Costs News

18 April 2019
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Test to claim more than fixed costs in cases that exit portal is not ‘low bar’

The ‘exceptional circumstances’ test by which claimants whose cases exit the portal can claim more than fixed recoverable costs should not be a low bar, the High Court has held.

Mr Justice Stewart was ruling in Ferri v McGill [2019] EWHC 952 (QB), an appeal against a decision of Master McCloud, sitting as a deputy costs judge.

The claimant, a self-employed builder and decorator, was riding his bicycle when the defendant’s opening car door struck him. He was off work for a week and then had some reduction in his ability to work.

He initially instructed the law firm Leigh Day, which obtained a report from a GP, who expected a full recovery from all symptoms in a maximum of four months. Leigh Day ran the case through the portal, and liability was admitted with no allegation of contributory negligence. The defendant made a settlement offer of £1,500 and the claimant instructed new solicitors, City firm Fieldfisher.

Fieldfisher said it did not consider the case to be a portal claim on the basis that the claimant had suffered a serious shoulder injury, had on-going loss of earnings and required private treatment. Soon after an arthroscopic operation – funded by an interim payment by the defendant – the claimant regained full movement with little pain, some two years after the accident. The claim settled without issue of proceedings for £42,000. The claimant sought more than fixed recoverable costs.

Master McCloud ruled that the correct test was that there must be some circumstance, which may include value or costs, but may also include all the circumstances of the case, which took the claim out of the general run of the type of such a case by reason of those circumstances.

She set the bar “low” as simply ‘outside the general run’ of those cases because the portal was intended to deal with simple cases which would typically be fast-track cases.

Mr Justice Stewart said the policy behind the fixed costs regime could be summarised as “swings and roundabouts”. He continued: “Section IIIA expressly provides that ex-protocol cases are to remain subject to the fixed costs regime. Two of the reasons for exiting the protocol are that the claimant notifies the defendant that the claim has been re-valued at more than the protocol upper limit or that the claim is unsuitable for the protocol, e.g. because there are complex issues of fact or law.

“In other words, the rules mandate fixed recoverable costs in such cases, subject only to subsequent judicial allocation of the claim to the multi-track or rule 45.29J(1). ‘Exceptional circumstances’ have therefore to be evaluated against those cases which are covered by part IIIA.”

The master was wrong to set a low bar, he held. “(i) Unavailable to the master, as it had not by then been decided, was the decision in Hislop and the obiter dictum of Coulson LJ that: ‘It goes without saying that a test requiring “exceptional circumstances” is already a high one.’

“(ii) The setting of the policy reasons reiterated in the fixed costs regimes cases cited earlier in this judgment, while allowing for ‘exceptional circumstances’ to depart from that regime, require a more strict, not a ‘low bar’, approach.”

Stewart J ruled that the master also used the wrong basket of cases against which to judge ‘exceptional circumstances’. It must be construed against the setting (i.e. the basket) in which it appears, he said.

“I have no evidence to support the [claimant’s] argument that there is no qualitative difference between a basket comprising (1) cases which remain in the protocol, or (2) cases which remain in the protocol and which exit the protocol or (3) cases which exit the protocol. If anything, first impressions suggest the contrary to [this] argument.”

Stewart J added that how the regime may impact on a particular litigant or lawyer could not inform the construction of exceptionality.

“The authorities already cited make clear the policy reasons behind this fixed costs regime in particular, and other similar fixed costs regimes. Exceptionality should not be a low bar and it must be measured against the types of cases that are covered by section IIIA.

“For these reasons, the master erred in law on both the central questions raised in this appeal.”

The judge ordered that Master Gordon-Saker, who acted as an assessor to him, reconsider whether exceptional circumstances existed.

Benjamin Williams QC (instructed by Fieldfisher) for the claimant/respondent, Roger Mallalieu (instructed by Horwich Farrelly) for the defendant/appellant.

 

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