Escaping Fixed Costs

The extension of the RTA fixed costs regime and new claims portal process came into effect for employer’s liability and public liability claim in July 2013 and in one fell swoop changed the landscape in respect of the recovery of costs for the majority of claims with a value of up to £25,000.  No longer was a successful Claimant able to recover costs on an hourly rate basis for the work reasonably done in the progression of the claim.  Profit costs were capped at £4280 plus 30% of damages for employers liability cases and £3790 plus 27.5% of damages for public liability cases, regardless of the extent of the actual work done to bring the claim to a conclusion.

How can fixed costs be avoided?

It is for the Claimant to decide how the claim is commenced.  It is therefore for the Claimant to decide whether a claim is appropriate for the MOJ Portal.

What is the scope of the Protocol?

Consideration should be given to whether the claim falls into the scope of either Protocol (Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims or Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents from 31 July 2013).  There are a number of exceptions to the scope of the Protocols, such as the accident not occurring in England and Wales, where the Claimant or Defendant is a protected party as defined in CPR 21.1(2) or the Defendant in a public liability claim is an individual, not acting in business capacity, say as a commercial landlord for example).

This should always be given some thought at the initial outset of the claim. If a case starts and ends in the MOJ portal there is no basis for escaping CPR 45, and in particular Part III. Even if the claim falls out of the Portal process the matter will be subject to fixed costs regardless of any protestations that the claim was submitted to the MOJ Portal in error.

What is the value of the Claim?

If the Claimant values quantum, on a full liability basis, in excess of £25,000 the claim shouldn’t be submitted to the MOJ Portal[1].  It is a given therefore that time should be spent obtaining detailed instructions from the Claimant as to the nature and extent of their injuries and financial losses at the outset of the claim, as well as the circumstances of the accident. Consider the possible future losses that could be relevant such as camouflage make up to improve the appearance of surgical scars, BUPA outlay for the use of private medical insurance, employers outlay in respect of earnings or the likely development of trauma related arthritis in serious orthopeadic injuries and the problems that can ensue. Is there a psychological injury that is likely to require CBT treatment?

It may be that a simple question results in information that supports a reasonable belief that the value of the claim is more than £25,000 and therefore exempt from the MOJ Portal. The value of claim can of course change as the claim progress and if the claim starts in the MOJ Portal but becomes multi track value then it is also reasonable for the claim to be removed from the MOJ Portal[2].

Complexity

How complex is the claim? Para 7.59 of Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims states: –

“Where the claimant gives notice to the defendant that the claim is unsuitable for this Protocol (for example, because there are complex issues of fact or law or where claimants contemplate applying for a Group Litigation Order) then the claim will no longer continue under this Protocol.”

The wording of this paragraph suggests that complexity is a reason to not submit the claim to the portal at the outset but also a basis on which to remove the claim from the portal should the claim became complex but again caution is need as para 7.59 goes on to state:-

“However, where the court considers that the claimant acted unreasonably in giving such notice it will award no more than the fixed costs in rule 45.18.”

If, upon assessment of the available evidence and information, it is decided not to submit the claim to the MOJ Portal the Pre Action Protocol for Personal Injury Claims applies and a letter of claim is sent to the Defendant to commence the clam and fixed costs do not apply. However, such a decision should not be taken lightly the Court can restrict the Claimant’s costs to fixed costs (including fixed portal costs) if it is found that the claim was unreasonable withheld or removed from the MOJ Portal.

Exceptional Circumstances

Once a claim is submitted to the MOJ Portal then fixed costs apply and only if a claim exits the portal is it possible to consider the final means of escaping the fixed costs regime –exceptional circumstances.

CPR 45.29J allows the Court to depart from the fixed cost regime stating:-

“If it considers that there are exceptional circumstances making it appropriate to do so, the court will consider a claim for an amount of costs (excluding disbursements) which is greater than the fixed recoverable costs referred to in rules 45.29B to 45.29H”.

 

The is no definition of ‘exceptional circumstances’ contained within the CPR nor is there any guidance provided as to what will be considered exceptional.

 

CPR 45.13, which relates to fixed recoverable costs in Road Traffic Accidents, is similarly phrased and both CPR 45.13 and CPR 45.29J provide a basis to depart from the usual costs position of fixed costs.

 

In Udogaranya v Nwagw[3] the Court considered what the ordinary meaning of exceptional meant by reference to the dictionary definition of ‘exceptional’ and found that exceptional meant ‘unusual or not typical’.

 

The Court (only at first instance to date) has considered what amounts to exceptional circumstances in the context of CPR 45.13 and 45.29J in several cases and it is clear that each case turns on its own facts.   Within the available case law three consistent basis of argument seem to exist. Namely those relating to conduct, unique injuries or conditions and complicated medical evidence.  A case can be exceptional due to the nature and extent of Claimant’s injuries as in Carlon v Domino’s Pizza Group Limited[4] and Yorke v Adams[5] or due to the Defendant’s conduct, as in Udogaranya v Nwagw

In Udogaranya, Master Howorth stated :-

 

“The predicted costs regime is an agreed scheme of recovery which is certain and easily calculated. This was done by providing fixed levels of remuneration which might over-reward in some cases and under-reward in others, but which is regarded as fair when taken as a whole. That is fair enough in the normal run-of-the-mill case.”

Therefore, if the case turns out not to be ‘run of the mill’ exceptional circumstances may well apply. A medical report from a neurologist may support a claim for provisional damages due to an increased risk of epilepsy leading to an application to amend pleadings to claim provisional damages or the Defendant’s conduct may be so poor that it resulted in protracted and unnecessary additional work being undertaken at each stage of the claim. Surely neither scenario is what was envisaged by the rules committee as being a typical fast track case.

 

Do not leave raising exceptional circumstances until the matter has settled and costs are being dealt with. Once you became aware that on order for exceptional circumstance may be appropriate inform the Defendant and explain your reasoning in open correspondence that can be relied upon as evidence in support of an application.  Ask the Defendant whether they agree and if not why not and if agreement can not be reached make an application to the Court supported by a detailed witness statement.

 

If the court is persuaded that exceptional circumstances exist the Court will then either summarily assess the costs or make an Order that costs are to be subject to detailed assessment[6].

 

Given the uphill struggle faced in obtaining such an Order one would think a Claimant would now be ‘home and dry’ in respect of escaping the fixed costs regime.  Alas, not.  If the Court assess costs for a sum less than 20% greater than the fixed costs, then the Court will only allow the lower of assessed costs and fixed recoverable costs and may order that the Claimant pay the costs of the assessment[7].

 

Seeking a finding of exceptional circumstances is not therefore without risk but there are cases which will fall into this category. They are likely to be exception to the rule but practitioners should be aware of the current case law to ensure that any cases that could potentially fit the mould are identified and the necessary steps are taken to lay the ground work for a successful application and an escape from the fixed costs regime.

[1]Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims para 4.1(3) and  Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents from 31 July 2013 para 4.1(3) – upper limit defined as £25,000 para 1.2(a)

[2] Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims para 5.9 and Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents from 31 July 2013 para 5.9

[3] [2010] EWHC 90186 (Costs),

[4] (unreported, Birmingham County Court 27.8.2010)

[5] (unreported, Sheffield County Court, 27.03.08)

[6] (CPR 45.29J(2)).

[7] CPR 45.29K and CPR 45.29L

Share Button