Fixed Costs Case Study
Was it a Reasonable Decision to Remove a Matter from the Portal?
ARC Costs recently successfully defended a client’s decision in a fixed costs matter to remove the matter from the Portal, and recovered fixed issued costs, despite the matter having left the Portal prior to expiry of the standard Stage 2 settlement period.
ARC Costs represented the Claimant who had suffered personal injury during a Road Traffic Accident in January 2015. A Stage 2 settlement pack had been served on 11 November 2017 when the Claimant made a formal offer of £7,855. The Defendant made a counter offer of £3,200 on 14 November 2016, and only made a small increased offer of £3,400 on 20 December 2016, described as their ‘best offer’.
On 22 December 2016, the Claimant provided the Defendant with the Stage 3 Court Proceedings Pack (the 29th day of the 35 day period provided for in the Protocol). In a telephone call between the parties on 11 January 2017, the Defendant increased its offer to £4,400. The Defendant did not pay the sums provided for by 7.72 of the Protocol within 15 days of 22nd December 2016.
The Defendant was therefore advised that the Claimant was exiting the Portal, and proceedings were subsequently issued. The matter was allocated to the Fast Track and on 17 March 2017 and listed for Trial in October 2017, and the Claimant made a Part 36 Offer of £6,500. The value of the claim was agreed in this sum on 12 April 2017, though the offer was not accepted owing to the Defendant wishing to restrict the Claimant to Portal costs rather than fixed costs. The Claimant subsequently applied for Judgment to be entered for the sum of £6,500, the Defendant having agreed the claim valuation but not having accepted the offer.
On preparing the Bill of Costs, ARC Costs receiving party client sought fixed costs for the listing stage up to the date of expiry of the Part 36 Offer, and costs on an indemnity basis thereafter for the Defendant having failed to beat the Claimant’s Part 36 Offer pursuant to CPR 36.17(1)(b) and (4).
The paying party did not contest the claim for indemnity costs.
With regards to the fixed costs element claimed, it was submitted that the receiving party had failed to comply with the Protocol with regards to the Stage 2 settlement period, and thus that the matter had been exited from the Portal prematurely, as payment for interim damages was made within the relevant Stage 3 period had the full Stage 2 settlement period been adhered to.
The receiving party disagreed, and reference was made to the telephone call held between the parties wherein the paying party was advised of the early submission of the Stage 3 Court Settlement Pack, and in which they had agreed that settlement in the Stage 2 period would not have been reached even had the full negotiations period taken place. This demonstrated the paying party’s awareness of when the Stage 3 pack had been submitted, and also that the progression of the matter to Stage 3 had been reasonable.
Provisional Assessment and Oral Hearing
Ultimately the receiving party was successful on provisional assessment in recovering the full fixed costs and indemnity costs, the Judge considering that they had acted reasonably in progressing the matter to Stage 3 early given the vast difference in the respective parties’ valuations, and that the receiving party was correct to remove the matter from the Portal for late payment.
The paying party did however, contest the matter to an oral hearing, and on providing further submissions Judgment was reserved.
On handing down Judgment, the Judge again sided with the receiving party. Critically, it was in reference to CPR 45.24(2)(b) as to whether a Claimant had acted unreasonably, that it was inferred that a Claimant could act reasonably in not following the Protocol to the letter. On considering the Stage 2 circumstances, it was evident that settlement was not going to be reached, particularly given that the Defendant’s valuation was less than 50% of the Claimant’s valuation, and that the Defendant had stated they had made their ‘best offer’ and that they had verbally stated that was no point in further negotiations taking place.
Further, the Judge stated that even had they erred in law in interpreting CPR 45.24(2)(b), that discretion in favour of the Claimant could be given under CPR 45.24(2) owing to the aforementioned factors, and also because it was mandatory that the Defendant pay the damages as per the Stage 3 Court Proceedings Pack under 7.72, which they had failed to comply with (no reason having actually been provided by the paying party for this default, particularly given the telephone conversation that had taken place between the parties).
The decision made at Provisional Assessment was therefore upheld, and the Claimant was awarded their fixed listing costs, indemnity costs, and costs of provisional assessment and the oral hearing.
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