Pre-action disclosure (“PAD”) costs have long been a contentious topic, regarding who should pay and how much. The Court of Appeal has brought some clarity by deciding that claims likely to be allocated to the Fast Track will fall under the fixed costs regime; therefore, Claimants cannot normally expect to recover assessed costs.

In Sharp v Leeds City Council [2017] EWCA Civ 33 the Court of Appeal decided that fixed costs apply to PAD applications made in connection with claims which started but no longer continue under the EL/PL protocol. The decision also applies to low value claims under the RTA protocol.

Facts

The Claimant tripped on a footpath injuring her wrist. She brought a claim against the Defendant Council through the Portal under the EL/PL Protocol. The claim exited the Portal. The Defendant failed to give pre-action disclosure and the Claimant made a PAD application. By the time of the hearing the Defendant had given the necessary disclosure. Nevertheless the Claimant was awarded her costs of the application which were assessed at £1,250. The Defendant appealed to a judge who reduced the Claimant’s costs to £300 on the basis that they were governed by the fixed costs regime applicable to the EL/PL Protocol. The Claimant appealed to the Court of Appeal.

Court of Appeal

In a unanimous decision the Court of Appeal held that fixed costs apply to PAD applications even in cases which had left the EL/PL Portal. It said that from the moment of entry into the Portal, recovery of costs for pursuing or defending the claim is intended to be limited to fixed rates so as to ensure proportionality in the conduct of small or relatively modest claims.

The Court considered a PAD application to be an interim application to which CPR 45.29H applied, and that permitting assessed costs would risk giving rise to an undesirable form of satellite litigation involving disproportionate expense.

The Court suggested that it was possible to apply for fixed costs to be disapplied in exceptional circumstances using the provisions of CPR45.29, but rather ironically indicated that it might be difficult for a Claimant to prove exceptional circumstances because Defendants frequently failed to comply with protocol obligations. It suggested that if there was evidence that the limit of fixed costs under the current rules was preventing effective disclosure, this was something that could be reviewed the Rule Committee with the possibility of higher, but still fixed costs, being allowed.

Subsequent developments

This approach was applied in Katie Gregory v Wilko Retail Limited (County Court at Manchester 7 September 2017) where the District Judge decided that where a PAD application was complied with before any hearing took place, the only applicable costs recoverable under CPR 45.29H were half the Type A solicitor’s costs specified in Table 6A, that is £125 plus VAT and the Court fee. The Type B advocate’s costs specified in the rules would be allowed only if there was a court hearing.

Impact

The Court of Appeal recognised that applying fixed costs at their current level to PAD applications might potentially have the consequence of preventing effective pre-action disclosure. However, the need to conduct litigation at proportional cost and the need to avoid satellite litigation were factors which currently carry greater weight. The reference to satellite litigation indicates that the Court might also have had in mind that permitting assessed costs for PAD applications would lead to PAD applications being used as a means for Claimant solicitors to generate income before issuing claims likely to succeed but to which fixed costs will apply, or before abandoning speculative claims.