FIXED COSTS DO NOT APPLY TO ALL EX-PORTAL CLAIMS: QADER OVERTURNED: PARLIAMENT IGNORED

In Qader & Others v Esure Ltd & Khan v McGee [2016] EWCA Civ 1109, 16 November 2016

 

the Court of Appeal held that the Fixed Recoverable Costs Regime does not apply to a claim started in the RTA Portal, which subsequently exited the portal and was allocated to the multi-track after proceedings were issued under Part 7 of the Civil Procedure Rules.

 

The result may be just, but the Court of Appeal accepted that to achieve that result it needed to add in words to the Civil Procedure Rules, even though there was no irrationality in the wording and no irrationality or inherent unfairness in giving effect to that clear wording.

 

The lead, and only judgment, was given by Lord Justice Briggs, author of the extremely controversial report proposing to abolish court hearings for most claims under £25,000. Here, as a judge, he re-writes the law passed by Parliament, to reflect what he thinks was the minister’s and the Government’s – not Parliament’s mind – intention.

 

Whatever view you take this decision has enormous constitutional implications. The full contribution of Lords Justice Gross and Tomlinson sitting on this appeal were:  “ I agree”.

 

Well, I disagree, but I am bothering to explain why.

 

The Court of Appeal recognized that it could re-write what is secondary legislation if it is in conflict with the Human Rights Act, as Parliament has given it that power in the Human Rights Act itself.

 

Clearly restricting a winning party to fixed costs where they have incurred significant costs is a potential breach of the European Convention on Human Rights, scheduled to the Human Rights Act as it could constitute breach of, among other things the right to a fair trial under Article 6.

 

To go down that legitimate route would of course have called in to question the whole issue of fixed costs, no costs, QOCS, small claims etc. – so they bottled it.

 

The decision is a constitutional outrage, and I deal with that further below. But most of you will want first, or only, to know the effect on your personal injury cases, so here it is.

 

The Court of Appeal set out the problem in the first paragraph of the judgment:-

 

“The issue turns mainly on the interpretation of section IIIA of CPR Part 45, read together with the relevant provisions of the RTA Protocol, and against the background of the process of consultation which preceded the making of that section in 2013, by way of implementation of fixed costs proposals in the reports of Jackson LJ in his Review of Civil Litigation Costs. It requires the court not merely to interpret the relevant provisions, but to consider whether they suffer from an obvious drafting mistake which can be put right so as to bring them into compatibility with the intention of the relevant legislator, namely the Civil Procedure Rule Committee, pursuant to the court’s exceptional jurisdiction to do so as explained by Lord Nicholls in Inco Europe Limited v First Choice Distribution [2000] 1 WLR 586, at 592.”
At paragraph 8 of the judgment the Court of Appeal made it clear that although this judgment concerns cases started within the RTA Portal “it is likely that that outcome will affect the interpretation and application of the similar and indeed overlapping provisions in Part 45 about the EL/PL Protocol.”

 

At paragraph 9 the court said:-

 

“Viewed as a whole, at first sight section IIIA appears to make comprehensive provision for the recovery only of fixed costs in all cases which start but no longer continue under either of the relevant Protocols, subject only to expressly stated exceptions.”

 

The only stated exception is disease claims – see CPR 45.29A(2).

 

The court recognised that claims allocated to the multi-track would involve higher, and often much higher expenditure of costs than claims resolved in the fast-track.

 

“Just as personal injury claims for less than £1,000 are inappropriate for the Protocols, so are claims for more than £25,000, so that there is an initial apparent symmetry between the scope of the Protocols and the fast track, in terms of the amount claimed.” (Paragraph 15 of the judgment).

 

The Court of Appeal then looked at three situations where an ex-portal matter was likely to be allocated to the multi-track:-

 

• where it is revalued at a substantially higher level than the upper portal limit of £25,000.00;

 

• where vehicle-related damages, excluded for portal purposes from the calculation of the upper limit, means that the claim is a substantial one;

 

• as here where there is an allegation of fraud.

 

The second example is an interesting one as that envisages a claim worth say £75,000.00 being suitable for the portal process, but not the fast track, which is a curious conclusion.

 

The court recognised that the wording of the rules means that fixed costs apply to all ex-portal claims:-

 

“On the contrary, the language of Part 45.29A and B, taken together, appears unambiguously to apply the fixed costs regime to all cases which start within the relevant Protocols but no longer continue under them.”

 

The Court of Appeal recognised the existence of the escape provision in CPR 45.29J.

 

Nevertheless the Court of Appeal held that fixed costs should be “automatically dis-applied in any case allocated to the multi-track, without the requirement for the claimant to have recourse to Part 45.29J.” (Paragraph 35).

