IS A £1 MILLION EX-PORTAL CLAIM SUBJECT TO FIXED COSTS?
Before any claim is placed on any portal a senior lawyer should review it. Here are some reasons why. Non personal injury lawyers need to start getting to grips with portal and fixed costs concepts, which are not always straightforward.
A claim is placed on the portal and it subsequently becomes apparent that damages on a full liability basis exceed £25,000.00 but contributory negligence is almost bound to reduce it below that sum. Let us assume that it becomes apparent that the claim is £48,000.00 on a full liability basis but there is likely to be a finding of 50% contributory negligence.
By paragraph 1.2 (1) (a) of the RTA Portal, £25,000.00 is the “Protocol Upper Limit” if the accident occurred on or after 31 July 2013 and that is on a full liability basis, including pecuniary loss but excluding interest. Vehicle damage does not come within that limit but I will park that issue J. In the EL/PL Portal, the relevant provision is paragraph 4.1(3).
By paragraph 4.3 of the RTA Portal “This Protocol ceases to apply where, at any stage, the claimant notifies the defendant that the claim has now been revalued at more than the Protocol Upper Limit.” Paragraph 4.2 of the EL/PL Portal is in identical terms.
Thus if the solicitor notifies the defendant accordingly the matter exits the Portal.
Under paragraph 6.15(1) of the RTA Portal the claim will no longer continue in the Portal if the defendant makes an admission of liability but alleges contributory negligence (other than in relation to the claimant’s admitted failure to wear a seatbelt). Paragraph 6.13 (1) is the relevant part of the EL/PL portal..
Assuming the matter exits the Portal the issue is which cost regime applies, Fixed Recoverable Costs or open costs?
The figures in the Tables under the CPR refer to the amount that the case settles for, not the amount claimed, so a claim exiting the Portal and settling for £24,000.00 does indeed result in fixed costs under the Table.
A case being allocated to the Multi-Track does not dis-apply Fixed Recoverable Costs. That is clear from the rules and was upheld by Birmingham County Court in Qader & Ors v Esure Services Ltd  EWHC B18 (TCC) (15 October 2015).
Please note that this decision has been appealed to the Court of Appeal and is currently awaiting a hearing date in that court.
Below is the relevant section of the judgment of His Honour Judge David Grant in that case which sets out the law succinctly and accurately. This begs the question of whether CPR 45.29A means that whenever a claim is started under the RTA Protocol it will forever be subject to Fixed Recoverable Costs as set out in Section IIIA of Part 45, although that part itself does give the power to the court to allow an escape from fixed costs.
Supposing a claim is started in the portal but it becomes clear that it is worth £1 million. It exits the portal and is allocated to the Multi-Track and is ultimately listed for a 10 day hearing. Does that remain subject to fixed costs? The answer appears to be yes, although again one would expect the court to operate the escape clause.
At paragraph 2 of his judgment in the Qader case His Honour Judge David Grant said:-
“The key issue raised in the appeal is whether, on a proper construction of the relevant provisions of the CPR, a fixed recoverable costs regime now applies to low value personal injury claims arising out of a road traffic accident, which start under the RTA Protocol but no longer continue under that Protocol or the Stage 3 Procedure, and instead proceed on the multi track.” (My italics)
There is reference there to “low value” but that is not how the rest of the judgment reads.
Indeed, does it not make sense that an ex-portal claim where liability, but not quantum, is admitted or where the argument is between say £40,000.00 and £50,000.00 should be subject to Fixed Recoverable Costs in a way that a fully contested £25,000.00 matter would be?
Given the escape clause why should not any ex-portal matter be subject to Fixed Recoverable Costs?
What happens if lawyers judge the claim to be worth well in excess of the portal maximum and so proceedings are issued without going through the portal procedure but the matter is subsequently settled for £25,000.00 or less, or the court orders that sum.
Is the court then free to restrict the claimant’s costs to Fixed Recoverable Costs?
the court specifically dealt with fixed costs. That was an RTA claim for £1,475.00 at full value but with 50% contributory negligence meaning that the actual agreed damages were £737.50 and thus below the minimum cost bearing limit of £1,000.00. At paragraph 27 the judge considered the term “agreed damages”;
“The term “agreed damages”, used in CPR 45.7(2)(d), is not defined in the rules. In the absence of particular definition, words should be given their usual meanings. It seems to me that the usual meaning of “agreed damages” is the amount of compensation which the parties have agreed should be paid. It is not the value of the claim before any deduction for contributory negligence. That would be an artificial meaning.”
