Not Fixed Costs Where Claim Reasonably Valued At Over £25,000
Posted on 18th August 2022 at 15:45
By Sean Linley, Costs Draftsman
In the unreported decision of Plaktevicius v Etills Ltd (County Court at Derby) (reported via LexisNexis), DJ Davies held that where an Employer's Liability claim had settled for £18,000.00 (less than the £25,000.00 upper limit) it was not subject to fixed recoverable costs on the basis that the claim had been reasonably valued at over £25,000.00. The Defendant averred the top-line value of the claim was £23,750.00.
DJ Davies also helpfully set out the applicable test for determining how to approach whether a claim was reasonably valued at over £25,000.00. It was provided as follows:
a. The valuation must be within an objectively reasonable range.
b. It is the Claimant's valuation which is relevant.
c. Hindsight cannot be applied and is not relevant.
d. The correct question is whether the Claimant's solicitors had a reasonable belief that the claim, on the evidence before them at the time of the assessment, could likely exceed £25,000.
e. The burden in justifying the valuation is with the Claimant.
It was also accepted by the Court that the test should not be overly stringent given it would ordinarily be made without medical evidence or concrete details as to pecuniary loss. It is not appropriate to treat the valuation in the same way as a valuation at the time evidence was in place.
The Costs Dispute
The Defendant's position was that:
"a. Damages were never likely to exceed £25,000, based upon the Judicial College Guidelines (15th edition) which, given that this was a claim supported by a conditional fee agreement, would have placed the damages for pain and suffering and loss of amenity with the Simmonds v Castle uplift in a band of
£3710-7390 for loss of the terminal phalanx of ring or middle fingers;
b. It was apparent at an early stage that loss of earnings would be minimal with future loss of earnings unsustainable;
c. As such, the failure to use the protocol was unreasonable."
The Claimant's stance was that:
"[...]there was a telephone call on 29 September 2018 which is recorded by the claimant as follows
“Call from TP insurer. Speaking to Amy wanted to know how much of the finger has been amputated- assuming no CNF [Claim Notification Form] due to the value of the claim-yes- would like to offer without prejudice rehab- advised best speak to HWA (Claimant's Solicitor's file handler)- she will call tomorrow.
27. This is put forward in the reply as evidence that the defendant considered the valuation to exceed £25,000 and that if not, then the defendant would have requested a Claim Notification Form to be submitted at that stage; at no point, thereafter, the claimant says, was the claimant requested to submit a Claim Notification Form. Of course, by this time, the letter of claim had been sent and there was no way now into the Portal.
28. In the circumstances, the reply states, the initial valuation was reasonable based on the evidence available at the time, the known nature of the injury, potential for prosthetics and a potentially significant claim for disadvantage on the labour market."
It was accepted that if the Claimant had been found to have unreasonably valued the claim then the Court had the discretion to restrict costs to no more than fixed costs as per CPR r45.24.
The Approach to Valuation of Claim - The Arguments
The Defendant submitted that there was no authority "specifically on the correct approach to the issue of valuation for the purpose of fixed costs." The Defendant set out a seven point test it believed should be followed, namely that:
"a. The valuation put upon the claim must be an objectively reasonable one, that is to say it must fall within an objectively reasonable range;
b. A relatively stringent approach should be taken to such valuations whereby the court should rigorously scrutinise the basis for the assertion that the value exceeded the upper limit;
c. The correct question is whether the claim is likely to exceed the upper limit. A mere possibility that it might is not sufficient;
d. There must be a reliable basis for the valuation. It is not appropriate to avoid the
EL/PL Protocol on the basis of speculation;
e. It is inappropriate to start the claims process outside the EL/PL Protocol when it is too early to say whether the value will exceed £25,000;
f. The valuation must be assessed without the benefit of hindsight by reference to what information which was or should have been available to the claimant at the time. However, later materials may well cast light on what a reasonable valuation should have been; and
g. The burden is on the claimant to prove that on a reasonably objective view, the value was likely to exceed the upper limit."
