COURT COULD NOT GO OUTSIDE FIXED COSTS REGIME: HOWEVER AN ORDER SEEKING INDEMNITY COSTS IS NOT AN “INTERIM” APPLICATION

I am grateful to Matthew Hoe from Taylor Rose    for sending me a copy of the judgment of Mrs Justice Carr in Parsa -v- D.S. Smith PLC (25th March 2019)  Parsa v D.S. Smith PLC – Approved Judgment – 25.03.2019 V1.  It relates to the question of whether the court should have made an order other than fixed costs.  It also decided that the claimant’s application seeking indemnity costs was not an interlocutory application and not subject to the fixed costs regime.  This meant that the claimant recovered £4,155 plus VAT and disbursements, however the claimant was also ordered to pay the defendant’s costs of the application assessed at £1,7120.00.

THE CASE

The claimant was injured whilst he was travelling in the back of a lorry. He was an illegal immigrant concealed in the lorry when it was struck from behind by the defendant’s vehicle.  The defendant put forward a defence of ex turpa cause, volenti and alleged contributory negligence.

THE CLAIMANT’S PART 36 OFFER

The claimant made an offer to settle in November 2016. It was accepted by the defendant four months after the expiry of the 21 days period for acceptance and only a week before trial.

THE CLAIMANT’S APPLICATION FOR COSTS

The claimant made an application for the costs of the action to be on the indemnity basis, because of the defendant’s late acceptance, the defendant’s conduct and “exceptional circumstances” under CPR 45.29J.

THE DECISION OF THE DISTRICT JUDGE

The District Judge refused the claimant’s application. He held that he had no jurisdiction to award costs on an indemnity basis.

“There was no provision for moving from fixed costs to assessed standard basis costs a result of late acceptance of a Part 36 offer in a fixed costs case. Finally, the Respondents’ costs of the Appellant’s application were payable under C.P.R. 45.29F.”

THE COSTS OF THE APPLICATION

The District Judge held that the claimant pay the defendant’s costs of the costs application which were not fixed costs and were assessed at £1,712.20.

THE CLAIMANT’S APPEAL

The appeal had been stayed for a period, awaiting the judgment in Hislop v. Perde [2018] E.W.C.A. (Civ) 176, [2019] 1 W.L.R. 201 (“Hislop”).  The judge found that the District Judge had not erred.

 

“It seems to me that, insofar as the law has moved on and been clarified by Hislop, there is no basis for interfering with what was essentially a finding of fact and an exercise of discretion by the Judge. He had before him the material to make the necessary deliberations in accordance with the wider and more contextually open-ended test identified by Coulson LJ in Hislop. Most centrally, he held that the Respondents’ delay in accepting the Appellant’s Part 36 offer was a very long way indeed from being an exceptional circumstance. That is an answer to ground 2 without more. Further, he was entitled to take into account costs expended as a result of any unusual conduct and entitled to take that into account as a material factor. Mr. Mallalieu points to the fact that, perhaps ironically, it was the delay on the Respondents’ part in accepting the Appellant’s final Part 36 offer that tipped the Claimant’s costs recoverability into the final and highest costs bracket.”
27. Finally, the Judge made the pertinent finding that this was not a case where there had been any deliberate or tactical game-playing. It, therefore, seems to me that, by reference to the C.P.R. 45.29J as explained in Hislop as set out above, the conclusion reached by the Judge was one that he was entitled to reach and with which an appellate court should not interfere.”

 

WAS THE CLAIMANT’S APPLICATION AN INTERIM APPLICATION?

The claimant’s appeal on being ordered to pay the assessed costs of the application was also unsuccessful.   The judge upheld the finding that this was not an “interlocutory” application.

 

