Kerry Underwood

Archive for July 2013

FIXED COSTS, ALL THE PORTALS AND FIXED RECOVERABLE COSTS

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ALL THE PORTALS AND FIXED RECOVERABLE COSTS

Personal Injury claims falling in the portal are the subject of an entirely different process. The Pre-action Protocol for Personal Injury Claims does not apply, but where the claim falls out of the process the protocols will then apply.

The original Road Traffic Accident portal came in to effect on 30 April 2010 in relation to qualifying road traffic accidents which occurred on or after that date.

In the first year, ending 30 April 2011, no fewer that 630,070 claims were submitted through the portal.

In the year 1 May 2011 to 30 April 2012 a total of 796,920 claims were submitted through the portal and in the year ending 30 April 2013 a total number of 883,363 claims were submitted through the portal.

From 1 May 2013 to 31 December 2013 a total of 497,675 claims were submitted through the road traffic accident portal.

The new Road Traffic portal effective 31 July 2013, appears as Annex B of the 65th Update – Practice Direction Amendments and the new Employers’ Liability and Public Liability portal, also effective 31 July 2013, appears at Annex C of the same document. Strictly they are known as the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents and the Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims.

The 65th Update itself, as compared to those two annexes, does not make any significant changes.

Road Traffic

 Claims brought within the Road Traffic Accident portal process operate within three key stages:-

  1.  Stage 1

The claimant completes a Claim Notification Form (CNF) on https://www.rapidclaimsettlement.org.uk/ and sends it electronically to the defendant insurer. Insurers have 15 business days to respond with a decision on liability, but the Motor Insurers’ Bureau (MIB) has 30 days to respond. In each case the response must be electronic.

  1. Stage 2

Once the defendant’s insurer has made an admission of liability, the claimant solicitor obtains a medical report. Where it is clear from the outset that an additional medical report is necessary from a medical expert in a different discipline, a second report may be obtained from a medical expert in that discipline. There is no fixed timetable for obtaining the medical report.

Within 15 business days of the report being confirmed as factually accurate, the claimant solicitor completes the Stage 2 settlement pack form. This is sent electronically to the insurer together with the medical report and any receipts/evidence of special damages claimed.

The insurer has 15 business days from receipt of the settlement pack to consider and either accept the claimant’s offer or make a counter offer. Where the defendant’s insurer makes a counter offer, there is a further 20 business days for consideration and negotiation between the parties.

Where agreement on quantum has not been reached at the end of the 20-day consideration and negotiation period, the claimant will prepare the Stage 3 version of the settlement pack form. Where the parties have not reached agreement to settle the case by the end of the negotiation period, the next step will be a Stage 3 hearing to determine quantum.

  1. Stage 3

Where quantum cannot be agreed by the end of Stage 2 and the court has to determine the amount of damages, this involves the further exchange and submission of pro-forma documents to the court. There will be a paper only hearing unless the judge otherwise directs or either party requests an oral hearing. Stage 3 is instigated by Part 8 proceedings being issued.

Where an offer has been made and settlement is reached after the issue of the claim but before the trial commences, fixed recoverable costs of £250 apply.

The agreed damages and fixed costs must be paid within ten days of settlement.

Pre 31 July 2013

In relation to road traffic accidents where the Claim Notification Form (CNF) was issued on or after 30 April 2013, the new, much lower, portal fees apply, but the system is essentially unchanged.

Cases where the conditional fee agreement was entered in to prior to 1 April 2013 still attract a success fee from the defendant, even in the new lower costs regime. This will apply to all cases taken on under a CFA prior to 1 April 2013 even if not portalled until 30 April 2013 or afterwards.

The position is the same in relation to after-the-event insurance recoverability.

Road Traffic Accidents

Fixed recoverable costs under the road traffic accident portal unsurprisingly apply only where the dispute arises from a road traffic accident (CPR 45.7(2)(a)). So what is a “road traffic accident”?

CPR 45.7(4) states:

‘(4)         In this Section–

(a)       ‘road traffic accident’ means an accident resulting in bodily injury to any person or damage to property caused by, or arising out of, the use of a motor vehicle on a road or other public place in England and Wales;

(b)      ‘motor vehicle’ means a mechanically propelled vehicle intended for use on roads; and

(c)       ‘road’ means any highway and any other road to which the public has access and includes bridges over which a road passes.’

In Schneider v Door2door PTS Ltd [2011] EWHC 90210 (Costs), the issue was:

‘did the Claimant, Mrs Schneider, suffer injury in a road traffic accident, in which case her costs are limited to those fixed under the recoverable costs regime in CPR rule 45 Part II; or are they “at large” because the accident was an accident, but not a road traffic accident and accordingly her costs are recoverable without limit, subject to being proportionate and reasonable?’

The facts were that the claimant was offered transport by an NHS Trust after a hospital appointment. Following the appointment the claimant was waiting with another patient. Transport was provided by the defendant. The claimant was informed by the defendant that the steps at the side of the transport vehicle were not working. They were supposed to unfold so that the patients could use them to gain access to the vehicle. Instead, the defendant offered the claimant a steep ramp which was for wheelchairs or passage through the central part of the vehicle. She chose the latter. She was holding on to two contact points (one of which was a handle). She placed her foot high up and this was on the floor of the vehicle. As she transferred weight onto the right foot, she felt her hip dislocate. The subsequent claim for damages against the defendant for negligence succeeded with a costs order in the claimant’s favour.

The claimant’s bill of costs sought a total of £22,982.91 including VAT and disbursements, whereas it was the defendant’s case that the costs should be limited to those payable under the fixed costs RTA regime in CPR 45, section 2 so that no more than £800, plus 20% of the damages calculated at £1,000 and a success fee of 12.5% plus VAT together with a reasonable sum for the disbursements listed in CPR.45.10(2), would be payable.

The rules state, so far as relevant:

‘In this Section –

(a)    “road traffic accident” means an accident resulting in bodily injury to any person or damage to property caused by, or arising out of, the use of a motor vehicle on a road or other public place in England and Wales;

(b)   “motor vehicle” means a mechanically propelled vehicle intended for use on roads; and

(c)    “road” means any highway and any other road to which the public has access and includes bridges over which a road passes.’

It was common ground that the transport vehicle belonging to the defendant was a ‘motor vehicle’ within the meaning of CPR 47.7(4)(b) and that at the date of the accident it was parked on a ‘road’ within the meaning of sub-section (4)(c). Following the Court of Appeal’s reasoning in Dunthorne v Bentley & Hume (Administrators of the Estate of Diane Elizabeth Bentley) and Cornhill Insurance Plc [1996] PIQR 323, the Master concluded:

‘Whilst I accept in layman’s terms that it might appear to defy logic were I to find on the facts of this case, that a road traffic accident could have taken place when, at the moment of injury, (1) Mrs Schneider was not the owner of the vehicle, (2) she was not inside the vehicle, (3) she was not the driver of the vehicle, (4) the vehicle was not in motion and (5) the vehicle was not in collision with Mrs Schneider or another vehicle, it is clear from Dunthorne that for a road traffic accident to occur, the tortfeasor’s vehicle does not need to be moving, nor must it be involved in a collision. On the contrary, in Dunthorne the Court of Appeal held that a road traffic accident had occurred through Mrs Bentley’s use of the car, even though at the moment of injury, it was stationary, undriveable and she was moving away from it. It follows that simply because the mini-bus had not commenced its journey, nor had it collided with another vehicle or pedestrian, that no road traffic accident could have taken place*. As was the case in Betty Green, I consider that use of the minibus occurred when Mrs Schneider placed her foot on the floor and her hands on the holding contact points, one such point being a handle. From that moment, she was engaged in an act or mode of “using” the vehicle and contrary to Mr James’ submission, in my judgment, what Mrs Schneider was not doing was simply putting herself into a position so that she could use it and that that use would not start until she was safely in her seat and the mini-bus had set off. Far from being a “causal concomitant”, in my judgment, her injury arose out of her use of the contact points and vehicle floor which were causal to the injury Mrs Schneider suffered.’

The claim was therefore deemed to be an RTA under the rules. As the claim settled for £5,000, the costs fell within the fixed recoverable costs regime in CPR 45 and were limited accordingly.

 

Exclusions

Note that the new RTA portal does NOT apply to a claim in respect of a breach of duty owed to a road user by a person who is not a road user.

Thus although an injury allegedly caused by, for example, defective road repairs is a road traffic accident it does not enter the road traffic accident portal.

It is arguable that it does not enter the new Employers’ Liability/Public Liability portal either as that portal excludes claims

“for damages arising out of a road traffic accident (as defined in paragraph 1.1(16) of the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents.”

Paragraph 1.1(16) reads:-

“(16) ‘road traffic accident’ means an accident resulting in bodily injury to any person caused by, or arising out of, the use of a motor vehicle on a road or other public place in England and Wales unless the injury was caused wholly or in part by a breach by the defendant of one or more of the relevant statutory provisions1  as defined by section 53 of the Health and Safety at Work etc Act 1974;”

and thus does not take matters any further.

Now it is likely that that exclusion from the Employers’ Liability/Public Liability portal was to stop RTA matters being brought in the Employers’ Liability/Public Liability portal where fees are higher, but the exclusion in the RTA portal appears to mean that such cases do not go in to either portal.

A case not going in to either portal cannot go in to Fixed Recoverable Costs, but rather goes straight to open standard costs.

 

COSTS IN THE PORTALS

 Pre 30 April 2013

From   £1,000.00 to £10,000.00 £
Stage 1 – £400.00
Stage 2 – £800.00
Total      £1,200.00

 

Post 29 April 2013

The post 29 April 2013 road traffic accident fees are:-

From   £1,000.00 to £10,000.00 £
Stage 1 – £200.00
Stage 2 – £300.00
Total      £500.00

(The Civil Procedure (Amendment No. 3) Rules 2013, SI 2013 No 789 (L.7))

The post 30 July 2013 fees are:-

From   £10,000.00 to £25,000.00 £
Stage 1 – £200.00
Stage 2 – £600.00
Total      £800.00

 In both portals the Stage 1 fee is payable 10 days after receiving the Stage 2 Settlement pack and the Stage 2 fee is payable 10 days after settlement is agreed.

 

Stage 3 Hearings

In all cases in all portals, whatever the value of the claims, the Stage 3 fee is £250 for a paper hearing and £500 for an oral hearing.

All fixed costs at all stages are exclusive of VAT.

 

Type A, B and C fixed costs

 Type A

Type A fixed costs are the legal representative’s Stage 3 costs for a paper hearing and in the Road Traffic Accident portal are £250.00 plus VAT.

In the Employers Liability and Public Liability portal which came into place on 31 July 2013, Type A fixed costs are £250.00 plus VAT.

  

Type B

Type B costs are additional advocate’s costs for conducting an oral Stage 3 hearing and are also £250 for Road Traffic Accident portal cases and are the same for the Employers’ Liability and Public Liability portals, giving a total fee of £500 for an oral Stage 3 hearing in all portals.

 

 Type C

Type C fixed costs are the costs for the advice on the amount of damages where the claimant is a child and are £150 in the Road Traffic Accident portal and are the same in the new Employers’ Liability and Public Liability portals.

Note that neither of the portals applies to protected parties within the meaning of CPR 21.1(2), for example a person lacking capacity within the meaning of the Mental Capacity Act 2005 (paragraph 4.3(2) of the EL and PL portal and paragraph 4.5(2) of the new RTA portal).

Although children are dealt with in CPR 21 they are not protected parties. The heading of CPR 21, and the term used throughout, is Children and Protected Parties. (My emphasis).

Note also that while both the portal and the Fixed Recoverable Costs Scheme allow for an additional fee in relation to a matter involving a child there appears to be no provision for such an additional fee if the matter is settled after exiting the portal but before proceedings are issued.

There appears to be nothing to stop a claimant issuing proceedings while the matter is still in one of the portals, provided that the appropriate time has expired since lodging the Claim Notification Form, which stands as the Letter of Claim.

Claimants may wish to do this in children cases to avoid the lacuna whereby no additional fee is payable in a child case where the matter has exited the portal but not yet been issued.

 London enhancement

The 12.5% uplift continues to apply where the claimant lives or works in certain areas of London – see below.

Road Traffic

Post 30 July 2013

On 31 July 2013 the road traffic portal was extended to cover claims up to £25,000, but only where the accident occurs on or after 31 July 2013 for claims between £10,001 and £25,000. (Paragraph 1.2(1)(a) and (b) of the new RTA protocol).

The trigger for road traffic accidents between £1,000 and £10,000 entering the portal is that the accident occurred between 30 April 2013 and 30 July 2013 inclusive.

On 31 July 2013 the new portal was introduced covering Employers’ Liability and Public Liability claims up to £25,000.

KEY DATES: ALL PORTALS

Road Traffic

£1,000 – £10,000

CNF pre 30 April 2013 = Old, higher costs
CNF 30 April 2013 onwards = New, lower costs

£10,001 – £25,000

Cause of action pre 31 July 2013 = does not enter portal
Cause of action 31 July 2013 onwards = enters new portal

Employers’ Liability and Public Liability except industrial diseases

Cause of action pre 31 July 2013 = does not enter portal
Cause of action 31 July 2013 onwards = enters new portal

 Industrial diseases

Letter of claim pre 31 July 2013 = does not enter portal
Letter of claim 31 July 2013 onwards = enters new portal

The protocols are generally well-written, clear and logical, but one small point to note concerns paragraph 4.1 of the new RTA portal which states that the portal applies to accidents where the CNF is submitted on or after 31 July 2013.

