PART 36 – IMPORTANT RECENT CASES

There have been a number of important recent cases in relation to Part 36, all of them in favour of claimants and this is a welcome corrective to what many perceived as an anti-claimant bias in relation to Part 36.

 

In particular the courts appeared to be slow to realise that a defendant’s failure to accept a claimant’s Part 36 offer when the claimant went on to match or beat that offer was meant to be met with a severe penalty in costs just as a claimant’s failure to beat a defendant’s Part 36 offer is severely penalised in costs.

 

95% liability offer

 

In Jockey Club Racecourse Ltd v Willmott Dixon Construction Ltd [2016] EWHC 167 (TCC)

 

the Technology and Construction Court of the High Court held that where a claimant had made an offer to settle the matter on the basis of 95% liability and then succeeded on a full liability basis by settlement the claimant was entitled to indemnity costs in the usual way.

 

It was irrelevant that a court was unlikely to make a 95%/5% liability split.

 

Here the claim arose out of alleged defects in the design and construction of a new grandstand at Epsom Racecourse.

 

In addition to the 95% liability offer the claimant had amended its Particulars of Claim after making that offer by making some amendments to its case on liability and by claiming the full costs of replacing the roof rather than the cost of repairs.

 

The judge held that it did not make any material difference that the Particulars of Claim had been amended after the Part 36 offer was made as the offer related solely to liability and not quantum and liability issues had been resolved in the claimant’s favour, ultimately here by consent.

 

It was not necessary for a Part 36 offer to reflect an outcome that would be possible at trial.

 

There was no reason why the claimant should not be entitled to indemnity costs from the earliest date by which the defendant could reasonably have put itself in a position to make an informed assessment of the case on liability.

 

Here the court found that that was four months after the date of the offer and thus ordered that the claimant should receive standard costs up to that date and indemnity costs thereafter.

 

Comment

 

A sensible and correct decision. Parliament has said that a claimant is required to match or beat its own offer in order to get indemnity costs and other benefits, such as a 10% uplift on damages. There is no reason at all for the courts to put a gloss on the clear words and intention of Parliament, but unfortunately many have been doing so and this is a welcome decision.

 

No “Near Miss” Rule

 

In Sugar Hut Group Ltd and Others v AJ Insurance Services (a Partnership) [2016] EWCA Civ 46

 

the Court of Appeal overturned a costs order obtained by a defendant after a quantum trial, holding that when exercising his discretion under CPR 44.2, the trial judge had erred in taking account of the defendant’s Part 36 offer, which the claimant had beaten at trial.

 

The judge had ordered the claimant to pay the defendant’s costs from 21 days after the date of the offer as he considered it unreasonable conduct on the claimant’s behalf to pursue a claim for business interruption losses for a higher amount than that which was in the defendant’s offer.

 

However the Court of Appeal noted that the defendant had not made a freestanding offer in relation to the business interruption losses.

 

The Court of Appeal also said that it could not be misconduct or unreasonable conduct, simply to pursue a claim in an amount greater than that at which it is valued by the other side. Something more was required. Here, while certain parts of the business interruption claim failed at trial, there was no finding at trial that the claim had been exaggerated in any way so as to engage CPR 44.2(5)(d).

 

Furthermore the Court of Appeal held that in depriving the claimant of some of its costs up to the expiry of the Part 36 offer – the court had only awarded the claimant 70% of its costs for that period – and requiring the claimant to pay the defendant’s costs after the expiry of the Part 36 offer, the judge had penalised the claimant twice for the same shortcoming.

 

The Court of Appeal held that the Part 36 offer was irrelevant as it had been beaten. In fact it had been beaten by a comfortable margin but that was not relevant either as there was no “near miss” rule regarding Part 36 offers. They were either beaten or they were not.

 

The claimant’s failure to succeed in all of its claim was adequately reflected in the order that the claimant be deprived of 30% of those costs of the claim for the entire period of the claim.

 

Indemnity costs in fixed costs cases

 

In Broadhurst v Tan and Taylor v Smith [2016] EWCA Civ 94 (23 February 2016)

 

the Court of Appeal held that a claimant who matches or beats its own Part 36 offer in a fixed costs case gets indemnity costs, as well as the other enhancements such as a 10% increase in damages etc. and in addition to fixed costs.

 

This resolves the issue between the two different lines of authority, both entirely justifiable on the wording of the different rules, one saying that fixed costs were just that and an indemnity costs order made no difference, and one holding that Part 36 and its provision for indemnity costs trumped CPR 45.29B, which deals with fixed costs.

 

Indemnity costs on claimant’s late acceptance

 

In ABC v Barts Health NHS Trust [2016] EWHC 500 (QB)

 

the claimant accepted the defendant’s offer eight months late and 14 days before trial.

 

The Queen’s Bench Division of the High Court ordered the defendant to pay the claimant’s costs up to the date of expiry of the Part 36 offer in the usual way and it also ordered the claimant to pay the defendant’s costs from the date of expiry to acceptance.

 

However it ordered those costs payable by the claimant to be paid on the indemnity, rather than the standard, basis.

 

Comment

 

I have no problem with this decision on the facts of the case but it brings into sharp focus the issue of whether a claimant should get indemnity costs on a defendant’s late acceptance of a claimant’s Part 36 offer.

