Fixed Costs - Shannon Eastwood, Atlantic Chambers

There are many types of fixed costs but this paper shall focus on:

1. The fixed costs for RTA, EL, PL claims under the Portal;

2. The escape provisions for cases that fall out of the Portal;

3. The fixed costs applicable for those cases; and

4. The contentious issues which are likely to arise.

Portal Costs

As part of the ‘Jackson reforms’, the following significant changes were made to the fixed costs regime:

1. The maximum value of claims under the ‘Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents’ was increased from £10,000 up to £25,000 where the claim notification form was sent on or after 31^st July 2013.

2. Accidents involving employer’s liability (“EL”) or public liability (“PL”) on or after 31st July 2013 were brought within the Portal with their own ‘Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability And Public Liability) Claims’.

3. Fixed Costs were introduced for all Fast Track cases which exit the Portal and either settle or proceed to judgment. If the case does not start in the protocol, however, it will not attract fixed costs.

Transitional provisions

The courts will continue to assess costs on the standard basis for any claims that cannot start within a Protocol, including:

1. Accidents before 31st July 2013 in EL/PL claims;

2. Accidents before 31st July 2013 in RTA claims valued in excess of £10k;

3. RTA cases worth less than £10k where the CNF was submitted before 31st July 2013; and

4. Disease claims where the letter of claim was sent before 31st July 2013.

Exceptions

The EL/PL Protocol does not apply to a claim—

(1) where the claimant or defendant acts as personal representative of a deceased person;

(2) where the claimant or defendant is a protected party as defined in rule 21.1(2);

(3) in the case of a public liability claim, where the defendant is an individual (‘individual’ does not include a defendant who is sued in their business capacity or in their capacity as an office holder);

(4) where the claimant is bankrupt;

(5) where the defendant is insolvent and there is no identifiable insurer;

(6) in the case of a disease claim, where there is more than one defendant;

(7) for personal injury arising from an accident or alleged breach of duty occurring outside England and Wales;

(8) for damages in relation to harm, abuse or neglect of or by children or vulnerable adults;

(9) which includes a claim for clinical negligence;

(10) for mesothelioma;

(11) for damages arising out of a road traffic accident (as defined in paragraph 1.1(16) of the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents).

The RTA Protocol has the same exceptions as items (1), (2) and (4) above and also does not apply to a claim:

1. in respect of a breach of duty owed to a road user by a person who is not a road user;

2. made to the MIB pursuant to the Untraced Drivers' Agreement 2003 or any subsequent or supplementary Untraced Drivers’ Agreements;

3. where the defendant’s vehicle is registered outside the United Kingdom.

Otherwise, please note that ‘public liability’ is drafted very widely and this means that all PI claims against a person other than the claimant’s employer “arising out of a breach of a statutory or common law duty of care” will fall within the Portal. In reality, this is likely to mean every PI claim below £25k.

Disease cases fall within the Portal unless there is more than one Defendant. When a disease case exits the Portal, however, they will not attract fixed trial costs as discussed further below.

Summary of admission to portal

Subject to the exceptions listed above the transitional provisions can be summarised as follows:

Summary of Fixed Portal Costs:

Road Traffic Accidents

Employer’s Liability and Public Liability Claims

NB re stage three – the additional advocate’s costs for conducting a stage three hearing is £250 for RTA/EL and PL portals, thus a total fee of £500 for an oral stage three hearing.

There is also an additional fixed fee for advice where the Claimant is a child - £150 plus VAT

All fixed costs above unless otherwise stated are exclusive of VAT.

Disbursements recoverable under the Protocols

The ability of claimant solicitors to avoid or minimise the effects of the restrictive fixed costs regimes that apply to claims covered by the 2013 RTA Protocol and the EL/PL Protocol by effectively outsourcing work, for example to a barrister, and then seeking to recover the cost as a disbursement had been a key area of contention prior to the new rules being implemented. However, the new CPR r.45.19 and CPR r.45.29I provide only a very limited list of recoverable disbursements, including:

• The cost of obtaining medical records (in so far as is provided for by the relevant Protocol);

• The cost of obtaining medical reports (in so far as is provided for by the relevant Protocol);

• The cost of obtaining a non-medical expert report (in so far as is provided for by the relevant Protocol). For example in RTA claims the cost of obtaining an engineer's report may be recovered;

• Court fees; and

• Any other disbursement that has arisen due to a particular feature of the dispute (see CPR 45.19(2)(e)).

