The great escape?

28 June 2023

The new intermediate track goes live on 1 October. As every reader will know, the defining feature of the new regime is the imposition of fixed costs. They are calculated using a matrix found in table 14 of the practice direction.

By far the most popular question I have been asked is how, if at all, can we get more from a paying opponent than the amount specified in the rules?

It will not be easy. The general provisions at CPR 45. 9 empowers the court to consider a claim for an amount of costs (excluding disbursements) in excess of fixed costs “where there are exceptional circumstances making it appropriate to do so”. This measure already exists for fixed personal injury costs and is rarely, if ever, exercised.

Judges appear fond of swings and roundabouts. The return on this matter may be mean but there is that theoretical basket of cases out there. Overall, the unproven theory goes, a dip here will be compensated for by a generous return there. The bar is set high, held Stewart J in Ferri v Gill [2019] EWHC 952 (QB).

An added complication is banding. Cases identified as knotty should be allocated to a higher or the highest band. Those generate greater costs and one view is that the challenging nature of a particular case is embedded in those higher costs. Concerns about the vulnerable (belatedly recognised by the amendment of CPR 1 in April 2021) are covered by CPR 45.10:

“45.10 (1)The court may consider a claim for an amount of costs (excluding disbursements) which is greater than the fixed recoverable costs referred to in Section VI, Section VII or Section VIII of this Part where—

(a) a party or witness for the party is vulnerable;

(b) that vulnerability has required additional work to be undertaken; and

(c) by reason of that additional work alone, the claim is for an amount that is at least 20% greater than the amount of fixed recoverable costs.”

Beware – fail to meet the 20% threshold and you only get the lesser of fixed recoverable costs and the amount assessed by the court (CPR 45.11).

Unreasonable behaviour by a party, paying or receiving (it is a two-way street), attracts a swingeing 50% penalty. It is defined as “conduct for which there is no reasonable explanation”.

That test is stiffer than the conventional test for an award of indemnity costs, which is that “there must be some conduct or some circumstances which take the case out of the norm”, as Lord Woolf explained in Excelsior v Salisbury [2002] EWCA Civ 879. The commentary in Cook on Costs 2023 at page 440 is illuminating.

To keep things simple and to send parties away at the conclusion of a trial, part 36 is recast in precisely the way Sir Rupert recommended. A good offer from a claimant under new CPR 36.24(5) entitles them to:

“The additional costs are an amount equivalent to 35% of the difference between the fixed costs for—

(a) the stage applicable when the relevant period expires; and

(b) the stage applicable at the date of judgment,

to which the claimant is entitled under paragraph (3)(a) and (b).”

Note that, whilst welcome, the Jackson 10% uplift is incorporated into the 35% provision.

Frankly, I suspect that the judiciary will be most reluctant to allow a party more than the tariff set out in the rules. One serving judge encapsulated the position so elegantly when they told me that any sign of flexibility would mean fixed costs becoming unfixed, thus frustrating the purpose of the exercise.

ACL special adviser Professor Dominic Regan

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28 Jun 2023

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