Through the Looking Glass - Part 1

Part 1: Application of the Fixed Recoverable Costs regime

The fixed recoverable costs introduced in July 2013 and found at CPR 45 IIIA was, for some, the dawning of a new costs age ushering in an apparently less expensive, complicated and disputable costs regime. That was over three years ago and, whilst Insurers, the NHSLA, the MOJ, and the Department of Health (see the previous blog of Tyler McEwen regarding Clinical Negligence and Fixed Costs) have been pushing for an extension to fixed costs both horizontally and vertically, there has been continued dispute about the nature and application of the existing regime.

Despite the intention that the new fixed costs were to be simpler, easier and more predictable nearly four years after introduction we are still testing the boundaries. After recent developments in case law regarding the applicability of fixed costs it feels like we have been left peering through the looking glass at track, value, particular elements of a case and indeed the effect of Part 36. It is vital that costs professionals and their instructing Solicitors grasp the issue to maximise costs recovery.

STARTING POINT AND SCOPE OF THE PROTOCOLS CPR 45.29

A states that where a claim is started under either the “RTA Protocol” or the “EL/PL Protocol” but no longer continues under the relevant Protocol or the Stage 3 Procedure in Practice Direction 8B, section IIIA shall apply. Accordingly, the real trigger for the applicability of the fixed costs regime is submission to the RTA or EL/PL Protocol and claimant layers should examine cases very carefully before submission in order to identify if the case should properly be started in the either of the Protocols.

The scope of the protocols set out at Paragraph 4 of both need to be considered, particularly with regard to the cases to which the Protocols do and don’t apply. For example, and this list is not definitive, they only apply where the claim includes a claim for personal injury, and is valued between the the small claims track limit and the “upper limit”. In the RTA Protocol the upper limit is £25,000.00 (excluding vehicle related damages) whereas in the EL/PL Protocol it is £25,000.00 on a full liability basis, including pecuniary loss but not interest. It is for this reason that an early quantum valuation should be considered in order to ensure that cases which may be worth above the upper limit are not submitted to the Protocol.

Neither Protocol applies where the claimant or defendant acts as a personal representative of a deceased person or is a protected party, or where the claimant is bankrupt. Careful consideration should be given to all the circumstances which may be important in considering if the Protocol the correct way to start the claim.

VALUE

In reading Jackson LJ’s Final Report on Civil Justice Reforms we could all be forgiven for believing that what was proposed was a fixed costs regime intended only to apply to cases which would normally be allocated to the fast track, i.e. those valued, settled or awarded at £25,000.00 or below – the value ambit of the fast track and what Jackson LJ called "lower value litigation". That understanding is re-enforced by the discussion, both with the report and still going on today with regard to an “extension” of the fixed costs regime for claims worth up to £250,000.00.

Although not specifically asked to decide the point, the Court of Appeal in Qader & ors v Esure Services Limited [2016] EWCA Civ 1109, a case regarding the applicability of fixed costs to multi-track claims (a more detailed discussion of which can be found in in Michael Mansi’s blog Allocation trumps settlement amount), also recognised that there was an apparent anomaly presented by the insertion of the apparent “ceiling” on the level of damages to which the fixed costs applied. The suggestion was that it was the inclusion within the tables of the £25,000.00 top value upon which the fixed amounts could be calculated which was the anomaly, rather than a failure to include a provision that ruled out applicability of the section to cases in which damages were agreed or awarded at over £25,000.00.

The judgement has been followed by CPR changes laid before Parliament on 2nd February 2017, due to come into effect in April this year, which remove the reference to £25k “ceiling” entirely from the tables within the rules and effectively, for all intents and purposes, confirms an extension of the fixed costs regime to all cases submitted to the Low Value Protocols – regardless of whether the matter is later re-valued at over the upper limit. It is therefore more important than ever that a case is properly valued before it is submitted to the portal after April 2017.

INTERIM APPLICATIONS

CPR 45.29H sets our provisions for fixed costs to be applied to interim applications and automatically applies to cases to which the section at large applies. Oddly, it seems to have taken some rather a long time to recognise these provisions and accept that applications too are subject to fixed costs, however the rule is clear in stating that the only costs allowed for interim applications are one half of the applicable type A and type B costs in table 6 or 6A plus applicable disbursements outlined in CPR 45.29I (such as the Court fee) and VAT. There has been several judgements at Circuit level on this point, particularly with regard to costs of Pre-Action Disclosure applications (Mark Davies v Asda, HHJ Denyer QC sitting at Bristol 9th June 2015, unreported; Mills v Farmfoods and Salter v Muller UK & Ireland, HHJ Belcher sitting at Leeds, 2nd November 2015, unreported) however the issue has now been determined by the Court of Appeal in Sharp v Leeds City Council [2017] EWCA Civ 33 – fixed costs apply to applications, including PAD applications. It is important therefore that Claimant Solicitors who have a costs order on an application remember that costs in addition to the fixed costs of the case are payable.

The strategy for Claimant Solicitors and their fixed costs must be to maximise fixed costs wherever possible. That includes ensuring that the correct level of fixed costs is sought (see Bird v Acorn Group Ltd [2016] EWCA Civ 1096), and that, where application costs are applicable they are sought in addition to the fixed costs. It also means knowing about the ways out of the fixed costs regime and how to use them, and the “escapes” will be considered in next week’s blog – “Through the Looking Glass – Part 2: Escapes from the Fixed Costs Regime”.

 

Written by Liam McKee - Costs Draftsman

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