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FREE BOOK CHAPTER from 'A Practical Guide to Industrial Disease Claims' by Andrew Mckie & Ian Skeate

Chapter Two – The Portals and Fixed Portal Costs in ELD Claims.

The Low Value Portals in Employers Liability Claims Came into effect for any claim where the accident date is on or after 31 July 2013. The purpose of this Chapter is to examine the most important aspects of the Portals in the context of Low Value Personal Injury claims, for claims that start off with the Low Value Portal but then exit the Portal.

The Portals can be found at:- http://www.justice.gov.uk/courts/procedure-rules/civil/protocol/pre-action-protocol-for-low-value-personal-injury-employers-liability-and-public-liability-claims#2.1

Which types of claims does the Portal apply to?

Paragraph 4.1 of the Portal helpfully sets out which claims they apply to:-

4.1  This Protocol applies where—

(1) either—

(a) the claim arises from an  accident occurring on or after 31 July  2013; or

(b) in a disease claim, no letter of claim has been sent to the defendant before 31 July 2013;

(2) the claim includes damages in respect of personal injury;

(3) the claimant values the claim at not more than £25,000 on a full liability basis including pecuniary losses but excluding interest (‘the upper limit’); and

(4) if proceedings were started the small claims track would not be the normal track for that claim.

It is important to note that if the claim is valued at more than £25,000 on a full liability basis, the claim will not commence in the Low Value Portal. It is also helpful to that the Protocol ceases to apply to a claim where, at any stage, the claimant notifies the defendant that the claim has now been revalued at more than the upper limit. Some Solicitors make the mistake of thinking that the Low Value Portal applies to accidents before 31 July 2013, and it is important to note it does not, and any accidents before this date, will still attract costs on the standard basis.

Claims to which the Low Value Portal does not apply.

There are a large number of scenarios where the Low Value Portal will not apply, and these are set out as follows:-

4.3  This Protocol does not apply to a claim—

(1) where the claimant or defendant acts as personal representative of a deceased person;

(2) where the claimant or defendant is a protected party as defined in rule 21.1(2);

(3) in the case of a public liability claim, where the defendant is an individual (‘individual’ does not include a defendant who is sued in their business capacity or in their capacity as an office holder);

(4) where the claimant is bankrupt;

(5) where the defendant is insolvent and there is no identifiable insurer;

(6) in the case of a disease claim, where there is more than one employer defendant;

(7) for personal injury arising from an accident or alleged breach of duty occurring outside England and Wales;

(8) for damages in relation to harm, abuse or neglect of or by children or vulnerable adults;

(9) which includes a claim for clinical negligence;

(10) for mesothelioma;

(11) for damages arising out of a road traffic accident (as defined in paragraph 1.1(16) of the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents).

Mesothelioma cases do not start inside the Low Value Portal, arguably due to their complexity, or where there is a disease case, with more than one Defendant. Further it may be important to note that the Protocol does not apply, where the Defendant is an individual in the case of a public liability claim, or the defendant is insolvent and there is no identifiable insurer.

The CNF

The Protocol sets out the following stages for completion of the CNF:-

Stage 1

Completion of the Claim Notification Form

6.1   

(1) The claimant must complete and send—

(a) the CNF to the defendant’s insurer, if known; and

(b) the Defendant Only Claim Notification Form (“Defendant Only CNF”) to the defendant,

but the requirement to send the form to the defendant may be ignored in a disease claim where the CNF has been sent to the insurer and the defendant has been dissolved, is insolvent or has ceased to trade.

(2) If—

(a) the insurer’s identity is not known; or

(b) the defendant is known not to hold insurance cover,

the CNF must be sent to the defendant’s registered office or principal place of business and no Defendant Only CNF is required. 

(3) Where the insurer’s identity is not known, the claimant must make a reasonable attempt to identify the insurer and, in an employers’ liability claim, the claimant must have carried out a database search through the Employers’ Liability Tracing Office.

(4) In a disease claim, the CNF should be sent to the insurer identified as the insurer last on risk for the employer for the material period of employment.

6.2  If the CNF or Defendant Only CNF cannot be sent to the defendant via the prescribed Portal address, it must be sent via first class post; and this must be done, in a case where the CNF is sent to the insurer, at the same time or as soon as practicable after the CNF is sent.

6.3  All boxes in the CNF that are marked as mandatory must be completed before it is sent.  The claimant must make a reasonable attempt to complete those boxes that are not marked as mandatory.

