Tag: part 36 offers

Part 36 Rewards

Dominic ReganLeave a comment

HOCHTIEF V ATKINS ( 2019) EWHC 3028 ( TCC) saw a claimant who bettered their Part 36 quantum offer by just  £4,500 secure  an uplift of £65,000 and interest at 6% above base plus indemnity costs.

JLE V WARRINGTON NHS TRUST (2019) 1WLR 6497  –  On 21 June 2018 the claimant made a Part 36 offer in the sum of £425,000, inclusive of interest, in respect of the Bill of Costs. That offer accordingly expired on Friday 13 July 2018, i.e. the last working day before the hearing commenced.  Master McCloud assessed the bill inclusive of interest in the sum of £431,813.05, i.e. £421,089.16 plus £10,723.89 interest. The claimant therefore beat her Part 36 Offer by just under £7,000.

Had the Court  granted the default Jackson 10% uplift the claimant would receive an additional £43,181-30.

The Master considered this to be unjust given that the offer was made late on and it was only bettered by a slender margin .The Master was plainly troubled by the disparity between the amount by which the offer was beaten (£7,000) and the consequential uplift ( 6 times as much ).

She thus  declined to award the uplift. The claimant successfully appealed to Stewart J who made the award. The defendant ought to have paid up and settled. It only had itself to blame . The offer was plainly good.

In TELEFONICA  V OFFICE FOR COMMUNICATIONS (2020) EWCA Civ 1374 the claimant had bettered its offer by £4.5m or 9% yet received no more interest than would have been payable had it made no offer at all. The Appeal Court endorsed the view of Stewart J in JLE ( above ) that it would be highly unusual for the Court to grant some benefits but to withhold others .This was particularly so on the facts of this £54m case. Indemnity costs and an additional £75,000 “was an almost trivial uplift and any significant enhancement in overall relief would only have been achieved by the award of additional interest on the principal sum “ ( paragraph 42).The Judge was in error by regarding the award of 2 trivial enhancements as justification for not awarding the major enhancement, uplifted interest. The Appeal Court corrected the omission and so Telefonica gained  a useful extra £900,000.

Some Judges at first instance had flirted with the concept of withholding some of the rewards, adopting a pick and mix approach. The Appeal Court made it abundantly clear that the victor  ought to  receive each of the four enhancements pursuant to CPR 36.17(1)(b).There is nothing in the Rule which undermines or lessens entitlement to the others. The rewards are a composite package. All of them  ought to be bestowed .

On a practical note I surmise that Sir Rupert Jackson would agree. An approach which encouraged arguments about dividing up the spoils would be a blatant incentive for the paying party to raise challenges in the hope of shaving something off. Finality and certainty are secured by this approach.

HOCHTIEF was a good offer on quantum. JLE was a good one on costs. These examples demonstrate why it is crucial for a receiving party to make good, early offers to settle. We do !

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

Part 36 offers and split trials

Robert PattersonLeave a comment

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.

Fixed Costs – the effect of acceptance of a Part 36 offer

Joanne Chase1 Comment

The case of Ansell & Evans -v- AT&T (GB) Holdings Ltd (County Court at Oxford 14/12/2017) was an appeal to the County Court in relation to the interpretation and effect of acceptance of a Part 36 offer made in a case to which fixed costs applies.

Further information can be found in Gordon Exall’s blog on this case here

Background

The Claimants had been injured in a car accident and the claim, due to its value, fell within the scope of the RTA protocol (‘the Protocol’). The claims were submitted to the Protocol and the Defendant admitted liability. Subsequently, the Defendant wrote to the Claimants stating that they were concerned that the accident was a low velocity impact and they therefore requested that they have access to the vehicle in order to arrange an inspection “in line with Kearsley -v- Klarfeld…” and that pending such investigations the Defendant “may wish to raise Casey -v- Cartwright”.

Shortly thereafter, the Claimants wrote to the Defendant stating that in light of this request, pursuant to paragraph 7.76 of the Protocol the claim was not suitable for and therefore would no longer continue under the Protocol.

Three months later, the Defendant wrote to the Claimants stating that “LVI is no longer an issue”.

No settlement having been reached, the Claimants issued proceedings under Part 7 and the Defendant thereafter made Part 36 offers, which the Claimant accepted within the relevant period.

The issue between the parties

Following settlement, the Defendant stated that it considered that the Claimants’ conduct in withdrawing the claim from the Portal had been unreasonable, and that the Claimant should be limited to pre-action fixed costs (CPR 45.29B Table 6C).

