Resiling from an admission: A recap in Shah v London Borough of Barnet [2021] EWHC 2631 (QB) - Rochelle Powell, Temple Garden Chambers

22/12/21/ In refusing the Defendant’s application for permission to resile from an admission, Master Stevens sets out a helpful and detailed overview of the relevant Civil Procedure Rules (‘CPR’) and case authorities.

Background

The Claimant had been injured when he fell over an uneven pavement, the Defendant was the relevant highway authority. The Defendant initially denied liability but later wrote stating that “liability will no longer be in issue”. Twelve months later and after proceedings had commenced, the Defendant made an application to resile from that admission.

The Law

CPR 14.1A(3)(b) and CPR 14PD.7 set out the criteria that the court must consider when determining an application to resile from an admission after the commencement of proceedings. In particular, 14PD7.2 states that:

In deciding whether to give permission for an admission to be withdrawn, the court will have regard to all the circumstances of the case, including –

(a) the grounds upon which the applicant seeks to withdraw the admission including whether or not new evidence has come to light which was not available at the time the admission was made;

(b) the conduct of the parties, including any conduct which led the party making the admission to do so;

(c) the prejudice that may be caused to any person if the admission is withdrawn;

(d) the prejudice that may be caused to any person if the application is refused;

(e) the stage in the proceedings at which the application to withdraw is made, in particular in relation to the date or period fixed for trial;

(f) the prospects of success (if the admission is withdrawn) of the claim or part of the claim in relation to which the admission was made; and

(g) the interests of the administration of justice.

Master Stevens noted that “all the circumstances” also included consideration of the overriding objective. He also referred to a number of case authorities, in particular Cavell v Transport for London [2015] EWHC 2283 (QB), which was found to have “significant similarities” with the facts of the instant case.

Decision

The court considered each of the grounds within the Practice Direction to perform a balancing exercise of all the circumstances of the case and the overriding objective. In refusing the Defendant’s application to resile, Master Stevens held that:

“it would reflect poorly on the justice system to allow the defendant another last “bite at the cherry” in respect of liability arguments… An important component of the overriding objective is compliance with rules and practice directions and therefore with protocols. The purpose of the pre-action protocols is to narrow issues and resolve disputes, or parts of them, wherever possible without having to engage expensive court resource. If issues are to be re-opened at a later stage there need to be very good reasons as the overriding objective makes clear.”

Comment

Practitioners should think carefully before making an admission and the appropriate time do so. It is important to obtain and consider all relevant information for the purposes of liability arguments before an admission is made. As with any application, the conduct of the parties and any prejudice they may face will be of paramount importance.

Image ©iStockphoto.com/pcatalin

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

Image ©iStockphoto.com/picha

QOCS and Set Off: Supreme Court ruling in Ho –v- Adelekun [2021] UKSC 43 - Rochelle Powell, Temple Garden Chambers

26/11/21. This appeal considered whether Qualified One Way Costs Shifting (‘QOCS’) could in any way constrain a defendant’s liberty to seek, or the court’s discretionary power to permit, a set-off between opposing costs orders. Overturning the Court of Appeal decision, the Court held that the setting off of costs against costs is a form of enforcement covered by the QOCS provisions. It was therefore precluded where a defendant’s costs exceeded the total of any order for damages and interest in favour of the Claimant.

Background

The appellant, Ms Adelekun, was injured in a road traffic accident on 26 June 2012 for which she alleged the respondent, Ms Ho, was liable. Ms Adelekun’s claim included damages for personal injuries. Ms Ho did not admit liability, but her solicitors offered to pay Ms Adelekun £30,000 in settlement of her claim in what was described as a “Part 36 Offer Letter”. In that letter, Ms Ho also offered to pay Ms Adelekun’s costs, such costs to be subject to detailed assessment if not agreed, if the offer was accepted. The offer was accepted and the parties agreed that Ms Ho was liable to pay Ms Adelekun’s costs of the claim. However, there was a dispute as to the basis of assessment for those costs: Ms Ho contended that Ms Adelekun’s costs were limited to fixed costs whereas Ms Adelekun argued that she was entitled to recover her costs assessed on the standard costs basis. The matter came before the Court of Appeal. It was held that only fixed recoverable costs were payable and Ms Ho was awarded the costs of the appeal. Ms Ho asked the Court if she could set off her obligation to pay Ms Adelekun the fixed recoverable costs for the claim against the much larger costs liability that Ms Adelekun owed her for the assessment dispute.

It was accepted by the parties that the QOCS scheme applied and that the claim concluded by way of an acceptance of a CPR Part 36 offer; there was no “order for damages” as within the meaning of the QOCS regime. However, the Court of Appeal held that set-off was not a form of enforcement and that the court did have power to order set-off (following the decision in Howe v Motor Insurers’ Bureau [2020] Costs LR 297), exercising it discretion in Ms Ho’s favour.

Judgment

The unanimous decision of the Supreme Court was that under the true construction of the QOCS regime, set off was a form of enforcement. It was made clear that [34]:

“Rule 44.14 does not in terms operate as a total ban of set-off of opposing costs orders. It just imposes a monetary cap… That will amount to a ban only if there are no orders for damages or interest (as in the present case) or if the aggregate amount of damages and interest has already been used up by other means of enforcement.”

Further, the Court held that [42-43]:

“QOCS is intended to be a complete code about what a defendant in a PI case can do with costs orders obtained against the claimant… we do not consider thatthe well-established jurisdiction to direct set-off of costs against costs under rule 44.12 is displaced by the QOCS scheme, provided that there is an order for damages or interest and that the headroom provided by that order has not been exhausted by other means of enforcement.”

Accordingly, the appeal was allowed.

Conclusion

This decision has significant implications for those all involved in the conduct of personal injury litigation, given that a large number of them settle.

However, the comments of the Supreme Court should be noted: it was acknowledged that the decision “may lead to results that appear anomalous” and, at the outset of their judgment, the Court questioned the “appropriateness of a procedural questions of this kind being referred to this court for determination”. It will now be a matter for the Civil Procedure Rule Committee to determine the “true” construction of the QOCS scheme and what, if any, action to take.

Image ©iStockphoto.com/BrianAJackson