We want to wish them and our newly qualified solicitors success in their legal path in what will, no doubt, be an interesting year in the insurance industry.

A total of 319 responses were received from legal professionals, mediators, insurers, members of the public and more. The consultation period closed on 30 June 2011 and the Government’s response summarises these responses. 

The consultation paper was aimed at improving our civil justice system which, despite its strengths, has not been working as well as it should have.

Kenneth Clarke MP states, in the introduction to this report:

“Our aim is to deliver a system that prevents the unnecessary escalation of disputes before cases reach the courtroom; where courts offer quicker and more efficient services where they are needed; where judgments can be enforced fairly; and where costs are borne in a fair way.” 

The proposals: 

Preventing cost escalation 

• Extending the financial limit of the RTA PI scheme, and introducing similar schemes for other personal injury claims.

It is important to note however, that whilst the Government plans to increase the financial limit (to £25,000) this is going to be done with caution, and only after a full evaluation of the current scheme, to be followed by publication of final impact assessment of the proposed increase.

Extending the scheme to EL/PL and low value clinical negligence claims is also going to be carefully considered, and will not be introduced until further consultation/evaluation has taken place.

• Developing mandatory pre-action directions for money claims under £100,000.

The Government decided to halt plans to develop mandatory pre-action directions at this stage. Instead, it is going to consider the effectiveness of the existing pre-action protocols and simplify them to ensure a more streamlined and cost effective process.

• Implementing a system of fixed recoverable costs, similar to that proposed by Jackson LJ in his report. 

The Government intends to extend fixed recoverable costs to include higher value claims and a broader range of personal injury claims.  This will be preceded by detailed discussions with stakeholders.

• Increasing the small claims track limit to £10,000.

A further increase, to £15,000, is indicated to follow, after a full evaluation of the initial increase (to £10,000) has taken place.

Please note that there will be no change to the current limit for PI claims.

The Government proposes to change CPR r. 26.7(3), to allow the judiciary to refer business-to-business disputes and other suitable cases with a dispute value over £10,000 to the small claims track without requiring the parties’ consent.  Furthermore, the judiciary will have the option of referring more complex cases with a value of less than £10,000 to the fast track, if appropriate.

The fast track limit is not going to increase at this stage.

Alternative Dispute Resolution 

• All small claims to be automatically referred to mediation.

However, as further analysis and development is required, at this stage, only cases with a value of up to £5,000 will be automatically referred to mediation, with a view to increase the referral limit to £10,000 in the future once the scheme has become established.

The Government proposes to assess the effectiveness of mediation delivered by telephone, face-to-face, web and hard copy formats at various stages of the pre and post issue process, and work closely with the Law Society – all in the name of education and encouragement to mediate.

It is proposed that parties in low value small claims should be given the opportunity to choose whether their small claim is determined on paper – if the judge agrees that is appropriate in the circumstances.

The use of telephone hearings in small claims cases is not taken forward until more reliable technological options are available to courts.

Debt Recovery 

• The procedures for the obtaining of third Party Debt Orders and Charging Orders will be streamlined. 

Structural Reforms 

• A single county court, operating as a single national entity for England and Wales, will be established. 

For more information, please contact: adi.frankovitch@horwichfarrelly.co.uk

The Court of Appeal dismissed both appeals and held that acceptance of a Part 36 offer pre-issue does not oust the application of fixed costs under Section II of Part 45.

Both cases arose from a road traffic accident claim for damages.  The parties in both cases reached an agreement as a result of the respective defendant’s Part 36 offer(s) of less than £10,000.  In each case the defendant agreed to pay the claimant’s costs but the parties failed to reach an agreement on the amount, and each of the claimants had therefore pursued costs-only proceedings under rule 44.12A.

Each claimant sought an order for costs to be assessed on the standard basis, relying on rules 36.10(1) and (3).

The defendants argued that fixed costs should be awarded, as per Section II of Part 45, as both cases arose out of RTAs’ and the award of damages in both cases did not exceed £10,000.

In Solomon v Cromwell Group Plc., DJ Wheeler held that on acceptance of the defendant’s offer, rule 36.10 was invoked, and by virtue of rule 44.12(1)(b) an order for costs on the standard basis was deemed to have been made. Accordingly, the fixed costs regime did not apply, but on detailed assessment it would be open to the costs judge to take account of the costs that would have been recoverable under the fixed costs regime.

On appeal, Judge Platts reached a different conclusion. He held that rule 36.10 only applies to costs “of the proceedings” and as the case settled pre-issue, it did not apply in this case. Therefore, no order for costs on the standard basis was deemed to be made under rule 44.12 and the case fell within Section II of Part 45, i.e. the fixed costs regime. Judge Platt went on to hold that as the claimant issued costs-only proceedings under rule 44.12A, the court was bound by rule 44.12A(4A) to assess costs in accordance with Section II of Part 45.

In Oliver v Doughty, DJ Smith reached the same conclusion.

The claimants in each case appealed against the judgements below, which refused to award them costs on the standard basis.

