FIXED COSTS : CPR 44.3 : CPR 44.4 : STANDARD BASIS : DETAILED ASSESSMENT
These were claims within the scope of the RTA Protocol (as defined in CPR 45.27 (now 45.16) arising from a rear end shunt. The claimants (driver and two passengers)’ solicitors, Lyons Davidson (LD), sent “early notification of claim” letters on behalf of the claimants to the defendant’s insurer, AXA Insurance UK PLC, in Birmingham on 23 November 2010.
The following day a Claim Notification Form (“CNF”) for each claimant was sent via the RTA Protocol’s online portal. Instead of directing the CNFs to AXA in Birmingham, they were sent to AXA Insurance Ireland.
AXA admitted liability in January 2011 and invited LD to resubmit the CNFs to it, the correct insurer, via the portal. LD did not resubmit the CNFs but instead tried to correspond with AXA and, having received limited response, issued part 7 proceedings in the Cardiff County Court.
Judgment was entered for the claimants on 16 August 2011 for amounts to be decided. The claims subsequently settled by consent in the sums of £1,126.18, £1,113.10 and £1,147.50 respectively and the terms of settlement were embodied in a form of a Consent Order which was sealed by the Cardiff County Court on 14 November 2011.
Paragraph 2 of the Order provided that “The Defendant do pay the Claimants costs of this action on the standard basis to be assessed if not agreed “.
Detailed assessment proceedings were commenced on 24 January 2012 when LD served a Bill of Costs totalling £17,430.11.
The Defendant’s Position
The defendant challenged the claimants’ entitlement to costs in excess of those which would have been allowed under the fixed recoverable costs regime.
On 13 March 2013 Costs Officer Pigott found that “..I do not have the power as a Costs Officer to actually overturn any of the orders… and so I am going to deal with the costs on a standard basis and not to deal with them under the fixed costs scheme.”
The defendant appealed arguing that an order for an assessment on the standard basis does not oust the Court’s power under CPR45.36 to limit the costs to the amounts set out in CPR45 Section VI (now Section III) which apply to claims under the pre-action protocol for low value personal injury claims in road traffic accidents (“RTA Protocol”).
Alternatively, the Court has the power under CPR44.4 and 44.5 (now CPR44.3 and 44.4) or at common law which is not ousted.
The Claimant’s Position
The claimants submitted that the Consent Order is a contract that binds the parties. As there was no question of fraud, misrepresentation, duress or mutual mistake, the contract cannot be set aside or varied. Each party was represented and signed the Consent Order on equal footing.
By seeking to limit the claimant to RTA Protocol costs where there has already been an order for a detailed assessment is an attempt by the defendant to rewrite the Consent Order. The defendant was estopped from raising this issue.
The Master’s Decision
Master Simons found, inter alia, that…..
“The Defendant cannot rely on CPR45.36. It seems implicit from the wording of the rule that the power to restrict the costs is to be exercised when the judgment is given in favour of the Claimants. If the Defendant wished to seek an order under CPR45.36, the time for doing so was after the terms of the settlement had been agreed and the parties were negotiating on the question of costs. He did not do so and consented to an order for there to be a detailed assessment on a standard basis. That is a contract which the Costs Judge does not have power to vary. Furthermore, there is an order of the Court which the Costs Judge is under an obligation to act upon.”
However, the claimants’ victory was short-lived. Master Simons continued….
“….that is not the end of the matter. The parties have agreed to a detailed assessment on a standard basis. At that detailed assessment the Costs Judge is obliged to have regard to all the circumstances in deciding whether the costs were proportionately and reasonably incurred or were proportionate and reasonable in amount. The Costs Judge must also have regard to the conduct of the parties including in particular the efforts made, if any, before and during the proceedings in order to try and resolve the dispute.”
Fortified by the comments of Lord Justice Moore-Bick who said at the permission hearing of Smith v Wyatt  EWCA Civ 941…
It is the function of the Costs Judge to determine whether costs have been reasonably and necessarily incurred and, if he can see that a particular course of conduct has led to a group of costs being incurred unnecessarily, he is entitled to say that and need not to consider each item individually. In my view the argument to the contrary is not really sustainable.
Master Simons found that…
“Although in this case the Consent Order overreaches the costs consequences set out in CPR45.36 thereby necessitating a Detailed Assessment on a standard basis, at the Detailed Assessment it is permissible to consider whether the conduct of the Claimants was such that it was not reasonable for them to have taken the case out of an alternative regime and, hence, not reasonable for them to incur the extra costs that have flowed from that unreasonable decision….
“I have to have regard to the conduct of the parties. The Claimants acknowledge that a mistake was made by them in failing to re-send the CNFs to the correct insurer, but they state that the Defendant’s conduct cannot be ignored as the Defendant ignored correspondence and failed to engage in any negotiations. Whilst there can be criticism of the Defendant’s conduct, nevertheless I am satisfied that the failure on the part of the Claimants to comply with the RTA Protocol has led to disproportionate costs being unreasonably and unnecessarily incurred.
“Having made the decision that the costs are disproportionate, it is open to me to go through the bill on an item by item basis. However, supported by the authority in Smith v Wyatt, I am not obliged to do so.
“In carrying out this detailed assessment I have to have regard to those factors set out in CPR44.5(3). I have decided that the costs are disproportionate. I have also decided costs have been unreasonably and unnecessarily incurred by reason of the Claimants acting unreasonably by failing to re-send the CNF to the correct insurer.
“When the Claimants’ solicitors were informed that the CNF had been sent to the wrong insurer, they were in error at that stage to take the case out of the RTA Protocol. They were obliged under the protocol to re-serve the CNF on the correct insurer and by failing to do so they acted unreasonably. Had they acted reasonably then they would not have been entitled to recover any more than RTA Protocol costs, and it seems to me that it creates an injustice if the Claimants’ solicitors were to profit as a result of their unreasonable conduct.
Accordingly, in conducting this detailed assessment on a standard basis, this court is not necessarily obliged to carry out a line by line assessment of the Claimants’ Bill of Costs as, in my judgment, the reasonable and proportionate costs that the Claimants should recover are those limited by Stages 1 and 2 of the RTA Protocol, and the Claimants should not recover more than those costs.