Sheppard v Essex Strategic Health Authority

A prospective costs-capping order is permissible where there is a real risk that costs will become disproportionate or unreasonable, that the risk cannot be adequately controlled by conventional case management and detailed assessment after trial, and that making the order is just. Such orders remain uncommon in ordinary litigation, but the court must assess the particular circumstances. An experienced and reputable solicitor is not immune from costs control, particularly where substantial public funds and expert evidence are involved.

The claimants appealed against Master Ungley’s order imposing a cap in principle on their costs in a complex clinical-negligence action concerning alleged failures in the management of hydrocephalus shunts. Breach, causation and quantum were substantially disputed. The claim involved two claimants, numerous experts, substantial costs already incurred and competing estimates of future costs.

The appeal was governed by whether the Master had been wrong to make the order under CPR 52.11. The central issue was whether prospective control by a costs budget was justified instead of relying exclusively on detailed assessment after trial.

1. Appeal dismissed. The claimant had to show that Master Ungley was wrong to make the order. The appellate court was concerned with a discretionary case-management decision and could not interfere merely because it might have chosen another reasonable solution.
2. The relevant test was whether there was a real and substantial risk that costs would be disproportionately or unreasonably incurred, whether that risk could not be managed by conventional case management and detailed assessment after trial, and whether it was just to make a costs-capping order.
3. Prospective budgeting and capping could control costs more effectively than assessment after the event. This was consistent with the CPR’s emphasis on active case management, proportionality and proper use of public resources.
4. The substantial costs already incurred, the large number of experts and the competing costs evidence justified the conclusion that there was a real risk of further disproportionate or unreasonable expenditure. The case was materially different from the ordinary clinical-negligence claim described in Smart v East Cheshire NHS Trust.
5. The order was upheld in principle. An experienced Costs Judge was to set the budget and could vary it if justified. The appeal was dismissed.

The appeal was from Master Ungley’s decision dated 23 February 2005, which imposed a costs cap in principle and directed that its level be determined by a Costs Judge. Mrs Justice Hallett dismissed the appeal.