6.4  Where the claimant is a child, this must be noted in the relevant section of the CNF.

6.5  The statement of truth in the CNF must be signed either by the claimant or by the claimant’s legal representative where the claimant has authorised the legal representative to do so and the legal representative can produce written evidence of that authorisation. Where the claimant is a child the statement of truth may be signed by the parent or guardian.  On the electronically completed CNF the person may enter their name in the signature box to satisfy this requirement.

There are a number of significant points that arise from this. Firstly the claimant Solicitor must ensure that the before the CNF is signed, it is sent to the Claimant to check and the Claimant’s Solicitor must have written conformation from the Claimant that the CNF has been agreed. This can be requested by the Defendant’s insurer later on in the proceedings. An important part of this process, is that all to often at Trial, the information on the CNF is incorrect, which can effect the credibility of the claim at Trial, especially as regards to the mechanism of the accident, and that is why it is essential that the Claimant gets an opportunity to check the CNF, before it is submitted to the Defendant’s insurer, and make any corrections that are required.

Secondly, sometimes a situation arises where there is no identifiable insurer. The Portal rules require that a search is made of the Employers’ Liability Tracing Office. The website to undertake the search can be found at :- https://eld.elto.org.uk/TCUsage/TANDC

Thirdly, as with other types of claims, all the mandatory information on the CNF must be completed. There is a warning in the Protocol which sets out:-

Failure to complete the Claim Notification Form

6.7  Where the defendant considers that inadequate mandatory information has been provided in the CNF that shall be a valid reason for the defendant to decide that the claim should no longer continue under this Protocol.

6.8  Rule 45.24(2) sets out the sanctions available to the court where it considers that the claimant provided inadequate information in the CNF.

Exit Points from the Portal

Contributory Negligence, liability not admitted or failure to respond

6.13  The claim will no longer continue under this Protocol where the defendant, within the relevant period in paragraph 6.11 —

(1) makes an admission of liability but alleges contributory negligence;

(2) does not complete and send the CNF response;

(3) does not admit liability; or

(4) notifies the claimant that the defendant considers that—

(a) there is inadequate mandatory information in the CNF; or

(b) if proceedings were issued, the small claims track would be the normal track for that claim.

6.14  Where the defendant does not admit liability the defendant must give brief reasons in the CNF response.

6.15  Where paragraph 6.13 applies the claim will proceed under the relevant Pre-Action Protocol and the CNF will serve as the letter of claim (except where the claim no longer continues under this Protocol because the CNF contained inadequate information).  Time will be treated as running under the relevant Pre-Action Protocol from the date the form of acknowledgment is served under paragraph 6.9 or 6.10.

There are therefore a number of ways in which the claim can exit the Portal. It is important for Claimant Solicitors to note the exit points from the Portal and provide appropriate notification to the insurer where an exit point is reached. It is helpful if the Claimant Lawyer has a suitable claims management system that will provide a notification for example the time limit for investigation expires and, there has not been an admission, so the claim can exit the Portal.

Time Limits

6.11  The defendant must complete the ‘Response’ section of the CNF (“the CNF response”) and send it to the claimant—

(a) in the case of an employers’ liability claim, within 30 days of the step taken pursuant to paragraph 6.1;

One may therefore often find in practice, that given the complexity of these types of cases, the employer and/ or their insurer will not be able to realistically investigate the cases within 30 days, and hence the reason for the high drop out rates from the Low Value Portal.

Admissions in the Portal.

1.1  In this Protocol—

(1) ‘admission of liability’ means the defendant admits that—

(a) the breach of duty occurred;

(b) the defendant thereby caused some loss to the claimant, the nature and extent of which is not admitted; and

(c) the defendant has no accrued defence to the claim under the Limitation Act 1980;

It should be noted that if an admission is made, and the Defendant then later exits the Portal, the admission will still be binding, unless the Courts permission is sought to withdraw the admission post proceedings or consent is provided. CPR 14.1B says:-

Admissions made under the RTA Protocol or the EL/PL Protocol

14.1B

(1) This rule applies to a pre-action admission made in a case to which the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (‘the RTA Protocol’) or the Pre-action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims (‘the EL/PL Protocol’) applies.

(2) The defendant may, by giving notice in writing withdraw an admission of causation –

(a) before commencement of proceedings –

(i) during the initial consideration period (or any extension to that period) as defined in the relevant Protocol; or

(ii) at any time if the person to whom the admission was made agrees; or

(b) after commencement of proceedings –

(i) if all the parties to the proceedings consent; or

(ii) with the permission of the court.

(3) The defendant may, by giving notice in writing withdraw any other pre-action admission after commencement of proceedings –

(a) if all the parties to the proceedings consent; or

(b) with the permission of the court.

