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RTA Protocol for low value PI claims – discontinuing the process - restriction to fixed costs

Ilahi v Usman
Manchester County Court
26 November 2012

This judgment concerns a claim which was proceeding under the RTA Protocol until the Claimant withdrew a Stage 2 offer to settle and issued Part 7 proceedings. The issue was whether the Claimant should be restricted to the Protocol fixed costs under CPR 45.36.  DWF’s Emma Pritchard acted for the Defendant and reviews the judgment in Ilahi v Usman (2012).

Facts

The Claimant brought a claim for damages for personal injury arising out of a road traffic accident on 26 April 2011. Liability was admitted and the medical evidence was that a full recovery would be made within 12 to 13 months of the accident.

The claim therefore fell to be dealt with under the Pre-Action Protocol for low value personal injury claims in road traffic accidents (“the RTA Protocol”).

The parties completed the Stage 1 procedure and the Claimant submitted the Stage 2 settlement pack with an offer to settle at £3,500 on 13 February 2012. The Defendant made a Stage 2 offer of £2,400 on 2 March 2012.

On 11 April 2012, the Claimant’s solicitors wrote to the Defendant saying, “Please note that our offer is formally withdrawn. The matter now exits the portal”.  The Claimant sought to rely on paragraph 7.39 of the RTA Protocol:

Where a party withdraws an offer made in the Stage 2 Settlement Pack Form after the total consideration period or further consideration period, the claim will no longer continue under this Protocol and the claimant may start proceedings under Part 7 of the CPR.

The Claimant never explained why the offer was withdrawn; she did not seek to obtain further medical evidence and there was no indication that she had not recovered in line with the original prognosis.

Had the Claimant not withdrawn her offer, the matter would have proceeded to Stage 3. Instead, the Claimant issued Part 7 proceedings resulting in a disposal hearing. 

The Defendant argued that the Claimant had acted unreasonably in withdrawing her offer. The matter should have remained within the RTA Protocol and subject to the fixed costs regime. Consequently, the costs of the Part 7 claim should be limited to those which would have been recoverable under the RTA Protocol.

The Claimant argued she had done nothing wrong. She was entitled to withdraw her offer and it was the automatic effect of paragraph 7.39 which caused the matter not to proceed to Stage 3.

After a short disposal hearing in which the Claimant recovered damages and interest of £3,388.03 the District Judge heard brief oral argument on the costs issues. She accepted the Claimant’s submission that the matter had automatically come out of the Protocol (as opposed to it being elected by the Claimant) and ordered the Defendant to pay costs assessed at £9,900.10. The Defendant appealed.

Findings

HHJ Platts, finding for the Defendant, held:

CPR 45.36 provides that where a claimant elects not to continue with the RTA Protocol and the court considers that the claimant has acted unreasonably, the court may order the defendant to pay no more than the Protocol fixed costs.

Did the Claimant “elect” not to continue with the RTA Protocol?

The word “elects” in rule 45.36(1)(b) has no special meaning. If a claimant has a choice whether or not to take a step, the automatic result of which is to discontinue the process, and she chooses to take that step then she must be taken to have elected to discontinue the process. The Claimant’s argument that the claim did not continue under the Protocol because of the automatic operation of paragraph 7.39 was not accepted.

Did the Claimant act unreasonably in withdrawing her offer?

The Claimant had been “slightly upset” by the Defendant’s offer and in submissions, argued that an unreasonably low defendant offer was of itself a good reason for a claimant to withdraw his or her offer and thereby exit the process.

However, the whole purpose of Stage 3 is that where the parties cannot settle within the Stage 2 procedure the matter should be referred to the court under Stage 3 where it will be resolved.

The result for a claimant in terms of damages on a Stage 3 determination should be no different to part 7 in a straightforward case such as this. The real reason for the Claimant withdrawing her offer was to take advantage of the costs implications of bringing a Part 7 claim.

“In my judgment to manipulate the RTA Protocol procedure to take the claim away from Stage 3 and into part 7 because of the costs implications is contrary to the spirit if not the letter of the protocol and wholly contrary to the overriding objective”

Conclusions

  • The Claimant had elected not to continue with the process under the Protocol and CPR 45.36 was engaged.

  • Further, she acted unreasonably in thereby discontinuing the process or causing the process to be discontinued.

  • The court therefore has discretion to order fixed costs only under CPR 45.36.

  • If a defendant does not make an acceptable offer, the sanction it faces is the risk of a costs order (albeit limited) within the Protocol procedure. It is not a good reason for a claimant to withdraw its offer and “exit the Portal”. There was no good reason for the Claimant to take it out of the procedure in this case. The matter could and should have remained within the RTA Protocol.

  • The consequence of the District Judge’s original decision was that the Claimant recovered in costs three times the amount of her damages and nine times the amount that was in issue between the parties. That result was neither proportionate nor just and the proper order is that the Claimant should be entitled to her fixed costs as set out in CPR 46 Part VI and no more.

Comment

DWF acted for the successful Defendant in this matter and this sensible and unequivocal judgment of HHJ Platts will no doubt be welcomed by insurers.

It was an important issue to take to appeal, as the first instance decision had serious implications for the future use of the RTA Protocol. The implications would have been all the more significant given the forthcoming extension to the Portal process both to EL and PL claims and to higher value motor claims.

Brian McCluggage of 9 St John Street who represented the Defendant on appeal said: “If the Claimant’s argument had been accepted, it would have destroyed the utility of the Portal. We would be seeing a flood of offer withdrawals in order to seek standard rather than fixed costs.”

In our experience, some claimant solicitors do look for ways to remove a case from the Portal in order to benefit in costs, and as we move towards the extension of the RTA Protocol, we are seeing more attempts to do that. Insurers need to be alive to when claimants are acting unreasonably in electing to discontinue the process so that arguments can be raised under CPR 45.36. Hopefully this judgment will put an end to this particular type of argument but if you have any doubts or queries about the validity of attempts to exit the Portal, please do not hesitate to contact us.

Contact

For further information please contact Emma Pritchard, Associate on 0161 604 2131 or at emma.pritchard@dwf.law  

By Emma Pritchard

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This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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