In a costs-related appeal, Stewart J has considered the proper construction of the “exceptional circumstances” provision in CPR 45.29J, which offers a potential escape route from fixed costs for claims which exit the RTA or EL/PL Protocols. Here, the claim had exited the RTA Protocol.
The lower court’s decision pre-dated Coulson LJ’s discussion of CPR 45.29J in Hislop v Perde [2018] EWCA Civ 1726. However, he avoided drawing detailed conclusions on the general ambit of CPR 45.29J, since that was not directly relevant in Hislop. Consequently, the observations in this case, albeit at High Court level, usefully add to the fixed costs jurisprudence.
At first instance, Master McCloud had held that, when considering CPR 45.29J:
- One had to look at exceptionality “in the context of the sort of cases that are in the Portal”.
- The correct test was that “there must be exceptionality in the sense that the case is taken out of the general run of this type of case by reason of some circumstance”. This might include value, would often include costs, and could be all the circumstances of the case.
- The test was a “low bar” one, because the Portal was intended to deal with simple cases, which would typically be fast track ones.
Stewart J noted that Section IIIA of CPR 45 expressly provides that ex-Protocol cases remain subject to the fixed costs regime. The rules mandate fixed costs in such cases, subject only to subsequent judicial allocation to the multi-track, or CPR 45.29J(1). Consequently, “exceptional circumstances” must be evaluated against those cases covered by Section IIIA.
In Stewart J’s view, the phrase “exceptional circumstances” had to take its colour from the setting in which it appeared (R v Soneji [2005] UKHL 340). That setting informed the court whether a strict approach to “exceptional” was warranted. Here, the master erred in adopting a “low bar” approach, because:
- In Hislop, Coulson LJ referred (obiter) to a test requiring “exceptional circumstances” as being “already a high one”.
- The underlying policy of the fixed costs regime required a stricter approach, not a “low bar” one.
The master also erred when defining the “basket” of cases against which a case had to demonstrate “exceptional circumstances”. The correct basket comprised the type of cases that had exited the Portal and were subject to the Section IIIA regime.
Case: Ferri v Gill [2019] EWHC 952 (QB) (17 April 2019) (Stewart J).
Claimant limited to fixed costs under rule introduced between settlement and costs hearing in case that had fallen out of the portal (County Court)
HHJ Sephton has allowed a costs appeal in proceedings that had fallen out of the Employer’s Liability/Public Liability Protocol (EL/PL Protocol) (as liability was not admitted). The claim was for around £50,000, but C subsequently accepted the defendant’s (D) Part 36 offer of £29,000.
In reaching his decision, HHJ Sephton had to consider which rules should apply, as there had been a rule change (under SI 2017/95) between the date when the Part 36 offer was accepted and the date of the costs hearing before the judge whose decision was appealed. Under the “old” provisions C claimed to be entitled to an assessment of costs while, under the “new” rules, C’s entitlement was limited to fixed costs of £2,500, and 10% of damages over £10,000.
Noting that the “new rules” were in force at the date of the costs hearing, HHJ Sephton said that the “litmus” was whether applying the new rules would cause “significant unfairness” to the parties (L’Office Cherifien Des Phosphates v Yamashita Shinnihon Steamship Co Ltd [1994] 1 AC 486). The “mere fact” that they were procedural rules, did not mean that they did not have retrospective effect (Yew Bon Tew v Kenderaan [1983] AC 553).
The new rules clarified that claimants who had brought a claim under the EL/PL Protocol, which was subsequently settled for more than £25,000, were not deprived of all costs (as a strict reading of table 6C, together with CPR 45.29D and 45.29E had originally implied). The aim was not to impose unfairness upon claimants but to (i) clarify the likely consequences if a claim was started under the EL/PL Protocol but ended up being worth more than £25,000; and (ii) to avoid injustice to claimants whose claims settled for more than £25,000.
HHJ Sephton concluded that, as there would be no unfairness to C, the new rules should apply.
The judgment is also of interest for its consideration of Qader v ESure [2016] EWCA Civ 1109 and Sharp v Leeds City Council [2017] EWCA Civ 33: both of which considered the appropriate approach to costs in cases that had fallen out of the EL/PL Protocol, and the circumstances leading to the rule change introduced by SI 2017/95.
Case: Lovatt v LEW Diecastings Ltd (In liquidation), County Court at Manchester (4 December 2018) (HHJ Sephton QC).
