The recent case of Qader & Ors v Esure Services Ltd [2015] EWHC B18 (TCC) concerned the applicability or otherwise of the fixed costs regime for cases which start out within the RTA portal but which are subsequently allocated to the multi track.
Facts
By way of background, the index road traffic accident occurred on 25 October 2015 and it was the Claimants’ case that the Defendant drove into the rear of their vehicle causing injury to all parties. However, the Defendant insurer alleged that the Claimants were bringing the claim fraudulently and had intended to cause a crash by sharply applying the brakes in a situation which didn’t warrant it.
The claim, as per the Claim Form, was valued between £5,000.00 and £15,000.00, firmly within the realm of the fast track, based upon damages alone.
In considering the facts of the claim, DJJ Nadarajah directed that the case be allocated to the multi track and listed the matter for a CCMC. The DDJ also set a date by which budgets should be filed by the parties.
At the CCMC it was ordered by DJ Salmon that the fixed costs regime would still apply to the Claimants’ costs and therefore that costs management would not be required, on the basis of CPR 45.29A. DJ Salmon refused permission to appeal his decision on the basis that:
“(a) The rule is clear on its face that the determining factor is not track but value in respect of the operation of the fixed costs regime.
(b) There is in CPR 45.29J a provision allowing the court to depart from the fixed costs regime whereby the court "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 ... which is greater than the fixed recoverable costs ..." a fraud case lasting two days may well be such a case.
(c) CPR 3.12 (c) clearly contemplates costs on the multi track being subject to fixed costs."
Permission to Appeal
CPR rule 52.3 (6) provides:
“Permission to appeal may be given only where –
(a) the court considers that the appeal would have a real prospect of success; or
(b) there is some other compelling reason why the appeal should be heard."
An application for permission to appeal was made by the Claimants under CPR 52.3(6) on three grounds and went before His Honour Judge Grant. On consideration of the grounds of appeal HHJ Grant determined that the Claimants had established permission under both CPR 52.3 (a) and (b) and as a result the grounds raised in the appeal were heard.
The Claimants’ grounds, Defendant's response and court's findings were as follows:
Ground 1- DJ Salmon had failed to interpret CPR 45.29A so as to implement the Jackson reforms purposively
It was claimed by Mr Skeate, acting for the Claimants, that DJ Salmon was incorrect in concluding the Fixed Cost Regime must apply to the multi track when a claim is commenced, but not continued, in the RTA pre-action protocol. Mr Skeate argued DJ Salmon fell into error as a purposive approach should have been applied rather than a technical one when considering the application of CPR45.29A. Mr Skeate supported his position with reference to both a key note speech and passages from Jackson LJ's final report.
Mr Smith, acting for the Defendant, argued that DJ Salmon interpreted the rules correctly and that CPR 3.12, 45.29A and 45.29C operate consistently irrespective of the allocation to a particular track. He argued that the interpretation sought by the Claimant would require vast re-wording of the CPR in order to comply and the Judge was not permitted such a degree of variance.
In considering the positon HHJ Grant concluded that the terminology of Section IIIA of Part 45 was quite clear in as much as the provisions of the CPR clearly applied to claims started under the RTA Protocol but which no longer continued under the same or the Stage 3 procedure. He concluded that there was no ambiguity or lack of clarity in the meaning of Section IIIA of Part 45 and as such, adopting a purposive approach to interpreting this rule was rejected.
Ground 2- DJ Salmon had failed to interpret CPR 45.29A in accordance with the overriding objective
It was Mr Skeate’s submission that CPR 45.29 must be considered in conjunction with the overriding objective in matters such as this and that this consideration would inevitably give rise to standard basis costs despite the plain meaning of CRP 45.29A, so as to give effect to the overriding objective as per CPR 1.2.
In response Mr Smith submitted that CPR 1.2(b) did not permit the court to deny the CPR’s clear intent simply because it did not consider it to fit well with the overriding objective.
HHJ Grant dismissed the Claimants’ point on the grounds that it was neither necessary nor appropriate to invoke CPR 1.2(b) in order to confer an additional interpretation. He confirmed that the terms of CPR 45.29A were quite clear in their meaning and their intention must be applied. HHJ Grant also distinguished the allegation of fraud in this case with those allegations found in the chancery division, commercial court and TCC cases, stating the later examples often involve the examination of voluminous documents, analysis of legal principles and the consideration of complex factual circumstances.
Ground 3- The Application of Rule 45.29A is in contravention of Section 3 of the Human Rights Act 1998 and Article 6 of the Convention
Simply put, Mr Skeate disputed CPR 45.29A on the grounds that it did not allow the Claimants a fair hearing due to the application of fixed fees preventing the Claimants from obtaining professional legal representation contrary to Section 3 of the Human Rights Act 1998 or Article 6 of the Convention.
By way of rebuttal, Mr Smith submitted three reasons why the fixed costs regime did not contravene Section 3 of the Human rights Act 1998 or Article 6 of the Convention:
1) It is legitimate to seek to limit the costs of proceedings with reference to the value of the claim;
2) A balance has been established whereby a Defendant is limited in their recovery of costs, not just via the CPR but also but also qualified one-way cost shifting; and
3) A system is already in place for the Claimant to be granted standard basis costs as per CPR 45.29J.
His Honour Judge Grant rejected Mr Skeate’s argument in favour of Mr Smith on the basis that much of the argument was covered in Ground 2 of the appeal, which had already been rejected and that he favoured Mr Smith's arguments in response. Finally HHJ Grant stated that CPR 45.29J provided a safeguard against injustice in proceedings in any event.
Accordingly, as the Claimant failed on all three grounds the appeal failed.
Conclusion and more
Chris Daniels, representing the Claimants, is quoted in the latest edition of Costs Lawyer magazine as saying 'The fixed costs regime prevents us from functioning effectively’.
So whilst there is a process for applying for standard basis costs under CPR 45.29J it is not a forgone conclusion that they will apply to claims that fall within the multi track when the provisions of CPR 45.29 have been met.
However, the story does not end there….as reported in the latest issue of Costs Lawyer magazine, the Claimants in the matter have decided to appeal the decision to the Court of Appeal, primarily on the basis that the rules as they currently stand may be in breach of Section 3 of the Human Rights Act 1998, which through Article 6 of the European Convention on Human Rights, provides the a right to a fair trial. The lack of right to a fair trial is being alleged in this instance on the basis that the Claimants are being limited to fixed recoverable costs against a party with unlimited resources and in spite of the fact that allegations of fraud are an issue in the case. This raises issues in relation to the overriding objective at CPR 1.1 (2)(a), which provides that the court must ‘deal with a case justly and at a proportionate costs, so far as is practicable, ensuring that the parties are on an equal footing'. Can it be that the parties are on an equal footing when one party is trying to defend allegations of fraud, serious enough to warrant the matter being allocated to the multi-track, but at the same time being heavily restricted in the costs it can recover for doing so?
In contrast the recent findings in Khan & one other v Mcghee would seem to endorse recovery of costs on the standard basis in claims where an allegation of fraud is made. DJ Rich allowed such costs on the grounds that the allegations of fraud ‘is likely to take the matter very far from the ordinary course of RTA litigation which the fixed fee cost regime is intended to cover’. The Defendant is appealing this decision which has also now been transferred to the Court of Appeal.
Both of these cases clearly raise the argument of whether there is equal access to justice for both parties in such instances and for that reason we doubt this is the last word on the application of fixed costs in multi track cases where fraud is alleged.
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