PORTAL ISSUES: WHAT HAPPENS IF THE DEFENDANT DOESN'T PAY THE COSTS?

Mediatelegal

It is clear that a new jurisprudence is developing around behaviour in, or around, the portal. A previous post looked at how the court will construe procedural issues arising out of the portal.  I am grateful to Tom Melville of  Cassell Moore for sending my a copy of the approved judgment in the case of Kukadia -v- Haven Insurance Company Ltd. This deals with the approach that the court takes when the insurer ignored the claimant’s solicitor and agreed damages  directly with the claimant. The insurer subsequently refused to pay the costs.   The judgment is set out below and is also an attachment to this blog.

Cassell Moore’s summary of the case can be found here.

THE JUDGMENT

District Judge Jenkinson, Liverpool County Court, 20th February 2014.

2170-3095-1-3YS62975-approved judgment

  1. THE JUDGE:  This is an application for summary judgment pursuant to Part 24 of the Civil Procedure Rules, in the alternative to strike out the defence of the defendant pursuant to Part 3 of the Civil Procedure Rules made on three separate cases: namely, Kukadia v Haven Insurance, which is case No.3YS62975; [Nord?] v Haven Insurance, 3YS63084; and a related case of Andrew v Haven Insurance, which is 3YS63019.  The latter of those cases, Andrew v Haven Insurance, involves a factual issue which is agreed between the parties renders that case unsuitable for an application for summary judgment.  However, on the other two cases, the claimant invited me to hear the application today.  I am told that directions may be agreed in relation to the Andrew matter.
  2. I expressed the view at the outset of the hearing, and there was no real dissent from either counsel and particularly for this purpose Mr Banks on behalf of the claimant, that this is not really a suitable application to strike out the defence pursuant to Part 3 of the Civil Procedure Rules, which is really there to address a more blatant abuse of process, a defence that really is utterly meritless and inappropriate.  In fact, I am invited to hear this application pursuant to Part 24 of the Civil Procedure Rules, the summary judgment provisions.
  3. It is, appropriate, of course, to grant summary judgment if the defendant has no real prospect of defending the claim or there are no other compelling reason why the claim should be disposed of at trial.  I have been taken to the note that appears on page 688 of the White Book, 2013 Edition, in the notes to CPR Part 24.2 which state:

“Where a summary judgment application gives rise to a point of law or construction, the court should decide that point if it has before it all the evidence necessary for a proper determination and is satisfied that the parties have had adequate opportunity to address the points in argument.”

  1. Mr Whibley on behalf of the defendant accepts that I would not be misdirecting myself if I was to proceed to hear the summary judgment application on that basis.  I have decided, pursuant to the overriding objective, that it is proportionate that I do so at this stage on the basis that I take, as I must do, the defendant’s factual case at its highest.
  2. The only issue is one of interpretation of the rules and, in particular, the pre-action protocol for low value PI claims in road traffic accident cases to which I will return in due course.  If this matter was to proceed to a small claims track hearing, as it probably would, given the value of the claim, although I have yet to hear representation on track because it may be that arguments could be made for it to be allocated elsewhere, it would effectively involve the same hearing before myself or another judge ventilating the identical submissions upon the interpretation of the rules.
  3. I am not satisfied that there is any other compelling reason why this matter should proceed to trial, the only reason given as a possibility being the fact that the defendant insurance company’s conduct is being criticised.  While I am satisfied that that is not a matter that need trouble me today or can or does form any part of my reasoning, I am satisfied that there are avenues of complaint that the parties are entitled to pursue elsewhere.  Insofar as the conduct of the defendant is concerned, I make no finding on that matter.
  4. My task today is limited to interpretation of the rules.  There are two slightly different factual scenarios in relation to the case of Kukadia and the case of Nord and I indicated from the outset that I proposed to deal with the issues on the Kukadia case as a standalone case and then I will hear any additional submissions that may be relevant insofar as the case of Nord is concerned.
  5. The facts on the Kukadia case, and as I indicated before taking the defendant’s evidence at its highest for these purposes, are as follows.  The claimant was involved in a traffic accident on 13th December 2013.  A claims notification form pursuant to the pre-action protocol for low value PI claims in road traffic accidents was submitted by the claimant’s solicitors on 2nd January 2013 and, indeed, was acknowledged by the defendant insurance company on the same date.  On 7th January 2013, the defendant insurance company admitted liability within what is colloquially known as the “portal”.  On 16th January 2013, the stage 1 costs pursuant to the above protocol were paid.  However, on approximately 4th January 2013, the defendant insurance company had contacted the claimant directly and agreed with the claimant, and, as indicated, I take the defendant’s evidence as correct on that point, to settle the claim on a sum that, according to paragraph 11 of the defence, specifically excluded any payment for costs.  The issue for today’s hearing is, in essence, whether or not that agreement effectively overrides the provision of paragraph 7.37 of the protocol, which states:

