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fast track fixed costs confirmed, 17 July 2013

24 June 2013
The Civil Procedure Rule Committee prepared rules to implement fixed costs in June 2013, and the CPR amendment to bring them into effect was published on 12 July. In the intervening period a number of amendments have been made. This article is an updated version of one first published on 16 June, which incorporates those amendments. The full rules can be found at http://www.justice.gov.uk/courts/procedure-rules/civil

The new regime

The majority of Employers Liability (EL), Public Liability (PL) and Road Traffic Accident (RTA) injury claims arising from incidents after 31 July 2013 where damages are worth £1,000 to £25,000 will be subject to new RTA and EL/PL pre-action protocols. These prescribe in detail the information that must be provided by claimants, and require rapid decisions on liability and quantum by defendants. This regime has a scheme of fixed costs, which can be as low as £500 for an RTA claim.

Claims which exit these protocols will be subject to the general pre action protocol for personal injury claims, and the existing fast track procedural rules. However, claims commenced under the RTA and EL/PL protocols after 31 July will be subject to a new scheme of fixed costs, which will be calculated based on the value of the claim.

Fixed Costs

For defendants, fixed costs are a key component of the scheme, which make the need for quicker response times worthwhile. The Government published an outline of the fixed costs it intended to apply to fast track RTA, EL and PL injury claims in February, but without the rules implementing the fixed costs regime it was unclear what exceptions and loopholes might be created.

Now that fixed costs rules are available, the final substantial piece of the jigsaw is in place and we can see more clearly the regime in which claims will proceed after July.

VAT and additional liabilities

The fixed costs throughout the rules exclude VAT, and this is reflected in the information below.

Additional liabilities (Conditional Fee Agreement (CFA) success fees and After The Event (ATE) premiums) are not recoverable in relation to CFAs and ATE policies entered into after 1 April, though they remain recoverable in relation to older agreements.

Though it will be possible for claims with pre 1 April CFAs and ATE insurance to fall within the costs rules, this will be unusual. Therefore the figures below do not include success fees.

Costs under the Low Value Claims Protocol

The Pre Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (the RTA Protocol) and the equivalent protocol for EL and PL claims (the EL/PL protocol) are divided into three stages:

  • stage 1 runs from the claim being submitted to a liability response by the defendant. Only if liability is admitted will a claim remain within the protocols
  • stage 2 allows the parties to exchange information on quantum and seek a negotiated settlement
  • stage 3 provides a process for the court to determine quantum where parties are unable to settle, or for the court to approve infant claims which have settled.

The first step towards implementing the new fixed costs rules was taken in April, when costs under the existing RTA Protocol were reduced. Claims settled within the protocol which would previously have attracted costs of £1,200 will only attract £500 if they enter the protocol on or after 30 April.

The next development will be expansion of the protocols themselves to encompass the majority of EL, PL and RTA claims valued at up to £25,000. RTA claims worth £10,000 - £25,000 and EL and PL claims will generally fall within the portal where the incident giving rise to the claim occurred after 31 July. Disease claims will fall under the EL/PL protocol where no letter of claim has been sent to the defendant before 31 July.

Expansion of the process to EL, PL and RTA claims up to £25,000 is new territory and so new costs rules are to be introduced allowing the following sums for claims concluding within the protocol:

RTA protocol EL/PL protocol
Claim value: £1k - £10k £10k - £25k £1k - £10k £10k - £25k
Stage 1 £200 £200 £300 £300
Stage 2 £300 £600 £600 £1,300
Stage 3 Decision on the papers (Type A) £250 £250 £250
Oral hearing (Type B) £250 (+ Type A costs) £250 (+ Type A costs) £250 (+ Type A costs)


The ability of claimant solicitors to get around the restrictive costs by effectively outsourcing work, for example to a barrister, and then seeking to recover costs as a disbursement has been a key question. However the rules provide a very limited list of disbursements including:

  • medical records
  • medical reports
  • non medical reports (insofar as permitted by the protocol)
  • court fees
  • for RTA claims, an engineers report and vehicle record searches
  • "any other disbursement that has arisen due to a particular feature of the dispute".

The protocols permit specialist legal advice to be obtained, where reasonably required in claims worth more than £10,000. In a late amendment the fixed costs rules confirm costs may be recovered in relation to such advice, but limit the additional sum of fixed costs available to pay for the advice by reference to stage 3 type C fixed costs, which are currently £150. The rules would suggest the cost is available only once.

In previous fixed costs regimes, judges have been reluctant to allow costs under catch all categories, such as the final one listed above, for fear of creating satellite litigation. However, it is likely that the wide application of this fixed costs scheme will result in a number of additional disbursements being allowed in relation to particular types of case.

Fast track fixed costs for claimants

Though broken down in a different way, claimant fixed recoverable costs follow the table set out below.

