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Set off and fixed costs in portal cases
In recent Part 8 detailed assessment proceedings heard at Liverpool County Court in November 2013, the MIB as second defendant ("the defendant") sought to argue that the recoverable costs in respect of a low value personal injury claim came within the jurisdiction of the small claims track and that costs were limited to the recovery of £70.00 fixed solicitors costs together with £200.00 in respect of the medical report. In particular, the defendant argued that as Stage 1 costs in the sum of £480.00 had already been paid at Stage 1 within the MoJ Portal, the claimant had in fact received an overpayment and the defendant was entitled to a reimbursement in the sum of £210.00.
The claim concerned a reasonably modest personal injury claim in respect of soft tissue injuries (for which a reasonable valuation might have been in the region of £1100.00 - £1200.00) with no substantive claim in respect of special damages. The procedure within the MoJ Portal was uneventful through Stage 1. The Stage 2 settlement pack was prepared the defendant removed the matter from the Portal and made a low offer in settlement of the claim. The defendant later increased their offer and the matter settled in the sum of £875.00 which was lower than the true value of the claim, although settlement was reached on the basis that the claimant was returning overseas.
The claimant solicitors did not dispute the defendant’s contention that because the matter had settled for a sum less than £1000.00, the matter was likely to attract small claims costs (quite possibly an arguable point but not one which featured as a point in dispute between the parties in the case.) It was disputed; however, that the recoverable small claims costs should be set against the Stage 1 costs already paid due to the admission of liability within the portal. It was on that basis that the matter proceeded.
In response to the commencement of Part 8 detailed assessment proceedings, the court made an order that the:
1) Defendant do pay the claimant's reasonable costs arising out of the claimant's claim for personal injury. Such costs to be assessed by detailed assessment;
2) Costs of the Part 8 proceedings be in the assessment.
In submissions made on behalf at the claimant the court was invited to consider the mandatory requirement for a defendant to pay Stage 1 fixed costs where a liability admission has been received in accordance with paragraph 6.18 of the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents pre 31st July 2013 ("the protocol)". Although it was not a point the claimant sought to advance in the claim or at the outset of the Part 8 detailed assessment proceedings, paragraph 7.37 of the protocol makes provision that any offer to settle made at any stage by any party will automatically include and cannot exclude the stage 2 fixed costs and must include an agreement in principle to pay disbursements. In the event that there is a dispute about the amount or validity of any disbursement the parties may use the procedure set out in rule 46.14 i.e. the Part 8 procedure. Furthermore, in settlement of claim, in accordance with paragraph 7.40 of the protocol, the defendant must pay any unpaid Stage 1 fixed costs, the Stage 2 fixed costs and the relevant recoverable disbursements. This did not deter the defendant, who sought to argue the point under the previous rule CPR 45.40 (now CPR 45.28 as amended):
‘Where a claim no longer continues under the RTA protocol the court will, when making any order as to costs including an order for fixed recoverable costs under section II of this part, taking into account the Stage 1 fixed costs together with any success fee on those costs that have been paid by the defendant’
The defendant argued that the phrase ‘taking into account…’ must mean that any costs recoverable pursuant to the order of the court must be set off against the Stage 1 fixed costs already paid. On behalf of the claimant and in addition to the relevant provisions of the protocol set out above, the court was also invited to consider CPR 27.14 which allows the court to order a party to pay Stage 1 and where relevant Stage 2 fixed costs in circumstances where the claim was one to which the protocol applied and where the claimant reasonably believed the claim was valued at more than the small claims track limit as was the case in the claim under review.
On the very narrow point under consideration by the court, the Deputy District Judge determined that the £270.00 in respect of solicitors fixed costs and the cost of the medical report should not be set off against the Stage 1 costs already paid. The court took into account CPR 45.40 but did not accept the defendant's argument that this would automatically amount to an entitlement to a reimbursement to the defendant in respect to the balance of costs already paid. Accordingly, the claimant recovered the costs of the claim and Part 8 detailed assessment proceedings in the assessed sum of £1824.88 inclusive of vat and disbursements.
Article provided by 7HS Barrister, Jacqueline Swain