 

LAWYER’S NEGLIGENCE IN PI AND SITTING BEHIND COUNSEL: DUNHILL CONSIDERED

In Dunhill v W Brook & Co & Another [2016] EWHC 165 (QB)

 

the Queen’s Bench Division of the High Court dismissed a professional negligence claim against solicitors and counsel regarding settlement of a personal injury claim at trial, the trial being on liability only.

 

The judge did not consider that counsel had acted negligently in advising that the claim be settled., and nor in relation to the amount of settlement.

 

Counsel had correctly analysed the evidence and had taken into account the fact that the main witness for the claimant had not appeared and that there was a risk of the claim failing completely.

 

There was also a risk of a finding of contributory negligence.

 

As the matter was at trial counsel had to deal with the evidence that he had and was not able to say that he needed more information about quantum before advising, even though it was not a quantum  hearing.
As there was no negligence on counsel’s part the judge said that it followed in this case that there was no negligence on the part of the solicitors either.  I do not see the logic of that. If counsel did the best job possible with inadequate instructions, then surely it is possible for the court to clear counsel of negligence but still hold the solicitors liable.

 

Had the judge found that counsel was negligent then it did not necessarily follow that the solicitors were also negligent.

 

However, in a potentially important finding, the court held that the solicitors would indeed have been negligent for sending a trainee solicitor to court who was not in a position to exercise independent Judgment regarding counsel’s advice, had counsel been found to be negligent:-

 

“If, therefore, contrary to my view, Mr Crossley [Counsel] was negligent, then I consider that the solicitors were also negligent in sending Mr Marsh [the Trainee Solicitor] to court on 7 January 2003.”

 

Comment

 

The case shows the importance of always having as up to date a view as possible concerning quantum.

 

This was a liability only trial and the issue of quantum had not been fully explored and counsel was not in possession of all of the relevant material.

 

On the day of the liability trial there was an unexpected problem in that one of the claimant’s witnesses failed to attend court.

 

Counsel took the view that this meant that there was a real chance that the claimant would lose on liability and obviously that would be an end to the matter.
Counsel therefore considered that settlement should be discussed and the matter was settled for £12,500.00.

Some may feel that the High Court has been rather generous to counsel and solicitors in this matter.

 

There was no consideration of the issue as to why the settlement could not have been on the basis of a proportion, 50/50, 75/25 or whatever with quantum to be decided at a later date.

 

Furthermore the trial judge did not criticise counsel for failing to make an application to adjourn. That seems a very curious decision. Counsel could have applied for an adjournment and if the adjournment was granted then there would have been no problem.

 

Had the judge refused the adjournment, then the matter could proceed and it is hard to see that the claimant would have been in a worse position by applying for an adjournment. The defence was well aware that the witness had not turned up.

 

It is possible that the court was influenced by the fact that the Supreme Court had given permission for the matter to be reopened as it found that the claimant lacked capacity and on 5 March 2015 the High Court approved an apportionment of liability under which the claimant would receive 55% of the value of her claim against Mr Burgin. This arises from the proceedings in Dunhill v Burgin (nos. 1 & 2) [2014] UKSC 18.

 

This decision is on very unusual facts and practitioners should not take too much comfort from it.

 

The other interesting point concerns the status of the solicitor’s representative at court “sitting behind counsel”.

 

Over recent years the tendency has been to assume that attendance is unnecessary. It will often be difficult to recover from the other side the costs of having the solicitor’s representative at court and in fixed costs cases there is no provision for any payment in respect of such a representative.

 

The net effect of this decision is that a solicitor risks being successfully sued for negligence for failing to have at court someone of sufficient seniority, even though in most cases they will not receive any remuneration for having that person at court.

 

Obviously a solicitor and own client charge can be made, and this reinforces the need to make such a charge to clients in personal injury cases, quite apart from any conditional fee success fee.

 

It will also reinforce the point that generally firms of solicitors will need to conduct their own advocacy if they are to run profitable businesses.

 

All of this will be brought sharply into focus when the Fixed Costs Regime  spreads to all cases up to £250,000.00 damages.

 

 

 

LEGALLY QUALIFIED CHAIR REQUIRED

That was the heading of a recent job advert in the Law Society Gazette online for a police authority. Our fearless reporter Dick Chilblain reports.

 

I met Sofa Sideboard, 36, Chaise-longue of the Furniture Liberation Front, a splinter group of the Campaign for a Furniture Discrimination Act:

 

” The language of power is about chairs and tabling. No-one wardrobes a motion or seeks a legally qualified commode. All items of furniture should be available for everything.”

 

WC Pan,162, of the extremist Toilet State group said his members were tired of being “p…ed on…. I live for the day when we have a Toilet of a Footsie 100 company and when jokes about toilets and motions are not considered acceptable.”

 

Change is resisted by the influential Chair and Table Association. Its spoke Aga Cooker,97, said that it was not realistic to expect footstools and umbrella stands to exercise power “for at least 50 years.” Cultural change and education was required.

 

The Solicitors Regulation Authority said that now it had abolished Continuing Professional Development and was scrapping training and exams and allowing Alternative Business Structures to do what they want  “there is no reason why any item of furniture should not own and manage a law firm- many do already.”

 

All the regulatory and representative bodies welcomed everything.