Following the decision in I v Hull & East Yorkshire Hospitals NHS Trust (25 February 2019), applications for a further interim payment on account of costs have 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. In the recent decision in RXK v Hampshire Hospitals NHS Foundation Trust  EWHC 2751 (QB), Master Cook observed that there was no decision of the High Court on the principle of whether such applications are well founded and have an adequate judicial basis in the rules and/or the authorities. Thus, the master took the opportunity in RXK to provide guidance ‘in the hope that such applications would be better prepared in future’.
Relevant costs rules
Civil Procedure Rule 44.2 makes clear that the court retains full discretion as to costs. The rule provides that the court has discretion as to (a) whether costs are payable by one party to another; (b) the amount of those costs; and (c) when they are to be paid. Although CPR 44.2 (2)(a) sets out the general rule on costs, that the unsuccessful party will pay the cost of the successful party, CPR 44.2 (2)(b) states that the court ‘may make a different order’. The court will have regard to the factors listed in CPR 44.2(4) when deciding on the type of order to make. Those factors include ‘the conduct of the parties’ which is elaborated under CPR 44.2(5). CPR 44.2(6) provides a list of the type of cost orders the court may make, and CPR 44.2 (8) provides 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 good reason not to do so.
RXK – factual background
The claimant suffered neurological injury as a result of negligent delay in her delivery. Proceedings were issued in November 2016 and, in July 2017, judgment was entered for damages to be assessed. The judgment also provided for interim payments on account of damages in the sum of £100,000 and for costs in the sum of £50,000. The first case management conference in the assessment of damages took place in March 2019, at which various directions were made. The application for a further interim payment on account of costs was supported by one paragraph in the witness statement of the claimant’s solicitor with a short summary of all profit costs incurred. Master Cook noted that there had been no attempt to apportion the figures between liability and quantum costs.
Decision and guidance
The master refused the application. It was clear that the claimant’s solicitor had failed to adequately address any of the issues and this amounted to ‘no more than cri de coeur for more money’. Agreeing with HHJ Robinson’s observations in X v Hull & East Yorkshire Hospitals NHS Trust, the master explained that the discretion conferred by section 51 of the Senior Courts Act 1981 and expressed in CPR 44(2) is a ‘very wide one’. He also explained that it was important to realise that HHJ Robinson made a cost order down to the date of the hearing of the application for an interim payment on account. This must, the master argued, be right because 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 type of order is sometimes described as a ‘prospective’ or ‘anticipatory’ costs order because it is made before the conclusion of the proceedings. Referring to the decision in I v Hull & East Yorkshire Hospitals NHS Trust, Master Cook held ‘the application which should be made in these circumstances is for a cost order down to a specific date and an interim payment on account of those costs’. This approach makes it clear that the court will wish to consider the factors listed in CPR 44.2(4) and (5) and will normally expect to be presented with sufficient information to enable it to carry out that exercise. The master also made clear that there was no basis for asserting any kind of exceptionality test; rather ‘the court will consider such applications on the basis of established principles’.
Master Cook set out the following factors that would be relevant when preparing applications for further interim payments:
i the type of funding agreement and details of any payments made under that agreement;
ii whether any Part 36 or other admissible offer has been made, and if so, full details of the offer;
iii details of any payments on account of damages made to date;
iv a realistic valuation of the likely damages to be awarded at trial;
v a realistic estimate of the quantum costs incurred to the date of the application;
vi 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
vii the likely date of trial or trial window.
Master Cook’s clear and concise judgment on an important aspect of costs in clinical negligence and personal injury matters is to be welcomed. It reinforces the earlier decision in I v Hull & East Yorkshire Hospitals NHS Trust and, more significantly, provides much-needed guidance on making applications for further interim payments. In essence, any prospective applicant must ensure that all relevant information and material is carefully prepared and put before the court in support of its application.
Masood Ahmed is an associate professor at the University of Leicester and a member of the Civil Procedure Rule Committee