On the face of it, this picks up pre 31 July 2013 accidents up to £25,000. In fact it does not, due to paragraph 1.2(1)(b) of the RTA portal which provides that the portal’s upper limit is £10,000 for pre 31 July 2013 accidents.

Thus from 31 July 2013 the starting point is that all road traffic, public liability and employers’ liability claims up to £25,000 go in to one of the two portals where the cause of action arose on or after 31 July 2013.

Small claims, that is currently all personal injury claims where general damages are £1,000 or less are excluded from the portal. (Paragraph 4.1(4) of RTA portal and Paragraph 4.1(4) of the EL and PL portal).

The new Employers’ Liability and Public Liability Portal

The key date for Employers’ Liability and Public Liability claims is the cause of action, NOT the date of notification.

In an industrial disease claim the key date is the date of the letter of claim.

Thus the new portal applies where the cause of action arose on or after 31 July 2013, or in the case of a disease claim, where the letter of claim is sent on or after 31 July 2013. (Paragraph 4.1(1)).

£25,000 is the valuation on a full liability basis including pecuniary losses but excluding interest. (Paragraph 4.1(3)).

In the first six months of the portal, that is from 1 August 2013 to 31 January 2014, a total of 10,568 accident claims have been submitted through the Employers’ Liability portal and a total of 3,777 disease claims have been submitted through the Employers’ Liability portal.

In the same period a total of 18,265 Public Liability claim have been submitted through the portal.

Conditional Fee Agreements

 The key date is 1 April 2013. If the CFA is pre-1 April 2013 then the success fee is recoverable from the other side; if not then it is not. The date of the CNF and whether the case is portalled or not, or goes into Fixed Recoverable Costs or not, is irrelevant to the issue of recoverability of the success fee.

After-the-Event Insurance

 Exactly the same conditions apply as for conditional fee agreements in relation to recoverability.

LEVEL OF COSTS – ALL PORTALS

Portal costs are dealt with in CPR 45.18 and are as follows:-

Fixed recoverable costs for claims within the rta and el/pl protocols

Claims of£1k-£10k

Stage 1              Stage 2             Total

Claims of£10k-£25k

Stage 1              Stage 2             Total

RTAClaims £200 £300 £500 £200 £600 £800
EL/PLClaims £300 £600 £900 £300 £1,300 £1,600

Claimants’ Costs

The fixed recoverable costs, set out in CPR 45.18, apply only in relation to a claimant who has a legal representative. (Paragraph 4.6 of the RTA portal and Paragraph 4.4 of the EL and PL portal).

Thus no-one but a legal representative can get portal costs, although claimants in person may use the portal (see Paragraph 5.10 of each portal). Thus a Claims Management Company cannot recover portal costs.

Where the claimant reasonably believes that the claim is valued at between £1,000 and £25,000 but it subsequently becomes apparent that the value of the claim is less than £1,000, the claimant is entitled to the Stage 1 and (where relevant) the Stage 2 fixed costs. (Paragraph 5.9 of each portal).

 

Defendants’ Costs

New CPR 45.29F has introduced capped, not fixed, costs for a defendant where a costs order is made in a case within the Fixed Recoverable Costs Scheme. The amount of the defendant’s recoverable costs is limited to the amount that the claimant would have received had s/he been successful at the same stage of proceedings.

Exemptions to the new rule capping defendants’ costs

Where the new Qualified One Way Costs Shifting rule applies, but is then disapplied, for example where a claim is found to have been fundamentally dishonest then the defendants’ costs are not capped.

CPR 45.29F(10) states that “where, in a case to which this Section applies, any of the exceptions to qualified one way costs shifting in rules 44.15 and 44.16 is established, the court will assess the defendant’s costs without reference to this rule”.

If Qualified One Way Costs Shifting never applied, eg because of the existence of a pre-1 April 2013 recoverable additional liability, then the new rule still applies.

The other exceptions, and the interplay between CPR 36 and new CPR 45.29 are of extreme complexity and are the worst drafted provisions that I have ever seen – and I have seen a few.

CPR 45.29F (9) reads:-

“Where, in a case to which this Section applies, upon judgment being entered, the claimant fails to obtain a judgment more advantageous than the claimant’s Part 36 offer, rule 36.14A will apply instead of this rule.”

This should read:-

“Where, in a case to which this Section applies, upon judgment being entered, the claimant fails to obtain a judgment more advantageous than the defendant’s Part 36 offer, rule 36.14A will apply instead of this rule.” (my emphasis)

Correction of this error in CPR 45.29F (9) would bring the rule in line with CPR 36.14A (3) which states as follows:-

(3)    Where the claimant fails to obtain a judgment more advantageous than the defendant’s Protocol offer—

(a)    the claimant will be entitled to the applicable Stage 1 and Stage 2 fixed costs in Table 6 or Table 6A in Section III of Part 45; and

(b)   the claimant will be liable for the defendant’s costs from the date on which the Protocol offer is deemed to be made to the date of judgment; and

(c)    in this rule, the amount of the judgment is less than the Protocol offer where the judgment is less than the offer once deductible amounts identified in the judgment are deducted.

(‘Deductible amount’ is defined in rule 36.15(1)(d).)

The new portals, Fixed Recoverable Costs and Part 36

 CPR 36.21 envisages three scenarios in relation to costs consequences following a Stage 3 hearing:

  • where the claimant fails to beat the defendant’s portal offer then the claimant must pay the defendant’s Stage 3 costs as well as not recovering its own Stage 3 costs;
  •  where the claimant beats the defendant’s offer but does not match its own offer the defendant pays the claimant’s Stage 3 costs;
  • where the claimant beats the defendant’s offer and matches or beats its own offer the defendant pays:

– the claimant’s Stage 3 costs;

–  interest on those Stage 3 costs at a rate not exceeding 10% above base rate;

– 10% additional damages;

– interest on all damages at a rate not exceeding 10% above base rate running from the first business day after the court proceedings pack (part A and part B) was sent to the defendant.

FIXED RECOVERABLE COSTS AND PART 36

 Section 1 of Part 36 remains in force for non-portal cases and also applies to cases which exit either of the portals.

A new CPR 36.10A provides that where a claimant accepts a Part 36 offer within the relevant period the defendant will pay the claimant’s costs up to the stage reached when the offer is accepted.

This is clearly open to abuse.   A defendant makes an offer which the claimant intends to accept but during the 21 day acceptance period another stage is due to be passed.  The claimant delays acceptance thus triggering an additional fee as the next stage is passed.

Where a defendant’s Part 36 offer is accepted after the relevant period the claimant gets the appropriate fixed costs applicable at the date of expiry of the relevant period, and the claimant pays the defendant’s costs from expiry to acceptance.

Where a claimant accepts the defendant’s protocol offer after the claim has exited the portal the claimant gets Stage 1 and 2 costs but pays the defendant’s costs from expiry to acceptance.

Judgment

 A new CPR 36.14A deals with the position on judgment, rather than acceptance of an offer, but the principles are exactly the same, save that the claimant who matches his or her own offer at trial gets indemnity costs, not fixed recoverable costs, from the date of expiry of the period for accepting the offer.

Defendants’ costs are capped, not fixed, by reference to the level of the claimants’ fixed recoverable costs.

Counterclaims

 Where a successful counterclaim is brought in an RTA claim which counterclaim includes a counterclaim for personal injury that counterclaim will attract the same fixed costs as though it had been a claim.

CPR 45.29G states:-

“(1) If in any case to which this Section applies—

(a) the defendant brings a counterclaim which includes a claim for personal injuries to which the RTA Protocol applies;

(b) the counterclaim succeeds; and

(c) the court makes an order for the costs of the counterclaim,

rules 45.29B, 45.29C, 45.29I, 45.29J, 45.29K and 45.29L shall apply”.

Where a successful counterclaim is brought in an RTA claim which counterclaim does not include personal injury, that counterclaim will attract 50% of the fixed costs applicable had it been a personal injury claim.

The new Employers’ Liability and Public Liability portal, and the accompanying Fixed Recoverable Costs Scheme, apply only to matters where the cause of action occurred on or after 31 July 2013, and thus by definition there will not be a recoverable success fee or after-the-event insurance premium and so Qualified One Way Costs Shifting (QOCS) will apply.

There is one possible exception and that is a pre-1 April 2013 industrial disease case with a pre-1 April 2013 recoverable success fee or after-the-event insurance premium. The date determining whether such a case is portalled is the date of notification, not the date of cause of action. Thus such a case may go in to the new portal AND not have QOCS protection. Industrial disease cases can never go in to Fixed Recoverable Costs; if they exit the portal they go straight to open costs for both sides.

When an Industrial Disease or illness claim exits the portal, then the Claim Notification Form can be used as the letter of claim under the protocol unless the defendant has notified the claimant that there is inadequate information in the CNF. (6.15 of the new portal).

However QOCS protection is lost in a whole host of situations – see Qualified One Way Costs Shifting (“QOCS”) – the most important of which is the failure to beat a defendant’s Part 36 offer. In such a case open, standard costs will be awarded to the defendant for the full sum.

The fixed costs sums are cumulative, although by deducting the cumulative total at the previous stage one can work out the extra costs at any given stage.

Procedure

The procedure is set out in detail in the relevant protocols, all of which are attached

–          Pre-action protocol for low value personal injury (Employers’ Liability and Public Liability) claims

–          Pre-action protocol for low value personal injury claims in road traffic accidents

Note that by paragraph 4.2 of the new RTA protocol the old protocol, that is the one that commenced on 30 April 2010, will continue to apply as it stands immediately before 31 July 2013 to all claims where the CNF was submitted before 31 July 2013.

PROCEDURE – EL AND PL PORTALS

Exclusions

Paragraph 4.3 lists 11 exclusions from the portal and thus the new EL and PL portal does NOT apply:-

(1)    where the claimant acts as personal representative of a deceased person;

(2)    where the claimant or defendant is a protected party as defined in CPR 21.1(2);

(3)    in the case of a public liability claim, where the defendant is an individual (‘individual’ does not include a defendant who is sued in their business capacity or in their capacity as an office holder);

(4)    where the claimant is bankrupt;

(5)    where the defendant is insolvent and there is no identifiable insurer;

(6)    in the case of a disease claim, where there is more than one employer defendant;

(7)    for personal injury arising from an accident or alleged breach of duty occurring outside England and Wales;

(8)    for damages in relation to harm, abuse or neglect of or by children or vulnerable adults;

(9)    which includes a claim for clinical negligence;

(10) for mesothelioma;

(11) for damages arising out of a road traffic accident (as defined in paragraph 1.1(16) of the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents).

Key points to note are that mesothelioma, clinical negligence and road traffic accidents are excluded, with road traffic accidents entering a separate portal. Cases involving children, but not those involving protected parties, go in the portal.

Paragraph 6.1(2) of the Employers’ Liability and Public Liability protocol provides that if the insurer’s identity is not known or the defendant is known not to hold insurance cover, then the CNF must be sent to the defendant’s registered office or principle place of business and a Defendant Only CNF in not required.

6.1(3) provides that were the insurer’s identity is not known, the claimant must make a reasonable attempt to identify the insurer and, in an Employers’ Liability claim, the claimant must have carried out a database search through the Employers’ Liability Tracing Office.

In a disease claim the CNF should be sent to the insurer identified as the insurer identified as the insurer last on risk for the employer for the material period of employment (6.1(4)).

PROCEDURE – RTA PORTAL

Exclusions

The new RTA portal does NOT apply to a claim

(1)    in respect of a breach of duty owed to a road user by a person who is not a road user;

(2)    made to the Motor Insurers’ Bureau pursuant to the Untraced Drivers’ Agreement 2003 or any subsequent or supplementary Untraced Drivers’ Agreements;

(3)    where the claimant or defendant acts as personal representative of a deceased person;

(4)    where the claimant or defendant is a protected party as defined in CPR 21.1(2);

(5)    where the claimant is bankrupt;

(6)    where the defendant’s vehicle is registered outside the United Kingdom

Note that the portal DOES apply to MIB uninsured driver claims. (Paragraph 4.5), and does apply to children, but not to cases involving protected parties.

Note that the new RTA portal does NOT apply to a claim in respect of a breach of duty owed to a road user by a person who is not a road user.

Thus although an injury allegedly caused by, for example, defective road repairs is a road traffic accident it does not enter the road traffic accident portal.

It is arguable that it does not enter the new Employers’ Liability/Public Liability portal either as that portal excludes claims

“for damages arising out of a road traffic accident (as defined in paragraph 1.1(16) of the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents.”

Paragraph 1.1(16) reads:-

“(16) ‘road traffic accident’ means an accident resulting in bodily injury to any person caused by, or arising out of, the use of a motor vehicle on a road or other public place in England and Wales unless the injury was caused wholly or in part by a breach by the defendant of one or more of the relevant statutory provisions1  as defined by section 53 of the Health and Safety at Work etc Act 1974;”

and thus does not take matters any further.

Now it is likely that that exclusion from the Employers’ Liability/Public Liability portal was to stop RTA matters being brought in the Employers’ Liability/Public Liability portal where fees are higher, but the exclusion in the RTA portal appears to mean that such cases do not go in to either portal.

A case not going in to either portal cannot go in to Fixed Recoverable Costs, but rather goes straight to open standard costs.

