Fixed Costs – How to know if you’ve been caught!
Fixed costs have been around for 17 years now but we all need a refresher now and then!
This overview considers the history on which fixed costs were introduced and includes rules on fixed costs, when they apply and how and when the Court might Order other than fixed costs.
Part 45 of the Civil Procedure Rules covers fixed costs and sets out the amounts in which, unless the Court orders otherwise, are to be allowed in respect of legal representatives’ charges.
Fixed Costs in RTA, EL and PL Claims have certainly evolved over the years and for this purpose let’s go back to the beginning!!!
The first fixed costs to come along were originally called ‘Predictable Costs’ and only related to RTA Claims. These were for RTA’s that occurred on or after 6th October 2003 and agreed damages did not exceed £10,000.00. CPR 45.11 outlined the amount of fixed costs the Solicitor would receive in these types of matters and CPR 45.12 outlined the disbursements that could also be recovered.
These Predictable Costs did not apply where proceedings had been issued, damages exceeded £10,000.00. It should also be noted there was also an exceptionality clause which remains an escape route in respect of the present fixed costs provisions.
These Predictable Costs for RTA Claims continued until the ‘Portals’ came along. This followed Lord Justice Jackson’s 2010 report and amongst a series of proposals Lord Justice Jackson recommended the introduction of fixed recoverable costs (FRC).
The first FRC Portal to come along was the RTA Portal which was introduced for accidents on or after 30th April 2010 with a value of up to £10,000.00. This was facilitated through an online portal system and were subject to reduced fees where the CNF (Claim Notification Form) was sent on or after 30th April 2013.
Thereafter, the upper limit was increased from £10,000.00 to £25,000.00 and related to whether the accident occurred on or after 31st July 2013.
It was from 31st July 2013 that protocols were introduced for low value employer’ liability and occupiers’ liability claims. Important to note that the trigger date for EL only disease claims (one Defendant) is the date of the Letter of Claim.
From 31st July 2013, if a claim fell out of the RTA, EL and PL portal, different fixed costs apply. No not hourly rates – we will come to that later!!!!
It is important to note that EL disease claims (one Defendant) that fall out of the portal are subject to normal inter parties assessed costs utilising hourly rates.
PL disease and EL disease claims with more than one Defendant together with all mesothelioma claims remain unaffected and are not subject to fixed costs. Again, these are subject to normal inter parties assessed costs utilising hourly rates.
CPR45.24(2) indicates the Court may Order the Defendant to pay no more than the fixed costs in rule 45.18 together with the disbursements allowed in accordance with rule 45.19.
The above may occur where judgment is given in favour of the Claimant, but the Court determines that the Defendant did not proceed with the process set out in the relevant Protocol. This was maybe because the Claimant provided insufficient information on the Claim Notification Form, or the Court considered that the Claimant acted unreasonably by discontinuing the process set out in the relevant Protocol and starting proceedings under Part 7 or by valuing the claim at more than £25,000.00. This was so that the Claimant did not need to comply with the relevant Protocol or in any other way that caused the process in the relevant Protocol to be discontinued or the Claimant did not comply with the relevant Protocol at all despite the claim falling within the scope of the relevant Protocol.
In relation to RTA claims CPR 45.29B indicates that subject to rules CPR 45.29F (Defendant’s costs), 45.29G (Counterclaims under the RTA Protocol), 45.29H (Interim Applications) and 45.29J (Disbursements) and for as long as the case is not allocated to the multi-track, the only costs allowed are the fixed costs in CPR 45.29C and disbursements in accordance with CPR 45.29I.
In relation to EL & PL claims CPR 45.29D indicates that subject to rules CPR 45.29F (Defendant’s costs), 45.29H (Interim Applications) and 45.29J (Disbursements) and for as long as the case is not allocated to the multi-track, the only costs allowed are the fixed costs in CPR 45.29E and disbursements in accordance with CPR 45.29I.
The Court of Appeal case of Qader & Others v Esure Ltd & Khan v McGee [2016] EWCA Civ 1109, 16 November 2016 held that fixed costs did not apply to a claim that started in the RTA Portal, which subsequently exited the portal and was allocated to the multi-track after proceedings were issued under Part 7 of the Civil Procedure Rules. It was the above case that created a Civil Procedure Rule change to add clarity to the situation which was:-
- Notification of allocation to multi-track = fixed costs only
- Formal allocation to the multi-track = hourly rates
Exceptional circumstances remains an escape route in respect of the fixed costs provisions, Case Law however, is extremely limited. The case of Carl Ferri – v – Ian Gill (2019) EWHC 952 (QB) was an RTA case (of sorts), this claim entered the portal, was removed from the portal by the Claimant’s new Solicitors and settled for £42,000.00. The Claimant’s Solicitors applied for costs to be assessed on the basis that there were exceptional circumstances making it appropriate to consider a claim for costs exceeding fixed recoverable costs. At first instance, Master McCloud found that there were exceptional circumstances. The Defendant however, successfully appealed that decision, with the High Court providing useful guidance on the threshold for “exceptional circumstances”.
The further case of Hislop v Perde & Kaur v Committee of Ramgarhia Board Leicester [2018] EWCA Civ 1726also confirmed that a Claimant could not escape fixed costs purely by the late acceptance of a Part 36 offer by the Defendant.
You may be pleased to hear, I will stop my fixed costs overview at this point, but as you can see fixed costs have now been around a while and the importance of understanding the provisions is paramount to ensure maximum costs recovery for your firm, whether it be fixed costs in relation to the RTA, EL and PL protocols or fixed costs where a claim no longer continues under the RTA, EL and PL protocols or claiming on an hourly rates basis.
How can PIC Help?
If you think your claim should not be subject to fixed costs, but are unsure then PIC can help.
Nick Tomlinson | Costs Consultant | Partners In Costs Ltd
Email: Nick.Tomlinson@pic.legal
21.01.21