that the parties and court could form a view about when it would be possible to assess damages on the basis of a settled prognosis.
“It is the court’s experience that in the majority of such cases the claimant will be between the ages of 12 and 22 before a final prognosis can be given,” he said.
The claimant’s solicitors, Irwin Mitchell, also sought a further £150,000 interim payment on account of costs. Having had the earlier interim payment, as well as one from the Legal Aid Agency – as the claimant has a legal aid certificate – this would take the total paid to £250,000, against its costs to date of £410,000.
The solicitor said that, by the time quantum was resolved, costs would be significantly higher.
Master Cook said he agreed with HHJ Robinson that CPR 44.2(1) and 44.2(2) were wide enough to allow the court to make an order of this.
But he highlighted that HHJ Robinson made a costs order down to the date of the hearing of the application for an interim payment before the district judge.
“This must be right as the wording of CPR 44.2(8) provides that the court will make an interim payment on account of costs only where it has made a costs order which could be subject to detailed assessment.
“This is sometimes described as a ‘prospective’ or ‘anticipatory’ costs order, because it has been made before the conclusion of the proceedings. The application which should be made in these circumstances is for a costs order down to a specific date and an interim payment on account of those costs.”
The court should consider such applications “on the basis of established principles”, he added.
Master Cook said a relevant consideration was preserving security for a defendant and to ensure that there was a limited risk of such costs having to be repaid.
He said other issues that an application could address included:
- The type of funding agreement and details of any payments made under that agreement;
- Whether any part 36 or other admissible offer has been made, and if so, full details of the offer;
- Details of any payments on account of damages made to date;
- A realistic valuation of the likely damages to be awarded at trial;
- A realistic estimate of the quantum costs incurred to the date of the application;
- Any other factor relevant to the final incidence of costs, “such as the possibility of an issue-based costs order, arguments over rates or relevant conduct”; and
- The likely date of trial or trial window.
In this case, the solicitor’s witness statement failed to adequately address any of these issues and “amounted to no more than a cri de coeur for more money”, the master said.
“The need for solicitors engaged in heavy and protracted litigation to expect adequate cash flow is now well understood and enshrined in the rules, see the note at 44.2.12 of the White Book.
“The parties may serve one further witness statement each and apply to re-list the application for hearing before me. I hope that those who make such applications in future will ensure that all relevant material is put before the court in support of the application.”