The Defendant accepted that the Court could not apply hindsight when considering the question of an objectively reasonable assessment but that evidence that ought to have been considered at the time for such an assessment should be viewed as appropriate. The Defendant set out in detailed submissions its views as to why a robust approach should be taken citing comments from LJ Jackson, the rules themselves and case law it purported supported its stance and approach.
The Claimant position was that the Defendant's approach was incorrect and to resolve disputes like this it was appropriate to look at CPR 44.4 and/or CPR 44.11. The Claimant's stance was that there was "is no linguistic or authoritative support for the application of a purely objective test or the application of a stringently robust test or for there being an onus on the claimant only to bring proceedings when they are absolutely sure that the claim is valued at over £25,000."
It was further contended that it was the Claimant's valuation that was relevant and that introducing a robust test of objectivity would run roughshod over the Protocol. Further it was averred that there was "no support for the proposition that would see a claimant wait until they have medical evidence." This point was accepted by the Defendant with it stated that medical evidence was Stage 2 work and not required at Stage 1.
The Claimant stated that:
"All Paragraph 4.1 requires is for a claimant's solicitor to take a reasonable view of quantum based on the information reasonably available at the time. If what is to hand indicates that the claim is worth over £25,000, then the claimant can take the decision not to use the EL/PL Protocol with all the consequences that such decision has.
61. The defendant's approach whereby it would have every case valued put in the portal on the basis that a clearer valuation would always allow a subsequent exit cannot be correct, it was submitted on the basis that the upper limit of £25,000 would not exist if so, and every injury claim would have to start in the portal.
62. As to the specific facts of this case, Ms. Bedford submitted that the focus of the defendant's criticism was based on a file note in which it was stated (incorrectly as events panned out) that “Much of the finger has been amputated”. Therefore, says the defendant, this is evidence of failure by the claimant to investigate properly. However, Ms. Bedford points out that the file note relied on is the defendant's not the claimant's solicitors'. It merely shows what the defendant insurer's file handler thought the position was after the phone call with the claimant's solicitors. Moreover, the file note goes on “She is not sure how much of the finger has been amputated”. This is not the same thing as saying, “much of it has been amputated.”
63. In summary, the claimant's solicitor looked at all the relevant information that she had to hand, applied it and her knowledge and experience, and concluded that this was potentially a multi-track claim."
The Approach to Valuation of Claim - The Court's View
DJ Davies set out the Applicable Test for determining whether a claim was reasonably valued over the upper limit of £25,000.
"65. To begin with, it is common ground that the provisions of CPR 45.24 do not apply directly in this case. The rule only applies directly where proceedings have been commenced under Part 7 of the CPR (the CPR 45.24 (1) condition) and where there has been a judgment (the CPR 45.24(2) condition). In my judgment nor do the provisions of CPR 45.29 apply they by way of analogy. I accept Ms. Bedford's submissions on this aspect. That said, the result which the defendant seeks can of course be obtained under CPR 44.4, but the respective tests to be applied before the court can get to that outcome under CPR 45.24 and CPR 44.4 are not identical. Whereas the same binary outcome (fixed costs or not) is reached, the route to that outcome differs in my judgment.
66. There is the clearest of steers at paragraph 61 of Williams in which Coulson LJ stated: “I consider that Part 44 provides a complete answer to the issues raised on this appeal. In a case not covered by r45.24, such as this one, a defendant can rely on the Part 44 conduct provisions to argue that only the EL/PL Protocol Fixed costs should apply.”
67. Taking guidance from that steer, I should therefore look at the facts through the lens of CPR 44. That is in my judgment less restrictive in its approach than CPR 45.24.
68. I concur with Ms. Bedford that of the two 'conduct' provisions contained within CPR 44, CPR 44.11 is neither of general application to a dispute such as this, nor is it of specific application on the facts of this case. There may well be cases whereby claimant or their solicitors' conduct strays into CPR 44.11 territory, but this is not one of them.
