The Angels’ Game

What happens in part 45 CPR tends to stay within part 45. There has been a discernible reluctance on the part of the County Court judiciary to exercise their discretion to award costs exceeding fixed costs pursuant to rule 45.29J CPR. Rule 45.29 reads as follows:

(1) If it considers that there are exceptional circumstances making it appropriate to do so, the court will consider a claim for an amount of costs (excluding disbursements) which is greater than the fixed recoverable costs referred to in rules 45.29B to 45.29H.

(2) If the court considers such a claim to be appropriate, it may—

(a) summarily assess the costs; or

(b) make an order for the costs to be subject to detailed assessment.

(3) If the court does not consider the claim to be appropriate, it will make an order—

(a) if the claim is made by the claimant, for the fixed recoverable costs; or

(b) if the claim is made by the defendant, for a sum which has regard to, but which does not exceed the fixed recoverable costs,

and any permitted disbursements only.

The crucial question for litigants seeking assessed costs or seeking to argue that a paying party is limited to fixed costs has been what would constitute “exceptional circumstances” as contemplated by the rule. Authority on the point has been scarce and rarely directly relevant: instead one has usually had to argue the point by way of analogy, drawn from other contexts.

Accordingly the recent decision of the High Court in Ferri v Gill [2019] EWHC 952 (QB) is of interest being a decision of a High Court judge (Stewart J) given on appeal from Master McCloud.  The claim had initially started life in the MOJ Portal, but settled for a sum substantially in excess of £25,000. The essential facts were as follows:

5. On 29th January 2015 Leigh Day completed a Claim Notification Form (CNF) under the pre-action protocol for low value personal injury road traffic accidents from 31 st July 2013 (the Protocol). Liability was admitted with no allegation of contributory negligence and the Defendant made a settlement offer of £1500.

6. The Claimant instructed new solicitors, in place of Leigh Day.

7. On 3rd November 2015 Fieldfisher wrote saying they did not consider the case to be a ‘fast track portal claim’ and would not be running it as such. This was on the basis that the Claimant had suffered a serious shoulder injury, had on-going loss of earnings and  required private treatment. They obtained a report from an orthopaedic surgeon who diagnosed damage to the acromioclavicular joint and advised that the Claimant be referred for possible corrective surgery.

8. On 20th October 2016 the Claimant underwent arthroscopic examination of his left shoulder with bursoscopy, arthroscopic sub-acromial decompression, arthroplasty and biceps tenodesis.

9. By January 2017 the Claimant had regained full movement with little pain.

10. On 13th February 2017 the claim settled without issue of proceedings in the sum of £42,000.

11. The orthopaedic procedure was performed privately by virtue of an interim payment in the sum of £6000 provided by the Defendant. The Defendant also made two interim payments in the sum of £555.94 for damages to clothing etc and £1000 to allow for the orthopaedic consultation.

12. In short, the Claimant suffered a significant shoulder injury, with two years symptoms, resolved only after a substantial operation. There was also a loss of earnings claim which required some putting together, as the Claimant is self-employed, lost some time totally off work and otherwise had to work reduced hours.

13. The Claimant sought more than fixed recoverable costs under CPR Part 45 and issued Part 8 proceedings under the costs only procedure in CPR46.14. It is these proceedings which came before the Master on 25th May 2018.

The Claimant’s solicitors sought to rely on rule 45.29J to argue for a higher award of costs, than that contemplated by the provisions of the fixed costs regime contained in part 45 CPR. At first instance they succeeded before the Master. When the matter was re-argued on appeal, they lost. The judgment of Stewart J contains some valuable references to the meaning of the phrase “exceptional circumstances”

27. Mr Williams QC, for the Respondent, referred to a number of cases which have considered the construction of “exceptional circumstances”. Perhaps the most helpful is the statement of Lord Steyn in R v Soneji16 , where, absent exceptional circumstances, the court was not allowed to postpone the making of a confiscation order beyond a statutory period of 6 months from the date of conviction. He said:
“…..there were competing arguments about whether the requirement of “exceptional circumstances” in section 72A(3) should be strictly construed. In lower courts a very strict approach has sometimes prevailed. An expression such as “exceptional circumstances” must take its colour from the setting in which it appears. Bearing in mind the context I would not adopt a very strict approach to the meaning of exceptional circumstances.”

28. Other examples were

(i) Lord Brown said in Dymocks v Franchise Systems v Todd17 in the context of third party costs orders at [24]-[25]:
“24. What, then, are the principles by which the discretion to order costs to be paid by a non-party is to be exercised ……

25. A number of the decided cases have sought to catalogue the main principles governing the proper exercise of this discretion and their Lordships, rather than undertake an exhaustive further survey of the many relevant cases, would seek to summarise the position as follows. (1) Although costs orders against non-parties are to be regarded as “exceptional”, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such “exceptional” case is whether in all the circumstances it is just to make the order…..”

