Costs Recovery Cases where Fixed Costs May Apply

We have a number of clients who have recently fallen foul of what I consider to be slightly underhand behaviour of paying parties in cases which settle prior to allocation. I therefore write this post as a warning to anyone who seeks recovery of costs outside of the fixed costs regime provided for in CPR 45 for low value personal injury claims.

CPR 45.29 provides that fixed costs apply in portal claims for as long as they are not allocated to the multi-track. But that leaves a difficulty in cases where the claim is suitable for allocation to the multi-track but has not actually been allocated at the time of settlement.

CPR 36.20 states:

  • (1) This rule applies where -
  • (a) a claim no longer continues under the RTA or EL/PL Protocol pursuant to rule 45.29A(1); or
  • (b) the claim is one to which the Pre-Action Protocol for Resolution of Package Travel Claims applies.
  • (2) Where a Part 36 offer is accepted within the relevant period, the claimant is entitled to the fixed costs in Table 6B, Table 6C or Table 6D in Section IIIA of Part 45 for the stage applicable at the date on which notice of acceptance was served on the offeror.

Therefore, unless there is an is express provision otherwise in any settlement offer (be it Part 36 or otherwise), the fixed costs regime continues to apply until the court has allocated the claim to the multi-track, even if, when agreeing directions, the parties have agreed that the claim should be allocated to that track.

On at least two occasions recently, however, my clients have experienced circumstances where they have sought my advice as to the wording of offers and have attempted to include a clause expressly disapplying the fixed costs regime due both to the settlement value of the claim and the fact that the parties had agreed it was suitable for allocation to the multi-track. In so doing, the paying party responded that they would not deal with costs at the time of offer and acceptance but that it should be left to the parties’ costs lawyers/costs draftsmen. They will have stated this knowing full well that, if there was no express agreement in an accepted offer to exclude fixed costs, the fixed costs regime would be applied by the court if the matter were to proceed assessment.

Please be clear: to be able to exclude the claim from fixed costs, there must be an express provision that the claim be excluded from the fixed costs regime provided for in CPR 45 and that standard-based costs are payable and will be subject to assessment if not agreed. Do not allow the paying party to persuade you to leave it to the costs lawyers/costs draftsmen as they will know that, without that express provision being included at the time the offer is accepted, the receiving party will only recover costs provided for in CPR 45. You must therefore insist that such a clause is included unless you are content to be limited to fixed costs.

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