MOD Claims Costs: Court Orders 60% Recovery

The latest costs ruling arising from military noise induced hearing loss litigation provides an important reminder that success at trial does not necessarily translate into recovery of all, or even most, of a successful party’s legal costs.

Following the determination of generic issues affecting thousands of hearing loss claims against the Ministry of Defence (MoD), Mr Justice Garnham has ordered the defendant to pay 60% of the claimants’ common costs. The decision reflects what the court considered to be a genuinely mixed outcome. Although the claimants succeeded on several of the most important issues, the MoD also achieved significant successes capable of affecting the value and viability of a substantial number of claims.

An interim payment on account of costs of approximately £2.5 million was also ordered.

For those involved in MOD claims costs, the decision is particularly significant. The litigation demonstrates the complexity of determining costs where parties succeed on different issues within large-scale group litigation and where the financial consequences of individual findings extend well beyond the test cases themselves.

What is the military hearing loss litigation about?

The litigation concerns armed forces personnel who allege that their hearing was damaged as a result of exposure to excessive noise during military service.

Thousands of current and former service personnel have intimated compensation claims for noise induced hearing loss, with reports suggesting that as many as 100,000 military personnel could potentially be affected.

A claim against MOD for hearing loss is different from an application under the Armed Forces Compensation Scheme. The Forces Compensation Scheme (AFCS) provides compensation for injury, illness or death caused by service, subject to its own eligibility requirements and assessment process.

Depending upon the circumstances, an award under the AFCS may include a lump sum and, for more serious injuries, a Guaranteed Income Payment. Civil claims against the Ministry of Defence MOD, however, are based upon principles of negligence and require consideration of matters including breach of duty of care, causation and loss.

As with other personal injury claims, the damages available through civil proceedings can therefore depend heavily upon the individual claimant’s circumstances, including the extent of their hearing loss and its impact upon their employment and future earning capacity.

The generic issues trial

The purpose of the litigation has not simply been to determine the position of one or two former members of the armed forces.

The court was asked to determine a series of generic issues capable of affecting a very large number of hearing loss claims. These included important questions concerning the diagnosis and assessment of military noise induced hearing loss and the way damages should be quantified.

Two former soldiers, Christopher Lambie and Jack Craggs, brought test claims and both received substantial damages.

The judgment was particularly important in relation to Lambie’s claim because of the approach taken to future loss of earnings and earning capacity.

Loss of earnings can represent one of the largest elements of compensation in serious hearing loss cases. A claimant whose hearing difficulties affect their ability to continue in a particular occupation, secure alternative employment or maintain their previous earning capacity may potentially suffer financial losses extending over many years.

The court recognised that future earnings could be the single most significant component of damages for a sizeable proportion of the wider cohort.

However, this was also one of the areas in which the MoD achieved an important result. Although Lambie recovered damages for loss of earning capacity, the MoD successfully resisted a substantially larger future earnings award. The judge described the outcome of this part of the case as overwhelmingly positive for the defendant.

That finding was important when the court subsequently considered MOD claims costs.

Why was the MoD ordered to pay only 60% of the costs?

The claimants sought an order requiring the MoD to pay 95% of the common legal costs and requested a payment on account of around £6 million.

The MoD argued that such an order would not fairly reflect what had actually happened at trial. Its position was that the outcome was genuinely mixed, with meaningful successes on both sides.

The court ultimately took a position between the two.

Mr Justice Garnham accepted that the claimants had been “very largely successful” on the major issues. Those issues had attracted much of the parties’ attention and accounted for a significant proportion of the work undertaken for trial.

The claimants’ successes reportedly included important foundational concepts, the preferred diagnostic method and the approach to quantification.

However, the MoD succeeded on a number of other issues, including the utility of military audiometry, latency, acceleration and cochlear synaptopathy.

These were not treated as insignificant side issues. Findings on those matters could directly influence whether some of the wider cohort of cases remain viable.

The result was an order that the MoD pay 60% of the claimants’ common costs, together with an interim payment on account of approximately £2.5 million.

MOD claims costs and partial success

The ruling illustrates an important feature of costs litigation; i.e., identifying the party that was broadly successful is not always the end of the exercise.

The court can consider the parties’ success and failure on individual issues when determining the appropriate costs order.

This becomes particularly important in complex litigation involving multiple generic questions, expert evidence and substantial common costs.

