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Fixed costs - more from the Court of Appeal on their use in pre-action disclosure applications as well as a forthcoming change to the rules around operation of the regime

Pre-action disclosure applications are commonplace in EL and PL claims, but for some time parties have disputed whether fixed recoverable costs ("FRC") or hourly rate costs should be recoverable in those cases that start out under the EL/PL Protocol, but which then drop out of the Portal by the time that the application has been made. In Sharp v Leeds City Council (2017), the Court of Appeal resolved the dispute.

In the third judgment that concerned the operation of the FRC regime in recent months, the Court of Appeal held that, where a pre-action disclosure ("PAD") application was made in a claim that had been brought under the EL/PL protocol but subsequently fell out, then FRCs applied. Charlotte Mail looks both at the implication of the judgment and at a forthcoming change to the rules around FRCs which has been brought about by the Court of Appeal's recent judgment in Qader v Esure (2016)


FRC have existed in most classes of personal injury claim up to a claims value of £25,000 for approaching four years now. Despite that, there have been three occasions in the last four months, when the Court of Appeal have been asked to adjudicate over how the FRC regime operates, the most recent occasion being in the case of Sharp v Leeds City Council (2017) which was heard at the beginning of this month.

The appeal focused on whether FRCs applied to a PAD application in a case that started out under the EL/PL Protocol, but subsequently fell out of the Portal and became subject to the Pre-action Protocol for Personal Injury Claims ("PAP"). Whilst the claim was a PL claim, the outcome potentially affects all claims starting out in the Portal, including RTA claims, where PAD applications are subsequently made.

The claimant injured herself after she tripped and fell on allegedly defective paving maintained by the defendant. The claimant submitted her CNF to the Portal, only for it to exit for reasons which were disputed, but which were irrelevant for the purpose of the appeal. The claim continued under the PAP. The defendant failed to provide pre-action disclosure and consequently the claimant made a PAD application.

At first instance, District Judge Heppell summarily assessed the costs on an hourly rate basis in the sum of £1,250. On appeal, His Honour Judge Saffman overturned that decision and concluded that the FRC regime applied to the application. Consequently, the costs payable were reduced to £305. The claimant appealed to the Court of Appeal.

Whilst the decision will affect EL, PL and RTA cases, it should be remembered FRCs do not apply to disease claims once the claim exits the Portal and that a PAD application in those claims would not be subject to FRCs.

The Court of Appeal's most recent judgment

As in the two previous judgments made by the Court of Appeal in respect of the FRC regime, Bird v Acorn (2016) and Qader v Esure (2016), Briggs LJ delivered the lead judgment of the court. Dismissing the appeal, he said that:

"…the fixed costs regime plainly applies to the costs of a PAD application made by a claimant who is pursuing a claim for damages for personal injuries which began with the issue of a CNF in the Portal pursuant to EL/PL Protocol but which at the time of the PAD application, is no longer continuing under that Protocol."

His conclusion was supported he said by the clear wording of both CPR r.45.29A, which states that claims that start out under the Low Value EL/PL and RTA Protocols are governed by Section IIIA of Part 45, unless they are subsequently allocated to the multi-track (of which more later) and CPR r.45.29D, which states that only FRCs are then recoverable in those cases. In claims that entered the Portal, it was, said Briggs a "…plain object and intent of the fixed costs regime" for FRCs to apply to all subsequent stages "…subject only to a very small category of clearly stated exceptions".

Having regard to the description of interim applications for the purpose of CPR r.45.29H as being "an interim application…in a case to which this Section applies", the link between the PAD application and the claim being brought meant it was entirely "apposite" for FRCs to apply in PAD applications.

News of a rule change affecting the FRC regime

As a direct consequence of another Court of Appeal judgment on the FRC regime, the CPR is to be changed in April. In Qader v Esure (2016), it had been argued that the rules clearly stated that FRCs should apply in all case that started out under the RTA Pre-Action Protocol, even those ones that were subsequently allocated to the multi-track. However, Briggs LJ held that it had never been the government's intention for FRCs to apply in cases that were worth over £25,000 and that the wording of the CPR should be amended.

Briggs' judgment has brought about the amendments which will be introduced on 6 April 2017 as part of the 88th update of the CPR, so that after "45.29J" in rule 45.29B and rule 45.29D, the words"…and for so long as the case is not allocated to the multi-track" will be inserted.

The impact of the rule change and the judgment

As we highlighted at the time of our update examining the judgment in Bird v Acorn and Qader, the outcome in both of those cases created some uncertainty, particularly in those cases that:

(i)            start in the Portal, but do not continue under it; and

(ii)           settle before allocation; and

(iii)          are likely to have been allocated to the multi-track.

The forthcoming rule change does not directly address the question as to whether FRCs or hourly rates should apply to those cases. However, paragraph 55 of Briggs' judgment in Qader seems to promote the notion of certainty and predictability under the FRC regime:

"To require parties to guess, or a court decide, whether a case which settled prior to allocation was or was not subject to fixed costs would introduce a damaging and unnecessary degree of uncertainty into a scheme which depends upon its predictability for its contribution towards the proportionate, speedy and effective disposal of civil proceedings"

Viewed against Briggs' words, it seems that there was a deliberate intention rather than oversight in Qader not to specifically address the type of claim identified above and defendants should therefore be maintaining that until a case is allocated to the multi-track only FRCs should be recoverable.

Similarly, following the judgment in Sharp, defendants should where they can seek to ensure that the costs of the PAD application are "assessed" at the level of FRC provided for in the rules and not reserved, as if costs were reserved and the substantive claim allocated to the multi-track, then the claimant may then seek to then argue that they should recover costs on an hourly rate basis for the PAD application.

Indeed, that holds true for any application made pre-litigation where costs are sought. Where costs are awarded against the defendant, then those costs should be assessed there and then, hopefully at the level of FRCs. Where they can, defendant should try to avoid orders being made for "costs in the case", or "costs reserved", as where those types of costs orders are made, there is a danger then that where those cases go on to be allocated to the multi-track, hourly rate costs may be claimed and recovered.

The Sharp judgment should lead to fewer PAD applications in future as the level of costs on offer means that there will be less of an incentive for claimant lawyers to issue them which will create welcome respite. However, we expect there to be a brief period of uncertainty as practitioners absorb yet another another Court of Appeal decision on interpretation of the FRC regime.

The Court of Appeal does seem to indicate that in certain, unspecified circumstances, parties in PAD applications could claim an amount of costs greater than FRCs, by making an application seeking to persuade the court that the case contains 'exceptional circumstances' for the purpose of CPR r.45.29J. The Court does concede however that the "…frequency with which defendants fail to comply with their Protocol disclosure obligations may make it difficult to pass the exceptional circumstances hurdle" in r.45.29J.

This case further highlights the need for Lord Justice Jackson to review the existing FRC regime as he considers extending FRCs into all areas of litigation up to £250,000. The introduction of the FRC regime has created significant satellite litigation and should the regime be extended further there is a danger that there will be further satellite litigation if the kinks are not ironed out beforehand.


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This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.