costs and healthcare regulators: a win, win situation?

As a matter of tradition, healthcare regulation and the awarding of costs in disciplinary proceedings have been unusual bedfellows. Whereas the Solicitors Disciplinary Tribunal and the Bar Disciplinary Tribunal have possessed cost awarding jurisdiction for many years, this has not been the position for most healthcare professions. However, times are changing, and a number of healthcare professional bodies are now obtaining authority to make awards of costs in disciplinary proceedings. I suggest, in reverse order of importance, that there are three reasons for this change.

Firstly, it must be common ground that the cost of disciplinary procedures to the professions is an ever increasing burden. An examination of most balance sheets of healthcare bodies shows an increasing sum that has to be set aside to pay for the cost of the disciplinary process. There is, in some quarters, registrants who are complaining that a substantial part of their registration fee is now being utilised in regulating those, whom it may be said, have abused their position. To award costs against a disciplined registrant means that those who cause the expenditure meet some part of that cost.

Secondly, there are those registrants who refuse to engage in the disciplinary process. They refuse to agree issues or documents and their conduct in terms of the preparation for hearings and the hearing itself means that huge costs are expended unnecessarily. Many committees are powerless in the face of such conduct. An ability to award financial penalties against those registrants who refuse to obey procedural directions is a powerful tool. If that sanction is extended as against those who represent registrants then you have a system which has proper sanctions for those who refuse to co-operate.

Thirdly, and perhaps most significantly, there has been a fear amongst some healthcare regulators that a jurisdiction of costs orders places the healthcare regulator at huge risk of having orders for costs made against the regulator in cases where the committee do not proceed to a sanctions order. The principle of costs following the event, and the losing party paying the costs, is the common position in civil proceedings.

The position has recently been restated by the Court of Appeal in Baxendale-Walker -v- Law Society on the 15 March 2007. In summary in disciplinary proceedings costs do not follow the event and there have to be exceptional circumstances for an award of costs to be made against a regulator.

The foundation case is Bradford City Metropolitan District Council -v- Booth (Times 10 May 2000). Lord Bingham, then the Lord Chief Justice, said that there was a balancing exercise to be performed between any financial prejudice suffered by the successful appellant in not obtaining his costs and the need to encourage public authorities to make and stand by honest reasonable and apparently sound administrative decisions.

In Gorlove -v- Institute of Chartered Accountants, (2001 EWHC Admin 220) Mr Justice Jackson said that costs would only be awarded against the regulator where the proceedings, …”were a shamble from start to finish, the conduct of the regulated body was misguided unreasonable and mistake was piled upon mistake”…

The facts in the case of Baxendale-Walker -v- The Law Society, were as follows:

Mr Baxendale-Walker did not regard the fact that he had never met someone (who in fact didn’t exist) as a reason not to give a glowing reference about him to a bank. This lead to one charge before the Solicitors Disciplinary Tribunal. A second charge related to evidence he had given in civil proceedings arising out of the same subject matter as the reference, in which his evidence had been entirely and roundly rejected. The Tribunal found the first charge made out but rejected the second. An order was made against The Law Society to pay 30% of Mr Baxendale-Walker’s costs on the basis that he had succeeded in relation to one allegation and a greater proportion of the costs incurred would have related to that allegation. That is in effect the civil position, namely costs following the event.

Lord Justice Moses in the court of Appeal held that was wrong.

The five principles from the judgment are:

(a) a regulator is in a “wholly different position” from an ordinary litigant and the rule that “costs follow the event” has no direct application

(b) unless the complaint is improperly brought or the proceedings are “a shambles from start to finish”, an order for costs should “not ordinarily be made against [the regulator] on the basis the costs follow the event”

(d) the tribunal must take into account that the regulator brings proceedings in the public interest and for the maintenance of proper professional standards. For the regulator to be exposed to an adverse costs order “simply because proceedings were unsuccessful” might have “a chilling effect on the exercise of its regulatory obligations, to the public disadvantage”

(e) it is a relevant factor if the practitioner brings the proceedings on himself

Lord Justice Moses picks up the description of “shambles from start to finish” from Gorlove and held that an order for costs should not ordinarily be made against the regulator on the basis that costs follow the event.

The core of the judgment of the Court of Appeal is point (d), namely that the Tribunal must take into account that the regulator brings proceedings in the public interest and for the maintenance of proper professional standards. For the regulator to be exposed to an adverse costs order “simply because proceedings were unsuccessful” might have “a chilling effect on the exercise of its regulatory obligations to the public disadvantage”.

The obtaining and exercising a costs jurisdiction is a win, win situation for healthcare regulators. That suggestion is made on the following basis:

an award of costs against a disciplined registrant will help to fund the disciplinary process. It will relieve to an extent, registrants paying for the process and it will mean that those who cause the expenditure are asked to pay
it is a valuable tool to regulate the disciplinary process and it avoids the unnecessary expenditure of costs. Both the registrant and those who represent them will face costs sanctions if they behave unreasonably in the administration of the process
there is little risk to the regulator in relation to orders for costs being made against them. It is only in exceptional cases ("a shambles from start to finish") will costs orders be made against regulators

Stephen Murfitt is head of Blake Lapthorn's Litigation and Dispute Resolution department and specialises in professional disciplinary work. To contact Stephen email stephen.murfitt@bllaw.co.uk or call 023 8085 7233.