This blog post was written by Mary Newnham of 12 King’s Bench Walk.
Introduction
In this case Master Brown ordered that a case involving a child claimant should be subject to costs management, despite falling within an exception to automatic costs budgeting, and despite the medical prognosis not yet being finalised.
Background
The Claimant was a child (aged 10 at date of accident and 12 at the date of the hearing) who had suffered a brain injury after being struck by the Defendant’s vehicle. Liability had been settled at 85/15 in the Claimant’s favour. Quantum directions were subsequently given in June 2023, providing for disclosure, exchange of witness statements and experts evidence through to a further CMC after May 2025.
According to the Claimant’s paediatric neurology expert, although she was already displaying severe neurodisability it was too early to give an accurate prognosis as to the full effects of her TBI. He intended to reassess her in 2026 (five years after the accident), when he would be better placed to comment on her long-term prognosis. The other experts (including psychiatry, educational psychology and care) were similarly guarded. There was no statement of value on the claim form but it was indicated that the claim was likely to be pleaded in excess of £10 million.
As part of the quantum directions, the court had ordered that the Claimant should serve an estimate of her costs from the date of the order to the next CMC and, if the Defendant wished to apply for a costs management order, it should make any such application no less than 14 days in advance of that CMC. In fact, the Defendant made its application much earlier than that.
The Claimant had already provided a costs estimate up to February 2023 amounting to around £253,000 (inclusive of VAT and disbursements). In accordance with the order of June 2023, the Claimant provided a further estimate of costs amounting to around £185,000. In December 2023, in support of a request for a further payment on account, the Claimant’s solicitors provided a breakdown of costs and disbursements to November 2023, at which point the incurred profit costs came to £411,000 (excluding VAT). A ‘short form’ bill and revised costs estimate had been served by the date of hearing, with costs to date at £850,000 (including profit costs of £633,000 excluding VAT). The estimated costs up to the next CMC were now £262,000 (inclusive).
The Claimant’s solicitors provided a detailed witness statement in which they sought to explain this increase in costs. The work was said to have been significantly more than anticipated for various reasons, including significant emotional and behavioural difficulties on the part of the Claimant, difficulties associated with the move to alternative rental accommodation and with the Claimant’s education. Witness evidence had turned out to be more extensive than anticipated, and the earlier estimate mistakenly only included one round of disclosure.
The decision
It was common ground that the case fell outside the costs management provisions within CPR3.12(1), but the Court retained a power to order costs budgeting in cases where it would not otherwise apply, pursuant to CPR3.12(1A) and 3.13(3). The Court had a general discretion to be exercised having regard to the overriding objective.
The Defendant’s arguments centred around their concerns (which appear to have been longstanding) about the extent of the Claimant’s costs and the degree to which they had exceeded the previous estimates.
The Claimant’s primary point was that this was a case where the prognosis was not yet known and would not be known until (at the earliest) 2026. There were significant uncertainties around her schooling, accommodation, care and rehabilitation. This was the underlying rationale for the exclusion of child claims from costs budgeting.
Master Brown considered in some detail the earlier case of CXS v Maidstone and Tunbridge Wells NHS Trust [2023] EWHC 14 (KB), in which a Defendant’s application for costs budgeting was dismissed in a complex clinical negligence case where the Claimant had cerebral palsy at birth. There were, as held in CXS, sound policy reasons behind the decision to exempt children’s claims from automatic costs management as it was plainly not sensible to budget over a period of five to ten years, with the potential for multiple applications to vary.
The Master emphasised that CXS did not form a precedent. There were some differences on the facts. In CXS the court was being asked to budget over a period of around 5 years during which period the claim was stayed and it was likely that the claim would not be resolved for many years after that. As said in CXS, this was typical of the kind of case the CPRC costs sub-committee had in mind when approving the exception from automatic costs budgeting.
