Young v AXA Insurance UK Ltd – Part 36, Fixed Costs and Exceptional Circumstances

This is a case which focuses on the interplay between Part 36 and fixed costs.

The background to the claim is that the Claimant brought an action against the Defendant for personal injury following a road traffic accident. The claim was initiated through the MoJ Portal however, the Defendant did not admit liability and the matter fell out of the Portal. The claim was issued and subsequently settled on 13 August 2018 by way of Part 36 in the sum of £2,616.66. As a result, the Defendant was liable to pay the Claimant’s fixed costs and disbursements (totalling £2,236.00).

As the matter settled by way of Part 36, the Defendant had 14 days from acceptance (28 August 2018) in which to provide payment in respect of the damages (CPR 36.14(6)) however, the Defendant failed to do so.

As a result of the same, and some 7 days after the date of payment prescribed by CPR 36, the Claimant issued an application on 5 September 2018 seeking an Order in the following terms:

a) Judgment for the Claimant in the sum of £2,616.66

b) An order that the Defendant do pay the Claimant’s agreed costs and disbursements in the sum of £2,236.

c) Costs of the application in the sum of £933.28

On 12 September 2018 the Defendant thereafter provided payment which therefore combated terms (a) and (b) of the sought order however, what remained was whether or not the Claimant was entitled to their application costs.

The structure of acceptance relevant to the case in respect of Part 36 was as follows:

a. On acceptance the claim is stayed - CPR 36.14(1)

b. That stay will not affect the power of the court to enforce the settlement or deal with costs -  CPR 36.14(5)

c. The settlement sum must be paid within 14 days -  CPR 36.14(6)

d. If “such sum” is not paid within 14 days (or by any later agreed date) the Claimant may enter judgment for the “unpaid sum” -  CPR 36.14(7)

The Claimant argued that the application costs fell outside of fixed costs on the basis that CPR 36.14 applies up to settlement and the subsequent entry of Judgment falls outside of settlement therefore the fixed costs regime did not apply. The Claimant suggested that if this argument was rejected, the need for an application amounted to “exceptional circumstances” and invited the Court to exercise their discretion under CPR 45.29J to award the application costs.

In response, the Defendant argued that CPR 36 and CPR 45.29 provided a comprehensive and seamless costs regime. Attention was drawn to the terms of CPR 45.29B which provides that in an RTA Protocol case like this “the only costs allowed” are CPR 45.29C fixed costs.

In reaching his verdict, HJ Godsmark considered the case of Sharp v Leeds City Council [2017] EWCA Civ 33 (which focused on whether applications for pre-action disclosure fell within fixed costs). He found that the application for Judgment does fall within the application of fixed costs and opined “The better, and to me more obvious, construction of the rules is as follows:-

  1. In a RTA Protocol claim like this the only costs allowed are those under the FRCR which are as set out in the Tables  (CPR 45.29B)
  2. Where such a claim settles by acceptance of a Part 36 offer the same fixed costs are recoverable (CPR 36.20)
  3. The FRCR applies up to and including a judgment order in a case which goes to trial. There is no reason why the FRCR should not apply up to and including judgment in a case which settles via Part 36.”

HJ Godsmark thereafter considered whether the need for an application amounted to “exceptional circumstances”. Whilst the Judge deemed the need for an application to amount to “exceptional circumstances”, he refused to make any other order than fixed costs on the basis that the Claimant was essentially too quick off the mark in making the application and did not attempt to chase or obtain the position as to the settlement sums. He stated that “Simply to issue an application without warning strikes me as precipitate.”

This case is a great example of showing that whilst an application to obtain Judgment does fall within the fixed costs regime, you may still be able to recover the additional costs on the basis of “exceptional circumstances”. However, the conclusions drawn demonstrate that in order for it to be deemed “exceptional circumstances” the receiving party must make some attempt to communicate with the paying party prior to issuing any application.

If you have any questions regarding this case law summary or want a copy of the full Judgment, please contact Karl Robson here

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