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Published 17 noviembre 2016
Whilst the reforms introduced by Lord Justice Jackson in 2013 have reduced the costs paid by litigants in many areas, there remain disputes over the interpretation of some of the rules, and this has led to satellite litigation as clarification of potential loopholes is required.
The question of whether cases should fall within one category of fixed recoverable costs or another has seen thousands of cases stayed awaiting the outcome of the Court of Appeal's decision in Bird v Acorn Group Ltd.
The issue considered in this case arises on cases which commence within the Low Value Protocols and fall out of it, following which proceedings are issued. In some Courts, the case is listed for a disposal hearing in the first directions order, skipping a stage in the Fixed Recoverable Costs (FRC) table in Part 45.29, and then the case settles.
In such cases it is common practice for the Claimant solicitors to seek the highest level of FRC recoverable, whereas Defendants have argued that this was contrary to the whole purpose of the FRC regime, which requires claims to progress sequentially through stages as work is undertaken and the claim progresses toward final hearing. In the cases immediately listed for disposal the solicitor in many cases will not have done much of the usual work carried out within the post allocation pre-listing stage of the process. There were a number of conflicting opinions from Judges as to whether the columns set out in the tables are to be considered individually or sequentially in stages, and whether a disposal hearing amounts to a Trial.
In Bird the Claimant argued the FRC were those in column 3 of Table 6D (£3,790 plus 27.5% of the damages). The Defendant disagreed and argued the Claimant was only entitled to the "post-issue, pre-allocation" first stage with lower costs of £2,450 plus 17.5% of the damages. The District Judge at first instance ruled in favour of the Claimant. Once the matter was listed for disposal, the case moved into column 3 and there was nothing in the rules to tell the parties that they must move sequentially through the columns.
The appeal was decided in favour of the Claimant. The Court of Appeal rejected the argument that it could not be said prospectively that a disposal hearing would be ‘final’ or ‘contested’, finding that it was sufficiently certain to be so. It also rejected the argument that the stages in Part B of the tables must be passed sequentially. The absence of allocation did not restrict the Claimant to the first stage.
The Court rejected the argument that if a disposal hearing were used for directions including allocation, and the claim then settled before listing for a full trial, fixed costs under the second stage would apply. Once a claim reaches the third stage, it cannot move backwards through Part B. The Court said that a claim that was allocated and listed for trial simultaneously proceeded directly to the third stage, skipping the second stage. It also follows that if a claim is disposed of at a disposal hearing, the fixed costs under Parts C and D of the tables will apply.
The outcome of the Appeal will have a significant impact on the costs payable on all case types subject to FRC, not just public liability ones, as was the case here. Parties should now treat disposal hearings as they would a Trial and set appropriate strategies.
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Owen Newcombe, Emma Fuller