 

The court made the point that to achieve the escape under CPR 45.29J the claimant has to show exceptional circumstances.

 

Thus the law now is that any case allocated to the multi-track for any reason takes the case out of Fixed Recoverable Costs.

 

The Court of Appeal here accepted that the clear wording of the rules, and indeed the judgments of the two lower courts, where not “irrational or, on its face, one which could not possibly have been intended, so as to compel the court to some other conclusion, even though it would, subject to relief under Part 45.29J, lead potentially, albeit only until the end of the trial, to rough justice for some claimants.” (Paragraph 35(c) of the judgment).

 

Thus the Court of Appeal here, following no canons of construction known to me, have, apparently for policy reasons, altered the wording of the Civil Procedure Rules which have been approved by Parliament by way of a statutory instrument.

 

Traditionally courts could never have recourse to anything discussed in Parliament, but had to look at the wording of legislation as passed by Parliament and without considering any background material. That rule was changed by the case of Pepper v Hart [1992] UKHL 3 which held that in certain exceptional circumstances Hansard, the official record of the proceedings of Parliament, could be referred to in order to assist in the interpretation of Parliamentary legislation.

 

This decision extends that principle enormously with the Court of Appeal taking the view that it is able to consider the process of consultation which proceeded the Civil Procedure Rules which “demonstrate that it was not in fact the intention of those legislating for this regime in 2013 that it should ever apply to a case allocated to the multi-track.” (Paragraph 35(d) of the judgment).

 

The Court of Appeal went on to say:-

 

“A conclusion that it should so apply is a result which can only have arisen from a drafting mistake, which the court has power to put right by way of interpretation even if, as here, it requires the addition of words, rather than giving the words actually used a meaning different from their natural and ordinary meaning. It should normally be possible to understand procedure rules just by reading them in their context, but this is a rare case where something has gone wrong, and where the court’s interpretative powers must be used, as far as possible, to bring the language into accord with what it is confident was the underlying intention.”

 

This is very dangerous territory. If a court is free at any time to change the wording of laws to reflect “the intention of those legislating” then where does it stop?

 

Members of Parliament voting for a particular provision may have very different intentions. For example Michael Foot and Enoch Powell joined together to defeat the Reform of the House of Lords because Enoch Powell wanted it to stay exactly as it was and Michael Foot wanted it scrapped altogether.

 

How would a court interpret those totally different intentions?

 

The key in any legislation is the wording as passed by Parliament. To start looking at “the intention of those legislating” gives the court virtually unfettered power to rewrite laws as it wants. It should also be remembered that the Rules Committee did allow for an escape– that is what CPR 45.29J is all about and therefore there is an existing mechanism to avoid injustice to claimants.

 

The Court of Appeal went on to say at paragraph 43:-

 

“But for what I am about to describe about the background to the making section IIIA of Part 45, it could not be said that it would have been irrational for the Rule Committee to have gone down the more rigorous route of making fixed costs applicable to all cases coming out of the relevant Protocols, leaving the combination of Part 45.29J and Part 36 to make appropriate provision, where necessary, for cases allocated to the multi-track. Looking simply and objectively at the CPR, that would appear to have been what the Rules Committee intended.”
To justify rewriting the clear wording of the Civil Procedure Rules, and the clear intention, the Court of Appeal then looked at what it called “the history of the making of this fixed costs scheme”.

 

It had this to say:-

 

“44. It is however clear that this rigorous approach is not what the Rule Committee actually intended. The original impetus for what became the fixed costs scheme for RTA and EL/PL Protocol cases came from Jackson LJ’s reports. At appendix 5 to his December 2009 Final Report is to be found a composite table (“table B”) of fixed costs for RTA, EL and PL cases which, although the amounts recoverable are different, has a structure which was eventually adopted almost precisely in Tables 6B, 6C and 6D in section IIIA of Part 45. His appendix is entitled “Fixed costs matrix for fast track personal injury claims”.

 

45. In March 2011 the Ministry of Justice published a consultation paper headed “Solving disputes in the County Courts: creating a simpler, quicker and more proportionate system”. At paragraphs 57 to 59 it noted Jackson LJ’s proposals for a regime of fixed recoverable costs for personal injury cases in the fast track. At paragraph 83 it noted that Jackson LJ’s fast track proposals could be used for cases which left the RTA Protocol process, for example where liability was not admitted. Paragraph 60 made express reference to the fixed costs table B in appendix 5 to Jackson LJ’s final report.