Moore-Bick LJ, giving the lead judgement, started considering the appeals by examining the Rules.  He noted as follows:

• The Rules have been subject to continuous development since their introduction.   Part 36 was intended to encourage parties to compromise proceedings by providing protection against liability for costs.  In its original form, Part 36 did not extend to offers to settle made pre-issue although provision was made for the court to take such offers into account when making an order for costs.  From the outset one consequence of accepting a Part 36 was a right to recover costs in respect of the period up to the date of acceptance of the offer, and by virtue of rule 44.12 an order for costs on the standard basis was deemed to have been made.
• In October 2000, rule 44.12 was introduced to enable parties who had reached agreement pre-issue but who could not agree on the amount of costs to be paid, to start costs-only proceedings.  Before the introduction of that rule, the receiving party would have had to issue fresh proceedings to recover his costs.
• In October 2003 Section II of Part 45 was introduced and was welcomed as a breakthrough in the search for a means of controlling the costs of low-value RTA claims.  That addition to the Rules provided an important part of the context in which the rules were amended later, in April 2007, to enable a Part 36 offer to be made pre-issue, by way of rule 36. 3(2):

“A Part 36 offer – 

(a) May be made at any time, including before the commencement of proceedings.”

The claimants argued that Judge Platts was wrong because the word “proceedings” in rule 36.10(1) must be given a broad meaning and was clearly intended to include cases falling within the scope of rule 36.3(2)(a). Rule 44.12 provides that where a right to costs arises under 36.10(1) a costs order will be deemed to have been made on the standard basis.  The combined effect of rules 36.10(1) and 44.12 is that on acceptance of the offer, the claimant is deemed to be holding an order for costs on the standard basis and does not need to obtain any further order from the court to issue proceedings for detailed assessment.  He can simply issue a notice of commencement. He can therefore bypass Section II of Part 45 altogether.

The defendants argued that Section II of Part 45 assumes that as the parties have reached an agreement on damages, but failed to reach an agreement on costs, one of the parties will bring costs-only proceedings under rule 44. 12A; the detailed assessment will then be conducted in accordance with Section II of Part 45, as per paragraphs (4)(a)(1) and (4A).

Moore-bick LJ determined:-

• Judge Platts was wrong to hold that rule 36.10(1) does not apply in a case where a Part 36 offer is made and accepted pre-issue.  It is true that the word “proceedings” normally refers to proceedings that have already been issued, and Part 36 as a whole is primarily directed to that situation, but the terms of Part 36 as a whole make it clear that steps taken in contemplation of proceedings are to be regarded as “proceedings” for the purpose of rule 36.10(1).

“That is the natural meaning of the language used and if it were not so the rules would be silent on the consequences of accepting a Part 36 offer made before proceedings had been issued…. the effect… is that the claimant is entitled to recover costs he has incurred in contemplation of proceedings up to the date of acceptance insofar as they would have formed part of his recoverable costs if proceedings had already been issued.”

• In the present case there are by definition no proceedings in which an order can be made, unless and until the receiving party issues a claim under Part 7 or one of the parties issues Part 8 proceedings under rule 44.12A.
• Rule 44.12 must be read and understood in that context.  “An order for costs cannot exist in a vacuum divorced from any substantive proceedings, and accordingly an order for costs cannot be deemed to have been made under rule 44.12(1)(b) if a Part 36 offer is made and accepted before any proceedings have been commenced.”
  
• Rule 44.12A provides a simplified procedure by which an order for costs can be obtained in a case where the dispute is settled pre-issue, but the court’s powers are limited to making an order for costs to be determined by detailed assessment or dismissing the claim.
• On the face of it, the procedure in rule 44.12A is apt to refer to cases that fall within Part 36. 10(1) as well as to those that do not. The procedure serves as a mechanism for producing an order for costs to be the subject of a detailed assessment where the parties agree that should happen.  It provides for Section II of Part 45 to take precedence in cases to which it applies.  This mechanism is intended to apply both to cases settled through the operation of Part 36 and to those which settled without recourse to it.
• Section II of Part 45 is intended to provide a consistent outcome that is fair across a broad range of cases, and does not necessarily lead to an outcome in every individual case equivalent to that which would result from a detailed assessment on the standard basis.  It is therefore inescapable that there is a degree of conflict between rule 36.10(3) and the fixed costs regime for which it provides.  Although that regime does involve an assessment of some kind, one cannot properly regard it as representing an assessment on the standard basis in those cases to which it applies.
• Despite the terms of rule 36.10(3) it is difficult to believe that the Rule Committee can have intended that a claimant in a low-value road traffic accident claim who accepts a Part 36 offer pre-issue should be entitled to recover costs assessed on the standard basis, whereas a claimant who accepts an offer to settle, made otherwise than under Part 36, should be limited to the costs prescribed by Section II of Part 45.
• Furthermore, it does not seem reasonable that a claimant who brings costs-only proceedings under rule 44.12A should be subject to a more restrictive costs regime than one who starts proceedings under Part 7 to recover his costs. The whole purpose of introducing Section II of Part 45 was to impose a ‘rough and ready’ system in a limited class of cases to save both time and money.
• “If the claimants’ argument were correct, the acceptance of a Part 36 offer would always result in an order for costs on the standard basis in low-value road traffic accident cases.  That would undermine the fixed costs regime and provide a powerful incentive for defendants not to make Part 36 offers in such cases. Moreover, rules 45.7 and 45.8 make it quite clear that the costs to be allowed in proceedings under rule 44.12A are those prescribed in Section II of Part 45, so if either party (perhaps the defendant) begins costs-only proceedings, there is no escape from the provisions of that Section. None of these consequences fits well with the broader scheme of the Rules which seeks to encourage settlement by the use of Part 36, and to control the costs of low-value road traffic accident claims in the manner described.”
• The Rules must be read in accordance with the established principle that where an instrument contains both general and specific provisions, some of which are in conflict, the general are intended to give way to the specific.
• Rule 36.10 contains rules of general application, whereas Section II of Part 45 contains rules specifically directed to a narrow class of cases.  The intention is that Section II of Part 45 should govern the cases to which it applies, to the exclusion of other rules that make different provision for the general run of cases.  The procedure in rule 44.12A is not exclusive and a claimant may start proceedings under Part 7 or Part 8 to recover costs (see also paragraph 17.11 of the Costs Practice Direction).  However, it is very doubtful whether he could recover more than the fixed costs for which Section II of Part 45 provides.
• In the present case, it is unnecessary to decide that question because both claimants issued proceedings under rule 44.12A. Accordingly, subject to any agreement between the parties to the contrary, neither can recover more or less by way of costs than is provided for under the fixed costs regime.
• The defendants submitted that it is not possible for parties to contract out of the fixed costs regime, but that is true only in part.  There is nothing in the Rules to prevent parties from settling a dispute on whatever terms they please, including as to costs.  Section II of Part 45 is concerned with proceedings under rule 44.12A and prescribes what the receiving party is to be allowed by way of costs in such proceedings. It is not open to the parties to expand or limit the court’s powers, and if a claimant chooses to proceed under rule 44.12A he will be unable to recover more than the amount for which Section II of Part 45 provides.  However, there is no reason in principle why, if parties choose to agree different terms, the agreement should not be enforceable by ordinary process.
• In Solomon v Cromwell the offer that was accepted in settlement of the claim was expressed to be a Part 36 offer.  Nothing else was said regarding the consequences of acceptance, apart from the defendant’s willingness to pay the claimant’s “reasonable costs” to be assessed if not agreed.  There was nothing to suggest that the defendant was willing to incur a liability in costs beyond that for which the Rules provide.
• In Oliver v Doughty the letter offering settlement was intended to contain a Part 36 offer carrying the consequences for which the Rules provide, but the reference to rule 36.10 cannot properly be read as anything more than an offer to pay costs on the usual basis, certainly not an offer to pay costs on a basis more or less generous than that set out in the Rules. I do not think that the parties agreed to depart from the consequences for which the Rules provide.
• Accordingly, neither claimant could recover more costs than the amounts prescribed in Section II of Part 45, and both appeals were dismissed.