A claimant group may succeed on the central basis of its case while losing on discrete issues which consumed substantial time and resources or which have significant financial consequences. Equally, a defendant may lose the principal arguments while succeeding on issues which materially restrict damages or reduce the number of claims capable of proceeding.

The hearing loss litigation appears to be a particularly strong example of this problem.

Although the claimants established important principles that may enable many cases to proceed, some findings favouring the MoD could result in other claims being discontinued or abandoned.

For costs practitioners, the case therefore highlights the importance of looking beyond the headline result when analysing recoverability.

The significance of loss of earnings

One of the most interesting aspects of the ruling is the significance attached to future loss of earnings. Compensation in military hearing loss cases is not necessarily restricted to an award for the hearing injury itself.

Where hearing damage has a measurable impact on a person’s ability to work, damages may potentially include past and future financial losses. The sums involved can become particularly substantial where a claimant is relatively young or their previous occupation depended upon hearing standards that they can no longer meet.

The MoD’s success in resisting the larger future earnings claim in the Lambie test case may therefore have consequences for the valuation of other claims.

This also helps explain why a costs assessment based simply upon which party obtained compensation awarded would fail to capture the full picture.

A claimant can recover substantial damages but still lose an important argument concerning how those damages should be calculated. In litigation involving thousands of similar cases, the aggregate financial significance of such a finding can be enormous.

Why could the ruling affect thousands of cases?

The wider significance of the litigation comes from the number of potential claims. The judge acknowledged that the proceedings have already been running for around a decade and that the overall value of the litigation could potentially extend into billions of pounds.

The generic findings should now provide greater clarity on how individual cases are approached. That may create an opportunity for a substantial number of claims to settle without each claimant having to litigate the same technical questions independently.

However, the decision could also have the opposite effect for some claimants. Mr Justice Garnham expressly recognised that some of the tens of thousands of people who have intimated claims may decide not to continue following the findings on particular medical theories.

The costs judgment therefore reflects a trial which produced meaningful results for both sides, even though the claimants succeeded on many of the principal issues.

What does the case tell us about managing legal costs?

For solicitors dealing with large-scale personal injury, military claims or clinical negligence claims, the decision reinforces the importance of costs management throughout complex litigation.

Significant expenditure may be incurred on expert evidence, medical causation, loss calculations and generic issues that ultimately produce differing levels of success.

Where costs run into millions of pounds, relatively small percentage adjustments can have very substantial financial consequences.

The difference between recovery of 95% of common costs, as sought by the claimants, and the 60% ultimately ordered by the court is significant. It demonstrates why parties should maintain a clear understanding of which costs relate to particular issues and how successes and failures may affect the eventual costs order.

The same principle can apply beyond group litigation. In high-value injury claims, clinical negligence claims and other complex disputes, a party may succeed overall while failing on issues that have generated considerable costs.

What happens next?

The substantive judgment may provide the basis needed for many military hearing loss cases to progress towards settlement. Following the earlier ruling, representatives of the claimants called on the government to engage in resolving cases rather than allowing the litigation to continue for further years.

Whether a broader settlement process emerges remains to be seen. What is already clear is that the court’s findings are likely to influence both the valuation and viability of a significant number of outstanding claims.

For armed forces personnel pursuing hearing loss compensation, the generic findings may provide answers to issues that have remained disputed for many years. For the MoD, its successes on certain medical and damages issues could substantially limit its overall financial exposure.

From a costs perspective, the latest decision is equally important. It shows that even where one side succeeds on the principal issues, the court may make a substantial adjustment to recoverable costs where the opposing party has achieved meaningful successes of its own.

How can ARC Costs assist with MOD claims costs?

Complex military hearing loss litigation can generate substantial costs documentation, particularly where claims involve extensive medical evidence, expert reports, causation arguments and significant claims for future financial loss.

ARC Costs can assist solicitors dealing with MOD claims costs, complex personal injury litigation and other high-value matters with the preparation and management of costs throughout the life of a case.

Where the outcome involves success on some issues but not others, careful analysis of the work undertaken and the relationship between individual issues and the costs incurred can become particularly important.

The latest military hearing loss ruling demonstrates precisely why costs should not be treated as an afterthought. In litigation involving substantial damages and potentially millions of pounds in common legal costs, the eventual costs order can itself become a major financial issue.

For firms handling hearing loss claims, wider claims against the Ministry of Defence MOD, personal injury or clinical negligence work, early involvement from experienced costs professionals can help ensure that costs are properly recorded, presented and supported as the litigation progresses.

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