£25k Valuation Was Reasonable Despite £11k Settlement | Fixed Costs Not Applied

This case involved an appeal by Yorkshire Aggregates Limited (the Defendant) against a decision of the Doncaster County Court regarding whether the Claimant was limited to fixed recoverable costs.

• On 11 August 2017, the Claimant suffered an accident at work resulting in a fracture to his dominant right index finger which required surgery. He was off work for 2 weeks.
• In December 2017, the Claimant instructed solicitors regarding his injury.
• On 27 June 2018, the Claimant’s solicitor submitted a letter of claim under the Pre-Action Protocol for Personal Injury Claims, valuing the claim above £25,000.
• On 8 May 2019, the Defendant made a Part 36 offer of £11,000 plus costs which was eventually accepted by the Claimant out of time.
• A consent order was approved on 8 September 2021, agreeing to determine the preliminary issue of whether fixed recoverable costs applied.

Issues

The key issue was whether the Claimant had acted unreasonably in valuing the claim above £25,000, such that he should be limited to fixed recoverable costs under CPR 45.

The grounds of appeal were:

1. The District Judge substituted his own valuation rather than evaluating the reasonableness of the Claimant’s valuation.
2. The District Judge failed to place the burden of proof on the Claimant.
3. There was no evidence of the Claimant’s valuation of general damages.
4. There was no evidence of the Claimant’s valuation of a claim for disadvantage in the open labour market.

Parties’ Respective Positions

Ground 1 – Substitution of valuation

The Defendant argued:

• The District Judge erred by making his own valuation of the claim rather than evaluating whether the Claimant’s valuation was reasonable
• The role of the court was to assess if the Claimant acted reasonably in valuing the claim over £25,000, not to value the claim itself
• The District Judge should have analyzed whether the evidence available to the Claimant in June 2018 supported a valuation over £25,000, not determine his own valuation.

The Claimant submitted:

• The District Judge clearly evaluated the reasonableness of the Claimant’s valuation and did not substitute his own view
• This is evidenced by multiple statements referring to assessing ‘reasonableness’ and finding the £25,000 valuation was ‘not unreasonable
• The evaluation appropriately considered the information available to the Claimant at the time of the letter of claim in June 2018.

Ground 2 – Burden of proof

The Defendant contended:

• The District Judge failed to take as his starting point that the burden of proof was on the Claimant to show the valuation was reasonable
• As the receiving party awarded £11,000 on a consent order, the Claimant had to explain why he initially valued the claim over £25,000
• The District Judge made only a passing reference to the burden of proof and failed to properly apply it against the Claimant.

The Claimant argued:

• The central question was whether the valuation was reasonable, so the burden of proof was not decisive
• In any event, the District Judge did acknowledge this was a standard basis assessment with any doubt favouring the Defendant
• The settlement figure does not shift the burden where the issue is whether a valuation above a set threshold was reasonable.

Ground 3 – Lack of general damages valuation evidence

The Defendant argued:

• There was no evidence that the Claimant valued general damages in the bracket found reasonable by the District Judge prior to the letter of claim
• Merely describing the injury did not amount to evidence of the Claimant’s valuation of general damages for the purposes of assessing reasonableness
• In the absence of evidence showing the Claimant valued general damages in that bracket, the valuation over £25,000 was inherently unreasonable.

The Claimant contended:

• Based on the description of the injury in the evidence, it was reasonable to value general damages within the bracket found by the District Judge
• There is no requirement for a written valuation calculation where the question is simply whether the valuation was reasonable
• The District Judge had sufficient evidence, including on the nature of the injury, to assess reasonableness of general damages above £25,000.

Ground 4 – Lack of disadvantage valuation evidence

The Defendant submitted:

• Equally, there was no evidence the Claimant valued any claim for disadvantage in the open labour market before the letter of claim
• The Judge could not find the £25,000 threshold valuation reasonable without evidence of the Claimant’s own valuation of disadvantage at that time
• In the absence of a valuation, it was not open to the Judge to find the £25,000 threshold reasonable based only on the prospect of a disadvantage claim.

The Claimant submitted:

• The working history evidence provided a reasonable basis to value a potential disadvantage on the open labour market claim
• The Protocol stage requires assessing reasonableness of valuation on limited evidence, not proof of a written valuation
• Given the crushing finger injury and impaired dexterity, it was reasonably open to value disability in the labour market above £25,000.

Decision

Ground 1 – Substitution of valuation

HHJ Sadiq found that the District Judge did evaluate reasonableness and did not substitute his own view.

“…regarding the District Judge’s decision at paragraph 42, he said this, “For me to make a finding on reasonableness, I consider I need to have sufficient evidence to lead me to have sufficient doubt that the claimant could not reasonably value the claim at more than £25,000 at that time“. He then continued, “However, my judgment is that, in light of what appears the claimant knew at the time of valuing the claim as more than £25,000, I am not going as far as to find that the claimant acted unreasonably in valuing the claim at that time at more than £25,000“. All these paragraphs of his decision point to the fact that it is clear that the District Judge did evaluate objectively the reasonableness of the claimant’s valuation and did not substitute his own view for it.” [29]

He also held that the assessment was conducted at the correct date (paragraph 30) and based on the information known at that time (paragraph 32).

