Justice administered by swings and roundabouts may not be thought of as the recognised way in which cases are decided in the courts of England and Wales, but where small disputes are involved, that is the means by which the costs of bringing most such matters before a judge are disposed of. That might be thought odd. After all, the English and Welsh legal system is recognised world wide as being fair and incorruptible, so it may appear counter-intuitive in that when the time comes to tot up the costs, what you get if you win and what your liability will be if you lose, is based upon a system of taking the rough with the smooth, as opposed to a precise analysis of how much it has cost the winner to succeed and what figure is a fair one for the loser to pay.
The genesis of swings and roundabouts lies in the desire of government to fix costs in the smaller types of civil dispute, so that the parties know what they will be in for, win or lose. In low value personal injury claims, a regime of fixed costs was implemented with effect from 31 July 2013 by the Civil Procedure (Amendment No 6) Rules (amending a regime that had started on 30 April 2010) restricting the level of costs recoverable in cases valued at up to £25,000. The claims affected were those which had started life under the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents, but had left the Portal (the online electronic gateway by which such personal claims are started), because, for example, no admission of liability has been forthcoming.
In circumstances such as these, Section IIIA of CPR 45 is engaged which provides for the payment of fixed costs where the claim succeeds, the level of which depends on various factors, such as the stage at which the case is resolved and the amount of damages payable. It follows that where fixed costs apply, there is no post-mortem about whether the compensation is in proportion to the costs expended to recover them. If you win £X, you are paid £Y in costs, irrespective of whether you have set your sights much higher.
So far, so logical, but no case is the same. If the matter is allocated to the multi-track, fixed costs cease to apply but what happens if, before allocation, the claim proves to be far more complex than appeared to be the position at the outset? This may happen if the claimant’s prognosis becomes far worse, or due to the defendant fighting every point tooth and nail. Put another way, when a case to which Section III applies is successfully completed pre-allocation, is there an escape route down which claimants can go so that their solicitors are paid properly for running their case in the face of furious opponents, who have driven up the costs far in excess of the fixed amount that otherwise would be payable?
The answer to that is “Yes” under CPR 45.29J:
“(1) If it considers that there are exceptional circumstances making it appropriate to do so, the court will consider a claim for an amount of costs (excluding disbursements) which is greater than the fixed recoverable costs referred to in rules 45.29B to 45.29H“.
That leads to the 64 million dollar question. What on earth are “exceptional circumstances” since there is no definition or guidance in the CPR?
Somewhat surprisingly, not much help is to be found in the case law on CPR 45 either, but what is clear is that recovering more than £25,000 is not “exceptional”. In Qader v Esure, the court chose the point of allocation of the case to a track for trial as the point of escape from the fixed costs regime and not the amount well in excess of the £25,000 for which that matter had settled. In doing so, the court made it clear that to move out of fixed costs, there needs to be an actual allocation to the multi-track, not merely a likelihood that that would have happened but for the earlier settlement.
That point was further rammed home by the Court of Appeal in Hislop v Perde. Coulson LJ said:
“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. The whole point of the regime is to ensure that both sides begin and end the proceedings with the expectation that fixed costs is all that will be recoverable. The regime provides certainty. It also ensures that, in low value claims, the costs which are incurred are proportionate…” (paragraph 50, judgment).
Such a view was then endorsed in Ferri v Gill by Stewart J:
“Exceptionality should not be a low bar and it must be measured against the types of cases that are covered by Section IIIA” (paragraph 52, judgment).
There is thus much more to being “exceptional” than just the money, but what? In Costin v Merron, Levenson LJ said in the context of CPR 45.12 (as then in force), that exceptional circumstances:
“…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 on the case by way of costs than would otherwise have been the case” (paragraph 11, judgment).
Against this background it is perhaps unsurprising that there is little further on this point where claimants have mounted CPR 45.29J challenges to the fixed costs regime. The hurdle is high and damages awarded of over £25,000 will not per se get the claimant home, albeit that compensation of £350,000 involving life changing injuries was enough to do so in Jackson v Barfoot Farms (Canterbury County Court, DD Jackson, 29 November 2017 (unreported)). That said, in two lower value cases which settled before allocation, the claimants have tried their luck and won.
Whilst care has to be taken when referring to decisions below High Court level, since they are not binding but only of persuasive value, in Lloyd v 2 Sisters Poultry Ltd the case had settled for £51,000 in circumstances where the claimant had become permanently disabled as a result of the tortfeasor’s negligence, thereby requiring the expenditure of far more in costs than would have been needed in a “run-of-the-mill” fast track case. It followed that the judge on appeal upheld the decision of the court below under CPR 45.29J that standard costs, not fixed costs, should apply.
Perhaps encouraged by that success, in Crompton v Meadowcroft the court also expressed itself to be satisfied that exceptional circumstances applied. In Crompton, the claim had left the Portal for a lack of any response, only for the defendant then to admit liability for the injuries she had caused the claimant through her negligent driving. Following the issue of proceedings, reliance was placed on the reports of four expert witnesses on the question of causation. Both parties accepted that the matter was appropriate for allocation to the multi-track, but immediately upon that consensus having been reached, the defendant offered £31,000 in settlement which the claimant accepted. That in turn gave rise to the CPR 45.29J application to escape the fixed costs regime.
Before the District Judge, it was the claimant’s case that the CPR 45.29C fixed costs of £7,360 plus VAT and Table 6B disbursements were insufficient because exceptional circumstances justified standard costs. The reasons for that were that the parties had agreed that the matter should be dealt with in the multi-track, that there had been four expert witnesses, that extensive medical disclosure had been necessary, that there was a risk of permanent disability, that the damages exceeded the CPR 45 Section III limit, and that, as a result, the work required to be done by the claimant’s legal team had been significantly greater that might have been anticipated.
Those submissions satisfied the court, with the judge taking care to say that he had not been persuaded that, post event, the action would have been allocated to the multi-track, but, on the contrary, the issues relating to the injuries, the possibility of permanent disability and the number of expert witnesses, were all unusual features, amounting to exceptional circumstances under the rule. It followed that the claimant escaped the fixed costs regime and her solicitors could enjoy their costs on the standard basis.
In conclusion, the judge said:
“It is right that the nature of a fixed costs regime does mean that one has to look closely at the circumstances of any particular case if exceptionality is being argued…” (paragraph 15, judgment).
With there being no guidance in the rules as to what constitute “exceptional circumstances”, these observations must be correct. Each case will turn upon its own facts, and matters such as the amount of the damages, the severity of the injuries, the number of witnesses and the conduct of the defendant, will all be factors to take into account. Whilst at the end of the day, it will be a matter for the judge to decide upon the persuasive weight to be attached to each, in reality, escapes from the fixed costs regime will initially based upon the proposition “if you don’t ask, you don’t get”.
Make no CPR 45.29J application, and the claimant’s solicitors will have to be satisfied with fixed costs, but make an application which is successful, and the benefits will far outweigh those costs. Even if the application fails, the indentation into the fixed costs will be far less than the sum by which the solicitors will benefit if it succeeds. That is perhaps another but less well-known example of the principle of swings and roundabouts. Bring an application for exceptional circumstances: you may win some, you may lose some, but taking the rough with the smooth, a successful application will reap much higher rewards than the amount by which the firm is out of pocket if the application is made and lost, or is not made at all.