(4) An application under rule 14.1B(2)(b)(ii) or (3)(b) to withdraw a pre-action admission must be made in accordance with Part 23.

Portal Costs and Disbursements – claims which remain in Portal.

Fixed costs in relation to the EL/PL Protocol

Where the value of the claim for damages is not more than £10,000

Where the value of the claim for damages is more than £10,000, but not more than £25,000

Stage 1 fixed costs

£300

Stage 1 fixed costs

£300

Stage 2 fixed costs

£600

Stage 2 fixed costs

£1300

Stage 3

- Type A fixed costs

£250

Stage 3

- Type A fixed costs

£250

Stage 3

- Type B fixed costs

£250

Stage 3

- Type B fixed costs

£250

Stage 3

- Type C fixed costs

£150

Stage 3

- Type C fixed costs

£150

The Fixed costs raises real questions of access to Justice and how Low Value Claims can be run in a fixed costs environment. Some points to consider are:-

  1. Ensure the correct level of fee earner is undertaking the work. There is now little point in Grade A fee earners undertaking Low Value cases. The majority of Portal cases now calls for Paralegals to undertake the work to make it efficient.
  1. More experienced fee earners should be undertaking the higher value and more complex portal cases. However, one has to cautious to ensure that the fee earner undertaking the work has appropriate supervision. One can make the mistake that dealing with portal work is straightforward. One has to remember that £25,000 personal injury claims, if litigated could be in the multi track.
  2. Make sure you have a case management system for Portal Cases. This is particularly useful for exiting claims from the Portal, which often requires the user to exit the claim from the Portal. Proclaim’s A2A software is very efficient for Low Value Portal routine cases, and the package of letters includes all the relevant correspondence, which is required when working to very tight fees.
  3. a multi party claim
  4. a serious injury claim, which for what ever reason is not allocated to the multi track.
  5. Allegations of fraud, with volumes of disclosure.

Disbursements in the Portal

45.19

(1) Subject to paragraphs (2A) to (2E), the court –

(a) may allow a claim for a disbursement of a type mentioned in paragraphs (2) or (3); but

(b) will not allow a claim for any other type of disbursement.

(2) In a claim to which either the RTA Protocol or EL/PL Protocol applies, the disbursements referred to in paragraph (1) are –

(a) the cost of obtaining –

(i) medical records;

(ii) a medical report or reports or non-medical expert reports as provided for in the relevant Protocol;

(aa) Driver Vehicle Licensing Authority;

(bb) Motor Insurance Database;

(b) court fees as a result of Part 21 being applicable;

(c) court fees payable where proceedings are started as a result of a limitation period that is about to expire;

(d) court fees in respect of the Stage 3 Procedure; and

(e) any other disbursement that has arisen due to a particular feature of the dispute.

(2A) In a soft tissue injury claim to which the RTA Protocol applies, the only sums (exclusive of VAT) that are recoverable in respect of the cost of obtaining a fixed cost medical report or medical records are as follows—

(a) obtaining the first report from an accredited medical expert selected via the MedCo Portal: £180;

(b) obtaining a further report where justified from an expert from one of the following disciplines—

(i) Consultant Orthopaedic Surgeon (inclusive of a review of medical records where applicable): £420;

(ii) Consultant in Accident and Emergency Medicine: £360;

(iii) General Practitioner registered with the General Medical Council: £180; or

(iv) Physiotherapist registered with the Health and Care Professions Council: £180;

(c) obtaining medical records: no more than £30 plus the direct cost from the holder of the records, and limited to £80 in total for each set of records required. Where relevant records are required from more than one holder of records, the fixed fee applies to each set of records required;

(d) addendum report on medical records (except by Consultant Orthopaedic Surgeon): £50; and

(e) answer to questions under Part 35: £80.

Interim Payments in the Portal

It may be argued that where one had a seriously injured client, for example a serious fracture, where the claim remains in the Portal, the Claimant should always be advised to wait until the end of the prognosis period before settling the claim, to see if he or she recovers in accordance with the prognosis period in the medical report. Many Claimants however, against advice will often seek to take the money, as they need it because the accident has caused financial hardship. An interim payment can become incredibly useful in such circumstances whilst the Claimant waits to see how the injuries settle down and to ensure the Claimant is recovered before a claim is settled. . The rules set out as follows:-

Request for an interim payment

7.12  Where the claimant requests an interim payment of £1,000, the defendant should make an interim payment to the claimant in accordance with paragraph 7.17.

7.13  The claimant must send to the defendant the Interim Settlement Pack and initial medical reports (including any recommendation that a subsequent medical report is justified) in order to request the interim payment.

