Kerry Underwood

PORTALS: UNREASONABLE EXIT, NOT USING, PART 36 AND COSTS

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Two recent decisions highlighted the contradictions between the Civil Procedure Rules and the portal rules and within the Civil Procedure Rules themselves.

 

Ex-Portal Costs Restriction Only Applies When Judgment Entered

In Williams v The Secretary of State for Business, Energy & Industrial Strategy [2018] EWCA Civ 852 (20 April 2018)

the Court of Appeal held that CPR 45.24, restricting a claimant to portal costs where it had unreasonably exited the portal, or not utilised the portal in the first place, only applies where judgment has been entered, and not where a matter has settled.

 

That reflects the literal wording of CPR 45.24:

 

“(2) Subject to paragraph (2A), where a judgment is given in favour of the claimant but –”.

 

The Court of Appeal rejected the paying party’s submission that this was an obvious drafting error, which the court should correct.

Thus the provision in CPR 45.24 limiting costs to CPR 45.18 portal costs, only applies when judgment is entered, which is relatively rare.

That is not the end of it.

Although failure to engage the portal process cannot lead to an imposition of portal only costs unless judgment is entered, unreasonably exiting portal DOES lead to the imposition of portal only costs, by an entirely different route, and that is the EL/PL portal itself, which at paragraph 7.59 says:

 

“7.59 Where the claimant gives notice to the defendant that the claim is unsuitable for this Protocol (for example, because there are complex issues of fact or law or where claimants contemplate applying for a Group Litigation Order) then the claim will no longer continue under this Protocol. However, where the court considers that the claimant acted unreasonably in giving such notice it will award no more than the fixed costs in rule 45.18.”

 

Unfortunately the Court of Appeal misquoted that paragraph in its judgment at paragraph 19, not the only technical mistake in this decision.

 

Note that the RTA portal has a similar provision at paragraph 7.76:

 

7.76 Where the claimant gives notice to the defendant that the claim is unsuitable for this Protocol (for example, because there are complex issues of fact or law) then the claim will no longer continue under this Protocol.  However, where the court considers that the claimant acted unreasonably in giving such notice it will award no more than the fixed costs in rule 45.18.”

 

As Alex Hutton QC, who appeared for the defendant in this matter, said it is illogical that a claim which started in the portal and was then unreasonably removed from it would attract portal only costs, while a claimant that was unreasonably never placed on the portal would attract open, standard costs.

 

It is entirely understandable that there is no provision within the portals themselves providing for what happens when a matter is never placed on the portal, as by definition a matter not on the portal is outwith the portal process.

Here it is the drafter of the Civil Procedure Rules, who seems to have missed the point.

Overall, the portals are vastly better written than the Civil Procedure Rules dealing with the portals and fixed costs.

However, there is a major sting in the tail in this case.

The Court of Appeal held that the general costs rules in CPR 44 gave the court power, in detailed assessment, to limit the assessed costs to CPR 45.18 portal costs, in line with the principles set out in the decisions in

 

O’Beirne v Hudson [2010] EWCA Civ 52; and

 

Javed v British Telecommunications PLC [2015] EWHC 90212 (Costs).

 

This case involved the claimant accepting the defendant’s Part 36 offer and thus the provisions in CPR 44 are capable of overriding the usual costs provisions triggered by Part 36.

In particular CPR 36.20(2) which states:

“Where a Part 36 offer is accepted within the relevant period, the claimant is entitled to the fixed costs in Table 6B, Table 6C or Table 6D in Section IIIA of Part 45 for the stage applicable at the date on which notice of acceptance was served on the offeror.”

remains subject to the overall costs provision in CPR 44.

 

Comment

This decision may be technically right, but the drafting of CPR 45.24(2) fairly obviously does not reflect the intentions of the portal and fixed costs scheme.

That is recognised by the court in it sanctioning CPR 44 as the way to achieve the same result, but only after the lengthy, expensive and uncertain process of a detailed assessment.

How does that fit in with the overriding objective?