Exiting the portal

 The claim will no longer continue under either protocol where the defendant within the relevant period:-

(1)    makes an admission of liability but alleges contributory negligence, other than in relation to a claimant’s admitted failure to wear a seat belt in an RTA matter; (6.15(1) RTA, 6.13(1) Employers’ Liability and Public Liability)

(2)    does not complete and send the CNF response (6.15(2) RTA, 6.13(2) Employers’ Liability and Public Liability)

(3)    does not admit liability (6.15(3) RTA, 6.13(3) Employers’ Liability and Public Liability)

(4)    notifies the claimant that the defendant considers that –

(a)    there is inadequate information in the CNF; or

(b)   if proceedings were issued, the small claims track would be the normal track for that claim. (6.45(4) RTA, 6.13(4) Employers’ Liability and Public Liability).

Where a party withdraws a Stage 2 offer the matter exits the portal (7.46 RTA, 7.43 Employers’ Liability and Public Liability).

Where the defendant fails to make a counter-offer within the specified period the matter exits the portal (7.40 RTA, 7.37 Employers’ Liability and Public Liability).

There are a number of instances where it is unclear what the sanction is for failure to comply with the protocol requirements, notably:-

  • failure by defendant to acknowledge the CNF the next day, that is electronic acknowledgement of the CNF and sending the claim to the insurer within one working day where the CNF is received directly by the insured;
  • failure by an insurer in an Employers’ Liability case to provide wages information within 20 days where liability has been admitted;
  • failure to pay settlement monies, including Stage 2 costs, within 10 days of settlement;
  • failure to resubmit CNF to the insurer within 30 days where first CNF issued to the defendant (Employers’ Liability and Public Liability only).

Keeping it in the Portal

In Phillips v Willis [2016] EWCA Civ 401

the Court of Appeal said that the starting point should be that any matter that has started in the portal should stay within it and not be transferred to the Small Claims Track, or any other track, unless absolutely necessary and the decision here to transfer the matter to the Small Claims Track was wrong in law and irrational.

“Once a case is within the RTA protocol, it does not automatically exit when the personal injury claim is settled. On the contrary, the RTA process is carefully designed to whittle down the disputes between the parties as the case passes through the various stages. It is to be expected that the sum in issue between the parties will be much smaller when the case reaches Stage 3 than it was back in Stage 1. The mere fact that the personal injury claim has been resolved is not specified as being a reason to exit from the RTA process.”

Here the claimant was injured in a road traffic accident and liability was admitted and general damages for personal injury, together with other losses, were agreed and the only issue remaining in dispute related to car hire charges.

The matter proceeded to Stage 3 of the portal by virtue of the claimant issuing a claim under Part 8 of the Civil Procedure Rules.

However when the parties attended the hearing the District Judge transferred the matter to the Small Claims Track and made directions and this was on the basis that the only issue remaining was car hire charges and that the matter should proceed under Part 7.

The claimant appealed to the Circuit Judge who upheld the decision of the District Judge.

However the Court of Appeal overturned the District Judge’s decision. The Court of Appeal was critical of the District Judge saying that he had caused the parties to incur substantial extra costs as a result of the order which he made of his own motion in circumstances where both parties were happy to have the matter dealt with within Stage 3 of the portal.
The Court of Appeal said:-

“29. The costs which the district judge caused the parties to incur were totally disproportionate to the sum at stake. First, the parties would have to pay a further court fee of £335.00 as a result of the district judge’s order. Secondly, the parties would incur the costs of complying with the district judge’s elaborate directions.”

The Court of Appeal then set out those extensive directions and pointed out that the remaining sum in dispute was just £462.00.

The Court of Appeal went on to say:-

“30. I dread to think what doing all that would have cost, but that was not the end of the matter. Both parties would need to instruct representatives to attend the further hearing. They would also have to write off the costs of the 9 April hearing [the Stage 3 Portal Hearing]. At the end of all that, the winning party would recover virtually no costs, because the case was now proceeding on the small claims track.

  1. In my view, the district judge’s decision taken on 9 April 2014 that further evidence was necessary to resolve the outstanding dispute between the parties was irrational. The district judge was not entitled to reach that conclusion.”

The Court of Appeal recognized that the issue in the appeal is how courts should deal with low value road traffic accident claims where the personal injury element has been resolved and only a modest dispute about car hire charges remains.

Although this case involved the pre-31 July 2013 portal, the principle applies to the current portals.

The Court of Appeal gives a helpful summary of the Stage 1 and Stage 2 portal procedure and says that if the matter is not settled by the end of Stage 2, the “case then proceeds to Stage 3, which is litigation.”

The Court of Appeal then went on to say:-

“9. At this point, Practice Direction 8B takes centre stage. PD 8B requires the claimant to issue proceedings in the County Court under CPR Part 8. The practice direction substantially modifies the Part 8 procedure so as to make it suitable for low value RTA claims where only quantum is in dispute. This modified procedure is designed to minimise the expenditure of further costs and in the process to deliver fairly rough justice. This is justified because the sums in issue are usually small, and it is not appropriate to hold a full blown trial. The evidence which the parties can rely upon at Stage 3 is limited to that which is contained in the court proceedings pack. A court assesses the items of damages which remain in dispute, either on paper or at a single “Stage 3 hearing”.”

The Court of Appeal stated that the provision which was of key importance to the present case is paragraph 7 of Practice Direction 8B, relating to the Stage 3 process, which reads:-

“7.1. The parties may not rely upon evidence unless —

(1) it has been served in accordance with paragraph 6.4;

(2) it has been filed in accordance with paragraph 8.2 and 11.3; or

(3) (where the court considers that it cannot properly determine the claim without it), the court orders otherwise and gives directions.

7.2. Where the court considers that —

(1) further evidence must be provided by any party; and

(2) the claim is not suitable to continue under the Stage 3 procedure,

the court will order that the claim will continue under Part 7, allocate the claim to a track and give directions.

7.3. Where paragraph 7.2 applies the court will not allow stage 3 fixed costs.”

The Court of Appeal dismissed as irrelevant the fact that the personal injury element of the claim had been settled and that that personal injury element was the gateway to the portal.

The court held that the District Judge had no power under paragraph 7.2 of Practice Direction 8B to direct that the case should proceed under Part 7, rather than Part 8.

As to when that paragraph could ever apply the Court of Appeal suggested that there might be cases involving complex issue of law or fact which are not suitable for resolution at a Stage 3 hearing.

The Court of Appeal also considered CPR 8.1(3) which provides:-

“The court may at any stage order the claim to continue as if the claimant had not used the Part 8 procedure and, if it does so, the court may give any directions it considers appropriate.”

The Court of Appeal accepted that the language of that rule is wider than that in paragraph 7.2 of the Practice Direction but said that “CPR 8.1(3) cannot be used to subvert the protocol process”.

The Court of Appeal said that in any event the District Judge here was relying upon paragraph 7.2 of the Practice Direction, and not CPR 8.1(3) but if they were wrong in that view then it would have been an impermissible exercise of the power under CPR 8.1(3) to transfer this particular case out of Part 8 and into Part 7 of the CPR.

I am grateful to Steven Turner, Counsel for the Respondent, for background information in relation to this matter.

Further guidance, interim payments and admissions

In Mulholland v Hughes and Conjoined Appeals, No. AP20/15, Newcastle-upon-Tyne County Court, 18 September 2015

the court held that a defendant cannot raise an issue at a stage 3 hearing that had not been set out in the Response Pack at stage 2.

The court also held that it can order a claimant to repay money if, at the stage 3 hearing, it is found that the damages due are less than the sums already paid.

Here the judge was hearing four appeals in relation to the interpretation of the Pre-Action Protocol for Low Value Injury Claims in Road Traffic Accidents.

In three of the cases the defendant had not raised at stage 2 a point in relation to the need for a hire vehicle, but raised the point at the stage 3 hearing.

The judge rejected an argument that offers made by a defendant at stage 2 should be regarded as admissions but said that it was not open to a defendant to raise something at a stage 3 hearing that had not been raised at stage 2.

The court said that the Settlement Pack and Response are not pleadings but they do require the parties to set out their case and it is incumbent on a defendant to set out clearly the precise nature of the defence, that is what is agreed and what is disputed and why it is disputed.

The court referred to paragraph 7.41 of the Protocol:-

“The defendant must also explain in the counter-offer why a particular head of damage has been reduced. The explanation will assist the claimant when negotiating a settlement and will allow both parties to focus on those areas of the claim that remain in dispute.”

“It follows that it is the intention of the Protocol that if a defendant wishes to raise an issue such as the need for hire, that is to be done at the time of the making of the counter-offer. To allow a defendant to raise the issue of need at Stage 3 runs entirely contrary to the notion that at the end of Stage 2 the parties should have clarity as to what remains in dispute.”

The court also held that requiring the claimant to prove need for car hire in every case was inconsistent with paragraph 7.11 which provides that in most cases witness statements will not be required and this indicates that witness statements will only be needed where hire, or for example the need for care, is formally raised by the defendant at stage 2.

“Irrespective of the above, I regard it as inequitable and unfair for a defendant, for the first time, to raise the issue of need at the Stage 3 hearing. It seems to me that it is tantamount to trial ‘by ambush’. It hardly needs to be said that to litigate in that way runs entirely contrary to the spirit of the Protocol, the expected behaviour of the parties and the intended collaborative approach.”

“Finally, in relation to this ground of appeal, even if it were permissible for a defendant to raise the question of need at a Part 8 hearing, given the absence of any forewarning, in my judgment, the proper course would have been to adjourn to enable the claimant to file evidence to demonstrate need: this is permitted by paragraph 7.1(3) and paragraph 7.2 of the practice direction. As I have made clear, however, in my opinion, the defendant should be estopped from raising need at this very late stage.”

Repayment of sums paid

The court held that there was nothing to prevent the court from ordering repayment of monies already paid under the protocol.

In the fourth appeal, what was in issue was the amount of general damages for pain, suffering and loss of amenity and the judge had awarded a sum less than that offered by the defendant at stage 2 and ordered repayment of the difference and that decision was upheld in this appeal.

“It cannot be just or equitable that a claimant is entitled to retain a sum in excess of that which is awarded by the court at the end of a hearing. That would be, in my view, manifestly unfair to the defendant. I do not think that such was the intention of the Protocol. If the claimant chooses to go to a Stage 3 hearing, he must accept the risk that a court will award less than the non-settlement payment and that he will have to refund the difference.”

“In the final analysis, a Protocol offer is, in essence, what is now generally referred to as a ‘Part 36 offer’. It is, after all, governed by CPR Part 36. Its purpose is the same, principally to obtain protection in costs. There is a difference in that under the usual provisions of Part 36, no money is in fact paid to the claimant but it seems to me that the same principles should apply.”

“Arguably, the closest analogy is a ‘Payment into Court’ pursuant to RSC Ord. 22 and CCR Ord. 11 which were largely superseded by Part 36. (Although there is still provision for payments into Court by virtue of CPR Part 37.) Under the old regime, if a Claimant (Plaintiff) did not recover more than the sum paid into Court, the Defendant was entitled to have the balance returned to him.”

“Accordingly, my view is that the non-settlement payment should be treated as an interim payment and, therefore, governed by CPR Part 25.”

“The claimant should send the Stage 2 Settlement Pack to the defendant within 15 days of the claimant approving —

(1)          the final medical report and agreeing to rely on the prognosis in that  report; or

(2)          any non-medical expert report,

whichever is later.” (My italics)

I realize that that is in the context of a second or subsequent report from the same expert, for the reasons set out in paragraph 7.8, but the use of the word “final” in paragraph 7.33 strongly suggests that one cannot submit further medical evidence once the Stage 2 Settlement Pack has been sent to the defendant.

I am reinforced in that by paragraph 7.66 which provides:-

“Comments in the Court Proceedings Pack (Part A) Form must not raise anything that has not been raised in the Stage 2 Settlement Pack Form.”

One can see the logic of having a cut-off point. It could happen that the medical evidence was obtained after the case had been to court, or had been settled by acceptance of a Part 36 offer or whatever. In those circumstances one would not have been able to reopen the case.

What about a new report dealing with fresh symptoms or unexpected medical developments?

If the new report is relevant and admissible then it should be paid for by the defendant if the case is won. If it is not admissible then obviously the defendant does not have to pay for it.

I am presuming that any additional injury does not take the claim above the portal limit of £25,000.00. If it does there is no problem as that is a reason for exiting the portal.

However that still leaves open the question of whether any evidence not produced by the end of Stage 2 is ever admissible in subsequent Part 7 proceedings. To allow that would effectively allow a claimant to bypass the decision in Phillips v Willis by exiting the portal, issuing Part 7 proceedings and getting the new evidence in that way.

Paragraph 7.76 appears to give the claimant an unfettered right to exit the portal. The problem is that “where the court considers that the claimant acted unreasonably in giving such notice it will award no more than the fixed costs in rule 45.18.”

In Phillips v Willis the Court of Appeal said this at paragraph 11:-

“It is important to note that the RTA process has an inexorable character. If a case falls within the parameters of the RTA process, the parties must take the designated steps or accept the consequences. The rules specify what those consequences are. The rules also specify when a case must remain in the RTA process, when it must drop out of the process, and when it may drop out of the process.”

Exiting the portal to try and get such fresh evidence in is likely to result in the court finding that the claimant has acted unreasonably. In those circumstances the court is likely to order the claimant to pay all of the defendant’s costs for dealing with the matter out of the portal, even though the claimant wins the case.

