I was recently instructed to provide advice on the costs procedure which followed a ‘settlement’ for a child in a personal injury claim.
This was a case that had proceeded via the Low Value Portal. The insurer upon settlement at Stage 2 sent the Claimant’s solicitors the full amount of damages and the majority of the fixed recoverable costs. The Claimant’s solicitors contacted the parent and advised of the settlement and arranged a parental indemnity form. Upon signing, the damages cheque was sent out to the parent. The solicitors then engaged in correspondence with the insurer for payment of the balance owed in costs. You would have thought here that the insurers would pay but they didn’t.
Instead, they (replying 3 months later) refused to pay and having spotted the error also asked for the damages cheque back as they had not agreed to parental indemnity (at the same time pointing out that the Court’s approval was required before any payment made). The insurers also stated that they made the payments in error.
For anyone involved in dealing with claims for children or protected parties, you should be fully aware of Rule 21.10(1) CPR 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.
The advice therefore was simple, the settlement was not binding and the monies should be returned. This is supported by the Supreme Court in Dunhill v Burgin  which stated that the rule overrides the general rule of contract and so the ‘settlement’ was not binding. As there was no binding ‘settlement’, there was also no agreement to pay costs and therefore, any potential claim for costs would automatically fail until the Court approved the settlement.
It was my advice that the Defendant were therefore allowed to withdraw from the agreement as was the case in Revill v Damiani  EWHC 2630 (QB). In summary, the insurer was entitled to the damages and costs back.
The rules regarding child settlements are simple and easily accessible to all. Not following the rules can be costly – in this case being no recovery of costs (and potentially having to refund the damages which no doubt had already been spent by the parent).
If you require advice or assistance in matters concerning infant settlements or costs then get in touch with Philip Nam on 0151 230 8931 / 07943 163 877 or [email protected]