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The Court of Appeal has recently considered the issue of which fixed costs apply where a matter is listed for a disposal hearing for the quantification of damages in Bird v Acorn Group Ltd  EWCA Civ 1096.
The issue arises because of the structure of the tables of fixed costs in CPR 45 Section IIIA in cases where a matter leaves the RTA or EL/PL protocols. In each case, where Part 7 proceedings are issued and the matter settles before trial, there are three possibilities for fixed costs depending on the stage at which the case settles.
The three stages are defined as “On or after the date of issue, but prior to the date of allocation under Part 26” (Column 1), “On or after the date of allocation under Part 26, but prior to the date of listing” (Column 2) and “On or after the date of listing but prior the date of trial” (Column 3).
The difference in costs can be significant: In an RTA claim with a settlement value of £5,000 for example, costs under column 1 would be £2,160; under column 3 they rise to £3,655, an increase of over 69%.
Clearly the draftsmen considered that cases would progress neatly through allocation and listing to trial. In practice however, the practice direction to CPR 26 allows the court to list the matter for a disposal hearing at the allocation stage, typically where judgment has been obtained by default or admission. In such cases, the matter is never allocated. Should the matter proceed to the disposal hearing, that hearing can either be the final hearing in the claim (whether contested or uncontested), or directions can be made for further conduct of the case. However it is always has the potential to be a “contested final hearing”.
The issue that arose in Bird (and thousands of cases stayed pending the determination of the appeal) was whether the fixed costs were those payable under column 1 or column 3. The Claimants sought the column 3 costs, on the grounds that the matter had been listed for a “trial”. The Defendant sough column 1 costs, on the grounds that a disposal hearing was not a trial, at least for the purposes of the fixed costs regime. The Defendant argued that all too frequently the disposal hearing was neither final nor contested.
The Court of Appeal found that listing for a disposal hearing triggered the column 3 costs. It was considered that because the disposal hearing was intended to finally dispose of the case and was capable of being contested, then it was a trial for the purpose of the fixed costs provisions.
The Defendant’s secondary tack was to argue that if the matter was allocated and directions (but no listing) given at the disposal hearing, then the matter would fall squarely under column 2. The Defendant pointed out the anomaly of the Claimant then being paid less in circumstances where the claim was continuing and there would be more work required. This secondary argument was rejected on the grounds that the columns were sequential, and once a column was reached it could not be reverted from.
As a result, in cases where the matter is listed for a disposal hearing (and, it was noted in the course of discussion, in cases where the matter is allocated to the fast track and listed at the same time) then there is no moment in time in which column 2 costs are payable, even though the columns are intended to be sequential.
The contention of either the Claimants or Defendants would have been supportable in this case given the ambiguity and structure of the fixed costs provisions. Defendants will rightly now feel a sense of injustice that the same fixed costs are payable for preparation for a 10 minute disposal hearing as for a full day trial. Had the decision gone the other way, Claimants would have rightly felt a sense of injustice at being paid the same amount for settling the day before a contested disposal hearing as the day after issuing proceedings.
In either scenario, it is doubtful that the injustice is evened out by the ‘swings and roundabouts’ principle upon which fixed costs are based, because the fixed costs proposals did not envisage the scenarios. They therefore were not accounted for when the data on which the proposals were based was collected. That is a failing of the fixed costs regime, which clearly took no account of the practice direction to Part 26. Had it done so adequately, it would have necessarily been more nuanced (and therefore more complex) than the existing scheme.
The whole episode should strike a cautionary note with regard to the forthcoming further review of fixed costs by Lord Justice Jackson. The rough justice which was an inevitable outcome of Bird was caused by a failure to account for all the procedural variety of a relatively straightforward system as fast track personal injury claims. For any horizontal or vertical extension of fixed costs to be fair, it will have to entail an exceptional degree of complexity.
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This article does not constitute legal advice.