Section II of CPR Part 45 introduced a fixed recoverable costs regime for claims arising out of some classes of road traffic accidents where the accident occurred on or after 06 October 2003.
“It seems, to me, clear that the intention underlying CPR 45.7 to 45.14 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 was regarded as fair when taken as a whole”.
The case of Kilby –v- Gawith concluded that a fixed success fee pursuant to CPR 45.11(2) of 12.5% was recoverable if a conditional fee agreement had been entered into even though there may be satisfactory ‘before the event’ legal expenses insurance available.
The case of Nizami –v- Butt concluded that the indemnity principle did not apply in cases falling under CPR Part 45
So why, after 7 years of the scheme and two Court of Appeal decisions, do Claimant Solicitors find themselves in a position that fixed costs are not being paid in a timely manner and what can they do to recover these costs?
As the damages of the case would have been agreed and the only outstanding issue remaining is the fixed recoverable costs and the only way forward is to issue ‘Costs-only Proceedings’ under CPR Part 8 and not as some people believe by way of Part 7 Proceedings.
In order to issue ‘Part 8 Proceedings’ you have to demonstrate that there is an agreement in writing that the Defendant will pay the costs of the action. It is important, upon conclusion (if settled by telephone), that a letter is sent to the Defendant to confirm the agreed damages with costs payable ‘in addition’ in accordance with CPR Part 45.
On sending a breakdown of the ‘fixed recoverable costs’ together with a list of recoverable disbursements and supporting vouchers it is advisable to notify the Defendant if payment is not received within 21 days that ‘Part 8’ Proceedings will be issued.
The Defendant may agree the fixed recoverable costs, however they may challenge:
- the level of the medical report fee
- the level of the insurance premium
- recoverability of the insurance premium
CPR 45.10(2)(a) confirms that the following disbursements are recoverable.
- the cost of obtaining:
- medical records
- a medical report
- a Police report
- and Engineer’s report
- a search of the records of the Driver Vehicle Licencing Authority
Insurance premiums are recoverable under CPR 45.10(2)(b) which confirms:
The amount of an insurance premium; or, where a membership organisation undertakes to meet liabilities incurred to pay the costs of other parties to proceedings, a sum not exceeding such additional amount of costs aswould be allowed under section 30 in respect of provision made against the risk of having to meet such liabilities;
An insurance premium is defined under CPR 43.2(1)(m):
Means a sum of money paid or payable for insurance against the risk of incurring a costs liability in the proceedings, taken out after the event that is the subject matter of the claim;
If this situation occurs ‘Part 8 Proceedings’ can be issued for the disbursements/insurance premium that remain in dispute
When issuing a ‘Part 8’ claim it will need to be accompanied by:
- evidence to support that there is an agreement to pay costs
- a copy of the breakdown of fixed costs
- disbursement vouchers
- a draft order for the Defendant to pay the Claimant the costs of the action to be assessed if not agreed
- acknowledgment of service ‘Part 8’
- Notice of Funding (if there are additional liabilities)
- The current court fee (£40)
Once issued the ‘Part 8’ proceedings should be served upon the Defendant or their nominated Solicitors and the Defendant will have 14 days to acknowledge service. If the Defendant fails to acknowledge service the Court should be approached to seal the draft order contained within the ‘Part 8’ Proceedings.
When the costs order is obtained a Notice of Commencement can be served for the remaining costs in dispute. A Defendant will have 21 days to file Points of Dispute.
If the Defendant fails to serve Points of Dispute a Default Costs Certificate can be requested. If Points of Dispute are served, Replies should be prepared and a hearing requested for the remaining issues to be decided by detailed assessment.
If the Defendant agrees the fixed costs and disbursements after ‘Part 8’ Proceedings have been issued, remember the ‘Part 8’ costs will be payable by the Defendant in addition.
So it is, therefore, apparent that if you have a case where the Defendant is not co-operating with the payment of fixed recoverable costs you should not delay in chasing for payment, for which those costs will not be recoverable and should issue Part 8 Proceedings after 21 days of sending the schedule of fixed costs if you have not received payment.
Although the fixed costs system is recognised as valid system to reduce the amount of time a legal representative spends working on each claim and is financially beneficial to the party responsible for paying the costs. The individual Solicitors firms whose costs have been limited in most cases are going to need those costs paid promptly in order to maintain cash-flow alongside increasing overheads.