In Uppal v Daudia LTLPI 9 July 2012

the Defendant successfully argued that the claimant had unreasonably removed the case from the portal.

This resulted in the successful claimant failing to recover over £20,000.00 in costs claimed and being ordered to pay the defendant’s costs on the indemnity basis.

Thus the defendant was awarded indemnity costs for having to defend unnecessarily Part 7 proceedings and the claimant was denied its claimed costs of over £20,000.00.

Practice Direction 8B, paragraph 7.1(3) allows the court to find that it cannot properly determine the claim without further evidence and in those circumstances, under paragraph 7.2, the court may find that the claim is not suitable to continue under the Stage 3 procedure and may order that the claim will continue under Part 7 and allocate the claim to a track and give directions.

However the comments of the Court of Appeal in Phillips v Willis should be noted and in that case they found that the District Judge had no power under paragraph 7.2 of Practice Direction 8B to direct that the case should proceed under Part 7.

At paragraph 36 of the judgment the Court of Appeal looked at the circumstances in which paragraph 7.2 might ever apply and referred to cases possibly involving complex issues of law or fact which are not suitable for resolution at a Stage 3 hearing.

CPR 8.1(3) provides:-

“(3) The court may at any stage order the claim to continue as if the claimant had not used the Part 8 procedure and, if it does so, the court may give any directions it considers appropriate.”

The Court of Appeal accepted that the language of that rule is wider than that in paragraph 7.2 and said that “CPR 8.1(3) cannot be used to subvert the protocol process.”

The cost of an admissible report is recoverable. There is no prohibition in obtaining a second medical report and one would not need to show that it was a disbursement reasonably incurred due to a particular feature of the dispute under CPR 45.29I (2) (h).

Even in a soft tissue injury claim paragraph 7.8B makes provision for a further medical report in certain circumstances.

Paragraph 7.2 of the portal states:-

“It is expected that most claimants will obtain a medical report from one expert, but additional medical reports may be obtained from other experts where the injuries require reports from more than one medical discipline.”
The limitation in paragraph 7.8 is in relation to a subsequent medical report from an expert who has already reported and does not deal with obtaining a medical report from a second or subsequent expert.

Paragraph 7.12 under the heading “Stay of Process” provides:-

“7.12.    Where the claimant needs to obtain a subsequent expert medical report or a non-medical report, the parties should agree to stay the process in this Protocol for a suitable period.  The claimant may then request an interim payment in accordance with paragraphs 7.13 to 7.16.”

Although that does not specify the stage of the proceedings reached where there can be a stay for this reason it does refer to interim payment and that is of course a pre-stage 2 issue and paragraph 7.12 appears amongst other pre-stage 2 matters.

If further medical evidence could be provided after the Stage 2 Settlement Pack has been sent, one would expect that to appear in paragraphs 7.32 onwards dealing with the Stage 2 Settlement Pack and subsequent events.

Other

CPR 45.18 fixed costs are only recoverable where the claimant has a legal representative, and thus are not payable to Claims Management Companies. (paragraph 4.6 of RTA portal and 4.4 of EL and PL portal). A claimant is allowed to portal in person (see Paragraph 5.10 of each portal).

Where the claimant reasonably believes that the claim is valued at between £1,000 and the protocol upper limit, but it subsequently becomes apparent that the value of the claim is less than £1,000, the claimant is entitled to the Stage 1 and (where relevant) the Stage 2 fixed costs. (Paragraph 5.9 of each portal).

Expert Reports – RTA

It is expected that in most claims with a value of no more than £10,000, the medical expert will not need to see any medical records. (Paragraph 7.5 of RTA portal).

In most cases, whatever the value, a report from a non-medical expert will not be required, but a report may be obtained where it is reasonably required to value the claim. (Paragraph 7.9(1) of RTA portal).

Expert Reports – EL and PL

It is expected that most claimants will obtain a medical report from one expert but additional medical reports may be obtained from other experts where the injuries require reports from more than one medical discipline (Paragraph 7.2 EL and PL portal).

Any subsequent medical report from an expert who has already reported must be justified and a report may be justified where –

(1)    the first medical report recommends that further time is required before prognosis of the claimant’s injuries can be determined; or

(2)    the claimant is receiving continuing treatment; or

(3)    the claimant has not recovered as expected in the original prognosis.

(Paragraph 7.6 of EL and PL portal).

Non-medical reports – EL and PL

Paragraph 7.7 of EL and PL portal provides that in most cases a report from a non-medical expert will not be required, but a report may be obtained where it is reasonably required to value the claim.

Counsel / Specialist Solicitor – all portals

The self-explanatory Paragraph 7.10 of RTA portal and 7.8 of EL and PL portal reads-

“In most cases under this Protocol, it is expected that the claimant’s legal representative will be able to value the claim. In some cases with a value of more than £10,000 (excluding vehicle related damages), an additional advice from a specialist solicitor or from counsel may be justified where it is reasonably required to value the claim.”

Paragraph 7.44 of RTA portal refers to “a sum equal to the Type C fixed costs of an additional advice on quantum of damages where such advice is justified under paragraph 7.10.” Exactly the same principle is set out in the EL and PL portal (Paragraph 7.41).

Paragraph 1.1(17) of RTA portal and 1.1(19) of EL and PL portal in the definition section states:-

““Type C fixed Costs” has the same meaning as in rule 45.18(2) of the Civil Procedure Rules 1998.”

CPR 45.18(2) sets Type C fixed costs at £150.00 (plus VAT).

Costs of expert reports and specialist legal advice

Where the claimant obtains more than one expert report or an advice from a specialist solicitor or counsel –

(a)    the defendant at the end of Stage 2 may refuse to pay; or

(b)   the court at Stage 3 may refuse to allow,

the costs of any report or advice not reasonably required.

(Paragraph 7.31(1) of RTA portal and 7.29(1) EL and PL portal).

Consequently where the claimant obtains more than one expert report or obtains an advice from a specialist solicitor or counsel –

(a)    the claimant should explain in the Stage 2 Settlement Pack why they obtained a further report or such advice; and

(b)   if relevant, the defendant should in the Stage 2 Settlement Pack identify the report or reports or advice for which they will not pay and explain why they will not pay for that report or reports or advice.

(Paragraph 7.31(2) of RTA portal and 7.29(2) EL and PL portal).

Claims for loss of earnings for attending court

 Where, under CPR 45.29 I (2)(g) loss of earnings, the court allows a claim for any loss of earnings or loss of leave by a party or witness due to attend a hearing or staying away from home for the purpose of attending a hearing, the specified sums, per day, for each person are:-

(a)    £90, where the value of the claim for damages is not more than £10,000; and

(b)   £135, where the value of the claim for damages is more than £10,000.

(65th Update – Practice Direction Amendments).

The sum of £90 reflects the amount allowable in the Small Claims Track in non-personal injury work; that track is for claims up to £10,000 and thus the witness allowances are unified between Small Claims civil matters and personal injury matters up to £10,000.

Interim Payments

Where a defendant makes an interim payment in accordance with Paragraph 7.19 of RTA portal and 7.18 EL and PL portal. but the claimant is not content with the amount paid, the claimant may start court proceedings.

However if the court makes no award, or an award no more that the defendant’s offer, then the court will order no more than Stage 2 fixed costs.

Offers

Any offer to settle made at any stage by either party will automatically include, and cannot exclude –

(1)    the Stage 1 and Stage 2 fixed costs;

(2)    an agreement in principle to pay a sum equal to the Type C fixed costs (£150 plus VAT) of an additional advice on quantum where such advice is justified under paragraph 7.10 of RTA portal and 7.8 EL and PL portal; (see above).

(3)    an agreement in principle to pay relevant disbursements allowed in accordance with CPR 45.19; or

(4)    where applicable, any success fee in accordance with CPR 45.31(1) as it was in force immediately before 1 April 2013.

(Paragraph 7.44 of RTA portal and 7.41 EL and PL portal).

Disputes re Costs

Where there is a dispute about whether an additional advice on quantum is justified or concerning the amount or validity of any disbursement a party may commence proceedings under CPR 45.29 so that the court may determine the amount.

Unreasonably exiting the Portal

Paragraph 7.76 of RTA portal and 7.59 EL and PL portal provides that where a court considers that the claimant acted unreasonably in serving notice that the claim was unsuitable for the portal it will award no more that CPR 45.18 fixed costs.

Note that the provision in the old portal whereby a case exited the portal if a defendant failed to acknowledge the CNF within one day of receipt has gone.

Although 6.10 of the new road traffic portal requires that the defendant must send to the claimant an electronic acknowledgement the next day after receipt of the CNF failure to do so no longer carries with it the penalty of the claim exiting the portal.

6.11 requires the defendant to complete the Insurer Response section of the CNF, the CNF Response, and send it to the claimant within 15 days and failure to do so does cause the matter to exit the portal (6.15(2)).

In the new Employers’ Liability and Public Liability portal the electronic acknowledgement requirement is at 6.10(a) and the CNF Response requirement is at 6.11 and again the matter does not exit the portal on the defendant’s failure to acknowledge, but does exit on failure to send the CNF Response (3.13(2)).

My view is that it would be unreasonable for a claimant to exit the portal merely because a defendant had failed to send the acknowledgement and that that would result in the claimant recovering only portal fees, even though the defendant is in breach of a requirement.

If the matter exits due to the defendant’s failure to complete and send the CNF Response, then the claimant gets Fixed Recoverable Costs.

There are at least three other areas where there is no sanction for breach of the rules:-

  • failure by the claimant to re-submit CNF within 30 days of first issue to insurer in Employers’ Liability and Public Liability claims;
  •  failure by the claimant to provide details of earnings claim within 20 days of the defendant making an admission of liability in an Employers’ Liability claim;
  •  failure by the defendant to pay the settlement monies within 10 days of the agreed settlement, including Stage 2 fixed costs.

ALL PORTALS

Stage 3 Hearings

In all cases in all portals, whatever the value of the claim, the Stage 3 fee is £250 for a paper hearing and £500 for an oral hearing.

VAT

All fixed costs listed are exclusive of VAT (CPR 45.18(6)).

London enhancement

The 12.5% uplift continues to apply where the claimant lives or works in an area set out in Practice Direction 45 and instructs a legal representative who practices in that area. (CPR 45.18(5)).

Paragraph 2.6 of Practice Direction 45 states that:-

“The area referred to in rules 45.11(2) and 45.18(5) consists of (within London) the county court districts of Barnet, Bow, Brentford, Central London, Clerkenwell and Shoreditch, Edmonton, Ilford, Lambeth, Mayors and City of London, Romford, Wandsworth, West London, Willesden and Woolwich and (outside London) the county court districts of Bromley, Croydon, Dartford, Gravesend and Uxbridge”

Children

An additional Type C payment of £150 plus VAT remains payable in cases involving children. Cases involving protected parties, either as claimant or defendant, do not go in to the portals.

In a portal case involving a child which proceeds to Stage 2 and is settled an application must still be made to the court for approval and the court requires the following information, as set out in Practice Direction 8B:-

  • the draft consent order;
  • advice by counsel, solicitor or other legal representative on the amount of damages;
  • a statement verified by a statement of truth signed by the litigation friend which confirms whether the child has recovered in accordance with the prognosis and whether there are any continuing symptoms. This statement will enable the court to decide whether to order the child to attend the settlement hearing;

If the court approves the settlement at a settlement hearing it will order the defendant to pay

(a)    Stage 1 and 2 fixed costs;

(b)   Stage 3 Type A, B and C fixed costs; and

(c)    disbursements allowed in accordance with rule 45.19 (CPR 45.21(2)).

Where the court does not approve the settlement at a settlement hearing it will order the defendant to pay Stage 1 and 2 fixed costs (CPR 45.21(3)).

Where the court approves the settlement at a second settlement hearing the court will order the defendant to pay:

(a)    Stage 3 Type A and C fixed costs for the first settlement hearing;

(b)   CPR 45.19 disbursements; and

(c)    Stage 3 Type B fixed costs for one of the hearings.

(CPR 45.21(5)).

The court has a discretion to also order either party to pay an amount equivalent to either or both the Stage 3 Type A or Type B fixed costs where the court does not approve the settlement at the first settlement hearing but does approve the settlement at a second settlement hearing (CPR 45.21(6)).

Infant settlement at Stage 3 or portal

CPR 45.22 applies where the claimant is a child and the matter is settled after proceedings are started under the Stage 3 procedure and the settlement is more than the defendant’s Road Traffic Accident protocol offer and an application is made to the court to approve the settlement.

A Stage 3 hearing to approve infant settlement or to assess damages must always be a hearing and will not be assessed on the papers.

Where the court approves the settlement at the hearing it will order the defendant to pay:

(a)    Stage 1 and 2 fixed costs;

(b)   Stage 3 Type A, B and C fixed costs; and

(c)    CPR 45.19 disbursements.

(CPR 45.22(2)).

Where the court does not approve the settlement at the settlement hearing it will order the defendant to pay Stage 1 and 2 fixed costs. (CPR 45.22(3)).

Where the court does not approve the settlement at the first settlement hearing, but does approve it at the Stage 3 hearing, it will order the defendant to pay:

(a)    Stage 3 Type A and C fixed costs for the settlement hearing; and

(b)   CPR 45.19 disbursements; and

(c)    Stage 3 Type B fixed costs for one of the hearings.

