It is not uncommon for claimants’ solicitors to start a case in the MOJ portal for low value claims and then withdraw it on the grounds that damages will exceed £25,000, often having secured an admission of liability.
The cynic might think this to be a deliberate tactic, though it is appreciated that claims may turn out to be worth more than initially thought. Sometimes, it is just carelessness in properly assessing the potential of a claim.
Obviously, the transfer of a claim from the fast track to the multi track can have significant cost consequences. In such circumstances, claimants’ solicitors will generally argue hard for standard basis assessed costs. However, are they actually entitled to them?
Where a claim has been commenced in the MOJ portal pursuant to the relevant pre-action protocol but is subsequently litigated, the status quo is that the claimant will be limited to fixed costs (CPR 45, Part IIIA). The exception to this rule is contained within CPR45.29(J)(1) which provides that:
“if it considers that there are exceptional circumstances making it appropriate to do so, the court will consider a claim for an amount of costs (excluding disbursements) which is greater than the fixed recoverable costs.”
Quadar v Esure Services Ltd  EWCA Civ 1109 is the leading authority for the position that where an ex-portal case is allocated to the multi-track, fixed costs will not apply (also see CPR 45.29B and CPR45.29D).
However, in Ferri v Gill  EWHC (QB), the court held that if a case settles for a sum in excess of the fast track limit, currently £25,000, this alone does not amount to ‘exceptional circumstances’ to warrant departure from the fixed costs regime. In that case the claim was commenced in the portal but settled pre-allocation for £42,000. At first instance Master McCloud found for the claimant and stated that such circumstances were ‘exceptional’ to allow the claimant to escape fixed costs. This was overturned by the High Court, which said that judges should not set a ‘low bar’ in deciding what amounts to ‘exceptional circumstances’.
We have had a number of successes in limiting claimants to fixed costs where they were started in the portal but subsequently settled for more than fast track level damages. The savings can be startling, especially where settlement is reached early in the litigation when the level of fixed costs is lower.
However, as fixed costs are calculated by reference to the level of damages recovered, the higher the damages, the higher the fixed costs. This may result in fixed costs being much higher than the actual costs incurred. In such cases, switched on claimants’ solicitors may actually offer to take fixed costs, arguing that they are entitled to them simply because the claim was started in the portal irrespective of its value. That line of reasoning can swiftly be rebutted by arguing that it is an abuse to bring a claim in the portal if it is clearly going to exceed the fast track level but there is a grey area if the value is borderline.
It is also careful to ensure that any offers make clear the type of costs which are being offered so that there is no confusion.
Thus, whilst there is a cost/benefit analysis to be done when considering settlement to ensure that the most advantageous deal is achieved, it is always worth considering whether settlement pre-allocation, even if for a slight over-valuation of damages, can bring about a substantial overall saving by restricting the claimant to fixed costs.
Should you require any advice or guidance, on this or a personal claim matter, the Insurance team are happy to advise. Please contact 01904 683074.