Costs implications for the unwary

The Court of Appeal in Tibbles v SIG PLC (T/A Asphaltic Roofing Supplies) [2012] EWCA Civ 518 highlighted the implications of allocation to track and the implications on costs and thereafter the importance of timely applications if seeking to vary costs orders under CPR 3.1 (7).

In the case of Tibbles, a low value claim for personal injury following an accident at work, the Court allocated the case to the small claims track on the papers.  The claimant’s solicitor disputed the allocation seeking the matter be reallocated to the fast track, with the defendant taking a neutral position.  In light of the application, the district judge re-allocated the matter to the fast track.  The claimant did not seek an order from the Court in relation to the costs incurred before allocation and as such CPR 44.11 applied, in that the costs up to and including re-allocation would be treated under the small claims track.  The matter proceeded to trial where the claimant obtained a costs award in his favour. 

The defendant took issue with the claim for fast track costs throughout, submitting that small claims applied up to allocation.  The claimant at costs assessment stage made an application to seek an Order under CPR 3.1 (7) or under the slip rule in CPR 40.12 to vary the Order and reallocate the matter to the fast track; to dis-apply the small claims track costs; and replace with costs under the fast track.  The District Judge took the view he had the jurisdiction to vary the Order.  

This order was set aside on appeal in the County Court and the claimant appealed to the Court of Appeal. The Court of Appeal considered the case law in respect of 3.1(7) and stated:

"the jurisprudence has laid down firm guidance as to the primary circumstances in which the discretion may, as a matter of principle, be appropriately exercised, namely normally only (a) where there has been a material change of circumstances since the order was made, or (b) where the facts on which the original decision was made were (innocently or otherwise) misstated." (Our emphasis)

The Court of Appeal dismissed the appeal finding that neither of the reasons for the appropriate exercise of discretion applied.  The claimant’s failure to seek to vary the order at the time of re-allocation was prejudicial to the defendant who was entitled to place reliance upon the Order as the action progressed.  

Due to the omission here, as seen at paragraph 47 of Tibbles, the claimant’s £20,000.00 of pre allocation costs were assessed under the small claim’s track rules and allowed at a fraction of the amount incurred.  

The Court further stated that its power to vary or revoke an order under CPR 3.1 had to be exercised timeously.  In Tibbles the order to re-allocate was made on 11 December 2008; the issue taken by the defendant in the points of dispute was raised on 15 June 2009; and the application to vary the Order under CPR 3.1(7) was made on 23 October 2009.  However, this short period of only 10 months was not seen as sufficiently ‘prompt’.

Rix LJ stated that there was room for a ‘prompt recourse’ to the Court seeking to vary an Order under CPR 3.1(7), however, he continued at paragraph 42 to address the term ‘prompt’ and stated that:

"..the Court would be unlikely to be prepared to assist an applicant once much time had gone by. … Promptness in application is inherent in many of the rules of Court: for instance in applying for an appeal, or in seeking relief against sanctions."

Further, it is submitted that the case of Tibbles has wide ranging costs implications for the unwary and not just in relation to allocation or reallocation to track.

For example where interim Orders are made that are silent as to costs, then pursuant to CPR 44.10, no party is entitled to the costs of the application, except where 44.10 (2) applies.  Therefore, should the omission be noticed (at some time later or at end of the case), if neither of the parties applies to vary the Order in good time then they will not be successful in a late application seeking an entitlement to costs.

As LJ Rix said in Tibbles,  

“There is nothing in civil procedure about which solicitors can justifiably be expected to know as much, as matters of costs.”