Costs Following Re-Allocation to the Small Claims Track: Kavak v FMC Chemicals Limited (Manchester County Court, April 2018)

Judgment has recently been handed down in the County Court case of Kavak v FMC Chemicals Limited (Manchester County Court, April 2018). The court ruled on the correct basis on which costs should be assessed, when a Portal claim exits the relevant Protocol and re-commences as a Part 7 claim.

An RTA claim was initially commenced through the Pre-action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (RTA Protocol).

However, the defendant disputed causation in its entirety and alleged contributory negligence. As a result, the claim was removed from the Protocol, in accordance with Section IIIA of CPR Part 45, and proceeded under Part 7.

1.png

The case was allocated to the fast track and heard on 9 April 2018, before His Honour Judge Pearce.

At the trial on liability, the judge ordered the defendant to pay £855.57 in compensation to the claimant for damage to his vehicle, caused by the accident. This was subject to a deduction of 25% contributory negligence.

However, the claimant was unsuccessful in arguing, on the balance of probabilities, that personal injuries complained of were a consequence of the accident. The claimant had been involved in 3 RTA’s within a 6 month period, this trial being in respect of the 3rd. Undisputed medical evidence stated that injuries sustained in the 1st and 2nd accidents were still causing symptoms at the time of the 3rd accident. As such, any injuries sustained were no greater after the 3rd accident than before.

At the end of the trial, an issue arose on costs, which the parties briefly covered orally, before filing more detailed submissions post-trial. Did the fixed costs regime apply, pursuant to Section IIIA, after the case was no longer resolved under the Protocol?

The claimant submitted that the fixed costs regime applied to the claim, as it had been started under the Protocol.

Figure: Section IIIA – Table 6B

2.png

Whereas, the defendant contended that the claim should never have been started under the Protocol, as the claimant could not prove that he had suffered injury as a result of the accident. The appropriate value of claim, given uncertainty on personal injury causation, ‘was such that it ought to have been brought by proceedings that would have been allocated to the small claims track’.

3.png

Counsel for the defendant argued that the claim ‘could and should be reallocated to the small claims track, pursuant to CPR 26.10’, limiting the claimant to costs set out in CPR 27.14. This would take effect from the date that it was allocated to the fast track (16 November 2017).

4.PNG

Conlon v Royal & Sun Alliance [2015] EWCA Civ was cited as authority for the Court’s wide power to retrospectively reallocate, even after judgment.

Claimant counsel conceded this principle, but argued that the Court should not exercise this power, as there was no ‘good reason’ to do so.

However, HHJ Pearce saw considerable force in the defendant’s argument that:

‘... had the claimant not pursued the personal injury element of this claim, the claim would have been limited to the small claims track cost and that the Claimant should not now get the benefit of the failure so to limit the claim’.

He went on to note, at paragraph 15, that:

‘... based on the Claimant’s argument, there is an incentive to a claimant to state that he has suffered personal injury so as to seek to achieve the (perceived) benefits of a case being in the fast-track. There is certainly a potential benefit to those who may recover legal costs because of allocation to the fast-track. In my judgment it would be unattractive to make orders that put a premium on presenting a claim that cannot be justified’.

Accordingly, HHJ Pearce agreed with the defendant that the appropriate order was to reallocate the claim to the Small Claims Track, with effect from the original date of allocation. This resulted in Small Claims Track Costs of £419, as written in the defendant’s skeleton argument.

In summary, Kavak comprised a claimant, whose argument lacked sufficient material to assert that he had suffered personal injury. But for the claim for personal injuries, in excess of £1,000, liability for vehicular damage, valued at much less than £10,000, would have resulted in small claims track costs. It is important that track allocation is determined prospectively. However, it is wrong to allow a litigant to take advantage of unjustified track allocation. Thus, retrospective re-allocation is allowed where there is ‘good reason’ to do so, as was the case here.

Full text judgment can be accessed here.