WHAT FIXED COSTS ARE PAYABLE WHEN DIFFERENT PARTS SETTLE AT DIFFERENT STAGES?
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.
|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|
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:-
|Balance of £7000.00, the fee would be||£1,880.00|
|20% of damages||£1,400.00|
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|
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|
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|
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.