Bratek v Clark-Drain Ltd (2018)
Fixed Recoverable Costs, it has been five years now since they were implemented in their current form, yet there is still so much ambiguity amongst the legal community as to the correct amount of costs to be paid on some cases.
Of course, Fixed Costs do not apply to all RTA or EL/PL cases, so it is not surprising that some receiving parties try and think of ways to avoid less favourable (in their view) Fixed Costs. However the CPR is clear, if a case is started on the Portal (RTA or EL/PL) then the receiving party is only entitled to recover Fixed Recoverable Costs under CPR 45 Section IIIA (CPR 45.29A – CPR 45.29L), unless the matter is allocated to the Multi-Track. Therefore as the law stands, even if a matter settles for £1,000,000.00, well above the Portal upper limit, the receiving party would be bound by fixed costs if the matter commenced on a portal and settles prior to Multi-Track allocation.
What other ways do receiving parties argue for the disapplication of Fixed Recoverable Costs? In the case of Bratek the Claimant sought to avoid being limited to Fixed Recoverable Costs as the case was settled by a Consent Order which included the term
“the Defendant to pay the Claimant’s Solicitor’s costs, inclusive of VAT and disbursements on a standard basis, to be assessed if not agreed.”
This case was heard in the County Court at Cambridge in April 2018 before His Honour Judge Yelton. Both parties provided HHJ Yelton a ‘bundle of authorities’ however HHJ Yelton found that these were of no direct relevance as none considered the issue that was before the Court, however some obiter dicta was expressed as to how HHJ Yelton had been persuaded by comments within the previous Judgement.
The Claimant was ultimately limited to Fixed Recoverable Costs as HHJ Yelton was of the opinion that in relation to the costs under CPR 45.29
“it does not seem to me that you can contract out of them in those circumstances (other) than in the very limited provisions referred to by the Court of Appeal in the Sharp case”.
An article on the case of Sharp v Leeds City Council (2017) can be found here.
One potential avenue for receiving parties to disapply Fixed Recoverable Costs was provided under CPR 45.29J, the exceptional circumstances rule. To make use of this rule the receiving party must ensure that they achieve a result which is 20% greater than the allowance of Fixed Costs under CPR 45.29K. Failure to achieve the 20% marker, results in adverse costs, reducing the motivation for pursuing higher costs under this provision.
Of course It is highly unlikely that a paying party would agree to apply the exceptional circumstance rule, especially if the Fixed Recoverable Costs work out ‘better’ for the paying party, however that is what the exceptional circumstance rule was put in place for under CPR 45.29J.
A critical approach to avoid Fixed Recoverable Costs applying to inappropriate circumstance, is to ensure only appropriate cases are put on the Portal in the first place. Of course there are only certain circumstances when the Portal should be avoided. Those are listed within the Pre-Action Protocols, an article on the RTA Protocol can be found here and an article on the EL/PL Protocol can be found here.
Further, if at the outset a matter is reasonably valued at more than the upper limit, £25,000.00 and the fee earner has reasonable belief that the case will likely settle for more than £25,000.00, then it would be appropriate to send a Letter of Claim rather than commence the claim on the Portal, thereby disapplying Fixed Recoverable Costs.
It must be borne in mind that the Court can under the rule CPR 45.24 limit the Claimant to Portal Costs under CPR 45.18 if the decision not to use the portal is deemed to be unreasonable. However if a receiving party sends a Letter of Claim due to reasonable belief that the matter would likely settle for more than £25,000.00, and at the time of reviewing the case at the outset a detailed file note supports the reasoning behind this valuation, this could be used to evidence why it was reasonable not putting the matter on the Portal, avoiding the lower CPR 45.18 costs.
Should you have any questions regarding this article or any cases of yours, please do not hesitate to contact us and we shall be happy to assist.