Setting the stage

Virtually the whole of the 52nd update of the Civil Procedure Rules and practice directions is taken up with a new procedure for low-value road traffic accident (RTA) claims.

The new procedure covers claims for personal injury arising out of a road traffic accident which occurs on or after 30 April 2010, where liability is admitted and the claim for damages, excluding vehicle-related damages, is between £1,000 and £10,000. Vehicle-related damages (pre-accident value, repairs and hire) can be included in the claim but they are left out of account for the purpose of deciding whether the claim falls within the parameters of the new procedure. Below £1,000 claims will still be dealt with on the small-claims track, and above £10,000 will be allocated to track in the usual way. The procedure will cease to apply if at any stage the claim is re-valued at over £10,000.

The procedure, which is the product of extensive discussions between interested groups, is intended to provide a streamlined means of resolving cases falling within its parameters, with claimants being compensated more quickly, solicitors getting staged payments of costs and more cases overall settling. It is designed in three stages. The court is not directly involved in the first two (which are embodied in the pre-action 'RTA protocol') but they need to be explained so that the third stage can be properly understood.

Sending the claim form

Under stage 1 the claimant's solicitor sends (electronically) a claim notification form to the defendant and his insurers. The defendant can decide that the claim cannot proceed under the protocol if inadequate information is provided. If the court eventually makes an award of damages in favour of the claimant in such circumstances, costs may be limited to the fixed costs provided under this procedure.

The claim will also move outside the protocol if the defendant fails to respond, liability is denied, or contributory negligence (other than the failure to use a seatbelt) is alleged. Otherwise, the defendant responds within 15 days and pays to the claimant's solicitor stage 1 fixed costs of £400 within a further ten days.

Submitting a settlement pack

The claim then moves on to stage 2. The claimant obtains a medical report and submits it within the stage 2 settlement pack which will also include evidence of special damages, receipts for disbursements and the claimant's valuation of the claim. If the defendant fails to respond within 15 days the claim exits the protocol. If the defendant responds accepting the claimant's figure, he pays that together with stage 2 fixed costs '“ a further £800 and disbursements.

If the defendant responds with a counter offer, a 20-day negotiation period begins during which it is hoped that the great majority of claims will settle. The claimant may include within stage 2 a request for an interim payment of £1,000; if requested, it is automatically payable within ten days. If the claim is not settled at this point it moves on to stage 3 which is governed by the new practice direction 8B.

The court proceedings pack

The claimant sends to the defendant the court proceedings pack which must contain the parties' final offer and counter offer, and supporting comments from each party on the disputed heads of damage. The defendant must pay to the claimant the stage 2 fixed costs and agreed disbursements, together with the defendant's own last offer of damages (less any interim payment) '“ a real case of having to put your money where your mouth is!

Unless the defendant says that the court proceedings pack is not as it should be, the claimant issues a part 8 claim including the court proceedings pack (but with the parties' offers in a sealed envelope '“ for obvious reasons). The claimant will at this stage either request a hearing or a determination on paper. The defendant files an acknowledgement of service and indicates his choice of a paper or an oral hearing. The district judge will at this point either dismiss the claim if it is unsuitable for this procedure (the claimant can start again under part 7) call for further evidence to be filed, list the claim for an oral hearing or proceed to a determination on paper. The court must give reasons for its determination, although I doubt whether these will be lengthy.

Having resisted the temptation to do so beforehand, the district judge now opens the sealed envelope and applies part 36, modified for this procedure so that:

(i) if the claimant beats the defendant's offer, the claimant recovers stage 3 costs of £250 (or £500 if there has been an oral hearing);

(ii) if the claimant equals or beats his own offer he recovers stage 3 costs, and an interest uplift; or

(iii) if the claimant fails to beat the defendant's offer the defendant recovers stage 3 costs.

These are fixed rules and there is no scope for 'Carver' arguments. Where there is a funding arrangement a success fee of 12.5 per cent is added to stage 1 and 2 costs, and 100 per cent to stage 3 costs.

The big question is whether there will be wholesale attempts by claimants or defendants to break out of the procedure to avoid its constraints. My guess is that, if they get the chance, judges will be astute to penalise inappropriate attempts at escape.