“Any offer to settle made at any stage by either party will automatically include and cannot exclude:

(1) stage 2 fixed costs in accordance with CPR 45.29;

(2) an agreement in principle to pay disbursements; and

(3) a success fee in accordance with rule 45.31(1).”

  1. It is said on behalf of the defendant, represented by Mr Whibley of counsel today, that this was an offer made outwith the protocol.  Contacting the claimant directly and making such an order, Mr Whibley says, evidences the intention of the insurance company to act outside the protocol and, accordingly, to reject its provisions.  He accepts and concedes they would not be able to rely upon any such offer as a proper offer within the protocol.  However, it is said on behalf of the defendant, the protocol does not override the fundamental principle of freedom of contract and there is nothing that prevents the parties agreeing to settle a claim that begins its life in the protocol on terms which are inconsistent with the provisions of it.
  2. On behalf of the claimant, Mr Banks says that the provisions of 7.37 of the protocol are clear and until such time as the claim drops out of the protocol by one of the trigger factors that precipitate its leaving it, any offers automatically include and cannot exclude the offer to pay the liabilities referred to at 7.37 of the protocol.  Mr Banks says that the position is quite different to Part 36, which specifically allows for offers to be made outside of Part 36 but provides that they will not have the costs protection that that particular provision of the CPR imputes.  Mr Banks also says that any reference to offers pursuant to the protocol within CPR Part 36 effectively relate to a different situation, namely stage 3 offers within the protocol.
  3. The claimant brings this application for summary judgment so the claimant must establish on the basis that this application is being approached today i.e. on an interpretation of the law on the assumption that nothing would be required at a final hearing beyond the interpretation of the rules that are available now, that, on a balance of probabilities, the claimant’s interpretation of the rules is correct.
  4. Against that background, I find as follows.  This was a claim that was proceeding pursuant to the pre-action protocol for low value PI claims in RTA cases.  The protocol is and was engaged by the provision of the claims notification form.  In fact, it appears that unless the defendant performs one of the acts that specifically cause the matter to drop out of the provisions of the protocol, then it remains in the protocol for 15 days before dropping out if no response is received.  However, in this case, in fact, the claimant’s notification form was acknowledged by the defendant and if there was any doubt as to whether or not this matter was proceeding pursuant to the protocol, it is removed in my judgment by the admission of liability that was made, it would appear, within the portal, and the payment of stage 1 protocol costs.
  5. I proceed, therefore, on the basis that the protocol did apply. Rule 7.37 of the protocol, which I have already quoted for the purposes of this judgment, is in, in my judgment, clear and unequivocal terms.  It would have been open to the drafter of the rules to add, had it been felt appropriate, “Any offer made pursuant to the protocol procedure will automatically include and cannot exclude” but that is not what rule 7.37 says.  The offer was an offer that was made at a stage of the protocol because none of the triggers which removed it from the protocol had applied.
  6. Referring back to the defendant’s case at its highest, the rules could have said, “Any offer made at any stage by either party will automatically include and cannot exclude,” and added words “unless the parties agree otherwise.”  Again, that is not said.  In my judgment, the logical interpretation of rule 7.37 is that any offer made at any stage by either party will automatically include and cannot exclude the responsibility to pay the additional matters set out within paragraph 7.37 of the protocol.  The acceptance of the offer by the claimant means that what is automatically included by reference to paragraph 7.37 applies and in my judgment the claimant is entitled to summary judgment on the basis of the costs claimed.

[Judgment ends]