In previous fixed costs regimes, courts have been reluctant to allow costs under "catch all" provisions such as those listed at para.2(e) above, for fear of satellite litigation. It remains to be seen whether and to what extent additional disbursements will be allowed in relation to particular types of cases.

The self-explanatory para.7.10 of the 2013 RTA Protocol and para.7.8 of the EL/PL Protocol state that:

• "In most cases under this Protocol it is expected that the claimant's legal representative will be able to value the claim. In some cases with a value of more than £10,000, an additional advice from a specialist solicitor or from counsel may be justified where it is reasonably required to value the claim."

The Protocols ¹ and the fixed costs rules² allow for a sum equal or equivalent to the Stage 3 Type C fixed costs in respect of this additional advice, which is currently £150 (plus VAT).

PORTAL Escape Provisions

There are 11 means of escape specified in each RTA, EL/PL Protocol and the claimant may give written notice that the claim will no longer continue under the relevant Protocol in the circumstances below. Claims which no longer continue under this Protocol cannot subsequently re-enter the process.³

It is important to understand these escape provisions as parties will often have an argument about whether the court considers that the claimant acted unreasonably under CPR 44.24 in issuing Part 7 proceedings. If so, the Claimant can be limited to the costs recoverable under the Portal and may even be penalised by paying the Defendant’s costs.

Where the situations below apply the claimant must give notice to the defendant that the claim will no longer continue under this Protocol. Unless the claimant’s notice is sent to the defendant within 10 days after the expiry of the relevant period then the claim will continue under the Protocol. ⁴

1. The defendant fails to pay the Stage 1 fixed costs within 10 days after receiving the Stage 2 Settlement Pack. ⁵

2. The claimant requests an interim payment of £1,000 and the defendant fails to pay the full amount within 10 days of receiving the Interim Settlement Pack. ⁶

3. The claimant requests an interim payment of more than £1,000 and the defendant fails to pay at least £1,000 within 15 days of receiving the Interim Settlement Pack.⁷

4. The claimant requests an interim payment of more than £1,000, the defendant fails to pay the full amount and the Claimant wishes to persist with an application for in interim payment. Please note, however, the Claimant has to beat the Defendant offer for an interim payment in order to recover anything more than Stage 2 fixed costs in the Part 7 proceedings. ⁸

The Claimant may also choose not to continue with the Protocol in the following circumstances, although there do not appear to be the strict time limits for electing to do so:

5. The claimant is a child and an interim payment is reasonably required. ⁹
   
   

6. The claim for personal injury damages has settled and there remain vehicle related damages (‘the additional damages’) being dealt with by a third party separate from the claim. In these circumstances, the claimant may start Part 7 proceedings in relation to the additional damages.¹⁰ These additional damages, however, must exceed £10,000 to be allocated to the Fast Track and recover costs.
   
   

7. The defendant fails to pay the following within 15 days of receiving the Court Proceedings Pack (Part A and Part B) Form from the claimant: ¹¹

   1. the final offer of damages made by the defendant in the Court Proceedings Pack (Part A and Part B) Form less any –

      1. deductible amount which is payable to the CRU; and

      2. previous interim payment;

   2. any unpaid Stage 1 fixed costs in rule 45.18;

   3. the Stage 2 fixed costs in rule 45.18; and

   4. the disbursements in rule 45.19(2) that have been agreed. Where the amount of a disbursement is not agreed the defendant must pay such amount for the disbursement as the defendant considers reasonable.

