No repayment of stage 1 fixed costs under RTA Protocol (J C and A Solicitors Ltd v Andeen Iqbal and another)

No repayment of stage 1 fixed costs under RTA Protocol (J C and A Solicitors Ltd v Andeen Iqbal and another)

This appeal examines three road traffic accident (RTA) claims made under the pre-July 2013 Pre-Action Protocol for Low Value Personal Injury Claims in RTAs (RTA Protocol) where stage 1 costs were made to claimant lawyers but the cases did not proceed to stage 2. At trial, the judge found in favour of the defendants’ insurers claim for recovery of those costs. Sue Brown, solicitor and director of Claims Portal and Medco discusses the appeal.

Cases: Iqbal and another v J C and A Solicitors Ltd; Smith and another v J C and A Solicitors Ltd; Pitts and another v J C and A Solicitors Ltd [2017] EWCA Civ 355, [2017] All ER (D) 99 (May). The Court of Appeal, Civil Division held that the judge had been wrong in his construction of the RTA Protocol. There was no express provision for repayment of the stage 1 costs in the relevant circumstances and therefore no such right could be properly implied.

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What are the practical implications of this case?

This case resulted from attempts by a few insurers to recover stage 1 costs under the pre-July 2013 RTA Protocol from claimant lawyers in cases where liability had been admitted at the end of stage 1, but the claim did not proceed to stage 2. Under the old version of the RTA Protocol, stage 1 costs of £400 plus VAT were payable within ten days of the admission being made. The first instance judgment, handed down in February 2016, caused considerable concern to many claimant lawyers. The judge held that the protocol was based on the premise that a personal injury claim would be made and the claim would proceed to stage 2, and that where they did not, the stage 1 costs must be repaid. Most firms doing RTA claims in any volume would have cases that did not proceed beyond the end of stage 1, generally because the client had made a full recovery from his injury within three to four weeks, and clearly were concerned at the prospect of having to make repayments. This was the appeal by the claimant lawyers, J C & A Solicitors, against that judgment, on the grounds:

  • first, that in the absence of an express provision for the repayment of stage 1 costs in the RTA Protocol, no such right could be properly implied, and
  • second, that there is no basis on which an obligation can be imposed on the claimant’s solicitors to make repayment

What issues did this case raise?

On the first ground of appeal, the very simple questions of what the RTA Protocol actually said about stage 1 costs, and whether, if it did not say they should be repaid, whether a requirement to repay should be implied. The Court of Appeal held that the RTA Protocol was quite clear that except where it is alleged that the claimant submitted a claim under the RTA Protocol without a reasonable belief that it should be valued at no less than £1,000, no obligation to repay stage 1 costs is imposed on claimants who do not pursue their claims beyond stage 1. The RTA Protocol is a clear, detailed and precise code, and it is an express term of this code that the claimant’s legal representative should receive the relevant fixed costs at the end of each stage regardless of what, if anything, happens at a later stage.

To what extent is the judgment helpful in clarifying the law in this area?

The lead judgment delivered by Lord Justice Briggs is extremely clear and addresses the issues relevant to this case from all angles. For cases like this one, where there is no allegation of wrongdoing or acting improperly against the claimant or his lawyers, there is really nowhere for insurers to go. The Court of Appeal does briefly address the issue lurking in the background, the so-called ‘400 Club’ point, that a practice developed of unnamed ‘unscrupulous lawyers’ submitting claims for claimants who had no intention of proceeding to stage 2, dismissing it on the basis that there is no evidence such a practice developed, and of course in this case no suggestion that J C & A were guilty of it. It appears if insurers did wish to pursue this issue further, they would have to be able to produce evidence that an individual firm was either submitting claims without proper authority or on the basis of having given inappropriate advice to clients in order to obtain authority to submit the claim.

In general terms, I think this joins a growing list of judgments arising from claims in the RTA and employer’s liability/public liability protocols where the courts treat the protocols as self-contained codes, and where a protocol rule is inconsistent with a general legal principle (here, the respondents had argued that as the claimant did not succeed, the general rule of the loser paying the winner’s costs prevented the claimant from retaining the monies paid), the protocol rule prevails.

What are the implications for practitioners? What will they need to be mindful of when advising in this area? Any best practice tips?

Since August 2013 the RTA Protocol has been changed and stage 1 costs are payable only after the stage 2 pack has been submitted so where a claim is not pursued beyond stage 1, the claimant will not have received any costs.

Are there still any unresolved issues practitioners will need to watch out for? If so, how can they avoid any possible pitfalls?

I think there is a small grey area on the second ground of appeal, the question of whether the legal position is that there is no basis on which an obligation can be imposed on the claimant’s solicitors, rather than or as well as the claimant, to repay sums paid to them and properly received by them pursuant to their retainer with the client. The Court of Appeal does not address that point because, having found in the appellants’ favour on the first ground, it doesn’t have to consider the second. However, Lord Briggs does comment that having initially thought he would also be with the appellants on that point, his view was ‘a little tempered’ by the Court of Appeal finding in Gavin Edmondson v Haven Insurance [2015] EWCA Civ 1230, [2015] All ER (D) 60 (Dec) that solicitors might have their own claim to recover fixed costs under the RTA Protocol rather than simply a right to bring proceedings in the name of their clients. That comment troubles me slightly as it does suggest Lord Briggs thinks there might be circumstances in RTA Protocol claims where claimant lawyers themselves could be pursued for the recovery of costs.

Interviewed by Fran Benson. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

 

 

 

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