Pre issue

£1,000-

£5,00

Pre issue

£5,001-

£10,000

Pre issue

£10,001-

£25,000

Post issue, pre allocation Post, allocation, pre listing Post listing, pre trial

Trial - advocacy Fee

Road Traffic Accident

Greater of

£550 or £100

+ 20 of

Damages

£1,100 +15 of Damages over £5k

£1,930

+ 10 of Damages over £10k

£1,160

+ 20 of

Damages

£1,880

+ 20 of

Damages

£2,655

+ 20 of

Damages

£500 (to £3,000)

£710 (£3-10,000)

£1,070 (£10-15,000)

£1,705 (£15,000+)

Employers Liability

£950

+ 17.5 of

Damages

£1,855

+12.5 of Damages over £5k

£2,500

+ 10 of Damages over £10k

£2,630

+ 20 of

Damages

£3,350

+ 25 of

Damages

£4,280

+ 30 of

Damages

£500 (to £3,000)

£710 (£3-10,000)

£1,070 (£10-15,000)

£1,705 (£15,000+)

Public Liability

£950

+ 17.5 of

Damages

£1,855

+10 of Damages over £5k

£2.370

+ 10 of Damages over £10k

£2,450

+ 17.5 of

Damages

£3,065

+ 22.5 of

Damages

£3,790

+ 27.5 of

Damages

£500 (to £3,000)

£710 (£3-10,000)

£1,070 (£10-15,000)

£1,705 (£15,000+)


In a piece of drafting which could well lead to satellite litigation, the rules say that these costs apply where a claim is started under RTA or EL/PL protocol, but no longer continues under the protocol.

In other words, a claimant who incorrectly fails to commence a claim under the protocol is arguably not subject to the rules. In contrast, protocol costs are also stated to apply where a claim should have been started under the protocol.

Once again, disbursements are a key issue and, aside from trial costs mentioned in the table, a list of recoverable disbursements is specified within the rules. This includes the disbursements allowed under the RTA and EL/PL protocol and also expert and lay witness expenses.

When might a success fee or ATE premium be recoverable?

Success fees under a CFA and ATE premiums are not recoverable if the CFA or insurance is entered into after 1 April. As most claims under the protocol (and therefore under the fixed costs rules) will relate to accidents after 1 April, recoverable success fees and premiums should be rare.

However, for RTA claims under £10,000 the trigger for fixed costs is the date that the CNF was submitted, and for disease claims the question is whether a letter of claim was submitted prior to 1 April. It is possible that some claims will arise where a CFA or ATE is entered into prior to April but no letter of claim or CNF is presented until after July and then a success fee will be recoverable.

Fixed costs of applications

The CPR rules committee has taken the unexpected step of prescribing a fixed recoverable costs sum for interim applications to the court. These are made up of the court fee, plus 50 of type A and type B costs as prescribed for quantum hearings at the end of the low value claims process.

Presumably the intended result is that an application that is settled or dealt with on the papers warrants £125 costs and an additional £125 is available if the matter is dealt with at a hearing. However the rule could be much clearer.

It is also unclear whether this rule extends to a pre-action disclosure application. Pre Action Disclosure applications are frequently encountered in low value injury claims and if costs are not controlled they amount to a loophole in the costs control mechanism.

Fixed recoverable costs for defendantsThe same set of fixed recoverable costs will apply to defendants. As Qualified One Way Costs Shifting (QOCS) will apply in almost all cases, defendant costs recovery will not be frequent, but it will be available when an exception to QOCS applies or where a defendant achieves a more favourable outcome than their own Part 36 offer.

Claimant solicitors will argue that defendants costs should be lower than claimants as the defendant has less work to do in dealing with a claim. The CPR Rules Committee has, however, taken the pragmatic view that is preferable to have some costs control rather than none at all, and as recovery will not be frequent use of the same figures is reasonable.

Defendant fixed recoverable costs are to be assessed against the pleaded value of the claim (excluding amounts not in dispute, vehicle related damage, interest, costs and contributory negligence). Where the claimant has simply given the maximum amount he expects to recover, this will be the sum used, and when no value is specified, the calculation will be on the basis of a £25,000 claim.

This deals with situations such as fraud where damages will not have been assessed but a defendant is entitled to costs - the rule allows for a costs calculation to be carried out in the only way realistically available.

In an effort to avoid unfairness to claimants where a claim has been quantified (such as where a claimant accepts a Part 36 offer outside the relevant period), the rules state that the amount of a costs order in favour of a defendant will not exceed the amount a claimant could have recovered at the same stage of proceedings. This may lead to satellite litigation, for example where a claimant argues that it as clear by the time of an order that the value of the claim was lower than that pleaded, even though damages have not been decided by a court. This seems to have been a late addition to the rules.

