In the recent appeal decision of Fitton v Ageas, a Circuit Judge has ruled on the effect of mistake during Stage 2 settlement negotiations of a Ministry of Justice (MoJ) Portal claim.[i]
Facts of the Claim and the Procedural Issue
On 20 June 2016, following a Road Traffic Accident (RTA), the claimant sent a claim notification form (CNF) to the defendant, pursuant to paragraph 6.1(1) of the relevant Pre-Action Protocol (PAP).[ii]
The defendant (Ageas) accepted liability and on 17 February 2017, the claimant submitted a Stage 2 settlement pack (see a draft example here), which sought total damages of £4,825, apportioned as follows:
- 4,125 for pain, suffering and loss of amenity (PSLA);
- £670 for physiotherapy; and
- £30 for miscellaneous expenses.
Within the ‘consideration period’, conferred by paragraphs 7.35 and 7.38 of the PAP, the defendant responded to the claimant’s offer by making a counter-offer for £2,500, comprising of PSLA alone.
Subsequently, the claimant amended its original offer of settlement by reducing the physiotherapy and miscellaneous expenses to nil and the PSLA damages to £3,900.
N.B. Although the claimant’s revised offer was received by the defendant, on 10 April 2017, the claimant’s legal representatives had failed to amend the gross settlement box, even though there were 2 prompts which specifically instructed them to do so.
As such, it appeared to the defendant as though both parties had submitted identical gross settlement offers of £2,500. The defendant ticked the ‘yes’ box, indicating that an agreed figure had been reached.
Contending that no compromise had been achieved, however, the claimant’s solicitors issued Part 8 proceedings under the Stage 3 procedure, in accordance with paragraph 1.1(1)(b) of Practice Direction 8B, so that the court could assess the level of damages at an oral hearing.
At St Helen’s County Court, Deputy District Judge Nasser found in favour of the claimant:
‘It cannot be the case that there is a compromise in this particular case where the Defendant has effectively accepted its own offer, inferring it had been made by the Claimant when it was clear that it has not and the Claimant has not ticked the box’.
In effect, the DDJ Nasser reasoned that the defendant was unable to profit from the claimant’s omission.
The defendant appealed and a hearing was listed for 5 November 2018. The matter was listed at the Civil and Family Court at Liverpool.
Decision on Appeal
On appeal, His Honour Judge Parker reversed the decision at first instance, favouring the defendant’s argument that settlement had been successfully negotiated.
‘... follow the rules and check the offer box prior to submitting an offer or response. The parties need not look behind the offer at the individual heads of loss’.
Firstly, the Circuit Judge found that the defendant was not bound by the law of estoppel.
Secondly, the rules that govern MoJ Portal claims are not governed by common law principles, such as compromise and the law of mistake. The ‘self-contained code’, introduced through the low-value Protocols was designed to streamline and simplify claims handling. Any ‘rough justice’ created by the process was outweighed by the generally proportional and cost-effective disposal of claims:
‘... there is very good reason for the protocol to be self-contained, to the exclusion of normal principles of contract and, for example, the doctrine of mistake – because of the risk that the objective sought by the protocol is thwarted by disproportionate satellite litigation. The protocol has been designed with the deliberate intention to avoid low value personal injury claims arising out of road traffic accidents, spiralling into unnecessary and costly litigation. It is a self-contained code and its operation is to the exclusion of normal principles of contract in a way that is similar to the operation of Part 36’.
Concluding that a compromise had been attained, HHJ Parker cautioned that an alternative finding ‘risked undermining the principles and intentions of the protocol’.
Hence, the claimant’s claim was dismissed and the defendant was awarded its costs of the Part 8 proceedings and the subsequent appeal.
It is foreseeable that this decision would be equally applicable to claims handled under the Employers’ Liability and Public Liability (EL/PL) PAP.
[i] Neil Rose, ‘Claimant “bound” by failure to change figure in portal’ (19 February 2019 Litigation Futures) <https://www.litigationfutures.com/news/claimant-bound-by-failure-to-change-figure-in-portal> accessed 20 February 2019.
[ii] Richard Welsh, ‘Costs: Claimant bound by settlement terms reached at stage 2 of the MoJ portal’ (2 November 2018 DWF) <http://insurance.dwf.co.uk/news-updates/2019/01/costs-claimant-bound-by-settlement-terms-reached-at-stage-2-of-the-moj-portal/> accessed 20 February 2019.