Aikens LJ and Pill LJ agreed.

For more information, please contact: adi.frankovitch@horwichfarrelly.co.uk

This indication by Moore-Bick LJ could be very significant for defendants if adopted, as pay-outs would increase as a result.

The claimant was employed by the defendant as a concrete diamond core driller.  For the purposes of his job he was provided with the use of a van, but as the locking mechanism of the rear doors was defective he could not open the doors from the outside. In order to open them, therefore, the claimant would lean over the front seats to access them from the inside.

The accident happened when the claimant attempted to open the rear doors of the van in the usual way.  He had to manoeuvre two 25 litre barrels of water and pull his body into the back of the van, and as he had done so he felt a pain in his leg which he thought was cramp.  Within a short period of time the pain grew considerably worse and he was taken to hospital where it turned out that he had suffered a massive disc prolapse.

The claimant underwent surgery but suffered on-going symptoms and was incapable of returning to work.

The claimant pursued the defendant for injury and loss.  Liability was admitted, subject to a reduction for contributory negligence.  A dispute ensued around the issue: whether the claimant would have suffered a similar injury in the future in any event, and if so, when?

The claimant’s medical expert stated in his report that it was unlikely that the claimant would have suffered a massive prolapse with similar consequences in the future, but at trial he did concede that the claimant would have suffered a much less severe prolapse in eight years.

The defendant’s expert concluded that the claimant was likely to suffer a similar prolapse with much the same consequences within two years.  The defendant argued that the accident had only accelerated what was the inevitable for the claimant, and damages should therefore be limited to two years.

The claimant argued that if the judge thought that there was any significant risk that the claimant would have suffered a similar injury in the future, the right course was to assess the risk and reduce his damages by an amount appropriate to reflect it.

The trial judge held that the issue before the court was one of causation and the ‘but for’ test was applicable, and falls to be determined on the usual standard of proof, the balance of probabilities.  He preferred the evidence of the defendant’s expert and found that the claimant was likely to have suffered a massive prolapse with similar consequences within two years.  Damages were to be assessed on this basis.

The claimant appealed on the grounds that the acceleration approach adopted by the trial judge was incorrect.

Moore-Bick LJ, giving the lead judgement, reviewed the relevant authorities:

In the case of Mallett v McMonagle [1970] AC 166 Lord Diplock described the approach of the court when assessing damages, as follows:

“The role of the court in making an assessment of damages which depends upon its view as to what will be and what would have been is to be contrasted with its ordinary function in civil actions of determining what was.   In determining what did happen in the past a court decides on the balance of probabilities.   Anything that is more probable than not it treats as certain.   But in assessing damages which depend upon its view as to what will happen in the future or would have happened in the future if something had not happened in the past, the court must make an estimate as to what are the chances that a particular thing will or would have happened and reflect those chances, whether they are more or less than even, in the amount of damages which it awards.”

In Davies v Taylor [1974] AC 207, Lord Reid said:

“When the question is whether a certain thing is or is not true…then the court must decide one way or the other. There is no question of chance or probability… But the standard of civil proof is a balance of probabilities. If the evidence shows a balance in favour of it having happened then it is proved that it did in fact happen…You can prove that a past event happened, but you cannot prove that a future event will happen and I do not think that the law is so foolish as to suppose that you can. All that you can do is to evaluate the chance. Sometimes it is virtually 100 per cent sometimes virtually nil. But often it is somewhere in between. And if it is somewhere in between I do not see much difference between a probability of 51 per cent and a probability of 49 per cent.” 

