November 17, 2016

Costs - Fixed costs do not apply to multi-track claims

The Court of Appeal has given their long awaited judgment in Qader & Ors v Esure Services Limited.

Overturning the previous decisions, Lord Justice Briggs found the fixed costs regime does not apply to cases which start within the RTA and EL/PL Protocol, but are subsequently allocated to the multi-track.

Despite finding the CPR (approved by Parliament by statutory instrument) made it clear that fixed costs did apply, the Court of Appeal nonetheless altered the wording of the CPR on the basis that this wording wasn't "the intention of those legislating". Briggs LJ recommended the CPR should be amended to make the costs position clear. Although there has been no application, the case may yet be appealed to the Supreme Court. 

The judgment has wide implications for insurers, not least a significant increase of costs liability in applicable cases. It is understood numerous cases had been stayed pending the outcome of this judgment.

The finding is also likely to result in a resurgence of claimant solicitors placing higher value claims (pleaded at a significantly reduced value) in the Portals to induce an early admission of liability. Once liability is admitted the sums claimed would be substantially increased and cases would subsequently be allocated to the multi-track with the liability admission already secured.

Insurers must be alive to this issue and scrutinise all claims in detail prior to admitting liability in the Portal. Indeed it will be difficult to succeed with an application to resile from the admission in such circumstances. However, where the same solicitors can be shown to routinely deploy this tactic, this conduct point could be taken by defendants, to seek to limit the costs claimed and deter further conduct in similar cases.

Insurers will now think twice before making an allegation of fraud, as this would be likely to place the claim in the multi-track and subject to greater costs exposure.

However, defendants may take heart from Lord Brigg's comments that "it by no means follows that every such case [over £25k or where fraud is pleaded] would be inappropriate for management and determination in the fast track".

Indeed, it appears that relatively simple frauds, such as a 'slam on', which can be heard in one day should stay in the fast track. However when the case starts to get more complicated (such as multiple witnesses and expert engineering evidence) the court will allocate to the multi-track. As the fast track has scope for each party to have one expert, it appears the determining factor will remain the value of the claim and the length of the trial (i.e. beyond one day).