Exceptional circumstances: has the issue ever taken on greater importance?

Personal injury practitioners will be well familiar by now with the fixed costs rules that (in various iterations) are contained within Part 45 of the Civil Procedure Rules. Even those who aren’t familiar with fixed costs because their work has never been covered by them, are likely to need to become familiar with them (and quickly) given the extension of fixed costs to claims worth up to £100,000.00 that many believe with be introduced from April 2023.

The fixed costs regime involves a “swings and roundabouts” approach to lawyer’s remuneration in various types of PI claims that (currently) have a value up to £25,000.00 and are not subsequently allocated to the multi-track following proceedings being issued. And whilst it is likely that most cases which satisfy the criteria for the application of the fixed costs rules will result in practitioners receiving nothing more than fixed costs, it is important that rules such as CPR 45.29J are not forgotten or overlooked. This allows practitioners dealing with cases that involve “exceptional circumstances” to recover costs in excess of those mandated by the fixed costs regime.

Two cases which are illustrative of the mechanism for escaping fixed costs provided by CPR 45.29J are Lloyd 2 Sisters Poultry Ltd (Costs) [2019] EW Misc 18 and Crompton v Meadowcroft (Costs) [2021] EW Misc 20.

Facts

The claim in Lloyd concerned a claim brought in relation to an accident which the Claimant suffered whilst in the Defendant’s employment. The claim was initially brought in accordance with the EL/PL Low Value Pre-Action Protocol (“the Portal”) before it dropped out of the Portal and proceedings were issued in October 2016. Prior to the claim being allocated to track, it was settled by way of acceptance by the Claimant of a Part 36 offer made by the Defendant. The Claimant argued that the circumstances of the claim were “exceptional” such that he was able to take advantage of CPR 45.29J and recover costs in excess of the applicable fixed costs. The court at first instance, and on appeal, agreed.

The facts of Crompton were slightly different, but the ultimate outcome was the same. Miss Crompton had sustained injury in a road traffic accident. Her claim was submitted through the RTA Low Value Pre-Action Protocol on 7 January 2017 and dropped out shortly thereafter. Liability for the accident was admitted in March 2017. Proceedings were nevertheless issued in 2020 and an offer to settle was made by D. Before the proceedings were settled the parties filed directions questionnaires and then settlement was reached. Post-settlement, the court allocated the matter to the multi-track.

Discussion

In both cases, the judges emphasised that the bar for determining that a case involves ‘exceptional circumstances’ is a high one. The same is also stated in the commentary to the White Book.

Guidance as to the meaning of the phrase “exceptional circumstances” and its application has been provided by the Court of Appeal in cases such as Costin v Merron [2013] 2 Costs LR 391 and Hislop v Perde and Kuar [2018] EWCA Civ 1726 and although Leveson LJ in Costin was dealing with the rule in CPR 45.13, its language and that of CPR 45.29J are very similar in meaning. Leveson LJ determined that a case to which the rule refers is exceptional in a sense that the case is taken out of the general run of the type of case by reason of some circumstances which means that greater costs are in fact incurred and would reasonably be expected to be incurred, and for a case to fall outside of the fixed costs regime exceptionally more money must have had to be expended than would otherwise have been the case. Nevertheless, Coulson LJ made it clear in Hislop that there does not have to be a precise causative link between the circumstances that are said to be exceptional and an increase in the costs claimed for a case to come within CPR 45.29J.

In Lloyd 2 Sisters it was the volume of work undertaken by the Claimant’s representative, the fact that the nature of the Claimant’s injury led to him suffering permanent disability, the need for detailed consideration of the Ogden tables to calculate future losses and the value of the claim which led to the court at both first instance and on appeal to determine that the case was “exceptional” within the meaning of CPR 45.29J.

In Crompton, it was the unusual number of expert witnesses, the evidence required to address the injury, the potential seriousness of the Claimant’s injuries and the calculation of losses leading to a significant increase in the volume of work required which persuaded the court to find for the Claimant.

The courts are often referred by defendants to policy arguments surrounding the certainty and clarity that the fixed costs regime gives to parties to litigation. This is correct and the certainty and clarity provided goes some way to explaining why the test in CPR 45.29J (and its predecessors) is one of exceptional circumstances and why courts are so loath to open too wide an ambit in allowing claims to fall outside of the fixed costs regime. However, the fixed costs regime does have an exception, a “safety valve” as described by the court in Lloyd. That is CPR 45.29J.

What is clear is what is held to constitute “exceptional circumstances” for the purposes of taking a case outside of the fixed costs regime will depend upon the facts of each case and whilst practitioners should be wary of trying to routinely bring too many cases within its ambit, if the circumstances of a case warrant it, practitioners should not be afraid to use the exception. That is what it is there for. It may well be that this “escape route” is utilised more when the extension of fixed costs to cases worth up to £100,000.00 finally comes into effect.

Nevertheless, a note of caution comes from CPR 45.29K and CPR 45.29L. Those that look to take a case outside of the remit of the fixed costs regime and, on assessment, go on to be awarded a sum of money that is less than 20% greater than the amount of fixed recoverable costs, will be awarded the lesser of the fixed recoverable costs and the assessed costs. The court may also deprive a receiving party of the costs of the costs-only and/or detailed assessment proceedings and make an order in favour of the paying party.

Let the great escapes begin!