Kerry Underwood

WHAT FIXED COSTS ARE PAYABLE WHEN DIFFERENT PARTS SETTLE AT DIFFERENT STAGES?

with 12 comments


Suppose for example the vehicle damages aspect of a claim is settled for £2,000.00 out of the portal but pre-issue and the general damages claim settles for £5,000.00 post-allocation.

 

The fee for a matter settled post-allocation is £1,880.00 as the core fee plus 20% of damages. Thus in that example is it 20% of £7,000.00, being the total of the settlement sum, or is it 20% of £5,000.00 being the sum settled at that stage?

 

A case settled pre-issue for between £1,000.00 and £5,000.00 attracts a fee that is the greater of £550.00 or £100.00 plus 20% of damages.

 

Thus in the example given a fee for settlement of the £2,000.00 element pre-issue would be £550.00 as that is the minimum, but arguably the claimant has then effectively got two core fees.

 

In that particular example the claimant would receive more costs because part of the claim was settled early. That seems to make little sense.

 

Examples:-

 

Fee payable
In relation to the settlement pre-issue of £2,000.00, the fee would be: £550.00
Balance of £5,000.00, the fee would be £1,880.00
20% of damages £1,000.00
Overall total £3,430.00

 

 

However if the correct analysis is that the whole of the £7,000.00 comes into play at the post allocation period then the calculation would be:-

 

Fee payable
Balance of £7000.00, the fee would be £1,880.00
20% of damages £1,400.00
Overall total £3,280.00

 

However let us turn that around and assume that the £5,000.00 element was settled pre-issue and the £2,000.00 element post-allocation.

 

The calculation is then as follows:-

 

Pre-issue costs of £100.00 plus 20% of damages £1100.00
Post-allocation costs of £1,880.00 plus 20% of damages of £2,000  (£400.00) £2280.00
Total £3380.00

 

Again the claimant is getting more because part of the claim settles early and that does not seem logical.

 

Clearly fixed costs are structured on the basis of a fixed core cost plus a percentage of damages. The fixed core cost is to represent the fact that there is a minimum amount of work in any case.

 

The potential effect is that if different parts of the claim are settled at different stages then the claimant could get the core costs several times over.

 

On the other hand if no fee is payable in respect of the first payment then surely the value of that payment must be taken into account later on as otherwise the claimant will get nothing for the work done in relation to the earlier settled aspect of the claim.

 

For example if there is a £100,000.00 claim, of which £80,000.00 is vehicle related damage and that element settles pre-issue and the £20,000.00 element settles later and costs paid on the basis of that £20,000.00, then the claimant’s solicitors would have recovered £80,000.00 and received no costs.

 

Thus it seems likely that one takes the later stage at which any part of the claim was settled but then uses the total settlement figure, whenever those elements have been settled.

 

However it appears that nothing settled in the portal comes into play.

 

On a high value claim this can have a significant effect.

 

Let us take the £100,000.00 claim, of which £80,000.00 is vehicle related damage. There is no doubt that such a claim goes into the portal and therefore goes into the Fixed Costs Regime.

 

If the £20,000.00 aspect is settled pre-issue and the £80,000.00 aspect settled post-allocation then the calculation is as follows:-

 

Pre-issue element £1,930.00 + 10% of £10,000.00 (damages over £10,000.00) £2,930.00
Post-allocation £1,880.00 plus 20% of damages (£80,000.00) £17,880.00
Total £20,810.00

 

Turn that around the other way:-

 

Pre-issue element £1,930.00 plus 10% of damages over £10,000.00 (£70,000.00) £8,930.00
Post-allocation £1,880.00 + 20% of damages (£20,000.00) £5,880.00
Total £14,810.00

 

If part of a claim is resolved within the portal then the portal costs are payable for that element and only the unresolved balance is subject to fixed costs and that was confirmed in the case of

 

Bewicke-Copley v Ibeh, Oxford County Court, 029YJ613, 4 June 2014

 

where most of the claim had been resolved in the portal leaving the balance, which was not resolved in the portal, as below the small claims limit.

 

The judge held that no costs were payable in relation to that balance as it was below the small claims limit and the solicitors had been paid in the portal for the resolved element.

 

All of this will be of greater significance once fixed costs cover everything up to £250,000.00.

 

The key point is that Fixed Costs are far from fixed.

 

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Written by kerryunderwood

July 27, 2016 at 7:25 am

Posted in Uncategorized

12 Responses

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  1. Hi Kerry,

    I am running a claim whereby we issued for the full amount of the claim and then GD’s went on to settle post issue pre allocation for £3,000.00 via part 36, with fixed costs offered on this element. The vehicle related damages settled still post issue pre allocation but separately for around £3,500.00, with the TPS stating that this element is subject to small claims costs as this would have been the allocation for the remaining balance. Do you think this is the correct approach or do you believe as we had no allocation, fixed costs should be payable on the whole amount?

    I make reference to CPR PD 45 2.3 Fixed recoverable costs are to be calculated by reference to the amount of agreed damages which are payable to the receiving party. In calculating the amount of these damages –

    (a) account must be taken of both general and special damages and interest;

    I’ve also looked around the provisions of CPR 36 in particular CPR 36.13. It makes reference to the fact that if one part is settled and the balance conceded then the only entitlement would be the part of the claim unless otherwise ordered. Given we settled at the same stage of proceedings albeit separately do you think this could also be flipped in support of the argument fixed costs should be payable on the whole sum?

    Thanks,

    Daniel

    Daniel Murray

    October 5, 2016 at 9:05 am

    • Daniel

      This point is likely to go to the Court of Appeal relatively soon.

      The most senior Judgment at this level so far holds that the fixed costs regime trumps small claims track costs.

