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The Importance of Allocation

There are specific rules applying to costs allocated to each of the Small Claims Track, Fast Track and Multi-Track.

For claims allocated to the Small Claims Track only fixed costs are recoverable confirmed by CPR 27.14 and calculated in accordance with Section I of Part 45.

Certain types of claims suitable for the Fast Track are also subject to fixed costs particularly those for personal injury.

Sections II to IIIA of CPR Part 45 set out the fixed recoverable costs of low value RTA, employers’ liability, and public liability claims, that is any claims which started or should have started in accordance with the pre-action protocols appropriate for those types of claims valued at up to £25,000.  Effectively any RTA, employers’ liability, or public liability claim that would be allocated to the Fast Track.    Although the protocols refer to claims up to that value, the rules in CPR 45 confirm that fixed recoverable costs apply to any claim that started under those protocols unless the claim is subsequently allocated to the Multi-Track.  Therefore, any claim starting under those protocols will be subject to fixed recoverable costs unless allocated to the Multi-Track, even if settlement is agreed at a figure exceeding £25,000.

Claimant solicitors should therefore carefully consider the potential value of a claim before submitting a Claim Notification Form to a Defendant.  If there is any doubt as to whether the claim might be worth less than £25,000 it would be advisable to submit a Letter of Claim to the defendant in accordance with the Pre-action Protocol for Personal Injury Claims.  If settlement is subsequently agreed at a lesser amount, the paying party will likely argue that the claimant had unreasonably avoided using the relevant protocol for low value claims and should be limited to the fixed recoverable costs set out in CPR 45, however to a claimant the risk of this is likely to be outweighed by the potential benefits that would be received if the claim did prove to be worth in excess of £25,000 and costs were recoverable on either the standard or indemnity basis.

From a defendant’s point of view, where a claim has started in accordance with one of the protocols for low value personal injury claims, but is clearly worth more than £25,000, consideration should be given to settling the claim before it can be allocated to the Multi-Track, to limit their costs liability to the claimant.

Although it is possible to escape fixed recoverable costs in exceptional circumstances under r45.29J claimants should expect some difficulty in persuading a costs judge that it would be reasonable to allow costs at a higher amount.

Fixed or scale costs are also appropriate in other types of claim such as those in the Intellectual Property and Enterprise Court, and limits apply to costs in Aarhus Convention claims.

The value of the claim is not the only factor that is considered when a claim is allocated to a particular track.  Clinical negligence claims are usually allocated to the Multi-Track due to complexity, the number of experts, or length of trial required.  Parts 26-29 of the CPR confirm rules relating to allocation, and the scope of, and examples of the type of claim that would be appropriate for, each track.  There are special rules for example that apply to housing disrepair cases in CPR 26.6(1)(b) which mean that many claims valued at less than the small claims limit of £10,000 should be allocated to the Fast Track rather than dealt with as a small claim.

Where settlement of a claim is agreed before allocation issues may arise between the parties as to which track would have been appropriate had the claim been allocated, and a costs judge will have consideration as to the party’s conduct, particularly whether it was reasonable for a claimant to have started the claim under a particular protocol, and what the appropriate track would be.  The specific rules for each track do not apply before allocation so any decision is at the costs judge’s discretion.

What happens if a claim is allocated to the wrong track?

There are occasions where parties might not agree on which would be the appropriate track when filing their directions questionnaires, or even where there has been an agreement, the Court might not allocate the claim to the track that a party might consider to be appropriate.

There are often occasions for example where once party might be keen for a claim to be allocated to the Small Claims Track to limit its potential costs liability, whereas the other might consider the Fast Track to be appropriate.  Allocation is often decided without a hearing and the Judge, or Court Officer making the decision might not have all the relevant information available to them when doing so leading to one of the parties issuing an application to re-allocate the claim.

If an application to re-allocate the claim is successful it would be sensible to seek that the previous order allocating the claim be set-aside, so that it retrospectively no longer has any effect.  This is due to the costs rules of a particular track applying whilst the claim is allocated to the track, and before. Therefore if a claim is allocated to the small claims track, and subsequently re-allocated to the Fast Track, a paying party will likely argue following conclusion of the claim that in accordance with CPR 27.15 the fixed costs payable in small track claim would apply to any costs incurred prior to the making of the order re-allocating the claim to the Fast Track, and that only costs incurred following the making of that order would be subject to detailed assessment.  If the original order allocating the claim to the Small Claims Track is set-aside, then the receiving party will be entitled to recover costs assessed on either the standard or indemnity basis for the whole of the claim.

In any legal proceedings the ability to foresee issues that might be raised when dealing with costs at the conclusion of the claim, whilst the claim is ongoing can help to identify action to be taken to avoid those issues arising at a letter date.  If such issues aren’t identified until the conclusion of the proceedings it can be more difficult for them to be overcome and can make detailed assessment proceedings more complicated leading to delays in costs being assessed or agreed, and ultimately recovered.

We offer free initial consultations so please feel free to contact me for further advice on the issues dealt with in this blog, or with any other costs queries you may have. 

About the author

Gavin Elliott

Gavin Elliott

Gavin is a Costs Lawyer, regulated by the Costs Lawyers Standards Board and a member of the Association of Costs Lawyers.

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