Counterclaims under the RTA protocol

Counterclaims have not been forgotten. Those brought in response to a claim commenced under the RTA protocol will be subject to the same set of fixed recoverable costs where they include an element of injury.

Where a claim is for damage only, costs recovery is 50 of type A and type B costs. Strangely, this is by reference to costs under the EL/PL Protocol, rather than the RTA protocol, but as the figures are the same for both protocols it makes no difference.

There is nothing in the rules to permit the claimant to recover an additional sum for defending a counterclaim. Nor are there any provisions for counterclaims in relation to EL or PL claims, presumably as these rarely occur.

Escape provisions

Parties can ask the court to depart from fixed costs, but in the event they do not recover at least 20 more than the fixed costs then they will be penalised by receiving only the lower of the assessed sum or fixed costs. In addition the court may require them to bear the cost of the assessment.

Calculating costs following Part 36 offers

Fixed costs do not fit easily within part 36, which provides for costs penalties where one party doe not accept another partys offer in a timely manner. Amendments to Part 36 will mean that penalties will remain effective (and in fact the penalty against defendants is strengthened)

There has always been a relevant period (typically of 21 days) for acceptance of either partys offer, within which parties can settle without penalty. In these cases fixed costs will be calculated based on the date of service of the notice of acceptance.

Claimant Part 36 offers

Defendants are currently subject to penalties where a claimant secures judgment at least as favourable as the claimants Part 36 offer - these include costs on the indemnity basis from the end of the relevant period, penalty interest on those costs and (for offers since April 2013), a bonus payment which in fast track claims would be 10 of damages. These penalties are set out under CPR 36.14.

The revised rules specify that claims no longer proceeding under the RTA portal will be subject to CPR 36.14. and the notes introducing the rules make it clear that the intended effect is to permit claimants to recover costs assessed on the indemnity basis in those circumstances. Specific rules are not set out in relation to costs up to the expiry of the relevant period - presumably fixed costs will be applied.

This amounts to a further incentive for claimants to make good early offers, and for defendants to look carefully at offers put to them.

Defendants Part 36 offer

Where the claimant accepts an offer after the relevant period has elapsed, or the defendant achieved judgment more favourable than its offer:

  • the claimant will recover costs calculated based on the stage when the relevant period elapsed and the value of damages recovered
  • the claimant will be liable for the defendants costs for the period from the date of expiry of the relevant period to the date of acceptance
  • if the parties do not agree the liability for costs then the court will make the determination
  • in relation to the defendants costs the sum awarded by the court "shall not exceed the fixed costs….applicable at the date of acceptance, less the fixed costs to which the claimant is entitled".

It makes sense that the claimant recovers costs up to the end of the relevant period, and that the defendant recovers costs from that point to the date of acceptance - this is aligned with the effect of Part 36 where fixed costs do not apply.

However the effect of the rules seems to be not to fix defendant costs (with savings on negotiations and satellite litigation) but instead to cap defendants costs recoveries by reference to fixed costs.

Disbursements will also be recoverable, in line with the fixed costs rules.

Protocol offers

Offers made under the low value claims process are not Part 36 offers but protocol offers.

Where a defendants protocol offer is accepted outside of the protocol then the claimant is entitled to stage 1 and stage 2 costs, while the defendant will be entitled to costs from the date the offer was made to the date on which it is accepted. As under part 36, defendants costs recovery will be limited by reference to the fixed costs regime, with the limit being calculated based on fixed costs at the date of settlement, less the stage 1 and stage 2 costs recovered by the claimant.

In other words, defendants protocol offers will be treated in much the same way as a Part 36 offer. There is no specific provision to put a claimants protocol offer on the same footing as a Part 36 offer, though it seems likely this in entitled to be achieved by the amendments. This may be an area of satellite litigation.

Other fixed costs

We understand that the CPR Committee has been giving consideration to introducing a rule which would fix or at least provide guidance to judges when assessing the cost of medical reports, based on the rates fixed under the MRO Agreement (Medical Reporting Organisation), however we do not have details of the timescale over which this might be implemented.

Commencement

The regime described here will apply to claims where the Claim Notification Form (RTA1) under the RTA or EL/PL protocol is submitted on or after 31 July 2013.

EL/PL protocols will apply, for the most part, where accidents giving rise to claims have occurred on or after 31 July (an exception is EL disease claims, where the relevant date is the date the claim notification form is submitted). In relation to RTA claims valued between £10,000 and £25,000 the protocol will also apply where the accident occurred after 31 July.

As the fixed costs regime applies to claims commended under the RTA and EL/PL protocols, it follows that, for the most part, these costs will apply only where the accident giving rise to the claim is on or after 31 July. Therefore, while the rules updates come into effect on 31 July, it will take some time before fixed costs come to capture the majority of claims.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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