Ground 4 : interim application.
28. This ground turns on whether or not the Appellant’s application of July 2017 was properly to be regarded as an interim application for the purpose of C.P.R. 45.29H. If not, as the Judge recognised, the Respondents’ costs to be ordered under C.P.R. 45.29F would be capped under C.P.R. 45.29F.
29. C.P.R. 45.29H provides as follows:
“Interim applications.
45.29H/1. 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…”
30. C.P.R. 45.29F reads as follows:
“1. In this rule (a) paragraphs 8 and 9 apply to assessments of defendants’ costs under Part 36 (b) paragraph applies to assessments to which the exclusions from qualified one way costs shifting in Rules 44.15 and 44.16 apply and (c) paragraphs 2 to 7 apply to all other cases under this section in which a defendant’s costs are assessed.
2. If in any case to which this section applies the court makes an order for costs in favour of the defendant (a) the court will have regard to and (b) the amount of costs ordered to be paid shall not exceed the amount which would have been payable by the defendant if an order for costs had been made in favour of the claimant at the same stage of the proceedings.”
31. The Judge held that the Appellant’s application of July 2017 was not an interim application for the following reasons: first, C.P.R. 45.29H does not
cover applications generally. It is limited to interim applications which must mean something. In Sharpe Briggs LJ said this at [35]:
“… A P.A.D. application falls within the description of interim applications in Rule 45.29H as being ‘an interim application… in a case to which this section applies’. The ‘case’ in which the application is made is, in my view, the Claim for damages for personal injury during and in the pursuit of which the P.A.D application is made. It is plainly an application for an interim remedy within the meaning of Part 25 and it is, in my view, ‘interim’ in the fullest sense because it follows the institution of the ‘Claim’ by the uploading of a C.N.F. on the portal, even though no proceedings under Part 7 have yet been issued and precedes the resolution of the Claim by settlement or final Judgment.”
Secondly, the claim had been resolved by settlement before the application was issued; thus it fell outside the definition of interim application identified in Sharpe. Thirdly, it was a final application by analogy with Fox v. Foundation Pilling Group Limited No. 1 [2011] P.I.Q.R. Q3 Court of Appeal (“Fox”).
32. The Appellant suggests, however, that the application for non-fixed costs was an interim application. First, the claim had not been resolved by settlement because the issue of costs was still outstanding. This approach does not involve any undue stretch of the language in C.P.R. 45.29H. Secondly, Fox was dealing with the meaning of the phrase “final order” in the now repealed Administration of Justice Act 1989 Destination of Appeals Order, not a final application. Mr. James submits that, if the application was not an interim application, the simple structure in C.P.R. 45 Part 3A is upset. That structure is that the fixed costs of all applications are fixed at half of the applicable type A or B costs in table 6 or 6A. The fixed costs of a claim or parts of a claim where they are outside the protocol are fixed by reference to one of those tables. He
submits that any other approach gives rise to striking anomalies with different regimes for the fixed costs of an interim application depending on who is the receiving party, since there is no equivalent of C.P.R. 45.29F for claimants. A defendant could potentially be paid as much for winning an interim application as it would for conducting the successful defence of an entire Claim. Where the defendant is the receiving party under an order for the costs of an interim application profit costs still have to be assessed. He submits that the “any other approach” is generally inconsistent with the entire scheme behind this section. He goes so far as to submit that on true analysis all applications of whatever nature must fall within the regime identified in C.P.R. 45.29H. Thus, a slip rule application post-judgment would fall within it as would an application to extend time for appeal.
33. Mr. James also referred to the wording of C.P.R. 45.29F, in particular sub-paragraph (1)(c) and (2) where he submitted that the wording is ill suited to an application of the type made by the Appellant here. He points to the fact that the situation would be anomalous, in particular had the Appellant won his application. On the Respondents’ approach he would have been able to recover uncapped costs; that is to drive a coach and horses through the spirit of C.P.R. 45.
34. At this stage, in case it is relevant elsewhere, I should make a short point arising out of [87] of the judgment. There the Judge suggested that the reference in C.P.R. 45.29F sub-paragraph (2) to the phrase “at the same stage” should be treated as meaning the costs application. Both Mr. James and Mr. Mallalieu are agreed that that is an incorrect reading of the rules. The
reference to the stage reached in the proceedings is to be assessed by reference to the stages identified in table 6B of C.P.R. Part 45.
35. Standing back and considering the overall structure of C.P.R. 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. The substantive litigation had ended; the claim had settled in relation to all bar costs and had been stayed by the automatic operation of C.P.R. 36.14. It is clear from Sharpe and, in particular, the statement by Briggs LJ at [35], that when one speaks of the settlement of the claim for present purposes, one speaks of settlement of the claim for damages for personal injury, not settlement of the costs claimed arising upon the claim.
36. The effect of this is not, as the Appellant suggests, that the Respondents’ costs of the true interim application are not subject to C.P.R. 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. C.P.R. 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.
37. Moreover, it seems to me that the analysis adopted by the Judge and advocated by Mr. Mallalieu does fit appropriately within the scheme of C.P.R. 45 IIIA.
That scheme focuses, not surprisingly, on the fixing of claimants’ costs. Those costs are fixed by reference to carefully negotiated and calculated rates set out in certain tables in C.P.R. 45.29C. There are specifically carved out circumstances as indicated when a defendant may be entitled to costs; even then there is still overall fairness because of the capping provisions which prevent recovery by a defendant of more than a claimant would have recovered at the same stage of the proceedings. There will always also be the additional control in place by reason of the assessment process itself by reference to the concept of reasonableness and proportionality.
38. For these reasons and in summary, the Judge was correct to treat the costs of the application of July 2017 as being outwith the scope of C.P.R. 45.29H. There is no challenge to his assessment of the Respondents’ costs beyond the issue of principle.