7.14  The claimant must also send evidence of pecuniary losses and disbursements.  This will assist the defendant in considering whether to make an offer to settle the claim.

7.15  Where an interim payment of more than £1,000 is requested the claimant must specify in the Interim Settlement Pack the amount requested, the heads of damage which are the subject of the request and the reasons for the request.

7.16  Unless the parties agree otherwise—

(a) the interim payment of £1,000 is only in relation to general damages; and     

(b)  where more than £1,000 is requested by the claimant, the amount in excess of £1,000 is only in relation to pecuniary losses.

Interim payment of £1,000

7.17 

(1) Where paragraph 7.12 applies the defendant must pay £1,000 within 10 days of receiving the Interim Settlement Pack.

(2) Sub-paragraph (1) does not apply in a claim in respect of a disease to which the Pneumoconiosis etc. (Workers' Compensation) Act 1979  applies unless there is a valid CRU certificate showing no deduction for recoverable lump sum payments.

Interim payment of more than £1,000

7.18  Subject to paragraphs 7.19 and 7.21, where the claimant has requested an interim payment of more than £1,000 the defendant must pay—

(1) the full amount requested less any deductible amount which is payable to the CRU;

(2) the amount of £1,000; or

(3) some other amount of more than £1,000 but less than the amount requested by the claimant,

within 15 days of receiving the Interim Settlement Pack.

7.19  Where a payment is made under paragraphs 7.18(2) or (3) the defendant must briefly explain in the Interim Settlement Pack why the full amount requested by the claimant is not agreed.

7.20  Where the claim is valued at more than £10,000, the claimant may use the procedure at paragraphs 7.12 to 7.19 to request more than one interim payment.

7.21  Nothing in this Protocol is intended to affect the provisions contained in the Rehabilitation Code.

It should be borne in mind that this process may only be utilised where there is a need for a further report. If the Defendant fails to make the interim payment, the Claimant may exit the claim from the process, subject to the following provisions:-

7.26  Where the defendant does not comply with paragraphs 7.17 or 7.18 the claimant may start proceedings under Part 7 of the CPR and apply to the court for an interim payment in those proceedings.

7.27  Where the defendant does comply with paragraph 7.18(2) or (3) but the claimant is not content with the amount paid, the claimant may still start proceedings.  However, the court will order the defendant to pay no more than the Stage 2 fixed costs where the court awards an interim payment of no more than the amount offered by the defendant or the court makes no award.

7.28  Where paragraph 7.26 or 7.27 applies the claimant must give notice to the defendant that the claim will no longer continue under this Protocol.  Unless the claimant’s notice is sent to the defendant within 10 days after the expiry of the period in paragraphs 7.17, 7.18 or 7.23 as appropriate, the claim will continue under this Protocol.

Fixed Costs and Disbursements - Claims which Exit the Portal

Fixed costs where a claim no longer continues under the EL/PL Protocol – employers’ liability claims

A. If Parties reach a settlement prior to the claimant issuing proceedings under Part 7

Agreed damages

At least £1,000, but not more than £5,000

More than £5,000, but not more than £10,000

More than £10,000, but not more than £25,000

 

Fixed costs

The total of—

(a) £950; and

(b) 17.5% of the damages

The total of—

(a) £1,855; and

(b) 12.5% of damages over £5,000

The total of—

(a) £2,500; and

(b) 10% of damages over £10,000

 

B. If proceedings are issued under Part 7, but the case settles before trial

Stage at which case is settled

On or after the date of issue, but prior to the date of allocation under Part 26

On or after the date of allocation under Part 26, but prior to the date of listing

On or after the date of listing but prior the date of trial

 

Fixed costs

The total of—

(a) £2,630; and

(b) 20% of the damages

The total of—

(a) £3,350; and

(b) 25% of the damages

The total of—

(a) £4,280; and

(b) 30% of the damages

 

C. If the claim is disposed of at trial

Fixed costs

The total of—

(a) £4,280;

(b) 30% of the damages agreed or awarded; and

(c) the relevant trial advocacy fee

D. Trial advocacy fees

Damages agreed or awarded

Not more than £3,000

More than £3,000, but not more than £10,000

More than £10,000, but not more than £15,000

More than £15,000

Trial advocacy fee

£500

£710

£1,070

£1,705

  

Disbursements for Claims within Fixed Recoverable Costs

45.29I

(1) Subject to paragraphs (2A) to (2E), the court—

(a) may allow a claim for a disbursement of a type mentioned in paragraphs (2) or (3); but

(b) will not allow a claim for any other type of disbursement.