He then went on to conclude as follows:

• The trial judge wrongly treated the question he had to decide as one of causation.
• In the case of Hanks v Ministry of Defence [2007] EWHC 966 (QB) (unreported) the judge considered the risks that certain events would happen in the future, and made different assessments in relation to different events relevant to different heads of loss.

Moore-Bick LJ said that he did not think that is the only permissible method to adopt:

“The assessment of damages is to some extent inevitably imprecise; what is required is that the judge adopts a method of assessment that is fair to the claimant and takes proper account of the evidence before the court and the way in which the case was presented.   Although in principle when considering what the future would have held for the claimant had he not been injured by the defendant the court should approach the matter by assessing the relevant risks or chances, that may call for a much more sophisticated enquiry than the court is equipped to perform…in many cases the acceleration method, although less refined, will be fair to the claimant if it properly reflects the medical evidence.   It is therefore necessary to consider the evidence before the court in this case and the way in which the arguments were developed.”

• Accordingly, Moore-Bick LJ went on to consider the evidence before the court.   He drew the following conclusions from the defendant’s expert evidence:

The claimant had a genetic predisposition to disc degeneration, and had already suffered significant degeneration.  The degeneration in the disc was such that irrespective of when it would have eventually happened, the consequences would have been the same.

The forces needed to cause disc prolapse of the kind that the claimant had suffered on the day of the accident, were no greater than could be expected to be caused in the course of ordinary activities.

It was highly likely that the claimant will suffer disc prolapse within two years.

• The trial judge was entitled to prefer the defendant’s expert evidence.  His evidence supports the conclusion that the chances of the claimant suffering a very similar injury in the future existed as from the moment of the accident and rose progressively to near certainty by the end of two years.  A detailed evaluation of the chances that the claimant would have suffered a similar injury at any given point in his working life might lead to a different award of damages, but that does not mean that it is wrong to adopt the acceleration approach.
• It may be said that the acceleration method would involve an element of swings and roundabouts, under which the claimant would recover damages calculated at the full rate over two years but nothing thereafter, rather than damages calculated at a progressively diminishing rate over a longer period.
• An excessively analytical approach to the assessment of damages should not be encouraged in cases of this kind, and where the medical experts have not attempted to forecast in statistical terms the chances that a similar injury would have occurred at different times in the future the judge will not have been provided with the means to carry out a proper assessment of the risks involved.  In those circumstances, provided the judge is careful to ensure that the cut-off date fairly reflects the medical evidence, the acceleration approach can properly be adopted.
• In the present case the trial judge mistakenly thought that he was dealing with a question of causation.  He was wrong about that, but it is permissible to adopt, as he did, an acceleration approach to the assessment of damages.  The trial judge’s finding fairly reflects the opinion of the expert witness whose evidence he preferred.

Moore-Bick LJ dismissed the appeal.

Sir Nicholas Wall P and Rix LJ agreed.

For more information, please contact: adi.frankovitch@horwichfarrelly.co.uk

HHJ Behrens considered CPR Part 36 and the claimant’s offer letter, as well as some of the leading authorities on Part 36 and dismissed the defendant’s application, on the grounds that the offer letter was not a valid Part 36 offer and thus could not be accepted after the 21 day period expired.

This was an application by the defendant for a declaration that the proceedings have been stayed pursuant to CPR r. 36.11, on the grounds that the defendant has accepted the claimant’s offer made pursuant to Part 36.

It was common ground between the parties that on 24 September 2008 (before the issue of proceedings) the claimant made an offer to settle, which the defendant rejected on 1 October 2008.

Proceedings were subsequently issued on 25 May 2011 and have reached the stage where a trial has been listed to take place in February 2012.

On 17 October 2011 the defendant purported to accept the offer in settlement of the whole claim.

The issue between the parties was whether the offer letter was a valid Part 36 Offer. The defendant contended that it was, and the claimant submitted that it was not.

The claimant submitted that the offer failed to comply with CPR r. 36(2)(b) as it did not say that it was intended to have the consequences of Part 36. He further submitted that it was inconsistent with Part 36 because it stated that after 21 days it could only be accepted “if we agree the liability for costs or the court gives permission”. 

The defendant argued that when the letter is read as a whole it refers to Part 36 in two places, and was clearly intended to be a Part 36 offer. He submitted that the court should resolve any ambiguity so far as possible as complying with Part 36. In those circumstances, one should ignore the last few words of the first paragraph of the offer. It is plain that the author of the letter had in mind the old provisions of Part 36 (i.e. prior to 6 April 2007). In those circumstances a reasonable solicitor receiving the letter was entitled to interpret it as if it was made under the new regime.

HHJ Behrens sitting as a Judge of the High Court considered the claimant’s offer letter, which was set out as follows:

OFFER MADE PURSUANT TO PART 36 OF THE CPR

Dear Sirs

Re: Our client: Mr Norman Lee Thewlis – Damage to Woodside Farm, Sandy Lane, Middlestown – Your Principal Insured – Groupama

We write further to the above and in one last attempt to settle this matter, we are instructed to put forward the following offer, this offer is made pursuant to Part 36 of the CPR and remains open for acceptance for a period of 21 days, from your receipt of this offer letter, thereafter it can only be accepted if we agree the liability for costs or the Court gives permission:-

1. Your client to pay our client damages in the sum of £20,000 within 21 days of the date of the letter. 
2. Your client to pay our reasonable costs and our clients experts costs (Peter Wade Consultancy) such costs to be subject to detailed assessment if not agreed. 