The court has a discretion to also order either the defendant or the claimant to pay an amount equivalent to either or both of Stage 3 Type A and Type B costs where the court does not approve the settlement at the first settlement hearing but does approve the settlement at the Stage 3 hearing (CPR 45.22(6)).

Where the settlement is not approved at the Stage 3 hearing the court will order the defendant to pay the Stage 3 Type A fixed costs (CPR 45.22 (7)).

Where the claimant is a child and at a settlement hearing, or Stage 3 hearing, the court orders that the claim is not suitable to be determined under the Stage 3 procedure it will order the defendant to pay:

(i)            Stage 1 and 2 fixed costs; and

(ii)            Stage 3 Type A, B and C fixed costs.

Where the court is to assess damages then an application to the court to determine the amount of damages must be started by a claim form on issuing the claim form the claimant must state the date when the Court Proceedings Pack (Part A and Part B) Form was sent to the defendant, copies of medical reports, evidence of special damages, evidence of disbursements and the value of the claim.

Note also that while both the portal and the Fixed Recoverable Costs Scheme allow for an additional fee in relation to a matter involving a child there appears to be no provision for such an additional fee if the matter is settled after exiting the portal but before proceedings are issued.

There appears to be nothing to stop a claimant issuing proceedings while the matter is still in one of the portals, provided that the appropriate time has expired since lodging the Claim Notification Form, which stands as the Letter of Claim.

Claimants may wish to do this in children cases to avoid the lacuna whereby no additional fee is payable in a child case where the matter has exited the portal but not yet been issued.

 Solicitor and own client costs

All matters set out above are fixed RECOVERABLE costs. Solicitors are allowed to charge client costs over and above these rates.

25% of the Allowed Damages Pool has become the standard. (See my recent blog – Conditional Fee Agreements, Damages-Based Agreements and Contingency Fees.)

FROM PORTAL TO FIXED RECOVERABLE COSTS

With effect from 31 July 2013 any case, except an Industrial Disease case, exiting any portal goes in to a new Fixed Recoverable Costs scheme and those Fixed Recoverable Costs are as per the table below.

Alone, industrial disease cases exiting the portal will go straight to open, standard costs and cannot be the subject of Fixed Recoverable Costs outside the portal.

A pre-31 July 2013 RTA portal case that is where the CNF was issued before 31 July 2013 that exits the portal now goes to the old so-called Predictable Costs Scheme which will soon wither on the vine.

Fixed recoverable costs for RTA, EL and PL claims falling out of the RTA and EL/PL protocols

Pre issue£1,000 – £5,000 Pre issue£5,001 – £10,000 Pre issue£10,001 – £25,000 Issued –Post issue

Pre Allocation

Issued –Post allocation

Pre listing

Issued –Post listing

Pre trial

Trial –Advocacy Fee
Case Settles before issue Case Settles before issue Case Settles before issue
Road   Traffic Accident
Fixed   Costs Greater of £550 or £100 + 20% of Damages £1,100+ 15% of Damages over £5k £1,930+ 10% of Damages over £10k £1,160+ 20% of Damages £1,880+ 20% of Damages £2,655+ 20% of Damages £500 (to £3,000)£710 (£3-10,000)

£1,070 (£10-15,000)

£1,705 (£15,000+)

Escape + 20% + 20% + 20% + 20% + 20% + 20% na
Employers   Liability
Fixed   Costs £950+ 17.5% of Damages £1,855+ 12.5% of Damages over £5k £2,500+ 10% of Damages over £10k £2,630+ 20% of Damages £3,350+ 25% of Damages £4,280+ 30% of Damages £500 (to £3,000)£710 (£3-10,000)

£1,070 (£10-15,000)

£1,705 (£15,000+)

Escape + 20% + 20% + 20% + 20% + 20% + 20% na
Public   Liability
Fixed   Costs £950+ 17.5% of Damages £1,855+ 10% of Damages over £5k £2,370+ 10% of Damages over £10k £2,450+ 17.5% of Damages £3,065+ 22.5% of Damages £3,790+ 27.5% of Damages £500 (to £3,000)£710 (£3-10,000)

£1,070 (£10-15,000)

£1,705 (£15,000+)

Escape + 20% + 20% + 20% + 20% + 20% + 20% na

Advocacy fees in fixed costs cases

The advocacy fee is a fixed add-on to the fee for the stage reached. This will often be at the end of the whole process, but could be at any post-issue stage, for example a quantum hearing post allocation but pre-listing where liability is admitted.

Otherwise you get what is in the box. The figures are most certainly NOT cumulative. All figures carry VAT on top.

In Mendes v Hochtief (UK) Construction Ltd [2016] EWHC 976 (QB)

the Queen’s Bench Division of the High Court held that the advocacy/brief fee in the Road Traffic Accident Fixed Costs Scheme is recoverable if the matter settles on the day of trial, and that “there are sound policy reasons for concluding that the interests of justice would be better served if the advocate was not penalized financially for negotiating a settlement at the door of the court.”

Here the parties attended at court for a fast track trial under the Road Traffic Accident Fixed Costs Scheme which provides for a fixed advocacy fee depending upon the amount awarded by the court.

On the morning of the trial the parties asked the judge for more time and settled the matter on the basis of £20,000.00 plus costs.

The judge assessed costs but refused to award the fixed advocacy fee as the case had been settled before the “final contested hearing” had started.

Under CPR 45.29(C) Table B a reference to “trial” is a reference to the final contested hearing.

The claimant appealed to the High Court.
The single issue was whether a trial advocacy fee is recoverable under the fixed costs scheme if a case settles on the day of trial but before the trial actually commences.

The High Court held that it was. Table B applies if a fixed costs matter is settled “on or after the date of listing but prior [to] the date of trial.”

A matter that settles on the date of trial obviously does not settle “prior” to the date of trial and thus is not covered by Table B.

Thus either the situation fell in Table C or was not covered at all. Table C refers to a “trial advocacy fee”.

The court held that the Civil Procedure Rules in relation to fixed costs “were intended to be a comprehensive guide to what was recoverable and when.”

The court cited with approval the decision of the High Court in

Nizami v Butt [2006] 1 WLR 3307 that the intention of a fixed recoverable costs regime:-

“…was to provide an agreed scheme of recovery which was certain and easily calculated. This was done by providing fixed levels of remuneration which might over-reward in some cases and under-reward in others, but which were regarded as fair when taken as a whole.”

If necessary, although the court doubted that it was, a purposive construction would be given to achieve that result.

The court also noted the difference in wording as compared with that relating to success fees which uses the term “concludes at trial”, the point being that the recoverable success fee jumps to 100% in those circumstances.

In three cases the courts had held that a trial had not started if settlement is reached beforehand, however close to the trial. Those cases are:-

Amin & Hussain v Mullings & Royal Sun Alliance [2011] 3 Costs LR 485

Sitapuria v Moorzadi Khan (Unreported), 10 December 2007, Liverpool County Court; and

James v Ireland [2015] 3 Costs LR 511

Those cases were on a different wording and reinforced the view of the High Court here, that is that a different conclusion on the different wording is not only possible but essential.

Comment

A correct and sensible decision. It should be noted that it is confined to settlements on the day of trial, as anything settled before will come within Table B as settled “prior to the date of trial”.

How many advocacy fees?

The Civil Procedure Rules in relation to the calculation of the fixed advocacy fee where the advocate is representing more than one claimant are silent in relation to the fixed costs scheme which follows on from the Road Traffic Accident Portal and the Employers’ Liability and Public Liability Portal.

There are, and have been for some time, fixed advocacy costs in all fast-track matters, although this is not widely known.

In relation to all fast-track trials except those flowing on from the portals the relevant rule is CPR 45.40 which provides:-

“(1)        Where the same advocate is acting for more than one party –

  • the court may make only one award in respect of fast track trial costs payable to that advocate; and
  • the parties for whom the advocate is acting are jointly entitled to any fast track trial costs awarded by the court.

(2)          Where –

  • the same advocate is acting for more than one claimant; and
  • each claimant has a separate claim against the defendant,

the value of the claim, for the purpose of quantifying the award in respect of fast track trial costs is to be ascertained in accordance with paragraph (3).

(3)          The value of the claim in the circumstances mentioned in paragraph (2) or (5) is –

  • where the only claim of each claimant is for the payment of money –
  • if the award of fast track trial costs is in favour of the claimants, the total amount of the judgment made in favour of all the claimants jointly represented; or
  • if the award is in favour of the defendant, the total amount claimed by the claimants,

and in either case, quantified in accordance with rule 45.38(3);”

Although the rule does not specifically say so it is clear that where there is more than one advocate each advocate gets the separate fixed advocacy  fee.

Thus it will be seen that under that scheme one adds up the total of the awards and that gives the figure upon which the advocacy fee is based.

Thus suppose that an advocate appears for four clients, each of whom recovers £4,000.00. That gives a total of £16,000.00 which is within the upper band and thus attracts an advocacy fee in ex-portal cases of £1,705.00.

If one of those claimants is a London claimant attracting a 12.5% uplift, is that applied to the whole sum or is only a quarter, that is 3.125%, applied to reflect the fact that only a quarter of the claimants is London based?

It becomes more complicated if the claimants recover different sums. Suppose the total awarded is £20,000.00, of which the London claimant gets £8,000.00 and the other three get £4,000.00 each. That total attracts an advocacy fee of £1,705.00.

Given that the London claimant has received 40% of the total damages is the enhancement then 5% of the total to reflect the fact that 5% is 40% of the enhancement of 12.5%?

At present this involves relatively small sums. That will change as Fixed Recoverable Costs spread to all areas of work and to all claims up to £250,000.00.

One would have thought that the courts would apply CPR 45.40 to ex-portal fixed costs cases where CPR 45.29(C) is silent.

However in Neary & Neary v Bedspace Resource Ltd, Chester County Court, Unreported, 4 December 2015, case number B07YJ633

a Circuit Judge allowed two sets of advocacy fees where one advocate was representing the two claimants.

There the judge also considered the issue of whether the solicitors got one or two sets of fees for all the work prior to advocacy and concluded that they got a set for each claimant.

That has generally been regarded as the rule and thus the real issue was whether there was one or two advocacy fees.

The judge had this to say:-

“2.          There is no dispute that the Claimants are entitled to their costs pursuant to the regime for fixed costs set out in section IIIA of CPR Part 45. These were claims started under the Pre-action Protocol for Low Value Personal Claims in Road Traffic Accidents, but which came out of the protocol, with Part 7 proceedings leading to the case being disposed of at trial. Accordingly, pursuant to CPR 45.29B, the Claimants are entitled to the fixed costs set out under paragraph C in Table 6B to CPR 45.29B (that is to say the total of £2,655 and 20% of the damages awarded and the relevant trial advocacy fee) and disbursements in accordance with CPR 45.291.

  1. The main issue that arises is whether, on account of their [sic] being two Claimants, each Claimant is entitled to recover the fees set out in Table 6B to CPR 45.29B (as the Claimants contend) or whether the claim is to be taken as a whole, allowing only the global award of costs (as the Defendant contends). The difference that this makes to the amount of costs is that, if the Claimants’ argument is correct, they are entitled to the fixed sum of £2,655 and the trial advocacy fee twice over, whereas if the Defendant is correct, they are entitled to the fixed sum and the advocacy fee only once jointly. The 20% uplift and the disbursements would amount to the same figure on either analysis, since the 20% would apply either to each individual award of damages or to the total award of damages; and the disbursements are in any event apportioned to each case.
  1. There is nothing in Part 45 which definitively guides the Court as to which of these two interpretations is right. The term “claim” is used interchangeably in the CPR to mean an individual cause of action (see for example CPR 7.3) or a case which may comprise one or more individual causes of action (see for example CPR 19.1), so in principle either interpretation could be said to be consistent with the rules.
  1. Both parties submitted before me that the other gained something of a windfall if their interpretation was correct. Unfortunately this is the nature of fixed costs regime – the amount of costs is inevitably a broad estimate of what is reasonable rather than a reflection of the actual time involved in preparing or presenting a case.
  1. It is not self-evident to me that the potential windfall to the Claimants’ lawyers through recovering the fixed fee and the advocacy fee twice over is any less than the windfall to the Defendant from only paying the fees once. The work involved in representing two Claimants will almost certainly be more than that involved in representing one. It is likely the additional work involved would be more than would be compensated by the recovery of 20% of the damages on two Claimants rather than one (especially as that fee is not intended to cover advocacy), but it is unlikely that the additional work, whether by way of preparation or advocacy, would be twice as burdensome as the work for one client alone. Hence either interpretation of the rules presents a potential windfall to one party.
  1. In my judgement, the correct answer to this issue can be discerned from the wording of Table 6B to CPR 45.29C. It states that it deals with the fixed costs that are recoverable “where a claim no longer continues under the RTA protocol.” Under the protocol there is no possibility of including the claim of more than one injured person in on claim. The protocol provides for a claim notification form which can only relate to a single person, and throughout the protocol the assumption is that only a single Claimant is involved. Table 6B cannot in my judgement properly be interpreted to mean the costs of the claim in any more broad sense than that contemplated by the protocol, that is to say the cause of action of an individual.
  1. Accordingly in my judgement, the Claimants are each entitled to recover the fixed fee and the advocacy fee.”

However it does appear that CPR 45.40 was not spotted by either advocate, and nor by the judge, and therefore this cannot be regarded as a definitive ruling.

