Kerry Underwood

MIB UNTRACED DRIVERS AGREEMENT FIXED COSTS SCHEME: THE SHAPE OF THINGS TO COME

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This blog has been updated as at 7 March 2017 to take into account the revocation of the new scheme to be replaced by the new new scheme, following my blog New MIB Untraced Drivers Scheme: Insurers At it Again

This is an extract from my forthcoming book – Personal Injury Small Claims, Portals and Fixed Costs  – hence the reference to chapters etc.

 

The book is over 1,300 pages long and is in three volumes and will be available in March at £80.00 including p&p, but it can be pre-ordered from me for £68.00 including p&p at kerry.underwood@lawabroad.co.uk or 01442 430 900.

 

I will be dealing with this topic in my forthcoming lecture tour – click here for details.

 

On 10 January 2017 a new MIB Untraced Drivers Agreement was entered into between the Secretary of State for Transport and the Motor Insurers Bureau and that was due to come in on 1 March 2017 in relation to accidents occurring on or after that date.

 

However following comments made in my blog New MIB Untraced Drivers Scheme: Insurers At it Again that agreement was scrapped.

 

A new new agreement, taking into account some of my comments about solicitors being excluded from the process, was entered into between the Secretary of State for Transport and the Motor Insurers Bureau on 28 February 2017 and that did indeed come into force on 1 March 2017 in relation to accidents occurring on or after that date.

 

The 2003 agreement continues in force in relation to accidents occurring on or after 14 February 2003 but before 1 March 2017.That scheme has a completely different costs structure.

 

Here I just look at the costs scheme under the new agreement and not the substance of the agreement, nor the law in relation to untraced drivers.

 

Such claims do not go onto the RTA portal and do not form part of the fixed costs system under the Civil Procedure Rules, and do not enter the conventional courts system at all.

 

What is of particular interest in relation to the Fixed Recoverable Costs Scheme is that it applies to all relevant claims, whatever their value.

 

Thus it is a fixed costs scheme without an upper limit and, as will be apparent from the parties to the agreement as set out above, these figures have been set with the approval of the Government, which in the form of the Secretary of State for Transport, has specifically agreed them.

 

Part 4 deals with costs and I set out the whole of that part at the end of this chapter but here is the table setting out the fixed costs and these costs are exclusive of VAT and reasonable disbursements.

 

Amount of the award Fee Entitlement
Not more than £10,000 (but excluding claims within the definition of the small claims track in which case there shall be no costs entitlement) £450
More than £10,000 but not more than £25,000 £700
More than £25,000 but not more than £50,000 The total of— (a) £700; and (b) 10% of the damages over £25,000
More than £50,000 but not more than £100,000 The total of— (a) £3,200; and (b) 10% of the damages over £50,000
More than £100,000 but not more than £175,000 The total of— (a) £8,200; and (b) 7% of the damages over £100,000
More than £175,000 but not more than £250,000 The total of— (a) £13,450; and (b) 7% of the damages over £175,000
More than £250,000 The total of— (i) £18,700; and (ii) 7% of the damages over £250,000 subject to a maximum £250,000

 

The figures have been skilfully kept below the portal figures.

 

Thus for a claim of £10,000.00 or under the fee is £450.00 and for a claim of over £10,000.00 but no more than £25,000.00, the fee is £700.00.

 

The comparable fees in the portal process resolved by the end of stage 2 of £500.00 and £800.00 respectively.

 

At present the portal system only covers claims up to £25,000.00, excluding vehicle related damages.

 

Here I will not deal with the issue of whether a claim that exits the portal because it is over £25,000.00 attracts fixed costs or not.

 

I deal with that extensively elsewhere.

 

It will be seen that in the MIB scheme the structure is based on “Who Wants To Be A Millionaire”, not that anyone is going to become a millionaire under this scheme.

 

Thus at £25,000.00 you have the fee of £700.00 and for anything above that you get 10% of the extra sum.

