Late Acceptance of Part 36 Offer; costs consequences; successful Appeal of costs order made in Claimant’s favour which order allowed a departure from the usual adverse costs consequences of CPR Part 36
CA (Civ Div) (Gross LJ, Asplin, J) 13th July 2017
Whilst working for the Defendant in January 2010, the Claimant had injured his foot in the workplace. Proceedings were issued in January 2012 with an unfavourable prognosis for the injury sustained by the Claimant provided by his orthopaedic surgeon.
The Defendant made a Part 36 offer in September 2012 to settle the entirety of the claim in the sum of £50k; the 21 day period for acceptance expired on 9th Oct 2012. No acceptance/rejection response was received from the Claimant.
The Claimant was granted a stay of proceedings and had foot surgery in May 2013. In April 2014, the stay was lifted at which point the Claimant increased his claim for damages to £248k. The Claimant also produced a new report from a new orthopaedic surgeon and although the prognosis was ‘slightly better’, overall it remained unfavourable.
Following disclosure of the Defendant’s surveillance evidence, in the parties’ orthopaedic experts’ joint statement, the Claimant’s expert altered his opinion such that it was more in line with the opinion of the Defendant’s orthopaedic expert, importantly it was concluded that the Claimant would be able to work until retirement age. The joint statement had the effect of undermining the Claimant’s case.
A trial was fixed for early 2015 however, in advance of this date (February 2015) the Claimant applied to vacate the trial and on 2nd June 2015 accepted the Part 36 Offer originally made in September 2012. He then successfully applied under CPR r.36.13(5) to alter the usual consequences of CPR Part 36, and at first instance the Defendant was ordered to pay his costs up until 30th Oct 2014. The Judge accepted that as the prognosis had been uncertain until the October 2014 orthopaedic experts’ joint statement, it would be unjust to apply the usual 21-day acceptance period, following which, under normal circumstances, the Claimant would have been responsible for the Defendant’s costs.
Basis of Appeal
The Defendant appealed the decision of the District Judge at first instance on the basis that the judge’s interpretation of the ‘concept of injustice’ had been wrong. And under CPR r.36.13(6) and CPR r.36.17(5) it was not unjust in all the circumstances of the case for the Claimant to pay the Defendant’s costs from 21 days after the Defendant’s September 2012 Part 36 offer.
Court of Appeal – Decision
The appeal was allowed. The Court of Appeal found:
- It was important not to undermine the salutary purpose of CPR Part 36 but at the same time the court should not conduct a microscopic examination of the case.
- Cases are fact specific and the general rule of Part 36 was that if the Claimant did not accept the Defendant’s Part 36 offer within the 21 days then they would be liable for the Defendant’s costs thereafter.
- On late acceptance of a Part 36 offer the court must, unless it considers it unjust to do so, order the Claimant to pay the Defendant’s costs from expiry of the relevant period, and it is for the Claimant to demonstrate the injustice.
- SA (A Child) v Hewitt (Costs)  EWCA Civ 1053 – brain damage to a child which resulted in difficulties in experts’ achieving a clear prognosis had applied the same principles but to a different end.
- Whilst not suggesting the Claimant’s injuries had been exaggerated, the overall process and timescales regarding the litigation provided some cause for concern – in effect, there was no discernible reason to distinguish this case from any other involving the usual risks of litigation.
- Questions were raised as to the point at which the Claimant opted to accept the original Part 36 offer, as this could not be reconciled with either the second medical report or the subsequent experts’ joint statement, which itself undermined the Claimant’s claim for the increased sum of £248k.
- The stay may have been relevant had it promptly followed the Part 36 offer but in reality there had been a significant time lapse.
- Even without a finding of exaggeration by the Claimant, the amount of the claim had been greatly increased following the stay.
- While always hesitating in overturning a decision on costs, the District Judge had erred in that he did not give proper effect to CPR Part 36 by properly identifying injustice. SG followed.
One of the main purposes of Part 36 offers is to transfer the risk from the Defendant to the Claimant, in the event that an offer is not accepted.
Uncertainty regarding the Claimant’s prognosis is part of the usual risk of litigation, it is not enough to show that it was difficult to form a view on how the litigation would go.
The District Judge had been wrong to not make the usual costs order following late acceptance where there was no clear and identifiable injustice.
Civil Procedure – Costs (LTL) – CPR (LTL)
Costs order: CPR – Part 36 Offers – Personal Injury Claims – Stay of Proceedings – Civil Procedure Rules 1988 r.36.133(5), r.36.13 (6) and r.36.17(5)
For the Defendant: Mr Michael Jones of Cobden House Chambers instructed by Louise Shaw, Partner, Plexus Law.
If you would like any further information on this case please contact:
Louise Shaw, Partner
Plexus Law, City Tower, Piccadilly Plaza, Manchester, M1 4BT
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