However Cardiff County Court has adopted the same view as Chester County Court and I am grateful to Robert Vernon of 9 Park Place Chambers in Cardiff for drawing my attention to that.

Of course there is an argument that as the Civil Procedure Rules specifically have that rule in relation to non-ex-portal matters then the very fact that there is no such rule in relation to ex-portal matters allows the court to reach a conclusion on the basis that had the Civil Procedure Rules intended the advocate to be restricted to one advocacy fee in an ex-portal case then it would have been very simple to apply the existing CPR 45.40, but they had not done so.

However I suspect that that is due to the well-known incompetence of the Rules Committee rather than any deliberate policy decision.

CPR 45.40 itself, specifically dealing with advocacy fees, reinforces the point that the preparation fee is definitely per claimant.

It could hardly be otherwise – claims settle at different stages and thus one may be resolved pre-issue, another post-issue and pre-allocation etc.

Clarification by a court which has considered CPR 45.40 in detail would be welcome.

Escape

In relation to escaping fixed fast track costs, the claimant must succeed in recovering a further 20% or more; if they fail to do so they will be liable for all of the defendant’s costs of dealing with that application. This is the same test as in relation to the existing fixed costs scheme and for all intents and purposes I expect that there will never be such an application. Remember also that even if the case is outside the portal, or is removed from the portal, and does not fall within the fixed fast track costs system any bill of costs of £75,000 or under will be subject to paper assessment and not detailed oral assessment.

If the claimant fails to achieve a further 20% then the claimant receives the lower of the sum as assessed or Fixed Recoverable Costs. (CPR 45.29K as amended by

The Civil Procedure (Amendment No.6) Rules 2013).

No doubt there will be cases which should properly be heard in the multi track, rather than the fast track, even though valued at £25,000 or less. However if this is perceived to have been done for costs reasons then the solicitor will be hit hard, the likely outcome being that as a solicitor you will be ordered personally to pay full indemnity costs to the defendant, even when the claim has been wholly successful.

Remember that personal injury cases of all kinds are subject to qualified one way costs shifting and the courts will be reluctant to move a case out of the fast track system into the multi track system when on the face of it the claimant will be at no risk of costs, and stand to gain a much higher award of costs than if the matter had remained in the fast track.
On the face of it Qualified One Way Costs Shifting applies, and so unless a Part 36 offer has been made in the assessment proceedings a claimant is free to have a go without the risk of a costs penalty. Paying parties are advised always to make a Part 36 offer in such circumstances.

Contributory Negligence

It will be seen that Fixed Recoverable Costs are very much higher than the fixed costs within the portal and this is likely to lead to fundamental changes in the way litigation is conducted by defendants.

For example, succeeding in a contributory negligence argument may cost a defendant more than admitting the claim on a full liability basis, as an allegation of contributory negligence causes the matter to exit the portal.

Take an Employers’ Liability claim worth £15,000 on a full liability basis.

If it settles at Stage 2 of the portal the costs are £1,300 giving a total payment of £16,300.

If it settles, say post-issue but pre-allocation with an agreed 20% deduction for contributory negligence, the position is:-

Damages (£15,000 – £3,000) £12,000.00
Fixed Recoverable Costs
£2,630 plus 20% of £12,000 (£2,400) £5,030
Total £17,030

In addition there will be the court fee and the defendant’s own costs. The further the matter progresses through the Fixed Recoverable Costs matrix, the greater the difference.

Part 36

It is likely that defendants will make much earlier, and more realistic, Part 36 offers, for two principle reasons:-

  • early settlement means much lower and certain claimant’s costs payable by the defendant;
  • Qualified One Way Costs Shifting means that a defendant must make a Part 36 offer to get any costs protection.

 

Damages-Based Agreement

 If acting under a Damages-Based Agreement in a personal injury matter, which at present all FRC cases are, then the indemnity principle limits you to a total of 25% of damages, INCLUDING VAT and counsel’s fees, so you will get nowhere near even Fixed Recoverable Costs.

Example

Let us take an Employer’s Liability case where £15,005 is awarded at court.

Act on an hourly rate basis, getting paid win or lose, and the proposed fixed recoverable costs (FRC) are £12,517.80 including advocacy fees and VAT.

Maximum fee (25% of £15,005) £3,751.25
Less
Counsel fixed advocacy fee including VAT                 £1,980.00
£1,771.25
Say counsel’s fee for conference, advice, etc.£1,500.00 + VAT £1,800.00
Fee to solicitor for taking risk and winning MINUS £       28.75

So you take all of the risk – and win.

Recovery is limited to £3,751.80, all of which – and more – is spent on counsel’s fees.

The defendant gets a windfall of £8,766.55 (FRC of £12,517.80 minus MAXIMUM DBA of £3,751.80).

Alternatively act by the hour and charge what you want.

Thus due to the indemnity principle, the solicitor acting for a successful claimant will only receive the contingency fee, even if recoverable costs would be higher. This point has been picked up by Master Haworth of the Senior Courts Costs Office. Speaking at the Lexis Nexis Costs and Litigation Funding Forum on 31 October 2012 he questioned what would happen in such a case, pointing out that the Legal Aid, Sentencing and Punishment of Offenders Act 2012 does not abrogate the indemnity principle and concluded that this meant that the solicitor would not be able to recover more than he would recover as a contingency fee.

Master Haworth gave as an example of a £12,000.00 personal injury case with recoverable costs of £6,000.00.

A solicitor operating under a Damages-Based Agreement would only be able to recover £3,000.00, providing the defendant’s insurer with a windfall of £3,000.00 and achieving no benefit for the claimant.

A solicitor in the same case with a conditional fee agreement and no success fee, thus totally protecting the claimant from any fees or deduction from damages would receive £6,000.00.

A solicitor with a conditional fee agreement with a success fee would receive up to £9,000.00, being recoverable fees plus a success fee capped at £3,000.00, being 25% of damages.

As Master Haworth so accurately put it:

“It makes DBAs meaningless in low-value claims,”

 

Clinical Negligence

Fixed Recoverable Costs are not yet in for Clinical Negligence cases but the NHS Litigation Authority has published a draft pilot scheme and the proposed fixed costs are set out below.

Clinical Negligence Pilot – Fixed Costs

 Fixed Fee Solicitor On Admission or Settlement  Expert Counsel – for Arbitration  Total
Stage 1Early Admission £500    
Denial £0 £0    
Stage 2No Admission

Expert Advice

£750 (stage 1 + £250) £500    
DenialBased on expert’s conclusions £0 £500 (still payable)    
Stage 3Quantum: Condition and Prognosis Report, Schedule of loss £750 £500    
Stage 3 (Offer)NHSLA Offer £300 or    
Stage 4Arbitration –          £500 (NHSLA offer beaten)

–          £0 (NHSLA offer not beaten)

£500  
Summary 

Repudiated at stage 1

Repudiated at stage 2

Admitted at stage 1 & negotiated at stage 3

Admitted at stage 1 and arbitration at stage 4

Admitted at stage 2 and negotiated at stage 3

Admitted at stage 2 and arbitration at stage 4

£0

£0

£1,550

£1,750

£1,800

£2,000

£0

£500

£500

£500

£1,000

£1,000

  

£0

£0

£0

£500

£0

£500

  

£0

£500

£2,050

£2,750

£2,800

£3,500

 

Statistics

The number and type of personal injury claims issued and for 2012/13 they are as follows:-

Total claims                         1,048,309

Comprised:

Road traffic                         749,555

Public Liability                    164,973

Employers’ Liability         91,115

Clinical negligence           16,006

Other                                    24,485

Unknown                            2,175

The above figures are taken from the Compensation Recovery Unit Performance Statistics.

It will be seen that 96.13% of personal injury cases are covered by three types of work in the FRC scheme, although obviously some are worth over £25,000.

Add in Clinical Negligence cases and on the same basis the figure rises to 97.66%.

 

Case Law

There has been little case law so far in relation to portal claims, but what there has been shows that the courts will not look kindly on claimant lawyers seeking to have cases dealt with outside the portal, and both new portals contain express provision that where a court considers that the claimant acted unreasonably in giving advice to exit the portal it will award no more than fixed costs in CPR 45.18.

This is highlighted in the case of

Ilahi v Usman, Manchester County Court, His Honour Judge Platts, 20 November 2012

In which His Honour Judge Platts stated at paragraphs 30 and 31 of his judgment:-

“30.        I am forced to the conclusion that the real reason for the claimant withdrawing her offer was to take advantage of the costs implications of bringing a Part 7 claim. Those advantages are, first, that a defendant will be under more pressure to settle since it might face a higher costs liability if he does not make an offer which the claimant accepts or fails to beat at hearing; and, second, that if the matter does go to a hearing the claimant’s solicitors will potentially recover more in costs than they otherwise would have done…

31.          In my judgment to manipulate the RTA Protocol procedure to take the claim away from stage 3 and into part 7 because of the costs implications is contrary to the spirit if not the letter of the Protocol and wholly contrary to the overriding objective. The court has developed the RTA Protocol in order to provide a speedy, certain and cost effective way of dealing with these claims.”

In the case of

Bewicke-Copley v Ibeh, Oxford County Court, 1 May 2014

the claim was submitted on to the portal and two heads of loss were agreed within the portal with the remainder being contested.

The Claimant sought to exit the portal and pursue a CPR Part 7 claim with the potential to recover costs that follow from a matter contested on the fast track and the Defendant asked the Court to award the Claimant judgment on the sums it stated had been agreed within stage 2 of the portal process, together with the fixed costs that would have followed from that agreement, and to limit any further costs recoverable by the Part 7 procedure to those that can be recovered in the small claims track.

The judge held that the heads of loss which were accepted in the portal were binding agreements and the remaining heads of loss continue on the small claims track. The judge noted:-

“31.        It defies logic and the aims and intentions of the protocol if at such point, all items that had previously been agreed were regarded as un-agreed.  If that were the case, I would expect the protocol to state this clearly.  It does not.”

Thus the fixed stage 2 portal costs were awarded in relation to the heads of loss that were agreed in stage 2 of the protocol process and the remainder of the claim was allocated to the small claims track.

In Davies and Others v Greenway, Senior Courts Costs Office, 30 October 2013, Case No JMS 1205590

the SCCO held that an order for assessment on the standard basis prevented the court from simply restricting the claimants’ costs to road traffic accident protocol amounts.

However the court was entitled to decide that those protocol amounts were the proportionate and reasonable sums without conducting a line by line assessment.

Here the claims were settled for less than £10,000 and would have been subject to RTA protocol fixed costs, but the claimants’ solicitors sent them to the wrong insurer and failed to re-submit them to the correct insurer, who had admitted liability.

Correspondence with the correct insurer produced a limited response and proceedings were issued and judgment entered with quantum to be assessed and the claims were then settled by consent, and the Consent Order provided:

“The Defendant to pay the Claimants’ costs of this action on the standard basis to be assessed if not agreed”.

The claimants’ solicitors served a bill totalling £17,430.11.  The defendant served Points of Dispute arguing that the claimant had unreasonably failed to comply and/or elected not to continue with the RTA process and its fixed costs scheme and that costs should be limited to “an amount commensurate with the costs under CPR 45 of Section VI pursuant to the express power in CPR 45.36”.

In O’Beirne v Hudson [2011] 1 WLR 17171 the Court of Appeal held that where there was a consent order for assessment on a standard basis the court could not limit the costs to those that are fixed costs for the small claims track.

The defendant argued that the same difficulty does not arise in the RTA protocol as CPR 45.36 expressly provides that the court can limit costs to RTA protocol amounts.

The claimants argued that the consent order was binding and that the defendants were seeking to re-write it, and that pursuant to

Solomon v Cromwell [2011] EWCA Civ 1584

an award of fixed costs cannot constitute a standard basis of assessment.

The court held that CPR 45.36 did not apply; the defendant had consented to an order for detailed assessment on the standard basis and that is a contract that the court had no power to vary.  The Master said that even if he was wrong about that he bore in mind that the power set out in CPR 45.36 is discretionary and not mandatory.

At the detailed assessment the Costs Judge is obliged to have regard to all the circumstances in deciding whether the costs were proportionately and reasonable incurred or were proportionate and reasonable in amount.  The Costs Judge must also have regard to the conduct of the parties including in particular the efforts made, if any, before and during the proceedings in order to try and resolve the dispute.

The Costs Master then quoted at length from the Cambridge County Court decision of 13 January 2011 in Smith v Wyatt.

 In that case the claimants sought permission to appeal to the Court of Appeal and at a permission hearing [2011] EWCA Civ 941, Lord Justice Moore-Bick stated:

“10.        It is the function of the Costs Judge to determine whether costs have been reasonably and necessarily incurred and if he can see that a particular course of conduct has led to a group of costs being incurred unnecessarily , he is entitled to say that and need not to consider each item individually.  In my view the argument to the contrary is not really sustainable”.

The original Cambridge County Court judgment, approved by the Court of Appeal, contained the following passage, quoted by the Costs Master here:

“13.        The essential test that emerges from O’BeIrne and Drew appears to me to have two elements, one of substance and one of process.

(a)    In substantive terms, the test to be applied on a detailed assessment when this problem arises is:

whether it is reasonable for the paying party to pay more than would have been recoverable had the relevant alternative regime applied.