 

Thus a claim settles for £40,000.00. The calculation is as follows:

 

The first £25,000.00 £700.00
10% of £15,000.00, being the surplus over £25,000.00 £1,500.00

 

TOTAL £2,200.00

 

Once you get to £50,000.00 then you have £3,200.00 in the bank and get 10% of the damages over £50,000.00.

 

That adds nothing at all that could not be achieved by unifying those bands and having a band that reads:

 

“More than £25,000.00 but not more than £100,000.00 – the total of

 

  • £700.00 and

 

  • 10% of the damages over £25,000.00.

 

Any which way if you have an award of £100,000.00 then the costs are £8,200.00.

 

After that you get 7% of the damages over of the damages over £100,000.00, and again, apparently entirely unnecessarily, that is split into a further three bands, that is:

 

  • £100,000.00 to £175,000.00

 

  • £175,000.00 to £250,000.00 and

 

  • more than £250,000.00

 

However what you in fact always get on an award over £100,000.00, whether it is £100,001.00 or £3 million, is £8,200.00 and then 7% of the damages over £100,000.00., up to a maximum fee of £250,000.

 

However this is far from being a random piece of pointlessness by the Government and the MIB.

 

Indeed precisely the opposite is true.
Those bands are precisely, to the pound, the four bands set out by Lord Justice Jackson in his lecture to the Westminster Legal Policy Forum on 23 May 2016.

 

I deal with that in more detail in chapter 52.

 

The sharp-eyed amongst you may have spotted that the scheme here is five bands, and not four. That is because Lord Justice Jackson did not have the fifth band, that is “more than £250,000.00” as he was only, at that stage, considering claims up to £250,000.00.

 

This is a powerful indication of how the Government is thinking in relation to Fixed Recoverable Costs for civil work generally.

 

Here are some examples of costs under the new MIB scheme:

 

Damages Costs
£10,000.00 £450.00
£20,000.00 £700.00
£30,000.00 £1,200.00
£40,000.00 £2,200.00
£50,000.00 £3,200.00
£60,000.00 £4,200.00
£70,000.00 £5,200.00
£80,000.00 £6,200.00
£90,000.00 £7,200.00
£100,000.00 £8,200.00
£150,000.00 £11,700.00
£200,000.00 £15,200.00
£250,000.00 £18,700.00
£500,000.00 £36,200.00
£1,000,000.00 £71,200.00
£2,000,000.00 £141,200.00
£3,000.000.00 £211,200.00
£3,554,286.00 £250,000.00

 

The fees for a hearing follow exactly those payable in stage 3 of the portal process, that is £250 plus VAT where the challenge to the award is by way of written observations and a total of £500 plus VAT where there is an oral hearing.

 

Those figures apply if the claim would have been allocated to the fast-track if it had been brought against an identified person by way of court proceedings.

 

Thus it will be seen that the whole costs regime up to £25,000.00 very closely follows the existing portal scheme and the structure of the claims above £25,000.00 follows exactly Lord Justice Jackson’s bands.
What remains to be seen is if the figures in this agreement, and the structure of those figures, that is a core fee plus 10% of damages between £25,000.00 and £100,000.00 and a core fee plus 7% of damages over £100,000.00, will be followed when Fixed Recoverable Costs are introduced to all personal injury cases.

 

The maximum fee is £250,000.00 and that maximum is hit when the damages are £3,554,286.00 or more.

 

“PART 4 – COSTS

 

Contribution towards legal costs

 

  1. (1) Where MIB pays an award (but not an interim payment) it shall also pay a contribution (‘the contribution’), towards any legal costs incurred by the claimant in seeking advice from a solicitor regarding the claim and any award made by MIB.

 

(2) The contribution shall be paid at the same time as the award unless, at that stage, the extent of the reasonable disbursements as defined by paragraph (11) are not yet known, in which case, payment will follow as soon as reasonably possible after these details are known.

 

(3) The contribution shall be calculated strictly in accordance with the provisions of this clause.

 

(4) MIB shall not be under a duty to make the contribution unless it is satisfied that the claimant did obtain some legal advice regarding the claim in accordance with paragraph (1).

