QADER IN THE COURT OF APPEAL: FIXED COSTS NO LONGER APPLY TO ACTIONS ALLOCATED TO THE MULTI TRACK

Perhaps the most surprising thing about the decision of the Court of Appeal in Qadar -v- Esure [2016] EWCA Civ 1109 is the route that had to be taken to get to the result.  The Court of Appeal added, to the rules, words that (it held) the Rules Committee had left out. (Also available on Bailli – here)

THE CASES ON APPEAL

The appeals related to the issue of whether fixed costs continued to apply when cases that had started in the RTA Portal were later allocated to the multi-track.

THE DECISION

The Court of Appeal held that fixed costs no longer applied in these circumstances.

(1) A close analysis of the history of the rules demonstrated that it was never the intention that cases in the multi track should be subject to fixed costs.

(2) The court could put right obvious drafting errors. The Rules Committee had failed to implement the obvious intention of the Government and exclude multi track cases from the fixed costs regime.

(3) The best way to give effect to the intention was to add, to Part 45.39B, after the references to 45.29J

“… and for so long as the claim is not allocated to the multi track”.

THE JUDGMENT

Lord Justice Briggs gave the judgment of the court. He stated:-
  1. In the Inco Europe case to which I referred at the beginning of this judgment, Lord Nicholls described the court’s jurisdiction to put right drafting errors in statutory provisions in the following terms, at[2000] 1 WLR 586, at 592C-H:
“It has long been established that the role of the courts in construing legislation is not confined to resolving ambiguities in statutory language. The court must be able to correct obvious drafting errors. In suitable cases, in discharging its interpretative function the court will add words, or omit words or substitute words. Some notable instances are given in Professor Sir Rupert Cross’s admirable opuscule, Statutory Interpretation , 3rd ed. (1995), pp. 93–105. He comments, at p. 103:
“In omitting or inserting words the judge is not really engaged in a hypothetical reconstruction of the intentions of the drafter or the legislature, but is simply making as much sense as he can of the text of the statutory provision read in its appropriate context and within the limits of the judicial role.”
This power is confined to plain cases of drafting mistakes. The courts are ever mindful that their constitutional role in this field is interpretative. They must abstain from any course which might have the appearance of judicial legislation. A statute is expressed in language approved and enacted by the legislature. So the courts exercise considerable caution before adding or omitting or substituting words. Before interpreting a statute in this way the court must be abundantly sure of three matters: (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the draftsman and Parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed. The third of these conditions is of crucial importance. Otherwise any attempt to determine the meaning of the enactment would cross the boundary between construction and legislation: see per Lord Diplock in Jones v. Wrotham Park Settled Estates [1980] A.C. 74 , 105–106. In the present case these three conditions are fulfilled. “
  1. It may be said that the interpretative jurisdiction to put right obvious drafting errors in a statute is fortified by the difficulties which typically face Parliament in doing so, in relation to primary legislation, in the light of its heavy workload. The same difficulties do not affect the Rule Committee to any similar effect. It can, and regularly does, re-consider rules when invited to do so by the court, either to correct drafting errors or other infelicities which have been proved to cause procedural difficulty. Nonetheless it is almost invariably the case that corrections cannot be made with retrospective effect, so that parties in ongoing litigation who are adversely affected by the relevant error do not thereby obtain relief from their predicament.
  2. In the present case the Rule Committee’s apparent failure to implement the continuing intention of the Government, in response to stakeholder concerns, to exclude multi-track cases from the fixed costs regime being enacted for cases leaving the RTA and EL/PL Protocols seems to me to satisfy all three of Lord Nicholls’ preconditions. The intended purpose of the fixed costs regime in this context was that it should apply as widely as possible (and therefore to cases allocated to the fast track, and to cases sent for quantification of damages at disposal hearings), but not to cases where there had been a judicial determination that they should continue in the multi-track. The intended restriction on the ambit of the fixed costs regime is clear, and the only reason for that restriction not being enacted in section IIIA of Part 45 appears to be inadvertence, rather than a deliberate decision by the Rule Committee to take a different course. Similarly the substance of the provision which the Rule Committee would have made, if it had taken steps to enact that restriction would have been to provide that, from the moment when a case was in fact allocated to the multi-track, the section IIIA fixed costs regime should cease to apply to that case.
  3. By contrast, I do not consider that the Rule Committee would have carried back to a pre-allocation stage a policy to dis-apply fixed costs, merely because a claim properly started in the Protocols had grown in value beyond £25,000, or had become the subject of a pleaded defence of fraud or dishonesty. As I have said, it by no means follows that every such case would be inappropriate for management and determination in the fast track. To require the parties to guess, or the court to decide, whether a case which settled prior to allocation (to which therefore part A or the first column of part B of Table 6B would apply) was or was not subject to fixed costs would introduce a damaging and unnecessary degree of uncertainty into a scheme which depends upon its predictability for its contribution towards the proportionate, speedy and effective disposal of civil proceedings.
  4. 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…”

 

12 comments

  1. Nicola Gelder · · Reply

    So if a matter is not issued and so not ‘allocated’ to Multi Track, eg a case settled for in excess of £25k pre-issue, then fixed costs still apply?

