Smith v Wyatt; Rennie v Logistic Management

(2011) 13 January Cambridge CC, HHJ Moloney QC (Unreported)

Costs in road traffic accident claims issued unreasonably

These two appeals before His Honour Judge (HHJ) Moloney deal with the situation where road traffic claims are dealt with poorly by the claimants in the pre-action protocol stage, as a consequence of which they are issued shortly before the expiry of the limitation period. In both of these cases, the defendant’s Part 36 offers had been accepted, which the claimants alleged gave rise to deemed costs orders under Civil Procedure Rule 36.10 for costs on the standard basis, to be assessed if not agreed.

At the detailed assessments, the district judges refused to carry out a line-by-line assessment. Instead, they awarded global sums equal to the sum that would have been awarded under the fixed recoverable costs (FRC) scheme had the claims been settled before the proceedings. C appealed in each case, holding that the district judges had exceeded their discretion.

Appeals dismissed

HHJ Moloney dismissed the appeals and held:

  • The Court of Appeal decisions in O’Beirne v Hudson and Drew v Whitbread [2010] applied even though the costs regime in these appeals was the road traffic accident (RTA) fixed costs scheme rather than the small claims and fast track as in O’Beirne and Drew.
  • The question remained as to whether the costs were reasonably incurred and reasonable in amount. The substantial element of the test in O’Beirne was whether it was reasonable for the paying party to pay more than would have been recoverable under the alternative regime. This has to be borne in mind by a district judge on a detailed assessment so that, if the district judge concluded that it was not reasonable to incur the extra costs involved in issuing proceedings, a line-by-line scrutiny would not be required.
  • If the district judges had simply found that a case ought to have fallen within a certain regime, without considering what was reasonable, that would have exceeded their discretion. In these cases, the district judges had addressed the central test as to costs reasonably incurred and reasonable in amount and had reached the correct answer.

Comment

HHJ Moloney has no hesitation in confirming that the Court of Appeal decisions of O’Beirne and Drew last year can also be applied to the RTA FRC schemes, thus reinforcing many first instance decisions to that effect (such decisions having previously been based on reducing the claimant’s costs due to conduct).

In summary, therefore, the impact of these decisions is that the courts can consider what track or cost regime ought to have applied when assessing whether the costs that have been incurred are reasonable. If you frame your points of dispute carefully in these cases, the court has substantial discretion to apply a fixed or restrictive costs regime even where the costs order requires costs on the standard basis.

Griffin v Wisbech Phab Club

(2011) 11 July Norwich CC, Unreported

Accident on platform used to raise wheelchair into a vehicle covered by fixed recoverable costs scheme under CPR 45

The claimant (C) was injured whilst being raised in a wheelchair on a platform attached to a vehicle. The operator had failed to secure the wheelchair or apply a seatbelt and C suffered an injury.

D alleged the case was covered by the fixed recoverable costs (FRC) scheme so fixed costs applied. The FRC scheme applies to claims for injuries caused by or arising out of the use of a vehicle on a road or public place.

The court held that the accident did arise out of the use of the vehicle because the vehicle with its platform was going to transport C and she had an accident whilst she was getting onto the vehicle. The FRC scheme applied.

Comment

This case is not binding but illustrates the point that the FRC scheme can apply more widely than is often assumed to the advantage of defendants and their insurers who may pay much less in costs as a result.

The court was referred to the case of Dunthorne v Bentley [1996], which was a case that concerned the applicability of motor insurance when a motorist ran across a road to obtain petrol to restart her broken-down car. The motorist was run over (and fatally injured). The driver of the other vehicle claimed for their injuries. The motorist’s insurance company said that the accident was not caused by her use of her car, but by her actions as a pedestrian. The court held that the reason for her being in the road arose from the use of her vehicle, and third party insurance applied.

Hadaway v Raza

[2011] 12 May Central London County Court

Part 36 offer could be accepted even during stay in proceedings

A reminder that a Part 36 offer can be accepted at any time unless it is withdrawn. In this case, the defendant accepted a claimant’s offer even though they had consented to a stay in proceedings. Gibbon v Manchester CC applied.

Lisbie v SKS Scaffolding

[2011] EWHC 90203 (Costs)

Meaning of ‘agreed damages’ in road traffic accident fixed recoverable costs scheme

The claimant (C) accepted a pre-issue offer of £1,475 reduced by 50 per cent for contributory negligence, so the agreed sum was £737.50. Costs were to be assessed in default of agreement. The claim included a personal injury, and general damages at full value were agreed at £1,450. The parties could not agree the costs.

C claimed road traffic accident (RTA) fixed recoverable costs (FRC) in the sum of £2,015.58. The defendant (D) offered small claims costs in the sum of £280.

C said that:

  • if the claim had been issued for the amount of the agreed damages, the small claims track would not have been the normal track because the value was £1,475 as contributory negligence was to be disregarded under CPR 26.8(2)
  • the claim would be allocated to the fast track, if issued
  • to say that the FRC scheme does not apply leaves an inconsistency in the rules so that parties would be forced to issue their claim to recover costs.

Court held

The decision in Parveen v Farooq (2009) (30 June 2009, Liverpool County Court) could not be distinguished and although was not binding the decision was followed in this case.

In the Parveen case, the Judge said that the focus had to be on the rule governing whether the case falls within or without the FRC scheme, ie CPR 45.7(2)(d). The only questions to ask are:

  • What were the agreed damages? (In Parveen, damages were £875 (ie £1,750 less 50 per cent.)
  • If a claim had been issued for £875, would the small claims track have been the normal track for that claim? The answer is yes, under CPR 26.6, which is signposted in rule 45.7 and refers only to the value of the claim.

There is, therefore, no need to assess the financial value of the claim or to consider contributory negligence as, at this stage, the court is not allocating to track but calculating fixed recoverable costs and the court knows what the agreed damages are.

Policy plays a part

The words ‘agreed damages’ are to be interpreted as they are written and cannot be interpreted to mean the value of the claim before deduction for contributory negligence even if inconsistency is the result. Inconsistency does not justify a different interpretation in a formulaic scheme aimed to deal with providing a certain and easily calculated basis for recovery of costs.

CPR 45.7(2)(d) uses the words ‘a claim being issued for the amount of the agreed damages’. If the Civil Procedure Rules Committee had wanted contributory negligence and other issues to be disregarded for the purposes of the FRC scheme, it would have used the words ‘a claim being issued that would not have been allocated to the small claims track having regard to its value’.

Advice

Watch out for the impact of contributory negligence. If the agreed damages fall below the small claims track because of the contributory negligence reduction, the FRC scheme will not apply to cases that have not been issued. The claimant is only entitled to small claims costs. You will need to take this point into account when you make offers to settle a claim.

Even though the portal scheme will apply to RTAs on or after 30 April 2010, the FRC scheme will continue to apply to plenty of cases, ie RTAs before 30 April 2010, claims falling out of the portal scheme or claims not involving a personal injury.