The quantum realm

From time to time, I deal with issues arising on the MOJ Portal and the various protocols which apply to the low value personal injury claims which proceed through it.

It is like entering the quantum realm: where the natural rules which govern the universe do not apply and strange things happen.

A recent example concerned a case which a solicitor had thought was worth more than £25,000 in value, had utilised the Personal Injury Pre-action Protocol, and after receiving denials of liability, subsequently issued part 7 proceedings limited to £20,000 having in the meantime revised downwards the valuation of the claim.

Foul! Cried the defendants, and on assessment of costs, argued that the claim should have been submitted via the MOJ Portal, with the happy consequence that the claim for costs should be limited to fixed costs accordingly.

The principal issue can be framed thus:

Having regard to all the circumstances of the case under rule 44.4 CPR was the issuance of part 7 proceedings/non submission of a Claims Notification Form,  conduct on the part of the Claimant which means the costs claimed in the Bill should be disallowed as disproportionate and unreasonably incurred?

The Pre-Action Protocol for Low Value Personal Injury (Employers Liability and Public Liability Claims provides so far as is material:

2.1  This Protocol describes the behaviour the court expects of the parties prior to the start of proceedings where a claimant claims damages valued at no more than £25,000 in an employers’ liability claim or in a public liability claim.  The Civil Procedure Rules 1998 enable the court to impose costs sanctions where this Protocol is not followed.

And:

4.1  This Protocol applies where—

(1) either—

(a) the claim arises from an  accident occurring on or after 31 July  2013; or

(b) in a disease claim, no letter of claim has been sent to the defendant before 31 July 2013;

(2) the claim includes damages in respect of personal injury;

(3) 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’); and

(4) if proceedings were started the small claims track would not be the normal track for that claim.

And if liability is denied:

6.13  The claim will no longer continue under this Protocol where the defendant, within the relevant period in paragraph 6.11 —

(1) makes an admission of liability but alleges contributory negligence;

(2) does not complete and send the CNF response;

(3) does not admit liability; or

(4) notifies the claimant that the defendant considers that—

(a) there is inadequate mandatory information in the CNF; or

(b) if proceedings were issued, the small claims track would be the normal track for that claim.

6.14  Where the defendant does not admit liability the defendant must give brief reasons in the CNF response.

6.15  Where paragraph 6.13 applies the claim will proceed under the relevant Pre-Action Protocol and the CNF will serve as the letter of claim (except where the claim no longer continues under this Protocol because the CNF contained inadequate information).  Time will be treated as running under the relevant Pre-Action Protocol from the date the form of acknowledgment is served under paragraph 6.9 or 6.10.

Rule 45.24 CPR provides so far as is relevant as follows:

(1) This rule applies where the claimant –

(a) does not comply with the process set out in the relevant Protocol; or

(b) elects not to continue with that process,

and starts proceedings under Part 7.

(2) Subject to paragraph (2A), where a judgment is given in favour of the claimant but –

(a) the court determines that the defendant did not proceed with the process set out in the relevant Protocol because the claimant provided insufficient information on the Claim Notification Form;

(b) the court considers that the claimant acted unreasonably –

(i) by discontinuing the process set out in the relevant Protocol and starting proceedings under Part 7;

(ii) by valuing the claim at more than £25,000, so that the claimant did not need to comply with the relevant Protocol; or

(iii) except for paragraph (2)(a), in any other way that caused the process in the relevant Protocol to be discontinued; or

(c) the claimant did not comply with the relevant Protocol at all despite the claim falling within the scope of 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.

That rule has very limited direct application as the vast majority of these cases will settle before judgment: most costs orders will be deemed ones.

But conduct of the parties is relevant as part of a broad assessment of the quantum of costs. Rule 44.4 CPR provides as follows:

(1) The court will have regard to all the circumstances in deciding whether costs were –

(a) if it is assessing costs on the standard basis –

(i) proportionately and reasonably incurred; or

(ii) proportionate and reasonable in amount, or

(b) if it is assessing costs on the indemnity basis –

(i) unreasonably incurred; or

(ii) unreasonable in amount.

(2) In particular, the court will give effect to any orders which have already been made.

(3) The court will also have regard to –

(a) the conduct of all the parties, including in particular –

(i) conduct before, as well as during, the proceedings; and

(ii) the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;

(b) the amount or value of any money or property involved;

(c) the importance of the matter to all the parties;

(d) the particular complexity of the matter or the difficulty or novelty of the questions raised;

(e) the skill, effort, specialised knowledge and responsibility involved;

(f) the time spent on the case;

(g) the place where and the circumstances in which work or any part of it was done; and

(h) the receiving party’s last approved or agreed budget.

