Source: https://kerryunderwood.wordpress.com/2016/11/16/fixed-costs-do-not-apply-to-all-ex-portal-claims-qader-overturned-parliament-ignored/
Timestamp: 2018-08-18 14:45:49
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FIXED COSTS DO NOT APPLY TO ALL EX-PORTAL CLAIMS: QADER OVERTURNED: PARLIAMENT IGNORED | Kerry Underwood
In Qader & Others v Esure Ltd & Khan v McGee [2016] EWCA Civ 1109, 16 November 2016
the Court of Appeal held that the Fixed Recoverable Costs Regime does not apply to a claim started in the RTA Portal, which subsequently exited the portal and was allocated to the multi-track after proceedings were issued under Part 7 of the Civil Procedure Rules.
The result may be just, but the Court of Appeal accepted that to achieve that result it needed to add in words to the Civil Procedure Rules, even though there was no irrationality in the wording and no irrationality or inherent unfairness in giving effect to that clear wording.
The lead, and only judgment, was given by Lord Justice Briggs, author of the extremely controversial report proposing to abolish court hearings for most claims under £25,000. Here, as a judge, he re-writes the law passed by Parliament, to reflect what he thinks was the minister’s and the Government’s – not Parliament’s mind – intention.
Whatever view you take this decision has enormous constitutional implications. The full contribution of Lords Justice Gross and Tomlinson sitting on this appeal were: “ I agree”.
Well, I disagree, but I am bothering to explain why.
The Court of Appeal recognized that it could re-write what is secondary legislation if it is in conflict with the Human Rights Act, as Parliament has given it that power in the Human Rights Act itself.
Clearly restricting a winning party to fixed costs where they have incurred significant costs is a potential breach of the European Convention on Human Rights, scheduled to the Human Rights Act as it could constitute breach of, among other things the right to a fair trial under Article 6.
To go down that legitimate route would of course have called in to question the whole issue of fixed costs, no costs, QOCS, small claims etc. – so they bottled it.
The decision is a constitutional outrage, and I deal with that further below. But most of you will want first, or only, to know the effect on your personal injury cases, so here it is.
The Court of Appeal set out the problem in the first paragraph of the judgment:-
“The issue turns mainly on the interpretation of section IIIA of CPR Part 45, read together with the relevant provisions of the RTA Protocol, and against the background of the process of consultation which preceded the making of that section in 2013, by way of implementation of fixed costs proposals in the reports of Jackson LJ in his Review of Civil Litigation Costs. It requires the court not merely to interpret the relevant provisions, but to consider whether they suffer from an obvious drafting mistake which can be put right so as to bring them into compatibility with the intention of the relevant legislator, namely the Civil Procedure Rule Committee, pursuant to the court’s exceptional jurisdiction to do so as explained by Lord Nicholls in Inco Europe Limited v First Choice Distribution [2000] 1 WLR 586, at 592.”
At paragraph 8 of the judgment the Court of Appeal made it clear that although this judgment concerns cases started within the RTA Portal “it is likely that that outcome will affect the interpretation and application of the similar and indeed overlapping provisions in Part 45 about the EL/PL Protocol.”
At paragraph 9 the court said:-
“Viewed as a whole, at first sight section IIIA appears to make comprehensive provision for the recovery only of fixed costs in all cases which start but no longer continue under either of the relevant Protocols, subject only to expressly stated exceptions.”
The only stated exception is disease claims – see CPR 45.29A(2).
The court recognised that claims allocated to the multi-track would involve higher, and often much higher expenditure of costs than claims resolved in the fast-track.
“Just as personal injury claims for less than £1,000 are inappropriate for the Protocols, so are claims for more than £25,000, so that there is an initial apparent symmetry between the scope of the Protocols and the fast track, in terms of the amount claimed.” (Paragraph 15 of the judgment).
The Court of Appeal then looked at three situations where an ex-portal matter was likely to be allocated to the multi-track:-
where it is revalued at a substantially higher level than the upper portal limit of £25,000.00;
where vehicle-related damages, excluded for portal purposes from the calculation of the upper limit, means that the claim is a substantial one;
as here where there is an allegation of fraud.
