Since the advent of the portal for fast track employers' and public liability claims, the various scenarios relating to how fixed costs should or should not be applied have gradually been played out in the courts. The last important decision was Qader & Others v Esure  EWCA 1109 where the Court of Appeal (to the relief of claimant solicitors) determined that Part 45 fixed costs did not apply to a case which originated in the portal but was later allocated to the multi-track. In doing so the Court took the highly unusual step of looking historically at what it considered Parliament had intended under the fixed costs regime - and then added words to the CPR to achieve the perceived legislative intention.
There do, however, remain questions over the application of fixed costs when the claim did not originate in the portal. One of the scenarios envisaged when the Jackson reforms were first announced and extended to EL and PL claims was the inflated valuation by claimants of damages above the £25,000 limit. This would take the claim outside the protocol and portal arrangements and potentially avoid the fixed costs regime even if they ultimately settled for less than £25,000. Surprisingly, despite all the initial alarm about this prospect, the reality is that it has not happened as often as anticipated. But what is the position if it does?
The starting point for this question is the Pre-action protocol for low value EL/PL claims. Section 4.1 states that the protocol applies where the claim includes damages in respect of personal injury and 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’). The key point here is that it is a valuation by the claimant. The protocol directs that the parties shall use the portal in cases where it applies.
The sanction for failing to use the portal is contained in CPR 45.24(1)(ii) which provides that if a claimant "does not comply with the process set out in the relevant Protocol and starts proceedings under Part 7… and a judgment is given in favour of the claimant… but the court considers that the claimant acted unreasonably by valuing the claim at more than £25,000, so that the claimant did not need to comply with the relevant Protocol… the court may order the defendant to pay no more than the fixed costs in rule 45.18 together with the disbursements allowed in accordance with rule 45.19." In those circumstances the relevant costs are portal costs rather than the Fixed Recoverable Costs (payable when a case exits the portal) and are lower.
That covers the position if proceedings were issued but what if proceedings were never issued? For example, if the claimant values the case above £25,000 so does not use the portal, but then accepts £5,000 in settlement pre-issue. It has been observed that claims that have never been in the portal and where proceedings were not issued would not attract either fixed costs under the portal arrangements or Fixed Recoverable Costs. Nor is there any entitlement to a standard award of costs, unless the parties agree. So if the settlement makes no provision for costs, on the face of it, there may be no entitlement to costs at all.
Either way, a prudent claimant will ensure that the valuation of the claim on the available evidence is carefully documented at the time so that proof can be provided to the Court at the time of assessment of the reasonableness of the valuation. Unfortunately the Qader case does not provide any comfort as it only applies to cases which have been allocated to the multi-track, not those which have not been allocated. The unfortunate upshot is that the wording of Part 45 encourages claimants to issue proceedings to obtain the certainty of standard costs. It appears that further satellite litigation is inevitable.