PI Brief Update

The Expanded Portal and Predictable Costs Regimes - Matthew Hoe, Jaggards & Taylor Rose Law

17/07/13. The new fixed cost rules were published on Friday 12th July, in the Civil Procedure (Amendment No 6) Rules 2013 (SI 2013/1695). The fixed costs will apply to most (but not all) personal injury claims in the scope the fast track.

The new rules set out two types of fixed costs. First, costs for claims settling under the RTA Protocol or the EL/PL Protocol (‘portal costs’). Those costs are fixed, with variation for the type of claim and the amount of damages. Second, costs for claims that exit the protocols (‘expanded predictable costs’). Those costs are calculated based on a simple formula based on the damages, which varies depending on the type of claim and whether the claim settles pre-issue, post-issue, post-allocation, pre-trial or at trial.

This article sets out what is provided by the new rules, but does not set out the figures to be allowed, which have been known for a while.

Capture

The expanded predictable costs will only apply to claims that start in but then exit the RTA or EL/PL Protocol. Thus they are not fixed costs for the whole of the fast track. If a claim is excluded from the protocols, it will also be excluded from the expanded predictable costs. The protocols list the types of claim that are excluded.

Commencement date

Both types of fixed costs will apply to claims in which the CNF is sent on or after 31 July 2013. Thus there will be a considerable run off of claims to which the new schemes do not apply. This is a simpler solution than the one that was possible from the government’s consultation response. That talked of claims exiting the protocol on or after 31^st July being subject to the expanded predictable costs.

Structure

CPR 45 Section II (known as ‘predictable costs’, in homage to the Woolf reports, or ‘predictive costs’, in homage to SMS messaging) survives unaltered. That’s a surprise, as it will quickly be side-lined. The increase in the small claims threshold to £10K for special damages rules out ‘bent metal’ claims falling under this Section. Only a handful of claims excluded from the RTA Protocol, such as claims by protected parties other than children or accidents in England & Wales involving foreign registered vehicles will still be under this Section.

CPR 45 Section III (portal costs) stays too, but is expanded to cover EL and PL claims, and claims up to £25K.

The new lower predictable costs for RTAs and the other expanded predictable costs for EL and PL claims are set out in a new CPR 45 Section IIIA.

CPR 45 Section VI, fast track trial costs, survives also, and will continue to apply to fast track claims outside the scope of portal costs and expanded predictable costs. The latter makes its own provision for trial costs, and thus is entirely self-contained.

Escape

The exceptional circumstances test has been lifted wholesale from CPR 45 Section II for Section IIIA. There must be exceptional circumstances which make it appropriate (a form of causation test) to allow a claim for costs greater than expanded predictable costs, and the receiving party must achieve at least 20% greater in order to keep his winnings. That is a test that has resulted in relatively few cases being allowed to escape Section II. Such is the price of certainty. Hopefully that will mean few claims where such circumstances are alleged and upheld by the court.

Behaviour controls

The power of the court to restrict claimants to portal costs remains, and Section IIIA confirms that nothing in the Section prevents the court exercising that power. Claimants should be cautious to exit claims from the protocols for no legitimate reason so as to recover Section IIIA costs, or to fail to follow the protocols at all in an attempt to avoid fixed costs altogether.

Part 36

Part 36 is amended to accommodate expanded predictable costs. If a Part 36 offer is accepted in the relevant period, costs will be payable in accordance with stage at which the notice of acceptance is served. That may encourage claimants to hold off accepting defendants’ offers for a few days until the claim reaches the next stage, if they consider the additional costs are worth the extra work.

If a claimant accepts a defendant’s Part 36 offer outside the relevant period or fails to beat it at trial, the claimant will have costs in accordance with the stage at which the relevant period expired. The defendant will be allowed costs up to the difference in costs between that stage and the stage at which notice of acceptance was served. That will still interact with QOCS, and defendants will not be able to recover more than the damages the claimant receives.

If a claimant beats his own offer at trial, he is still entitled to indemnity costs and the expanded predictable costs will not apply.

Defendant’s costs

These are capped at the same levels fixed for claimant’s costs. In the Part 36 situation, defendant’s costs are fixed at the difference between the fixed costs at the stage when the claim settled and the fixed costs at the stage at which the Part 36 expired.

If it is a case to which the exceptions to QOCS apply (strike out for having no reasonable grounds, abuse of process or obstructive conduct, or fundamental dishonesty), the defendant’s costs are not capped.

Counterclaims

These shall attract the same expanded predictable costs as originating claims, unless they do not involve personal injury; in which case, they get only half of the expanded predictable costs.

Interim applications

To prevent an explosion of these, their costs are also fixed. An amount equivalent to half of the Stage 3 Type A and Type B portal costs shall be allowed.

Exclusions

The protocols exclude a range of claims. The basic criterion for inclusion is that there must be an injury claim and the value of the claim must be likely to fall in the fast track range. They exclude accidents outside of England & Wales; claims by litigants in person, personal representatives, protected parties and bankrupts; abuse, clinical negligence and mesothelioma claims; motor claims on the MIB Untraced Drivers Agreement or where the defendant’s vehicle is registered outside the UK; PL claims against an individual; claims in which the defendant is insolvent and there is no identifiable insurer; disease claims in which there are co-defendants.

The expanded predictable costs also exclude all employer’s liability disease claims.

Conclusion

The new rules are thorough and seem unlikely to give much scope for disagreement. Satellite litigation should be limited. Likely litigation will concern the consequences unreasonable exit from or failure to follow the protocols, and what constitutes ‘exceptional circumstances’, and what types makes it appropriate to allow greater costs.

Matthew Hoe
Jaggards & Taylor Rose Law

Image ©iStockphoto.com/Mark-W-R