The second example is an interesting one as that envisages a claim worth say £75,000.00 being suitable for the portal process, but not the fast track, which is a curious conclusion.
The court recognised that the wording of the rules means that fixed costs apply to all ex-portal claims:-
“On the contrary, the language of Part 45.29A and B, taken together, appears unambiguously to apply the fixed costs regime to all cases which start within the relevant Protocols but no longer continue under them.”
The Court of Appeal recognised the existence of the escape provision in CPR 45.29J.
Nevertheless the Court of Appeal held that fixed costs should be “automatically dis-applied in any case allocated to the multi-track, without the requirement for the claimant to have recourse to Part 45.29J.” (Paragraph 35).
The court made the point that to achieve the escape under CPR 45.29J the claimant has to show exceptional circumstances.
Thus the law now is that any case allocated to the multi-track for any reason takes the case out of Fixed Recoverable Costs.
The Court of Appeal here accepted that the clear wording of the rules, and indeed the judgments of the two lower courts, where not “irrational or, on its face, one which could not possibly have been intended, so as to compel the court to some other conclusion, even though it would, subject to relief under Part 45.29J, lead potentially, albeit only until the end of the trial, to rough justice for some claimants.” (Paragraph 35(c) of the judgment).
Thus the Court of Appeal here, following no canons of construction known to me, have, apparently for policy reasons, altered the wording of the Civil Procedure Rules which have been approved by Parliament by way of a statutory instrument.
Traditionally courts could never have recourse to anything discussed in Parliament, but had to look at the wording of legislation as passed by Parliament and without considering any background material. That rule was changed by the case of Pepper v Hart [1992] UKHL 3 which held that in certain exceptional circumstances Hansard, the official record of the proceedings of Parliament, could be referred to in order to assist in the interpretation of Parliamentary legislation.
This decision extends that principle enormously with the Court of Appeal taking the view that it is able to consider the process of consultation which proceeded the Civil Procedure Rules which “demonstrate that it was not in fact the intention of those legislating for this regime in 2013 that it should ever apply to a case allocated to the multi-track.” (Paragraph 35(d) of the judgment).
“A conclusion that it should so apply is a result which can only have arisen from a drafting mistake, which the court has power to put right by way of interpretation even if, as here, it requires the addition of words, rather than giving the words actually used a meaning different from their natural and ordinary meaning. It should normally be possible to understand procedure rules just by reading them in their context, but this is a rare case where something has gone wrong, and where the court’s interpretative powers must be used, as far as possible, to bring the language into accord with what it is confident was the underlying intention.”
This is very dangerous territory. If a court is free at any time to change the wording of laws to reflect “the intention of those legislating” then where does it stop?
Members of Parliament voting for a particular provision may have very different intentions. For example Michael Foot and Enoch Powell joined together to defeat the Reform of the House of Lords because Enoch Powell wanted it to stay exactly as it was and Michael Foot wanted it scrapped altogether.
How would a court interpret those totally different intentions?
The key in any legislation is the wording as passed by Parliament. To start looking at “the intention of those legislating” gives the court virtually unfettered power to rewrite laws as it wants. It should also be remembered that the Rules Committee did allow for an escape– that is what CPR 45.29J is all about and therefore there is an existing mechanism to avoid injustice to claimants.
The Court of Appeal went on to say at paragraph 43:-
“But for what I am about to describe about the background to the making section IIIA of Part 45, it could not be said that it would have been irrational for the Rule Committee to have gone down the more rigorous route of making fixed costs applicable to all cases coming out of the relevant Protocols, leaving the combination of Part 45.29J and Part 36 to make appropriate provision, where necessary, for cases allocated to the multi-track. Looking simply and objectively at the CPR, that would appear to have been what the Rules Committee intended.”
To justify rewriting the clear wording of the Civil Procedure Rules, and the clear intention, the Court of Appeal then looked at what it called “the history of the making of this fixed costs scheme”.
