Defendants can raise issues of conduct during costs assessments.

The Claimant fell off a ladder at work and brought a claim for personal injury, pleading a claim for damages well in excess of the fast-track limit (then £15,000). At the multi-track trial, which ran into a second day, the Claimant recovered damages of £9,291.56. The Recorder ordered costs to be assessed on the standard basis. The Claimant’s Solicitors lodged a bill of costs seeking £78,458.65 including a 100% uplift reflecting a CFA. At the costs assessment the District Judge ruled that she would be assessing the costs from March 2006 as if the case had been allocated to the fast track, which restricted the level of trial costs recoverable.

Held: The fact that a party has not raised a matter with the trial judge does not preclude him from raising it before the costs judge under CPR 44.5. When assessing costs under 44.5 the costs judge must have regard to “all the circumstances” of the case, and to the factors set out in 44.5(3) which include conduct, efforts made to resolve matters, value of claim, importance to parties etc. However, the District Judge was not entitled to find that she was going to assess the costs of trial, at the outset, as if the case were on the fast track. To do so seemed to the Court of Appeal to rescind the Recorder’s order. It was however permissible to assess costs on the standard basis taking into account that the case should have been allocated to the fast track. The case was remitted to the District Judge for reconsideration on this basis.

Comment: This is a very useful decision for defendants and insurers. Claimants cannot “run-up” costs in over-pleading their claims and escape without consequences when it comes to costs. Also, the notion that a paying party cannot, as a matter of principle, raise issues of conduct during the costs assessment has been finally and conclusively rejected.

For further information contact Raj Patel, Kennedys, 0161 829 2599.

The Claimant suffered injury in a minor RTA. Proceedings were issued claiming general damages in excess of £1,000. The claim was settled prior to allocation for £400 general damages and £719.06 credit hire. The consent order provided that the Claimant’s reasonable costs should be assessed on the standard basis. The Defendant argued that, notwithstanding the terms of the consent order, costs should be assessed with reference to the small claims limit. At first instance the District Judge ruled that the consent order precluded an assessment with reference to the small claims track. On appeal before HHJ Stewart QC that decision was reversed, with the Judge finding that there was nothing in “reasonable” or “standard basis” preventing a judge from finding that the appropriate award of costs was on the small claims basis.

Held: The Court of Appeal held that the fact that a claim would have been allocated to the small claims track was material when it came to assessing what costs were payable. In so doing the Court broadly applied the principles in Lownds v Home Office and accepted that CPR 44.5(1) allowed a judge to take all the circumstances into account.

Comment: This is a welcome move away from the apparently rigid guidance provided in Lahey v Pirelli Tyres Ltd as to what may be taken into account on assessment. It is a positive decision for defendants and their insurers, particularly when considering the increasing number of claims fuelled by claims management companies and credit hire companies which fall within the small claims track. This decision will cause those operations to consider whether they pursue such claims at all via a lawyer as they may not be able to recover costs. In practical terms it will also mean that insurers can settle cases which are small claims (or thereabouts) in the knowledge that they can take up matters in relation to costs at a later date on assessment.

For further information contact Raj Patel, Kennedys, 0161 829 2599. Raj was the conducting solicitor for the defendant prior to his move to Kennedys.

The Claimant was one of five passengers in a car being driven late at night by the Defendant. The car was involved in a collision, causing serious brain damage to the Claimant. Primary liability was admitted and the key issue was contributory negligence. The Claimant had been sharing the front passenger seat with another passenger and neither of them had been wearing a seatbelt. Experienced road accident safety engineers reached agreement that a properly worn seatbelt would probably have been beneficial in reducing the severity of the injury suffered. At first instance the Judge declined to reduce the damages for contributory negligence on the grounds that, despite this, it had not been shown that a belt, if worn, would sufficiently have reduced the injuries suffered.

Held: The Judge had to decide whether the evidence showed, on the balance of probabilities, that a seat belt would sufficiently have reduced the injuries to require a reduction for contributory negligence. The Court of Appeal held that this decision was a fine one and she was entitled to say that the issue of causation had not been proved.

Comment: This case is an important reminder that, when seeking to argue contributory negligence for not wearing a seatbelt, it is vital that there is clear expert evidence that a seatbelt would have reduced the severity of the injury. This evidence should come from an appropriately qualified medical expert. Only once causation has been proved will a court decide whether a reduction of 15% or 25% for contributory negligence should apply.

The decision is also the latest in a long line of attempted challenges to the guidance set out by Lord Denning in Froom v Butcher [1976]. Given the Court of Appeal’s findings, it was not necessary for the Court of Appeal to review Froom v Butcher in detail. However, in a clear endorsement of this decision, Lord Justice Hughes stated that no indication should be taken “that I would otherwise have welcomed the opportunity to re-visit the judicial anticipation of modern public attitudes which underlay Froom v Butcher.”

