Costs Management Hearings – Dispensing with Budgets
Despite the passing of more than 10 years since the introduction of costs management, circumstances continue to arise whereby the application of the regime is not clear and falls to be tested by the Courts. In a recent matter concerning a significantly complex wrongful birth case before District Judge Rich at the KB District Registry in Birmingham, the question arose as to whether budgeting could be dispensed with upon a wrongful birth claim.
The issue to be addressed was that, in such a case, the action is brought on behalf of the parents despite the matter, in essence being for the wellbeing of the child. This conflicted position is an anomaly to that of budgeting being disapplied in cases brought on behalf of the child themselves.
It was noted that budgeting would apply unless one of the exceptions are triggered or the court orders otherwise in accordance with CPR 3.12(1)(e).
The matter was significantly complex in that, the child, now aged 3, was born with Down’s Syndrome. The Claimant’s position was that the information and advice given during pregnancy was all reassuring and no such issues were raised.
The Defendant’s position was that all imagery and advice was reasonable and therefore all matters were denied. As such, a preliminary hearing on liability was agreed between the parties and matters were to proceed on this basis.
It was reasonably believed that the case could be valued at more than £10 million, especially when claims would include Occupational Therapy, Physiotherapy, Speech and Language Therapy, additional education needs, Aids & Equipment, Assistive Technology, transport, suitable accommodation, as well as General Damages and past gratuitous care and expenses.
The Defendant’s position was that budgeting ought to apply and that this was a matter than was not brought on behalf of a child but the parents. Second, the value of the claim, in their view, would not reach and therefore surpass £10 million.
The position outlined to the court by the Claimant was:
- The phases of Issue; CMC; Disclosure and Witness Statements are all but completed;
- Expert reports were due for exchange by 1st November 2024, so were well on their way, with incurring such fees and costs. This would merely leave, PTR, Trial Prep and Trial.
- ADR – this was being explored so costs are incurred within this phase also.
- There is high cost of complying with the costs management regime at this stage coupled with the fact that the benefit to be achieved from it will be significantly less than would otherwise have been the case
- The case has numerous complexities and unknowns with a significant number of years before a final prognosis.
- Due to the unknows, there is not sufficient certainty to enable sensible assumptions concerning the extent of the work required moving forward to provide for a basis for budgets.
- Incorrect assumptions may lead to further applications for variance, adding another layer of costs to all matters.
- Additionally, budgets in such a matter may be set that are artificially high.
- Defendant will be concerned that costs will not be “capped” but all such concerns would be addressed at a detailed assessment, with doubt in their favour.
- CJC’s Final Report – Costs Review in May 2023, noted that costs budgeting should be retained BUT pertinently, “one size does not necessarily fit all”.
- There was a genuine belief that the matter will be more than £10M.
Overall, the Claimant did not know where they would land on the case given the uncertainties, which would impact budgeting. To proceed with the same would incur significant cost and court resources.
Discretion given to the court under 3.12(e) is to deal with matters such as this, where, if the claim form contains a statement that the claim is valued at £10 million or more – cases such as this would be specifically excluded.
DJ Rich, without hesitation, agreed that the claim should be exempt from cost budgeting. He noted it was a fully liability disputed wrongful birth with a child with Down’s Syndrome and therefore will be a valuable case. When making his decision he acknowledged it would be worth £10 million or more on the Claimant’s best case. He did note that cost budgeting being exempt does not mean there cannot be a detailed assessment down the line giving the parties a fair assessment of the costs claimed.
It was therefore recorded that, “this Claim is exempt from cost budgeting. CPR 3 PDE 7.7 is disapplied.”
This case demonstrates the potential for budgeting to be disapplied where a case is brought by parents for the ultimate benefit of their child, however it must be noted that the matter hinged, significantly, upon the overall value as opposed to who had brought the claim. As such, it may well have been a different outcome or a more difficult task to have the court apply its discretion per CPR 3.12(1)(e) to disapply budgeting despite the child being the ultimate beneficiary of any damages had that been the sole thrust of the submission.
Darren Malone is an Associate Costs Technical Specialist and Advocate within the Irwin Mitchell Costs Team.
Counsel of No5 Chambers appeared on behalf of the Defendant.
