Landmark case resolves costs dispute

The Court of Appeal has resolved a long-running dispute about which level of pre-action protocol fixed costs apply where a case settles before the disposal hearing.

The case, Bird v Acorn Group [2016] EWCA Civ 1096, was leapfrogged to the Court of Appeal because it affects thousands of cases stayed pending judgment.

The case relates to claims commenced under the pre-action protocol for low value personal injury (employers’ liability and public liability (EL/PL)) or the Road Traffic Act (RTA) protocol. The issue was which level of fixed costs apply where Pt 7 proceedings are launched and a disposal hearing is listed but the claim settles before the disposal hearing takes place.

In Bird, the court held that listing a case for a disposal hearing is a listing for trial and therefore the case settled at the third stage, which has higher fixed costs.

The claim originated from an incident where a spanner fell onto a customer’s hand at a garage.

Helen Lloyd, solicitor at Michael W Halsalls, who acted for Acorn Group, said the decision “provided much needed clarity”.

Matthew Hoe, director at Taylor Rose TTKW, who acted for the unsuccessful appellant, said: “Unfortunately for defendants the main remedy they are left with following this decision is making better offers at Stage 2 under the RTA or EL/PL Protocol, or better post-exit, pre-issue Pt 36 offers.

“That will either encourage settlement or give the defendant better protection. If such offers are accepted outside the relevant period but after listing of a disposal hearing, the defendant will benefit from the increase in fixed costs. The defendant gets assessed costs on late acceptance, capped at the difference between the fixed costs applicable when the relevant period expired and the fixed costs applicable at the time of settlement.”

Hoe said thousands of cases were stayed for two reasons. 

“First, the judgment being appealed was from February 2015 so cases built up waiting for the appeal,” he said.

“Second, the district judge in the County Court at Birkenhead had said that court centre was handling up to 50 of these cases per day. In Birkenhead, unlike most other county court hearing centres, there is a triage process which results in a great many claims being listed for a disposal hearing.”