JCA v Lucas

JCA v Lucas's Tags

Tags related to this article

JCA v Lucas

Published 19 mayo 2017

400 Club Rule scrutinised by the Court of Appeal

The question of costs in claims commenced within the Low Value Protocols has been considered further by the Court of Appeal, the judgment in JC & A Solicitors Limited v Lucas and Others determining the entitlement of solicitors to retain Stage 1 costs in old claims which are not progressed.

The original Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents, introduced in 2010 and applying to collisions where the CNF was submitted prior to 31 July 2013, provided that Stage 1 costs (£400 plus VAT) were to be paid by the Defendant's insurer to the Claimant's solicitors within 10 business days of an admission of liability at Stage 1.  The Protocol did not stipulate whether the Stage 1 costs would be repayable if the claim was not pursued. The insurance industry estimate that there were thousands of cases in which solicitors presented claims which never went any further, earning these solicitors £400 + VAT in each case and the nickname "the 400 Club".

The question considered by the Court of Appeal was whether the costs paid on those unpursued cases should be repaid to the insurers. The court was told that some 400 claims remain outstanding in which the case never progressed beyond the payment of Stage 1 costs, possibly just for the insurer involved in the appeals. The Court was told that there was no allegation of impropriety on the part of the solicitors, which may have been a material factor in the final decision.

Lord Justice Briggs, who delivered the lead judgment, noted that the Protocol did not require repayment of the Stage 1 costs where claims fall into the small claims track at Stage 2, and that the rules do not confer a right to repayment.  He concluded that there is not an obligation on Claimants or their solicitors to repay the Stage 1 costs, and therefore the 400 Club can keep their costs.

Wider impact

As he did in his judgment in Sharp v Leeds City Council (Insurance Adviser Alert February 2017), Lord Justice Briggs was keen not to recognise implied exceptions to the rules of the Protocol which could be destructive of the clear purpose of the fixed costs regime (Sharp), and the swings and roundabouts to which he referred in both judgments should limit the frequency of applications to escape fixed costs on the basis of exceptional circumstances.

The problem outlined in these cases was consigned to history by the protocol changes introduced for CNFs submitted on or after 31 July 2013 (for RTA claims up to £10,000 in value) and for accidents on or after that date (for claims over £10,000 or EL/PL accident claims). However they serve to highlight the ongoing battle to plug loopholes that could be exploited by Claimant solicitors in any fixed costs regime.

Authors

Peter Allchorne

Peter Allchorne

Bristol

+44 (0) 117 918 2275

Andrew Parker

Andrew Parker

London - Walbrook

+44 (0)20 7894 6232

David Williams

David Williams

Leeds

+44 (0)113 251 4844

< Back to articles