The fetter of “Swings and Roundabouts”- in a world of “Exceptional Circumstances”.
Craig Ralph, Kings Chambers, Manchester & Leeds, firstname.lastname@example.org
The “Fixed Recoverable Costs” regime under sII Part 45 is now an established part of the “Costs” landscape and in large part is a successful regime that is both cost effective, and dare I say “profitable” for legal advisors in the majority of cases. Nonetheless, the concept of “swings and roundabouts” is not always apposite nor just and the rules reflect that reality and allow for the receiving party to contend for a sum beyond the “fixed” if the court “…considers that there are exceptional circumstances making it appropriate to do so.” -CPR r45.12 (1).
This article addresses the procedural steps and pitfalls to be negotiated by a receiving party who seeks to aver that the quantum of costs should be out with rr.45.9 to 11 by dint of a finding of “Exceptional Circumstances”.
In an applicable Road Traffic Accident claim which settles pre proceedings by agreement as to the principle of costs the parties will ordinarily resolve the quantum of those costs without difficulty by reference to CPR rr45.9 to 11. Nonetheless sII recognises that accord as to quantum may not always be capable without the intervention of the courts (as a matter of fact or law). In this regard the mechanism under CPR Part 8 may be invoked to bring the matter for assessment under CPR r44.12A or r21.10(2).
Claims for an amount of costs exceeding fixed recoverable costs
The court will entertain a claim for an amount of costs (excluding any success fee or disbursements) greater than the fixed recoverable costs but only if it considers that there are exceptional circumstances making it appropriate to do so.
If the court considers such a claim appropriate, it may –
assess the costs; or
make an order for the costs to be assessed.
If the court does not consider the claim appropriate, it must make an order for fixed recoverable costs only.
Pleading exceptional Circumstances:
Part 45 sII, rr. 45.7 to 45.14 and PD 25A.8 mandate that unless the Claimant pleads and details “Exceptional Circumstances” in the claim form the only costs which are to be allowed are “fixed” by reference to CPR 45.9, together with Disbursements within CPR 45.10 and, if applicable, a Success Fee by reference to CPR 45.11.
Thus without more, the rule suggests that the “Exceptional Circumstances” are those that arose during the substantive claim and pre date the bringing of the Part 8 proceedings.
This is an important first point because sII of Part 45 envelops infant settlement proceedings. It is not uncommon for the sum offered in compromise to not find favour with the court (with the inevitable adjournment flowing), but such “delay” and inevitable increase in work and cost are unlikely to be deemed as having arisen due to “Exceptional Circumstances” and are more likely to be deemed to have arisen because of a failure by the legal advisor or the litigation friend to properly reflect or collate the lay and expert evidence prior to issuance. (Whilst none binding, such was the approach taken by a respected District Judge (DJ Stockton) in Shepherd v Aslam [04/06/10] Oldham County Court Unreported).
Thus the concept of “Exceptional Circumstances” and the “purpose” of the rule at 45.12 appear to condescend to matters arising from the substantive facts and law pre issue of Part 8 proceedings.
Although the phrase “Exceptional Circumstances” is not explained within Part 45 it is not a difficult concept to understand in generality. The preponderance of the online dictionaries defines “Exceptional” as “Outstanding” or “Out of the ordinary”. Thus it ought to come as no surprise that the concept is often argued when a party seeks an “equitable” outcome . Nonetheless, a word of caution. “Exceptional” in the specific context of SII Part 45 will be subject to the interpretative fetter imposed by the binding authorities on interpretation generally and Part 45 specifically.
Purposive Interpretation of the CPR and Part 45 sII:
The rules are to be interpreted purposively:
In Collier v Williams  EWCA Civ 20 the Court of Appeal stated, Dyson LJ at para 69:
“the rules should, if possible, be interpreted in a practical way which permits certainty and minimizes the risk of satellite litigation..”
