Court of Appeal Judgment in Bird v Acorn Group - Matthew Hoe, Taylor Rose TTKW
15/11/16. The Court of Appeal has handed down judgment in Bird v Acorn Group. Thousands of cases that were stayed for the appeal can now be resolved. The appeal was resolved in favour of the claimants. The appeal concerned the long-running dispute about the applicable fixed costs formula for claims that settle ahead of a disposal hearing. The specific circumstances are:
a claim is started under the RTA Protocol or the EL/PL Protocol;
the claim exits the Protocol before conclusion;
Part 7 proceedings are started;
a disposal hearing is listed (in this case promptly on transfer to the County Court at Birkenhead);
the claim settles before the disposal hearing.
The tables in CPR 45 Section IIIA set out formulae for fixed costs depending on the stage at which the claim settled. The tables are Table 6B (for RTA claims), Table 6C (for EL claims) and Table 6D (PL claims). Table 6D was the particular Table under consideration in Bird but the same conclusions apply to the other two tables. Part B in each table deals with settlements post issue. There are three stages and each has its own fixed costs formula.
The defendant argued that these claims fell into the ‘post-issue, pre-allocation’ first stage with lower fixed costs. The claimant said that they fell into the ‘post-listing, pre-trial’ third stage with greater fixed costs (approx. £2,000 per claim).
Many had differing views on what was the ‘fair’ or ‘sensible’ outcome. Inevitably, the Court of Appeal confined itself to construing the relevant rules. Crucial was the special definition of ‘trial’ in CPR 45 Section IIIA: ‘the final contested hearing’. The precise purpose of that definition is unclear, but the Court of Appeal decided that it encompassed a disposal hearing. Therefore a listing for a disposal hearing was a listing for trial, engaging the third stage.
The Court of Appeal rejected the argument that it could not be said prospectively that a disposal hearing would be ‘final’ or ‘contested’, finding that it was sufficiently certain to be so. It rejected also the argument that the stages in Part B of the tables must be passed sequentially. Therefore the absence of allocation did not restrict the claimant to the first stage.
The Court rejected the argument that if a disposal hearing were used for directions including allocation, and the claim then settled before listing for a full trial, fixed costs under the second stage would apply. Once a claim reaches the third stage, it cannot move backwards through Part B.
In a further blow to defendants, the Court said that a claim that was allocated and listed for trial simultaneously proceeded directly to the third stage, skipping the second stage.
It also follows that if a claim is disposed of at a disposal hearing, the fixed costs under Parts C and D of the tables will apply.
Some practitioners are concerned that the rules in Section IIIA implement Sir Rupert Jackson’s and the Government’s proposals in a way that was not intended. The Jackson Interim Report confirms that the three stages in Part B were derived from analysis of actual claims, divided into groups depending on the payment of court fees for allocation questionnaires and listing questionnaires. In a claim settling before a disposal hearing an allocation fee was never paid, so those cases were in the data set that gave rise to the formula for the first stage. A complementary concern is that these rules were intended for fast track cases but appear to apply to multi-track claims with a value above the fast track threshold; that issue will be considered by the Court of Appeal in Qader v Esure. That judgment is due next Wednesday.
The result throws up inconsistencies with other rules. Disposal hearings (particular in the County Court at Birkenhead) are likely to be in a block list with Stage 3 hearings and infant approvals. The preparation required is similar. All will typically be listed for 10 minutes. The advocate’s fixed costs would be £250; and yet for a disposal hearing under Section IIIA could be as much as £1,705. The trial advocacy fees in Section IIIA are similar in amount to fast track trial fees in CPR 45 Section VI, but those are specifically stated not to apply to disposal hearings – presumably with the intention that lower fees would be reasonable. Further, the fixed costs for attending an interim application hearing are only £125 under CPR 45.29H.
The main remedy for defendants following this decision is making better offers at Stage 2 under the RTA or EL/PL Protocol, or better post-exit, pre-issue Part 36 offers. That will either encourage settlement or give the defendant better protection. If such offers are accepted outside the relevant period but after listing of a disposal hearing, the defendant will benefit from the increase in fixed costs. The defendant gets assessed costs on late acceptance, capped at the difference between the fixed costs applicable when the relevant period expired and the fixed costs applicable at the time of settlement.
If the defendant is deprived of the opportunity to make an offer, or more generally, the defendant should consider whether there is an argument under CPR 45.24 that the claim should not have left the Protocol and that consequentially the claimant should only have portal costs. That point has been successfully argued in many cases, including in the County Court at Birkenhead.
Finally defendants may consider applying to set aside the default judgment or order that gave rise to the disposal hearing, undoing the trigger for greater costs. In liability admitted cases, that has not formerly been the practice. The costs of such an application are fixed under CPR 45.29H and it would pass a cost/benefit analysis if there are good grounds. Defective service and lack of statutory notice may become valuable arguments.
Taylor Rose TTKW