 

(5) The contribution will —

 

  • involve a single payment regardless of whether the claimant may have sought advice from more than one solicitor, and

 

  • be calculated by reference to the totality of the claimant’s entitlement to compensation in respect of the death, bodily injury or damage to property, and

 

  • subject to clause 22, represent the totality of the claimant’s entitlement to legal costs.

 

(6) The contribution shall be entirely separate from any liability on MIB to pay the costs of arbitration proceedings pursuant to clause 22 or an arbitrator’s fee pursuant either to clause 14 or clause 22.

 

(7) The contribution shall be the total of

 

  • the fee calculated in accordance with paragraph (8),

 

  • the amount of value added tax validly charged on that fee, and

 

  • reasonable disbursements (if any).

 

(8) The fee referred to in paragraph (7)(a) shall be calculated in accordance with the following table —

 

 

Amount of the award Fee Entitlement
Not more than £10,000 (but excluding claims within the definition of the small claims track in which case there shall be no costs entitlement) £450
More than £10,000 but not more than £25,000 £700
More than £25,000 but not more than £50,000 The total of— (a) £700; and (b) 10% of the damages over £25,000
More than £50,000 but not more than £100,000 The total of— (a) £3,200; and (b) 10% of the damages over £50,000
More than £100,000 but not more than £175,000 The total of— (a) £8,200; and (b) 7% of the damages over £100,000
More than £175,000 but not more than £250,000 The total of— (a) £13,450; and (b) 7% of the damages over £175,000
More than £250,000 The total of— (i) £18,700; and (ii) 7% of the damages over £250,000 subject to a maximum £250,000

 

Where —

 

‘Amount of the award’ refers to the amount of the award paid to the claimant

 

(a) before deduction of —

 

(i) any interim payment/payments already paid,

 

(ii) the specified excess (where applicable), and

 

(iii) reimbursement due to the Department for Work and Pensions through the Compensation Recovery Unit (‘the CRU’) (or to any successor of that Unit) in respect of benefits received by the claimant, providing such benefits can be validly offset against his claim;

 

(b) ignoring any amount which has to be paid to the CRU in respect of hospital charges.

 

‘Small claims track’ refers to any claim where, had the claim been brought against an identified person by way of court proceedings, the claim would have been allocated to the small claims track, as defined in the Civil Procedure Rules 1998, or any successor thereto, as they were on the date that MIB’s claim form was submitted to MIB in accordance with clause 10(2).

 

(9) Where the award includes an element of compensation in the form of periodical payments —

 

  • the award for the purpose of paragraph (8) shall be calculated by adding to the lump sum compensation the amount which represents the total of the annual instalment payments multiplied by the multiplier/multipliers adopted by MIB (or an arbitrator as the case may be) by reference to the relevant edition of the Ogden Tables as applicable at the date of the award, and

 

  • MIB will set out the approach it has followed to show how it has calculated the contribution.

 

(10) Where the award includes an element of provisional compensation, the contribution shall make no allowance for the possibility that the claimant may, at some future time, be entitled to apply for further compensation but where the claimant is successful in applying for further compensation, an additional contribution shall be calculated in accordance with this clause by reference solely to the amount of further compensation which the claimant recovers at that stage.

 

(11) The reference to reasonable disbursements in paragraph (7)(c) shall mean—

 

  • reasonable expenditure incurred by or on behalf of the claimant which MIB has specifically authorised in advance (MIB’s consent not having been unreasonably withheld) where the evidence resulting from such expenditure has been disclosed to MIB; and

 

  • counsel’s reasonable fees where reasonably incurred.

 

(12) The claimant may request MIB to pay a higher figure towards legal costs than the contribution calculated in accordance with the other provisions of this clause, but only where he can show that the claim was exceptionally complex and thereby warranted a higher figure and a claim will not be viewed as exceptionally complex by reason of its value alone.

 

(13) Where a request for a higher figure is made by the claimant pursuant to paragraph (12) —

 

  • MIB shall decide whether to make a further payment and, if so, what further payment it considers is justified.

