Fixed recoverable costs-settling at the court door

This article was first published on Lexis®PSL Personal Injury on 24 May 2016. Click for a free trial of Lexis®PSL.

The case of Dos Santos Medes v Hochtief (UK) Constructions Ltd dealt with the issue of fixed recoverable costs (FRC) under the Civil Procedures Rules (CPR) in a claim brought under the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (RTA Protocol). Jasmine Murphy examines the case and its potential implications.

Original news

Dos Santos Medes v Hochtief (UK) Constructions Ltd [2016] EWHC 976 (QB), [2016] All ER (D) 18 (May)

The Queen’s Bench Division allowed an appeal from a decision of a recorder, refusing to award a fixed-advocacy fee on the basis that the case had settled. It had not strained the language of CPR 45.29C to conclude that the case was one where the claim had been ‘disposed of at trial’, albeit by way of settlement rather than judgment.

What issues did this case raise? Why is it significant?

Medes v Hochtief (UK) deals with another issue thrown up by the drafting of Part IIIA of CPR 45: Fixed Recoverable Costs. FRC apply to cases commenced either in the RTA, Employer’s Liability or Public Liability Protocols after 31 July 2013, but which later leave the Protocol and Part 7 proceedings are issued.

In Medes v Hochtief (UK) the issue was whether the trial advocacy fee was payable by the defendant when the case settled at court on the morning of trial, but before the trial started. The trial judge disallowed the trial advocacy fee because the trial had not yet commenced and the case had settled before trial. On appeal, Coulson J, overturned his decision and allowed the trial advocacy fee because the case was disposed of at trial, albeit by way of settlement rather than judgment.

It is a significant case because it is the first authority on this point. As it is a decision of a High Court judge it is binding on District and Circuit judges at County Court level.

The decision is encouraging for claimant lawyers. At a time when costs in personal injury cases are significantly squeezed (this case was settled for £20,000 and costs allowed were £6,655 plus disbursements) this decision upholds the (perhaps obvious) principle that counsel should be paid their brief fee even if a case settles on the morning of trial. The decision of Coulson J provides certainty as to the interpretation of the rules. It also encourages settlement—which would not have happened had the decision of the lower court not been overturned. As Coulson J said ‘…there are sound policy reasons from concluding that the interests of justice would be better served if the advocate was not penalised financially for negotiating a settlement at the door of the court’.

How helpful is this judgment in clarifying the law in this area? Are there any remaining grey areas?

This judgment of Coulson J is very helpful because he was aware of the wider significance of his decision and so gave a very careful, considered judgment. As this was an appeal which followed immediately from an oral hearing for permission to appeal, he reserved judgment so that further written submissions from both parties could also be considered. Coulson J considered that a purposive interpretation should be given to the rules and rejected a comparison with the old conditional fee agreement rules which dealt with the timing of trigger points for an increase in the success fees.

Grey areas remain. If the parties attend court for a trial, yet the trial is adjourned on the day for whatever reason, what costs are recoverable for the adjourned trial? The FRC regimes only refer to one trial advocacy fee. If two claimants are included in one claim, is only one lot of fixed costs recoverable or two lots? If a claim starts in the Protocol but then leaves the Protocol and is allocated to the multi-track because its value is greater than £25,000, do FRC still apply (the question to be considered by the Court of Appeal in Qader and others v Esure Services Ltd [2015] Lexis Citation 247, [2015] All ER (D) 295 (Oct))?

What does all this mean for lawyers and their clients? What should they do next?

This case provides certainty to both sides. It also hopefully means that claimants should be able to find an advocate who is prepared to attend trial and negotiate at the door of the court on their behalf without the fear of not recovering the trial advocacy fee.

Defendants should be aware that if they intend to settle a case, to not leave this until the day of trial if they want to avoid paying the trial advocacy fee.

How does all this fit in with other developments in this area? Do you have any predictions for future developments?

Until there is more guidance from the High Court and Court of Appeal, inconsistent decisions are being made at County Court level about the interpretation of FRC, particularly with regards to the grey areas mentioned above. Some judges follow a purposive approach and some stick rigidly to the wording of the rules. Hopefully there will be more decisions like this from the High Court and the Court of Appeal to clarify and give guidance on FRC.