Philip Nam is a legal consultant, advocate, costs draftsman and mediator dealing with civil and commercial litigation and disputes. He can be contacted on 0151 230 8931 or [email protected]
I was recently instructed by a firm of solicitors to review a claim for outstanding costs between a claimant who was a child and the defendant who was an insurer in a road traffic accident claim. My solicitor client had told me that they had recovered most of the costs but there were still some costs outstanding which included part of the fixed sums due under Part 45 of the Civil Procedure Rules.
The solicitors told me that they had settled the claim on a parental indemnity basis and asked me to advise them how they can recover the costs. As a firm of solicitors, it is expected of the them to know and understand the rules concerning infant settlements and the starting point in this case is Rule 21.10 (1) which states:
(1) Where a claim is made –
(a) by or on behalf of a child or protected party; or
(b) against a child or protected party,
no settlement, compromise or payment (including any voluntary interim payment) and no acceptance of money paid into court shall be valid, so far as it relates to the claim by, on behalf of or against the child or protected party, without the approval of the court.
As this case had settled by parental indemnity and thus was no approval of the court, the agreed settlement for damages was not valid and therefore any damages paid, as well as costs, ought to have been returned or, at least, kept on the solicitors’ client account.
The Supreme Court in Dunhill v Burgin  following Dietz v Lennin Chemicals LTD  stated that the rule overrides the general rule of contract and so this settlement was not legally binding. The court observed that the policy underling the CPR is clear: that children and protected parties require and deserve protection, not only form themselves but also from their legal advisors. Therefore, as there was no binding settlement, there was no agreement to pay costs and it was my advice to the solicitors that any claim for unpaid costs must automatically fail until such time that the court approves the settlement.
It should also be noted that any defendant or in fact claimant can withdraw from an agreement to pay damages before the court approves the settlement as this was the case in Revill v Damiani .
Therefore, in order for the claimant to pursue a claim for unpaid costs in an infant or protected party case they first must obtain approval from the court of the damages settlement and seek an order for costs that way.
It is best in all cases to keep things simple and following the rules is something that should be as simple as can be.
If you would like further information and assistance with any infant approval or costs matters, then please get in touch on 0151 230 8931 or [email protected].