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Disposal is a trial - Court of Appeal Decision in Bird v Acorn.

The Court of Appeal's decision in Bird v Acorn represents a significant victory for Claimants, who can now expect to recover higher levels of fixed costs in ex-portal cases that settle early.

The Court of Appeal’s decision in Bird v Acorn represents a significant victory for Claimants, who can now expect to recover higher levels of fixed costs in ex-portal cases that settle early.

The Court of Appeal’s decision in Bird v Acorn Group Ltd [2016] EWCA Civ 1096 was handed down on 11 November 2016. The appeal concerned the question of whether listing an unallocated ex-portal claim for a 10 minute ‘disposal hearing’ amounted to listing the claim for ‘trial’ when determining the level of fixed costs recoverable under CPR r.45.29E, Table 6D part B. Though Bird itself was a PL claim, the decision will apply equally to RTA and EL cases (which are governed by Tables 6B and 6C). 

The facts 

The Claimant commenced a claim under the pre-action protocol for low value EL/PL personal injury claims (‘the Protocol’). The claim exited the Protocol after no response was received from the Defendant. Liability was subsequently admitted, but the parties were unable to agree quantum. Proceedings were issued and, after the Defendant failed to acknowledge the claim, default judgment was entered. The claim then passed from the County Court Money Claims Centre to Birkenhead (the Claimant’s preferred hearing centre), where it was immediately listed for a 10 minute disposal hearing. The claim then settled before that hearing took place. At no stage was the claim allocated to a track. 

The issue before the Court of Appeal concerned the level of fixed costs to be awarded to the Claimant under Table 6D part B, which provides as follows: 

B. If proceedings are issued under Part 7, but the case settles before trial

Stage at which case is settled

On or after the date of issue, but prior to the date of allocation under Part 26

On or after the date of allocation under Part 26, but prior to the date of listing

On or after the date of listing but prior the date of trial

 

Fixed costs damages

The total of— (a) £2,450; and (b) 17.5% of the damages

The total of— (a) £3,065; and (b) 22.5% of the damages

The total of— (a) £3,790; and (b) 27.5% of the damages

 

 

The Claimant argued that the disposal hearing was equivalent to a trial and therefore the highest level of costs (column 3) should be applied. The Defendant principally argued that: 

  • Adopting the “final contesting hearing” definition of a trial under CPR r.35.29E(4)(c), it cannot be said that disposal hearings were necessarily going to be “final” or “contested”. For example, it could be that further directions were made at the disposal hearing. PD26 expressly provides that disposal hearings shall be used either to decide the amount in dispute or for the purposes of giving directions. 
  • If the claim were allocated to a track at the disposal hearing, that would effectively revert the Claimant back to the lower fixed costs under column 2. It would be counterintuitive for the Claimant to be entitled to higher overall costs at one stage and then be entitled to lower overall costs at a later stage after more work had been done.
  • The three columns were intended to be sequential and so column 3 costs could not be claimed unless the claim had been allocated.

The Defendant therefore argued that the Claimant should only be entitled to fixed costs under column 1 of Table 6D part B. 

The decision

 The Court found in favour of the Claimant. The listing of a disposal hearing was a listing for trial, therefore engaging column 3.

The prospect that the disposal hearing might prove to be neither final nor contested was insufficient to justify not engaging column 3 costs. Much of the work necessary to prepare the claim for disposal (such as preparing and serving the requisite evidence) would have taken place following the listing for the disposal hearing. 

In terms of engaging column 3 without the claim being allocated, the Court noted that courts commonly allocate claims to the fast track and list for trials simultaneously. Further, the work required to prepare for the disposal hearing would not be undone by allocating the claim at that hearing instead. Column 3 costs were proportionate for preparing for the disposal hearing; once that column is engaged, it is not possible to ‘back-track’ to any of the other columns. 

Comment 

This decision will be welcome news for claimants in RTA, EL and PL claims subject to the fixed costs regime. The Court recognised that the preparation involved for a disposal hearing was comparable to, although perhaps not always as extensive as, preparation for a trial. The decision confirms that, once a claim is listed for a disposal hearing, the claimant will be entitled to claim the highest figure permitted for fixed recoverable legal costs whenever the claim settles before the listed disposal hearing. 

The case does produce the somewhat anomalous outcome that a claimant will be restricted to recovering a total of £650 for legal costs should his claim proceed to a Stage 3 final hearing, but over £3,790 for an (arguably) less complicated 10 minute disposal hearing. 

This might be seen as an example of the ‘swings and roundabouts’ principle of fixed costs in operation or (more cynically) it might be seen as an indication that the drafters of the fixed costs rules overlooked making a provision for disposal hearings within the fixed costs scheme. The Court of Appeal certainly did not see it that way (see paragraph 17 of the judgment) and so, unless the Rules Committee intervene, claimants are likely to recover considerably more costs for claims which settle at an early stage going forward. 

Although not directly beneficial to Defendants, the decision does at least provide some welcome clarity as to the costs position in such cases. In view of the fact that maximal costs will now be recoverable from a very early stage once proceedings are issued, the need for Defendants to make early effective settlement offers has never been more acute. 

Note 

Practitioners should be aware that the Court of Appeal’s decision in Qader & Others v Esure Services Ltd is expected on 16 November 2016. That case concerns whether ex-portal claims attract fixed costs even when they are subsequently allocated to the multi-track. The High Court ruled that they did; the judgment can be read here

Tom Semple, pupil                                                                                          14th November 2016

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