The Claimants’ position was that:-

  • Pursuant to CPR 36.20 there was no deemed order for costs (CPR 44.9 applies only to settlement under CPR 36.13);
  • CPR 36.20(2) provides that where a Part 36 offer is accepted within the relevant period the Claimant is entitled to fixed costs applicable at the date on which the notice of acceptance was served;
  • The court had no discretion to go behind the self-contained provisions of CPR 36 and make some other order as the court;
  • Even if the court did have such a discretion, the court should not do so because if the Defendant had wished to raise issues of reasonableness it should not have made an offer pursuant to CPR 36; and
  • It is incumbent on a defendant to ‘say what it means’ when making offers. The consequences of CPR 36.20 are designed to give certainty in the event that the claim is settled. The consequences of the Defendant’s offer should therefore have been construed contra preferentem in favour of the Claimants.

The Claimants also alleged that, in the alternative,  it had not been unreasonable to withdraw the claim from the Portal in light of the Defendant’s statement that it “had LVI concerns”

The Decision

At first instance, the Court dismissed the Claimants’ application on the basis that it had been unreasonable to withdraw the claim from the Portal. However, the judge did not give any reasons for dismissing the Claimants’ argument that by operation of CPR 36.20 costs payable by the Defendant were fixed to the sums set out in Table 6B for the stage at which the claim settled and that therefore the Court did not have discretion to make an order in a different amount. The judge at first instance refused permission to appeal.

The Claimants made an application for permission to appeal on the grounds that (1) the judge had failed to give reasons for their judgment, (2) that the judge was wrong in law to reject the Claimants’ argument that by operation of CPR 36.20 costs payable by the Defendant were fixed at those set out in Table 6B, and (3) that the judge was wrong in law to conclude that the Claimants’ had acted unreasonably by withdrawing the claim from the Portal.

At the appeal hearing the Court allowed the appeal on the first ground, but dismissed the second and third grounds.

The First ground was a simple question of fact. As to the third, the court held that the letter sent by the Defendant that it “had LVI concerns” was merely an indication that complex issues might be raised, but was not of itself sufficient to give rise to complexity sufficient to justify withdrawal from the Portal.

However, had the Claimants succeeded on the second ground, the reasonableness or otherwise of the Claimants’ conduct would have been irrelevant. Thus it was upon the second ground that the Claimants’ case hinged and therefore the reasons for dismissal require more detailed analysis.

In respect of the second ground, which was that CPR 36.20 provides that where a Part 36 offer is accepted within the relevant period a claimant is entitled to the costs applicable for the stage at which the claim settlement, the judge held that CPR 36.20(1) incorporates CPR 45.29A(1), which therefore incorporates CPR 45.29A(3) which incorporates CPR 45.24 (consequences of failure to comply or electing not to continue with the relevant pre-action protocol). Simply put, the judge found that where a case settles by CPR 36, the court has discretion to award a different amount to that provided for under CPR 36.20 and Table 6C if the court determines that the claimant acted unreasonably.

Analysis

CPR 36.20(2) provides that where a Part 36 offer is accepted within the relevant period, the claimant is entitled to the fixed costs in Table 6C of Section IIIA of Part 45 for the stage applicable at the date on which notice of acceptance was served on the offeror.

There is no provision within CPR 36.20 which is relevant to these facts. In particular, there is no provision which states that CPR 45 generally shall apply where a Part 36 offer is accepted within the relevant period or which provides for any discretion for the court to award any other amount.

CPR 36.20(1), states “This rule applies where (a) a claim no longer continues under the RTA or EL/PL Protocol pursuant to rule 45.29A(1)”.

So far as it is relevant CPR 45.29A(1) provides that “subject to paragraph (3), this section applies (a) to a claim started under (i) the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (‘the RTA Protocol’)… where such a claim no longer continue under the relevant Protocol or the Stage 3 Procedure in Practice Direction 8B”

CPR 45.29A(3) provides that “nothing in this section shall prevent the Court making an order under rule 45.24.”

The judge found that because CPR 45.29A(1) states that it is “subject to” CPR 45.29A(3), where the court considered that withdrawal from the portal was unreasonable under CPR 45.24, by virtue of CPR 45.29A(3) the claim had not “continued under the RTA Protocol” for the purpose of CPR 36.20(1). Accordingly, the Court was not bound to allow only those costs within Table 6C.

