Reid v Wye Valley NHS Trust & Anor

At a costs budgeting hearing, the usual order is costs in the case, but the court may make a different or modified order where the circumstances justify it. The court may consider the parties’ conduct, including whether they made reasonable efforts to negotiate a realistic budget. An unrealistically high budget may justify a costs consequence, although the court should avoid a sanction so severe that it discourages realistic offers or produces disproportionate satellite litigation. A percentage reduction to costs recoverable by the successful party may be appropriate instead of making no order as to costs.

The claimant brought a high-value clinical negligence claim against two NHS trusts. Following case management, the court conducted a separate costs budgeting hearing. The defendants argued that the claimant had failed to make reasonable efforts to negotiate the budget and that there should be no order as to the costs of the hearing.

The court considered the claimant’s budget, the parties’ offers and counter-offers, the extent of negotiation, and the substantial reductions made to several phases of the budget. The central issue was the appropriate costs order for the budgeting hearing.

1. Costs discretion. The court had regard to Civil Procedure Rules 1998, rules 44.2 and 44.2(6). The general rule is that the unsuccessful party pays the successful party’s costs, but the court may consider all the circumstances, including conduct and partial success, and may make another order.
2. Costs budgeting conduct. The discipline applicable to ordinary litigation also applies to costs budgeting. Parties should take reasonable steps to agree budgets where possible. The court may take account of an unrealistic budget or inadequate engagement with negotiation when deciding the costs of the budgeting hearing. The court relied on the approach described in AEI Rediffusion Music Ltd v Phonographic Performance Ltd and Findcharm Ltd v Churchill Group Ltd.
3. Assessment of the material. The claimant’s budget contained substantial claims that were outside a realistic range, particularly in relation to statements of case, the schedule of loss, experts, preparation for trial and trial attendance. The defendants’ offers were not themselves unrealistic. The negotiation position was mixed, and the offers relied on had largely been made at a late stage.
4. Order. The court rejected the defendants’ request for no order as to costs. The appropriate order was costs in the case, subject to a 25 per cent reduction in those costs if the claimant ultimately recovered her costs. This reflected the unrealistic budget while avoiding an excessive consequence that might discourage reasonable negotiation.