PI Brief Update

Exceptional Circumstances and recovering costs above fixed recoverable costs - Sean Linley, Carter Burnett

30/11/21. Fixed recoverable costs were first introduced in 2010. It was said to be a procedure that would make costs in lower value claims simpler and easier to deal with. Back then the scheme only applied to road traffic accident claims with a value with damages of up to £10,000.00. Fast forward 11 years and we have seen the upper limit increased and fixed costs extended into other areas including employer’s liability and holiday sickness claims. Beyond this we already have firm indication from the judiciary that the fixed costs limit will be increased and be expanded to cover more claims. It should come as no surprise then that new battlegrounds are emerging with parties looking to utilise the fixed costs rules to seek costs which are above and beyond those fixed recoverable costs would otherwise provide.

One such mechanism open to parties is to the ‘exceptional circumstances’ test under CPR r45.29J. The procedure allows parties to seek a claim for an amount of costs exceeding fixed recoverable costs if ‘exceptional circumstances’ can be shown. The question which has ultimately been raised is what exactly constitutes ‘exceptional circumstances’ and this is an issue the court was asked to address in the case of Crompton v Meadowcroft (Costs) [2021] EW Misc 20 (24 August 2021). The claim was for a road traffic accident. It was submitted by the portal but exited it with liability admitted thereafter on 8 March 2017.

Chronologically there was an unusual issue in that the Notice of Allocation to the Multi-Track was received after the claim had been settled and concluded. Consequently, the Qaderanomaly was in play whereby a claim which starts life on the Portal but is not allocated is restricted to fixed costs. Critically this was not a factor which was taken into account when considering exceptional circumstances.

The Claimant argued that there were exceptional circumstances and that a claim for costs above the fixed recoverable costs ought to be allowed pursuant to CPR r45.29J.

The Arguments

The Claimant's position was set out as thus:

8. Miss Cosgrove for the receiving party (the claimant) says that this case, the case before me, is far from a straightforward case and is not the nature of case that the fixed costs regime was intended to encompass or envisage. There are a number of aspects to the case that she would say are of particular relevance - the quantity of experts, and in this case medical experts; the extensive medical disclosure. This was a case where the claimant’s solicitors had to consider that their client might suffer disablement as a consequence of her injuries. They had to refer to Ogden tables in calculating the impact going forward as regards her financial loss. The settlement figure when it ultimately was resolved was outside of the anticipated fast track limit, and indeed this is a case which the court ultimately - albeit after the event, as it were - deemed to be suitable for the multi-track. And of course, if this case had been allocated to the multi-track before its settlement, then we would not be in the fixed costs regime.

The Defendant's position was summarised as follows:

9. The defendant says, yes, the nature of the fixed costs regime means that there are swings and roundabouts; that there are cases where fixed costs mean that a claimant’s representation would be a winner, as it were; and a case where a claimant’s representation would be a loser by the very nature of the rigidity of a swings and roundabouts system, but that’s the way it goes - sometimes you win, sometimes you lose - and that this is one of those cases, potentially at least, where the claimant’s representation would be on the wrong side of that relationship. It may be the case that the claimant’s representatives carried out an amount of work that was greater than will be properly reimbursed under the fixed costs regime, but they have to take that on the chin because that is the nature of the scheme and that those that set up the scheme, as it were, anticipated that that would be the case.

The Decision

Deputy District Judge Ayers considered matters and held that:

13. [...] having looked at the matter in hand, looked at the circumstances of this claimant’s claim, I am satisfied that the work required by those representing the claimant was significantly greater than might have been anticipated and that in this case there was exceptionality; and I do deem it appropriate to allow the claimant to depart from the fixed costs regime so as to be properly reimbursed in respect of the work done and the costs incurred on their client’s behalf.

14 In taking that view I am not simply being persuaded by the fact that the court, post-event, determined that this case should be allocated to the multi-track. I am taking into account the fact that there were an unusual number of expert witnesses, medical witnesses, who were addressing the issues deriving from the injuries sustained by the claimant; that there were unusual features; there was the potential that this claimant might suffer permanent disability, albeit and thankfully for her it would seem that did not prove to be the case; and I am satisfied that there were issues with regards to the calculation of her potential loss that merited investigation and a more extensive amount of work incurred.

15 It is right that the nature of a fixed costs regime does mean that one has to look closely at the circumstances of any particular case if exceptionality is being argued, but here I am satisfied that there was sufficient exceptionality to overcome the threshold, and I'm satisfied that the claimant’s application should succeed.

Analysis

The decision bears striking similarities with 2 Sisters in that disability (or the prospect thereof) and complications concerning losses were both considered to be exceptional circumstances. The judgment does not provide significant detail around the other areas but it is notable that an unusual number of expert witnesses and medical witnesses, which were needed to address issues deriving from the injuries sustained by the Claimant, were also viewed as exceptional circumstances. In Crompton there were five experts, in addition to an MRI scan, CBT and physiotherapy.

It is welcoming to have more guidance on the exceptional circumstances test and some practical examples of what the court may consider to be so. That said both here and in 2 Sisters the court repeated and made clear that the test has a high threshold. Success in arguing exceptional circumstances will turn on the specific facts of the case.

Notably, previous case law has also shown a reluctance by the court to accept late acceptance of a Part 36 offer as an exceptional circumstance.

Practitioners ought to give consideration to whether there has been additional work generated on cases to which fixed costs apply and consider what gave cause to them. What is critical is that the circumstances are to be exceptional within the fixed costs regime and not in terms of litigation generally. This is a subtle but an important distinction. An assessment can be made as to the merits of pursuing an application of exceptional circumstances under CPR r45.29J with these principles in mind. If a practitioner is uncertain then an opinion should be sought from an experienced costs specialist.

The decision is published against the backdrop of continuing fixed costs arguments between parties, a review into fixed costs (both as to the level of fixed costs generally and the impact of vulnerability on the level of fixed costs) and the proposed expansion of fixed recoverable costs in civil litigation. Cases like this are therefore likely to be noteworthy as it is likely such battlegrounds will become more commonplace moving forwards and as in Crompton such arguments are likely to be hard fought.

Sean Linley
Senior Costs Draftsperson / Assistant Manager (Carter Burnett, Newcastle)
25.11.2021

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