A claimant who receives less at stage 3 of the RTA protocol than was offered at stage 2 has to reimburse the difference, a circuit judge has ruled.
According to Horwich Farrelly – the defendant firm which acted in one of four conjoined appeals – the decision means claimant solicitors could be deemed to have acted negligently if they failed to advise a client “about the risk of having to repay a non-settlement payment”.
A transcript of the case is not yet available, but Horwich Farrelly said in its case, Saul v Fielding, the defendant admitted liability and, in response to the stage 2 settlement pack, put forward valuations of £1,900 for general damages and £298 for physiotherapy charges.
Agreement could not be reached and part 8 proceedings were issued. At the stage 3 hearing, the district judge assessed general damages at £1,500 and physiotherapy charges at £350.
The judge ordered the difference between the amount paid by the defendant at stage 2 and awarded at stage 3 (£348) be repaid by the claimant. In addition, the claimant was ordered to pay the defendant’s stage 3 fixed costs.
The other three cases concerned credit hire and there had been similar ‘overpayments’.
According to the law firm, HHJ Freedman rejected the appeal in Saul on the grounds that:
- Any ‘offers’ and ‘counter-offers’ at stage 2 cannot be construed as admissions. A defendant is at no time bound by any offer or counter-offer made unless it is accompanied by words such as ‘agreed’. Therefore, a court at stage 3 is not bound by offers made by the defendant at the end of stage 2; and
- The non-settlement payment should be treated as an interim payment and is, therefore, governed by CPR part 25. “HHJ Freedman asserted that a claimant’s solicitor can either retain the interim payment or, if paid out to the claimant, explain to their client that the sum should not be spent in the event that a court order for repayment is made,” Horwich Farrelly’s report of the case said.
Its briefing on the case said: “The judge acknowledged that whilst it may be useful for the court to have an understanding of what a defendant is prepared to offer in relation to each head of damage, ultimately it is for the court to carry out its own assessment. Therefore, the court is entitled to award a lower amount than that offered by the defendant at stage 2.”
It said HHJ Freedman allowed the other three appeals, ruling that the original decisions in Mulholland v Hughes, Wareham v Dodd and Purvis v Iqbal were wrong, and the claimants’ claims for hire were to be allowed in full.
“In these three cases the defendant had raised objections to the claimant’s claim for credit hire (that the claimant had not proved their ‘need’ for a replacement vehicle) at the stage 3 hearing which had not been raised at the Stage 2 negotiation process.
“In Mulholland and Purvis the credit hire claims had been dismissed as there was no evidence of ‘need’. HHJ Freedman granted the appeals on the basis that it was incumbent on the defendant to raise any issues during the stage 2 negotiation process. To do so at stage 3 was ‘inequitable’ and ‘runs entirely contrary to the notion that it should be clear to all parties what remains disputed by the end of stage 2.
“In Wareham the district judge had limited the hire charges to the sum offered by the defendant on the basis that need had not been proved.”
Partner Patrick McCarthy said: “This was a case which Horwich Farrelly felt particularly strongly about. The claimant’s suggestion that valuations were admissions and that the court had no jurisdiction to order reimbursement of any overpaid non-settlement payment, essentially removed any risk for claimants proceeding to stage 3 hearings.
“In future cases a claimant must be alive to the fact that, whilst they have received a non-settlement payment, if the matter proceeds to a stage 3 hearing they may be required to reimburse the defendant if their claim for damages is assessed at a figure below that offered by the defendant.”