 

  • MIB must thereafter make this further payment as soon as possible, and

 

(14) Any dispute about the amount of the contribution under this clause or about any additional amount pursuant to paragraph (12), shall be referred to an arbitrator pursuant to clause 15.

 

Costs of arbitration proceedings

 

  1. (1) For the purposes of the Arbitration Act 1996 (where the arbitration is to be conducted in England and Wales) or the Arbitration (Scotland) Act 2010 (where the arbitration is to be conducted in Scotland) the arbitration proceedings are to be regarded as commencing on —

 

  • the date of receipt by MIB of the notice of appeal pursuant to clause 16 (1), or

 

  • where notice of intention to appeal is provided pursuant to clause 16 (3), the date of receipt by MIB of such notice of intention,

 

but this clause does not apply where MIB applies to an arbitrator for approval of an award pursuant to clause 14 (and references to arbitration proceedings in clause 21 are to be read accordingly).

 

(2) Subject to paragraph (3), MIB shall, upon being notified of the final decision of the arbitrator, pay to the arbitrator a fee based on the daily rate for a Recorder, as set out in the Ministry of Justice’s Judicial Fees schedule and published on its website.

 

(3) Where it appears to the arbitrator that, having regard to all the circumstances of the case, there were no reasonable grounds for the claimant to have appealed MIB’s decision or award (as the case may be), the arbitrator may, in his discretion, order —

 

  • the claimant, or

 

  • where he considers it appropriate to do so, any solicitor or other person acting on behalf of the claimant,

 

to reimburse MIB the fee it has paid to the arbitrator or any part thereof.

 

(4) The arbitrator may, in his discretion but subject to paragraph (5), order MIB to pay (in addition to the arbitrator’s fee) the claimant’s reasonable legal costs of —

 

  • the arbitration proceedings, and

 

  • preparing the notice of appeal.

(5) Where the award being appealed (or the amount being claimed if the appeal relates to a dispute or decision other than one relating to the amount of the award) would have been allocated to the fast track had the claim been brought against an identified person by way of court proceedings, (‘fast track’ being defined by reference to the Civil Procedure Rules 1998, or any successor thereto, as they were on the date that MIB’s claim form was submitted to MIB in accordance with clause 10(2)), the maximum sums which the arbitrator may award in total for legal costs pursuant to paragraph (4) are as follows —

 

  • £500 plus VAT for proceeding with an appeal in accordance with clauses 15 and 16 and, in addition, where the preliminary decision of the arbitrator is challenged before a final decision is reached pursuant to clause 19, either

 

  • £250 plus VAT where the challenge is by way of written observations, or

 

  • £500 plus VAT where the challenge is by way of an oral hearing.

 

(6) The arbitrator may order the claimant (or any solicitor or other person acting on his behalf) to pay MIB’s reasonable legal costs of the arbitration proceedings (including the costs of any oral hearing) but only where he considers that the appeal or dispute (as the case may be) was frivolous, vexatious or otherwise entirely unmeritorious or involved fraud or fundamental dishonesty and he shall have regard to (but shall not be bound by) the maximum sums allowable pursuant to paragraph (5) for claims falling within the fast track as defined in that paragraph.

 

(7) Where, pursuant to paragraphs (3) and (6), the arbitrator orders —

 

  • the claimant to reimburse MIB in respect of any legal costs or fees, MIB may deduct an amount equal to that reimbursement from any amount which it pays to the claimant to discharge its liability under this Agreement; or

 

  • a solicitor or other person to reimburse MIB in respect of any legal costs and/or fees, MIB may deduct an amount equal to that reimbursement from any amount which it pays to that solicitor or other person to discharge its liability to the claimant under this Agreement.

 

(8) Save for the reasonable costs of preparing the notice of appeal pursuant to paragraph (4), the arbitrator may only order payment of any legal costs of the arbitration proceedings which were incurred on or after the date of commencement of the arbitration proceedings as defined by paragraph (1).”

 

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Written by kerryunderwood

February 3, 2017 at 10:38 am

Posted in Uncategorized

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