The right price?
By David Ellis
Costs in low-value cases involving children are unnecessarily complicated and have led to battles between claimants and defendants, says David Ellis
A few years ago almost all infant injury cases were subject to costs on the standard basis, even if they fell under the £1,000 small claims limit, as the argument was that the CPR referred to infant cases being treated as allocated to the multi-track. The additional work involved on such cases includes instructing counsel to advise on quantum, and issuing part 8 proceedings, together with representation either by solicitor or junior counsel at the approval hearing. While some insurers occasionally argued that small claims costs applied, it was generally accepted that standard basis costs (together with the costs of advice and representation) were recoverable.
The first attack of this position came about following an amendment to the CPR part 45.10 (2) (c) referring to counsel and court fees on infant cases being recoverable disbursements. It was generally accepted that, while technically an infant case may be treated as being a multi-track case, it would still be subject to the predictive cost calculation. In the low-value infant cases, costs recovered would be much lower than having standard basis costs applied and could be half the amount of costs recovered.
The accepted general position today seems to be that the predictive costs regime applies. One solicitor in an unreported county court decision successfully argued that, because of the need for more than one medical report and the additional work of the part 8 proceedings, standard basis costs should apply.
It was argued that, because the predictive costs regime only states that a medical report (not reports) could be recovered, the predictive costs regime was only meant to cover the most straightforward of infant cases. Although the argument succeeded in this case, a non-reported county court level decision is next to useless as a precedent.
The predictive costs regime was intended to end the costs war, but defendant insurers succeeded in making ground in a further skirmish. They argued that counsel's fees for attendance at the approval hearing were not recoverable as a disbursement, despite part 45.10 (2) including 'fees payable for instructing counsel'. Sherred v Carpenter CC (Taunton) (Judge O'Malley) 5 March 2009 overruled a district judge's decision allowing counsel's fee for attendance, on the basis that it was unnecessary in any 'perfectly straightforward case'. Such a fee reducing the profit cost figure further for the claimant solicitor.
Quicker but riskier
Perhaps unsurprisingly in the low-value cases, some firms avoided seeking the court's approval route by settling any parental indemnity instead. A quicker but riskier solution given the possibility of future negligence claims and never being certain that in reality the claim would not simply result in the parents gaining a new plasma television or the like.
This use of parental indemnity came up in the case of Coles v Keklik CC (Liverpool, Judge Stewart QC, 30 June 2008). In this case, the claimant solicitor settled damages on this basis for £250, ambitiously seeking the protection of the court in relation to recovering costs despite not having followed the court approval route. The court ruled that the case was a small claims matter. This was followed in the county court decision of Aurangzeb v Walker (Sup Ct Costs Office, Master Rogers, 22 January 2009) concerning a £500 parental indemnity settlement. Claimants had seen standard basis costs reduced to predictive costs reduced to small claims costs.
I think that if damages are only a couple of hundred pounds, then there is significant risk of small claims costs applying; but, if damages are closer to £1000, and provided the approval route is followed, then there is a good chance of standard basis costs being awarded. The permission for appeal of an order for small claims costs in the county court case of Dockerhill v Healey seems to endorse this view.
With the new RTA claims regime in force since 30 April 2010, the cost position is perhaps a compromise between small claim costs and standard basis costs. Showing a reasonable expectation of exceeding £1000 will help those just under the £1000 to be dealt with under this new cost regime. As for those that fall out of this regime, no doubt the cost battle will continue. Claimants are due a decision in their favour considering they have gone from standard basis costs to small claim costs in some of these cases.