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8 July 2019

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Ferri –v- Gill [2019], EWHC 952 and the costs “certainty myth”

Posted by: Jamie Patton

Written by Jamie Patton and Nick Mercer

This recent case is another reminder of the unintended consequences that can arise from badly drafted rules.

Ferri –v- Gill was a case where the claimant had brought an action for personal injury following a road traffic accident. Initially it was anticipated that the value of the entire claim would be less than £25,000 so it was formally notified to the Defendant via the Ministry of Justice’s claims portal for low value claims (the “Portal”).

It later became apparent that the value of the claim and the complexity of the claimant’s injuries were more considerable. As a result the matter was removed from the Portal by the claimant’s solicitors because the potential claim had risen above the £25,000 Portal limit. The matter ultimately settled two years and a shoulder operation later for the sum of £42,000 without court proceedings being issued.

When it came to the question of costs the claimant’s solicitors argued that the claimant should be entitled to costs on a standard basis because the matter settled for an amount that would have put the case in the Multi-track (where standard costs apply) had court proceedings been issued and the matter allocated.

The defendant argued Part 45.29B of the Civil Procedure Rules (“CPR”) applied: where a case is started in the Portal, only fixed recoverable costs were applicable “for as long as the case is not in the multi-track”; a rule implemented following the decision in Qader v Esure [2016]. In other words, from the perspective of the claimant’s entitlement to costs, the case was to be limited to costs recoverable as if the matter had exited the Portal, but was worth less than £25,000 and allocated to the Fast Track where the lower value Fixed Recoverable Costs applied.

The claimant counter argued that CPR 45.29J (1) applied to this case, which states:

 “If it considers that there are exceptional circumstances making it appropriate to do so, the court will consider a claim for an amount of costs (excluding disbursements) which is greater than the fixed recoverable costs referred to in rules 45.29B to 45.29H.”

The judge at first instance accepted the claimant’s submission that there were “exceptional circumstances” in this case justifying a departure from the rules. This then allowed the judge to make an award of costs for more than was recoverable under fixed recoverable costs.

The defendant appealed and won. The appeal court held that the case did not fall within the scope of exceptional circumstances to justify a departure from the fixed recoverable costs regime. It further found that the judge at first instance had erred when assessing exceptionality as a “low bar” to overcome, contending that the opposite was the case.

What is unfortunate about this and the line of cases that preceded it is not only the interpretation of CPR45.29J and the definition of “exceptional” but the fact that this rule, created to ensure certainty in the litigation process, does exactly the opposite.

A claimant is now penalised if they present a claim in the Portal but it subsequently transpires that the value of the claim is greater than the £25,000 Portal limit. The rule is essentially saying “Tough! You’re stuck in the lower costs regime!”

Surely this can’t be fair?

How can a rule that has been drafted allegedly for the purposes of achieving  certainty be regarded as such when:

  1. A claimant is forced to engage the use of a crystal ball to predict the possible valuation bracket of their case from the very outset; and
  2. It requires the interpretation of an inherently uncertain phrase: “exceptional circumstances”.

The majority of road traffic accidents are notified to defendant insurers within weeks of the accident occurring at which point, actually predicting what medical complications might befall the injured accident victim is virtually impossible. One of the appeal judges suggested that it was the claimant’s solicitor’s prerogative to either take that risk by submitting a claim promptly (not knowing the full value of a claim) or to reduce that risk by waiting a couple of months. This completely ignores the need, in more serious injury cases that still border on the £25,000 mark, to seek urgent rehabilitation treatment funded by a defendant insurer – which is often ignored until a claim is formally presented. It also fails to acknowledge practices of defendant insurers attempting to make direct approaches to would-be claimants to make offers prior to medical evidence being obtained. If claimant lawyers want to stay in business, they have to move quickly on claims – that is the nature of the industry.

Yet, a prediction is required. If it transpires that a solicitor has got that prediction wrong, and the potential value of a claim exceeds the Portal limit of £25,000 then they are perfectly entitled to remove the matter from the Portal and an entirely new procedural regime then applies. But why is the change of procedural regime (triggered by the change in the value of the claim) not then aligned with the appropriate costs regime? There seems to be no logical reason for this when an identical case started with a letter of claim, as opposed to through the Portal, will benefit from the more potentially lucrative costs applicable to the Multi-track.

The judge clearly thought it was reasonable for the matter to exit the Portal based on value, yet that was not enough of a reason to award costs on the standard basis. Had the matter exited unreasonably, the judge would likely have limited the claimant to Portal costs (CPR 45.18) – pursuant to r7.76 of the pre-action protocol – as opposed to fixed costs (CPR 45.29). It seems therefore that the reason fixed costs were awarded was simply because the matter was not allocated to the Multi-track; the case’s value and complexity ignored unless and until it is formally allocated.

As it stands the rules allow for this inconsistent approach. The higher costs regime will only be applicable in a matter initiated in the Portal if proceedings are issued and the matter is formally allocated to the Multi-track. Only then will the claimant’s solicitor be appropriately rewarded for the work they have done on a case. Quite why the rule makers do not see that this will encourage claimant solicitors to force cases into court to get them past the allocation stage is baffling.

There was a shred of hope for claimants where a case fell under the definition of exceptional circumstances. The interpretation of this is entirely subjective and therefore, inherently uncertain. In arriving at the decision it did in Ferri v-v Gill, the appeal court would appear to have ignored the context of a normal portal case: any matter which is admitted and valued at under £25,000. Surely a case initially thought to be under the £25,000 threshold but is subsequently found to be worth considerably more is exceptional. The dictionary appreciation of exceptional is “…unusual and only likely to happen very infrequently”. These valuation issues do not happen very often so why are they adjudged unexceptional?

By attempting to achieve certainty the rule accomplishes the opposite: claimants are faced with the uncertainty of being penalised in costs if their solicitors fail to predict what the likely value is of their case before medical evidence is even reviewed.

Surely a fairer – and much more certain – way of dealing with track allocation in the County Court is to have the applicable costs regime strictly applied to the applicable procedural regime a case finds itself in and the regime determined by strict case valuation brackets. If a case is suddenly found to be worth over £25,000 why not just allow the costs that would ordinarily apply to a case of that value to be applied no matter how it was started? That way, every party knows where they stand.

Sadly, the rules do not allow for that any longer. At least we can now say with certainty that where a matter started in the Portal but subsequently becomes more complex or of greater value than initially predicted, a claimant is only going to recover costs commensurate with their type of case if their solicitors avoid all attempts to settle until allocation, after proceedings are issued. We are certain this is not what this rule intended.

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Jamie Patton - Head of PI and RTA/Credit Hire Departments

To discuss how Glaisyers can assist you contact Jamie Patton on Jamie.Patton@glaisyers.com or via 0161 832 4666.

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