Costs and allocation: where damages fell below the threshold

Where a claim is for a sum less than £10,000 it will be allocated to the small claims track and only limited costs will be recoverable, ordinarily restricted to court fees and expenses.

In Khan v Aviva Insurance Limited (unreported) the Defendant’s insured reversed her car into the Claimant’s vehicle. The Claimant brought a claim for personal injury and credit hire charges. The claim was allocated to the fast track.

The personal injury claim was not made out and was dismissed accordingly, but the credit hire claim was successful and the Claimant was awarded £6,265.80. This set up the following argument on costs:

a. The Claimant said that fixed costs pursuant to CPR 45.29B should apply (c. £5,000 plus allowable disbursements);
b. The Defendant argued that because the claim was only allocated to the fast track because of the personal injury claim (which had failed), and that otherwise it would have been allocated to the small claims track, the order should be:
i. That the Claimant pay the Defendant’s cost of the personal injury claim and that the Claimant should recover only small claims costs in respect of the credit hire claim; or
ii. That alternatively the Defendant pay the Claimant’s cost limited to small claims costs.

On the question of allocation, the Judge reaffirmed that individual parts of a claim cannot be allocated to different tracks – so the whole claim was, and remained, allocated to the fast track. The Judge considered that the claim could have subsequently been re-allocated but noted that no such application had been made. The position was clear: “it was the personal injury element of the claim which was the reason why the claim was allocated to the fast track. If there had not been the personal injury claim, the claim for the other losses would almost certainly have been allocated to the small claims track…”.

The Judge considered that the general rule, over-arching the Court’s general discretion as to costs, is that the unsuccessful party will be ordered to pay the cost of the successful party (CPR 44.2(2) – usually expressed as ‘costs follow the event’). The Claimant was the successful party on the basis that “it is the Defendant who is writing the cheque”. On this basis, the normal rule, in this case, would be that fixed costs pursuant to CPR 45.29B will apply unless the court should make “a different order”.

The Court considered the interplay between fixed costs and the power to make “a different order”, finding that the object of fixed costs is to provide certainty such that exercising a power to make “a different order” should be exercised with caution.

The Judge found that “where a case has in fact been allocated to a particular track and has succeeded, to deprive the successful party of the costs normally awarded simply because the level of damages in fact fell ultimately below the threshold of the track is, again, not an automatic reason to depart from the normal rule”.

The Claimant was awarded fixed costs pursuant to CPR 45.29B.

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