69. This then leads me to consideration of CPR 44.4(3) against the backdrop of the parties' general submissions and begin with Mr. Roy's 'seven propositions'. As a general framework they are a suitable starting point. I concur with some but not all of his propositions. In my judgment when the court is looking at a case such as this under CPR 44.4 and when it comes to apply the factors in CPR 44.4(3):
a. The valuation must be objectively reasonable that is to say within an objectively reasonable range- if it is not the claimant is restricted to fixed costs;
b. As the protocols set out, the court is looking at the claimant's valuation; I reject the defendant's arguments as to 'self-certification'.
c. Hindsight has no place when the court looks back to appraise the valuation at the point when it was carried out. Whereas later documents such as the settlement sum can be taken into account to a degree, too much reliance on settlement sums can introduce an element of hindsight through the back door and may ignore for example even in a full liability case that a claimant may just need the money quickly and be prepared to accept less than full value (I stress that is not an issue on the facts of this case, but I make the point generally);
d. The correct question is- did the claimant's solicitors have a reasonable belief that the claim on the basis of the evidence before the claimant's solicitors at the time of assessment could be likely to exceed £25,000? Put another way was there no objectively reasonable prospect of the claimant's damages ever exceeding £25,000.
e. The burden in terms of justifying the valuation lies with the claimant;
f. Given the stage at which the assessment is made (absent usually any medical evidence or concrete details as to pecuniary loss) the test should not be overly stringent, and certainly nothing as strict as had a case been valued with all medical and other evidence in place, as would be the case for example just before a full-blown Part 7 claim was issued, for the purposes of statement of value in the claim form and calculation and payment of court fees.
g. There is never a point at which assessment of value can be said to be made too early. As Ms. Bedford submitted, 'how long is a piece of string'? That depends in each case and that breeds uncertainty. Given that the garnering of hard documentary evidence is Stage 2 work, it does not sit easily with the scheme of the EL/PL Protocol to expect claimants to obtain this at Stage 1. Even had this case been put in the portal, the parties would have been none the wiser as to the medical and pecuniary loss position until hard evidence was forthcoming. There will always be cases where claimants' solicitors will get it wrong, either through inexperience or failure to take the most basic instructions, but claimants' solicitors run the risk; there can be no automatic presumption that claimants should wait until they have assembled the evidential jigsaw before issuing a letter of claim. Equally, whilst some solicitors may wish to delay issue for whatever reason, there is no obligation on solicitors to do so- at their own risk as to costs as stated above, they can issue an expeditious letter of claim."
Application in the Current Claim
This led to the question as to the application of these factors in the present claim. The Claimant had produced a witness statement together with providing the Court three privileged documents which it was felt discharged the burden upon them.
Reference was made to the Claimant's solicitor's experience in crush/amputation injury cases (i.e. that they they attract relatively high special damages), the fact that the Claimant was off work and was unlikely to be able to return his employment or similar, there was scope for the Claimant to require a prothesis which would have been costly. the Claimant required rehabilitation (the extent of which was unclear at that point) and surgery had only recently been undertaken and based on the solicitor's experience it was contended that sometimes more than one bout of surgery would be required.
The Court concluded as follows:
"73. I have considered the claimant's evidence, in the light of CPR 44.4(3) and the submissions of counsel. The court is not looking for a counsel of perfection, just objective reasonableness. One of the aspects that the court needs to consider is the specialised knowledge involved, and Ms. Wainwright states that she was at the relevant time someone qualified for 24 years undertaking exclusively personal injury work across the whole spectrum of cases insofar as quantum is concerned. To that extent, whilst the test is not a strict test, but still one of reasonably objectivity, that has to be factored into the court's consideration to a minor degree, compared for example with a valuation done by an inexperienced trainee paralegal. A 'sensible solicitor' in my judgment is one with some experience in the respective field, not an unqualified person.
74. The defendant's position, albeit informed by the level at which the claimant some 12 months after the letter of claim pitched his schedule and the level at which the claim settled, is that this claim was never going to reach threshold. The top line, on the defendant's case, would have seen the claimant's claim valued at £23750, the potential prosthetics claim being dismissed as a fanciful possibility.
75. Overall, applying the facts of this case to the test under CPR 44.4(3), I cannot say that the claimant's solicitors conduct in valuing this case as being over £25,000 was objectively unreasonable on the basis of the evidence before Ms. Wainwright, and on the basis that I would not necessarily accept the prosthesis claim as fanciful. The defendant adduced no evidence that prostheses never or vary rarely feature in partial digital amputation cases.
