Bird v Acorn Group Limited  EWCA Civ 106
In a judgment handed down on 11 November 2016, the Court of Appeal has clarified an important point in relation to the fixed costs regime applicable to personal injury cases commenced under the Pre-Action Protocol for Low Value Personal Injury Claims (“the Protocol”). Namely, whether the listing of a 'disposal hearing' is the same as listing a case for trial, such that the higher level of fixed costs applicable to trial listing applies.
The difference is relatively modest in the individual case, but the point has a substantial impact across the many thousands of cases that commence under the Protocol and potentially proceed into litigation. A significant number of cases were stayed pending the decision and will now have to be settled, meaning that defendants and their insurers will be liable for thousands of pounds more in each case affected.
The appeal concerned a public liability (“PL”) claim, which started within the portal through which cases under the Protocol are commenced, exiting due to the defendant’s failure to respond on liability. Negligence was subsequently admitted and medical evidence was served. However, no offer was made by the defendant and proceedings were issued. Judgment was entered in default and the claim was listed for a 'disposal hearing'. Prior to the hearing, the parties agreed the damages, although costs could not be agreed as there was a dispute over which column applied to the fixed recoverable costs arising out of CPR 45.29E. The claimant argued that the costs applicable to settlement on or after the date of listing for trial (but prior to trial) were appropriate. The defendant argued that the costs applicable to settlement post issue, but prior to allocation were appropriate. The claim was listed for a provisional assessment which found in favour of the claimant. The defendant requested an oral hearing on the point.
At the hearing, the defendant argued that there was no certainty that the disposal hearing would dispose of the case. Further, that the stages are sequential, given the use of the word ‘respectively’ in CPR 45.29E 4 (a). It was argued that if the listing stage did apply, if a case did not settle at disposal and directions were ordered to trial, the case would then revert back to the earlier stage, which would make no sense.
District Judge Campbell upheld the initial provisional assessment. She agreed with the claimant that there was no allocation and that the listing of the disposal hearing was the only mechanism to see a conclusion to the proceedings. There was also nothing in the rules that says that the parties must move sequentially through the stages.
In a leapfrog appeal, the decision of District Judge Campbell was upheld by the Court of Appeal. It was held that the listing of a case for a disposal hearing is the same as listing the case for trial, in terms of the applicable fixed costs. The fact that a disposal might not determine the claim, with directions being given instead was something that could occur with a trial, which may be adjourned due to the need for further directions. A disposal is intended to dispose of the case and the listing requires the parties to undertake the work required to assist the court in that aim.
What this means for you
Although the case dealt with the EL/PL Portal, the interpretation of the rules will apply equally to road traffic accident claims pursued under the low value personal injury protocol. All claims which have been stayed pending this decision will now need to be settled and swift contact from claimant representatives can be expected.
The case highlights the importance of defendants responding to claims within the portal in a timely fashion and demonstrates the increased costs which can be incurred should the defendant not be active in these types of claims. It is noteworthy that the decision was handed down on the same day as it was announced that Lord Justice Jackson has been asked to report by 31 July 2017 upon the extension of fixed recoverable costs to a much wider category of claims (click here to read Alistair Kinley’s review of Jackson’s announcement). The decision should not come as a surprise as it continues the trend towards providing substantial incentives to settle claims without litigation. When combined with the impact of the Court of Appeal decision of Broadhurst v Anor v Tan & Anor (EWCA) Civ, the message is clear. If a fast track EL/PL or RTA claim is not settled prior to the issue of proceedings, then the potential costs impact upon defendants is substantial, through the cases being pushed swiftly through the fixed costs stages and with the potential additional imposition of hourly rate costs on an indemnity basis if a claimant part 36 offer is successful.
To minimise the risk of increased costs, consideration should be given to the following:
- If dealing with a claim in which an admission of liability is appropriate, ensure compliance with the Protocol requirements and seek to resolve the claim in the portal at stage two or three.
- If the claim drops out of the portal and it is a case that you wish to settle, then make a sensible part 36 offer as early as possible. If the case is then issued and later listed for disposal/trial, then the defendant will have costs protection against the increased fixed costs.
- Scrutinise the reason for portal drop out very carefully. Are there grounds to argue that the matter should have remained within the Portal and/or that the claimant did not comply with the Protocol under CPR 45.24? If so, it may be possible to persuade the court that the claimant should be limited to Portal costs only.
- If a default judgment has been entered, consider whether to apply to set the judgment aside. Depending on the individual case, if there are reasonable grounds for the application, even if your assessment of the defence prospects is relatively poor, the avoidance of a disposal hearing listing may well lead to a significant costs benefit.
- The issue is however exacerbated by the increasing practice of certain courts, such as Birmingham, to list fast track trials at the allocation stage. This is done in order to minimise the work required by court staff and to increase efficiency. Unfortunately, this also likely has the effect of moving the recoverable fixed costs in defended cases to the listing stage on allocation, again missing out one of the fixed costs stages. Whilst the Court of Appeal did not directly address that issue, reference was made to the power under CPR 28.2(2)(a) to list for trial at the same time as allocation and it was evident that the Court of Appeal accepted that counsel for the claimant was correct in asserting that this was the position. Again, delay in settlement following issue of proceedings in such cases will quickly lead to the higher fixed costs applicable to trial listing.
Working example – how this would work in practice:
- A PL claim drops out of the portal due to no contact from the defendant.
- It is listed for a disposal hearing, but in advance of the hearing settles for £20,000.00.
The table below provides the details of fixed costs in this case for issued RTA, EL and PL claims:
||Settlement post issue, prior to allocation
||Settlement post allocation, prior to listing
||Settlement post listing, pre trial
£1,930 +10% of damages over £10,000
£1,160 + 20% of damages
£1,880 + 20% of damages
£2,655 + 20% of damages
£2,500 + 10% of damages over £10,000
£2,630 + 20% of damages
£3,350 + 25% of damages
£4,280 + 30% of damages
£2,370 plus 10% of damages over £10,000
£2,450 + 17.5% of damages
£3,065 + 22.5% of damages
£3,790 + 27.5% of damages
Had the Court of Appeal sided with the defendant in Bird v Acorn, the costs payable in the above example would have been £5,950.00, whereas the costs payable in this case would now be in line with the listing stage and amount to £9,290.00, a difference of £3,340.00.