Kerry Underwood

CLAIMANT ENTITLED TO INDEMNITY COSTS ON LATE ACCEPTANCE, COURT RULES

with 4 comments


I deal in detail with this subject in chapter 22 of my book Personal Injury Small Claims, Portals and Fixed Costs which runs to three volumes and over 1,300 pages and is available for £80.00 here or from Amazon here.

Below I report the case of Russell v Noble, 15 May 2017, Oldham County Court, where the judge awarded the Claimant indemnity costs on late acceptance by the Defendant of a Part 36 offer where judgment had not been entered.

Leave to appeal has been granted.

In truth this decision does not take matters any further, but I am reporting it as a counterweight to the equally non-binding and of limited relevance decision in Anderson v Ladler in Newcastle County Court, where the judge came to the opposite conclusion.

Take your pick.

The issue of whether or not a Claimant is entitled to indemnity costs on late acceptance of a Part 36 offer by the Defendant, where judgment has not been entered, is a key and unresolved area.

There are First Instance and Circuit Judge decisions both ways and they continue to be made on a regular basis with courts coming to different conclusions.

I have no idea why the Anderson case has received such publicity but I suspect it relates to the publicity machine of the insurance companies and the fact that the summer break is nearly upon us.

The Russell v Noble case

In Russell v Noble, Oldham, 15 May 2017, case B99YM995

the judge carefully analysed Part 36 and the relevant case law and also considered public policy issues.

The judge accepted that there is no specific provision in the rules in relation to a late acceptance case in the absence of judgment being entered (Paragraph 33 of the decision).

The judgment is of such clarity that I can do no better than quote extensively from it:

“  40.  On the basis that Broadhurst indicates that such a course of action is appropriate in a case where there has been a judgement I am of the view, applying the overriding objective, amongst other things, the same ought to apply to a situation where there has been out of time acceptance, but before trial and judgement. That has to be subject to the decision in Fitzpatrick, but which I would respectfully seek to distinguish on the following basis.

  1. The Court of Appeal has held at the absence of a reference in 36.10.4 (now 36.13) is not fatal. The later Court of Appeal case of Broadhurst proceeded to order indemnity costs notwithstanding the absence of a reference to the same in 36.21, and in doing so sought to resolve tension between part 36 and part 45.

 

  1. Fitzpatrick leaves open the possibility of an indemnity costs order (although with reference to 44.3, which is not applicable in this case)

 

  1. To the extent that it is proper to have regard policy considerations, they were considered, and effect given to them, by reference to Parliamentary papers in the Broadhurst case so as to clarify and reinforce the intention of part 36.

 

  1. The Fitzpatrick decision is a case where the background was far removed from the fixed costs low value RTA regime. The alternatives in Fitzpatrick were either assessed costs on a standard basis or assessed costs on an indemnity basis. The question and effect of a fixed costs regime was not relevant and not considered.

 

  1. In this case the real issue is whether or not the claimant should be restricted to the fixed costs or should have the costs, after the relevant period, assessed. If the only way to bring that about is to order that costs be on an indemnity basis then so be it.

 

  1. The Overriding Objective should not be the last resort of District Judges dealing with cases like this, but should be the first resort. The objective will best be met by part 36 having the teeth that Parliament intended it to have; for there to be fairness between the parties by way of equal treatment under the rules; court resources to be saved by early settlement and there being consequences arising from failure to accept a well-judged part 36 offer within the time laid down by the rules. The Overriding Objective is not served by allowing defendants to defer the acceptance of the claimant’s offer in the knowledge that the only consequences will be the incremental costs arising from the various stages in the fixed costs regime. There will be no incentive to even consider part 36 offers in those circumstances until perhaps, as in this case, the very day before trial.

 

  1. Indemnity costs does not, turn on the tap of liquid gold for the claimant. It means the costs are to be assessed as opposed to fixed, whereby 44.3 (3) will apply but so will 44.3 (1) – costs not to be allowed unless reasonably incurred and reasonable in amount.

 

  1. The above reasons the claimant’s application for costs to be assessed on an indemnity basis is granted.”

 

This is an incomparably better reasoned decision than that in the Anderson case.

There the judge referred to the Defendant having “reverse incentive” to proceed to trial once an offer had expired, as late acceptance would attract the same costs basis as losing at trial.

That is nonsense of course.

If the Defendant lost at trial and failed to beat the Claimant’s Part 36 offer, which is comparing like with like, then the Defendant would unquestionably have to pay indemnity costs, including for the trial, which would be a much greater sum – see Broadhurst v Tan and Taylor v Smith [2016] EWCA Civ 94.

If the Claimant’s offer is too high, then the Defendant does not simply have the choice of accepting it or not accepting it.

The Defendant can make its own, lower, offer and thus put the Claimant under pressure as a Claimant’s failure to beat a Part 36 offer at trial, or on late acceptance, again unquestionably leads to the claimant paying costs from the date of expiry of the Part 36 offer to acceptance or Court Order.

The same argument could apply to claimants, that is they may as well push on to trial rather than accept late and pay all of the costs from expiry of the time for accepting the Part 36 offer, as well as forfeiting post Part 36 costs in a case that they have won.

It makes no sense at all.

Perhaps the fullest and clearest decision on this point so far is that of Regional Costs Judge Besford in

Sutherland v Khan, Kingston-Upon-Hull County Court, case number: A81YM424.

As stated above there are plenty of decisions either way and I deal with these extensively in chapter 22 of my book referred to above and that chapter deals with just Part 36.

I also deal with it extensively in my blog PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE?

I am sure that we can all agree that we need a definitive decision of the Court of Appeal as soon as possible.

This whole issue will become of even greater importance once fixed costs spread to all civil litigation, as Lord Justice Jackson is expected to recommend in his report this month, and with a higher upper value, and again we await Lord Justice Jackson’s report as to the recommended value of claims to be brought within the Fixed Costs Regime.

I am grateful to David Pilling of counsel for information and assistance in relation to this piece.

Also see:

CLAIMANT’S PART 36 OFFERS: SIX NEW DECISIONS

PART 36 AND RESERVING COSTS TO END OF CASE

PART 36: WHAT HAPPENS WHEN THE OTHER SIDE’S OFFER IS BETTER THAN YOUR OWN.

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Written by kerryunderwood

July 4, 2017 at 9:19 am

Posted in Uncategorized

4 Responses

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  1. Hi Kerry,

    If you go to stage 3 hearing on an infants case do you still need to file counsels advice on quantum

    Shahzad Pathan

    July 4, 2017 at 12:56 pm

  2. Shahzad

    I have answered your email on the same subject.

    Kerry

    kerryunderwood

    July 5, 2017 at 2:40 pm

  3. Hi Kerry,

    Hope you are well. Do you have a copy of the Judgment in Russell -v- Noble?

    Regards

    Brian

    Brian Dempsey

    July 5, 2017 at 3:13 pm


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