The purpose of Section II of Part 45 is as stated by Mr Justice Simons at paragraph 23 of Nizami v Butt  1 W.L.R. 3307 as cited with approval by the Court of Appeal (Dyson LJ giving the lead judgment, para 9) in Lamont v Burton  EWCA Civ 429.;
“23. It seems to me clear that the intention underlying CPR 45.7-14 was to provide an agreed scheme of recovery which was certain and easily calculated. This was done by providing fixed levels of remuneration which might over-reward in some cases and under-reward in others, but which were regarded as fair when taken as a whole.”
Therefore, whilst r45.12 mandates the court to “entertain a claim for costs…greater than the fixed recoverable costs..” it will only do so when it has found “Exceptional Circumstances”. The finding of Exceptional Circumstances in a regime intended to “over-reward or under-reward” must create a wide margin within which all but the truly “Exceptional” belong.
Thus the fact that a claim is pursued in a certain manner that results in the fixed costs under rewarding is conceptually insufficient for CPR 45.12. It would be contrary to the principle which underpins the entire “fixed regime”.
If the Court finds Exceptional Circumstances”. What is to be “assessed”?:
Whilst no binding authority exists on the point; it can be argued that upon a proper interpretation of r45.12 the mandatory requirement- “.. must include on the claim form details of the exceptional circumstances which he considers justifies the additional costs”- requires the receiving party to set out the “Exceptional Circumstances” and then to set out what additional costs are incurred by those “Exceptional Circumstances”. Put another way, what the receiving party is required to do is detail the “Exceptional Circumstances” in order that the court may ascertain a “reasonable sum” for that “exceptional work”. Indeed it can be argued that to assess the whole of the costs on the standard basis simply because the court made a finding that some element of the claim was an “Exceptional Circumstance” is counter intuitive in a regime that strives for certainty and expressly debars the circumventing of the mandatory provisions of Part 45 . (Whilst none binding, such was the approach taken by a respected District Judge (DJ Wandsworth) in Wright v Clarke and Admiral Insurance [11/04/10] York County Court Unreported).
Notwithstanding the above, in the respectful opinion of this writer such an approach is wrong. CPR r45.12 is not mandatory; it imposes of discretion and invites assessment. The just effect of rr 45.13 and 45.14 (see below) would be skewed if the court merely assessed the “Exceptional” elements. What is required is an assessment of a properly pleaded case supported by a detailed bill showing the reasoning behind the averment of “Exceptional Circumstances” with the claimants costs being allowed for work reasonably incurred and reasonable in amount to prosecute the claim.
Final Word of Caution r45.13 & 14:
Assuming that the matters are fully pleaded and the court entertains the claim for costs greater than the “fixed” regime such may still not result in the costs recovered being “worth the price of the candle”.
For the receiving party to recover more by way of costs than “fixed” costs he must not only convince the court that there are “Exceptional Circumstances” but must also convince the court to assess costs at a sum equal to or greater than 20% more than the “fixed” costs. If he or she does not then they will only recover the lesser of the fixed costs and the assessed costs. Furthermore such will result in the “costs of the costs” falling at the claimants door [CPR rr45.13 & 45.14].
Costs may be recovered beyond the “Fixed regime” in applicable RTA claims under sII of Part 45 if the pleadings detail “Exceptional Circumstances”. If the court considers that there are “Exceptional Circumstances” then the entirety of the (detailed) Bill of costs should be assessed, not simply the costs arising from the “Exceptional Circumstances”. Such ought to be assessed on the standard basis with any “doubt” as to the reasonability of the costs (as to quantum or incurrence) being resolved in the paying parties favour. The sum once assessed will not however be recovered unless the assessed sum exceeds the “Fixed Costs” by 20%. Finally, the costs of the assessment will be resolved by reference to the “20%” trigger, thus one would be well advised to seek specialist costs advice before seeking to stand out with the “fixed” regime.
R v Roberts  2 Costs LR 323 What amounts to good reason or exceptional circumstances in the context of criminal law costs proceedings.