(2) In a claim started under either the RTA Protocol or the EL/PL Protocol, the disbursements referred to in paragraph (1) are—

(a) the cost of obtaining medical records and expert medical reports as provided for in the relevant Protocol;

(b) the cost of any non-medical expert reports as provided for in the relevant Protocol;

(c) the cost of any advice from a specialist solicitor or counsel as provided for in the relevant Protocol;

(d) court fees;

(e) any expert’s fee for attending the trial where the court has given permission for the expert to attend;

(f) expenses which a party or witness has reasonably incurred in travelling to and from a hearing or in staying away from home for the purposes of attending a hearing;

(g) a sum not exceeding the amount specified in Practice Direction 45 for any loss of earnings or loss of leave by a party or witness due to attending a hearing or to staying away from home for the purpose of attending a hearing; and

(h) any other disbursement reasonably incurred due to a particular feature of the dispute.

(2A) In a soft tissue injury claim started under the RTA Protocol, the only sums (exclusive of VAT) that are recoverable in respect of the cost of obtaining a fixed cost medical report or medical records are as follows—

(a) obtaining the first report from an accredited medical expert selected via the MedCo Portal: £180;

(b) obtaining a further report where justified from an expert from one of the following disciplines—

(i) Consultant Orthopaedic Surgeon (inclusive of a review of medical records where applicable): £420;

(ii) Consultant in Accident and Emergency Medicine: £360;

(iii) General Practitioner registered with the General Medical Council: £180; or

(iv) Physiotherapist registered with the Health and Care Professions Council: £180;

(c) obtaining medical records: no more than £30 plus the direct cost from the holder of the records, and limited to £80 in total for each set of records required. Where relevant records are required from more than one holder of records, the fixed fee applies to each set of records required;

(d) addendum report on medical records (except by Consultant Orthopaedic Surgeon): £50; and

(e) answer to questions under Part 35: £80.

(2B) Save in exceptional circumstances, no fee may be allowed for the cost of obtaining a report to which paragraph (2A) applies where the medical expert—

(a) has provided treatment to the claimant;

(b) is associated with any person who has provided treatment; or

(c) proposes or recommends treatment that they or an associate then provide.

(2C) The cost of obtaining a further report from an expert not listed in paragraph (2A)(b) is not fixed, but the use of that expert and the cost must be justified.

(2D) Where appropriate, VAT may be recovered in addition to the cost of obtaining a fixed cost medical report or medical records.

What about interlocutory applications?

The costs recovery of interlocutory applications has now become very limited and is set out in CPR 45 as follows:-

Interim applications

45.29H

(1) Where the court makes an order for costs of an interim application to be paid by one party in a case to which this Section applies, the order shall be for a sum equivalent to one half of the applicable Type A and Type B costs in Table 6 or 6A.

(2) Where the party in whose favour the order for costs is made—

(a) lives, works or carries on business in an area set out in Practice Direction 45; and

(b) instructs a legal representative who practises in that area,

the costs will include, in addition to the costs allowable under paragraph (1), an amount equal to 12.5% of those costs.

(3) If an order for costs is made pursuant to this rule, the party in whose favour the order is made is entitled to disbursements in accordance with rule 45.29I.

(4) Where appropriate, VAT may be recovered in addition to the amount of any costs allowable under this rule.

Complex Cases – Amount of Costs Exceeding Fixed Recoverable Costs

There is scope with the rules for a claim for an amount exceeding fixed recoverable costs or predictive costs, where there are ‘exceptional circumstances’, and it is set out as follows:-

Claims for an amount of costs exceeding fixed recoverable costs

45.13

(1) The court will entertain a claim for an amount of costs (excluding any success fee or disbursements) greater than the fixed recoverable costs but only if it considers that there are exceptional circumstances making it appropriate to do so.

(2) If the court considers such a claim appropriate, it may –

(a) summarily assess the costs; or

(b) make an order for the costs to be subject to detailed assessment.

(3) If the court does not consider the claim appropriate, it will make an order for fixed recoverable costs (and any permitted disbursements) only.

There is no current definition in the White Book, as to what this is likely to mean in practice, However, from experience this is likely to potentially apply in the following examples:-

However, if the application is made and fails, the following consequences will apply:-

45.14

(1) This rule applies where –

(a) costs are assessed in accordance with rule 45.13(2); and

(b) the court assesses the costs (excluding any VAT) as being an amount which is less than 20% greater than the amount of the fixed recoverable costs.

(2) The court must order the defendant to pay to the claimant the lesser of –

(a) the fixed recoverable costs; and

(b) the assessed costs.