It had this to say:-
“44. It is however clear that this rigorous approach is not what the Rule Committee actually intended. The original impetus for what became the fixed costs scheme for RTA and EL/PL Protocol cases came from Jackson LJ’s reports. At appendix 5 to his December 2009 Final Report is to be found a composite table (“table B”) of fixed costs for RTA, EL and PL cases which, although the amounts recoverable are different, has a structure which was eventually adopted almost precisely in Tables 6B, 6C and 6D in section IIIA of Part 45. His appendix is entitled “Fixed costs matrix for fast track personal injury claims”.
In March 2011 the Ministry of Justice published a consultation paper headed “Solving disputes in the County Courts: creating a simpler, quicker and more proportionate system”. At paragraphs 57 to 59 it noted Jackson LJ’s proposals for a regime of fixed recoverable costs for personal injury cases in the fast track. At paragraph 83 it noted that Jackson LJ’s fast track proposals could be used for cases which left the RTA Protocol process, for example where liability was not admitted. Paragraph 60 made express reference to the fixed costs table B in appendix 5 to Jackson LJ’s final report.
In February 2012 the Ministry of Justice published the Government’s response to that consultation. At paragraph 15 it announced its intention to increase the financial limit of the RTA Protocol to £25,000. At paragraph 20 it announced the Government’s intention to extend the system of fixed recoverable costs, subject to further discussions with stakeholders, in a way similar to that proposed by Jackson LJ in his review.
In a consultation letter dated 19 November 2012 Helen Grant MP, the Parliamentary Under-Secretary of State for Justice, notified stakeholders of the Government’s intention to introduce a matrix of fixed recoverable costs which would apply to RTA, EL and PL claims which “exit the Protocol process” based on Jackson LJ’s table B (in appendix 5 to his Final Report), but amended to take account of inflation since the table was produced in 2009, and reduced throughout by an amount intended to reflect the forthcoming ban on referral fees. She attached as Annexe B to her letter a tabular form of her proposals, modelled on Jackson LJ’s template and containing, for the most part, precisely the amounts now set out in Table 6B for RTA Protocol cases. She sought further views and evidence on (among other things):
“The interface between proposed FRC arrangements within and outside the Protocols, particularly with regard to incentives for either side to exit.”
In a further response to consultation dated 27 February 2013 the Ministry of Justice stated, at paragraph 6, that it was the Government’s intention to ask the Rule Committee to make rules which would fix recoverable costs in low-value personal injury cases at the level set in Annexe A. Annexe A continued to adopt the structure of Jackson LJ’s table B, with amounts which in all respects, save for slightly different trial advocacy fees, were later included in Table 6B for RTA Protocol cases.
Paragraph 87 of that response stated as follows:
“Respondents were unclear as to whether the proposals are intended to apply to multi-track, as well as fast track, cases between £10,001 and £25,000. There was a clear view (whilst still arguing the proposed levels of FRCSs were too low in any event) that any proposals should only apply to fast track cases. It has always been the Government’s intention that these proposals apply only to cases in the fast track and if a case falling out of the protocols is judicially determined to be suitable for multi-track, normal multi-track costs rules will apply”.”
So the Court of Appeal now thinks it acceptable to take into account consultations, results of those consultations, ministerial letters etc.
On that basis virtually any piece of legislation could be reworded in any way the court wants at any time.
The Court of Appeal justifies its decision by saying “there is no evidence that the government ordered its policy in relation to multi-track cases falling outside the fixed costs regime…”
Legislation is that which is passed by Parliament. It is not necessarily Government policy. Parliament is a check on the Government.
More worryingly the Court of Appeal said:-
“Furthermore it is plain that the fixed amounts recoverable were all based upon a table originally proposed by Jackson LJ and then amended after consultation, specifically chosen for fast track cases.”
So the Judiciary commission a report from Lord Justice Jackson and then amend the wording of the Civil Procedure Rules so that the law is as Lord Justice Jackson recommended, and not as passed by Parliament.
It may well be that here the outcome is sensible and just. That is not the point. Parliament makes the laws and the courts interpret them.
In other cases, any other approach could lead to very dangerous results indeed.
