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Fixed Recoverable Costs (FRC) DO NOT Apply to Multi-track Claims

So held Briggs LJ handing down the unanimous decision of the Court of Appeal yesterday in the conjoined appeals of Qader v Esure Services Limited and Khan v McGee, PIBA and APIL intervening [2016] EWCA Civ 1109 [Click here for a copy judgement].

Decision at First Instance

Both claims exited the RTA portal following a denial of liability and allegations of fraud.

In Qader, DJ Salmon (upheld on appeal by HHJ Grant) had found that part 45.29A unmistakeably provided for the fixed costs regime to apply, notwithstanding allocation of the case to the multi-track, although he acknowledged that the Rule Committee might not have intended that consequence.

In Khan, DJ Rich had come to the opposite conclusion. That as the case was far removed from an ordinary modest value RTA case, it was unfit for the application of the fixed costs regime and the court could properly exercise a discretion under that rule at the CCMC stage, that the case should proceed on the ordinary multi-track basis of assessed costs from then on.

Decision on Appeal

Briggs LJ held that:

  • There was nothing in Part 45.29 which expressly limited FRCs to fast track costs;
  • The language of Part 45.29A and B, lead clearly to the conclusion that fixed costs apply to all cases properly started within the RTA Protocol but then continuing outside it, regardless whether allocated to the fast track, to the multi-track or, indeed, not allocated at all but dealt with at a disposal hearing;
  • However, an analysis of the historic origins of the scheme, and in particular the process of consultation which preceded it, demonstrated that it was not in fact the intention of those legislating for the regime that it should ever apply to a case allocated to the multi-track;
    In short, it was a plain case of a drafting mistake;
  • Following Lord Nicholls in Inco Europe Limited v First Choice Distribution [2000] 1 WLR 586, at 592, the court was able to correct obvious drafting errors;
  • That could be achieved by adding to Part 45.29B, after the reference to 45.29J, the phrase: 
“…and for so long as the claim is not allocated to the multi- track…”

Knee Jerk Reaction

The inevitable consequence of the decision is that Claimant Solicitors will seek to have claims allocated to the multi-track, whilst Defendant insurers will be less willing to allege fraud, for fear of opening themselves up to a substantial costs liability.