A recent County Court ruling, Rigley v Zurich Insurance Company (UK) Ltd, in which DAC Beachcroft Claims acted on behalf of Redcar and Cleveland Borough Council, provides crucial clarity for insurers and their policy holders regarding the court's ongoing jurisdiction to determine complexity banding under fixed recoverable costs (FRC), even after a Part 36 offer has been accepted and proceedings are stayed.
Background
The case involved a road traffic accident in which the claimant was seeking credit hire (and other associated losses) together with personal injury. The defendant challenged the court's initial decision to assign the case to Complexity Band 2 (allocation to the immediate track was agreed). The defendant contended that the claim more appropriately sat within Complexity Band 1.
The assignment issue
Initially, the court allocated the case to Complexity Band 2. The defendant applied to set aside or vary this part of the order, arguing that although quantum was disputed, because liability was not in dispute and the trial was expected to last no more than one day, the claim fell squarely within Band 1.
While this application was pending, the defendant made a Part 36 offer to settle. The claimant accepted the offer, subsequently arguing that under CPR 36.13, the acceptance stayed the claim and deprived the court of jurisdiction to hear the defendant's pending application to change the banding.
The hearing and key rulings
At the hearing, the defendant was represented by Mr. Colin Richmond (of Parklane Plowden). The defendant argued that the court maintained an explicit discretion to deal with costs even after a stay.
Agreeing with the submissions made on behalf of the defendant, Deputy District Judge Gibson concluded that the court retained jurisdiction and ordered that the case be reallocated to Complexity Band 1.
The decision provides a number of notable takeaway points
- Jurisdiction post-Part 36 acceptance: The court clarified that a claim stayed upon the acceptance of a Part 36 offer remains extant and within the court's jurisdiction. Specifically, CPR 36.14(5)(b) provides that any stay arising under the rule does not affect the power of the court to deal with any question of costs relating to the proceedings.
- Definition of Complexity Band 1 within intermediate track: The judgment emphasised that for personal injury claims on the intermediate track, the criteria in CPR 26.16 table 2 are the primary guide. Where liability is not in dispute, quantum is in dispute, and the trial is listed for no more than one day, the claim "on the face of it" belongs in Complexity Band 1.
- Exercise of discretion under CPR 3.3(5): The court noted that an application under CPR 3.3(5) is not a "review" of a prior decision but a fresh consideration of the issue itself. This allows the court to correct banding assignments that do not align with the clear wording of the FRC tables, even if the previous judge exercised discretion differently.
- Impact of "reasonable costs" in Part 36 offers: The claimant argued that by making a Part 36 offer while the case was allocated to Band 2, the defendant was bound by Band 2 costs. The court rejected this, holding that "reasonable costs" are always subject to the court's discretion and the applicable FRC regime. Making an offer does not prevent a defendant from pursuing a pending application to vary the banding.
The importance of the decision
The decision of Deputy District Judge Gibson is a significant one for insurers, reinforcing the ability to challenge incorrect complexity banding even after a claim has technically settled via Part 36. It confirms that the "stay" triggered by settlement does not lock in an unfavourable cost band if an application to vary that band is already before the court. This decision enhances defendants' ability to secure appropriate fixed recoverable costs, offering insurers greater certainty that settlement does not mean waiving the right to ensure costs are assessed at the correct level of complexity.
Lewis Gamble-Thompson, Risk & Insurance Lead Office of Redcar and Cleveland Borough Council said "this decision highlights the importance of challenging band assignments early, and the success of this application has meant significant fixed cost savings for the council on this claim."
Adam Burrell, Head of Costs at DAC Beachcroft Claims Ltd commented that "this is another decision from a County Court which demonstrates a willingness to dismiss attempted technical loopholes with the extended FRC scheme. Paying parties will take a great deal of comfort from the reinforcement of the court's discretion to reduce unreasonable costs."
Any of our clients wishing to discuss this case should speak to their usual DAC Beachcroft Claims contact or a member of our Costs Team.