Consequently it was held that the claim fell outside the Fixed Recoverable Costs scheme, as the damages were under £1,000.00 and therefore it was not cost bearing at all.
Where a solicitor chose to put the matter in the Portal the court would be entitled to award Fixed Recoverable Costs on the basis of £24,000.00, which is within the Fixed Recoverable Costs Scheme Upper Limit. Otherwise everyone could issue in the portal but if the matter does not settle exit on the basis of over £25,000 and then in fact settle for£15,000 or whatever and claim open costs.
Whether a court could properly exercise its discretion in costs so to do if the matter had never been in the Portal, because it is nearly double the Portal limit, is an interesting question.
There does seem to be a dichotomy between the fact that it is the full value, without taking into account contributory negligence, in the Portal but the settled value, which clearly does include taking into account contributory negligence, which forms the basis of quantum for Fixed Recoverable Costs.
What Fixed Recoverable Costs?
If the case is subject to Fixed Recoverable Costs, because it was once in a portal, but it settles for £50,000.00, what costs are payable?
Table 6 is not entirely clear. In relation to pre-issue work for both portals it has three value bands, £1,000.00 to £5,000.00, £5,001.00 to £10,000.00 and £10,001.00 to £25,000.00. That suggests that Fixed Recoverable Costs cannot apply to a pre-issue settlement of over £25,000.00.
However there is no such limit in relation to the next three categories, that is:-
- issued – post-issue pre-allocation
- issued – post-allocation pre-listing
- issued – post-listing pre-trial
For the difficulties with these categories please see my blog DISPOSAL HEARINGS: WHICH FIXED COSTS ARE PAYABLE?
Neither is there any such limit in relation to the final column of Table 6, that is trial advocacy fees.
If a road traffic accident matter settles post-issue then the structure of Fixed Recoverable Costs is that there is a fixed fee that increases through the stages, that is it is £1,160.00 for the first stage rising to £1,880.00 for the second stage and £2,655.00 for the third stage.
In addition, whatever stage has been reached, there are additional recoverable costs of 20% of damages. Thus the Fixed Recoverable Costs on a £50,000.00 matter settled just after issue would be £11,160.00 plus VAT and court fees etc.
Might we have the irony of a claimant lawyer arguing that Fixed Recoverable Costs apply and a defendant lawyer seeking to invoke the escape clause?
A claim is submitted in the Public Liability Portal but the defendant denies liability and blames its sub-contractors. What happens?
The possibility of more than one defendant does not of itself cause the matter to drop out of the portal; that only applies in industrial disease cases – see EL/PL 4.3 (6).
If there has been a denial of liability then the matter no longer continues in the portal- see EL/PL 6.13. (3) which provides that if the defendant does not admit liability within 40 days in a PL matter (6.11 (b)) then it no longer continues under the portal.
By virtue of EL/PL 5.11 claims which no longer continue under the Protocol cannot re-enter it.
Consequently the matter is out of the portal and cannot go back in and must proceed in the usual way with a letter of claim against the sub-contractors and proceedings issued if appropriate.
What costs regime then applies – Fixed Recoverable Costs or open costs? On balance my view is Fixed Recoverable Costs as the matter, albeit now with additional parties, is ex-portal.
However if the claimant decides not to proceed against the original defendant, but rather only against the sub-contractor, then that goes into the portal as that particular matter would never have gone into the portal, and obviously could never have dropped out.
Supposing the claimant issues against both and then discontinues, or even does not serve the original defendant. That is then a claim against the sub-contractors only which could not have been issued in the portal and is now not ex-portal in relation to the remaining parties. Do open costs apply?
I say above that on balance I think Fixed Recoverable Costs apply. Supposing the court allocates the matter to the Multi-Track because of a multiplicity of the defendants, then the matter against the sub-contractors will never have been in the portal and will be in the Multi-Track. The court might decide that Fixed Recoverable Costs do not apply.
In either of these scenarios that would leave, in costs terms, the claimant who had made a mistake by failing to issue against the sub-contractors initially, in a better position than the solicitor who had got it right and issued the whole claim in the portal and thus bound her or himself forever to Fixed Recoverable Costs.
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