Part 36 leads to indemnity costs, enhanced interest and an additional £75,000.00 in damages in Downing -v- Peterborough & Stamford Hospitals NHS Foundation Trust [2014]

If you ever needed to be convinced of the advantages of putting forward a strong early Part 36 offer then this look no further than the case of Downing –v- Peterborough & Stamford Hospitals NHS Foundation Trust where the Claimant was awarded indemnity costs, increased interest (10% instead of 8%) and an additional £75,000.00 in damages.

The Case

The matter was a high value medical negligence claim. The Claimant made a Part 36 offer of £1.2 million (inclusive of interest). Damages were awarded in the sum of £1,508,524.00.

In accordance with CPR 36.14(3)(b) and (c) the Claimant requested that costs be awarded on the indemnity basis from the relevant date and for interest on those costs to be awarded at a rate not exceeding 10% above base rate. The Judge noted that the court was obliged to make such an award unless it was considered to be ‘unjust’ to do so

The Judge further when considering CPR 36 noted that “a decision was taken, as a matter of public policy, to impose sanctions in order to encourage and facilitate the settlement of litigation and, correspondingly, to avoid parties incurring the costs involved in going to trial and also to save court time.”  Effectively, the rule was not in place as a punishment for conduct or as a result of breaching a rule but instead as a way to encourage lawyers to explore the possibility of an early settlement.

The Defendant argued that they had been mis-led by one of the experts who they stated appeared to take a less optimistic view of the Claimant’s prospects of recovery when giving oral evidence as opposed to the written evidence which had previously been provided. The Judge stated that all of the experts in the case were “tentative and cautious as to the changes of significant improvement [to the Claimant]” and that resultantly there was “nothing […] to justify a departure from the presumption in favour of indemnity costs”. The Judge accordingly awarded that costs should be assessed from the relevant date on the indemnity basis and further that there should be interest on those costs at 10% above base rate.

The Judge subsequently referred to CPR 36.14(3)(d) which states that an additional amount (on damages awarded) not exceeding £75,000.00 to be paid which is calculated based on the sliding scale set out within the rule (10% of the first £500,000 and 5% of any amount above that figure limited to £75,000.00). The Judge accordingly awarded the maximum figure of £75,000.00.

Part 36 – Friend or Foe?

It is clear that putting forward a strong early Part 36 offer can offer up some strong rewards. There is a clear incentive for both Claimants and Defendants and the judgment in Downing acts as a reminder of the potential implications of beating your own Part 36 offer.

Equally the risks of pursuing litigation at the expense of properly considering any Part 36 offer put forward highlights the potential risk at assessment. Any party seeing this judgment should be acutely aware of the benefits of placing early risk on the Other Side.

In my opinion it makes sense for all parties, Claimant or Defendant to put forward a strong Part 36 offer early on. For a Claimant and Defendant the opportunity to get indemnity costs, enhanced interest and additional damages should be appealing enough but there is also the opportunity to settle early, a benefit for all the parties involved and indeed the court’s reasoning for the awarding of the aforementioned benefits.

Part 36 in Costs Litigation 

The same benefits apply in costs litigation and it is therefore nonsensical to not make a strong early Part 36 offer.

That applies for both the receiving and the paying party who can both benefit out of the Part 36 regime. Again the added bonus here is that it can lead to an early settlement avoiding the incurring of unnecessary legal costs.

There will obviously be litigators who are aggressive in the amount of costs they want to recover and there will always be paying parties putting forward unrealistic offers but tactically this plays right into Part 36 and the ‘riches’ that can be awarded.

How do people feel about the new Part 36 regime, have you started putting forward and receiving early Part 36 offers? Please comment below.

If you have any questions or queries in relation to this blog please contact Sean Linley (sean.linley@clarionsolicitors.com and 0113 336 3327) or the Clarion Costs Team on 0113 2460622.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s