When Do Fixed Costs Apply in Personal Injury Cases?
We are now seeing a number of personal injury cases where one party argues for and against the application of fixed costs.
Often the opposing party, whether receiving or paying, makes detailed arguments in the Points of Dispute or Replies, which overlook the absolute basics.
This shouldn’t be surprising as the rules are lengthy and reasonably complex. But there are some essentials to bear in mind.
For fixed costs to apply, the action must be personal injury, and be in respect of RTA, employers’ liability or public liability.
There are 3 regimes:
CPR Part 45 II
· Applies to RTA cases only, where proceedings are issued under Part 8 for costs only (CPR 46.14), or under CPR 21.10(2) infant settlement approval.
· This regime does not apply if either of the subsequent ones are the correct regimes.
These are now rarely seen as most cases “in the system” to which it applies will have been settled.
CPR Part 45 III
· Applies to cases that settle under the Pre Action Protocols for Low Value PI claims, whether RTA, EL or PL.
The EL/PL PAP applies where—
(a) the claim arises from an accident occurring on or after 31 July 2013; or
(b) in a disease claim, no letter of claim has been sent to the defendant before 31 July 2013;
For a more detailed breakdown of the 3 regimes, see here.
There are three stages to a claim:
· Stage 1: a claim notification form is submitted in the portal by the claimant’s solicitors
· Stage 2: if liability is admitted then a settlement pack is submitted by the claimant and considered by the defendant, who then makes an offer. The matter can often be settled at this stage.
· Stage 3: If quantum cannot be agreed, or if the claimant is a child and an infant approval hearing is required, which is a modified Part 8 as set out in Practice Direction 8B
In all of these instances, “portal costs” are set out under CPR 45 and depend on the stage at which the case settles, and whether the provisions of Part 36 are applicable.
The case falls out of the portal if either:
· the claimant gives notice that the claim is now valued at more than the upper limit, or
· liability is denied or contributory negligence alleged (other than in relation to the claimant’s admitted failure to wear a seat belt in RTA cases).
In that instance, the fixed costs under CPR 45IIIA apply. It is worth noting that even if the case is now going to be a multitrack case, until allocation actually takes place, only fixed costs apply if the matter settles (Qader v Esure (2016) EWCA Civ 1109).
There are often instances where the matter exits the portal because it’s believed that the value is greater than the upper limit, or where it wasn’t started in the portal because the valuation was greater than the upper limit, but subsequently the case settles for a sum which is within the portal limits. In our experience, the court will want to make sure that the original and subsequent valuations were reasonable. CPR 45.24 provides that if the claimant was unreasonable not to start or continue in the portal, the court can order that only fixed costs and disbursements will apply. The recording of valuation decisions is therefore crucial.
Likewise there are times when the claimant seeks fixed costs, however the defendant claims that the case should not have started in the portal at all!
These appear most frequently in cases that fall out of the portal due to denial of liability, but then settle for a sum greatly in excess of the upper portal limit.
Because the Part 45 IIIA fixed costs are in part calculated as a percentage of damages, there are times when the fixed costs are significantly more than the claimant might be expected to get on assessment on the standard basis!
The get-out clause here is CPR 45.29J – exceptional circumstances. Although on the face of it the wording of that provision applies for a claim for costs in excess of fixed costs, it has been successfully used at provisional assessment as grounds to disallow the fixed costs, resulting in a standard basis assessment of a significantly lesser amount.
This article was written by Darrel Lumby who is a Costs Lawyer with over 20 years’ experience in costs, dealing with a wide and varied range of cases, including Court of Protection and high value and complex Personal Injury, Clinical Negligence and Commercial Litigation. He has also been instructed in high profile and sensitive Actions against the Police and Civil Liberty Claims. His experience and knowledge has led him to be instructed in cases where costs exceed £1m