Costs Differential Orders are a useful tool in a defendant’s arsenal to ensure plaintiffs issue cases in the appropriate court jurisdiction. Calderbank Letters offer a mechanism to defendants to facilitate the early resolution of claims, and their role in civil litigation, including personal injury actions, was placed on a statutory footing by the Legal Services Regulation Act 2015, with the relevant section 169 having been enacted in October 2019.
Both of these litigation tools were the subject of discussion in the noteworthy 2021 Court of Appeal decision in McKeown v Crosby & Vocella  IECA 139 which further highlights the role & effectiveness of both Costs Differential Orders and Calderbank Letters in personal injuries litigation.
Background - what are Costs Differential Orders & Calderbank Letters
Costs Differential Orders act as a penalty to plaintiffs who receive an award of damages which falls below the court’s monetary jurisdiction. Essentially such Orders oblige a plaintiff to pay the difference between the costs actually incurred by the defendant defending the proceedings in the court in which the proceedings were brought and those that would have been incurred by the defendant if the proceedings had been brought in the appropriate lower court.
Calberbank Letters or Offers are written settlement offers made “without prejudice save as to costs”. The flexibility with respect to the timing of when they can be made during proceedings and the absence of the necessity to physically lodge funds in court make them a particular useful tool to assist defendants in the early resolution of claims.
The 2018 Court of Appeal decisions in Jibrain Moin v Veronica Sicika & John O’Malley v David McEvoy  IECA 240 provided greater traction to Costs Differential Orders. The Court of Appeal essentially outlined that it is incumbent on judges to make a Costs Differential Order unless there are good reasons for not doing so, where an award is significantly within the monetary jurisdiction of a lower court.
The 2021 case of McKeown v Crosby & Vocella provides a further recent illustration of the circumstances in which a Costs Differential Order can and should be sought.
McKeown v Crosby & Vocella
In this case, the plaintiff was involved in a road traffic accident and suffered soft tissue injuries to her left shoulder, arm and hand. These injuries had resolved four months after the accident, with some intermittent pain in her back.
The defendants had written to the plaintiff’s solicitors outlining that if the plaintiff failed to achieve an award of damages within the High Court jurisdiction, they would apply for a Costs Differential Order.
The plaintiff was awarded the sum of €76,000 in damages in the High Court by O’Hanlon J, a figure within the minimum High Court jurisdiction of €60,000. However, the defendants appealed the decision in respect of the award of general damages.
Following the High Court hearing, the defendants’ solicitors also issued a Calderbank Letter offering a sum of €47,156 plus Circuit Court costs. This offer was rejected by the plaintiff, who proceeded to make a counter-offer of €61,000 plus High Court costs. This was not accepted by the defendants and the matter proceeded to the Court of Appeal.
Court of Appeal
Ultimately, the plaintiff was awarded the sum of €41,000 in the Court of Appeal and the defendants were awarded both their costs of appeal and the excess costs they incurred in defending these proceedings in the High Court at first instance.
The plaintiff asserted that it would be unduly harsh to penalise her for costs on the double (the costs of the appeal and a Costs Differential Order in respect of the High Court proceedings).
Judgment & Court’s Rationale
With regard to the appeal costs, the Court referenced the dilemma arising where costs fall to be decided when a plaintiff is awarded damages in the High Court which are too high, and are ultimately reduced on appeal, through no fault of their own. It also acknowledged that to oblige the defendants to pay two sets of appeal costs after a successful appeal could be viewed as an injustice.
In these circumstances, the Court made reference to Section 169 of the Legal Services Regulation Act 2015 and the requirement for the Court to have regard to any offer of settlement made, to abate the element of unfairness that might otherwise arise. The Court noted that virtually all of the costs of the appeal would have been avoided had the plaintiff accepted the defendants’ Calderbank offer, a key factor in the Court’s decision to oblige the plaintiff to discharge both parties’ appeal costs.
In respect of the Costs Differential Order, the court found that the injury was of a kind that fell squarely within the relevant category in the Book of Quantum and could find no basis to support the commencement of these proceedings in the High Court. This coupled with the fact the defendants wrote to the plaintiff a month after service of the Personal Injuries Summons, signalling their intention to seek a Costs Differential Order if required, ultimately led to the defendants being awarded the excess costs incurred by them in defending the matter in the High Court.
Commentary – takeaway points for litigants
The McKeown case is a very welcome decision from the perspective of defendants and provides a cautionary tale to plaintiffs in civil litigation. It demonstrates the power of a Calderbank Letter while an appeal is pending, which was a material factor in the court’s decision to penalise the plaintiff on appeal costs in this instance.
The case highlights the benefit of defendants sending early warning letters to plaintiffs’ solicitors in appropriate cases, outlining an intention to apply for a Costs Differential Order. Equally, plaintiffs should ensure proceedings are issued in the appropriate jurisdiction and duly consider the merits of any Calderbank Letters received.
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About the Author
Fergal Mullins is an associate solicitor in the Healthcare team at Hayes solicitors. He primarily advises clinical practitioners, hospitals and indemnity bodies on the defence of clinical negligence claims. Prior to joining Hayes, Fergal worked in a London firm in the area of clinical negligence, having trained and worked post qualification in a large Dublin firm in the same area.