      All of this is dealt with in great detail in my book – Kerry on… Personal Injury Small Claims, Portals and Fixed Costs, which can be ordered from Amazon here.

      In Singh v Ajaz, Bristol County Court, 27 September 2016, unreported, His Honour Judge Denyer QC, on appeal from a decision of a District Judge held that the Fixed Recoverable Costs Regime under CPR 45.29A applied to the costs of a claim properly begun in the RTA Portal and which was subsequently allocated to the small claims track.
      The claimant was the driver of a vehicle involved in a collision on 1 July 2014 and claimed damages for personal injury, the pre-accident value of the vehicle and for hire, recovery and storage charges.

      A Claim Notification Form was submitted on the portal on 29 July 2014 and the defendant did not admit liability and therefore the matter exited the portal.
      Subsequently general damages for personal injury were agreed in the sum of £1,500.00 and the pre-accident value of the vehicle in the sum of £2,250.00.

      The claimant issued Part 7 proceedings for the recovery of the hire, recovery and storage charges totalling £11,536.00.

      The claim was allocated to the small claims track and listed for a small claims hearing and the balance of the damages was then agreed in the sum of £6,800.00, that is within the small claims limit of £10,000.00 when there are no general damages in issue.

      The only issue at the small claims hearing was in relation to costs.

      The claimant argued that costs should be awarded under the Fixed Recoverable Costs Scheme set out in CPR 45.29A and the defendant contended that the only costs payable were those in CPR 27.14.

      The claimant relied on the comments of Lord Justice Jackson at paragraph 4 of Phillips v Willis [2016] EWCA Civ 401 and the decision of HH J. Grant in Qader v Esure Services Ltd, 19 October 2015.

      The Deputy District Judge accepted that there was clear conflict between the two rules and that the current case met the criteria in both rules.

      However he held that CPR 27 and the costs regime in CPR 27.14 in particular represented a special code and therefore those provisions trumped the provisions of CPR45.29A.
      On appeal the Circuit Judge said that before looking at CPR 27.14 it was necessary to look at CPR 27.2, which contains a list of rules that do not apply to small claims and that rule does not exclude CPR 45. (I deal in detail with CPR 27.2 in Chapter 8 – The Small Claims Track).

      CPR 27.14 is fairly clear on the face of it in limiting any costs save for the exceptions set out in that rule but CPR 27.14(2) (h) does provide for payment of stage 1 and 2 costs in certain circumstances, which did not apply here.

      Nevertheless on the face of it CPR 27.14 applied.

      However the case also fell within CPR 45.29A – C.

      There is a stark difference between the two rules with CPR 45.29A – C being more generous in its costs provisions than CPR 27.14.

      The court held that it would have been helpful if the Rules Committee had specified which was to apply and here the judge held that the case had to be governed by the later rule, that is CPR 45.29A – C which came into effect in July 2013 rather than the earlier CPR 27.14.

      This was presumably on a basis similar to that of the Doctrine of Implied Repeal in relation to Acts of Parliament and that doctrine says that where there are two Acts of Parliament in conflict the later in time is deemed to have impliedly repealed the earlier one.

      CPR 45.29A – C was clear in its terms and if there was to be an exception to it in relation to claims allocated to the small claims track one would have expected that to be set out there.

      The very fact that it is drafted in such blanket terms suggests that it is not intended that a modification for claims allocated to the small claims track should be read into it.

      That interpretation was supported by the comments of Lord Justice Jackson in Phillips v Willis at paragraph 4 and although strictly obiter it was a clear statement by him and he had in mind the very issue with which this appeal was concerned.

      I understand that this case is likely to go to the Court of Appeal.

      Kerry

      kerryunderwood

      October 7, 2016 at 4:26 pm

      • Thanks Kerry, I attended your Seminar on the matter back in May in Manchester and I am yet to receive any material from it. Is that the book which I am awaiting a copy of?

        Daniel Murray

        October 10, 2016 at 4:10 pm

  2. Daniel : everyone received a set of material on the day – a big red folder! If for any reason you did not have one, or take yours, then please let me know and I will send you an electronic copy. The book is different from the course material, although there are overlaps.

    Kerry

    kerryunderwood

    October 10, 2016 at 4:21 pm

  3. Good Afternoon Kerry,
    i know this thread has been inactive for a while but i still have Defendants arguing small claims costs on such matters. I have had a look around the Net for a case report or the transcript of Singh v Ajaz, but without success. Does anyone have the court case number so i can order a Transcript?

    mohammed

    January 16, 2017 at 3:40 pm

    • Don’t know case number, but was a judgment of HH Judge Denyer QC in Bristol County Court on 27 September 2016. It is not binding and there is no binding decision on this topic. The key issue is whether it survives the Courtof Appeal decision in Qader v Esure Services Ltd [2016] EWCA civ 1109, which is binding.

      I think it does, but that does not mean that the High Court or Court of Appeal will uphold the ratio in Singh, where leave to appeal was granted but the defendant withdrew the appeal.

      Kerry

      kerryunderwood

      January 16, 2017 at 8:36 pm

  4. Kerry,
    Is the Singh v Ajaz case being appealed? Its very helpful and seems to have flown under the radar a bit!
    Phil

    Phil

    April 11, 2017 at 9:56 am

    • Phil
      As per reply below, leave to appeal was given, but the defendant withdrew the appeal.
      Kerry

      kerryunderwood

      April 11, 2017 at 2:57 pm

      • Hi Kerry – Is there a transcript for Singh v Ajaz?

        Ian

        November 27, 2017 at 3:24 pm

  5. Ian – I have not got one.
    Kerry

    kerryunderwood

    November 29, 2017 at 5:53 pm


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