8. Where there are complex issues of fact or law in relation to the vehicle related damages the claimant may give notice to the defendant that the claim is unsuitable for this Protocol¹²

Finally, the claim will automatically no longer continue under the Protocol in the following circumstances and the claimant may start Part 7 proceedings:

9. The defendant does not respond to the Stage 2 Settlement Pack and make an offer within 15 days (‘the initial consideration period’) the claim will no longer continue under the Protocol and the claimant may start proceedings under Part 7 of the CPR.¹³

10. The defendant gives notice to the claimant within the initial consideration period (or any agreed extension that the defendant— (a) considers that, if proceedings were started, the small claims track would be the normal track for that claim; or (b) withdraws the admission that the defendant caused some loss to the claimant, although the nature and extent of which does not have to be admitted.¹⁴

11. Where a party withdraws an offer made in the Stage 2 Settlement Pack Form after the total consideration period or further consideration period, the claim will no longer continue under this Protocol

FIXED COSTS FOR Cases that exit the Portal

The applicable fees for cases that have left the Portal are set out at CPR45.29 onwards as follows:-

Escape Clause

It is possible for a claimant to apply under CPR r.45.29J for an order for costs exceeding the Fixed Recoverable Costs but only if the court “considers that there are exceptional circumstances making it appropriate to do so”.

Further, to "escape" the Fixed Recoverable Costs a claimant must, on assessment, succeed in recovering an amount which exceeds the applicable Fixed Recoverable Costs by 20% or more; if they fail to do so, the claimant will be liable for the defendant's costs of dealing with that application. In addition, the claimant will only recover the lower sum of either the assessed costs or the Fixed Recoverable Costs (see CPR 45.29K).

Interim Applications

CPR r.45.29H provides for additional Fixed Recoverable Costs in respect of interim applications. Essentially, the fixed costs amount to the court fee, disbursements as listed in CPR r.45.29I and a sum up to £250 (plus VAT). This is broken down as £125 in respect of the legal representative's costs (i.e. half of the Type A costs) and £125 in respect of the advocate’s fee (i.e. half of the Type B costs). These costs are fixed irrespective of the type or value of the claim and, therefore, apply to all RTA, EL, PL claims from £1,000 to £25,000.

Disbursements

In addition to the costs set out above, under the Fixed Costs regime the claimant may only recover the following disbursements as prescribed by CPR r.45.29I, namely:

1. "the cost of obtaining medical records and expert medical reports as provided for in the relevant Protocol;

2. the cost of any non-medical expert reports as provided for in the relevant Protocol;

3. the cost of any advice from a specialist solicitor or counsel as provided for in the relevant Protocol;

4. court fees;

5. any expert's fee for attending the trial where the court has given permission for the expert to attend;

6. expenses which a party or witness has reasonably incurred in travelling to and from a hearing or in staying away from home for the purposes of attending a hearing

7. a sum not exceeding the amount specified in Practice Direction 45 or for any loss of earnings or loss of leave by a party or witness due to attending a hearing or to staying away from home for the purposes of attending a hearing;

8. any other disbursement reasonably incurred due to a particular feature of the dispute.

In a claim started under the RTA Protocol only, these disbursements may also include the following costs:

(a) an engineer's report;

(b) a search for the records of the –

(i) Driver Licensing Authority;

(ii) Motor Insurance Database "

These disbursements are largely self-explanatory and should be generally uncontroversial. The most notable exception, however, is sub-section (c) “the cost of any non-medical expert reports as provided for in the relevant Protocol”. According to the Protocol a report from a ‘non-medical expert’ is recoverable where it is reasonably required to value the claim.

Both the RTA Protocol and the EL/PL Protocol make provision for an additional advice on quantum where the value of the claim exceeds £10,000 and the advice is reasonably required. The Protocols, however, are silent as to whether an advice on liability may be recoverable.

This omission is not surprising from the Protocol given that liability must have been admitted in claims that progress through the Portal. Yet the rules governing ‘non-medical expert reports’ in cases which exit the Portal are the same. This means that there may be scope for arguments about whether an advice on liability, or a non-medical expert’s report which only deals with liability, is reasonably required to value the claim. Similarly, there is no provision within the new scheme for the cost of counsel drafting any pleadings. Presumably, therefore, these costs must be met out of the fixed profit costs.

