Winning the fight for Allocation and the Costs that go with it

Our market-leading Volume Motor team secured a costs saving of over 90% after a successful allocation argument.

The matter was allocated to the small claims track after the Portal rather than fast track despite special damages of over £10,000. At the later costs appeal the result was a saving of over £11,000 in costs.

Background

The original claim arose from a road traffic accident on 24 October 2020. The claim started on the MoJ Portal and liability was admitted. After exit from the Portal, Part 7 proceedings were issued on 19 August 2021, and they were limited to special damages only as the personal injury element of the case had been agreed.

The notice of proposed allocation was for the fast-track and we submitted a directions questionnaire stating that the small claims track was appropriate. Our argument was that even though special damages were slightly above £10,000, there was no longer a personal injury element or any complex areas of law which required allocation to the fast track. At allocation hearing on 2 February 2022 the Judge allocated the claim to the small claims track in line with our argument.    

The case proceeded to a small claims hearing on 21 April 2022 as quantum was not agreed.  At the hearing special damages were assessed at £8,032.14. There was insufficient time to deal with costs as the claimant solicitors argued fixed recoverable fast track costs should apply and we argued small claims track costs. The matter was listed for a further hearing on 6 June 2022. We were advised by counsel that there were reasonable arguments on both sides as to why either CPR 27 small claims costs or CPR 45 fixed recoverable costs should apply.

Our argument was that there was no conflict between CPR 45.29B for RTA fixed recoverable costs and CPR 27.14 for small claims costs, as it is determined by the separate rule CPR 46.11. Once the matter is allocated to the small claims track those special rules apply. We also referred to Qader v Esure Services Ltd [2017] 1 WLR 1924 where upon upwards allocation to the Multi Track CPR 45 SIIIA ceases to apply. We argued that the situation should not be any different with allocation downwards to the small claims track 

The counter argument included reference to CPR 46.11(2) which states, “Once a claim is allocated to a particular track, those special rules shall apply to the period before, as well as after, allocation except where the court or a practice direction provides otherwise.” Therefore, it was clear that the court did have a discretion in the matter.

We proceeded to the costs hearing where the claimant was awarded small claims costs only in the sum of £446.

Costs claimed

The claimant solicitors appealed and sought the following costs in addition to the small claims costs that were awarded:

1. Fixed recoverable profit costs of £2,655 plus 20% of damages (£2,470.03) plus VAT = £6,150.03

2. Counsel fee £1,070 plus VAT

3. Medical report fee £180 plus VAT (We note that this had already been paid by the defendant)

4. Telephone hearing £30.17 plus VAT

5. Small claims hearing fee £346.00

SUB TOTAL - £8,032.24

6. Costs of appeal - £4,629.96

TOTAL CLAIMED: £12,662.20.

Outcome of appeal

The appeal was allowed to an extent.

We were successful with our argument that there is no conflict between CPR 45.29B and CPR 27.14. The claimant would therefore still only be entitled to the small claims costs under CPR 27.14, but the previous judge failed to award the sums that CPR 27.14(2)(h) provided for.

In light of this, there was effectively a recalculation of the applicable costs under CPR 27, which totalled an additional £1,176. This included £960 Stage 1 & 2 costs (£200 + £600 respectively as the case was worth over £10,000 plus VAT when it was in the Portal) and the £216 medical report fee.

In negotiation prior to the hearing, we had considered this position to be correct and had discussed with the claimant the idea of compromising the appeal on that very amount. However, the claimant wished to hold out for the Section IIIA fixed recoverable costs. The claimant lost on that point.

The claimant solicitors filed a cost schedule for the costs of the appeal totalling £4,629.96. As the matter was small claims, we successfully argued they were only entitled to the court fee and transcript totalling £360.48.

Total sum sought - £12,662.20

Total sum awarded by Court - £1,536.48

Total amount payable - £1,080.48

We had already paid for Stage 1 Portal costs previously along with the medical report fee. After credit for interims the amount payable was only £1,080.48. The costs saving was therefore over £11,000.

What can be taken from this decision

Where a claim has started life in the Portal there is not always an automatic pathway to fixed recoverable costs. Where personal injury is settled and a special damages claim is then continued, it can be argued that it falls under the small claims track where special damages are under £10,000. There can even be an argument for small claims track allocation where the special damages are worth more than £10,000 under circumstances where complexity is lacking. We need to be aware of claimant tactics, seeking to avoid small claims costs where possible and we need to be forceful with arguments against this. 

This excellent saving of over 90% is proof that letting an appeal go ahead can be fruitful, even when the expected result is not perfectly clear on the facts. Sometimes standing your ground and making good arguments is the best way to make a killer saving for a client and the best way to set precedents going forward.