Infant Approval v Parental Indemnity avoiding the problems
Infant Approval – v – Parental Indemnity
In a case concerning a minor, settlement is all too often reached using the fictional procedure commonly known as ‘Parental Indemnity’. This is done despite the rules contained within CPR 21.10 which makes it clear that no settlement, compromise or payment shall be valid without the approval of the court. Therefore the Claimant solicitor who settles a Claimant minor’s case by way of Parental Indemnity not only contravenes the rules but also potentially leaves themselves open to an action in negligence.
CPR 21.10 governs ‘compromises etc by or on behalf of a child or protected party’ and the relevant sections are set out below: -
21.10 (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….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.
(2) Where –
(a) Before proceedings in which a claim is made by or on behalf of, or against, a child or protected party…..are begun, an agreement is reached for the settlement of the claim; and
(b) The sole purpose of proceedings is to obtain the approval of the court to a settlement or compromise of the claim,
the claim must –
(i) Be made using the procedure set out in Part 8 (alternative procedure for claims); and
(ii) Include a request to the court for approval of the settlement or compromise.
When issuing a claim for infant approval under CPR Part 8, there are modifications to the general rules regarding issued claims, the most salient of these being CPR 8.9 (c) which states a matter issued by way of Part 8 shall be treated as being allocated to the multi-track and therefore Part 26 does not apply.
This has interesting consequences for a solicitor pursuing a claim on behalf of a minor which settles for less than £1,000.00. Due to the ‘special provisions’ contained within CPR 8.9 the financial limits placed on claims for the purposes of allocation are dispensed with and therefore the usual argument made by a Defendant insurer that the claim was always going to be a small claims case which in turn attracts small claims costs is entirely negated. Also negated is the argument that the claim is subject to the predictable costs regime were the claim arises out of a Road Traffic Accident, however this argument is negated for different reasons, and those will be explained in turn. The consequence being the Claimant solicitor is entitled to claim costs from the unsuccessful Defendant paying party on the standard basis by submitting a detailed bill of costs for assessment in the usual manner.
Turning to the first potential argument regarding small claims, the Defendant’s often cite the case of Coles v Keklick (30th June 2008). In this case HHJ Stewart QC Sitting on appeal in Liverpool County Court held that the Claimant solicitor was entitled to small claims costs following the Claimant’s claim being settled on the basis that the Defendant pay £250.00 in damages plus costs. Crucially in this case, the matter was settled by way of ‘Parental Indemnity’ and therefore no proceedings were issued under Part 8, the alternative claims procedure, and therefore in turn the provisions in CPR 8.9 were not invoked and the financial limits for allocation contained within CPR Part 26 applied. The judge commented that the whole issue of Parental Indemnity was something that he had not personally come across either sitting as Designated Civil Judge or in Private Practice and as far as he was concerned there had to be court approval of the settlement under CPR 21.10 for the same to be valid. He commented that unless the claim was issued under Part 8 then the track to which it would have been allocated to must have been the small claims track, there being no factors, other than the very fact that the Claimant was a child, upon which it could be said that the small claims track was not the appropriate track.
Where a claim is issued under the Part 8 procedure for Infant Approval the case of Dockerill & Healey v Tullett is much more on point. This was a case which arose out of a Road Traffic Accident which took place on the 20th July 2007. A claim was made on behalf of the Claimant minor which ultimate settled for £750.00. A Claim Form was issued in February 2009 for the approval of the terms of settlement. HHJ Oliver-Jones QC, sitting in Birmingham County Court came to the conclusion that costs should be assessed on the standard basis under and in accordance with CPR 44.5. A Defendant may still argue that the Judge on an assessment has the power under CPR 44.5 to award costs commensurate with those allowed under the small claims regime, and that contention cannot reasonably be challenged. However having regard to the fact that CPR 8.9 treats the claim as being allocated to the multi-track, the argument raised is often fatally undermined.
Moving onto the argument that may be raised by a Defendant regarding the payment of fixed predictable costs, this argument is easily answered by reference to the rules contained within CPR 45.7 (2) which relates to the scope and interpretation of the rules governing the fixed predictable costs regime. The relevant rules are set out below: -
45.7 (2) This Section applies where –
(a) The dispute arises from a road traffic accident;
(b) The agreed damages include damages in respect of person injury, damage to property, or both;
(c) The total value of the claim does not exceed £10,000.00; and
(d) If a claim had been issued for the amount of the agreed damages, the small claims track would not have been the normal track for that claim.
The use of the word ‘normal track’ is defined by CPR 26.6. A normal track for small claims track cases is any claim for damages which includes a claim for personal injuries where the damages are less than £1000.00. Therefore a minor’s claim which settles for less than £1,000.00 equally cannot be made the subject of the fixed predictable costs regime.
In short, the easiest way to avoid any problems in being paid in cases which involve a minor where the damages recovered are less than £1.000.00 is to issue proceedings for infant approval under Part 8. What will follow then is a detailed assessment in the usual manner with the receiving party submitting a bill for assessment, Points of Dispute and Replies being submitted (if appropriate) and a detailed assessment hearing taking place. In our experience the Judge presiding over the assessment procedure will have no alternative but to assess the Claimant’s costs by reference to the relevant rules detailed above and therefore proceed with the assessment on the basis of what is considered ‘reasonable’ by the court.
CRAIG LEIGH
Advocate
