Court of Appeal backs claimants over fixed costs in ‘drop-out’ portal cases

Hoe: insurers need to make better offers

Hoe: insurers need to make better offers

Listing a portal ‘drop out’ case for a disposal hearing is listing for trial, meaning that it attracts column 3 fixed costs if it then settles, the Court of Appeal has ruled.

The much-anticipated decision – which was leapfrogged from the ruling of District Judge Campbell in Birkenhead County Court – will allow for the resolution of thousands of cases that have been stayed until the issue was resolved.

In Bird v Acorn Group Ltd [2016] EWCA Civ 1096, a public liability claim was withdrawn from the portal due to the defendant’s failure to respond. Liability was admitted by Acorn’s insurer shortly afterwards. Mr Bird’s solicitors submitted medical evidence and details of his special damages with a view to settlement.

Nothing was agreed, and proceedings were issued. Acorn failed to acknowledge service and Mr Bird obtained default judgment, after which the claim was transferred from the Money Claims Centre to Birkenhead for assessment of damages.

The case was listed for a disposal hearing but then settled. Costs were not agreed, with the sole issue being which column within table 6D part B – for portal drop-out cases that settle before trial where proceedings are issued under part 7 – applied for the purpose of fixing the costs.

DJ Campbell decided that the listing of a case for a disposal hearing was a listing for trial and so column 3 applied. The defendant argued that it should be column 1.

Giving the ruling of the appeal court – which had advice from the Senior Costs Judge, Master Gordon-Saker, as assessor – Lord Justice Briggs gave several reasons for his conclusion that column 3 applied and that claimants did not have to advance through the columns sequentially.

First of all, “listing a case for ‘disposal’ means exactly what it says. The purpose of doing so is, so far as possible, finally to dispose of the case at first instance”.

With listing for a disposal hearing the trigger for the claimant to prepare and serve evidence, he noted the district judge’s comment that many disposal hearings settle shortly before trial.

Briggs LJ said: “It seems most unlikely that the rule committee can have intended to leave the claimant to the much lower column 1 level of recovery after such a settlement, having done all of the work necessary to achieve finality at the disposal hearing, and being entitled to fixed costs equivalent to column 3, plus the trial advocacy fee, if the matter proceeded all the way to a disposal hearing.”

He also did not accept that if column 3 was triggered when a disposal hearing was listed for trial, there would be no incentive for insurers to settle. “Settlement saves the insurer its own costs of preparing for a contested hearing, and both its own and the claimant’s advocacy fees.”

Briggs LJ concluded: “In every case where a claimant obtains judgment for damages to be assessed, followed by a disposal hearing for that assessment, there will be a progression from column 1 (which comes into force when proceedings are issued) to column 3, when the disposal hearing is listed.

“The fact that column 2 is jumped over because there is no intermediate allocation to the fast-track seems to me to be just one of those events which means that the three columns will not always be triggered in succession. But that by no means undermines the good sense of a conclusion that, once there has been a listing for a disposal hearing, column 3 is triggered.”

Matthew Hoe, director of litigation and dispute resolution and head of costs at Taylor Rose TTKW, which acted for the defendant/appellant, said: “The main remedy for defendants following this decision is making better offers at stage 2 under the RTA or EL/PL protocol, or better post-exit, pre-issue part 36 offers. That will either encourage settlement or give the defendant better protection.”

Alternatively, the defendant should consider whether there is an argument under CPR 45.24 that the claim should not have left the protocol, or to apply to set aside the default judgment or order that gave rise to the disposal hearing, undoing the trigger for greater costs.

The Court of Appeal is also due to hand down its decision on Qader v Esure, in which a circuit judge decided that the fixed recoverable costs regime applies to low-value personal injury claims that start under the RTA and EL/PL protocols but then exit and proceed on the multi-track.

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