The above mentioned offer relates to the whole of our client’s claim against your client and takes into account any counterclaim they may have and is inclusive of interest. 

Please take your client’s instructions on the above and revert to us in due course. 

Yours faithfully

Lawsons

He went on to consider CPR Part 36 and the authorities to which he was referred:Gibbon v Manchester City Council [2010] EWCA Civ 726; C v D [2011] EWCA Civ 646; Epsom College v Pierse Contracting [2011] EWCA Civ 1449; Huntley v Simmonds [2009] EWHC 406 (QB); Carillion v PHI Group [2011] EWHC 1581 (TCC); Shah v Elliot [2011] EW Misc 8.

HHJ Behrens concluded as follows:

• Rule 36.2 means what it says. It uses the word “must”. Furthermore, the courts have previously treated failures to comply with this rule as fatal and he saw no reason not to follow this approach.
• In the case of Huntley Underhill J regarded the defect (the offer failed to state that the damages which took the form of periodical payments would be adequately funded in keeping with r. 36.5(4)(d) as technical, yet he still held that the offer was not a Part 36 offer.
• There is considerable force in the observations of Akenhead J in the case of Carillion:

“…A Court should be cautious about seeking to introduce purely contractual interpretation and construction principles into the exercise of determining whether an offer is compliant with Part 36.  It should however be clear that it is compliant”

• It is by no means clear that the claimant did intend the letter to have the consequences of the new Part 36.  The final sentence of the first paragraph is inconsistent with Part 36.
• Furthermore, whilst the letter refers to some of the consequences of Part 36 it does not refer to them all.  In C v D Moore-Bick LJ was careful to point out that an offer presented as a Part 36 offer must “otherwise comply with its form”.
• The offer letter does not comply with rule 36.2 and was not therefore an offer within Part 36.
• HHJ Behrens said that in light of the above, it was not necessary for him to express a view on the construction of the letter.
• He added that a reasonable solicitor reading the clause “it can only be accepted if we agree the liability for costs or the Court gives permission” would understand that the offer did not remain open for acceptance after 21 days unless one of the conditions specified in the clause were satisfied.
• Whilst a party accepting a Part 36 offer is liable to pay costs, those costs are on the standard basis.  Under the clause above, it is possible that the claimant may wish to argue that costs should be payable on an indemnity basis.  There is no reason why a claimant should not attempt that however, he cannot do so in a Part 36 offer.
• Therefore, as a matter of construction this offer was not open for acceptance after 21 days.  It was not accordingly a Part 36 offer.

The application was dismissed.

For more information, please contact: adi.frankovitch@horwichfarrelly.co.uk

We successfully argued that both the period of hire and the daily rate applied were excessive, and proved to the court that the claim for a PAV shortfall was higher than the vehicle’s actual worth.

HHJ Gosnell accepted our arguments and reduced both the period of hire and the daily rate applied.  He dismissed the claims for the PAV shortfall and engineer’s fee, and in accepting our arguments that the matter was wrongly allocated to the fast track, he allowed the claimant small claims track costs only.

We were also awarded our costs in the sum of £2,460.

The claimant’s claim included hire charges in the sum of £12,991.39, PAV shortfall of £10,650, and engineer’s fee in the sum of £58.75.  They claimed costs in the sum of £6231.82, and the total value of the claim was a hefty £29,931.96.

The claimant’s hire claim consisted of 81 days at a daily rate of £90.56, and the claimant’s solicitors confirmed pre-trial that they were not claiming impecuniosity, therefore spot rates must apply.  The claimant provided spot rates evidence as did we.

The claimant claimed £18,500 for the PAV and had received £7,850 which the insurers’ engineer calculated as the correct market value of the vehicle pre-issue.

The claimant had provided poor engineers evidence in support of their claim that the PAV they were paid by the insurers was not the correct market value, and our engineer’s rebuttal evidence proved their evidence to be misguided.  Furthermore, the claimant also confirmed in their Part 18 replies that they had bought their vehicle 4 months before the accident for £11,499 and our argument that it was unreasonable to have asked for substantially more than the vehicle was worth, was accepted.

At court, HHJ Gosnell agreed that the claimant had unnecessarily kept the hire vehicle while arguing over the value of his vehicle without good reason, and reduced the recoverable hire period to 49 days at a reduced daily rate of £64.24. He therefore awarded the claimant £3,147.76 for hire charges, out of which £2,751.20 has already been paid by way of interim payment.

HHJ Gosnell dismissed the claim for PAV shortfall, and the claim for engineer’s fee as per the case of Clark v Ardington. Although the claim was allocated to the Fast Track, we argued, as per the case of O’Beirne v Hudson, it was a small claims track matter and the claimants were only entitled to small track costs of £500. HHJ Gosnell accepted our argument, and he ordered the claimant to pay our costs of £2,460.  Having claimed £23,700.14 by way of damages, and £6,231.82 by way of costs, this was a great result and a substantial saving.

For more information, please contact: max.withington@horwichfarrelly.co.uk

We applied to the court for an order that the claim be struck out, but the claimant’s solicitors argued that the non-compliance was due to the court corresponding with their address as pleaded on the claim form, whilst it was another office that was dealing with the claim.

DJ Jones granted our application and awarded us costs of the entire action, in accordance with CPR r. 27. 14(2)(g).  She said, in obiter, that it was not the court’s duty to apologise for corresponding with a party’s address as it appears on the court’s file.  The claimant, or his representatives, had a duty to notify the court if there had been a change in address, which in this case they had not.

