Part 36 Round-Up
IEH v Powell [2023] EWHC 1037 (KB) – ‘in righteousness shall you judge’ Leviticus 19:15-16
In this matter, the Court deliberated as to whether the normal Part 36 consequences should apply in the case of a child who sustained a serious brain injury where the Claimant had accepted a Part 36 offer 18 months late. It was held that the normal costs provisions would not apply. In Master Fontaine’s words ‘I have concluded that it would be unjust to the Claimant to make an order under rule 36.13 (5) (b).’ He added ‘…the Part 36 regime recognises that the application of rule 36.13 (5) has the potential to cause injustice, and provides a mechanism for avoiding any injustice in rule 36. 13(6), in appropriate cases’.
That said, Master Fontaine made it clear that the costs incurred during the intervening period would be subject to the inquiry of the Senior Courts Costs Office on detailed assessment. In this instance, the Claimant failed to keep the Defendant informed as to the steps being taken following receipt of the offer.
Commentary – Whilst this judgement evidences the ‘gentle hands’ of the judiciary, this is no license to dispense of the usual Part 36 consequences when prognosis remains guarded and there are uncertainties in the value of the claim. The judgment makes it clear that each case will turn on its own facts and the solicitor’s conduct, in particular will come under close examination.
Mate v Mate & Ors [2023] EWHC 806 (Ch) – Was the Part 36 offer valid?
In this matter, the Claimant succeeded at Trial in a claim for unjust enrichment and was awarded £625,000. A separate judgment now dealt with the issue of costs. These consisted of the following issues:
Q.1 – What is the appropriate costs award in these proceedings?
A.1 – The Court made a reduction of 25% takes account of the fact that the Claimant had failed in her property estoppel element of her claim.
Q.2 – If the Claimant is entitled to be paid her costs, should D1 be a paying party along with D2 and D3?
A.2 – D1 ceased to be legally represented and instructed different solicitors from D2 and D3, in recognition of the potential for conflicting interests between the Claimant on the one hand and D2 & D3 on the other. This is especially the case where D1 was plainly a reluctant participant in the Trial, appearing only to give evidence in the morning of the third day.
Q.3 – Was the offer of £650,000 made by the Claimant on 12 August 2022 a valid Part 36 offer?
A.3 – D2 and D3 submit that the Claimant’s offer was not a valid Part 36 offer because it was not addressed to or served on D1. The Court took the view that the fact that the Claimant’s offer was not addressed to or served on the Claimant did not render it an invalid offer. There is nothing in CPR Part 36 which requires a Claimant to serve a Part 36 offer on all the Defendants. There was nothing to prevent D2 & D3 from accepting the Claimant’s offer in full and final settlement of her claim and thereafter seeking a contribution from D1. The fact that they did not raise any query regarding D1’s position at the time of the Claimant’s offer was made, suggests they were well aware that they could have brought the Claimant’s claim to an end by agreeing to pay the sum of £650,000 as indicated in that offer.
Q.4 – If so, was the Claimant’s offer served in time to engage the provisions of CPR 36.17(4) and if the provisions of CPR 36.17(4) are engaged, what is the effect of those provisions and is it unjust to apply some or all of them?
A.4 – The notice of trial date said it would start on 6 September 2022, with judicial reading allocated on 5 September “and the parties are not required to attend on this day”. It was accepted that, if the Trial was said to have started on 5 September, the offer was made less than 21 days before Trial. The Court found that the Trial started on 6 September. “In my view the trial started on the day all parties were required by the notice to attend court. The fact that, in advance of the trial, trial bundles and skeleton arguments were prepared and lodged and that provision was made for a day’s judicial reading does not override the clear terms of the notice given to the parties.”
Commentary – An array of points to mull over in particular, the judge’s decision that a Part 36 offer was valid even when it was not served on all the defendants and that the offer was made in time because judicial reading time does not constitute the start date of a Trial.
Lampor & Ors v Jones [2023] EWHC 667 (Ch) – to depart or no to depart?
The main issue to be considered was whether to depart from the normal Part 36 consequences. The Claimants brought an action in relation to a right of way of some 155m in length. The Defendant admitted the Claimants had a right of way, but there was a dispute about the width of that right of way. At Trial, the Trial judge ordered that despite the Defendant failing to beat the Claimants’ damages and costs inclusive Part 36 offer of the 27 August 2021, in view of the fact that the Defendant had made certain offers of settlement which would have brought a satisfactory end to the matter, the judge held, that it was unjust for the normal Part 36 consequences to apply in awarding the Claimants’ their costs in the usual way. The udge limited their claim for costs up until the 10 March 2022 and ordered the Defendant to pay £98k plus VAT by way of interim payment.
Both parties appealed:
The Claimants appealed that the judge was wrong in his finding that it was unjust for the consequences of CPR 36.17(4) to not apply. The Claimants contended that it was unjust not to continue the effects of CPR 36.17(4) beyond 10 March 2022 because ultimately the Claimants obtained a better outcome at /Trial than the terms of the Defendant’s offer. On appeal, the judge held like the Trial judge that in view of no assessment of the Claimant’s costs, there was no definitive answer as to whether the Claimants had actually beaten the Defendant’s offer on costs. Indeed, Mr Justice Mellor relayed that there were ‘major issues as to the proportionality of the Claimants’ costs giving rise to a set of circumstances where the actual recovery is significantly less than what was being sought by the Claimants.
The Defendant appealed that the judge was wrong to find that the Claimants had beaten their Part 36 offer in that the result at Trial was for the repair work to be carried out by a vibrating plate compactor and that the Part 36 Offer envisaged the work being done by a tractor-mounted grader. On appeal, the judge held that the distinction between the compactor and the tractor-mounted grader was insignificant in determining whether the Claimants had beaten their Part 36 Offer.
It is also worth noting the judge’s final comments that ‘this dispute has been conducted in an entirely disproportionate way and at entirely disproportionate cost’. The Claimants’ costs had amounted to £427k and the costs of the Defendant amount to £218k.
Commentary – A case to consider when a settlement has been reached on the basis of a damages and costs settlement and once again proportionality rears its head!