In this case, the timescales were significantly different. While it could not be stated with certainty that a final prognosis would be available in 2026, he did not see that this would provide any substantial difficulties with costs budgeting. There was at least some reasonable expectation that there can be some assessment of damages within a period that was reasonable for costs budgeting purposes, and substantial directions had already been given with that in mind.
Perhaps optimistically, Master Brown considered that budgeting of a claim such as this should not be an expensive or time-consuming exercise and could usually be disposed of within an hour. Parties should be providing costs information to their clients in any event. If necessary, the matter could be costs budgeted in parts, as in longer-running cases involving adult protected parties.
The Master’s decision appears to have been driven primarily by concerns raised by the Defendant over the Claimant’s costs:
“The concerns which the Defendant has raised in this case in my judgment substantially outweigh any of the concerns about costs budgeting. In short, I am persuaded that the Defendant’s concerns provide a clear and compelling justification amounting to a good reason for taking the steps which the Defendant has asked me to take.”
“Costs of over £1 million are in my judgment, at the very least, concerning… In any event in my judgment, sitting both as a costs judge and as KB master, there are real apprehension that such costs would go substantially beyond what is reasonable or proportionate.”
Overall, therefore, while the Master recognised that this was a case with significant complexities and unknowns, he did not see them as presenting any hurdles to costs budgeting. Reasonable and safe assumptions could be made, and it was always open to parties to apply for variations.
Moreover, he considered that there were positive reasons to costs manage this case. It would reduce the risk that costs would become excessive and disproportionate and the prospect that detailed assessment would be required. It could be expected to provide transparency and enhance settlement. In some cases, costs estimates could be expected to provide reassurance that costs would be in a reasonable and proportionate range, but that had not worked in this claim and the Master lacked the necessary confidence that it would work in future.
In a point of more general application, the Master considered that there was at least some basis to thinking that costs budgeting may be beneficial for children and protected parties in an assessment under CPR46.4, because of the presumption that costs in excess of a budget are unreasonable. Thus costs budgeting may provide some protection to a child or protected party from a claim by the their solicitors in costs (although in this particular case, the court was told that the funding arrangement was such that there would be no liability of the Claimant to pay costs in excess of those recovered inter partes).
Takeaways
While there are solid policy reasons (as set out in this case and CXS) why claims involving children are not automatically case managed, there are some cases where costs management can and should be ordered.
As to whether costs management can be ordered, some child cases are more “budgetable” than others. Lack of final prognosis is clearly not a total bar, but budgeting is more likely to be ordered when it can reasonably be anticipated that a prognosis will be forthcoming in the near future. As a rule of thumb, if the Court feels able to make substantive case management directions (rather than e.g. simply ordering a stay), it is more likely to feel able to costs manage the case, at least in part. There will still, however, be cases where this simply cannot be done – where claims are “bristling with complexity and unknowns”, per CXS.As ever, this point is highly fact specific and previously decided cases will be of limited value as precedent.
As to whether costs management should be ordered, the increasing costs on the Claimant’s side were clearly a major factor here. The Claimant’s solicitors provided reasons for the increase, in what was by any measure a complex case.[1] But I would suggest that it was the unpredictability of the repeated increases (rather than the reasonableness of the post-hoc explanation) which led the Master to want more oversight. It is therefore important to make sure that any costs estimates are realistic from the start. In some cases, the provision of costs estimates will be used as a light touch alternative to full costs management. In this claim, the failure of that process to provide sufficient transparency and predictability is what led to the imposition of budgeting.
Master Brown was, however, keen not to frame the imposition of budgeting as a punishment. In his analysis, there were net benefits for both parties in having costs managed by the Court. It would therefore be open to Defendants to argue that budgeting should be considered in many child claims that fall outside automatic costs management, without necessarily having to demonstrate any particular concerns about costs incurred so far.
[1] A further point to take away for Claimants is that, despite the decision in Hadley v Przbylo [2024] EWCA Civ 250 that the costs of attendance at case management meetings are recoverable inter partes, some judges will be casting a critical eye over the level of involvement of the litigation team in treatment and rehabilitation.
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