Proceedings arose out of a road traffic accident.  The claimant’s solicitors issued proceedings against the owner of the defendant’s vehicle instead of the driver at the time of the accident, despite having knowledge that the owner was neither driving nor a passenger in her motor vehicle at the material time.

We filed a defence in which we raised the issue of the defendant having been incorrectly pleaded, and we subsequently issued an application for an order that the claimant amend his pleadings within 7 days, failing which his claim would be struck out.

The claimant agreed to amend the pleadings and pay the defendant’s wasted costs of amendment in the sum of £700, and accordingly the application hearing was vacated.  A consent order was sealed by the court outlining these terms.  However, the claimant failed to file and serve an amended set of proceedings or pay the agreed costs.

We therefore issued an application for an Unless Order for the claimant to file and serve an amended claim form and particulars of claim within 14 days and pay the wasted costs of £700 within 14 days, or the matter be struck out, with the defendant being awarded costs of the entire action.  In any event, we sought the costs of the application.

The court granted the application, giving the claimant a third bite of the cherry, but the claimant once again failed to comply.  As the claim was effectively struck out by the order, we applied for the matter to be listed as a disposal hearing to deal with the defendant’s costs of the entire action.

It was at this point that the claimant’s solicitors advised the court that they had been corresponding with the wrong office.  It transpired that the court had been corresponding with the claimant’s solicitors’ address as pleaded on the claim form; but the claimant’s solicitors now informed the court that there was another address dealing with the matter.

The court apologised and notified us that the DJ had ordered that the claimant be given another 14 days to comply with the terms of the order.  However, the claimant breached this order as well; so we applied for the matter to be struck out and the defendant’s costs be awarded in respect of the entire action.  The application was listed to be heard by way of telephone hearing, and was opposed by the claimant’s solicitors

We made the court aware that the amended claim form had been received on the day of the telephone hearing, which was approximately a month after the timeframe imposed by the court.  Notwithstanding this, we questioned the address for service, as we had not been notified of the change of address and had therefore continued to correspond with the address on the claim form.  Furthermore, the claimant’s solicitors had responded from that address!  In addition, the claimant’s solicitors had not paid the defendant’s costs as previously agreed.

DJ Jones granted our application and the claim was struck out. She awarded the defendant costs of the entire action, in accordance with CPR r. 27.14(2)(g). The DJ added, in obiter, that the court need not apologise for corresponding with the claimant’s solicitors’ using the address which appeared on the court file. The claimant or their representatives had a duty to notify the court if there is a change in address, which in this case they had not.

This is a great result which serves as a reminder that applications to court can be successfully made to strike out claims and recover adverse costs associated with non-compliance of court orders.

For more information, please contact: max.withington@horwichfarrelly.co.uk

Our Credit Hire team applied to transfer the case from Part 8 to Part 7 proceedings.  The claimant opposed the application on the grounds that all heads of loss remained in dispute; that the disputed hire issues were not raised within the Protocol as required; and that such transfer prejudiced him with respect to costs.

At the defendant’s application hearing, DJ Ayers held that when allocating a matter only the amounts in dispute should be taken into account, subsequently the matter was transferred to Part 7 proceedings.  Having initially reserved the costs of the defendant’s application, the DJ held that no costs should be awarded to the defendant in respect of the application and that the claimant’s costs of the personal injury aspect be limited to those within the MOJ Protocol.

Our Credit Hire team was successful in conducting a telephone application, regarding a case brought in the MOJ portal being transferred from Part 8 to Part 7 proceedings.

The claimant had initiated a claim in the MOJ portal in respect of general damages, hire charges, storage charges, medical expenses and travel expenses.  The defendant insurer had agreed the claim for general damages, medical expenses and travel expenses within the portal.

Neither spot hire rates evidence, nor a list of issues were produced by the insurer during the MOJ portal.  An interim cheque was sent to the claimant’s solicitors in respect of the agreed heads of loss however, this was £5.00 less than the agreed amount on the portal.  The remaining heads of loss – hire and storage charges – fell within the remit of the small claims track.

Instead of banking the cheque as an interim, and issuing Part 7 proceedings for the remaining heads of loss, the cheque was returned to the insurer and the claimant issued Part 8 proceedings for all heads of loss.  The matter was listed for hearing on the papers, where the claimant was destined to recover all heads of loss in full.

The matter was listed for a final hearing, and even with a time constraint, we were able to obtain spot hire rates evidence.  At the paper hearing, we instructed a barrister to make verbal submissions regarding the reallocation of the matter to Part 7.  The DJ kindly allowed us to make an application and attach the proposed defence.

The matter was subsequently allocated to the small claims track within Part 7 proceedings with costs of the application and MOJ process reserved.  The claimant vigorously opposed the application on the grounds that (a) the disputed issues regarding hire were not raised during the MOJ portal; (b) notwithstanding, the heads of loss were inseparable and should be considered as a whole and therefore the matter should be allocated to the fast track; and (c) the defendant insurer’s inaction and then subsequent application had prejudiced the claimant’s right to recover costs.  The application was listed for telephone hearing.

The claimant’s representative conceded that Part 7 proceedings were the correct avenue of recovery, and requested that the court exercise its power under CPR Rule 3 and allocate the matter to the fast track.  We argued that general damages had been agreed in the draft defence and within the MOJ portal.  The DJ advised that for the purpose of allocation, only the amounts in dispute should be examined.  The claimant’s representative conceded this point, and therefore the matter was allocated to the small claims track.