The Court of Appeal should have adopted a purposive approach, as suggested by Alexander QC, and added the words:

 

“or the claim settles for payment for a sum of money to the claimant before proceedings start”

 

and, after the words

“starts proceedings under Part 7”

adding in to CPR 45.24(2):

 

“where settlement is reached for payment of a sum of money to the claimant or where…”

 

Again, in this section, the Court of Appeal has misquoted the suggested wording by Alex Hutton QC, and appears to be unable to distinguish between claim and claimant.

In a separate part of the judgment, in relation to a separate matter, the Court of Appeal said that all of the portals are expressly designed to apply only in cases where there is one defendant – see paragraph 32 of judgment.

That is not the way portals have been understood; in relation to the EL and PL portal the general view has been that in industrial disease cases, the portal is indeed confined to matters where there is only one defendant, but in other EL/PL cases, the portal can, in principle, apply where there is more than one defendant.

That widespread interpretation arises from paragraph 4.3 of the EL/PL portal which states:

 

4.3        This Protocol does not apply to a claim –

(6) In the case of a disease claim, where there is more than one employer defendant;”

 

Had the portals intended to exclude all claims where there is more than one defendant, then the words “in the case of a disease claim”, would have been excluded so that the relevant provisions simply read that the protocol does not apply to a claim where there is more than one employer defendant

Not the Court of Appeal’s finest hour.

 

Part 36 and Unreasonable Exit from the Portal

In Ansell and Evans v A.T and T (GB) Holdings Limited, Oxford County Court, Case No C38YJ961, 14 December 2017

Oxford County Court, on appeal from a decision of a District Judge, held that where a claimant had accepted a defendant’s Part 36 offer in a fixed costs case which had exited the portal, the court could apply the provisions of CPR 45.24 and restrict the claimant’s costs to portal fixed costs under CPR 45.18, together with the disbursements allowed in accordance with CPR 45.19.

In simple terms CPR 45.24 restricts a claimant’s costs to portal costs if the court considers that the claimant has acted unreasonably in exiting the portal.

Here, the claimant exited the portal and the defendant then made a Part 36 offer, which the claimant accepted in time.

The claimant argued that it was entitled to the fixed costs applicable for the ex-portal, pre-issue, stage as Part 36 trumped CPR 45.24.

The defendant argued that the court always had a discretion to limit the claimant’s costs to CPR 45.18 portal fixed costs if it found, as here, that the claimant had unreasonably exited the portal.

Her Honour Circuit Judge Clarke found in favour of the defendant, that is that however an offer was made and accepted, either under Part 36 or as a Calderbank offer, the court retained its power under CPR 45.24 to limit costs to portal costs, where the claimant had exited unreasonably.

Thus CPR 45.24 is not trumped by Part 36.

 

Comment  

A correct decision, although arguably reached by the wrong route, on the wording of the rule – see the write up of

Williams v The Secretary of State for Business, Energy & Industrial Strategy [2018] EWCA Civ 852 (20 April 2018).

Given the wording of CPR 45.24, as interpreted by the Court of Appeal, the safest cause of action is to rely on the wording of the portal itself, rather than CPR 45.24.

However, the central point here, that Part 36 gives an entitlement to costs, and does not of itself, except in specified circumstances, say what those costs will be, is undoubtedly correct.

The claimant who has unreasonably exited the portal and thus is in the post portal fixed costs regime under CPR 45.29, is nevertheless only entitled to CPR 45.18 fixed costs.

Thus acceptance of a Part 36 offer creates an entitlement to the relevant fixed costs in a fixed costs case, but those may be CPR 45.18 portal costs, not CPR 45.29 post portal fixed costs, even if the case has reached that point.

The problem arises, as we have seen, in relation to a case that has never been on the portal, and obviously if it has never been on the portal, it cannot have exited the portal.

As the law stands, such a matter is not subject to fixed costs at all, and the paying party would have to rely on general costs provisions in CPR 44, and that involves going to a detailed assessment, which is lengthy, expensive and uncertain.

I far prefer the approach of Her Honour Judge Clarke.

 

 

 

 

 

 

 

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Written by kerryunderwood

July 16, 2018 at 9:28 am

Posted in Uncategorized

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