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Keoghs Insight

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Dan Oldroyd

Dan Oldroyd

Associate

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Judgment provides further confirmation of fixed costs in cases over £25,000

Client Alerts07/09/2018

Scutchings v Gibbs and Liverpool Victoria Ltd – 11th June 18
County Court in Manchester - District Judge Davies

Keoghs has successfully limited a claimant to Fixed Recoverable Costs, following acceptance of a Part 36 offer of £40,000 made by the defendant prior to allocation to track. The Court rejected the claimant’s various submissions that hourly rate costs should be allowed, which were:

  1. Because the claim was notified on the Portal by mistake;
  2. On the basis of the track that the claim would have been allocated to under CPR 46.13(3);
  3. Acceptance of the Part 36 offer created a contract to pay hourly rate costs rather than fixed recoverable costs; 
  4. The case satisfied exceptional circumstances under CPR 45.29J.

Background

The claim arose out of a road traffic accident which occurred on 3 August 2013. The claimant notified the claim on the Portal in September 2013. The defendant denied liability and the claim exited the Portal. The claimant obtained medical reports from an orthopaedic surgeon, spinal surgeon, psychiatrist and neurologist. Proceedings were issued in July 2016 and following service some months later a defence was filed in January 2017. The Court sent a proposed notice of allocation to the multi-track on 30 January 2017.

At the end of December 2016 the defendant made a Part 36 offer to settle the claimant’s claim in the sum of £40,000. This offer was accepted on 19 January 2017.

Claim for costs – Standard basis or fixed?

The claimant submitted a bill of costs for standard basis, hourly rate, costs. The defendant objected contending that fixed costs applied. Upon provisional assessment, the Court found that that fixed costs did not apply and allowed costs on an hourly rate basis. The defendant challenged the provisional assessment finding, contending that fixed recoverable costs applied to the claim.

The defendant submitted that a three stage test should be applied in these cases, which the Court agreed was appropriate:

  1. Do fixed costs pursuant to Part III A of CPR 45.29 apply?
  2. If so, have the parties contracted out of that application by virtue of the express final provisions of the Court order?
  3. If yes, then the matter rests there. If not, then can the claimant seek to argue exceptional circumstances relief pursuant to CPR 45.29J?

Arguments at detailed assessment

  1. The claimant submitted that fixed costs do not apply as follows:
  2. The claimant put the case on the MOJ Portal by mistake;
  3. That CPR 46.13(3) applies and that the Court, where allocation has not yet taken place, can restrict the costs which are recoverable in line with the likely track it was to be allocated to;
  4. The offer was made under CPR 36.13 and not 36.20 and created a distinct term to the offer that the costs were not fixed. A binding contract to pay standard basis costs was created;
  5. That exceptional circumstances exist for the Court to allow the claimant to escape fixed costs under the discretion the Court has in CPR 45.29J

Court’s Ruling

In considering the matter the Court found that following the defendant’s three stage test, fixed costs did in fact apply to the matter. In response to the claimant’s arguments, the Court found as follows:

  1. There was insufficient evidence to support the submission that notification of the claim on the Portal was a mistake. The bill of costs shows a considerable amount of time was spent considering the case prior to uploading the CNF. 2. CPR 45 is a self-contained code and the submission to assess according to track under CPR 46.13(3) is unsustainable and does not fit with that code. The Court noted that CPR 46.13(3) deals with restriction of costs and not the increase in costs that was being sought. 
  2. CPR 36.13(1) and CPR 36.13(3) specifically create a regime of those costs subject to CPR 36.20 namely where the costs are not fixed. CPR 36.20 applies where a claim no longer continues under a Protocol.
  3. The Court found no exceptional circumstances exist and this Rule was not there to overcome a lacuna in the Rules, if it was that.

Conclusion

The decision is further confirmation that fixed costs apply to cases that settle over £25,000, prior to allocation to the multi-track that started in the Portal in accordance with the decision of Qader & Ors v Esure Ltd [2016] EWCA Civ 1109 and subsequent amendments to CPR 45.

Exceptional circumstances is a high threshold and it did not exist in this case where expert reports from four disciplines had been obtained. Claimants should take care in considering the value of a claim before notifying on the Portal.

It provides further certainty to defendants when making Part 36 offers that fixed recoverable costs apply to such cases.