Fixed costs – No exceptional circumstances where pre-allocation Part 36 offer accepted in time.
The Claimant brought an action for damages for personal injury arising from a road traffic accident on 13 December 2018. A CNF was submitted on 5 June 2019, but the matter was withdrawn from the Portal owing to the Defendant seeking to investigate liability further. A number of medical reports were obtained, and in view of the impending expiry of limitation, proceedings were issued. The Claim Form was pleaded at up to £100,000.00, and a Notice of Proposed Allocation to the Multi Track was issued. Pre-allocation the Defendant made a Part 36 offer in the sum of £135,000.00. The Claimant approached the Defendant to contract out of fixed costs, however, no response was received, and the Claimant accepted the offer on 26 July 2022.
On 28 July 2022, the case was allocated to the Multi-Track and was listed for a CCMC on 4 November 2022. As the case had settled by way of the Part 36 acceptance, the CCMC did not proceed.
The Court was asked to consider and determine two separate issues: –
Firstly, whether the Court had jurisdiction under CPR 36.20, where Part 36 offer is accepted in time, to consider CPR 45.9J (exceptional circumstances), and secondly, if CPR 45.29J was available, whether the instant case demonstrated “exceptional circumstances” to make an order under that provision.
Submissions made
Issue 1- can 45.29J apply where Part 36 offer is accepted in time.
Claimant
The Claimant sought to sidestep the judgment of McGreevy-v-Kiramba [2022] EWHC 2561 (SCCO) where Costs Judge Leonard found that there was no reference in CPR 36.20 (2) to CPR 45.29B, 45.29J or 45.29C, it merely conferred the right to recover the fixed costs in Table 6B. The Claimant relied on obiter comments by Coulson LJ in Hislop-v-Perde [2018] EWCA Civ 1726 that in an exceptional case of delay, it may be possible for the Claimant to escape the fixed costs regime via 45.29J.
Defendant
The Defendant sought to rely on McGreevy.
Issue 2-use of 45.29J to escape fixed costs
The Claimant argued that the case fell within the test of exceptional circumstances and provided six grounds to support this contention (a) it would have been a multi-track allocation, (b) the Claimant had suffered a permanent disability (c) Ogden tables were required, (d) There were three experts and more expected, (e) this was a complex case likely to require a 3 day Trial, (f) value. Readers will recognise the basis for these arguments from older fixed cots cases dealing with exceptional circumstances.
The Defendant relied upon Hislop that a test requiring ‘exceptional circumstances’ is already a high one, and also Ferri v Gill [2019] EWHC 952, that for comparator purposes, the Court should only consider other cases that had existed, and merely exiting from the Portal did not render a case exceptional.
In giving judgment, District Judge Carter found that: –
Issue 1
The Court found that Costs Judge’s Leonard’s analysis was correct. The Claimant was unable to rely on 45.29J given that the provisions of CPR 36.20 were clear, the only costs recoverable are those to be found within Table 6. Other elements of the CPR were excluded from 36.20 and the Court found that had it been the rule drafters’ intention that CPR45.29J should be available under 36.20, it would have been included therein. The Judge noted in particular that the Claimant’s Solicitor had attempted to contract out of fixed costs, which suggested they were aware that acceptance pre-allocation would lead to fixed costs.
It is important to note that the Judge went on to say that whilst possibly harsh, this finding was in accordance with the longstanding fixed cost ‘swings and roundabouts’ principles.
Issue 2
Despite the finding on Issue 1 in respect of the non-availability of 45.29J in this instance, the Court considered the various points raised by the Claimant in support of the exceptional circumstances point and found that the matter did not meet the “high bar” test of exceptionality. Later allocation was not in itself exceptional in light of the basket of cases that must be used as comparators; complexity relating to permanent disability, Ogen tables, experts or trial length were not exceptional; nor was the value. This conclusion is interesting as, based on pre-existing examples of successful exceptionality cases, these arguments ticked several of the boxes and one might wonder how much the issue of certainty was in the Judge’s mind.
Conclusion
Be aware of Part 36 and the interplay, or lack of thereof, with fixed costs. Consider the timing of offers where you lack allocation, yet it is impending and brings with it a potentially significant costs burden.
This is also another example of the Court interpreting the fixed costs rules in the interest of certainty, proportionality and as part of a “swings and roundabouts” approach.
In terms of the test for exceptional circumstances, whilst this is not a binding decision, it gives an indication of the Court’s reluctance to allow in excess of the fixed costs.
How can PIC help?
As costs specialists with many years of experience, PIC are not just experts in resolving costs at the conclusion of a case but are also well placed to provide costs advice whilst a matter is ongoing to help identify, and mitigate, risks to recovery such as this before they manifest. It is absolutely imperative when settling a case to consider the costs implications of your settlement at that time, and PIC are always happy to assist in technical aspects of costs.
Jackie Woods, Costs Consultant
22.08.2024