(Rule 35.4(4) gives the court power to limit the amount that a party may recover with regard to the fees and expenses of an expert.)

The interrelationship between rules 45.24, 44.4 and the question of how non-compliance with a relevant Protocol should be addressed by the court has been the subject of binding authority in the case of Williams v Secretary of State for Business Energy and Industrial Strategy [2018] 4 WLR 147.

In that case Coulson LJ dealt with the non-application of rule 45.24 CPR in these terms:

However, as Judge Godsmark QC found, rule 45.24 does not apply to the facts of the present case. There have been no Part 7 proceedings. There has been no judgment. Although Mr Hutton QC sought to argue that in some way the requirement for Part 7 proceedings and a final judgment were simply examples of when the court could exercise its discretion under rule 45.24 , I am unable to accept that submission. It is clear that rule 45.24 is dealing with specific circumstances where the court may exercise its discretion to order the payment of no more than fixed costs. Those circumstances (where there are Part 7 proceedings and a judgment) are not examples, but pre-conditions which have to exist before the rule can be applied.

He went onto explain how rule 44.4 CPR could be applied:

These provisions contain numerous ways in which a party whose conduct has been unreasonable can be penalised in costs (what I shall call “the Part 44conduct provisions”). In my view, the Part 44 conduct provisions provide a complete answer to a case like this. They provide ample scope for a district judge or a costs judge, when assessing the costs in a claim which was unreasonably made outside the EL/PL Protocol, to allow only the fixed costs set out in the EL/PL Protocol.

And:

In my view, it is at this point that paragraphs 2.1, 3.1 and the warning at 7.59 of the EL/PL Protocol, become relevant. Taken together, those paragraphs comprise a clear indication that, if a claim should have been started under the Protocol but was not, and it was unreasonable that the claim was not so started, then by the operation of the Part 44 conduct provisions, the claimant should be limited to the fixed costs that would have been recoverable under the EL/PL Protocol.

Further:

In both O’Beirne and Javed , the assessment was to be undertaken by reference to what is now rule 44.4 (which, at the time of both those cases, was rule 44.5 ), namely by having regard to all the circumstances of the case, including conduct. It seems to me that, in a case where a claim was not reasonably made under a Protocol, rule 44.11 (Misconduct) is of equal, if not more, importance. It will very often be because of misconduct on the part of the claimant or the claimant’s legal representatives that a claim was made which unreasonably avoided the relevant Protocol altogether. In addition, I note that, whilst O’Beirne favoured an item by item approach to the assessment, Master Simons in Javed said that that was unnecessary in these sorts of circumstances. For my own part, I prefer the approach of Master Simons. If the judge has concluded that, as a result of unreasonable conduct, the relevant fixed costs represent the maximum recovery, then an item by item approach is unnecessary.

(emphasis added)

There is a bemusing number of County Court judgments which are invoked in this area. Largely, they can be described as irrelevant and should not be cited in court. The County Court cannot set a precedent. The doctrine of stare decisis applies. The position is as set out in the Practice Direction (Citation of Authorities) [2001] noted at page2538 of the White Book:

 6.1 A judgment falling into one of the categories referred to in paragraph 6.2 below may not in future be cited before any court unless it clearly indicates that it purports to establish a new principle or to extend the present law. In respect of judgments delivered after the date of this Direction, that indication must take the form of an express statement to that effect. In respect of judgments delivered before the date of this Direction that indication must be present in or clearly deducible from the language used in the judgment.

 6.2 Paragraph 6.1 applies to the following categories of judgment:
Applications attended by one party only
Applications for permission to appeal
Decisions on applications that only decide that the application is arguable
County Court cases, unless
(a) cited in order to illustrate the conventional measure of damages in a personal injury case; or
(b) cited in a County Court in order to demonstrate current authority at that level on an issue in respect of which no decision at a higher level of authority is available.

(emphasis added)

It follows that in so far as it was ever appropriate to cite fact specific decisions in low value claims by various members of the County Court bench, that point has passed now that there is a binding decision of the Court of Appeal.

In the instant case, the decision not to use the MOJ Portal, would be reasonably informed by the denials of liability made earlier . Submitting Claims Notification Forms would thus have been a pointless exercise. Moreover, for the reasons set out above, Williams and the clear wording of rule 44.4 CPR require the court to consider all the circumstances of the case, and including conduct before, as well as during the proceedings, including in this case the fact that the claim was defended after the issue of proceedings.

The defendants complaint was about the quantum of costs, but the answer really lay in their hands. They could have promptly admitted liability. They could have made a well-judged early part 36 offer. They did neither of those things. As the court observed, the purpose of submitting a claim through the MOJ Portal was to negotiate a settlement. Where liability is disputed, there is nothing to be achieved by utilising the MOJ Portal.

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