There has been little case law so far in relation to portal claims, but what there has been shows that the courts will not look kindly on claimant lawyers seeking to have cases dealt with outside the portal, says Kerry Underwood.
Both new portals contain express provision that where a court considers that the claimant acted unreasonably in giving advice to exit the portal, it will award no more than fixed costs in Civil Procedure Rules (CPR) rule 45.18. This is highlighted in the case of Ilahi v Usman (Manchester County Court, His Honour Judge Platts, 20 November 2012). His Honour Judge Platts stated at paragraphs 30 and 31 of his judgment:
“30. I am forced to the conclusion that the real reason for the claimant withdrawing her offer was to take advantage of the costs implications of bringing a Part 7 claim. Those advantages are, first, that a defendant will be under more pressure to settle since it might face a higher costs liability if he does not make an offer which the claimant accepts or fails to beat at hearing; and, second, that if the matter does go to a hearing the claimant’s solicitors will potentially recover more in costs than they otherwise would have done …
31. In my judgment to manipulate the RTA Protocol procedure to take the claim away from stage 3 and into part 7 because of the costs implications is contrary to the spirit if not the letter of the Protocol and wholly contrary to the overriding objective. The court has developed the RTA Protocol in order to provide a speedy, certain and cost effective way of dealing with these claims.”
In this case, the claim was submitted onto the portal, and two heads of loss were agreed within the portal, with the remainder being contested.
The claimant sought to exit the portal and pursue a CPR part 7 claim, with the potential to recover costs that follow from a matter contested on the fast track. The defendant asked the court to award the claimant judgment on the sums it stated had been agreed within stage 2 of the portal process, together with the fixed costs that would have followed from that agreement, and to limit any further costs recoverable by the part 7 procedure to those that can be recovered in the small claims track.
The judge held that the heads of loss which were accepted in the portal were binding agreements and the remaining heads of loss continue on the small claims track. The judge noted:
“It defies logic and the aims and intentions of the protocol if at such point, all items that had previously been agreed were regarded as un-agreed. If that were the case, I would expect the protocol to state this clearly. It does not.”
Thus, the fixed stage 2 portal costs were awarded in relation to the heads of loss that were agreed in stage 2 of the protocol process, and the remainder of the claim was allocated to the small claims track.
The Senior Courts Costs Office held that an order for assessment on the standard basis prevented the court from simply restricting the claimants’ costs to road traffic accident protocol amounts. However, the court was entitled to decide that those protocol amounts were the proportionate and reasonable sums, without conducting a line-by-line assessment.
Here, the claims were settled for less than £10,000, and would have been subject to RTA protocol fixed costs, but the claimants’ solicitors sent them to the wrong insurer, and failed to re-submit them to the correct insurer, which had admitted liability.
Correspondence with the correct insurer produced a limited response, and proceedings were issued and judgment entered with quantum to be assessed, and the claims were then settled by consent. The consent order provided: “The Defendant to pay the Claimants’ costs of this action on the standard basis to be assessed if not agreed.”
The claimants’ solicitors served a bill totalling £17,430.11. The defendant served points of dispute, arguing that the claimant had unreasonably failed to comply and/or elected not to continue with the RTA process and its fixed costs scheme, and that costs should be limited to “an amount commensurate with the costs under CPR 45 of Section VI pursuant to the express power in CPR 45.36”.
The Court of Appeal held that, where there was a consent order for assessment on a standard basis, the court could not limit the costs to those that are fixed costs for the small claims track.
The defendant argued that the same difficulty does not arise in the RTA protocol, as CPR 45.36 expressly provides that the court can limit costs to RTA protocol amounts.
The claimants argued that the consent order was binding, and that the defendants were seeking to re-write it, and that pursuant to Solomon v Cromwell  EWCA Civ 1584, an award of fixed costs cannot constitute a standard basis of assessment.
The court held that CPR 45.36 did not apply; the defendant had consented to an order for detailed assessment on the standard basis, and that is a contract that the court had no power to vary. The Master said that even if he was wrong about that, he bore in mind that the power set out in CPR 45.36 is discretionary and not mandatory.
At the detailed assessment, the costs judge is obliged to have regard to all the circumstances in deciding whether the costs were proportionately and reasonable incurred, or were proportionate and reasonable in amount. The costs judge must also have regard to the conduct of the parties, including, in particular, the efforts made, if any, before and during the proceedings in order to try and resolve the dispute.
The Costs Master then quoted at length from the Cambridge County Court decision in Smith v Wyatt. In that case the claimants sought permission to appeal to the Court of Appeal and at a permission hearing ( EWCA Civ 941), Lord Justice Moore-Bick stated:
“10. It is the function of the Costs Judge to determine whether costs have been reasonably and necessarily incurred and if he can see that a particular course of conduct has led to a group of costs being incurred unnecessarily , he is entitled to say that and need not to consider each item individually. In my view the argument to the contrary is not really sustainable”.
The Costs Master here said: “it is important that I form a view on the issue of proportionality”. That view was that the costs were disproportionate. Furthermore, the claimants’ failure to comply with the RTA protocol led to disproportionate costs being unreasonably and unnecessarily incurred. Having found disproportionality, the Costs Master said that it was open to him to go through the bill on an item by item basis but that, following Smith v Wyatt, he was not obliged to do so.
Had the claimants acted reasonably by re-serving the claim notification form on the correct insurer, they would only have been able to recover RTA protocol costs. It would be unjust to allow them to recover more and thus benefit from their unreasonable conduct.
Thus, although the consent order required the court to carry out a detailed assessment, the court was entitled, in that detailed assessment, to limit costs to RTA protocol costs and that was the order of the Costs Master.
The defendant successfully argued that the claimant had unreasonably removed the case from the portal. This resulted in the claimant failing to recover over £20,000 in costs claimed and being ordered to pay the defendant’s costs on an indemnity basis.
The claimant had argued that it was entitled to remove the claim from the portal because the defendant had not made an offer in response to the claimant’s counter-offer within the total consideration period.
The judge held that there was no such requirement and that the defendant was only required to respond to the claimant’s first offer within the initial consideration period. The defendant was awarded indemnity costs for having to defend unnecessarily Part 7 proceedings and the claimant was denied its claimed costs.
The defendant successfully argued that technical non-compliance with the portal was not a ground for a claimant to remove a case from the portal and recover Part 7 costs.
Here, the defendant had used the A2A system to access the portal, which was unable to send acknowledgements of claim notification forms, contrary to paragraph 6.10 of the portal protocol. However, within 48 hours the defendant had responded with the Full Insurer Response, accepting the claim and admitting responsibility. On the same day, the claimant removed the matter from the portal.
The court held that this was not a ground for removal and that the claimant’s conduct was unreasonable. Parties should not lightly remove claims from the portal and should never do it on technical grounds.
Once a party had communicated its decision not to continue with the portal process, then that process is at an end and the parties are not at liberty to resume it, even if Part 7 proceedings have not been commenced and the case was still physically in the portal.
Here the claimant was restricted to CPR 45.36 portal costs, compared with a Part 7 costs schedule claiming over £16,000. The defendant was awarded some of its costs of defending the claim, reflecting costs that would not have been incurred had the matter remained in the portal.