“…in my judgment, it is also clear that the District Judge undertook the assessment of the claimant’s valuation based on the information known to the claimant’s solicitors at the relevant time in June 2018. Regarding the general damages claim, he referred to the relevant edition of the JS Guidelines in force at the time accepting the claimant’s solicitor’s submission… The District Judge also referred to the claimant’s file note of evidence dated 16 February 2018 over four months prior to the letter of claim in June 2018 … and he considered the letter before action or letter of claim regarding the assessment of the claimant’s valuation…” [32]

Ground 2 – Burden of proof

On the burden of proof ground, the held that this was not a relevant consideration as the difference between the settlement figure and the £25,000 threshold should have little or no bearing on where the burden of proof lies.

“Firstly, the simple question for the District Judge to answer was whether the claimant’s valuation of the claim in excess of £25,000 at the relevant time in June 2018 was reasonable or not, which the District Judge did consider and address. Second, in my view the burden of proof issue did not assist in the circumstances of this case. Neither party in their written skeleton arguments referred to the burden of proof issue adequately or at all. Mr Hogan, counsel for the defendant, did not say in the hearing below that the burden of proof was decisive in the circumstances of this case. [36]

“What Mr Hogan did say is that this being an assessment of costs on the standard basis and, therefore, CPR 44.3(2)(b) applied. But I agree with Mr Latham, counsel for the claimant, in his written submission that the difference between the settlement figure and the £25,000 threshold should have little or no bearing on where the burden of proof lies. I would also agree with his submission regarding where the line should be drawn regarding the settlement figure. [37]

“But, in any event, one has to consider the whole of the District Judge’s judgment, not just one paragraph which was relied upon by Mr Hogan for the defendant. It is clear to me that the District Judge did acknowledge that he was performing a costs assessment on the standard basis and that any doubt should be resolved in favour of the paying party i.e. the defendant. At paragraph 15, he said, “If CPR 44.3(2)(b) is then the relevant guide, then I take it that Mr Hogan says the court should have “sufficient doubt” as per CPR 44.3(2)(b)“… Further, at paragraph 42, he said, “For me to make a finding of unreasonableness, I consider I need to have sufficient evidence to lead me to have sufficient doubt that the claimant could not reasonably value the claim at more than £25,000 at that time“. For all these reasons, Ground 2 fails as well.” [38]

Ground 3 – Lack of general damages valuation evidence

In dismissing this ground, the Judge found there was sufficient evidence at the relevant time of general damages falling within the relevant Guidelines bracket based on the description of injury.

“…in relation to the general damages claim, based on the claimant’s solicitor’s file note of 16 February 2018, there was evidence from which the claimant could reasonably conclude that the claimant’s injury fell within bracket 7(k) of the relevant JS Guidelines in force at the time for partial loss of index figure which covers also injuries to the index finger giving rise to disfigurement and impairment of grade 4 dexterity and the bracket between £10,670 up to £16,420. [40]

“The District Judge, in fact, dealt with this in some detail in his judgment at paragraphs 23 to 27, noting in particular from the file note that the claimant had suffered a crush injury resulting in a fracture to the dominant index figure which required an operation. There was impaired sensation and dexterity and disfigurement.” [41]

Ground 4 – Lack of disadvantage valuation evidence

Similarly, he found that there was enough evidence regarding disadvantage in the labour market.

“I am unable to conclude that there was no evidence in support of the District Judge’s findings that there could have been a claim for disadvantage on the open labour market. [41]

“Again, District Judge Preston dealt with this matter in some detail at paragraphs 31 to 39 of the transcript of judgment. In particular, he considered the file note and the note of the claimant’s working history which was clearly relevant to a claim for disadvantage on the open labour market. He also considered the claimant’s solicitor’s submissions that, if the claimant could not work as a HGV driver in the future for whatever reasons, there were other jobs that the claimant had previously done which he was now unable to do or disadvantaged from doing because of the impaired dexterity caused by the injury (see in particular paragraph 33). He also considered the later medical report of Mr Knight which supported a potential claim for disadvantage in the open labour market, but was careful to acknowledge that the claimant did not have that medical report at the time.

Addressing the point made by the Defendant about written reasons both for the valuation and acceptance of the Part 36 Offer, the Judge said:

“I have also taken into account the defendant’s submission that there was no evidence of a written valuation of the case in excess of £25,000 at the time and no reasons given why the Part 36 offer of £11,000 was accepted. Regarding the first point, in my view that was not a determining factor. The question simply is whether the claimant’s valuation was reasonable or not based upon the information known at the time. I have no doubt that the district judge was alive to this point, namely the lack of a written valuation of the case in relation to quantum because it was raised in oral submissions by Mr Hogan, counsel for the defendant, at the hearing below… [43]

“Regarding the second point and the lack of reasons given for accepting the Part 36 offer of £11,000, again I have no doubt that the District Judge was alive to that point as well given that it was raised by Mr Hogan in his oral submissions in the court below (see the bottom of page 67). But, in any event, this is no discrete ground of appeal that the District Judge failed to consider that no reasons were given by the claimant for accepting the offer of £11,000. Grounds 3 and 4 both focus on there being no evidence of any valuation of the claim for general damages or disadvantage on the open labour market. There was, in any event, a potential reason. Part 35 of the replies from the claimant’s medical experts at page 170 and dated 13 July 2020 undermined any significant claim for disadvantage on the open labour market. For all these reasons, Grounds 3 and 4 fail and, therefore, the appeal is dismissed.” [44]