What would it take for Froom v Butcher to be overturned? As the Court of Appeal pointed out in this most recent decision, there is a powerful public interest in there not being an enquiry into fine degrees of contributory negligence, but this would not necessarily prevent the figures of 15% and 25% being increased. It is clear that there is judicial resistance to any changes being made. However, that is not to say that if an insurer picked the right case, and collated strong evidence from appropriate experts, another challenge could not be made.

For further information contact Richard West, Kennedys, 0845 838 4832.

• Insurers will make savings on costs where damages are settled at above around £2,000 provided that they are able to settle claims within the timescales laid down within Stage 2. A commercial calculation will need to be carried out to weigh up the costs of allowing a specific claim proceed to stage 3 if the offer if not accepted.
• Is the IDSL Portal compulsory? Electronic exchange under the process must be secure and the portal created by IDSL is the only means on the market at present by which this can be achieved. So, by default, use is compulsory at least in the short term. A fee per claim will be payable when the claim is accepted under the process (likely to be about £1). There will be two interface methods – either by entering data directly into the portal or by application to application links from in-house case management systems.
• The timescale for admitting liability is tight. A decision must be made within 15 days of the claimant sending the claim notification form (CNF) electronically. Insurers will need to have a system in place for checking the portal for new CNFs as it appears they will not be notified separately of these.
• Small claims, which do not include at least £1,000 for pain, suffering and loss of amenity, will be excluded. However, the rules provide that, if the claimant reasonably believes that the claim is valued above £1,000 he is entitled to Stage 1 and, if relevant, Stage 2 costs. This is likely to lead to disputes over whether such a belief was reasonable or whether costs should be limited to those available in the small claims track.
• When the rules refer to a time period for a payment, this is the time by which the claimant must receive a cheque or transfer of funds. Any failure to pay will give the claimant the right to exit the process. Insurers will have to ensure that their internal processes are sufficiently tight to ensure compliance.
• Does a solicitor have to act on behalf of the insurer at stage 3? There has been much debate on this point with differing views. Concerns have been expressed that stage 3 involves "reserved legal activities" and that accordingly lawyers must be involved. However, the proposed rules make provision certainly for paper hearings to be handled by the insurer (or defendant) themselves. The rules state that the insurer may complete the acknowledgement of service and this must be accompanied with any evidence to be relied upon. This is the defendant’s case that will be considered by the judge and will need to have a statement of truth. If the insurer/defendant has confidence in the claims handlers’ drafting skills then, subject to any challenges to this approach, this stage can be completed with no involvement by lawyers. What about an oral hearing, can a barrister be instructed direct? The Bar Standards Council states that the insurer should have a licence, but obtaining one should not be an issue. In the short term it may prove that, until the process has been tried and tested, the comfort of a lawyer’s involvement will be sought. However, with time and experience the involvement of lawyers may decline.
• Where disputes arise between the parties arising out of the operation of the process, they will not be determined until a subsequent costs hearing in the conventional litigation. This is likely to lead to some delay in resolving any recurring issues, subject to these costs hearings being fast tracked.

The above is only a selection of key issues raised by the new process. As can be seen, we are about to enter a whole new regime for dealing with low value RTA claims and some of the difficulties to be encountered will only become apparent once the system is in operation. At this stage insurers who wish to take advantage of the costs savings to be achieved should ensure that they are signed up to the portal, familiar with the three stage process and ready to respond within the relevant timeframes.

For further information contact Kathy Dwyer, Kennedys, 01622 625 649.

The Master of the Rolls is presently considering the Advisory Committee on Civil Costs' recommendation to increase the interim Guideline Hourly Rates for 2010. In the meantime the Guideline Hourly Rates for 2009 continue to apply for work undertaken since 1 January 2010.

NHS charges apply to all personal injury claims occurring after 29 January 2007. The tariff and ceiling on charges will be increasing on 1 April 2010. The increases will apply only to injuries sustained on or after that date. All charges will be increased by 3.5% in line with Hospital and Community Health Service inflation, making the maximum recoverable amount £42,999. For more information about NHS charges and recoverable benefits, including details of our specialist Benefits Recovery Unit, see our Benefits Briefing.

On 25 February 2010 the MoJ confirmed that the decision in Rothwell and others v Chemical and Insulating Company Ltd is not to be overturned and pleural plaques will remain non-compensatable (until such time as further medical evidence/research becomes available). However, the Government accepts that individuals who had begun a claim for pleural plaques prior to the House of Lords ruling, and whose claims were effectively on hold, would be eligible for a newly created fixed payment scheme of £5,000. A series of further announcements were made and can be read in greater detail via the MoJ website.