Solicitor CFA’s Post April 2013

As part of this Chapter it is helpful to note the provisions for Conditional Fee Agreements Post April 2013 and success fees from the Claimant post April 2013. They are set out as follows in LASPO 2012 as follows:-

44

Conditional fee agreements: success fees

(4B) The additional conditions are that—

(a) the agreement must provide that the success fee is subject to a maximum limit,

(b) the maximum limit must be expressed as a percentage of the descriptions of damages awarded in the proceedings that are specified in the agreement,

(c) that percentage must not exceed the percentage specified by order made by the Lord Chancellor in relation to the proceedings or calculated in a manner so specified, and

(d) those descriptions of damages may only include descriptions of damages specified by order made by the Lord Chancellor in relation to the proceedings.”

This should be read in conjunction with the Conditional Fee Agreements Order 2013, which sets out:-

Specified proceedings

4.  A claim for personal injuries shall be proceedings specified for the purpose of section 58(4A)(b) of the Act.

Amount of success fee in specified proceedings

5.  (1)  In relation to the proceedings specified in article 4, the percentage prescribed for the purposes of section 58(4B)(c) of the Act is—

(a)

in proceedings at first instance, 25%; and

(b)

in all other proceedings, 100%.

(2) The descriptions of damages specified for the purposes of section 58(4B)(d) of the Act are—

(a)

general damages for pain, suffering, and loss of amenity; and

(b)

damages for pecuniary loss, other than future pecuniary loss,

net of any sums recoverable by the Compensation Recovery Unit of the Department for Work and Pensions.

Thus, in post April 2013 proceedings, the rules suggests that the Solicitor can charge the Claimant 25% of past pecuniary losses and general damages recovered, but not future losses and thus the explanatory note sets out in the order:-

Notwithstanding the effect of article 3, section 58(4B) of the 1990 Act, enables the Lord Chancellor, in respect of proceedings specified by order under section 58(4A), to effectively cap the lawyer’s success fee at a percentage of specified damages awarded to the client. Article 5 provides that, in a claim for personal injuries, the success fee shall be limited to a maximum of 25% of the damages awarded for pain, suffering and loss of amenity and pecuniary loss, other than future pecuniary loss and net of any sums recoverable by the Compensation Recovery Unit, inclusive of VAT.

Qualified One Way Costs Shifting (QOCS)

Pre-action disclosure applications are not protected by QOCS, nor are proceedings where a claimant has entered into a pre-commencement funding arrangement, whish is denied in:-

48.2(1)

A pre-commencement funding arrangement is-

(i)             a funding arrangement as defined by rule 43.2(1)(k)(i) where……”

CPR 43.2(1)(k)(i) defines a funding arrangement as “an arrangement where a person has –

(i)            entered into a conditional fee agreement or a collective conditional fee agreement which provides for a success fee…..”

The QOCS rules set out under 44.14:-

Effect of qualified one-way costs shifting

44.14

(1) Subject to rules 44.15 and 44.16, orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the claimant.

(2) Orders for costs made against a claimant may only be enforced after the proceedings have been concluded and the costs have been assessed or agreed.

(3) An order for costs which is enforced only to the extent permitted by paragraph (1) shall not be treated as an unsatisfied or outstanding judgment for the purposes of any court record.

Exceptions to qualified one-way costs shifting where permission not required

44.15  Orders for costs made against the claimant may be enforced to the full extent of such orders without the permission of the court where the proceedings have been struck out on the grounds that –

(a) the claimant has disclosed no reasonable grounds for bringing the proceedings;

(b) the proceedings are an abuse of the court’s process; or

(c) the conduct of –

(i) the claimant; or

(ii) a person acting on the claimant’s behalf and with the claimant’s knowledge of such conduct,

is likely to obstruct the just disposal of the proceedings.

Exceptions to qualified one-way costs shifting where permission required

44.16

(1) Orders for costs made against the claimant may be enforced to the full extent of such orders with the permission of the court where the claim is found on the balance of probabilities to be fundamentally dishonest.

In order words, if the Claimant proceeds to Trial, and recovers zero, provided that the claim is not found to be fundamentally dishonest, or one of the other exemptions above applies, the Court can still makes a costs order but the Defendant will not be able to enforce it. A County Court Judgment would not be recorded against the Claimant in such circumstances.

The Defendant will only be in summary, be able to enforce any order, upto the amount of damages recovered by the Claimant.

QOCS protection may also be lost if the claimant fails to beat a defendant’s Part 36 offer, but the defendant will only be able to recover costs up to the level of the claimant’s damages.