76. The defendant's case appears predicated on the basis that in effect there needs to be clear blue water beyond the £25,000 threshold before the claimant can be said to have acted objectively reasonably. I disagree. In my judgment, on the assumed factual outcome of a best-case scenario based on the information to hand, the claimant's solicitors did not act unreasonably in coming to the assessment of quantum as they did.
77. It follows therefore that the defendant's challenge fails, and I will therefore assess the claimant's costs at £7786.32."
Analysis
The case offers up a clear and helpful picture as to the approach the Court ought to take when determining whether a claim was reasonably valued at over £25,000.00. DJ Davies accepted that the relevant factors to be considered were through the lens of CPR 44 and the factors set out there under.
As described earlier in this article, the applicable test was summarised by the Court as follows:
a. The valuation must be within an objectively reasonable range.
b. It is the Claimant's valuation which is relevant.
c. Hindsight cannot be applied and is not relevant.
d. The correct question is whether the Claimant's solicitors had a reasonable belief that the claim, on the evidence before them at the time of the assessment, could likely exceed £25,000.
e. The burden in justifying the valuation is with the Claimant.
It was also accepted by the Court that the test should not be overly stringent given it would ordinarily be made without medical evidence or concrete details as to pecuniary loss. It is not appropriate to treat the valuation in the same way as a valuation at the time evidence was in place.
The Court was also clear that there is a never point at which the assessment of a value of case can be said to be too early. It would, however, be a risk borne by the Claimant solicitor. An inexperienced file handler may, for example, neglect to obtain a crucial piece of information in the initial instructions.
In the current claim the Court looked at the type of injuries, possible loss of earnings (the Claimant was off work), future employment prospects, rehabilitation needs and the possibility of prosthetics. Moreover, the file handler's experience in similar litigation was a highly relevant factor.
These are all very helpful factors when considering claims which ultimately settle for less than the upper limit. Though not relevant in this case, another relevant factor would be contributory negligence, something made clear in the respective Protocols themselves.
The other important point of note is that the current claim was never submitted via the Portal. Any claim entered onto the Portal (even those in error or at the Defendant's request) will likely see costs restricted to fixed costs. The Court of Appeal decision in Qader v Esure [2016] EWCA Civ 1109 gives rise to what is commonly referred to as the 'Qader Anomaly'. This is a quirk whereby a claim submitted to the Portal is restricted to fixed costs where that case settles without allocation to the Multi-Track, irrespective of the eventual settlement. This is a factor which LJ Dyson, when he was Master of the Rolls, dismissed as a lacuna which the Civil Procedure Rule Committee would not waste its time on. We flag this factor as cases which enter the Portal will not go through the process described in this article, though, ultimately if it was determined a claim was worth in excess of the upper limit then it ought not to be onto the Portal in any event. Case law also demonstrates that putting a claim on the Portal in error or even putting it on at the Defendant's request will see costs restricted.
The message is clear. Practitioners should undertake an assessment at the outset of a case considering the likely claim value. A contemporaneous file note is likely to be greatly assistive, briefly setting out the reasons why a case is non-Portal. Where a case is felt to exceed the upper limit then practitioners must stick to their guns and not be persuaded by their opponents otherwise. This is where experience and specialist expertise will have a big part to play. Those file handlers with less experience may wish to seek a view from someone with the relevant experience. This is likely to be more persuasive if the basis of costs is challenged later on. And if a challenge is made later on then do not be afraid to seek a specialist opinion, your costs representative should be able to assist and give a view.
Overall this is a positive case for Claimants and is welcome guidance on the approach to be taken by the Court when considering whether a claim was reasonably valued over £25,000. This will no doubt be an approach which will carry forwards when the upper limit is increased to £100,000.00 next year.
Should you have any queries arising from this article or upon costs generally then please do not hesitate to get in touch with our friendly team either via phone 01482 534567 or e-mail info@carterburnett.co.uk
Tagged as: fixed costs, Fixed Recoverable Costs
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