Fixed costs: stage 3 costs where disposal hearing listed
Bird v Acorn Group Ltd [11.11.16]
Rising claims costs seem inevitable following the Court of Appeal’s decision to allow stage 3 fixed costs in cases listed for disposal following judgment on admission or in default.
This judgment is, undoubtedly, bad news for defendants. It represents a windfall for claimants in those cases where liability is not in issue and a matter is simply listed for a short, quantum-only disposal hearing.
The Court of Appeal complimented the practice of Birkenhead County Court in its “prompt process for the triage of incoming claims”, in listing these uncontested matters for early disposal hearing. However, that practice is not universal and it seems strange that the question of the applicable level of fixed costs a claimant may recover should be determined by the practice of individual courts. In other words:
- If a court (such as Birkenhead) simply lists a matter for disposal in response to directions questionnaires then any subsequent settlement will always attract stage 3 fixed costs.
- However, if a court allocates the matter and provides a trial window, then any settlement prior to a date being fixed for trial will only attract the stage 2 fixed costs.
Perhaps more concerning, and the Court of Appeal only fleetingly considered this, is the potential mischief created by Part 28.2 of the Civil Procedure Rules (CPR). This sets out the general provisions the court will apply when allocating a matter to the fast track. These provide that a court will fix a date for trial (or alternatively will provide a trial window) when giving directions. This means that even on fully contested maters the court can/should fix a trial date when giving directions. Again, it seems strange that the costs of any subsequent settlement are be determined by the decision at the allocation stage either to fix a date for trial or merely to place in a trial window.
One can well envisage claimants now urging the courts to issue a trial date when giving directions - after all, the directions questionnaire specifically requests availability for the witnesses - so as to go straight to stage 3 costs.
There is also a corresponding provision to fix trial dates on allocation to the multi-track, pursuant to Part 29.2 of the CPR. With the expansion of fixed costs into the multi-track currently under review by Lord Justice Jackson, the prospects of court practice determining the appropriate level of fixed costs, in circumstances where the monetary differences in the various stages is likely to be far more significant, is worrying.
One immediate reaction to this may be for defendants to make early and generous offers, but such a tactic will lead to an unrealistic inflation of damages.
View our review of the first instance decision, which sets out the full background to this case and provides details of the financial implications of this decision.
Following a leapfrog appeal, the Court of Appeal found unanimously for the claimant and upheld the decision of the lower court in awarding the claimant the full stage 3 fixed costs.