The Court of Appeal here unequivocally add words to the Civil Procedure Rules. At paragraph 56 the court says:-
“The best way to give effect to that intention seems to me to be to add this phrase to Part 45.29B, after the reference to 45.29J:
“…and for so long as the claim is not allocated to the multi-track…””
The £25,000.00 limit
The Court of Appeal discussed this at some length – that is the fact that Part A of Table B has a reference to an upper damages ceiling of £25,000.00 and thus it remains unclear as to whether a claim which is for over £25,000.00, and where it is determined by settlement or judgment, but which is in the fast-track is subject to Fixed Recoverable Costs or not.
“I recognise also that my proposed insertion of words to Part 45.29B does nothing about the anomaly represented by the £25,000 apparent damages ceiling in part A of Table 6B. It is unnecessary in the context of these appeals to do so, both because neither of them reached settlement prior to the issuing of Part 7 proceedings, and because the damages claimed are well below £25,000. It is a continuing anomaly which, in my view, the Rule Committee should be invited to consider at the earliest available opportunity. It may also be minded to devise an amendment to section IIIA of Part 45 which fully reflects the concerns which underlie this judgment, not merely in relation to the RTA Protocol, but to the EL/PL Protocol as well.”
The irony of this is that Lord Justice Jackson has himself proposed that fixed costs should apply to the lower reaches of the multi-track and so it is strongly arguable that the Rules Committee have drafted the rules in accordance with Lord Justice Jackson’s intentions.
All of the talk about more work in the multi-track etc. making it unsuitable for a fixed costs regime is going to look a bit weak next July when Lord Justice Jackson proposes a massive extension of fixed costs, to include a huge number of multi-track claims.
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More like adding a whole sentence rather than words…what the actual f***?
[…] Kerry Underwood comments on this decision: […]
Fixed costs confusion | Legal Costs Blog
Indeed. Just think what we could achieve if we could all add 14 words to any bit of legislation that we do not like.
What if the case leaves the portal but is not litigated and settles for £20,000 damages – do fixed costs apply here?
Yes- anything exiting the portal and within the portal upper limit of £25,000 is subject to Fixed Recoverable Costs, with the exception of industrial disease claims which go straight to open costs, and also any claim allocated to the multi track, but obviously that can’t happen in an unissued matter.
Yesterday the Court of Appeal left open the situation in relation to an issued ex portal matter dealt with in the fast track but above the portal limit of £25,000.
What about case which enters the portal but settles post issue/pre-allocation for £26,000.
Do you anticipate Claimant’s to argue that multi-track costs should apply because the claim would have been allocated to the multi-track? Or are they only entitled to multi-track costs upon allocation??
Could go either way, but defendant’s argument would be that an undefended claim for just 4% above normal fast track limit would have been allocated to fast track, not multi track, but interesting point.
[…] Kerry Underwood – Qader Overturned: Parliament Ignored. […]
Is it your understanding that this case now covers RTA and EL/PL cases which exit the portal and are allocated to Multi Track. I know Qadar refers to RTA matters and EL/PL cases as the judgment unfolds but in paragraph 56 it refers to adding the magic words to Part 45.29B and in paragraph 58 gives the suggestion that someone should devise an amendment to section IIIA ……to EL/PL as well?
Also does this judgment have retrospective effect?
Yes to both. All judgments are declaratory of the law, as the theory is that judges cannot make the law or alter the law, although they very obviously did here. So the law is deemed always to have been what the court says it is. However, in except in exceptional circumstances, that does not allow old cases to be re-opened.
Technically the decision is obiter in relation to EL/Pl- but it will be followed- the wording and principles are identical.
Hi Kerry, would appreciate opinion on RTA case settled £65,000. Initially entered in portal. Notice of allocation to multi track, both parties agreed it would be multi track. Budgets drafted. Responses to Budgets prepared. Directions agreed including multi track. Matter then settled for £65,000 without the actual order being made that the matter is allocated to the multi track. The court even went to the point of ordering budgets to be filed and agreed if possible. D arguing ‘Qadar” and fixed costs. Surely given both parties agreed multi track is applicable and went the the point of attempting to agree budgets, costs can be assessed?
Unless and until the matter is allocated to the Multi-Track, then fixed costs apply.
