Increased damages when a claimant lacks capacity in serious injury cases?

A recent High Court cost ruling by Master Whalan in the case of PLK & Ors [2020] EWHC B28 (Costs)  is likely to lead to an increase in damages in catastrophic injury cases where there is a lack of financial capacity.

An application was made by four different firms who specialised in Court of Protection work who argued that the 2010 SCCO guideline hourly rates did not recognise the specialism of their work or high overheads and did not reflect inflation in the past 10 years. They sought costs in various matters where they were acting on behalf of protected parties in which the hourly rates claimed were significantly in excess of the SCCO guideline rates (GHR).

Master Whalan stated that he was not able to change the SCCO rates because this was a role which was the exclusive preserve of the Civil Justice Council and rejected the argument that cost burdens were higher in such work but accepted that the rate should be subject to some form of periodic upwards review. He said “I am satisfied that in 2020 the GHR cannot be applied reasonably or equitably without some form of monetary uplift that recognises the erosive effect of inflation and, no doubt, other commercial pressures since the last formal review in 2010.”

He added that cost officers who handled Court of Protection bills should exercise “pragmatic flexibility” when applying the 2010 SCCO rates to the hourly rates claimed and recommended that “If the hourly rates claimed fall within approximately 120% of the 2010 GHR, then they should be regarded as being prima facie reasonable”. 

The Master then produced a table for future guidance which essentially applied a 20% uplift on 2010 SCCO figures set out below: 

In exchanges with counsel there was discussion that this area of work may sometimes be “stressful and relentless” but that many aspects of the day-to-day general management of a protected party’s interests are “routine”. Master Whalan said that this was relevant to the determination of the appropriate status or grade of fee earner for the work in question, rather than the calculation of hourly rates generally.

Implications of the Judgment 

In cases of serious personal injury such as traumatic brain injury where there is a lack of financial capacity and therefore a need to appoint a deputy to manage property and financial affairs, it is now likely to be contended that the multiplicand for future deputyship costs should be uplifted by around 20% per annum to reflect the above finding.  This argument may find judicial favour in light of the observations of Master Whalan.

Keoghs Comment

The findings of Master Whalan were provided to assist practitioners and Costs Officers/Judges who process over 8,000 Court of Protection bills annually to recognise a reasonable starting point as to hourly rates to be applied in this discrete area of work and to help achieve consistency. However, the collateral impact of the case is likely to be felt in damages awarded in serious brain injury claims.

The court specifically stated that it was not usurping the role of the Civil Justice Council in recasting the SCCO 2010 guideline rates. The task of reconsidering the historical 2010 position across the piece is already underway as the Civil Justice Council has established a Working Group, chaired by Stuart J, to conduct an evidence-based review of the basis and amount of the guideline hourly rates.  The Working Group has circulated a request for evidence to practitioners to be completed by 31 October 2020.  The Working Group is anticipated to respond with a draft report for full consultation by the end of 2020.

It is widely anticipated that there is likely to be an uplift in SCCO rates although there may be different models under consideration for determining rates, for example according to practice areas rather than on the current geographical basis.

Insurers are advised to consider current reserves in particular in relation to multiplicands for future loss in relation to Court of Protection/Deputyship costs. The judgment is likely to bring into sharp focus arguments that such costs must reflect the principle of proper delegation from the deputy to the appropriate level of fee earner for routine day-to-day work and also that a competitive selection process has taken place at the time of the appointment (having regard to geography and price) to ensure that the costs and damages claimed are reasonable and proportionate.