Ferri v Gill

Factual and Procedural Background

This appeal concerns an order made by Master McCloud, acting as a Deputy Costs Judge, on 25th May 2018, relating to costs assessment in a personal injury claim arising from a road traffic accident. The claim was initially brought under the pre-action protocol for low value personal injury claims in road traffic accidents (the Protocol), but subsequently exited the Protocol. The Claimant was injured when struck by a car door while riding a bicycle, sustaining significant injuries including to the shoulder, which required private surgery funded by interim payments from the Defendant. The claim settled for £42,000 without formal proceedings being issued.

The Claimant sought costs exceeding the fixed recoverable costs under CPR Part 45 and issued Part 8 proceedings for costs only. The Master dismissed preliminary points raised by the Defendant, allowed the Claimant's costs to be subject to detailed assessment pursuant to CPR 45.29J (exceptional circumstances provision), extended the Claimant's time to apply for a hearing of detailed assessment, and granted the Defendant permission to appeal the legal test applied under CPR 45.29J.

Legal Issues Presented

1. What is the correct legal test for determining "exceptional circumstances" under CPR 45.29J to allow costs exceeding fixed recoverable costs in claims that have exited the Protocol?
2. Whether the Master erred in applying a "low bar" test for exceptionality rather than a stricter standard.
3. Whether the Master correctly identified the appropriate "basket" of cases against which exceptionality must be judged, specifically whether it should be cases within the Protocol or those that have exited it.
4. Whether the Master erred in failing to consider the extent to which any exceptional circumstances caused significant additional costs.

Arguments of the Parties

Appellant's Arguments

• The Master erred in principle by applying an incorrect legal test for exceptionality under CPR 45.29J.
• The Master wrongly treated the exceptionality threshold as a "low bar" rather than a high or strict standard.
• The Master failed to consider whether alleged exceptional circumstances actually caused significant additional costs.
• The Master’s overall decision was wrong and outside the scope of reasonable disagreement.

Respondent's Arguments

• The Master’s test of exceptionality as being "outside the general run" of cases is correct and consistent with prior authorities.
• The term "exceptional circumstances" should not be construed too strictly given the policy context of CPR 45.29J.
• Rules 45.29K and 45.29L provide safeguards against abuse of the exceptionality provision, discouraging frivolous claims for costs beyond fixed recoverable costs.
• The Master correctly applied the test to the facts, recognizing the particular circumstances of the case as taking it out of the general run of Portal cases.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court analyzed the legal framework of CPR Part 45 Section IIIA, which governs claims that have exited the Protocol for low value personal injury claims. The fixed costs regime applies to such claims, subject only to limited exceptions under CPR 45.29J for "exceptional circumstances."

The Court emphasized that the term "exceptional circumstances" must be interpreted in the context of the fixed costs regime’s policy, which aims to limit costs and avoid disproportionate expenditure in low value claims. The Court noted that prior authorities establish that "exceptional" means something out of the ordinary or outside the general run of cases but cautioned against adopting a "low bar" for exceptionality.

The Master had applied a "low bar" test for exceptionality, considering a case exceptional if it was merely "outside the general run" of Portal cases. The Court found this approach legally incorrect, as it failed to appreciate the high threshold required for exceptionality given the policy context and the fixed costs regime’s purpose.

Moreover, the Court held that the appropriate comparator ("basket") against which exceptionality must be assessed is not all cases within the Protocol but specifically those cases that have exited the Protocol and are subject to the Part IIIA fixed costs regime. The Master erred in using the broader basket of all Portal cases, including those still within the Protocol.

The Court also considered the safeguards in CPR 45.29K and 45.29L, which discourage parties from making exceptionality claims unless they are likely to exceed fixed costs by at least 20%, reinforcing the need for a high threshold.

The Court reviewed relevant authorities, including Qader, Sharp, Hislop, and Costin, and interpreted the fixed costs regime as designed to provide certainty and proportionality, allowing only a narrow escape from fixed costs in truly exceptional cases.

Finally, the Court acknowledged that the Master’s assessment of the facts and whether this case met the exceptionality threshold was not subject to appeal, as permission was granted only on the legal test applied.

Holding and Implications

The Court allowed the appeal in part, holding that the Master erred in law by applying an incorrect, too low, test for "exceptional circumstances" under CPR 45.29J and by comparing the case to an incorrect basket of cases.

The matter is to be remitted to the Senior Courts Costs Office for reconsideration before a different Master, applying the correct legal test and appropriate comparator group.

The decision directly affects the parties by requiring reassessment of the costs claim under the proper legal standard. No new precedent beyond clarification of the proper interpretation and application of CPR 45.29J is established by this ruling.