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Court of appeal costs guidance where claimant fails to use MOJ portal

Williams v The Secretary of State for Business, Energy & Industrial Strategy
Court of Appeal
20 April 2018

The recent Court of Appeal decision in Williams v The Secretary of State for Business, Energy & Industrial Strategy (2018) confirms that CPR r.45.24 does not apply to cases which have settled without proceedings but that arguments on conduct can be raised where the claimant should have used the MoJ portal to start a claim. It also provides helpful guidance on how defendants should raise their objections in these situations. William Mackenzie outlines the findings.

Background

The claimant brought a claim for Noise Induced Hearing Loss (NIHL). There were potentially two defendants and thus the claimant contended it was not suitable for the MoJ portal in accordance with paragraph 4.3(6) of the Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims ("the Protocol").

The defendant wrote to the claimant at the start of the claim stating:

“If this claim is not submitted through the claims portal and the claim is ultimately settled against our client alone, the defendant will seek an order from the court for fixed costs to be applied under CPR Part 45.24.”

The defendant settled the claimant's claim following a number of Part 36 offers and counter offers and without the need for proceedings. By that time it had emerged that the claimant did not pursue his claim against the other defendant. Part 8 costs only proceedings were brought and an order was made for costs to be assessed by way of detailed assessment on the standard basis.

At the first hearing on the issue, the deputy district judge held that the claim should have been brought under the Protocol and in the MoJ portal. Therefore pursuant to CPR r.45.24, on the costs consequences of a failure to use the Protocol, the claimant was only entitled to portal fixed costs. At the first appeal the DDJ's interpretation of CPR r.45.24 was held to be wrong. The judge ordered a provisional assessment of the costs but made it clear that "an appropriate sum may well be fixed costs."

The defendant appealed to obtain a determination on whether the fixed costs regime applies to claims settled before proceedings are issued and if it does not, whether under CPR Part 44 the court is entitled to take into account the conduct of the party to reach a decision that only fixed costs should apply.

At the earlier hearings, the claimant had contended that, because of an earlier order by DJ Stark directing a detailed assessment of the claimant's costs on a standard basis, the judge did not have jurisdiction to consider the fixed costs issue. Both judges rejected that contention, and the same argument was not pursued before the Court of Appeal.

Court of Appeal findings

Application of CPR r.45.24 to claims settled without proceedings

It was determined r.45.24 does not apply to the facts because there had been no Part 7 proceedings and no judgment. There was also no error in the drafting of this rule requiring it to be rewritten to meet the facts of the case.

Use of CPR Part 44 on conduct

The Court of Appeal took guidance from the decisions in O'Beirne v Hudson (2010) CA and Javed v British Telecommunications PLC (2015) HC.

Lord Justice Coulson stated at paragraph 59:

"In both O'Beirne and Javed, the assessment was to be undertaken by reference to what is now Part 44.4 (which, at the time of both those cases, was Part 44.5), namely by having regard to all the circumstances of the case, including conduct. It seems to me that, in a case where a claim was not reasonably made under a Protocol, Part 44.11 (Misconduct) is of equal, if not more, importance. It will very often be because of misconduct on the part of the claimant or the claimant's legal representatives that a claim was made which unreasonably avoided the relevant Protocol altogether. In addition, I note that, whilst O'Beirne favoured an item by item approach to the assessment, Master Simons in Javed said that that was unnecessary in these sorts of circumstances. For my own part, I prefer the approach of Master Simons. If the judge has concluded that, as a result of unreasonable conduct, the relevant fixed costs represent the maximum recovery, then an item by item approach is unnecessary."

Part 44 therefore provided a complete answer to the issues raised in this case: "In a case not covered by r.45.24, such as this one, a defendant can rely on the Part 44 conduct provisions to argue that only the EL/PL Protocol fixed costs should apply."

Guidance on the procedure of raising the argument

Usually costs-only proceedings will be issued under Part 8. A defendant who wants to argue that the claimant should be restricted to fixed costs only should raise that submission as soon as possible in the Part 8 proceedings. Under 46PD 9.7 that would probably be when the defendant files an acknowledgement of service stating its intention "to contest the claim or to seek a different order".

Comment

  • Assessment of costs on the standard basis does not preclude the court from allowing fixed costs if deemed to be reasonable. Claimant firms have been trying to contend that standard basis means hourly rates. This case puts to bed that contention.

  • An item by item approach is not required if the court considers fixed costs apply even if costs are to be assessed on the standard basis.

  • If Part 8 proceedings are brought the issue of non-compliance with the protocol should be raised as soon as possible, i.e. when filing the acknowledgment of service.

  • If there are two or more potential defendants in an EL disease claim which the claimant proceeds with outside the portal then the court will need to be satisfied that there were reasonable prospects of succeeding against the second defendant for the claimant to defeat an argument that fixed costs should apply.

  • If from the outset a defendant believes that there are no prospects of a claimant succeeding against other defendants it would be worth putting the claimant on notice in early correspondence.

  • The Court of Appeal also agreed with the judge below that if a defendant wishing to limit a settlement offer to fixed costs because of the argument about the viability of the claim against other defendants, then it could do so expressly in the offer letter. This would inevitably make the offer a Calderbank letter but would raise the issue at the relevant time (rather than at the end of the case) and would provide some costs protection.

Contact

For further information, please contact William Mackenzie, Senior Managing Costs Advisor, on 020 7645 9507 or at William.MacKenzie@dwf.law

By William MacKenzie

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This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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