QOCS of course took away the need for After the Event insurance cover in relation to low value personal injury cases in some circumstances, as in effect the Claimant’s risk of paying the Defendant’s costs has now been taken away except in very limited circumstances.

Claimant Lawyers have to be wary of the rules surrounding fundamental dishonesty. In the case of Gosling v Screwfix and Anr (unreported, 29 March 2014) at Cambridge County Court, HHJ Moloney QC ordered the claimant to pay the defendant’s costs of the action on an indemnity basis.

The Judge ruled that a personal injury claimant who exaggerated the extent of his ongoing symptoms should be denied the protection of qualified one-way costs shifting (QOCS) on the grounds that the claim was “fundamentally dishonest”.

Caution should be expressed in multiple defendant cases, where it is arguable that QOCS protection may not apply against a defendant who is sued in a multiple defendant case, and the case fails against one Defendant. QOCS arguably allows recovery of costs by the Defendant against whom the Claimant has failed upto the aggregate amount of damages awarded to the Claimant. In such circumstances a Sanderson or Bullock order should be sought that the compensating Defendant pay the costs order, and the Claimant should take out ATE to cover such a risk.

Defendant’s Costs and Part 36 Offers – Post July 2013 Cases

Defendant’s Costs can recovered in certain circumstances within FRC and CPR 45 sets out as follows:-

45.29F

(1) In this rule—

(c) paragraphs (2) to (7) apply to all other cases under this Section in which a defendant’s costs are assessed.

(2) If, in any case to which this Section applies, the court makes an order for costs in favour of the defendant—

(a) the court will have regard to; and

(b) the amount of costs order to be paid shall not exceed,

the amount which would have been payable by the defendant if an order for costs had been made in favour of the claimant at the same stage of the proceedings.

(3) For the purpose of assessing the costs payable to the defendant by reference to the fixed costs in Table 6, Table 6A, Table 6B, Table 6C and Table 6D, “value of the claim for damages” and “damages” shall be treated as references to the value of the claim.

(4) For the purposes of paragraph (3), “the value of the claim” is—

(a) the amount specified in the claim form, excluding—

(i) any amount not in dispute;

(ii) in a claim started under the RTA Protocol, any claim for vehicle related damages;

(iii) interest;

(iv) costs; and

(v) any contributory negligence;

(b) if no amount is specified in the claim form, the maximum amount which the claimant reasonably expected to recover according to the statement of value included in the claim form under rule 16.3; or

(c) £25,000, if the claim form states that the claimant cannot reasonably say how much is likely to be recovered.

(6) Where an order for costs is made pursuant to this rule, the defendant is entitled to disbursements in accordance with rule 45.29I

(7) Where appropriate, VAT may be recovered in addition to the amount of any costs allowable under this rule.

Thus for the purpose of the assessment exercise, the Defendant can only recover its fixed costs that would have been payable by the Defendant, to the Claimant, if an order for costs had been made in favour of the Claimant at the same stage in the proceedings.

The Defendant can still of course make a Part 36 offers within proceedings to protect its costs position, and the following provisions will apply:-

Where the claimant accepts an offer after the relevant period has elapsed, or the defendant achieves judgment more favorable than its offer:

  • the claimant will recover costs calculated based on the stage when the relevant period elapsed and the value of damages recovered
  • the claimant will be liable for the defendant’s costs for the period from the date of expiry of the relevant period to the date of acceptance
  • if the parties do not agree the liability for costs then the court will make the determination
  • in relation to the defendant’s costs the sum awarded by the court “shall not exceed the fixed costs….applicable at the date of acceptance, less the fixed costs to which the claimant is entitled”.

The Claimant can make early Part 36 offers in FRC cases and the consequences for the Defendant in the Claimant obtaining a more advantageous Judgment at Trial, are it can be argued, quite severe for the Defendant:-

36.14

(1) Subject to rule 36.14A, this rule applies where upon judgment being entered –

(a) a claimant fails to obtain a judgment more advantageous than a defendant’s Part 36 offer; or

(b) judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant’s Part 36 offer.

(1A) For the purposes of paragraph (1), in relation to any money claim or money element of a claim, ‘more advantageous’ means better in money terms by any amount, however small, and ‘at least as advantageous’ shall be construed accordingly.

(2) Subject to paragraphs (6) and (7), where rule 36.14(1)(a) applies, the court will, unless it considers it unjust to do so, order that the defendant is entitled to –

(a) costs from the date on which the relevant period expired; and

(b) interest on those costs.

