Important decision made on disbursements and fixed recoverable costs

Aldred v Cham [2019] EWCA Civ 1780

In a landmark decision for compensators and insurers, the Court of Appeal has unanimously decided that, where items are claimed as disbursements for work already included within the fixed recoverable costs in Part 45 of CPR, then no additional sums for these disbursements are recoverable.

The facts

The claimant was a minor who sustained personal injuries after being involved in an RTA. The claim started in the portal but dropped out due to liability initially being denied. An offer to pay damages of £2,000 was subsequently made to the claimant and his legal representative instructed counsel to advise on settlement. Section 5.2 of Practice Direction 21 supplementing CPR rule 21 provides that:

"An opinion on the merits of the settlement or compromise given by counsel or solicitor acting for the child or protected party must, except in very clear cases, be obtained".

Counsel for the claimant subsequently recommended settlement and the offer of £2,000 was accepted. Part 8 proceedings were issued to obtain approval which took place with the court ordering the defendant to pay the claimant’s costs to be assessed if not agreed. Costs fell to be determined in accordance with section IIIA of CPR Part 45. The claimant served a bill of costs seeking counsel’s fee at £150 (excluding VAT) for providing the settlement advice by way of disbursement within rule 45.29I. The costs judge allowed the disbursement in addition to the fixed recoverable costs in Table 6B.

On appeal before the circuit judge, the decision of the costs judge was upheld on the basis that, if the claimant was a child, the need to obtain counsel’s advice on valuation would constitute “a particular feature of the dispute” within the meaning of rule 45.29I(2)(h). In addition, the circuit judges stated:

“Since they are not otherwise expressly provided for or referred to it is clear, in my judgment that the provision for "any other disbursement reasonably incurred due to a particular feature of the dispute" under rule 45.291(2)(h) must include the fee in question.”

The second appeal

The Court of Appeal categorised the issues that fell to be determined as follows:

(a) Issue 1: Was counsel's advice "due to a particular feature of the dispute"?

(b) Issue 2: If the advice was due to a particular feature of the dispute, was the cost thereof a disbursement reasonably incurred which the court should allow, in addition to the fixed recoverable costs?

In moving to consider these questions, the Court of Appeal disapproved the first instance decision of Master Campbell in Madej v Maciszyn [2013] and approved the decision of HHJ Wood QC in Olesiej v Maple Industries [2012]. In reaching this conclusion, which carries significant implications for those engaged in high volume low value personal injury claims, Lord Justice Coulson declared:

“The fact that, in a particular case, a claimant is a child, or someone who cannot speak English, or who requires an intermediary, is nothing whatever to do with the dispute itself. Age, linguistic ability and mental wellbeing are all characteristics of the claimant regardless of the dispute. They are not generated by or linked in any way to the dispute itself and cannot therefore be said to be a particular feature of that dispute…I reach that conclusion based on the plain words of r.45.29I(2)(h).”

The fixed costs regimes

In further analysis of how the costs regime at section IIIA of CPR Part 45 operates, the Court of Appeal considered how disbursements interact with the fixed levels of remuneration for profit costs. Key answers were provided to questions concerning what exactly the fixed recoverable costs included:

1. In the vast majority of cases, counsel's fees, although properly described as a disbursement, and although doubtless reasonably incurred, would not be allowed by the court under r.45.29I(1)(a). That is because the work that is the subject of the disbursement has already been allowed for in the fixed recoverable costs (Table 6B).
2. Table 6B operates on the premise that all the costs which might ordinarily be expected to be incurred up to a particular stage of the case will be deemed to be included in the amount stated by way of fixed recoverable costs.
3. Disbursements, on the other hand, are one-off items which are for specific items of work. They are not easily addressed by reference to the same general considerations noted above, because the need for them will depend on the particular circumstances of the case. Accordingly, the rules simply provide that where such disbursements fall into one of the categories in r.45.29I(2) they will be recoverable in addition to the fixed costs.
4. Applying a modicum of common sense, it seems to me that the two different concepts have been melded together in a robust and workable fashion in Section IIIA of Part 45. If an item of work is deemed (or can be said implicitly) to be within the fixed recoverable costs in Table 6B, then it will not be separately recoverable as a disbursement. The brief fee is the most obvious example of that analysis.
5. Counsel's fees are a disbursement but, if the item of work to which they relate is deemed to be within the fixed costs regime at Table 6B, they will not be recoverable in addition to those fixed recoverable costs. That will cover the vast majority of counsel's fees unless, of course, it can be shown that such fees arise within the particular exceptions at r.45.29I(2), including the catch-all at r.45.29I(2)(h).

What this means for Keoghs clients?

Receiving parties have traditionally sought to maximise claims made within the fixed costs regimes in CPR Part 45 by outsourcing work capable of being performed by solicitors to third parties or agents such as counsel, medical agencies, costs lawyers etc. The Court of Appeal has now unanimously found that most of this work must be deemed to be within the fixed costs set out in Sections II, III and IIIA of CPR Part 45.

Fixed costs regimes such as these operate on a swings and roundabouts approach. They over-reward in some instances and under-reward in others; but when taken as a whole, they provide transparent and predictable remuneration. This welcomed decision from the Court of Appeal allows paying parties to ensure the abuse of such costs regimes is minimised, and allows Keoghs to continue fighting unreasonable and disproportionate items of costs for compensators and insurers such as:

• Counsel’s fees for settling Particulars of Claim, an Advice, or abated brief fee
• Advocacy Fees
• Interpreter/Translator’s fees
• Medical agency fees 

Keoghs has significant expertise and specialist costs teams dedicated to validating and challenging claims made within the various fixed costs regimes within CPR.