John M Hayes are always thorough and meticulous in the preparation of bills but more importantly than that they are very approachable and willing to help. Dealing with them is a pleasure.
Brendan McNeany, Partner, Samuel Phillips
The situation did not look good for claimant friendly personal injury solicitors.
The conjoined hearings of Iqbal & EUI Ltd vs Leake & JC&A Solicitors; Smith & EUI Ltd vs Naylor & JC&A Solicitors; Pitts & EUI Ltd vs Stock & JC&A Solicitors were set before DJ Philips at first instance in the Cardiff County Court. The matter concerned whether the TPIs were entitled to recover paid Stage 1 costs of £400 plus VAT (as they were under the old RTA Protocol) in the event that the claim failed to proceed to Stage 2.
Under the old RTA Protocol, which applied to matters where the Claim Notification Form was submitted pre-31 July 2013 (see RTA PAP, para. 4.2), Stage 1 costs were payable upon the defendant’s admission of liability only and without any formal requirement for the claim progressing to Stage 2. Essentially this meant that claimants were paid their Stage 1 costs even in the event that no further steps were taken to pursue their claim.
Such conduct on the part of purportedly unscrupulous claimants (and/or their solicitors) led to TPIs coining the term “£400 club”. But although membership was exclusive, the TPIs could (would?) not say how much collectively had been paid out.
Whilst the amendments to the RTA PAP remedy this issue (if, indeed, there ever was an issue) by providing that ‘the defendant must pay Stage 1 fixed costs [in the vastly reduced sum of £200 plus VAT] within 10 days after receiving the Stage 2 Settlement Pack’, TPIs remained gravely concerned about the amount of Stage 1 costs paid out under the old PAP in relation to those cases which had not progressed to Stage 2.
Returning for a moment to Cardiff County Court, DJ Philips found that, notwithstanding the fact that the old RTA PAP itself made no express provision for recovery of Stage 1 costs in the circumstances under question, “the whole system [old RTA PAP] is based upon the premise that there will be a claim made for personal injury, and that any claim will proceed from Stage 1 to Stage 2.” Ultimately, he found that “in a case where for whatever reason, the claim is not proceeded with, then in my judgment any Stage 1 fixed costs must be repaid.”
Owing to the importance of the decision vis-à-vis potential repercussions for those who had received Stage 1 costs, the claimants’ conjoined appeal was leapfrogged to the Court of Appeal.
The Court of Appeal unanimously allowed the claimants’ appeal. Briggs LJ gave the leading judgment and, specifically in relation to the “£400 club”, had the following to say –
I must deal briefly with what has come to be called the “400 Club” point. [T]here is no evidence that any such practice did develop and it is not suggested that JC&A were guilty of any such practice in any of the cases under appeal. There is now no risk that such a practice might develop and it would be wrong to construe the plain words of the RTA Protocol by reference to a purely theoretical risk of abuse.
So much for TPI cynicism.
In the absence of any express provision within the old RTA PAP itself, Briggs LJ declined the Defendants’ invitation to make provision by implication that Stage 1 costs were recoverable in the circumstances described. In a comprehensive judgment he found, amongst other things, that there was a “raft of reasons why, after the conclusion of Stage 1, a claim may not continue under the RTA Protocol, without necessarily becoming the subject of subsequent court proceedings”. As such, the £400 plus VAT was not to be treated as an interim payment on account by reference to old CPR 45.40 (current CPR 45.28) but instead a payment in respect of work actually undertaken pursuant to Stage 1 of the old RTA PAP.
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Thursday 29th June 2017