As I draft this article the World’s stock markets are plummeting with fears over the global effect of COVID-19 and I am, somewhat strangely, reminded of a phrase that I learnt during a summer work experience placement: ‘fat-finger trading’. The phrase can loosely be defined as a keyboard input error or mouse ‘misclick’ in the financial markets whereby an order to buy or sell is placed of far greater size than intended. It is staggering that parallels between the daily dealings of an international wealth management company and personal injury litigation can be drawn; yet I do so here.
Offer, communicated. Acceptance, communicated. That is all it requires. Once matters reach stage 2 of the Pre-Action Protocol for Low Value PI Claims in RTAs or the Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims (hereinafter ‘the Protocols’) both sides negotiate by entering figures for the various heads of loss claimed. There is an absolute requirement (by rule 5.1) that those figures ‘must be sent via www.claimsportal.org.uk’. The question for consideration here is what happens if either party (it should be emphasised that this cuts both ways) makes an error or a ‘fat-finger trade’?
The answer, it seems, is it depends entirely on the stage at which the mistake is made. Both Fitton v Ageas (HHJ Parker on appeal in Liverpool) and Draper v Newport (DJ Baker at first instance in Birkenhead) adopt the approach that the Protocols are self-contained codes and the common law doctrine of mistake cannot be imported into the same. To quote HHJ Parker at paragraph 40 of his judgment ‘the offer had been made by the Claimant, albeit mistakenly and the offer was accepted by the Defendant, as the Defendant was entitled so to do. Whether there was a meeting of the minds between the parties or not did not matter. There was an offer within the Protocol made by the Claimant and there was an acceptance within the Protocol made by the Defendant. The matter was thereby compromised’. This approach is consistent with HHJ Gore QC’s (when Merseyside DCJ) approach in Purcell v McGarry in which he commented that ‘speaking of the RTA Protocol, what we have here, as with the Part 36 structure, is a free standing structure to regulate the making of offers and the giving of acceptances in the negotiated settlement of pre-Action Protocol low Value Personal injury claims where liability is admitted therefore the ordinary rules of contract to the effect that the making of the counter offer constitutes a rejection of the original offer was thereby lapse. It has no application in this area’. In respect of the aforementioned caselaw it is of note that the compromises in Fitton and Draper were both reached during the stage 2 process.
The Protocol upper limit (as per rule 1.2) is £25,000. A claim may include vehicle related damages but these are excluded for the purposes of valuing the claim (rule 4.4). Vehicle related damages can include pre-accident value, vehicle repair, excess and hire. In theory therefore claims significantly in excess of £25,000 can be included within the Protocol and it will not have escaped the attention of the insurance world that a significantly higher volume of hire claims are being submitted to the Protocol alongside straightforward claims for general damages. A genuine mistake by adding an extra zero to an offer could be very costly and, seemingly, binding. ‘Rough justice’ is how the system is often described. Brutal may be more apt, if indeed it is just at all. I respectfully disagree that if a Claimant values a case at £25,000 and makes an offer in accordance with that then a Defendant intends to counter offer £20,000 but by genuine mistake (which is apparent to all by the Claimant’s own valuation) inserts £200,000; all that is required is the Claimant to accept that in the Protocol and the Defendant is so bound. It cannot have been the intention of the rule makers to produce a system capable of that level of injustice. It also appears inconsistent that the common law doctrine of mistake is excluded from the Protocol yet the documents supported by statements of truth within the Protocol can and are used as part of contempt of Court proceedings.
Unfortunately it seems that the Courts are adopting this approach. DJ Hickinbottom did so in Bradford very recently in the case of Heyes v Esure. However, he went on to conclude that there was no compromise on the basis of the stage at which the agreement had been reached.
By way of brief chronology the matter had proceeded through the Protocol, agreement was not reached at stage 2 and the Claimant had issued Part 8 proceedings. The claim was listed for a stage 3 hearing but prior to the same taking place the parties had corresponded via email to the effect that the Defendant had made an offer (found by the Court to be a genuine and obvious mistake) of global settlement to the tune of nearly double the pleaded value on the Claimant’s claim form. The same day the Claimant had purported to accept the same and within minutes the Defendant averred a mistake had been made. The matter came before the Court for legal argument.
The issues in the case were identified as:
- Was there a compromise?
- Is any such compromise within or without the Protocol?
- Does it matter because of the mistake?
The Learned Judge quickly found there had been a compromise, the body of the caselaw was of the view that if that compromise occurred in the Protocol then the doctrine of mistake did not apply (at paragraph 26), but, the interesting point was the stage at which this particular compromise occurred, was it ‘within’ the Protocol?
In finding that the compromise occurred outside the Protocol the Learned Judge relied on the following key points:
- There is a distinction to be drawn between stages 1 and 2 and stage 3 of the Protocol, the Protocol concludes with the words ‘the stage 3 procedure is set out at PD8B’ and the editorial introduction to the Practice Direction in theWhite Book observes ‘the stage 3 procedure builds on the Protocol process’. This led to the conclusion that the Protocol and the stage 3 procedure are linked but they are also separate and distinct processes and different considerations apply to the non-Court and Court procedures.
- Offers at stage 2 must be made via the Protocol whereas after that process is complete there is greater freedom for the parties to negotiate via email.
- The status of offers made within the Protocol differs to those made after stage 2 by virtue of CPR36.28 which provides ‘(1) The amount of the Protocol offer must not be communicated to the court until the claim is determined. (2) Any other offer to settle must not be communicated at all’.
The Defendant was ultimately therefore allowed to rely on the doctrine of mistake and it was determined there was no binding compromise. The cautionary tale is therefore, at stage 2, for now, there is no room for fat-finger trading.