15th November 2019
Anthony Johnson (instructed by Clare Tolson of Keoghs) represented the Defendant at the hearing of the Claimant’s appeal against a Costs Order that was largely in the Defendant’s favour that had been made by a Regional Costs Judge at a hearing that took place in January 2019. That hearing itself had been listed to determine costs issues arising from a Fast-Track trial that had taken place in October 2018. The main contentious feature in the case was an unusually worded Part 36 offer made by the Claimant’s solicitors.
The underlying case was a causation dispute in a general damages only personal injury claim where liability had been formally admitted pre-issue. The Defendant made no formal allegation of fraud but argued that the Claimant had not come up to proof in relation to his alleged injuries: an 8-week neck injury and a 32-month back injury. The Deputy District Judge dealing with the original trial had found that the neck injury was proven but not the back injury, leading to an award of damages of just over £1,500 against a claim of just under £10,000. He had, however, put off the costs arguments to a separate occasion, seemingly due to a lack of available time at the end of the Court day.
At that costs hearing, the Claimant’s representatives argued that they had beaten either or both of their two Part 36 offers which stated the following: “To agree the issue of liability on the basis the Claimant will accept 90% of the claim for damages and interest to be assessed” and “To accept, on the condition that liability is admitted by the offeree, 90% of the claim for damages and interest to be assessed.” The Defendant argued that these offers did not represent a genuine attempt to settle the claim, as they sought to compromise the issue of liability which had already been formally conceded by the Defendant. However, even if the offers were valid then they had been beaten by the Defendant because the Claimant had recovered well under 90% of the damages that he was seeking from the Defendant. DJ Reeves accepted the Defendant’s case at the costs hearing and restricted the Claimant to fixed Fast-Track costs of the underlying claim as the Defendant had argued, along with ordering the Claimant to pay the Defendant’s costs of the costs-only hearing on the basis that the situation that had arisen was ‘exceptional’ pursuant to CPR 45.29J. The Claimant was granted permission to appeal both of these findings.
HHJ Walden-Smith rejected the appeal and found that the District Judge had not erred in his interpretation of the offer. She felt that the determinative factor was that the judgment for the Claimant was not ‘at least as advantageous’ as his Part 36 proposal for the purposes of CPR 36.17. Given that the existence of the duty of care and breach of duty had been conceded by the Defendant in the Defence, accepting the offer would have to be construed as conceding the final constituent element of the tort of negligence, i.e. that the Defendant caused the Claimant some loss. Accordingly. if the Defendant had accepted the offer then it would not have been open to him to continue to challenge causation, the issue that he was eventually largely successful upon.
Further, any award of damages at all would have to be construed as a discount on the offer because a 10% discount will always be better than 100% of the same thing. If the Claimant’s interpretation of the offer was correct then claimants could use such offers to place defendants in an impossible position in all cases where causation was challenged in order to prevent them from continuing to defend claims against the background of any award to the Claimant leading to punitive costs consequences. She commented that whilst she accepted that the purpose of CPR 36 is to limit claims and encourage settlement, it is not a system that is designed to prevent a realistic possibility of a party arguing fundamental principles.
She also upheld Judge Reeves’ decision that the costs of the costs arguments were ‘exceptional’. She emphasised that the fact that costs were dealt with on a separate day to the Fast-Track trial does not in itself give rise to a finding of exceptionality. However, the case was exceptional because the Claimant’s representatives had not had in mind the Overriding Objective pursuant to CPR 1 to decide cases proportionality because they had approached the case excessively by virtue of the factual and legal issues that they had raised.