Legal Cost Specialists

Santa's naughty list

One of the constant problems defendants face in low value RTA claims is claimant solicitors issuing proceedings at the earliest opportunity to avoid fixed costs.

The case of Javed v British Telecommunications plc [2011] EWHC 90212 (Costs) is an interesting example of claimant solicitors being penalised for issuing proceedings unnecessarily and prematurely.

Costs Judge Master Simons concluded:

“I am in no doubt that the Claimant was unreasonable in commencing proceedings when she did. By issuing the proceedings when she did, the Claimant was in breach of the pre-action protocols. It is clear from the correspondence that at the time proceedings were issued a settlement was still being actively explored by the Defendant.

… The Pre-Action Protocol states that the issue of proceedings is a last resort. It is noteworthy that the Solicitors’ file of correspondence shows that proceedings had been prepared at the beginning of September 2009, and had been signed by the Claimant on 9 September 2009, almost a month before any medical evidence was disclosed to the Defendant. This, in my judgment, shows an intention to issue proceedings, not as a last resort, but at the earliest opportunity. There was no necessity to issue proceedings as there was no danger of any limitation period expiring. The Defendant was actively engaging in settlement negotiations having already admitted liability and having already made a payment in respect of special damages. The Claimant’s solicitors were happy to incur the cost of preparing the proceedings even before they had disclosed any medical evidence or made any Part 36 offer.

… This was a fairly standard, small road traffic accident claim. The only slight complication was the Claimant’s previous accident. Had the Claimant disclosed all the relevant medical evidence with her Part 36 offer, in accordance with the Pre-Accident Protocols, I have little doubt that this claim would have settled without the necessity for the issue of proceedings. Therefore my decision on the first issue is that the Claimant acted unreasonably in issuing proceedings.”

The Defendant argued that as the Claimant had issued proceedings prematurely, the Claimant’s costs ought to be assessed by reference to the sums that would have been allowed had the proceedings not been issued. These costs would have been calculated under the fixed recoverable costs regime set out in Section II of Part 45 of the CPR, which would have amounted to £1,190 plus additional liabilities, VAT and relevant disbursements. This was despite the fact that the matter had settled on acceptance of a Part 36 offer and a consent order sealed ordering costs to be paid on the standard basis.

The Master concluded:

“Pursuant to her acceptance of the Defendant’s Part 36 offer, the Claimant is entitled to her costs to be assessed on the standard basis, if the amount of costs is not agreed.

… In carrying out a detailed assessment I am obliged, pursuant to CPR 44.5(1), to have regard to all the circumstances, one of which is the fact that costs were unreasonably incurred by the premature issue of the proceedings. I must also have regard, pursuant to CPR 44.5(3), to the conduct of the parties, including in particular the efforts made, if any, before and during proceedings in order to try and resolve the dispute.

… In carrying out this detailed assessment the first decision that I have reached is that the Claimant’s costs have been unreasonably incurred as a result of the Claimant issuing proceedings prematurely. My second decision is that the costs claimed are disproportionate. The next step I have to take is to assess those costs to which the Claimant is reasonably entitled. To do this I must have regard to the factors set out in 44.5(3). Having regard to those factors I conclude that the Claimant should recover those costs that she would have recovered had she acted reasonably. I consider that it is within my discretion, if I consider it to be unnecessary, not to carry out a line by line assessment to enable me to decide what costs it is reasonable for the paying party to pay and whether it is reasonable for the paying party to have to pay more than would have recoverable if an alternative regime applied. I have not been referred to any requirement in CPR for a Costs Judge to carry out a line by line assessment in order to decide the amount of costs that it is reasonable for the paying party to have to pay. In this case, I am satisfied that had the Claimant acted reasonably, then her Solicitors would not have been entitled to recover any more than fixed recoverable costs and it seems to me that it would create an injustice if they were to profit as a result of their unreasonable conduct. Having made that decision it is not necessary for me to carry out a line by line assessment. In my judgement, the Court can limit the costs to fixed recoverable costs, and in this case the court should limit the Claimant’s costs to fixed recoverable costs and the court is not necessarily obliged to carry out a line by line assessment of the Claimant’s bill of costs.

… Consequently, I assess the Claimant’s costs at an amount which is equal to those costs that would have been payable under Section II of Part 45 of CPR.”

A sensible and robust decision and a warning to misbehaving claimant solicitors. They can go on Santa’s naughty list.

4 thoughts on “Santa's naughty list”

  1. I know there has been chatter recently re pre-proceedings Part 36 acceptance and therefore “standard basis” costs versus fixed recoverable costs but my understanding has always been that “standard basis costs” does not mean “not fixed costs” that is, the RTA fixed recoverable costs is still open to a standard basis or indemnity basis assessment as issues as to recoverability of additional liabilities (i.e. notification issues) and disbursements (no fixed amounts for those) still require a test of reasonableness, necessity etc. I think Claimants take “standard basis” to be “costs at hourly rates” when in reality that is not the case surely?

  2. Think the court of appeal have just determined a similar issue in a case upheld on appeal from a decision by HHJ Platts in Manchester.
    Solomon v Cromwell …i knew the name would come.

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