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Lisbie v SKS Scaffolding Ltd, Senior Court Costs Office, 1 April 2011

17 May 2011
The issues

Costs – fixed costs – road traffic – settlement below £1,000.

The facts

In August 2008 the Claimant had a road traffic accident. He instructed solicitors to claim damages against the Defendant. In November 2008 a claims management company wrote to the Defendant’s insurers on behalf of Mr Lisbie and Lewis Day Transport Plc for whom Mr Lisbie worked, stating that they were willing to accept a 50/50 settlement.

The day after that letter was sent the Claimant’s solicitors wrote to the Defendant’s insurers putting forward an offer of £1,650 in final settlement. The Defendant’s claims handling agents rejected the offer of £1,650 and put forward an offer of £1,475, subject to a 50/50 apportionment in respect of contributory negligence. The Claimant’s solicitors accepted that offer, provided that their costs and disbursements were met. They put forward a calculation in accordance with Section II of Part 45 of the Civil Procedure Rules 1998 in the sum of £2,015.58. Accident Helpline replied to say that they were requisitioning a cheque in respect of one half of the agreed damages but that they would not be in a position to consider costs because the settlement fell below £1,000.

In March 2009 the Claimant commenced costs only proceedings in the St Albans County Court. The issue was whether the Claimant was entitled to fixed recoverable costs in accordance with Section II of CPR Part 45 or whether he was entitled to fixed costs only, which had been agreed in the sum of £280.

The decision

CPR 45.7 sets out costs to be allowed in costs only proceedings under the procedure set out in Rule 44.12A (fixed recoverable costs). The Section applied where the dispute arose from a road traffic accident and the damages included personal injury damages, the road traffic accident and the total of the damage did not exceed £10,000 and that if the claim had been issued for the amount of the agreed damages, the Small Claims Track would not have been the normal track for that claim.

CPR 26.6 provided that the Small Claims Track was the normal track for any claim for personal injuries where the value of the whole claim was not more than £5,000 and the value of any claim for damages for personal injuries was not more than £1,000.

CPR 26.7 provided that when deciding what the appropriate track was, the Court should disregard any contributory negligence. The Costs Practice Direction provided that the fixed recoverable costs were to be calculated by reference to the amount of agreed damages and that in calculating those damages, the amount of damages attributed to contributory negligence had to be deducted.

The Court would follow and adopt the reasoning of Judge Stewart in the unreported decision of Parveen v Farooq. The term ‘agreed damages’ was not defined in the Rules. In the absence of definition, words should be given their usual meanings. The usual meaning of ‘agreed damages’ was the amount of compensation which the parties have agreed should be paid. It was not the value of the claim before any deduction for contributory negligence. That would be to give the words an artificial meaning. CPR 45.9, which provided the formula for the calculation of the costs under Section II used the term ‘damages agreed’. The Court could see no reason why damages agreed and agreed damages did not mean the same thing.

Section 25A.3 of the Practice Direction made it plain that any damages deducted on account of contributory negligence were to be disregarded. The result was the ‘damages agreed’. The Court accepted that there was an inconsistency with this interpretation – namely, that the claim would have been allocated to the Fast Track if issued, but that only Small Claims Track costs were recoverable if not issued. It will be deeply unfortunate if solicitors were driven to issue claims which need not be issued, simply to make cost bearing claims. However, the Court had to interpret the words of the Rule as they were written.

The claim fell therefore outside the fixed recoverable costs regime and the Claimant was entitled only to costs in the sum of £280, being fixed costs referable to the Small Claims Track.

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