(ii) In R v Kelly18 the Court of Appeal considered the statutory requirement to pass a life sentence “unless the court is of the opinion that there are exceptional circumstances relating to either of the offences or to the offender which justify its not doing so”. Lord Bingham said: “…the mandatory duty imposed on the court is not absolute. It is relieved of the duty to impose a life sentence where two conditions are met: first, that the court is of the opinion that there are exceptional circumstances relating to either of the relevant offences or to the offender; and secondly, that the court is of the opinion that those exceptional circumstances justify the court in not imposing a life sentence. We must construe “exceptional” as an ordinary, familiar English adjective, and not as a term of 16 [2005] UKHL 340 at [28]; see also Lord Rodger at [33] and Lord Carswell at [66]. 17 [2004] UKPC 39
18 [2000] 1 QB 199 at 208 art. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered…”

The construction of “exceptional circumstances” does not take place in a factual or contextual vacuum. It also involves a comparative exercise against other cases, which are unexceptional: for something to be exceptional, requires consideration of what is the “norm” and the degree of departure from the norm. This aspect of the exercise was engagingly termed the “basket” exercise in the judgment.

The judge noted accordingly:

40. The two central questions are (i) was the Master was right in her test of “exceptional”; (ii) was she right in deciding against what ‘basket’ of cases a case needs to be exceptional.

On the first point the High Court judge decided that exceptional in this context did not pose a low bar for a receiving party to surmount:

42. However, there is no getting away from the fact that the Master herself said she was applying a ‘low bar’ to exceptionality and that she construed her test of “outside the general run of these cases” through that prism. There is a further indication of this from her application of the test to the circumstances in her judgment at [10] 32 . Indeed it might be inferred that she gave permission to appeal on the basis that she was not adopting a high threshold since (a) “outside the general run” says nothing more than exceptional, and (b) there is no suggestion in her judgment that she was aware of the “basket”point which arises from the wording of her judgment.

43. As the House of Lords said in R v Soneji, an expression such as “exceptional circumstances” must take its colour from the setting in which it appears. The setting in which it appears informs the Court whether a strict approach to exceptional is or is not warranted. This is apparent from Soneji where the House did not accept the lower courts’ strict construction and did not itself “adopt a very strict approach” “bearing in mind the context”.

44. Was the Master correct in using a “low bar” or not a “strict approach”, bearing in mind the context of Rule 45.29J. I do not believe she was. My reasons are as follows:

i) Unavailable to the Master, as it had not by then been decided, was the decision in Hislop and the obiter dictum of Coulson LJ that: “It goes without saying that a test requiring “exceptional circumstances” is already a high one”.

ii) The setting of the policy reasons reiterated in the Fixed Costs regimes cases cited earlier in this judgment, while allowing for “exceptional circumstances” to depart from that regime, require a more strict, not a “low bar”, approach.

Turning to consider the correct comparator (an interesting exercise, akin to the correct identification of a comparator in a discrimination case) the High Court judge found:

49. The initial question is whether the Master did use the wrong basket. Mr Williams submitted that it is not clear that she did. He says that she referred to the ‘Portal’ rather than the Protocol and that certain paragraphs of her judgment only make sense if she was using the correct basket. There is some difficulty in the terminology used in the Master’s judgment. However it seems to me that she was probably using the term ‘Portal’ in the sense of cases within the Protocol and those that had exited the Protocol and were subject to the Section IIIA regime. Then at [12] she says: “It is a low bar because the Portal is intended to deal with, in my judgment, simple cases which would typically be fast track cases and, for the factual circumstances that I have set out, it is on balance outside the general run of such cases.” It is correct that cases exit the Portal for a number of reasons, only one of which is that the value is said to be more than the Protocol upper limit; another is that the claimant gives notice to the defendant that the claim is unsuitable for the Protocol (for example, because there are complex issues of fact or law)35. Nevertheless, the basket must comprise only the cases covered by the Part IIIA Fixed Costs Regime. Therefore cases which have exited the Protocol under its paragraphs 4.43 and 7.76, (a) form part of the basket against which exceptionality must be construed and (b) do not qualify as engaging exceptionality merely because they are of that type.

The case was remitted to another Master: the High Court judge proposed Master Gordon-Saker who had sat as an assessor, to determine if the case was exceptional. The case is the fullest exegesis to date on rule 45.29J. It does however confirm an impression, I have had over the last 6 years, that an award of “exceptional circumstances” costs, is so rare in practice that it is reserved for the angels.

Whether this should be so, is an interesting question. The context of a case which exits the Protocol and becomes subject to the fixed costs regime under part the latter part of part 45 CPR, is that it is a simple case, allocated to the Fast Track capable of being dealt with in 1 day, without a multitude of experts and where damages will normally be below £25,000.

Once these assumptions are eroded, through more involved expert evidence of a substantially higher valuation of damages, or where the issues are rendered more complex or more important through for example, allegations of fraud or dishonesty, the bar for “exceptional circumstances” should be more easily surmounted.

Set against that is the remorseless expansion of the Fast Track: now in the London Courts cases worth up to £100,000 seem routinely to be allocated to the Fast Track. The reasons for this trend appear to be more geared to a scarcity of judicial resources and a dislike of costs management, than a change in the rules or a principled expansion of the District Judge’s jurisdiction. In consequence, this trend will also make it harder to find “exceptional circumstances” as District Judges become enured to trying cases of up to £100,000.

This case also illustrates the breadth given to the application of the fixed costs rules: not only do they apply to trials and interlocutory applications, but now also on appellate authority, to pre-action disclosure applications. A corollary of this trend, is that there is now little downside for a defendant to take a robust approach in any case that comes within part 45, given a likely very limited exposure to adverse costs.

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