The Defendant's Costs

In a case which falls within the Fixed Recoverable Costs scheme any costs order made in the defendant's favour will be "capped" in accordance with CPR r.45.29F, rather than being fixed. Essentially, the defendant’s costs are assessed on a standard basis and the recoverable costs are then capped at the amount of fixed costs that the claimant would have received had they been successful after the point at which their liability for costs has arisen. In reality, this will have the same effect as awarding fixed costs in the majority of cases.

It is important to bear in mind that Qualified One Way Costs Shifting (QOCS) under CPR r.44.13 will also apply to the vast majority of cases where fixed costs apply. The one exception that springs to mind is a disease case where the claimant has entered into a pre-commencement funding arrangement before 1^st April 2013 but the letter of claim has not been sent until after 1^st July 2013.

It is outside the scope of this paper to consider QOCS in detail but it is worth noting that under CPR r.45.29F(10) the defendant's costs will not be capped if the claimant loses the protection of QOCS by virtue of one of the exceptions in CPR r.44.15 and r.44.16. For example, where the claim is struck out on the basis that there are no reasonable grounds for bringing the proceedings or if the claimant is found to be fundamentally dishonest then neither QOCS nor fixed costs caps will apply.

Conditional Fee Agreements

Cases where the conditional fee agreement ("CFA") was entered into prior to 1^st April 2013 still attract a success fee payable by the other side despite the fact that fixed costs apply. In other words, if the Claimant enters into a CFA before 1^st April 2013

The same principles apply to the recoverability of ATE insurance premiums entered into before 1^st April 2013.

In reality, the only cases which would fall under the Portal with a pre-1^st April CFA would be RTA claims worth less than £10,000 or disease claims where the letter of claim is sent after 1^st July 2013.

CASE LAW

The Portal system and the rules above are still in their infancy and, as expected, there is still a limited amount of case law available on these issues. Nevertheless, practitioners ought to be aware of the following cases, which are not included in the official law reports but available on Lawtel and Westlaw:

1. Bostan v Royal Mail GroupLimited, Bradford County Court, 11^th June 2012

Offers made within the Portal cannot be accepted after the case has left the Protocol and the time for acceptance has lapsed.

2. Glazer v Reid, Liverpool County Court, 2^nd March 2012

D offered nothing for repairs and requested an inspection. C claimed that this was a withdrawal of the admission of causation of some damage. D replied promptly confirming that causation was still admitted and the inspections was just for quantification. Court concluded that the Claimant’s actions were premature, disproportionate and, therefore, unreasonable. C costs were limited to Portal costs.

3. Ilahi v Usman, Manchester County Court, 20^th November 2012

C withdrew their Portal offer in response to a very low offer by the Defendant. On appeal HJ Platts concluded that this was unreasonable and C’s costs were limited to Portal Costs.

4. Patel v Fortis, Leicester County Court, 5^th December 2011

D filed acknowledgement of CNF one day late (supposed to be the next day after receipt of CNF). C withdrew from Portal. Judge concluded that C acted unreasonably in response to technical non-compliance with no prejudice and contrary to overriding objective. Note, the Judge emphasized that the same could not be said of a failure to make an offer on time. C limited to Portal costs but did not have to pay D’s costs.

5. Ullah v Jon, Croydon County Court, 20^th March 2013

Admission in the Portal are binding and may be relied upon in subsequent proceedings.

6. Kevan v Hamilton, Liverpool County Court, 22^nd March 2013

Credit hire claim where D raised a Copely v Lawn defence on the basis that they offered to provide a replacement vehicle. C withdrew from the Portal on the grounds on complexity. Judge concluded that C was too hasty in doing so and limited to Portal costs.

7. Greenway v Davies, Senior Courts Costs Office, 30 October 2013

In a detailed assessment on a standard basis the claimant’s costs were limited to those recoverable under stages 1 and 2 of the Pre-Action Protocol for Personal Injury Claims in Road Traffic Accidents despite the fact that, by consent, the defendant agreed to pay the claimants reasonable costs. Note the similarities to the case of O'Beirne v Hudson [2010] EWCA Civ 52 limiting the Claimant’s costs to small claims costs.

Shannon Eastwood
Atlantic Chambers