(b)   In process terms, what is important is that the Costs Judge always bears in mind that he is both conducting a detailed assessment and applying the test at (a) above.  If he does so, and having done so concludes that it was not reasonable to take the case out of the alternative regime and hence not unreasonable to incur the extra costs that flow from that unreasonable decision, he will have remained within his proper discretion.  If he does not do so, but simply concludes that the case ought really to have been (say) a small claim and therefore that the regime automatically and comprehensively applies, regardless of reasonableness one way or the other, he will have stepped outside of his discretion and in effect re-written the costs order he is supposed to be applying”.

The Costs Master here said “…..it is important that I form a view on the issue of proportionality”.  That view was that the costs were disproportionate.

Furthermore the claimants’ failure to comply with the RTA protocol led to disproportionate costs being unreasonably and unnecessarily incurred.

Having found disproportionality the Costs Master said that it was open to him to go through the bill on an item by item basis but that, following Smith v Wyatt, he was not obliged to do so.

Had the claimants acted reasonably by re-serving the CNF on the correct insurer they would only have been able to recover RTA protocol costs.  It would be unjust to allow them to recover more and thus benefit from their unreasonable conduct.

Thus although the consent order required the court to carry out a detailed assessment the court was entitled, in that detailed assessment, to limit costs to RTA protocol costs and that was the order of the Costs Master.

In Uppal v Daudia LTLPI 9 July 2012

the defendant successfully argued that the claimant had unreasonably removed the case from the portal.

This resulted in the claimant failing to recover over £20,000 in costs claimed and being ordered to pay the defendant’s costs on an indemnity basis.

The claimant had argued that it was entitled to remove the claim from the portal because the defendant had not made an offer in response to the claimant’s counter-offer within the total consideration period.

The Judge held that there was no such requirement and that the defendant was only required to respond to the claimant’s first offer within the initial consideration period.

The defendant was awarded indemnity costs for having to defend unnecessarily Part 7 proceedings and the claimant was denied its claimed costs of over £20,000.

In Jaykishan Patel v Fortis Insurance Ltd LTL 11 January 2012 (2011)

the defendant successfully argued that technical non-compliance with the portal was not a ground for a claimant to remove a case from the portal and recover Part 7 costs.

Here the defendant had used the A2A system to access the portal, which was unable to send acknowledgements of Claim Notification Forms, contrary to paragraph 6.10 of the portal protocol.

However within 48 hours the defendant had responded with the Full Insurer Response, accepting the claim and admitting responsibility.  On the same day the claimant removed the matter from the portal.

The court held that this was not a ground for removal and that the claimant’s conduct was unreasonable.  Parties should not lightly remove claims from the portal and should never do it on technical grounds.

Once a party had communicated its decision not to continue with the portal process then that process was at an end and the parties were not at liberty to resume it, even if Part 7 proceedings had not been commenced and even if the case was still physically in the portal.

Here the claimant was restricted to CPR 45.36 portal costs, compared with a Part 7 costs schedule claiming over £16,000.  The defendant was awarded some of its costs of defending the claim, reflecting costs that would not have been incurred had the matter remained in the portal.

What is a disease?

The new EL and PL protocol, in the definition section at 1.1(12) states that “disease claim” means a claim within sub-paragraph (14)(b), that is:-

“a disease that the claimant is alleged to have contracted as a consequence of the employer’s breach of statutory or common law duties of care in the course of the employee’s employment, other than a physical or psychological injury caused by an accident or other single event;”

As disease claims go straight from the portal to open, standard costs, rather than entering the Fixed Recoverable Costs scheme, the definition is important.

There have already been a number of relevant cases as the question is also important in relation to the old fixed success fee scheme, which lives on in relation to conditional fee agreements entered in to on or before 31 March 2013.

In Patterson v Ministry of Defence [2012] EWHC 2767 (QB) [2012 All ER (D) 127 (Oct)

the Queen’s Bench Division of the High Court held that symptoms arising from exposure to cold weather did not constitute a disease, but rather an ordinary employers’ liability claim.

Mr Justice Males states that to use the dictionary definitions of “disease”:

“would be to expand the concept so far that the exception (“disease” within Section V of CPR 45) would leave far too little scope for the basic rule in Section IV to operate. That cannot be right.” (Paragraph 33).

Mr Justice Males goes on to state that the definition of “disease” in paragraph 2.2 of the Pre-Action Protocol for Personal Injury Claims does not apply as this definition was there for the draftsman of CPR Part 45 to use but they did not.

Such injuries are known as non-freezing cold injuries. The court’s reasoning was that as such injuries were not caused by any virus, bacteria, noxious agent or parasite they were not a disease.

In Fountain v Volker Rail Limited, 24 August 2012, Central London County Court

His Honour Judge Mitchell, sitting with Master Hurst of the Senior Courts’ Costs Office, held that exacerbation of a pre-existing condition was an injury and not a disease.

This was an appeal from the first instance decision of Master Haworth of the Senior Courts’ Costs Office.

Modern medical opinion means that Noise-Induced Hearing Loss, traditionally treated by the law as a disease, may in fact be an injury.

The same is true in relation to Hand/Arm Vibration Syndrome.

For an interesting article on this issue see Andrew Hogan’s blog NIHL and HAVS: Not diseases after all?

 

Children

CPR 45.21(2) provides that where the court approves the settlement at a settlement hearing the defendant shall pay Type C costs (£150 plus VAT) as well as other costs and disbursements.

A settlement hearing is essential in all cases involving children, whatever the value and whatever the procedure.

From the reports that I am getting judges are refusing to allow deductions from children’s damages to fund the success fee/solicitor and own client costs. This raises the issue of whether anyone will act for children in portal/Fixed Recoverable Costs cases where the recoverable fees are unprofitable.

Note also that while the portal and the Fixed Recoverable Costs Scheme allow for an additional fee in relation to a matter involving a child there appears to be no provision for such an additional fee if the matter is settled after exiting the portal but before proceedings are issued.

There appears to be nothing to stop a claimant issuing proceedings while the matter is still in one of the portals, provided that the appropriate time has expired since lodging the Claim Notification Form, which stands as the Letter of Claim.

Claimants may wish to do this in children cases to avoid the lacuna whereby no additional fee is payable in a child case where the matter has exited the portal but not yet been issued.

NEW PROTOCOLS AND PART 36

 CPR 36.21 envisages three scenarios in relation to costs consequences following a Stage 3 hearing:

  • where the claimant fails to beat the defendant’s protocol offer then the claimant must pay the defendant’s Stage 3 costs as well as not recovering its own Stage 3 costs;
  • where the claimant beats the defendant’s offer but does not match its own offer the defendant pays the claimant’s Stage 3 costs;
  • where the claimant beats the defendant’s offer and matches or beats its own offer the defendant pays:
  • the claimant’s Stage 3 costs;
  • interest on those Stage 3 costs at a rate not exceeding 10% above base rate;
  • 10% additional damages;
  • interest on all damages at a rate not exceeding 10% above base rate running from the first business day after the court proceedings pack (part A and part B) was sent to the defendant.

FIXED RECOVERABLE COSTS AND PART 36

 Section 1 of Part 36 remains in force for non-protocol cases and also applies to cases which exit either of the protocols.

A new CPR 36.10A provides that where a claimant accepts a Part 36 offer within the relevant period the defendant will pay the claimant’s costs up to the stage reached when the offer is accepted.

This is clearly open to abuse.   A defendant makes an offer which the claimant intends to accept but during the 21 day acceptance period another stage is due to be passed.  The claimant delays acceptance thus triggering an additional fee as the next stage is passed.

Where a defendant’s Part 36 offer is accepted after the relevant period the claimant gets the appropriate fixed costs applicable at the date of expiry of the relevant period, and the claimant pays the defendant’s costs from expiry to acceptance.

It appears, although the rules are far from clear, that the defendant’s costs, from expiry of the Part 36 to the date of acceptance, are capped by reference to fixed recoverable costs. The defendant’s fixed recoverable costs are dealt with by CPR 45.29F which states that if a Part 36 offer is accepted out of time then costs are determined under CPR 36.10A.

CPR 45.29F(2) states:-

If, in any case to which this Section applies, the court makes an order for costs in favour of the defendant—

(a)    the court will have regard to; and

(b)   the amount of costs order to be paid shall not exceed,

the amount which would have been payable by the defendant if an order for costs had been made in favour of the claimant at the same stage of the proceedings.

In addition CPR 36.10A(10)(b) states that where a court orders costs to be paid to the defendant those costs must not exceed the level of the relevant fixed recoverable costs.

Where a claimant accepts the defendant’s protocol offer after the claim has exited the portal the claimant gets Stage 1 and 2 costs but pays the defendant’s costs from expiry to acceptance.

Judgment

 A new CPR 36.14A deals with the position on judgment, rather than acceptance of an offer, but the principles are exactly the same, save that the claimant who matches his or her own offer at trial gets indemnity costs, not fixed recoverable costs, from the date of expiry of the period for accepting the offer.

Defendants’ costs are capped, not fixed, by reference to the level of the claimants’ fixed recoverable costs.

Website

A useful website in relation to portal claims is that of barrister Sarah Robson at

http://www.sarahrobsonbarrister.co.uk/Reported-Cases.html

Written by kerryunderwood

July 31, 2013 at 3:36 pm

Posted in Uncategorized

DBAS – CAN YOU CHARGE DISBURSEMENTS?

with 4 comments


With massive employment tribunal fees coming in and with it being compulsory to have a Damages-Based Agreement if acting on a no win no fee basis in such cases the issue of disbursements under a DBA is crucial.

It is unclear whether the Regulations allow the solicitor to charge the client

– disbursements in the event of defeat;

– disbursements, excluding counsel’s fee, over and above the maximum of 25% in personal injury cases and 50% in civil cases.

It would be difficult to make the Regulations any harder to understand.

On the face of it the charge made to the client, including disbursements, is capped at a percentage of monies “ultimately recovered by the client” (Regulation 4(2)(b), (personal injury), 4(3) (civil), and 7 (employment).

So, no recovery no disbursements as any percentage of £0 is £0 and no charge to the client for unrecovered disbursements, classically an after-the-event insurance premium, over and above the maximum percentage.

However it is not as simple as that.

Regulation 4(1) reads:

“(1) In respect of any claim or proceedings, other than an employment matter, to which these Regulations apply, a damages-based agreement must not require an amount to be paid by the client other than –

(a) the payment, net of

(i) any costs (including fixed costs under Part 45 of the Civil Procedure Rules 1998);

(ii) where relevant any sum in respect of disbursements incurred by the representative in respect of counsel’s fees,

that have been paid or are payable by another party to the proceedings by agreement or order; and

(b) any expenses incurred by the representative, net of any amount which has been paid or is payable by another party to the proceedings by agreement or order”.

Thus (b) is unrecovered disbursements, but disbursements do not include counsel’s fees, which are regarded as core costs forming part of the agreed percentage.

Thus if 20% was agreed in a personal injury matter settling for £100,000, then counsel’s fees MUST be included within that 20% and if there were unrecovered disbursements of up to £5,000 then these could be charged as there is £5,000 spare before the overall 25% cap of £25,000 is reached.

The issue is whether, in a case where the figure is 25%, including by law counsel’s fees, the solicitor can charge extra for unrecovered disbursements, The logic is the same if the case is lost – 25% of nothing is nothing, but can the solicitor charge extra for unrecovered disbursements?

The key factor is the use of the word “payment” which appears to be used as a noun, with a specific, statutory meaning as set out in Regulation 1(2), rather than meaning the overall sum paid, which is its obvious, natural English use.

The statutory definition of “payment” appears in Regulation 1(2).

“payment” means that part of the sum recovered in respect of the claim or damages awarded that the client agrees to pay the representative, and excludes expenses but includes, in respect of any claim or proceedings to which these regulations apply other than an employment matter, any disbursements incurred by the representative in respect of counsel’s fees.

Pick the bones out of that.

What that appears to mean is that a solicitor can charge the maximum percentage as a “payment” AND charge non-counsel unrecovered disbursements on top and that the references in Regulation 4(2)(b), Regulation 4(4) and Regulation 7, to a percentage capped “payment” is indeed a reference to the statutory definition of a “payment”, rather than a reference to, er, well, a payment.

Presumably the letter to the client must read:

“Please make payment of 25% of the damages. In relation to the after-the-event insurance premium please do not make payment, but rather give me cash, a cheque, a debit or credit card non-payment”.

I am slightly reinforced by this view by the use of the phrase “must not require an amount to be paid other than” in regulation 4(1) BEFORE, and applicable to, both the concepts mentioned in Regulation 4(1)(a) and 4(1)(b).

The situation is the same for employment matters except that there counsel’s fees are specifically treated as a disbursement and so can definitely be charged on top of the agreed contingency fee, provided that the total is within the 35% maximum.

However it is clear (as mud) from what I have said above that my view is that in an employment matter you can charge disbursements AND counsel’s fees over and above the 35%.

So that is that then. Well not quite. The “Explanatory” Notes to the Regulations are anything but.

Take this:

“DBAs are a type of ‘no win, no fee’ agreement under which a representative ……….can recover agreed percentage of a client’s damages if the case is won (“the payment”), but will receive nothing if the case is lost”.

Does “nothing” mean that the client will pay “nothing” or that the solicitor will get no financial benefit?

Thus a client pays the new Employment Tribunal fee of £1,200 and the case is lost. The solicitor has had the money to pay the fee, but has paid it out and so, arguably, has received “nothing”.

