Fixed costs: two un-appealing decisions for defendants

Within the space of a week in November 2016, the Court of Appeal swept aside some of the uncertainties surrounding the fixed fee regime for low value fixed cost claims. It is clear now that a defendant will no longer be able to take advantage of what was previously a grey area.

Bird v Acorn Group [2016] confirmed that, for the purposes of the fixed recoverable costs regime in the Civil Procedure Rules (CPR), a disposal hearing is the same as a final trial. Therefore, as soon as a case is listed for disposal, the claimant can claim the final stage of costs in the fixed costs table. The defendant’s argument was that a disposal is not the same as a final trial: there are separate stages in the table, which suggests costs will increase as the claimant’s solicitors undertake additional trial preparation work. It would be unjust for the claimant to be entitled to the final stage of costs immediately upon listing for disposal, (often shortly after proceedings have been issued). The defendant’s argument, however logical, failed.

By way of reminder, the difference between stage one and stage three costs is:

  • RTA cases - £1,495
  • EL cases - £1,650 plus an additional 10% of the agreed damages
  • PL cases - £1,340 plus an additional 10% of the agreed damages

Hot on the heels of Bird v Acord Group, came Qadar and others v Esure Services Ltd [2016]. This involved a road traffic accident claim that had started life within the Ministry of Justice Claims Portal (the Portal), but had been removed due to fraud concerns. Subsequently Part 7 CPR proceedings were issued and a defence served alleging fraud. The case was allocated to the multi-track. The question for the court was whether the CPR fixed costs regime still applied. The defendant argued that it did because the CPR was drafted in absolute terms. The court disagreed: there was never an intention for the fixed cost regime to apply to claims not allocated to the fast track.

Practical lessons

What can an insurer or compensator take from these two decisions?

More competitive Part 36 offers by claimants may follow. For claimants, the ‘ideal’ time to

  • Settlement within the Portal remains the most cost-effective way of dealing with low value claims. Allowing claims to drop out unnecessarily should be avoided. If a claim is being dropped intentionally then, in light of Qadar, consideration needs to be given to the rationale behind the decision and the costs implications. There is now even more incentive for claimants to remove claims from the Portal.
  • Know your opponent and keep in mind the implications of their involvement. Birkenhead and Liverpool County Courts (used by a number of the larger bulk claimant firms) are the most prevalent for the listing of disposal hearings. Those that issue in those courts will do all they can to obtain the listing of a disposal hearing. In fact, any solicitor in any court will now no doubt be pressing for the directions to include a listing for a disposal hearing.
  • For claims no longer within the Portal, refrain from making an admission of liability. There is nothing gained, as it will allow the claimant to obtain judgment and seek a disposal hearing (or quantum trial). However, be wary of continuing your denial when filing directions questionnaires as the case could be allocated to the multi-track if the court considers the case to be complex or if the trial could take more than one day.
  • Similarly, even in liability-disputed cases, think carefully about whether all witnesses should be called. If the case is going to take more than one day, then it will be allocated to the multi-track leading to assessed costs, even in low-value cases.
  • Utilise the window of opportunity to settle a claim that has exited the Portal. Once the case has been issued, defendants should do all that they can to settle before directions are issued. Waiting for directions risks the court listing it for disposal or final trial with corresponding final stage costs applying. However, always try to balance the commercial considerations for a single claim with the risk of ‘damages creep’.
  • More competitive Part 36 offers by claimants may follow. For claimants, the ‘ideal’ time to now seek to settle is just after the matter has been listed for disposal or final trial. Doing so entitles the claimant to the final stage fixed costs - even though they have not done the work that was presumably envisaged by those drafting the rules. Making a good Part 36 offer may now be more readily accepted (and the claimant still gets the final stage fixed costs) or, if the claim carries on to a court hearing and the claimant beats the offer, they get assessed costs (following Broadhurst v Tan [2016]).

Related items: Fixed recoverable costs: Mixed news for defendants