The claimant raised issue with regards the amount of costs that he could recover, reiterating that he had been prejudiced by the defendant insurer’s inaction arguing that should the issues regarding hire have been raised earlier, the claim would have exited the MOJ process and the claimant would have recovered predictive costs.

The defendant’s representative was cautious not to go behind the previous order of the DJ which stated: “the costs of this application and the matters referred to above be reserved”.  He went further, submitting that in accordance with the claimant’s representative’s statement, a claim notification form was submitted on 1st February 2011 and Stage 3 pack submitted on 21st September 2011.  We were at no stage aware of general damages being settled during this period.  It may therefore be inferred that settlement would have been reached during the MOJ Portal in any event and therefore MOJ costs apply.

The DJ held that if the claimant’s solicitors raise issue with the costs incurred in relation to general damages, it is for them to make an application at the appropriate time in relation to wasted costs.  Obviously, the claimant would have to prove that the defendant had in some way been unreasonable for the purpose of CPR Rule 27.14 (2) (g).

The claimant’s solicitors have subsequently advised that it is “no longer economically viable” to pursue the claim for hire and storage charges in the aggregate sum of £4,030.80.  Therefore, the matter settled on the basis of general damages in the agreed sum of £2,777 plus MOJ portal costs.

The outcome of the telephone hearing has saved the insurer client approximately £3,000-£5,000 standard fast track costs, plus hire and storage charges in the region of £4,000 due to the discontinuance; and is therefore a successful result.  However, this is also a cautionary tale insofar that the court and claimant’s solicitors are beginning to challenge the tactics used by defendant insurers, and are questioning conduct when considering their potential recoverable costs.

In such circumstances, it is our recommendation for the insurer, during Stage 2 of the MOJ process, to look to settle heads of loss such as personal injury and related expenses. If the insurer has genuine concern with the hire charges, storage charges, loss of use etc. these issues need to be outlined in a list of issues, and documentation in support of arguments (spot hire rates) will need to be disclosed. If the claimant’s representative then continues to Stage 3 within the MOJ process in relation to hire charges, and an application needs to be made by the defendant, this should help to limit the costs recoverable to the claimant.

For more information, please contact: max.withington@horwichfarrelly.co.uk

DJ Troy held the claimant’s solicitors were premature to assume that the claimant had no available BTE cover, on the basis of a single letter which they sent and which was not responded to.

He held that to comply with the test in Sarwar, the claimants’ solicitors had to have sight of the claimant’s policy, and to have read it to establish its propriety.  This should have been done prior to obtaining ATE cover.  He held that the ATE premium was not recoverable.

This is a very positive result and the guidance provided by DJ Troy surrounding the issue of enquiries into the existence of BTE cover makes the decision all the more important.

This was a detailed assessment which dealt with the recoverability of the claimant’s ATE premium.  The claimant instructed his solicitors to deal with his RTA claim.  Instructions were obtained over the telephone and the claimant’s solicitors’ subsequent attendance note confirmed advising the claimant of the various funding options, and his decision to use the ATE policy suggested by them.

The claimant’s solicitors sent a letter to Direct Line Insurance as a possible BTE insurer however, despite several reminders, no response was received.  There was no indication that the claimant’s solicitors ever asked the claimant for a copy of his policy for inspection.

Our costs team had established that the claimant did have the benefit of BTE cover after making only one telephone call, and on that basis asked the court to determine that the ATE premium was not recoverable.

We relied on the case of Sarwar v Alam [2001] EWCA Civ 1401 and argued that in low value claims it would be the most appropriate to use BTE cover, to reduce costs.  We also argued that if ATE is to be considered, then cover should not be taken out until proper enquiries have been made.

The claimant’s solicitors argued that they have not only sent one letter to Direct Line; they have also sent several reminders before assuming that no BTE cover is in place.  He further argued, relying on Sarwar, that there must be a limit to the obligations placed upon claimants’ solicitors who are not expected to embark on a treasure hunt, and that the ‘Sarwar test’ should not be used rigidly.

The claimant’s main argument was that even if the defendant was able to establish the existence of BTE cover through one telephone call, he had not produced any evidence as to the nature of the cover, and the claimant is not obliged to rely on the cover if it was inappropriate.  He also submitted that the claimant’s ATE policy was cancellable, a point which DJ Troy accepted, although he couldn’t tell over which period.  Finally, the claimant argued that it is for the defendant to prove that the claimant had acted unreasonably.

To begin with, DJ Troy considered the provision according to which ATE premium falls within CPR rule 45.10(2)(b), and the duty placed on a claimant’s solicitor to take reasonable steps to establish whether BTE insurance exists.  He went on to note that two clear features emerge from the case of Sarwar:

1. Initially the claimant’s solicitors should ask the claimant to have sight of his policy, and;
2. The solicitor should read the policy to check its suitability.

Only when the claimant’s solicitor can show that the BTE cover is unsuitable, he is justified in taking out ATE cover.  There may be circumstances when the BTE provider may need to be contacted to clarify the terms of the policy, but this should not be done prior to reading the policy.

In the present case, such steps were not taken.  The claimant’s solicitor had simply followed a standard script; the attendance note confirming the funding advice was given to the claimant was of high formulaic nature, and was founded on the basis that the claimant’s solicitors had no expectation of a response from the BTE provider; there was no record of the claimant having been asked to produce his policy of insurance.