(3) Subject to paragraph (6), where rule 36.14(1)(b) applies, the court will, unless it considers it unjust to do so, order that the claimant is entitled to –

(a) interest on the whole or part of any sum of money (excluding interest) awarded at a rate not exceeding 10% above base rate(GL) for some or all of the period starting with the date on which the relevant period expired;

(b) his costs on the indemnity basis from the date on which the relevant period expired; and

(c) interest on those costs at a rate not exceeding 10% above base rate(GL); and

(d) an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage set out below to an amount which is –

(i) where the claim is or includes a money claim, the sum awarded to the claimant by the court; or

(ii) where the claim is only a non-monetary claim, the sum awarded to the claimant by the court in respect of costs –

Amount awarded by the court

Prescribed percentage

up to £500,000

10% of the amount awarded;

above £500,000 up to £1,000,000

10% of the first £500,000 and 5% of any amount above that figure

It is argued that it is therefore prudent for Claimant lawyers to make early Part 36 offers to encourage Defendants to settle early. This will likely be the only way, it is argued that Defendants will be encouraged to settle cases within fixed recoverable costs.

Early and realistic Part 36 offers will hold a tactical advantage for the Claimant.

A Warning for Disease Cases and Multiple Defendants

In Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654, the claimant issued proceedings against six named defendants for noise induced hearing loss (NIHL). The third defendant, Venduct, accepted that it was responsible for any liability that was established on the part of the first and second defendants.

The claimant then settled with the fourth, fifth and sixth defendants, who agreed to pay him £20,000. This was recorded in a Tomlin order. The claimant then served a notice of discontinuance in respect of the claim against Venduct.

Venduct sought its costs of £8,000 from the claimant; under the QOCS rule 44.14(1), a successful defendant can enforce a costs order up to the damages recovered by the claimant.

At first instance, Regional Costs Judge Hale in Nottingham held that the Tomlin order did not meet the requirement of the rule that such costs could only be paid from an “order for damages and interest.The schedule to a Tomlin order was not an order of the court”, he said.

He also ruled that Venduct would have been entitled under rule 44.14, in principle, to enforce its costs order against the claimant, even though the source of the claimant’s funds was another defendant. The Court said:-

  1. For the reasons explained below, I consider that each of these ways of testing the underlying dispute between the parties about multi-defendant cases leads to the conclusion that the Costs Judge was correct when he concluded that Venduct were, in principle, entitled to enforce its costs order against the claimant, even though the source of the claimant's funds was another defendant.
  1. Let us assume that the claimant issued proceedings against two defendants, A and B, which went all the way to trial. The claimant recovered £100,000 against defendant A, but the claim against defendant B failed, leading B to incur £40,000 by way of costs. In circumstances where the claimant had freely sued B (so that a Bullock or Sanderson order was inappropriate), I can see no reason in principle why B should not recover the £40,000 from the £100,000 payable by A to the claimant. 
  1. The QOWCS regime is designed to ensure that a claimant does not incur a net liability as a result of his or her personal injury claim: that, at worst, he or she has broken even at the end of the action. In the example I have given, the QOWCS regime will have facilitated his recovery of £100,000 against A. But there is no reason why that regime should prevent B from recovering its costs out of the damages payable by A.
  1. Any other result would give a claimant carte blanche to commence proceedings against as many defendants as he or she likes, requiring those defendants to run up large bills by way of costs, whilst remaining safe in the knowledge that, if the claim fails against all but one defendant, he or she will incur no costs liability of any kind to the successful defendants, despite the recovery of sums by way of damages from the unsuccessful defendant. That seems to me to be wrong in principle, because it would encourage the bringing of hopeless claims. 
  1. The wording of the rule is consistent with that approach. There is nothing in r.44.14(1) which suggests that the claimant's fund (out of which the costs order will be met) is specific to the damages and interest payable by the defendant seeking to enforce the costs order, as opposed to the damages and interest payable by any other defendant. No such limitation can be discerned, and on the contrary, r.44.14(1) deals simply with orders for costs made against a claimant on the one hand, and orders for damages and interest made in favour of the claimant, on the other. The language is wide. It is clearly capable of embracing the situation in which defendant B has a claim for costs against the claimant which does not exceed the amount of the order for damages and interest made in favour of the claimant and payable by defendant A.

Conclusions 

Thus it may be argued that if the majority of Portal Claims, continue to exit the low value portal, and are litigated, these types of Claims are likely to remain profitable for Claimant Solicitors. As will be seen from later Chapters Employers liability cases can be extremely complicated and the danger of using inexperienced fee earners can lead to matters being missed, or claims with little or no prospects of success being progressed to litigation. The key to post Jackson cases is arguably identify the cases likely to fail very early on, and that is what the remainder of this book will concentrate on.

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