Author: Robert Patterson

Part 36 offers and split trials

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Where a split trial has been ordered and a party has made a Part 36 offer which relates to issues that have not yet been decided, the usual order will be that costs are reserved until after quantum has been determined. Does, however, unreasonable and dishonest conduct on behalf of the offer allow the court to make a costs award?

In Original Beauty Technology Company Ltd & Ors v G4k Fashion Ltd & Ors [2021] EWHC 954 (Ch) (28 April 2021), the Claimant submitted that under CPR Rule 36.17(3), if they did not do better than the Defendant’s Part 36 offer, then the Court would order them to the pay the Defendants’ costs, unless it was unjust to do so. It was their case that the qualification “unjust to do so” gave the court a very wide discretion and in circumstances where the Defendants’ conduct was dishonest and unreasonable, that discretion was wide enough to allow the court to make an award of costs before quantum was determined.

On that issue, David Stone (sitting as a Deputy Judge of the High Court) found that the language used in CPR Rule 36.17 prevented the court making a costs order. In particular, the Judge found that the rule required judgment to be entered, which it had not, and for that judgment to be no better than the Part 36 offer, before the qualification in CPR Rule 36.17(3) could take effect. Furthermore, it was held that the court “must” take into account the factors listed in CPR 36.17(5) before exercising its discretion. Crucially, although the court was aware of the existence of the Part 36 offer, it could not be informed of its terms; the focus of the injustice analysis in the rules was on the circumstances of the making of the offer and the provision of relevant information, not the general conduct of the parties. Of the five factors listed in CPR Rule 36.17(5), the only factor before the court was whether the offer was a genuine attempt to settle the proceedings, and that was not disputed by the Claimant.

The Claimant also relied on the comments of Jackson J in Multiplex Constructions (UK) Limited v Cleveland Bridge UK Limited and Anor [2007] EWHC 659 TCC at paragraph 26, where he found that in an exceptional case a Judge may make an immediate order for costs despite a Part 36 offer if the circumstances warranted such a course. The Judge rejected those submissions because CPR Rule 36.17 was not in force in its current form at the time that judgment was given in that case and that no general discretion could be transferred across.

In summary, it was found that whilst reserving costs following a split trial was not the appropriate course, it was the only course of action open to the Judge.

This article was featured in our March 2021 newsletter, see the full newsletter here.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.

No Qualified One-way Costs Shifting protection for counterclaiming defendant

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Qualified One-way Costs Shifting (QOCS) protection applies to claimants in proceedings which include a claim for damages for personal injuries. While there is no argument that the term ‘claimant’ can mean a person bringing a counterclaim, how the court should interpret the term ‘proceedings’ for the purposes of CPR rule 44 is open to debate.

Indeed, this question has been subject to two contrary authorities at Circuit Judge Level.

In Ketchion v McEwan (26 June 2018), HHJ Freedman found that the term ‘proceedings’ must be given a wide meaning with the result that QOCS protection is extended to the costs of both the main action and the counterclaim. The natural result of that decision was that the unsuccessful defendant could avoid costs orders arising from both the claim and the counterclaim

Taking a contrary view, HHJ Venn in Andrew Waring v Mark McDonell (6 November 2018) interpreted ‘proceedings’ more narrowly as meaning the claim or the counterclaim, thereby treating the claim and the counterclaim as separate proceedings; the defendant would therefore have QOCS protection in respect of the counterclaim, but not the claimant’s successful claim

The decision in Waring has now been supported by HHJ Gargan in Jim Sutcliffe v Aftab Ali (15 January 2021). The Judge found that treating the claim and the counterclaim as separate proceedings better reflected the underlying principles behind the QOCS reforms, as to do otherwise would encourage defendants to bring weak or tenuous counterclaims to provide a defence to any costs claim by a successful claimant.

Robert Patterson is an Associate in our Costs and Litigation Funding team. If you have any questions please contact him on 0113 3363337 or at robert.patterson@clarionsolicitors.com.

This article was featured in our March 2021 newsletter, see the full newsletter here.

Court declines to set aside default costs certificate

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The Claimant in Masten v London Britannia Hotels Ltd obtained a default costs certificate in the sum of £363,695.25 when the Defendant missed an agreed date to serve points of dispute. Although the points of dispute should have been served by 28 February 2020, the default costs certificate was not issued until 10 June 2020 and the application to set aside was filed on 26 August 2020. The reasons for not serving points of dispute were essentially a combination of overwork, administrative error and the effects of the pandemic.

It was held that an application to set aside a default costs certificate must be made under CPR rule 47.12 rather than as an application for relief from sanctions; the criteria for relief from sanctions can apply, but the extent of that is open to argument.

It was accepted that the application had been made promptly in the circumstances of the claim and that there were good reasons for the detailed assessment to continue; in particular the claim was subject to costs management and the Claimant’s budget had been exceeded by at least £56,000.

The Master nevertheless went on to reject the application upon application of the Denton criteria. The default was found to be serious and significant and the Defendant offered no good reason for it. The Master found that setting aside the default costs certificate would cause inevitable prejudice to the Claimant.

It was also held that the failure to file points of dispute was negligent and the loss of opportunity to challenge the bill was the consequence of that negligence.

This article was featured in our January 2021 newsletter, see the full newsletter here.

Robert Patterson is an Associate in our Costs and Litigation Funding team. If you have any questions please contact him on 0113 3363337 or at robert.patterson@clarionsolicitors.com.