Fixed costs and exceptional circumstances

Fixed costs in fast-track RTA, EL and PL litigation are nigh. While revisions to the CPR to accommodate such fixed costs have yet to be published (such rules perhaps, even in draft, being ‘on hold’ pending the fixing of defendant costs in such litigation), it is expected that there will be an escape clause of sorts as currently found in CPR 45 Section II. Update below!

CPR 45.13(1) (formerly CPR 45.12(1)) provides that:

The court will entertain a claim for an amount of costs (excluding any success fee or disbursements) greater than the fixed recoverable costs but only if it considers that there are exceptional circumstances making it appropriate to do so.

So what might constitute ‘exceptional circumstances’? There is, in short, precious little guidance to be found – but that can hardly be surprising given the very meaning of the word ‘exceptional’.


It is convenient to start with the matter of Udogaranya -v- Nwagw [2010] EWHC 90186 (Costs), a decision of Master Haworth sitting at the SCCO. While the first part of the judgment deals with an entirely separate issue (i.e. whether or not fixed costs apply following the making and accepting of a CPR 36 offer pre-litigation – an issue resolved authoritatively, and affirmatively, in the matter of Solomon v Cromwell Group PLC Oliver v Doughty [2011] EWCA Civ 1584), the second part of the judgment deals with the claimant’s fall-back argument that exceptional circumstances existed. In summary, Master Haworth set out the following factors as militating in the claimant’s favour:

* It was not a run-of-the-mill case;
* The defendant “gave the claimant the run-around“;
* The defendant’s insurers and solicitors “scatter[ed] their shot somewhat widely as to breach of duty“;
* Causation and liability were disputed (either there was no impact or there was a low velocity impact (‘LVI’)).

Ultimately, Master Haworth was persuaded that exceptional circumstances existed.

The case of Carlon -v- Domino’s Pizza Group Limited (Unreported: District Judge Wyatt, Birmingham County Court 27/08/10) involved a barely adolescent child who was knocked over by a car on a zebra crossing and the defendant driver made off. She suffered some orthopaedic injuries and some psychological consequences, PTSD and phobic anxiety about pedestrian travel. However, the claimant began to suffer from anorexia nervosa some nine months after the index accident, which led to a lengthy hospital stay, and medical opinion raised the possibility that the claimant’s disorder might have been a consequence of the accident. Judge Wyatt came to the view that:

“… the element of the possibility that there was a connection between her eating disorder or its exacerbation and this accident is and amounts to in itself exceptional circumstances.

Further, the judge added that:

“… the possible connection to a severe eating disorder, particularly one that led to a prolonged period of inpatient treatment, was something that took this case well outside the normal range of orthopaedic and psychological consequences of a road accident that would be otherwise likely to fall within the fast track regime. I also take the view that it made it well outside the buffer zone of swings and roundabouts.

Before both of the aforementioned cases, District Judge Oldham handed down judgment in the matter of Yorke -v- Adams (Unreported: Sheffield County Court 27/03/08). Ms Yorke’s claim was based not on physical injuries one might ordinarily associate with a RTA but on an exacerbation or acceleration of her symptoms as a sufferer of multiple sclerosis. In short, the claimant’s lawyers obtained not only neurological evidence but also evidence concerning the claimant’s care needs, taking the claimant’s costs no doubt far beyond the realms of FRC. The defendant initially appeared to understand the need for a care assessment but subsequently resiled from that position having obtained his own neurological report which contradicted the claimant’s expert’s opinion that a causative link existed between the index accident and the exacerbation of the claimant’s symptoms.

Judge Oldham ultimately held that it would be “wholly unreasonable” to suggest that there was nothing exceptional about the case and exercised the Court’s discretion to permit the claimant to present a claim for costs to be subjected to detailed assessment.

Finally, the matter of Ford -v- Lincolnshire Road Car Company Limited (Unreported: District Judge Cooper, Lincoln County Court 26/09/11) concerned a claim for damages arising out of a RTA when the elderly claimant was a passenger on a bus. She suffered relatively minor physical injuries but was subsequently diagnosed as having an adjustment disorder with anxiety. Sadly, the claimant was also diagnosed as having Alzheimer’s Disease and the question arose as to whether or not the index accident was causative of the onset of claimant’s dementia (or accelerated it).

In short, psychological evidence was inconclusive and a psychiatric report was recommended but the claimant’s son and litigation friend ultimately decided not to pursue that line of enquiry having regard to the claimant’s age, likely delays, additional stress/anxiety for the claimant and cost. Judge Cooper expressed no concern about approving the parties’ agreement as to quantum, accepting submissions on the claimant’s behalf as to delay, additional stress etc. not being beneficial to her.

