Application for interim damages and costs refused by the court

NAX V MAX & Anor [2021]

This article was authored by Jonathan House, Litigation Executive, Birmingham.

In the case of NAX V MAX & Anor [2021], the claimant suffered serious and life changing injuries following a road traffic accident on 23 November 2018. Whilst the defendant admitted primary liability, causation and contributory negligence were raised as issues within the defence. In particular, the defendant disputed the claimant’s position that he had lost capacity. The provisional Schedule of Loss pleaded damages at approximately £8 million.

At an early stage in proceedings, before any Costs and Case Management Conference, the claimant sought numerous costs orders and applied for an interim payment on account of costs. Costs Budgets had been exchanged and were as follows:

  • Claimant: £1,228,769.00 (of which £399,074 was incurred costs)
  • Defendant: £494,819.00 (of which £174,392 was incurred costs)

The claimant sought an interim payment of 70% of the incurred costs.

The defendant’s overall position was that the case was in the early stages of litigation with little exchange of evidence. Further, the defendant highlighted that the jurisdiction to make costs orders under CPR Part 44 was discretionary and therefore, it remained possible for there to be issued-based or conduct based orders, or some other order inconsistent with the orders sought at the conclusion of the case. Critically, there had also been Part 36 offers made in relation to liability.

Decision

The court considered two previous cases - X v Hull & East Yorkshire Hospitals NHS Trust [unreported];and RXK v Hampshire Hospitals NHS Foundation Trust [2019] and stated as follows:

"…In contrast to the position in X v Hull, there have been early Part 36 offers in this case. If the approach I have set out above … is the correct approach to the second stage of the determination then I could not with an appropriate degree of certainty, bearing in mind also potential deductions for contributory negligence, conclude that there is sufficient security for the defendant’s costs in an immediate award of damages or otherwise as proposed by Mr. Reddiford. Put another way, if I were persuaded that the underlying costs orders sought should be made, the effect of making an interim payment would be to diminish the security which is to be found in those costs orders. In all the circumstances even if I were persuaded to have made the final costs orders, I would not therefore have been satisfied that it was appropriate to make an order for interim payment of costs”

The court further highlighted the fact that there been little evidence obtained or disclosed in this case. The judge had not seen any witness statements nor a police report and disclosure had not yet taken place.

The medical evidence had also remained at an early stage. Most critically, there had been a recommendation for a neuropsychological evaluation. No such evidence had yet been served and the judge further highlighted: “…In any event in all the circumstances I am not satisfied that I can dismiss as fanciful the possibility of exaggeration in relation to the head injury”.

The other key factor in the case was the period between the Case Management Conference and the trial which was approximately 18 months. This period was considered to be ‘normal’ in a case of this nature, with Master Brown stating:

It seemed to me, even accepting that such an exceptional length of time may not be a pre-condition for the making of an order, the demands on cashflow are significantly less heavy here than the sort of case which Irwin LJ had in mind.

There was further concern raised as the extent of the costs claimed, which were considered to be excessive.

In considering all of those factors, the court refused to make a costs order or an order for an interim payment.

Comment

At first blush it would appear surprising that an interim payment was refused in such a high value case. Claimants will perhaps think twice before making applications in the future, particularly on those matters where contributory negligence and causation remain live issues, and where there has been little (or no) exchange of evidence. Fundamentally, this case highlights once again that the court will consider a wide range of factors before making any costs orders or interim payments, especially for those cases at a very early stage in proceedings.