Unreasonable failure to use protocol will lead to fixed costs being awarded: CPR 44 prevails
Our Jenny Cawthorne, Costs Draftsman and GCILEx, reports on the recent Court of Appeal decision in Williams v The Secretary for Business, Energy & Industrial Strategy [2018] EWCA Civ 852.
The Court of Appeal ruled that where a matter was incorrectly run and settled outside of the EL/PL protocol, the Claimant ought to be limited to fixed Portal costs under CPR 44.
THE CLAIM
In this case, the Claimant sent Letters of Claim to the Defendant seeking damages for hearing loss incurred during the course of his employment. At no point did the Claimant attempt to use the EL/PL Protocol. The Claimant attempted to argue that there were two potential Defendants thus rendering the portal rules obsolete.
Upon receipt of the Letter of Claim, the Defendant advised that if the matter was not submitted through the Portal and the claim was ultimately settled solely against that Defendant, they would seek an order from the Court for fixed costs to be applied under CPR Part 45.24.
The claim eventually settled for £2,500, against the Defendant, by way of a Part 36 offer. During the course of the claim, the Claimant had come to the conclusion that there was no viable claim to be pursued against the other proposed Defendant.
THE ISSUE AS TO COSTS
The Claimant’s costs were submitted at £4,924.52 (if not subject to the fixed costs regime) compared to the £1,970.00 under the EL/PL Protocol.
At first instance, the Deputy District Judge found that CPR 45.24(2)(c) applied (i.e. where the Claimant did not comply with the relevant Protocol at all despite the claim falling within the scope of the relevant Protocol) and thus fixed costs should be ordered.
On Appeal, the matter came before His Honour Judge Godsmark QC who disagreed with the DDJ’s judgment. He advised that he could not read CPR Part 45.24 as applying when express conditions are not met. The claim was not brought within the Protocol and therefore there were no fixed costs. HHJ Godsmark QC concluded that the Claimant was entitled to costs to be assessed on the standard basis.
HHJ Godsmark QC did say however that, although there had to be a provisional assessment, the District Judge might well conclude that fixed costs were the appropriate sum.
COURT OF APPEAL DECISION
The Court of Appeal agreed with HHJ Godsmark QC’s decision that CPR 45.24 did not apply. The Court of Appeal, however, held that where a claim should have been started in the protocol but unreasonably wasn’t then the conduct provisions contained in CPR 44 would apply.
Speaking in the judgment, on CPR 44, Coulson LJ stated that:
“These provisions contain numerous ways in which a party whose conduct has been unreasonable can be penalised in costs (what I shall call “the Part 44 conduct provisions”). In my view, the Part 44 conduct provisions provide a complete answer to a case like this. They provide ample scope for a District Judge or a Costs Judge, when assessing the costs in a claim which was unreasonably made outside the EL/PL Protocol, to allow only the fixed costs set out in the EL/PL Protocol.”
Coulson LJ continued, at paragraph 62,
“62. … For the reasons that I have given, it will usually follow that a claimant who, on this premise, has only incurred a higher level of costs because he or she has unreasonably failed to follow the EL/PL Protocol, will be restricted under Part 44 to the fixed costs and disbursements encompassed by that Protocol”.
It is therefore in the Court’s discretion to restrict costs because of unreasonable conduct.
CONCLUSION
The key lessons in this case are as follows:
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- Neither the EL/PL Protocol nor CPR 45.24 provides a mechanism which automatically applies the fixed costs regime in circumstances where a claim has not been started under the protocol and/or has not been the subject of a Part 7 claim (or judgment).
- However, in a case where the Protocol should have been used, and its non-use was unreasonable then, pursuant to CPR 44 conduct provisions, the Claimant will usually be entitled to recover only the fixed costs and disbursements permitted by the Protocol.
- A Defendant who wishes to argue that costs should be restricted to fixed costs only should raise this objection as soon as possible in the Part 8 costs only proceedings.
Should you have any queries relating to fixed costs or arising from this article, please do not hesitate to contact us to discuss.