Fixed costs apply to pre-action disclosure applications made after leaving the portal

02 Feb 2017

Sharp v Leeds City Council [2017] EWCA Civ 33

On 1 February 2017, the Court of Appeal determined a short but important point – whether the fixed costs regime for claims which started, but no longer continue, under the EL/PL Protocol for Low Value Personal Injury Claims applies to the costs of an application for pre-action disclosure (PAD) in connection with such a claim.

It was held that fixed costs do apply. There had previously been an inconsistent approach taken by the courts in relation to the costs of such applications. This case has clarified matters for future reference. 

The decision applies equally to low value injury claims begun under the RTA Protocol.  However, it will not cover applications in relation to disease claims, which are currently outside the fixed costs regime following Portal drop out. Further, it will not impact upon the limited category of low value claims currently outside the fixed costs regime such as those involving clinical negligence or accidents abroad.

The facts

This was a low value personal injury case where the claimant alleged she had tripped and fallen whilst walking along a defective footpath on 26 February 2014. It was alleged that she had suffered injury to her right wrist. The claimant submitted a Claims Notification Form (CNF) against the council within the portal on 23 July 2014. The matter then fell out of the portal for reasons that were disputed.

The defendant failed to disclose the necessary information following the claimant’s requests and a PAD application was then made by the claimant on 24 February 2015. The question was whether this was classed as an “interim” application to which CPR 45.29H applied.

Under CPR 45.29H (1), where the court makes an order for costs of an interim application to be paid by one party in a case to which this Section applies, the order shall be for a sum equivalent to one half of the applicable Type A and Type B costs in Table 6 or 6A. The application fee can also be included in the costs award.

It was initially held that standard costs applied and they were assessed on the standard basis at £1,250.00. The basis of this decision was that CPR 46.1 applied, which deals with pre-commencement disclosure. The defendant appealed against this decision.

County court appeal

On 2 November 2015 the case went to appeal in the Leeds County Court before HHJ Saffman. The defendant’s appeal was successful and it was held that Rule 45.29H did apply here and the claimant was only entitled to fixed costs, calculated at £305.00 (NB the court application fee was lower at this time). It was held that applications should be classed as interim from the commencement via the CNF until final settlement of the claim.

This was an interim application seeking an interim order. The appellant was only entitled to fixed costs for the PAD application. The claimant then took the matter to the Court of Appeal.  

Court of Appeal decision

The Court of Appeal dismissed the appeal.

It was held that fixed costs would apply for pre-action disclosure applications in accordance with CPR 45.29H. The judgment reiterates the general rules of disclosure according to the personal injury pre action protocols; the principle being that early disclosure of relevant documentation enables a case to settle. The background of fixed costs CPR 45 has been explained with reference to LJ Jackson.

The main points to be taken from the judgment are as follows:

  • The plain object and intent of the fixed costs regime is that from the moment of entering into the Portal, fixed costs will apply, subject to a small minority of clear exceptions.
  • CPR 45.29D provides that the fixed costs and disbursements prescribed are ‘the only costs allowed’.
  • The fixed costs regime clearly applies to a case which starts under the EL/PL protocol but never reaches the stage when proceedings are issued, pursuant to Part 45.29E and Part A in Table 6C in particular.
  • Whilst PAD applications are in some respects separate from the claim, an application in the context of a personal injury claim is sufficiently close to the actual claim itself to allow for fixed costs.
  • A PAD is an application for an interim remedy within the meaning of Part 25 and is ‘interim’ in the fullest sense as it follows the CNF and comes before the Part 7 proceedings and precedes settlement or final judgment.
  • A defendant who successfully resisted a PAD application would recover fixed costs under part 45.29F.
  • CPR 46.1 rules are therefore displaced in light of the decision that CPR 45.29F will have precedence in this type of case.
  • The court sympathised with the claimant’s assertion that limiting costs in this way may not act as a sufficient spur to compliance by defendants. There was a recommendation that the fixed costs regime needs to be kept under review and defects to be remedied by adjustment of the fixed allowances where necessary.
  • Additionally, there would be availability under CPR45.29J to seek a higher award of costs based upon exceptional circumstances, albeit the court recognised that the frequency with which defendants did not comply with their disclosure obligations may make it difficult to satisfy the exceptional circumstances test.
  • It was suggested that to allow assessed costs for PAD applications would lead to satellite litigation and disproportionate expense which the fixed costs regime seems to combat.

What this means for you

Defendants will need to be aware that fixed costs will apply to pre-action disclosure applications once claims have fallen out of the portal. This will prevent claimants from claiming standard costs for such an application. It is important that this case is referred to when necessary if there is a dispute of this nature in relation to costs.

Following the Court of Appeal guidance it is possible that claimants will be less likely to make pre-action disclosure applications due to the changes to the cost/benefit analysis. In the case of Kirton v Asda Stores Ltd at Wakefield County Court (quoted by the Court of Appeal) it was suggested that such pre-action disclosure applications are commonplace. This case could therefore make a difference in the way claims are handled in relation to disclosure in future. 

It should be borne in mind that the application fee on notice for such an application is now £255 and that the starting point in relation to such an application is that the party making the application should pay the costs (46.1(2)). In order to shift that presumption, the applicant has to persuade the court under 46.1(3) that a different order should be made, considering the extent to which it was reasonable to oppose the application and compliance with a pre-action protocol. Qualified one-way costs shifting is disapplied in relation to PAD applications under Part 44.13(1) meaning defendants can recover their costs.

We may also see an increase in applications under CPR 45.29J, where claimants seek an amount of costs exceeding fixed recoverable costs. However, as the Court of Appeal noted, simple non-compliance may be said to be so common that a claimant would likely struggle to persuade a court that there were “exceptional circumstances”.  The court hinted that deliberate disregard may satisfy that requirement, but it is likely to prove difficult in practice to show that non-compliance was actually deliberate.

The decision is to be welcomed as clarifying that the type of excessive costs schedules (£1,250 was awarded initially in this case) presented in the past for such applications will no longer be valid.  However, as the following table shows, the costs of such applications will still be noteworthy, ranging between £250.00 - £592.52, leaving aside costs of opposition. The answer remains of course to ensure compliance with the relevant Protocol, this denying opponents the opportunity of raising such applications.

 

Solicitor fees

VAT

Advocate fees

VAT

Court Fee

Total

Application without notice

£125.00

(50% of £250 Type A)

£25.00

N/A

N/A

£100.00

£250.00

Application without notice (London 12.5% uplift)

£140.63

£28.13

N/A

N/A

£100.00

£268.76

Application on notice (uncontested)

£125.00

£25.00

N/A

N/A

£255.00

£405.00

Application on notice (uncontested) (London 12.5% uplift)

£140.63

£28.13

N/A

N/A

£255.00

£423.76

Application on notice (contested at a hearing)

£125.00

£25.00

£125.00

(50% of £250 Type B)

£25.00

£255.00

£555.00

Application on notice (contested at a hearing) (London 12.5% uplift)

£140.63

£28.13

£140.63

£28.13

£255.00

£592.52

 

David Caswell
Partner and head of costs
E: david.caswell@blmlaw.com
T: 0161 838 6833
 
 
Marie Ingoe
Professional support lawyer
E: marie.ingoe@blmlaw.com
T: 0161 602 1120
 
 

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.

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David Caswell

David Caswell

Partner,
Manchester


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