As Judge Cooper described it, the “real fighting ground” was the issue of costs. For the claimant it was argued that the test under CPR 45.12 (as it then was) was satisfied: the case was exceptional on its own facts and while the claimant did not obtain psychiatric evidence it should not count against her – the issues still had to be explored even without additional expert evidence and with sensitivity, demanding particular expertise and experience to make a judgment call on what was a finely balanced issue. Judge Cooper agreed.

Not exceptional

The matter of Fretter -v- Ewing (Unreported: District Judge Kirby, Bury St. Edmunds County Court 09/12/10) concerned a claim for damages for personal injury by the elderly claimant who was knocked over by the defendant driver whilst trying to cross a road. Liability was disputed and the claimant’s solicitors took steps to issue proceedings, to include the drafting of particulars of claim. However, shortly before issuing proceedings the claimant made a CPR 36 offer which was promptly accepted by the defendant.

Judge Cooper accepted that the claimant’s solicitor was put to a lot of work in pursuing the claimant’s claim, presumably as a direct result of the defendant’s apparent intransigence, but held that the case did not involve exceptional circumstances. The learned Judge also commented, in essence, that the claimant could have chosen to issue proceedings rather than make a CPR 36 offer but as the claimant proceeded as she did she was “penalised because [she] happened to deal with things correctly and sensibly“.

In the case of Briscoe -v- Tilt (Unreported: Master O’Hare SCCO 09/02/12), the claimant’s argument that exceptional circumstances existed essentially rested upon the defendant’s denial of causation on the ground that the index accident involved a LVI.

Upon receipt of notification of the defendant’s intention to raise a LVI defence, the claimant’s solicitors put the defendant on notice of the claimant’s intention to seek costs on an hourly rate basis in the event that the defendant chose to settle the claimant’s claim without litigation. The defendant maintained his position and invited the claimant to abandon his claim; the claimant proceeded to consider the defendant’s engineers’ report, raise questions thereon, seek further information and instruct agents to obtain further witness evidence.

Ultimately, the defendant disclosed his statement and repeated his LVI defence but also made an offer of £1,000 in full and final settlement of the claim – plus FRC. The claimant accepted the defendant’s offer but issued costs-only proceedings in an endeavour to recover his costs on a traditional time versus hourly rate basis.

Master O’Hare’s decision was that exceptional circumstances did not exist in the case, holding that:

* FRC ought to apply to a broad category of cases which settle pre-issue, including sometimes cases with particular problems.
* Unusualness by itself is not enough.
* A defence of LVI, by itself, is not “exceptional enough” to escape FRC.
* The claimant’s warning to the defendant of a claim for costs over and above FRC was irrelevant.
* The claimant was not forced to incur costs relating to reading the engineers’ report, obtaining witness evidence etc.; the claimant did that voluntarily.

The Master went on to say:

I think the claimant who does that sort of work and who wants more than fixed recoverable costs, ought to be issuing proceedings and getting his ordinary costs in that way. All those things are often done by claimants before issuing proceedings. I think claimants may sometimes avoid being limited to fixed recoverable costs for things like that if they can say, “Well, we made our offers. the pre-action stage was over. It was perfectly reasonable for us to prepare for issue and trial in that way”, but that is not this case. In this case the claimant is the one who threatened to issue but never issued. The claimant is the one who kept this claim going on for so long and in the end is just given a brush-off figure. It is not enough for him to say “Look, it has taken twelve months for you to give up your LVI allegation”.

I think it is like many other cases where allegations are made and are later withdrawn. The fact that it went on for twelve months is because the claimant, having been told, “Go ahead, sue us”, decided not to do so”

Finally, in this section of ‘not exceptional cases’, is the matter of Sargeant -v- Fellows (Unreported: District Judge Lumb, Dudley County Court 12/10/12). The claimant was a passenger in her mother’s car and, expectedly, liability was fairly promptly admitted. The claimant suffers from a chromosomal disorder which causes a variety of problems, including intellectual and developmental delay, with limited understanding and behavioural disorders, such that she needs 24-hour care. While the claimant sustained largely minor, soft tissue injuries in the accident, she also suffered some psychological disturbance.

Diligently, the claimant’s solicitors obtained a number of witness statements (mother, carers). Medical evidence comprised of a GP report compiled without examination of the claimant – necessary so as to not cause the claimant distress and anxiety when presented with unfamiliar people/circumstances and in any event as the claimant would have been unable to communicate with the expert – and based largely on the evidence of the claimant’s witnesses. Ultimately the claim was compromised, subject to the approval of the Court, in the sum of £2,200.