To that extent the Defendants are right and it is now quite common for budgets to be filed and then the matter settled before allocation, in which case there is no extra fee for preparing and filing the budget etc.
The obvious question is why a claim ultimately settling for £65,000.00 pre-allocation was initially entered on to the portal, which has a maximum of £25,000.00.
There may be a good reason, but in my experience solicitors are far too quick to put matters on the portal, without properly considering whether they in fact satisfy the portal criteria.
Had the matter been resolved within the portal process, then you would have been stuck with portal costs under CPR 45.18 – no ifs and no buts.
Depending on the circumstances, that is as to why a matter that ultimately settled for 260% of the portal maximum was put on the portal, then you may succeed in an exceptional circumstances application under CPR 45.29J.
The relevant provision is rule 8.1 of the Civil Procedure (Amendment) Rules 2017, effective 6 April 2017, which provides that Fixed Recoverable Costs only apply “for as long as the case is not allocated to the Multi-Track.”
That provision put into statutory effect the Court of Appeal decision in
Qader & Others v Esure Ltd [2016] EWCA Civ 1109
and again that provided for fixed costs to be dis-applied, but only once the case had actually been allocated to the Multi-Track.
All of this is dealt with at great length in my book Personal Injury Small Claims, Portals and Fixed Costs, running to over 1,300 pages and three volumes and costing £80.00 and available from Amazon here or me here.
Thank you very much for taking the time to respond, Appreciate the response, I can but just shake my head sometimes at the changes that have been made. Kind Regards, John
I would like your opinion on a case I have recently settled. It was an RTA – went on the portal, but the insurers did not accept liability on the portal within time, and the claim was exited. The insurers then accepted liability a few months later. The claim became complicated as our clients injuries did not resolve and the claim settled for £35,000.
The defendant knew this would settle over £25,000 after our client was medically examined. Proceedings were not issued. D’s are arguing ‘Qadar’ and fixed costs. Would fixed costs be applicable here as the Defendant did not accept liability on the portal?
Yes – any ex portal matter remains subject to fixed recoverable costs unless and until it is allocated to the multi-track.
This is all dealt with in my book – Personal Injury Small Claims, Portals and Fixed Costs available from Amazon here or me here for £50 including P&P.
Afternoon Kerry.
Thank you for sharing your knowledge with the wider community. I wonder if I could tap into this on a specific case I am dealing with?
The basis of the Claimant’s submission appears to be that the CPR update effective 06/04/2017 (rule 8.1 of the Civil Procedure (Amendment) Rules 2017) has imposed a rule change which, if deemed to have retrospective affect, prejudices the Claimant, exposing her to ‘adverse costs’ and creates an exceptional circumstance pursuant to CPR 45.29J. There are no other submissions made re: exceptional circumstances.
The Defendant argues that ‘exceptional circumstances’ do not exist in this case or in these circumstances. Specifically, fixed recoverable costs and the CPR update (which does not afford a rule change, simply a clarification/correction) applies to a broad category of cases started before 06/04/2017. The CPR update does not add difficulty or complexity. Furthermore, the Claimant was not forced to incur costs exceeding fixed recoverable cost values; this was in her control.
I was however very surprised to learn that the local county court ordered in the Claimant’s favour at PA and has awarded costs other than FRC. I am now seriously considering an application for an oral hearing on this issue and wondered if you would be kind enough to give me your thoughts. I thought this was clear cut?!
Fixed Costs apply. In any event it is the claimant’s fault if they have put a matter on the portal which is over the limit, so they are the author of their own misfortune. It is possible to conceive of cases where there would be special circumstances, but the mere fact of being an ex portal case over the limit cannot be one and the Court of Appeal has ruled on this, as has the Civil Procedure Rules, approved by Parliament.
Insofar as there is a conflict – and I do not think that there is – then the doctrine of implied repeal applies.
The Court of Appeal decision was before the rule change/clarification. It is trite law that courts declare, but do not change, the law, so it is deemed to have always been the law, so there is no retrospectivity.
Obviously I do not know the full facts, but on the face of it the County Court decision is wrong.
All dealt with on my Autumn Tour – please see my blog – Getting the Retainer Right.