The Court of Appeal has recently considered and resolved the interplay between the rules for fixed recoverable costs for low value personal injury claims (Part 45 IIIA CPR) and the provisions of Part 36. It held that the tension between CPR 45.29B and CPR 36.14A had to be resolved in favour of CPR 36.14.

A few weeks earlier, in the IPA Annual Lecture in January, Jackson LJ set out his strong recommendations for the introduction of fixed costs for all civil claims up to the value of £250,000.

CPR 36 and CPR 45.29C

Part 36 allows a claimant to recover assessed costs on the indemnity basis where it obtains judgment against the defendant which is at least as advantageous as the sum offered by the claimant to settle the claim under Part 36. But there is a fixed recoverable costs regime for lower value personal injury cases (CPR Part 45 IIIA).

The decision in Broadhurst v Tan and Taylor v Smith [2016] EWCA Civ 94 concerned Part 36 offers made before 6 April 2015, but the position after 6 April 2015 is the same. The Court of Appeal held that claimants whose claims fall within the fixed costs regime and who beat their Part 36 offers at trial will become entitled to the enhancements in old CPR 36.14 (now CPR 36.17) including indemnity costs.

The Court of Appeal overturned the lower court's decision. They held that as a matter of strict interpretation of the CPR this was the correct outcome, but it also accorded with the general policy of encouraging settlement.

The future of fixed costs?

Jackson LJ has urged the government to adopt a policy of permitting only fixed cost recovery in all types of claim worth up to £250,000; alternatively such a regime could apply to all claims with no ceiling as to value, he said. He has presented a grid of recommended fixed costs reflecting the 10 stages contained in (cost budgeting) Precedent H. According to his grid, claims should be divided into four different bands which would be stepped in value. 

What does this mean?

The Court of Appeal has found that the current fixed costs regime for low value personal injury claims will be overridden by Part 36, so indemnity costs can still be awarded. This means that claimants should be strongly advised to make early Part 36 offers with a view to escaping the regime.

There are, of course, other fixed recoverable cost regimes in place in the CPR: an example is the scale costs regime for claims in the Intellectual Property Enterprise Court (IPEC). That regime does not appear to allow Part 36 to trump its provisions.

Whether any new, extended, fixed costs regime should allow either or both claimant or defendant to exit the regime if they make successful Part 36 offers will no doubt be a topic for comment in any consultation on new draft fixed costs rules. Jackson LJ is hopeful that both consultation and rule making could be completed during the course of 2016, which is perhaps an optimistic timescale.