Claimant who exited portal by error avoids fixed costs

Stewart: Very unlikely that solicitors will feign error

A costs judge was entitled to find that a case that erroneously exited the portal would have done so legitimately at some stage and so the claimant was entitled to regular, rather than fixed, costs, the High Court has ruled.

Mr Justice Stewart rejected the argument that this might provide incentives for claimant solicitors to increase the perceived value of the claim to get out of fixed costs.

Ryan v Hackett [2020] EWHC 288 (QB) was a road traffic accident injury claim that started in the protocol and then exited when it should not have done – it was based on the defendant not making an interim payment in time, when in fact he had.

The value of the claim kept rising and it was eventually allocated to the multi-track before the claimant accepted a £20,000 part 36 offer.

Two provisions on costs when exiting the protocol that might have applied did not: protocol paragraph 7.76, because the claimant did not serve notice on the defendant that it was unsuitable for the protocol; and CPR 45.24, because there was no judgment.

At first instance, Master Rowley looked instead at the unreasonable conduct provisions in CPR 44.11 and found, based on a concession by the claimant, that his conduct in sending the notification to exit the portal, when he was not entitled to do so, amounted to unreasonable conduct.

But he concluded that the case would always have exited the protocol at some stage and the costs would have been incurred anyway, noting the uncontested increase in the value of the case as it progressed and the fact that proceedings were indeed subsequently issued.

Deciding that the claimant was entitled to his costs on the standard basis, he rejected as “speculation” the defence argument that the defendant may have offered a figure which the claimant may have accepted.

On appeal, Stewart J rejected multiple attacks on Master Rowley’s approach. “The reality is that an experienced master, taking into account the fact that there would have been a perfectly valid reason for the claimant to exit the protocol, and the fact that the claimant’s solicitors did in fact exit as soon as (they thought it was) possible, concluded that it would in any event have been exited in due course…

“There was therefore ample basis for the master’s conclusions. I would add that there was no evidential basis for suggesting that the defendant would have made other, substantial offers within the portal.

“The stage 2 window is only 35 days. Although it can be extended by agreement, there is nothing to suggest that the claimant’s solicitors would have agreed to an extension.”

The defendant argued that the master wrongly elided the claimant with his solicitors, but Stewart J found that, even if he did, there was “no particular disadvantage” to the claimant in exiting the portal.

This was not the same as the cases about solicitors switching clients from legal aid to conditional fee agreements: “There was no obvious disparity between the interests of the claimant and his solicitors.”

Stewart J rejected too the arguments that the master’s decision opened the door to widespread flouting of the protocol and might provide incentives to increase the perceived value of the claim in order to avoid fixed costs.

“It is very unlikely that solicitors will feign error so as to exit the protocol in the hope that circumstances will validly arise which would authorise them to exit in accordance with the protocol rules themselves,” he observed.

Further, rule 44.11 gave the court a discretion: “It is up to the master to make the appropriate decision on the facts and arguments raised.”

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