The claimant’s case against FRC was based on a perceived exceptional duty of care required of the claimant’s solicitors in dealing with such a sensitive case involving a party under a disability and represented by a litigation friend; additional work, over and above that which one might normally expect in a <£10,000 RTA claim, was required including the need to obtain detailed witness statements from the claimant's mother and two carers. It was accepted on behalf of the defendant that such matters made the case more complex/difficult, but it was denied that the same amounted to exceptional circumstances.

Judge Lumb agreed, holding that:

* The case was "only marginally” more complex than a case involving a young baby bringing a claim via a litigation friend.
* If a heightened duty of care was required of the claimant’s solicitors as was submitted, then “one would have thought that the solicitors would not just simply entrust that to an agency to obtain those statements, but would go and obtain those statements directly themselves“.
* While the case was not run of the mill, had unusual features and required additional work (compared to straightforward cases), it was not exceptional.

Anecdotal matters

Regarding those cases referred to above as being ‘unreported’, there nevertheless exist transcripts of the judgments (most if not all of which are available via Lawtel). Following a search of the interweb, I found details of further cases in which the issue of exceptional circumstances arose:

In the matter of Noor -v- Fincham (Principal Costs Officer Lambert, SCCO, 22/03/11), the minor claimant was hit by the defendant’s car as she attempted to cross a road. The claimant lost consciousness, was admitted to intensive care and was found to have sustained multiple fractures to her skull and her eye socket. Subject to the court’s approval, the claim was compromised in the sum of £4,000 on the basis of shared responsibility for the accident.

In support of costs other than FRC, the claimant argued:

* The nature/multitude of injuries;
* The need for expert medical evidence in more than one discipline;
* The need for three infant approval hearings / additional advice from counsel; and
* Exceptional circumstances include circumstances which are out of the ordinary.

Principal Costs Officer Lambert was not convinced and FRC only were allowed. For further details of this case, please see the very useful website of Messrs Horwich Farrelly here.

The matter of Thompson-Humphrey -v- Cordner (Costs Officer Martin, SCCO, 17/09/12), another case handled by Horwich Farrelly and involving a separate issue concerning alleged determination of the basis on which costs were to be paid (i.e. the ‘approval judge’ having made an order that the claimant’s costs be subject to detailed assessment – an assertion I too have been faced with and successfully rebutted), also involved alleged exceptional circumstances.

In short, the case required no fewer than seven infant approval hearings and the obtaining of GP, paediatric and orthopaedic evidence and MRI scans. Ultimately, agreement was reached in the sum of £3,304.70 and the same was approved by the Court. Argument on behalf of the defendant also included reference to the fact that at no point prior to the submission of the claimant’s costs (at approximately three times the level of FRC) was mention ever made of the claim being exceptional and thus deserving of costs over and above FRC. Costs Officer Martin is quoted as saying:

Are the costs exceptional in any event? There are a number of medical reports from three experts and several supplementary reports dealing with contradictions within the evidence. If it were to found [sic] to be exceptional, it is this aspect which would be the most persuasive. There were a number of adjournments necessary and there was a substantial amount of medical evidence. But I don’t regard this as exceptional even within the narrow description of “exceptional” in Udogaranya. Counsel could have applied for an order under CPR 45.12 at the infant approval but such an application was not sought. If the conducting fee earner did not consider this case to be exceptional, then neither do I.

Summary – and a gentle reminder

Exceptional circumstances are just that – exceptional. While there are cases where costs over and above FRC have been allowed, and not, case law is most unlikely to assist a court in deciding an issue arising solely out of the particular facts of any given case. However, decisions such as those above should at least be of some assistance to anyone considering whether or not a case is exceptional so as to warrant more than FRC and before issuing costs-only proceedings for that purpose.

The ‘gentle reminder’ bit:

Swings and roundabouts
Per Simon J in the matter of Nizami -v- Butt, cited with approval by Dyson LJ in Lamont -v- Burton:

It seems to me clear that the intention underlying CPR 45.7-14 was to provide an agreed scheme of recovery which was certain and easily calculated. This was done by providing fixed levels of remuneration which might over-reward in some cases and under-reward in others, but which were regarded as fair when taken as a whole.

I think such a rationale will take on an even greater significance once costs across the personal injury fast track are fixed. The will of parliament to control costs in such litigation is almost palpable and has been/continues to be the subject of news reports and opinion on an almost daily basis, such that one might be forgiven for thinking that a finding of ‘exceptional circumstances’ will be even more difficult to secure.

