Introduction to CPR Fixed Costs

CPR fixed costs rules are outlined in Part 45 of the Civil Procedure Rules. Fixed costs regimes apply to cases starting out in the Pre-Action Protocol for low value personal injury claims in Road Traffic Accidents, as well as employer’s liability and public liability claims. CPR fixed costs generally apply if the claim settles for less than £25,000, or if a claim has begun on the MOJ Portal and is not allocated to the Multi-Track.

In cases where CPR fixed costs do not apply, the costs are not capped, and the receiving party can usually claim significantly higher costs at an hourly rate.

If a claim settles, either by way of acceptance of a Part 36 Offer or as part of a final Order, the Claimant will be entitled to claim their fixed costs and disbursements, dependant upon the stage of litigation that applies. A claim for a disbursement can include anything from Court fees, medical reports, or input from Counsel.

An example of a common fixed costs dispute, which we discussed in our recent article, is when a claim starts off in the Portal, and then settles for in excess of £25,000 but has never been allocated to the Multi-Track.  Costs the Court will allow is limited to that which would be permitted under the fixed costs regime, but many paying parties will argue that standard costs should be recoverable.  This can only apply if the parties have contracted out of fixed costs.

The recent case of Nema V Kirkland provides an example of a fixed costs dispute in a case where disbursements have not been agreed, and outlines the means by which these costs should be assessed by the Court if they cannot be agreed.

Nema V Kirkland

In Nema V Kirkland, the Judge struck out the detailed assessment proceedings and the Claimant’s Bill of Costs and held that the Claimant should have instead made an application under CPR 36.320(11) for assessment of fixed costs.

This case was initially subject to the CPR fixed costs regime. The Claimant had been injured as a result of an RTA, and proceedings were issued after the claim exited the protocol. The Defendant then made a Part 36 Offer and the claim settled for £5,500. The Claimant issued detailed assessment proceedings as an agreement could not be reached in relation to costs of the disbursements.

The Defendant then made an application to strike out the Claimant’s Notice of Commencement and the Bill of Costs, on the basis that the case was subject to CPR fixed costs rules, and that there was no provision entitling the receiving party to commence detailed assessment proceedings.

The Defendant Solicitor in the case, Mr Waszak, referred to the case of Broadhurst v Tan [2016] EWCA Civ 94 in which Dyson MR stated the following:

“The 2013 Amendment Rules… introduced changes to Part 36 to take account of Section IIIA. A new rule 36.10A legislated for the treatment of costs in Section IIIA where a defendant’s Part 36 offer was accepted by the claimant. The effect of this provision was that the claimant would receive the fixed costs provided for by Section IIIA. This disapplied the usual rule, contained in the pre-existing rule 36.10 , that where a Part 36 offer is accepted, the claimant is entitled to costs assessed on the standard basis to the point of acceptance..”

The Judge agreed with the stance of the Defendant Solicitors and struck out the Notice of Commencement. It was held that an application under CPR 36.20(11) would have been appropriate, as it states that the Court must make an order as to costs in the event that parties do not agree liability for costs. He also highlighted that CPR 45 distinguishes between fixed costs and disbursements and makes a separate provision for each.  Master Leonard stated:

“where following acceptance of a Part 36 offer, fixed costs are recoverable under CPR 45 Section IIIA, there can be no deemed order for costs under CPR 44.9. CPR 44.9 applies where a right to costs arises under CPR 36.13(1), but CPR 36.13(1) is expressly subject to CPR 36.20. CPR 36.20 provides that a claimant’s entitlement to costs and disbursements, following acceptance of a Part 36 offer, is dictated by Section IIIA of Part 45. That is quite inconsistent with the existence of a deemed order for costs on the standard basis, as is the requirement that any dispute be resolved by an order under CPR 36.20(11). The logical conclusion is that where CPR 36.20 applies, CPR 36.13(1) is disapplied.”

It was stipulated that costs of such an application would be limited to £250 +VAT, in line with an interim application.

Ivanov v Lubbe

The case of Ivanov v Lubbe, CC (Central London; 17 January 2020) provides guidance upon what an application made under CPR r. 36.20(11) should include in the following terms:

“Applications should comprise two paragraphs, the first seeking a costs order and the second asking for costs to be assessed in accordance with the sum sought. Ideally, the application should exhibit a Form N260 (statement of costs) or at least the disbursements page.”

In this case, the Court also held that a party seeking to invoke the court’s costs jurisdiction should make a Part 23 application.  It should also be noted that under the High Court decision in Parsa v DS Smith PLC and Anr, a costs application should not be considered an ‘interim application’ and as such, costs recovery should not be capped at £250 + VAT.

Can ARC Costs Assist in Fixed Costs Disputes?

The ARC Costs team are extremely experienced in dealing with  fixed costs disputes. We are always happy to help with CPR fixed costs challenges. For more information on legal costs, please find out more about our speciality areas of expertise, and our services, such as preparing Bills of Costs and Costs Budgets.