Departing from fixed costs: A rascal’s approach?

Departing from fixed costs: A rascal’s approach?

In recent months we have noticed an increase in the number of firms claiming standard costs for fast track matters, rather than the usual position of fixed costs.

In the event that the claim is valued in excess of £25,000 the Claimant ought to proceed in line with the Pre-action Protocol for Personal Injury Claims, rather than the Pre-action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims. The Claimant should also notify the Defendant that they have valued the claim above fast track level as soon as possible.

Assuming that the Claimant has acted with just cause, they may proceed to claim standard costs upon settlement, even if the final damages figure is below £25,000.

The argument presented by firms is that they had “reasonable belief” that the damages would exceed £25,000 when the claim was submitted. Before a Defendant concedes the costs position, it is important to take a closer look at the Claimant’s valuation of the claim.

In one of our recent cases a Claimant’s solicitor appears to have assumed this level of valuation, when a simple conversation with their client would have revealed the minor nature of her injuries and quick recovery period. It was evidently a fast track claim from inception.

In another case the solicitor attempted to argue that the Claimant’s loss of earnings claim contributed to the increase in her valuation. However her client was receiving low earnings which again should have been evident from a conversation with him.

To ignore the relevant pre-action protocol without just cause can place the Claimant in a dangerous situation. The Courts do not take kindly to unreasonable conduct by either party and have a wide discretion to penalise parties in respect of costs.

CPR 45.24 permits the Court to severely limit the Claimant’s entitlement to costs to portal only costs if their conduct is found wanting.

The Claimant found this out to his detriment in the recent case of Harford v Music Store Professional UK/DV247 Ltd. The case was valued at over £25,000 but eventually settled at just over £11,000.

The Claimant’s solicitors argued that they had reasonably valued the claim at above fast track level, and furthermore that the provisions of CPR 45.24 could only be used “where judgment is given.” Here, a Part 36 offer had been accepted rather than any judgment having been obtained.

Costs Judge Haworth rejected both arguments. He dismissed the Claimant’s argument that a Defendant in these circumstances has a very high bar to clear in terms of establishing that the claim has been over-valued. He also concluded that the Claimant’s acceptance of the Part 36 offer constituted a judgment, and discretion under CPR 44.11 permitted him to limit costs as he saw fit.

Points to consider when faced with standard costs:

1. Did the Claimant reasonably believe that the claim was worth in excess of the fast track level during the protocol period?
2. What information did the Claimant’s solicitor have when valuing the claim?
3. Did they follow the relevant pre-action protocol?
4. Did they inform the Defendant of their valuation?
5. What value did damages settle at?

If you would like to discuss this topic in more detail, please contact Daisy McConnell.