    Nicola Gelder Senior Solicitor
    Motor, Fraud, RL & IHT, Resolution Law
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  2. How could they? If it settled for more than £25,000 it was never going to enter the portal and would never be subject to the fixed costs regime? The Protocol upper limit is £25,000. Why do you say fixed costs would apply to a case of more than £25,000?

  3. Damian Rigby · · Reply

    Perhaps if the true extent of a claim was not known at the outset and it started out in the Portal?

    1. I see what you mean now. This is unresolved. A claimant would be best advised to get the matter allocated to the Multi Track before settling a case for more than £25,000. However given they way the issue has been dealt with to date. Remember in the case of Jamadar the court imposed a duty on a claimant to lodge a costs budget even though the case was not (technically) allocated to the multi track on the grounds that it was obvious that it was a multi track case. Similar principles could apply here.

  4. Michael Loveridge · · Reply

    Since when has the Court of Appeal had the right to rewrite legislation?

    I really think they’ve grossly overstepped their powers of interpretation here, and it’s an extremely dangerous precedent.

    I sincerely hope there’s an appeal to the Supreme Court that will put them back in their box.

  5. If the claim exited the portal but was not issued and damages agreed for £20,000 – would fixed costs apply?

    1. Trainee Costs Lawyer · · Reply

      If the cause of action was on or after the 31st July 2013, then yes fixed costs would apply as it is under the £25K limit

  6. I do have a problem with the anomaly described at para 39. The judge seems to agree with Roger Mallalieu that there is a consistent message in 45.29A, B & C that the fixed costs regime applies to cases started correctly within the protocol but settle outside it, even for an amount over £25,000. They all seem to agree that the reference in part A of Table 8B (sic)(6B?) to an upper limit of £25k is an anomaly. He ducked the issue at para 58 by saying he didn’t have to decide it and wants the rule committee to clarify it but I don’t see how that interpretation can be right.

    There may well be a consistent message in 45.29A, B & C but nowhere that I can see has the court considered whether that sits consistently with the rest of Part 45 and the scope of the protocol itself. Take Tables 6 & 6A in 45.18 for cases that settle within the portal. Both tables have upper limits of £25,000. 45.16 says that whole section applies to cases which “have been or should have been started under Part 8” – in other words cases from the protocols. The protocols have a stated “upper limit” of £25,000. A limit is a limit! The protocol ceases to apply to cases where it is revalued at over £25,000. It shouldn’t matter what track it may have been allocated to. The Court seems to have considered 45.29 in isolation rather than looking at the timeline of a case and the rules and protocols leading up to it ending up at 45.29.

    I’m struggling to see how it’s right that if a case drops out of the portal and concludes for over £25,000 that the costs are fixed in accordance with 45.29 Table 6B.

    If part A of Table 6B needs amending to remove the upper limit then surely the upper limit also needs removing from Tables 6 & 6A. I had a client query a couple of weeks ago where they settled an EL case still in the portal for over the protocol limit. Table 6A can’t apply because of the upper limit and there is nowhere else for it to go other than standard basis costs. It wasn’t taken out so can’t go into table 6B. Surely that has to be the case for all cases that start in the portal but conclude for more than £25,000….

    1. Having re-read it I see where I’m partly wrong and it goes back to the root of the problem described in para 20 of the ruling. 45.29A-C appears to catch ALL cases which start in the portal but drop out, regardless of track allocation or value. The anomaly is therefore the financial limit contained in part A to Table 6B which doesn’t sit with the reading of the rest of that section.

      The CA has had to interpret by refererence to original intentions that cases actually allocated to the Multi Track are not caught by the tables but in other respects has kicked it back to the CPRC to tell us what should be caught by the tables and what shouldn’t, particularly cases that drop out but settle pre-proceedings for more than £25,000 which 45.29A&B says ARE caught but part A to Table 6B suggests are not.

      Now that’s cleared up it still doesn’t sit right with me that a case over £25k which the rest of the rules, PDs and protocols say are unsuitable for the procedure and accompanying costs regime should be caught by 45.29. There is a consistent theme that if your case is over £25k, you’re out of the regime.

      1. Jon, in that situation you still have the 45.29J “exceptional circs” escape route from FRC.

  7. Thanks Jasmine.

    The trouble with that is that if the rule is to be read in a way that 45.29 isn’t intended to incorporate an upper limit of £25,000, the value of the claim as of itself doesn’t necessarily make it exceptional and will lead to satellite litigation over arguments as to when value is exceptional.

    Looks like an interesting one to be involved in!

  8. Trainee Costs Lawyer · · Reply

    How does this judgment sit with CPR 3.12(1)(d) which states that costs management and costs budgeting does not apply where the proceeding are the subject of fixed costs (unless the Court orders otherwise). Surely this shows that fixed costs can apply to multi-track cases

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