JC and A Solicitors Limited v Iqbal and others  EWCA Civ 355
A case which confirms what happens to Stage 1 Protocol payments when a matter is not pursued into Stage 2.
Until this case, it was arguable that a loophole existed under the old April 2010 RTA Pre-Action Protocol. The case was in fact three cases with identical circumstances, wherein claims were initiated under the 2010 RTA Pre Action Protocol. In each case liability was admitted by the insurer and Stage 1 payments of £400.00 were made. However following the admissions, none of the claims proceeded to Stage 2 and eventually each became statute barred.
With the Defendant considering that each Claimant had effectively lost their case, they commenced proceedings in the small claims track for recovery of their Stage 1 fixed costs. The claims went before DJ Philips who determined that the Stage 1 payments had to be repaid. The case was appealed by JC and A Solicitors with Judgement released earlier this month.
JC and A argued that DJ Philips had erred on two grounds. Firstly, the judge was incorrect that there was no express or implied provision within the rules for the repayment of the Stage 1 costs. The second ground was that in any event there would be no basis upon which the repayment could be imposed on the solicitors, the entitlement to Stage 1 costs being that of the Claimant.
In Lord Justice Briggs Judgment (with which LJ McFarlane and LJ Flaux agreed), the appeal was allowed. The Justices’ determined that there was certainly no explicit entitlement within the rules to recover the payment and that no implied entitlement could be inferred from the rules either.
The Justices’ highlighted that while the £400 for the Stage 1 payment may be considered excessive for the work done at stage 1, these costs have now been reduced within the updated July 2013 portal. In any event the Justices’ determined that:
“A fixed costs regime inevitably involves what are generally called swings and roundabouts, in which the benefits of certainty are perceived usually to outweigh the disadvantages and disproportionality inherent in having costs payable for such work assessed.”
Further to the above, there was no evidence before the Justices that there had been any exploitation of the apparent ‘loophole’ by either JC and A, or indeed by the profession at large. As such the motivation to construe the rules in order to close an already shut loophole, with only a theoretical and historical risk, would be wrong.
As the case relates to the ‘old’ RTA Pre Action Protocol, the number of cases to which there is application is limited. However the judge was informed that there were 400 or more cases with similar circumstance so for those cases at least there is now certainty.
A more wide reaching consideration of the decision does shed light on some of the Court’s current priorities.
- The Court is reluctant to imply terms in a “clear detailed and precise code”.
- Importance is placed on the ability for solicitors to provide certainty within cost retainers to their clients.
- Fixed cost “inevitably involves what are generally called swings and roundabouts”
- When an objective of a particular regime (fixed costs being an example) is to mitigate costs and reduce reliance on litigation, the Court will be hesitant to encourage satellite litigation which would in itself compromise the objective.
While the case has no direct application to matters being pursued under the new Protocol, it can be seen as encouraging for Claimant solicitors. It represents the Court’s commitment to the rules as written as well as the Court’s acceptance of the realistic nature of pursuing claims under the Protocols.