Noise Induced Hearing Loss (NIHL) claims – fixed recoverable costs (FRC) payable and the potential cost implications of defendants settling at different stages

The new FRC regime in NIHL claims is relatively straightforward where the defendants adopt a co-ordinated approach from the outset, but what happens in multiple defendant NIHL claims when a co-ordinated approach is not adopted and the claim concludes at different stages?

By way of a brief overview, fixed costs apply to NIHL claims when the letter of claim is served post 1 October 2023 and where no more than three defendants are pursued. Note that defendants with the same solicitor representative count as a single defendant for these purposes. There are some key exclusions as set out below; -

• Claims valued at more than £25,000; meaning that this regime only applies to Fast Track claims
• Claims against four or more defendants; note the aforementioned caveat on multiple defendants having the same representative
• Claims where a defendant alleges that a claimant’s hearing loss is de minimis, where a defendant requests a second audiogram, or the defendant(s) seek permission to obtain their own medical evidence.
• Military claims (meaning noise-induced hearing damage from working in loud environments without hearing protection, eczema or dermatitis from handling hazardous substances without skin protection, asthma or other respiratory problems from working near noxious fumes without a mask).

Anything else that is not captured by one of the above exclusions will fall under the new regime and fixed costs will apply. The amount of fixed costs payable are outlined in Civil Procedure Rule 45, Table 15 – NIHL claims; -

From the above, we can see that the total amounts payable for each stage of settlement vary dependent on how many defendants are being pursued. It is clear to see that the fixed costs increase as the claim progresses and the key triggers are liability being admitted, proceedings being issued and the claim being listed for trial. This follows similar fixed costs regimes but note the distinction about whether papers have been prepared to start proceedings with the differential in base costs amounting to as much as £620. This is not something we see in the wider rules on the Fast and Intermediate Track. How this will be approached by the courts is unknown but presumably at the very least the claimant will need to provide a copy of the draft proceedings to substantiate their claim for this higher sum.

Likewise, we do not see the multiple defendant columns in the wider regime, so how does this all work in practice? What happens when defendants settle at different times? I have outlined some illustrative examples below, starting with the most straightforward;

• In a single defendant claim that settles pre-litigation where liability is disputed but the papers are not prepared to start proceedings, the total amount payable in costs is £4,129.
• By contrast, a single defendant claim that settles with liability being disputed but on or after the date that the court allocates the claim under Part 26, but before the date that the court lists the claim for trial would attract costs of £8,671.

You will see that this is more than double the pre-litigation costs and potentially the only work conducted is the issue of proceedings, consideration of the defence and drafting of the directions questionnaire. You can immediately see the benefits of early settlement. Things become a little more complicated where there is more than one defendant involved and a co-ordinated approach has not been possible as can be seen below.

• If in a three defendant claim, they all concede liability and settle on a co-ordinated basis, then only one set of costs applies i.e. not one set of costs for each defendant. When papers have not been prepared, this would be £4,129
• If the defendants settle unilaterally, those who are conceding liability will pay costs on a 100% basis for the number of defendants who are settling at that time. So in a three defendant claim whereby liability is admitted by two defendants and papers not prepared to start proceedings when the first two defendants settle the claim, the fixed cost payable to be split between these two defendants would be £3,613. Then, the remaining defendant will be responsible for costs based on whichever stage they settle at for the total number of defendants at the outset, LESS the costs paid by the early settlers. So, with the above case being the example, the one defendant who pursues the claim, denies liability and settles on or after the date that the court lists the claim for trial but before the trial, would be liable for fixed costs in the sum of £14,659 (less the £3,613 paid by the two defendants who settled at an earlier stage). Net amount payable by the remaining defendant totals £11,046.

You can see that the burden is therefore higher, with a single defendant claim settling at the same stage being £10,942. If the defendants are considering the prospect of settling the claim on a unilateral basis, the costs for which they will be liable for should be factored into their decision making. If the defendants can agree a co-ordinated approach and/or consider joint representation, this will limit the costs payable.

Disbursements are separate and in addition to the fixed recoverable costs allowed under Table 15. CPR 45.61 sets out the permitted disbursements. The disbursements that we would expect to see (depending on the circumstances of claim and stage of settlement) are: -

• Medical records
• Protocol permitted expert reports (medical and non-medical)
• Court fees
• Telephone hearing conference fees
• Trial advocate’s fees

In contrast to the wider Fast and Intermediate Track fixed costs regimes, counsel’s fees are treated as disbursements, rather than an extension to the fixed costs, and are considerably less restricted than in other claims. The only restrictions are that the counsel instructed must be the intended trial advocate, that the work in question must be reasonably undertaken, that it must be reasonable to instruct counsel to undertake that work and that the cost must be justified. 

As we move in to the new Fixed Recoverable Costs world, we are actively considering strategies to assist our clients in limiting the costs payable. We recommend that the paying party should be looking to make offers at an early stage of the claim and also seek to agree a co-ordinated approach with co-defendants. Both of these points are key factors in ensuring that clients limit their costs exposure.