Fixed fees apply to claim which settled for £42k

Ferri v McGill [2019] EWHC 952 (QB)

The claimant (‘C’) was struck by a car door whilst riding his bike. C’s injuries resulted in a week off work and some reduction in his ability to work thereafter. C instructed solicitors who obtained a GP’s report anticipating full recovery in 4 months. The claim was initially run under the pre-action protocol for low value personal injury road traffic accidents (‘the Protocol’).

The defendant (‘D’) made an offer of settlement of £1,500. C instructed new solicitors who did not consider the case to be a ‘fast-track portal claim’ on the basis that C had suffered a serious injury, had on-going loss of earnings and required private treatment.

The claim settled, without issue of proceedings, in the sum of £42,000. C sought more than fixed recoverable costs.

Costs

D’s points of dispute contained a number of preliminary points:

Point 2 – the case started under the Protocol, if it had not exited the Protocol any offer automatically includes (and cannot exclude) fixed costs

Point 3 – if the case exited the Protocol CPR 45 Section IIIA would apply and “for as long as the case is not allocated to the multi-track” the only costs allowed are fixed costs.

The only relevant ‘escape’ from fixed costs is at CPR 45.29J: “If [the Court] considers that there are exceptional circumstances making it appropriate to do so, the court will consider a claim for an amount of costs which is greater than fixed recoverable costs“.

At first instance Master McCloud, sitting as a Deputy Costs Judge, allowed C to escape fixed costs, finding that the test of exceptionality should be a “low bar” and that it was enough that the case was exceptional compared to those cases that the Protocol was intended to cover.

D appealed.

The key grounds of appeal were that the Master erred:

  1. in considering the circumstances against which exceptionality should be judged;
  2. in expressly regarding the test of exceptionality as a “low bar”.

The Court heard a number of authorities (argued by analogy and/or drawn from other contexts), on either side of the argument, which it is useful to summarise:

  • [2016] imported in to the Rules the words (at, for example, rule 45.29B) “and for so long as the claim is not allocated to the multi-track” – providing that fixed costs do not apply to claims allocated to the multi-track even if they were started under the Protocol
  • [2017] the Court of Appeal refused to extend the exceptions to the fixed costs regime noting that “the plain object … of the fixed costs regime in relation to … [the] Protocol … [is to limit] the fixed rates of recoverable costs
  • In Hislop v Perde [2018] the Court of Appeal again refused to depart from the fixed costs regime noting “If a case begins under the fixed costs regime then it should only be in exceptional circumstances that the parties are able to escape it” and “it goes without saying that a test requiring “exceptional circumstances” is already a high one
  • in R v Soneji [2005] ‘exceptional circumstances’ were required to allow the court to postpone the making of a confiscation order – in that case it was noted that “An expression such as “exceptional circumstances” must take its colour from the setting in which it appears” – the court declined a very strict approach to the meaning of exceptional circumstances
  • in Dymocks v Franchise Systems v Todd [2004], considering third party costs orders: “Although costs orders against non-parties are to be regarded as “exceptional”, exceptional in this context means no more than outside the ordinary run of cases
  • In R v Kelly [2000], considering the requirement to pass a life sentence save for in “exceptional circumstances”, the court said: “We must construe “exceptional” as an ordinary, familiar English adjective, and not as a term of art. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered
  • In Kilby v Gawith [2008]: “Part 45 must be construed by reference to their ordinary meaning when viewed in their context. That is, in the context of section II of Part 45, which must, in its turn, be construed in the context of the CPR as a whole … this involves a consideration of the statutory purpose of the relevant rules
  • In Costin v Merron [2013]: “exceptional circumstances … must be exceptional in the sense that the case is taken out of the general run of this type of case” and “the phrase “exceptional circumstances” … speaks for itself. It cannot possibly mean anything other than that, for reasons which make it appropriate to order the case to fall outside the fixed costs regime, exceptionally more money has had to be expended … than would otherwise have been the case”.

However, the Court considered that the statements quoted above in Costin would not survive Hislop (a later decision) and that Master McCloud did not have the benefit of Hislop at the time she made her decision.

The Court noted that ex-Protocol cases remain fixed costs cases subject only (i) to subsequent judicial allocation to the multi-track or (ii) in “exceptional circumstances” evaluated against the ‘basket’ of ex-Protocol cases.

As the case was not issued and therefore not allocated, the question was whether the Master was right in applying a ‘low bar’ to exceptionality (i.e. “outside the general run of these cases”). The Court considered this to be the wrong approach. Hislop determines the test as “already a high one“. Policy reasons dictate “a more strict, not a “low bar”, approach”.

As to the ‘basket’ of cases, it is not right to consider the sort of cases that are in the Portal (i.e. typically simple fast-track cases). Rather, a party must demonstrate exceptionality against the type of cases that have exited the Portal and are subject to the Part IIIA regime.

The consequence of the appeal is that the case has been remitted to the SCCO for reconsideration before a different Master.