Do it properly
PD 2.8 CPR 45, Section II (and assuming for present purposes that any future escape clause relating to fixed costs across the fast track will contain a similar requirement) provides that:

Costs only proceedings are commenced using the procedure set out in rule 46.14. A claim form should be issued in accordance with Part 8. Where the claimant is claiming an amount of costs which exceed the amount of the fixed recoverable costs the claim form must give details of the exceptional circumstances to justify the additional costs.” (my emphasis)

So, do not just leave the contention to the bill narrative or, worse still, to the replies to points of dispute. I have seen costs draftsmen, and thus their instructing solicitors, do just that and it is pitiful.

Be reasonable
One interpretation of the above-cited provision of PD 2.8 CPR 45, Section II is that only “the additional costs“, and not therefore ‘all of the costs’, might be justified/allowed by reason of exceptional circumstances. Consider then whether or not it might be preferable to seek allowances over and above FRC in respect of certain aspects/items of work done rather than seeking to recover every minute spent against an hourly rate.

Had such consideration been undertaken in a number of the above cases I cannot help but think that different results might have been achieved. That said, such additional costs in isolation may in any event be insufficient to avoid the ‘hurdle’ (see below) and so be an unattractive, even pointless, tactic for claimants. By that very same token however, it may be a very beneficial tactic indeed for defendants.

The ‘hurdle’
That hurdle is CPR 45.14 (and again assuming a similar provision in respect of the forthcoming fixed fast track costs):

(1) This rule applies where:

(a) costs are assessed in accordance with rule 45.13(2); and

(b) the court assesses the costs (excluding any VAT) as being an amount which is less than 20% greater than the amount of the fixed recoverable costs.

(2) The court must order the defendant to pay to the claimant the lesser of:

(a) the fixed recoverable costs; and

(b) the assessed costs.

And then CPR 45.15:

Where –
(a) the court makes an order for fixed recoverable costs in accordance with rule 45.13(3); or

(b) rule 45.14 applies, the court may –

(i) decide not to make an award of the payment of the claimant’s costs in bringing the proceedings under rule 46.14; and

(ii) make orders in relation to costs that may include an order that the claimant pay the defendant’s costs of defending those proceedings.

As Master Haworth put it in Udogaranya:

The claimant has to make a choice. Either he accepts the predictable costs or he pushes forward in the knowledge that 45.13 [now CPR 45.14] may be applied if the matter goes to a detailed assessment. Whilst he may win the battle, he may not win the war if he does not achieve a significantly greater figure than he would otherwise do in relation to predictable costs.

Do the maths carefully and realistically else the penalty in costs at CPR 45.15, should you fall at the aforementioned hurdle, may well leave you with negative equity.

Update 14th July 2013:

Since drafting the above post, The Civil Procedure (Amendment No.6) Rules 2013 were published on 12/07/13 and set out the new FRC and governing rules in respect of most personal injury claims of fast-track value.

The amendments shall come into force on 31/07/13 and apply as follows:

RTA claims: where the claim notification form is sent on or after 31/07/13;
EL/PL claims: where the accident occurs on or after 31/07/13; and
Industrial disease: where no letter of claim has been sent to the defendant before 31/07/13.

Accordingly, it seems that the current CPR 45 Section II shall continue to apply in respect of RTA claims under £10k in value and which enter the Portal before 31/07/13 but exit the Portal after that date.

For the avoidance of doubt, there is no escape, no matter what the circumstances, from fixed costs within the Portal. However, for cases that exit the Portal and enter the new world of fixed costs across (most of) the personal injury fast track (litigated or not of course, the new FRC applying to pre- and post-issue claims), there is provision for FRC to be exceeded in exceptional circumstances.

The relevant provisions are as follows:

CPR 45.29J

(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.

CPR 45.29K

(1) This rule applies where—
(a) costs are assessed in accordance with rule 45.29J(2); and
(b) the court assesses the costs (excluding any VAT) as being an amount which is in a sum less than 20% greater than the amount of the fixed recoverable costs.

(2) The court will make an order for the party who made the claim to be paid the lesser of—
(a) the fixed recoverable costs; and
(b) the assessed costs.

CPR 45.29L

(1) Where—
(a) the court makes an order for costs in accordance with rule 45.29J(3); or
(b) rule 45.29K applies,

the court may—

(i) decide not to award the party making the claim the costs of the costs only proceedings or detailed assessment; and
(ii) make orders in relation to costs that may include an order that the party making the claim pay the costs of the party defending those proceedings or that assessment.

As you were then.