Imagine the following dialogue:

Client: “I have sent you £1,200 for the court fees”

Solicitor (who has got that £1,200): “I have received nothing from you”.

In relation to employment matters the Explanatory Notes say:

“Regulation 7 provides for the maximum amount that is payable to the representative from a client’s damages under a DBA in respect of an employment matter, so that the amount of the payment, including VAT, must not be greater than 35% of the sum ultimately recovered by the client in the claim or proceedings”.

Now, Explanatory Notes do not form part of the Regulations and were clearly written by someone who has no knowledge of the law, but “maximum amount that is payable” takes the definition beyond the statutory one of “payment” (Even the headnote is wrong “(This note is not part of the Order)” – these are Regulations, not an Order.

On balance I believe that disbursements are chargeable over and above the agreed contingency fee.

Contingency fees are simple and valuable. Damages-Based Agreement are amongst the worst ideas in history. Hence Don’t touch with a BArgepole.

Written by kerryunderwood

July 24, 2013 at 12:45 pm

Posted in Uncategorized

PATENTS COUNTY COURT AND CAPPED COSTS

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PATENTS COUNTY COURT
CAPS
Patents County Court cases are subject to costs caps of £50,000 on the final determination of liability and £25,000 on an inquiry as to damages or account of profits.

In Azzuri Communications Limited v International Telecommunications Equipment Limited trading as SOS Communications [2013] EWPCC 22, 16 April 2013

the successful claimant argued that as the trial included a determination of liability and a decision on quantum he was entitled to £75,000, being the sum of both caps.

The court disagreed, holding that where there was only one set of proceedings with one trial then only one cap, that of £50,000 applied. The rules only contemplated separate caps if there were separate proceedings.

 

PATENTS COUNTY COURT
CONDITIONAL FEE AGREEMENTS

In Jodie Henderson v All Around The World Recordings Limited [2013] EWPCC 19, 27 March 2013

the claimant had entered into a conditional fee agreement with her solicitor and had taken out after-the-event insurance.

The issue was whether those recoverable additional liabilities came within the cap, or were in addition to it.

The court held that “costs” included additional liabilities, both within the cap and by reference to scale costs and therefore no additional liabilities were recoverable.

Written by kerryunderwood

July 24, 2013 at 11:28 am

Posted in Uncategorized

Mental Capacity and Conditional Fee Agreements: Problem solved

with 6 comments


A contract between a patient lacking capacity and his solicitor is generally a voidable, not void contract, and while it is sensible to ensure that both the claimant/patient and the litigation friend sign any conditional fee agreement, making them jointly and severally liable under the agreement, it is not fatal to the agreement if only the claimant/patient has signed.

Any challenge by a paying party that the conditional fee agreement is void as between solicitor and client should fail.  Of course if the contact is void then due to the indemnity principle there is no liability on the paying party for costs.

In the case of contracts other than for necessaries, the general rule is that a person who is lacking mental capacity is bound by his contract unless he can show both that the lack of capacity meant that he did not understand what he was doing and that the other party was aware of the lack of capacity.

If the patient can satisfy these two conditions, then the contract is voidable at his option.

This rule was laid down in

Imperial Loan Co Ltd v Stone (1892) 1 QB 599 where the court said:

“When a person enters into a contract and afterwards alleges that he was so insane at the time that he did not know what he was doing, and proves the allegation, the contract is as binding on him in every respect, whether it is executry or executed, as if he had been sane when he made it, unless he can prove further that the person with whom contacted knew him to be so insane as not to be capable of understanding what he was about”.

“The validity of a contract entered into by a lunatic who is ostensibly same is to be judged by the same standards as a contract by a person of a sound mind, and is not voidable by the lunatic or his representatives by reason of unfairness unless such unfairness amounts to equitable fraud which would have enabled the complaining party to void the contract even if he had been sane.

This view was confirmed more recently in

Special Trustees for Great Ormond street v Ruskin and Others, High Court, 19 April 2000.

Assuming that the solicitor entering into the conditional fee agreement was aware of the client’s lack of capacity, then the contract is potentially voidable, but not void.

However, even assuming that the paying party can establish that the claimant lacked capacity to enter into a conditional fee agreement, the contract is still binding upon the claimant/patient but potentially voidable at his or her election.

This paying party has no standing to interfere with that legal position and has no power to argue that the claimant/patient should be required to void the contract.

In Forde v Birmingham City Council [2009] 1 WLR 2732

the court was considering the status of a potentially voidable conditional fee agreement retainer where undue influence was alleged.

There, the court said:

“But an agreement obtained by the exercise of undue influence is voidable, not void.  It remains in effect unless the person influenced seeks to set aside the contract and the court allows her to do so; such relief may be given on terms, eg as to payment of a reasonable sum for services actually rendered:

Johnson v EBS Pensioner Trustees Ltd [2002] Lloyds Rep PN 309, paragraphs 76-80 and O’Sullivan v Management Agency and Music Ltd [1985] QB 429.  There is no evidence that Miss Forde had done anything to avoid CFA2.  On the contrary she has consented to these proceedings being brought by McGrath on her behalf.  What the council cannot do is to purport to avoid CFA2, to which it is not a party, on her behalf and in defiance of her wishes; nor is the court required to proceed on the basis that she has avoided it when she has not”.

Thus a conditional fee agreement made with a patient, and which has not been voided by the patient, remains enforceable and thus the paying party is bound to meet any costs order within the indemnity principle and has no standing to challenge the validity of the conditional fee agreement.

Contract for necessaries

 There is a strong argument that a conditional fee agreement to pursue a lawsuit is a contract for necessaries; such contracts have always been treated differently.

Section 7 of the Mental Capacity Act 2005 provides that if necessary goods or services are supplied to a person who lacks capacity to contract for them that person must nevertheless pay a reasonable price for them.

“Necessary” means suitable to a person’s condition in life and actual requirements at the time when the goods or services are supplied.  The Mental Capacity Act 2005 provides an explanation of lack of capacity which is very much the same as that previously applied by the courts.

Ratification

 A person who lacks mental capacity at the time of entering into a contract, thus rendering it potentially voidable, may nevertheless be bound by it if he ratifies it after recovery, or during an interval where he has the capacity to ratify the contract.

Ratification can be express or implied by conduct, including by acquiescence or inactivity, and there is an overlap with the doctrine of estoppel.  Clearly a client who continues to give a solicitor instructions is impliedly, if not expressly, ratifying the contract, which in personal injury wok will almost invariably be a conditional fee agreement.

Ratification is different from novation.

Thus the action of acting for a patient under a conditional fee agreement should not of itself cause any difficulties over and above those involved anyway in such cases.

I am grateful to Andrew Hogan, Costs Barrister, for much of the material relating to capacity

 In Dunhill v Burgin [2012] EWCH 3163 (QB)

the issue was whether CPR 21.10 applies where it was not known that the claimant lacked capacity and a case was settled at the door of the court.

CPR 21.10 provides in uncompromising terms that no settlement of any kind involving a protected party is valid without the approval of the court.

Here the claimant’s personal injury claim was settled on the day of trial and the settlement was mentioned to the judge and a consent order approved, but sometime later it emerged that the claimant had been a patient within the meaning of the Mental Health Act 1983 and, now acting with a Litigation Friend, she issued negligence proceedings against her former solicitors and counsel.

She also issued an application for a declaration that she had not had capacity to enter into the original purported settlement. Thus the court had to consider whether CPR 21.10 applied where the claimant had brought a claim in breach of CPR 21.2 and thus had asserted to the court and to the defendant that she was not under a disability.

It held that it did.  Thus a party who lacks capacity to conduct litigation is protected even though he or she has not been officially declared as lacking capacity and the rule applies whether or not the party is legally represented.

Written by kerryunderwood

July 11, 2013 at 12:55 pm

Posted in Uncategorized

DBAs AND COSTS BUDGETING: CURIOUSER AND CURIOUSER

with 9 comments


The Civil Procedure Rules dealing with costs management and costs budgeting are entirely silent on the interplay with Damages-Based Agreements (DBAs).

I simply have no idea how a solicitor acting under a DBA is meant to prepare a costs budget.

There are at least three options, the apportionment one and the ordinary one, and the fixed fee one.

Let us take a case worth £100,000 with a DBA with a figure of 50% of damages recovered as the fee, that being the maximum allowed in a non-personal injury or non employment matter.

Thus the maximum fee is £50,000.  For simplicity’s sake let us assume ten relevant sections of Form H and where the solicitor estimates the costs of £10,000 for each stage, but knowing that, due to the indemnity principle, no more than £50,000 can ever be recovered.

One approach – the apportionment one – is for the solicitor to halve each component, so that although the court may have awarded £10,000 for pre-action work, the solicitor will only be able to claim £5,000.  That would be unwise as obviously the claim may settle before £50,000 worth of between the parties costs have been incurred, so why artificially limit yourself to less than that sum?

By putting in the full amount the solicitor will get paid the correct sum if the case settles within the first five stages.  Of course it means that if the case goes beyond Stage 5 the solicitor is earning nothing, but that is the reality anyway – once the solicitor has done work equal to half of the damages he or she is working pro bono.

Furthermore if the apportionment method is used one’s own client has an obvious complaint against the solicitor.  Let us assume that the case settles at the end of Stage 5 and thus the solicitor, limited by the costs budget, receives £25,000 from the losing side and charges the client the balance of £25,000.  The client has every right to point out that he is £25,000 out of pocket compared with the situation if the solicitor had put the full, arguably correct, sum in for each stage.

An alternative is to put the full sum in for each stage, accepting that however much that comes to the actual recoverable costs will never exceed £50,000.

Obviously it would be entirely wrong artificially to front load costs to ensure maximum between the parties costs whenever the matter settles……….

The third option is to state that whatever stage the case reaches the fee is a sum equivalent to 50% of the damages and that that is the sum sought from the other side.  I advise against this as generally the judiciary are wedded to hourly rates, in spite of the clear will of Parliament that other funding options should be available.  Strictly, in my view, this is the correct option.  The client is paying a fixed lump sum and the indemnity principle means that the claimant solicitor should neither seek £5,000 or £10,000 for any given stage as the client is not liable for any sum for any given stage.

What seems to me to be crystal clear is that a claimant who matches or beats its own Part 36 offer at trial gets the full 50% DBA fee, that is he or she gets costs on the indemnity basis.

The solicitor and own client costs are unquestionably 50% and thus costs on the indemnity basis are 50% of damages.

A paying party has no prospect of arguing that a method of payment approved by Parliament, with Parliament fixing the maximum percentage, is unreasonable.

A matter is approaching trial. The costs budget, regularly updated, shows that the winning claimant’s costs will be £300,000 on £1 million claim.

Can the claimant and solicitor switch to a 50% DBA, thus triggering costs of £500,000 if the claimant’s Part 36 offer is matched?

Yes, in my view, and there is nothing to stop parties entering in to a DBA at any stage. In all cases there will have been some investigative work before a DBA is entered in to.

Supposing, very early on in a DBA case a claimant succeeds in obtaining summary judgment with an order for indemnity costs. The same principle applies, that is a sum equal to 50% of damages for what may have been relatively little work, all fully recoverable.

 

Costs Management and Budgeting and Damages-Based Agreements

Supposing, in a personal injury case funded by a DBA and with costs limited to 25%, including VAT, of damages, the claimant puts in a high costs budget and subsequently the defendant finds out that the matter is being conducted under a DBA and therefore the maximum that they would ever be liable for, including costs, is 125% of damages.

Could a defendant, having fought the matter to trial, argue that if it had known that the matter was conducted under a DBA it would have settled much earlier as it would know the limit of their costs?

Suppose in a DBA case the claimant has made an offer under Part 36 to settle the whole claim for, say £100,000, and that offer remains open; is it acceptable for the claimant to put in a budget of say, £75,000, knowing full well that s/he is valuing the claim at a sum which will result in far lower costs, a matter that the defendant cannot refer to at that stage because of the Without Prejudice nature of a Part 36 offer?

Can the defendant subsequently argue that if they had known that the claimant was acting under a DBA, then they would have accepted the Part 36 offer, knowing that the claimant’s costs would be limited to 25% in personal injury cases and 50% in all other cases, including VAT and counsel’s fees?

An obvious answer is to amend the Civil Procedure Rules to provide that a claimant should notify the defendant within seven days of the signing of a DBA that the matter is being conducted under a DBA.

Even these scenarios are not clear. A personal injury claimant, knowing full well that the full value of the claim is £100,000 may nevertheless want the costs budget to give a figure of well over £25,000 as the court might decide to make an award based on the claimant getting only 50% of budgeted costs because s/he has exaggerated.

Arguably the correct order is to still allow the claimant’s lawyer the full 25%. Thus damages are in fact £100,000 where the claim was for £500,000, and the court penalizes the claimant to the extent of 50% because of this exaggeration.

Let us assume that the agreed budget was £50,000. 50% of that is £25,000 and the claimant therefore recovers costs of £25,000, which is the maximum that s/he could have recovered in any event under a DBA.

These are yet more another reasons why DBA means Don’t Touch with a Bargepole, although if you are a claimant you may fancy a late switch to a DBA.

Thank to Simon Gibbs – http://www.gwslaw.co.uk/blog/ – for drawing the general issue to my attention.

It would be so nice if something would make sense for a change

Alice in Wonderland – Lewis Carroll

Written by kerryunderwood

July 10, 2013 at 2:57 pm

Posted in Uncategorized

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