DJ Troy commented that the letter which the claimant’s solicitors sent to the BTE provider was aggressive and the accompanying questionnaire was “entirely unacceptable”.  The requirement that some of the replies will be supported by a statement of truth has no place in the process, which is a simple search for information.  With the letter/questionnaire being so litigious, he thought that there was no surprise that it rarely yielded a response.  Moreover, the fact that the claimant’s solicitors sought the assistance of the Ethics Department suggests that they realised themselves that their letter was potentially unacceptable.

Accordingly, he found that the approach taken by the claimant’s solicitors did not meet the basic requirements of Sarwar.  They have failed to take proper steps to identify and consider any BTE cover before taking out the ATE insurance.  Therefore, he held that the ATE premium in this case was not recoverable.

DJ Troy then stated the following points, by way of guidance:

• Claimants’ solicitors should not enter into a binding ATE policy before they have exhausted the basic steps of obtaining and reading the policy.
• ATE cover which is taken out at the outset and is genuinely cancellable (with no premiums being incurred) causes no prejudice to the defendant.  However, this does not release the claimant from the obligations to comply with Sarwar.
• If the claimant’s solicitors, following the required enquiries, have managed to established that no appropriate BTE cover exists, the defendant should not be able to attack a cancellable ATE policy, provided it remained cancellable at all times before the proper Sarwar enquiries had been completed.
• The burden of proof is upon the claimant to show that he has behaved reasonably.  This is because the claimant’s solicitors must comply with the Funding Code, request sight of the claimant’s policy at the outset, and it is they who seek the recovery of the ATE premium.
• If the claimant’s solicitors have not followed Sarwar then the defendant is quite entitled to say that the claimant has not behaved reasonably, and it is not necessary for the defendant to make other enquiries.  The burden should only shift to the defendant in cases where there is no obvious immediate BTE insurer (non-RTA claims, for example), and where a claimant does not use the available BTE cover because it is thought to be inappropriate.

For more information, please contact: nicola.critchley@horwichfarrelly.co.uk

The claimants’ evidence did not add up.  The second claimant alleged , similarly to his wife, he injured his left shoulder.  This was impossible if their version of events was correct.  Moreover, they presented an extensive list of vehicle damage, whereas the defendant’s vehicle only had a few small scratches.

At trial, the inconsistencies became clear when the claimants gave evidence.  The defendant’s evidence was favoured by DJ Heels on the grounds that she “had made appropriate concessions, admitting that she was in error by being in the wrong lane and cutting across the claimants’ vehicle, and she stuck to all of her evidence”.

Accordingly, DJ Heels dismissed the claimants’ claims, and ordered that they pay the defendant’s costs, to be assessed if not agreed.

The claimants alleged that they were leaving a car park at the time of the accident.  They were in the left hand lane intending to turn left at the junction. The first defendant was in the right hand lane and was in the process of moving into the left hand lane; he failed to wait for a gap in the traffic and proceeded forwards, consequently colliding with the driver’s side wing of the claimants’ vehicle. The claimants alleged that the impact was so extreme that their vehicle went up onto two wheels resulting in the defendant’s vehicle becoming lodged beneath theirs!

The first defendant admitted liability for the accident but denied causation.  She admitted that she was in the process of changing lanes. Once a space became available she indicated and moved into the left hand lane when the rear nearside door of her vehicle made light contact with the offside front corner of the claimants’ vehicle.  She said that this was merely a minor collision, and that she was not jolted in her vehicle as a result.  She continued in her journey without stopping because she did not even think about the possibility that there could have been damage caused to the vehicle or to the claimants.

Inconsistencies in the claimants’ evidence were clear from the outset.  The only damage to the defendant’s vehicle were small scratches to the passenger door, and the cost of repairs’ was £235.75 yet the claimants presented an extensive list of repair work which was in stark contrast with that of the defendant’s.

The first claimant attended A&E 3 hours after the accident, complaining of injuries to the head, neck, hip, and shoulder, but she told the police officer who attended the scene that she suffered no injuries.  Her witness statement, taken 10 days post-accident, alleged injuries to the neck, back, and right hip, yet she did not mention the hip injury to her medical expert.  She did however say that she suffered injuries to the left shoulder and the right ribs.

The second claimant told his medical expert that he was on light duties at work for several weeks post-accident but had not taken time off.  His records revealed that, in fact, he was made redundant from full time work the day prior to the accident.  He was retained only on an agency basis.  It transpired that in the 6 weeks following the accident, he only attended work for 11 days.  He also complained of an injury to the left shoulder which was not possible if the circumstances of the accident were as described by him and his wife.

DJ Heels preferred the defendant’s version of events.  In reaching this view she highlighted that the defendant, in giving evidence, had made appropriate concessions, admitting that she was in error by being in the wrong lane and cutting across the claimants’ vehicle, and that she stuck to all of her evidence.

DJ Heels went on to say that had the claimants’ version of the collision been less incredible than it was, she may have had more sympathy with them.  However, she could not accept that the defendant would not have noticed the two collisions described by the claimants, not to mention the claim that their vehicle had to be “revved to a roar” to free it from the defendants!

Whilst the judge did accept the claimants’ submission that the visible damage may not always reflect that that has actually occurred, she found that she would have expected to see more damage to the defendant’s vehicle based on the claimants’ version of events.  She held that the claimants’ vehicle damage had been caused in the collision but that there was no injury occasioned to the claimants.

DJ Heels proceeded to dismiss the claim, and ordered the claimants to pay the defendant’s costs, to be subject to detailed assessment if not agreed.

For more information, please contact: mark.hudson@horwichfarrelly.co.uk