Court Refuses Differential Costs Appeal in Medical Negligence Case

The Court of Appeal has upheld the High Court’s refusal to grant a differential costs order in Milmoe v Chatzis and Another, even though the damages awarded were at Circuit Court level. The Court found that, in the absence of a warning letter or any engagement between the parties on remittal, the trial judge had properly exercised discretion in declining the order. Our Medical Law team considers the decision’s implications for practitioners.

What you need to know

• A patient sued a private clinic and her consultant for negligent post-operative care following breast augmentation surgery. She alleged that their failure to prescribe antibiotics on discharge led to an infection, additional pain and increased scarring.
• The High Court had found in favour of the patient, awarding €44,460 in damages. However, interestingly the Court declined to make a differential costs order despite the award falling within the Circuit Court jurisdiction - up to €60,000 for personal injury cases.
• The clinic appealed the High Court decision, challenging both the calculation of damages and the refusal to grant a differential costs order under section 17 of the Courts Act 1981.
• Ultimately, the Court of Appeal upheld the trial judge’s decisions on the assessment of damages, that the infection contributed to an increase of 35% to the scarring, and that 50% of the procedure costs be reimbursed.
• In addition, the Court also found no error in the refusal to make a differential costs order, factoring in the case complexity and the absence of a section 17 warning letter.

Parties should be mindful of monetary jurisdictional issues at the time of issuing medical negligence proceedings and during the course of these proceedings. The refusal of a differential costs order in this claim[1] is a reminder that parties should be proactive in communicating if a case should be heard a lower court, during the course of the proceedings. Although the damages of €44,460 fell within the Circuit Court jurisdiction, the decision reemphasises that differential costs orders are discretionary and not guaranteed. Silence or inaction by a party may make obtaining a differential costs order more challenging at a later stage in proceedings.

Quantum - the calculation of damages

The patient had accepted that some level of scarring would have been due to her surgery, which was not at issue in this case. The issue was the extent to which the delay in treating the infection after surgery had worsened that scarring. The only expert evidence given, was from the patient’s expert, who acknowledged that it was not possible to say precisely how much the infection increased scarring.

Consequently, the clinic submitted that the trial judge was not entitled to fix a 35% contribution due to infection-related scarring, without expert evidence. The Court of Appeal disagreed with this view, which in its opinion, overemphasised the role of the expert witness and underemphasised the role of the trial judge. Instead, it found that the alternative of no award of damages due to the absence of expert evidence on a precise percentage for contribution, would be an injustice where the clinic’s established breach of duty had caused significant injury. Relying on a 2009 case[2] where the Court awarded €75,000 for similar injuries, the trial judge adjusted the award to €90,000. This amount allowed for inflation, of which 35% equated to €31,500.

Differential costs orders

As the High Court awarded damages comfortably within the Circuit Court jurisdiction, the clinic sought a differential costs order under section 17 of the Courts Act 1981(Courts Act). If granted, the patient would have to pay the clinic the difference between High Court costs and Circuit Court costs, that would have been incurred.

Section 17(5) of the Courts Act gives judges a discretion on whether to grant a differential cost order. However, the default is to make one unless there is good reason not to. Here, the Court of Appeal agreed with the trial judge that an order should not be awarded in favour of the clinic.

Reasons for refusal

The Court of Appeal accepted the two main points of the trial judge, namely, the unclear jurisdiction and that no section 17 warning letter had issued.

• Unclear jurisdiction: As the case was initiated before the Personal Injury Guidelines came into effect, damages were assessed under the Book of Quantum. The Book of Quantum gave no guidance on scarring. The scarring was described as “quite obvious” and “quite different” to the expected outcome. Given this uncertainty and the range of possible damages, the Court of Appeal felt that the jurisdiction was not clear cut, and that initiating the claim in the High Court was understandable.
• No section 17 warning letter: The Court reviewed the case law on differential costs orders. It noted that in those cases, a warning letter had issued, and the parties had engaged on the question of whether the cases should be returned to a lower court. In contrast, the absence of any warning letter or communication from the clinic regarding referring the case back to a lower court weighed against granting a differential costs order.

Factors taken into account by Courts in considering whether to grant differential costs orders

There have been a number of recent cases, where the Courts have refused to grant differential costs orders. In the cases of Kazmierzak and Quinlan, the Courts highlighted the importance of considering both:

• The reasonableness of initiating proceedings in a higher court, and
• The presence of warning letters.

Other factors to be considered when granting these orders include situations where the damages awarded exceed the amount offered in a Calderbank letter[3], where the award is close to the jurisdictional limit of the lower court, and where unforeseen developments during the course of trial reduces the value of the claim.

In Quinlan v Quinlan, the Court stated that:

“a differential costs order will be significantly more difficult to resist where the defendant had warned the plaintiff in advance that an order would be sought if necessary.”

Based on these recent decisions, while a cost differential warning letter is not a prerequisite to granting an order, the absence of any warning or pre-trial engagement may be taken into account in appropriate cases. Section 17 is intended to encourage plaintiffs to commence proceedings in the appropriate Court, with the risk that they may be penalised by a differential costs order if they do not. Importantly, where a case has been referred to it, the Circuit Court retains jurisdiction to award damages above its normal monetary limit. This provides some reassurance to plaintiffs in cases where the expected damages are close to the boundary between jurisdictions of the High Court and the Circuit Court.

Conclusion

Differential cost orders are ultimately discretionary. Their granting will hinge on the circumstances of each case. However, the Milmoe decision serves as a cautionary tale; if there is good reason to believe that damages will be a below a jurisdictional threshold, steps should be taken in anticipation of this. Parties should be mindful of issuing proceedings in the appropriate Court. Consideration should be given to issuing a section 17 warning letter, in applicable cases, as it may increase the chances of obtaining a costs differential order.

For more information and expert advice on navigating clinical negligence claims, please contact a member of our Medical Law team.

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The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] Milmoe v Chatzis and Another

[2] Reilly v. Moir & Ors. [2009] IEHC 164

[3] This is a settlement offer in writing that protects you on legal costs if the other side refuses the offer and does worse in court