Case of conflicting CPR provisions “highlight concerns over fixed costs extension”

Car crash: should interim damages payment be taken into account?

A recent ruling caused by “shoddy” drafting of the CPR highlights the importance of any extension of fixed costs being accompanied by “a well-drafted and fully integrated set of procedural rules”, a costs specialist has warned.

Lee Coulthard, assistant regional manager in the Leeds office of costs firm John M Hayes, said it would also be important for the rules themselves, rather than the principles behind them, to be put out to consultation.

But he continued: “Sadly, past evidence suggests that this hope is likely to prove forlorn.”

In Jones v Jones, a case in North Shields County Court, an interim payment of £1,800 was made in respect of vehicle damage, and so was not included in the subsequent part 7 proceedings. The defendant made a part 36 offer of £5,850 in respect of ‘the whole claim’, which was accepted.

The issue was whether the £1,800 should be added to the £5,850 to calculate the fixed costs in table 6B (£1,160 plus 20% of the damages as it settled before allocation). The difference amounted to £360 + VAT.

The claimant relied on CPR 45.29C(4)(b), which says: “Unless stated otherwise, a reference to damages means agreed damages.”

The defendant, meanwhile, looked to CPR 36.20: “Fixed costs shall be calculated by reference to the amount of the offer which is accepted.”

Mr Coulthard reported that the court found in favour of the claimant. “The argument that it would be absurd to exclude damages agreed outwith the scope of the final part 36 offer from the scope of costs was accepted, especially as it was obvious that if the vehicle damages had not been agreed pre-action and had been included in the proceedings then the fixed costs would have been on the whole sum.

“The court recognised the problem with the wording of CPR 36.20, and dealt with this by reading the words ‘by reference to’ as meaning ‘having a bearing on’, such that the amount of the part 36 offer had to be taken into account when determining the fixed costs but was not the only relevant sum.

“There was also criticism of the drafting of the rules, as CPR 36.20 assumes that there will only ever be one part 36 offer disposing of the entirety of the claim, but this is clearly not the case.”

Mr Coulthard, who did not act in the case, said the decision was “surely correct”.

He said: “Whilst the defendant’s reasoning is superficially attractive based on a formal reading of the wording of CPR 36.20, the result is so patently absurd that it is no surprise that the court interpreted the provision so as to avoid that consequence.

“Of course, as was recognised by the judge, the problem is caused by shoddy drafting and a failure to ensure that part 36 tallies with the provisions of part 45. This is certainly not the first time that such problems have been caused by a failure of the rules to account of the practical realities of running cases.

“It can only be hoped that any extension of fixed costs is accompanied by a well drafted and fully integrated set of procedural rules. Furthermore, the rules themselves, rather than just the general principle of any extension, should be subject to a reasonable period of consultation. Sadly, past evidence suggests that this hope is likely to prove forlorn.”

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