A claimant’s application for indemnity costs in a protocol case was not an interlocutory application and so not subject to the fixed-costs regime, the High Court has ruled.
Parsa v DS Smith PLC and Anr was a road traffic accident case where various part 36 offers were made by the parties – during which time the claim left the protocol – with the defendants accepting the claimant’s £7,500 offer, some four months after the expiry of the period for acceptance and only a week before trial.
The claimant applied for his costs on the indemnity basis on three grounds: that the part 36 offer was accepted out of time; the defendants’ conduct; and “exceptional circumstances” for the purpose of CPR 45.29J.
His Honour Judge Tindal said he would have ordered them for a two-month period of unreasonable delay from the defendants receiving the claimant’s substantive response to their defence and accepting his offer. But he said there was no provision for moving from fixed costs to assessed standard basis costs a result of late acceptance of a part 36 offer.
As a result, the defendants were to pay fixed costs of £4,155, with the claimant ordered to pay the defendants’ costs of the costs application, assessed at £1,712, because it was not an interim application for the purpose of CPR 49.29H.
The appeal was stayed pending the Court of Appeal’s ruling last year in Hislop v Perde, which established that standard costs could be claimed in a fixed-costs case where there is a late acceptance of a part 36 offer.
The appeal before Mrs Justice Carr went on to consider first whether the judge was wrong to hold that there was no power to award indemnity basis costs. The claimant sought to argue that section 51 of the Senior Courts Act 1981 and CPR 44.2 provided an overriding power and general discretion to award costs.
Carr J disagreed: “Hislop confirms that in protocol cases, the provisions of CPR 45 IIIA are a complete code for the determination of costs. Recourse to other rules can be made only where it is expressly permitted by the section.” Section 51 was a power made expressly “subject to… rules of court” and so was also of no help. “If the appellant’s argument were correct, the principal (sic) and underlying policy as confirmed in Hislop would be subverted.”
She continued: “The code and the provisions of CPR 45 IIIA allow for the recovery of more than fixed costs only in exceptional and clearly identified circumscribed circumstances. This is a clear policy decision.
“The purpose of the regime is to avoid arguments about the scope and basis of costs and resulting satellite litigation in the many hundreds of thousands of cases falling within the regime. It is a self-contained code; there is no scope for escaping it, save in the exceptional circumstances identified.”
The claimant also challenged the finding that the defendants’ conduct did not amount to exceptional circumstances under CPR 45.29J. Carr J said such claims were highly fact-specific, and that the threshold to be met in order to establish exceptional circumstances was “a high one”.
She found no basis for interfering with what was essentially a finding of fact and an exercise of discretion by the judge, noting that he considered the delay “a very long way indeed from being an exceptional circumstance”.
The final appeal was against the ruling that the defendants’ costs of the application were payable and therefore capped under CPR 45.29F. This turned on whether or not the costs application was properly to be regarded as an interim application for the purpose of CPR 45.29H.
“Standing back and considering the overall structure of CPR part 45 and in particular the dicta and approach confirmed most recently in Hislop, it seems to me that the judge was right to treat the application of July 2017 as not being ‘an interim application’ for the purpose of CPR 45.29H,” Carr J said.
“The substantive litigation had ended; the claim had settled in relation to all bar costs and had been stayed by the automatic operation of CPR 36.14. It is clear from Sharpe [v. Leeds City Council [2017] EWCA (Civ) 33] and, in particular, the statement by Briggs LJ at [35], that when one speaks of the settlement of the claim for present purposes, one speaks of settlement of the claim for damages for personal injury, not settlement of the costs claimed arising upon the claim.
“The effect of this is not, as the appellant suggests, that the respondents’ costs of the true interim application are not subject to CPR 45.29H. Rather, that provision did not apply in the first place because the application was not, properly understood, an interim application at all.
“If the appellant is right, it is difficult to see what role the word ‘interim’ plays at all. CPR 49.29H would simply apply to all applications at any stage… It seems to me that that simply cannot be a sensible reading or construction of the relevant provisions which so clearly do refer to ‘interim applications’.”
Mark James represented the appellant, Roger Mallalieu the respondents.