This site uses cookies.

RTA Protocol: Late Final Payments Are Not a Ticket to Greater Costs - Matthew Hoe, Jaggards & Taylor Rose Law

28/10/14. Can a claimant tear up the agreement and issue Part 7 proceedings for the damages if the defendant fails to pay damages and/or costs within 10 days of a settlement at Stage 2 of the RTA or EL/PL Protocol? That was the issue before the court in Coggon v Irvine (County Court at Birkenhead, 17 October 2014, unreported). The answer was ‘no’. The claimant was limited to RTA Protocol costs.

The Issue

Paragraphs 7.47 and 7.44 of the Protocols require the defendant to pay within 10 (business) days. It is a mandatory provision, but the Protocol contains no automatic consequence or sanction if the deadline is missed. Thus it is a question of what is reasonable in the circumstances.

The regional costs judge had identified the issue as arising in a number of assessments, and listed three cases together for consideration of the preliminary issue of whether it was reasonable for the claimant to exit the protocol and commence proceedings, and ultimately to recover costs on the standard basis calculated by reference to hourly rates and time spent.

This was thus an older case in which escape from the Protocol opened up the possibility of costs on an hourly rate. In more recent cases, where the issue arises also, the claimant seeks the fixed recoverable costs under CPR 45 Section IIIA, which invariably exceed the fixed Protocol costs under Section III. In those cases, the claimant does not so often go so far as to commence Part 7 proceedings for the damages, and merely seeks the pre-litigation stage of the fixed recoverable costs. Coggon is equally of interest in those cases because it considers the question of whether it is reasonable to exit the Protocol.

The Case

In the particular case, the costs payment had been received marginally late (8 days) by the claimant. The damages were paid in time. The claimant had proceeded to commence Part 7 proceedings for the damages as if no agreement had been reached.

Power to Restrict

The court identified that the first issue was whether it had the power to restrict costs to those allowed under the RTA Protocol. The claimant argued that CPR 45.24 was inapplicable because there had been no judgment, and argued that the court must still perform a line by line assessment and could not jump to allowing a fixed sum. The defendant argued that judgment should be interpreted broadly so as to encompass orders, but in the end there was little difference to the court’s discretion to be exercised under Part 44.4, because the court still had to decide whether the costs were unreasonably incurred and then decide what to do if they were. In accepting the defendant’s submission, the court came to conclusions in the same vein as the circuit judge in Brown v Ezeugwa (Tunbridge Wells County Court, 12 January 2014, unreported) and the costs judge in Davies v Greenway (SCCO, 30 October 2014, unreported).

Reasonable to Issue?

The court then considered whether the claimant was justified in issue Part 7 proceedings. The claimant’s position was that there was an undisputed breach by the defendant, which entitled the claimant to exit the Protocol and commence proceedings. Even there was no automatic sanction, the claimant urged the court to impose a sanction otherwise the Protocol would be ‘toothless’. The claimant argued that the Protocol was outside the usual rules of contract law, and drew an analogy with Part 36. The claimant said that it was reasonable to withdraw the offer.

The defendant countered those arguments in the following ways. The Part 36 analogy was poor, because offer and acceptance under that Part led to a binding agreement, where enforcement was the remedy if breached. Part 36 departs from the common law thus only in the way that it treats rejected offers, not accepted offers. Notionally the late payment of costs resulted in lost interest of under £3, and if the court were to impose a sanction, allowing issue of Part 7 proceedings and creating potential exposure to a further costs liability running into thousands was disproportionate. The claimant had received the damages and costs (even though the cheques were returned) weeks before the proceedings were commenced.

The defendant referred to the careful structure of the RTA Protocol. There are two classes of provisions relating to payment. First, those for payments at interim stages where the protocol provides for automatic exit if they are not made. Second, final payments, for which there is no automatic exit. The defendant submitted that was intentional. There was no exit because there was no dispute left to leave the Protocol (save only for a dispute on disbursements, for which costs-only proceedings would be the appropriate route). The only valid way forward would be an enforcement claim, which did not require an exit from the Protocol. Generally, if settled claims are litigated, they should be struck out for abuse of process. The claimant, in acting as he had done, had failed to comply with the overriding objective.

Outcome

The court accepted the defendant’s submissions. The court found that the claimant had acted unreasonably. As a consequence, the claimant’s costs were limited to the RTA Protocol amounts which the defendant had offered already. The claimant was ordered to pay the defendant’s assessment costs.

The claimant’s (or his solicitor’s) conduct is the latest tactic to recover greater costs. Coggon is only a first instance judgment but is a guide to the view of a court centre that deals with many costs claims. When there is a minor breach of the Protocols, an extreme option which may result in recoverability of greater costs may be attractive. But it might be better to pick up the telephone and try to resolve the problem before it backfires expensively.

Matthew Hoe
Jaggards
Taylor Rose Law
With thanks to Stephen Turner at Parklane Plowden for the account of events at court

Image ©iStockphoto.com/BrianAJackson

All information on this site was believed to be correct by the relevant authors at the time of writing. All content is for information purposes only and is not intended as legal advice. No liability is accepted by either the publisher or the author(s) for any errors or omissions (whether negligent or not) that it may contain. 

The opinions expressed in the articles are the authors' own, not those of Law Brief Publishing Ltd, and are not necessarily commensurate with general legal or medico-legal expert consensus of opinion and/or literature. Any medical content is not exhaustive but at a level for the non-medical reader to understand. 

Professional advice should always be obtained before applying any information to particular circumstances.

Excerpts from judgments and statutes are Crown copyright. Any Crown Copyright material is reproduced with the permission of the Controller of OPSI and the Queen’s Printer for Scotland under the Open Government Licence.