ARC Costs recently assisted on a case of a CPR 36.20 fixed costs assessment application, whereby the Defendant claimed that such an application fell within the definition of an interim application, thereby limiting the Receiving Party Claimant to fixed application costs of £250 + VAT.  However, ARC Costs successfully argued on behalf of the Receiving Party that the case was not an interim application; and therefore, not subject to costs as prescribed by CPR 45.29H.

Please note that this article relates to the CPR as they stood prior to the fixed costs reforms on 1 October 2023 as can be found here. These Rules continue to apply to all cases issued prior to 1 October 2023, or in PI cases, where the cause of action arose pre-1 October 2023.  As such references to the CPR may be different to those that currently exist in the present CPR.

We continue to assist in post-1 October 2023 fixed costs disputes, and therefore please do not hesitate to get in touch regarding the same.

Interim application costs allocated under CPR 45.29H

Part 45 of the Civil Procedure Rules sets out the rules for the fixed costs regime in civil litigation. The amount of legal fees that can be recovered by the successful party in fixed costs cases is fixed and predetermined. This system was designed to provide greater certainty and transparency in legal costs for both parties, reducing the time and expense associated with cost assessments.  Whilst some disbursements are also fixed under CPR 45 (particularly the Low Value RTA Protocol), there can remain disputes as to the reasonableness of medical expert fees, particularly once a party starts instructing experts outside of those most commonly approached to provide an opinion in personal injury cases, such as GPs and Orthopaedic Surgeons.

There are, of course, circumstances in which CPR 45 fixed costs can be escaped, such as in the case of a Part 36 Offer, where a Claimant beats their own offer at a hearing, or under exceptional circumstances under CPR 45.29J.

In respect of Part 36 Offers, the Court of Appeal confirmed in the case of Hislop v Perde [2018] EWCA Civ 1726, that fixed recoverable costs would continue to apply where the acceptance of a Part 36 Offer occurs before Trial, unless there are exceptional circumstances. It was also clarified that the late acceptance of a Part 36 Offer would not amount to exceptional circumstances for the purposes of CPR 45.29J.  As such, indemnity costs will only apply to the period after a Part 36 Offer has expired, only when that offer has been beaten by a Claimant at Trial, and not for late acceptance. 

Turning back to applications however, under CPR 45.29H it is stated that:

“ Where the Court makes an order for costs of an interim application to be paid by one party in a case to which this Section applies, the order shall be for a sum equivalent to one half of the applicable Type A and Type B costs in Table 6 or 6A.” 

CPR 45.18(2) defines Type A fixed costs as legal representative costs, and Type B as the advocate’s costs. Both sums are fixed at £250 + VAT each, totalling £500 + VAT. 50% of these costs are recoverable on a successful interim application, being fixed at £250 + VAT in addition to the usual fixed costs awarded for the remainder of the case.

Case Study: Defining Interim Applications

In the subject case, the Defendant objected to an Order for costs beyond those of an interim application made by the Court, following the Receiving Party (for which ARC Costs was acting) having been successful in defeating the Paying Party Defendant’s offer in a fixed costs paper assessment. In addition to the fixed costs awarded, the Court had ordered the Defendant to pay the Claimant’s application costs in the summarily assessed sum of £1,250. The Defendant relied upon the Judgment in Nema v Kirkland to support their argument that an application for costs made by the Claimant was an interim application; and thus, should be subject to limited costs under CPR 45.29H. For this reason, the case was listed for a second hearing (following the fixed costs dispute of the main action having been resolved) at which the parties were ordered to attend. Inevitably with this being an attended hearing, the Paying Party was causing costs to spiral even further in respect of the application.

Acting on behalf of the Claimant, ARC Costs’ position was that the Court was correct and entitled to order as it did in relation to costs on an hourly rate, standard basis. It was submitted that the Claimant’s application was not an “interim hearing” for the purpose of CPR 45.29H on the basis that the substantive dispute, in relation to damages, had concluded via a Part 36 Offer acceptance. The application was plainly, by character and definition, a final hearing, and the wording of an “interim application” would have no proper function if the Defendant’s position was to be accepted.

Within the skeleton argument, the Receiving Party referred to a number of case law examples and relevant sections of the Civil Procedure Rules to support their case. Specifically, it was submitted that:

Section IIIA of CPR 45 clearly relates to the substantive proceedings, not proceedings for the determination of costs. In the case of Crosbie v Munroe [2003] EWCA Civ, Brooke LJ stated the following:

“Until the time the substantive claim is settled, the “proceedings” relate to liability and the amount of any compensation. After the substantive claim is settled, the “proceedings” relate to the assessment of the costs the paying party has to pay. “

He further stated:

“Even when Part 8 proceedings have to be commenced in order to obtain a court order for detailed assessment, the “costs of the proceedings” within the meaning of CPR 47.19 still relate only to the costs leading up to the disposal (on this occasion by agreement) of the substantive claim.”

The Receiving Party further relied upon the Judgment of Carr J (on appeal from His Honor Judge Tindal) in Parsa v Smith in which it was stated regarding costs not being an interim application for the purpose of CPR 45.29H:

“Standing back and considering the overall structure of CPR. Part 45 and in particular the dicta and approach confirmed most recently in Hislop, it seems to me that the Judge was right to treat the application of July 2017 as not being “an interim application” for the purpose of CPR 45.29H.” 

He further stated:

“The effect of this is not, as the Appellant suggests, that the Respondents’ costs of the true interim application are not subject to CPR 45.29H. Rather, that provision did not apply in the first place because the application was not, properly understood, an interim application at all. If the Appellant is right, it is difficult to see what role the word “interim” plays at all. CPR 49.29H would simply apply to all applications at any stage and, indeed, in answer to questions from the court Mr. James was forced to embrace this extreme position. It seems to me that that simply cannot be a sensible reading or construction of the relevant provisions which so clearly do refer to “interim applications”. As the Judge said, the word “interim” has to mean something.”

ARC Costs were ultimately successful in this matter and the Judge concluded the the Claimant was entitled to the original costs listed within the original fixed costs assessment Order (£1,250) plus costs of the attended hearing in the additional sum of £1,000 + VAT.

How Can ARC Costs Assist? 

ARC Costs are a team of specialist Costs Draftsmen and Costs Lawyers who have vast experience in dealing with both paying party and receiving party costs disputes as independent costs experts.

We are happy to assist and advise on any fixed costs matter and have a specialist team that deal with this area of work, who enjoy regular success in this novel area of costs law.

We deal with costs recovery and can assist in advising you in relation to your costs entitlement. We can also assist with costs enforcement to ensure your costs are paid and recovered once agreed or assessed. If you require any further information or would like our assistance, please contact us on 01204 397302, via email on info@arccosts.co.uk, or via our live chat function.

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