 

46. In February 2012 the Ministry of Justice published the Government’s response to that consultation. At paragraph 15 it announced its intention to increase the financial limit of the RTA Protocol to £25,000. At paragraph 20 it announced the Government’s intention to extend the system of fixed recoverable costs, subject to further discussions with stakeholders, in a way similar to that proposed by Jackson LJ in his review.

 

47. In a consultation letter dated 19 November 2012 Helen Grant MP, the Parliamentary Under-Secretary of State for Justice, notified stakeholders of the Government’s intention to introduce a matrix of fixed recoverable costs which would apply to RTA, EL and PL claims which “exit the Protocol process” based on Jackson LJ’s table B (in appendix 5 to his Final Report), but amended to take account of inflation since the table was produced in 2009, and reduced throughout by an amount intended to reflect the forthcoming ban on referral fees. She attached as Annexe B to her letter a tabular form of her proposals, modelled on Jackson LJ’s template and containing, for the most part, precisely the amounts now set out in Table 6B for RTA Protocol cases. She sought further views and evidence on (among other things):

 

“The interface between proposed FRC arrangements within and outside the Protocols, particularly with regard to incentives for either side to exit.”

 

48. In a further response to consultation dated 27 February 2013 the Ministry of Justice stated, at paragraph 6, that it was the Government’s intention to ask the Rule Committee to make rules which would fix recoverable costs in low-value personal injury cases at the level set in Annexe A. Annexe A continued to adopt the structure of Jackson LJ’s table B, with amounts which in all respects, save for slightly different trial advocacy fees, were later included in Table 6B for RTA Protocol cases.

 

49. Paragraph 87 of that response stated as follows:

“Respondents were unclear as to whether the proposals are intended to apply to multi-track, as well as fast track, cases between £10,001 and £25,000. There was a clear view (whilst still arguing the proposed levels of FRCSs were too low in any event) that any proposals should only apply to fast track cases. It has always been the Government’s intention that these proposals apply only to cases in the fast track and if a case falling out of the protocols is judicially determined to be suitable for multi-track, normal multi-track costs rules will apply”.”

 

So the Court of Appeal now thinks it acceptable to take into account consultations, results of those consultations, ministerial letters etc.

 

On that basis virtually any piece of legislation could be reworded in any way the court wants at any time.

 

The Court of Appeal justifies its decision by saying “there is no evidence that the government ordered its policy in relation to multi-track cases falling outside the fixed costs regime…”

 

Legislation is that which is passed by Parliament. It is not necessarily Government policy. Parliament is a check on the Government.

 

More worryingly the Court of Appeal said:-
“Furthermore it is plain that the fixed amounts recoverable were all based upon a table originally proposed by Jackson LJ and then amended after consultation, specifically chosen for fast track cases.”

 

So the Judiciary commission  a report from Lord Justice Jackson and then amend the wording of the Civil Procedure Rules so that the law is as Lord Justice Jackson recommended, and not as passed by Parliament.

 

It may well be that here the outcome is sensible and just. That is not the point. Parliament makes the laws and the courts interpret them.

 

In other cases, any other approach could lead to very dangerous results indeed.

 

The Court of Appeal here unequivocally add words to the Civil Procedure Rules. At paragraph 56 the court says:-

 

“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…””

 

The £25,000.00 limit

 

The Court of Appeal discussed this at some length – that is the fact that Part A of Table B has a reference to an upper damages ceiling of £25,000.00 and thus it remains unclear as to whether a claim which is for over £25,000.00, and where it is determined by settlement or judgment, but which is in the fast-track is subject to Fixed Recoverable Costs or not.

 

The Court of Appeal had this to say:-

 

“I recognise also that my proposed insertion of words to Part 45.29B does nothing about the anomaly represented by the £25,000 apparent damages ceiling in part A of Table 6B. It is unnecessary in the context of these appeals to do so, both because neither of them reached settlement prior to the issuing of Part 7 proceedings, and because the damages claimed are well below £25,000. It is a continuing anomaly which, in my view, the Rule Committee should be invited to consider at the earliest available opportunity. It may also be minded to devise an amendment to section IIIA of Part 45 which fully reflects the concerns which underlie this judgment, not merely in relation to the RTA Protocol, but to the EL/PL Protocol as well.”

 

The irony of this is that Lord Justice Jackson has himself proposed that fixed costs should apply to the lower reaches of the multi-track and so it is strongly arguable that the Rules Committee have drafted the rules in accordance with Lord Justice Jackson’s intentions.

 

All of the talk about more work in the multi-track etc. making it unsuitable for a fixed costs regime is going to look a bit weak next July when Lord Justice Jackson proposes a massive extension of fixed costs, to include a huge number of multi-track claims.