ISSUE BASED COSTS ORDERS: RELEVANT FACTORS INCLUDE CLAIMANT’S OFFER OF SETTLEMENT

The judgment in Welsh v Walsall Healthcare NHS Trust (Costs) [2018] EWHC 2491 (QB) is one of those “cut out and keep” judgments in that it contains a useful precis of all the relevant rules and principles relating to issue based costs orders.  The failure by the defendant to make an offer of settlement, or accept an offer by the claimant which would have left it in a better position, were relevant factors in determining a percentage reduction of the claimant’s costs when the claimant had unreasonably pursued an issue to trial.  Further there is a reminder that the best way of a defendant protecting itself in relation to costs is by making a Part 36 offer.

“The Defendant could have protected itself on costs as a whole, including the costs referable to the consent issue, by making a sufficient monetary offer.”

THE CASE

The claimant had succeeded in a clinical negligence trial.  The judge held that an offer made by the claimant did not come within Part 36. The claimant had made allegations of lack of informed consent to the operation, that allegation had been dropped part way through the trial. The defendant contended that the issue of consent had led to unnecessary costs being incurred and that the claimant should only recover part of its costs and also be responsible for 30% of the defendant’s costs.

THE JUDGMENT

The judge reviewed the rules and principles relating to issue based costs order.  The claimant had not pursued the consent issue at trial. However the claimant had made an offer to settle for 80% of damages. This was not an effective Part 36 offer, but was still a factor that the court could take into account.

  1. The conduct of the Claimant in pursuing this issue is not the only relevant consideration though. I must also put into the balance my assessment that the Claimant did effectively succeed on a full liability basis and that the Defendant’s ‘success’ on this one issue did not have any substantial impact on the monetary claim. The Defendant could have protected itself on costs as a whole, including the costs referable to the consent issue, by making a sufficient monetary offer.
  2. I also take account of the liability offer made by the Claimant, albeit at a late stage. It was made a little too late to be considered an effective Part 36 offer. I do not know to what extent the trial costs had been incurred by then. I doubt there was any huge increase in costs liability between the Friday afternoon and the Tuesday morning after the Bank Holiday. I have set out my interpretation of the offer above. Given the limited impact the consent issue had on the damages claim, even if it was viewed as 80% of the losses attributable to every pleaded allegation, it still represented a better outcome for the Defendant than the result after trial. Had the Defendant thought it necessary, clarification could have been sought and I am confident the Claimant would have been willing to agree that the offer carried no implied admission on the consent issues. Acceptance of the offer therefore represented another way in which the Defendant could have limited the trial costs.
  3. In the circumstances, I do not consider it appropriate to attempt to divide up the costs relating to the consent issue and to make the Claimant liable for all such costs, as the Defendant invites me to. The Defendant suggests that approximately 30% of its costs relate to the consent allegations and that I should make an order that effectively provides for the Claimant to be responsible for 30% of the costs on both sides. I accept that the calculation put forward by the Defendant is put forward in good faith and represents a genuine attempt to split out the costs of the consent issue. However, I do not accept that is the appropriate approach.
  4. Equally, I do not accept the Claimant’s suggestion that I should limit any costs for which she is liable to at most 10% of the ‘time costs’ relating to trial and trial preparation. That would represent a very modest sum. If I thought that was the extent of the costs wasted by the Claimant’s conduct on the consent issue, I would probably be persuaded not to depart from the usual order.
  5. My approach in exercising my discretion is to say that the Claimant has overwhelmingly been the winner in the litigation. This was a claim for damages and the Defendant could have secured costs protection by making a sufficient Part 36 money offer and/or by admitting that it was liable to compensate the Claimant including for the loss of the benefits of successful surgery. The Claimant’s offer provided a further opportunity to save costs, particularly trial costs relating to liability. That encompassed the costs of the consent issue. On the other hand, pursuing the consent issue without proper consideration of the available evidence within the correct legal framework, added unnecessarily to the total costs expended on both sides. The Claimant must bear responsibility for that. I consider that it would be unjust to ignore this in the costs order I make.
  6. The starting point that the unsuccessful party pays the successful party’s costs remains strong. However, the circumstances I have identified lead me to a limited departure from the general rule. Having weighed all the circumstances, I have decided that the appropriate order is that the Defendant should pay 85% of the Claimant’s costs, to be agreed or assessed.
    1. In arriving at that percentage, I have looked at the approved costs budget for each party. I have considered how the costs break down and thought about the parties’ conduct as it relates to the various costs stages. I have acknowledged that the Claimant may initially have been acting reasonably in exploring the consent issue and that there is scope for disagreement as to which costs might be properly allocated to the consent issue. I do not pretend to have conducted any precise mathematical analysis. Rather, I have reached a judgment as to how best to do justice between the parties considering all the circumstances I have identified. The result is that the Claimant will be responsible for a meaningful proportion of her own costs to reflect the wasted expenditure on both sides in relation to the consent issue. However, in line with the general principle that the unsuccessful party pays the costs, the Defendant will be paying the bulk of the Claimant’s costs and all its own costs.
  7. I suspect that the Defendant will consider that I have not moved far enough from the general rule and that the Claimant will maintain that I should not have moved at all. However, standing back and taking a broad view in the particular circumstances of this case, I consider that it is fair that the Claimant should recover most, but not all, of her costs.