Alternative View

It is possible to argue that the judge on appeal erred in their finding as set out above.

In this case, it was a simple matter of fact that the claim had not continued under the Protocol under CPR 45.29A(1). CPR 45.29A(3) states that “nothing in this section” shall prevent the court from making an order under CPR 45.24. However, it does not state that a finding under CPR 45.24 that the claim had left the portal unreasonably would mean that section CPR 45.29A(1) did not apply. Furthermore as is clear, CPR 36.20 is not “in this section” (i.e. within CPR 45.29A) and therefore CPR 45.29A(3) is specifically dis-applied.

Summary

Claimants should careful to ensure that they do not withdraw a claim from the portal unless the defendant has actually raised a complex issue. Parties should be sure to clarify with their opponent whether there are any issues of conduct prior to the issue of proceedings and in any event before any offer of settlement is made or accepted. It is a common tactic for defendants in particular to only raise issues such as this after settlement has been agreed, as was indeed the position in this case. Written correspondence on the point prior to the acceptance of an offer should at the least give rise to an argument in estoppel should they later try to raise conduct.

Evaluating Litigation Risk & Part 36 Offers

Joanne ChaseLeave a comment

In the clinical negligence matter between JMX (A child by his Mother and Litigation Friend, FMX) v Norfolk and Norwich Hospitals NHS Foundation Trust [2018] EWHC 185 (QB), Mr Justice Foskett found that a Part 36 liability offer of 90% was a genuine offer, which resulted in the Claimant securing the costs benefits listed in CPR 36.17(4).

These benefits included:

1) costs on the indemnity basis following expiry of the offer;

2) interest payable on those costs at a rate not exceeding 10% above base rate;

3) the recovery by the Claimant of an additional amount to be determined after the damages have been assessed pursuant to rule 36.17(4)(d).

The matter had been listed for a liability only trial on Monday 31 October 2017. On 06 October 2017, the Claimant had made a Part 36 offer to accept 90% of the damages to be agreed or assessed. The offer expired on Friday 27 October 2017 and was not accepted by the Defendant. The matter proceeded to trial and the Claimant achieved a result more advantageous than the offer.

CPR 36.17(5) provides that “In considering whether it would be unjust to make the orders referred to in paragraphs (3) and (4), the Court must take into account of the circumstances of the case including-

a) the terms of any Part 36 offer;

b) the stage in the proceedings when any Part 36 offer was made, including in particular how long before the trial started the offer was made;

c) the information available to the parties at the time when the Part 36 offer was made;

d) the conduct of the parties with regard to the giving of or refusal to give information for the purposes of enabling the offer to be made or evaluated; and

e) whether the offer was a genuine attempt to settle the proceedings.”

The Defendant had tried to argue that the offer was not realistic and failed to reflect any realistic assessment of the litigation risks. They argued that the Claimant’s Part 36 offer letter did not explain why only a 10% reduction was being offered, which went against the Court of Appeal’s guidance in the case of Huck v Robson [2002] EWCA Civ 398.

This, however, was not accepted by Mr Justice Foskett, who found that “Whilst, of course, it is open to the offeror to explain this kind of thinking in the letter making the offer if it is thought helpful, I do wonder whether in most cases it would assist. I can see the letter prompting a reply (sometimes expressed in language that does not help the settlement process) and it may be thought better simply to leave it to the recipient of the offer to assess the offer as it stands”.

The judgment highlighted the power that Part 36 offers have, and whilst the judge did not criticise the Defendant for failing to accept the offer at the time it was made, he did stress that “Part 36 was drafted in a way that provides an incentive to a defendant to view seriously and, where appropriate, to accept a claimant’s Part 36 offer. The decision not to do so may be perfectly understandable and reasonable even if, in due course, it turns out to have been the wrong one. It is simply a reflection of the litigation risk that each party has to evaluate”.

The judge considered the appropriate interest rate to be awarded (CPR 36.17 (4)(c)), and confirmed that 5% above base rate from 28 October 2017 would do justice.

Whilst a 10% deduction may not, in some cases, amount to much in monetary terms, the judge recognised that in high value serious injury cases worth several million pounds, a 10% reduction would not be an insignificant amount of money, particularly when saved for the public benefit in matters against the NHS.

If you have any questions or queries in relation this blog please contact Joanne Chase (joanne.chase@clarionsolicitors.com and 0113 336 3327) or the Clarion Costs Team on 0113 2460622.