Kerry Underwood

PART 36 AND INDEMNITY COSTS ON LATE ACCEPTANCE: THE CHAOS CONTINUES

with 21 comments


I will be chairing an all-day conference on Tuesday 14 November in London on Part 36 which Ben Williams QC and David Pilling will be speaking. Save the date!

In McKeown v Venton, Liverpool County Court, 24 July 2017

His Honour Graham Wood QC, Designated Civil Judge for Cheshire and Merseyside, held that a late accepting Defendant did not have to pay indemnity costs to the Claimant whose Part 36 offer had been accepted late.

Unless it was unjust, the Claimant was entitled to indemnity costs if it obtained a judgment better than, or equal to, its Part 36 offer, but, in the absence of judgment, the court had no discretion to award indemnity costs, absent exceptional circumstances, which were not present here.

Late acceptance of a Part 36 offer did not of itself constitute exceptional circumstances.

In Richardson v Wakefield Council

HH Judge Gosnell held that CPR 36.17 trumped CPR 45 and allowed standard, not indemnity, costs to be awarded to a Claimant on late acceptance by the Defendant.

Thus, in that case, the Claimant escaped fixed costs, but did not get indemnity costs, something aptly described by Judge Wood in McKeown as “something of a halfway house between the position adopted by District Judge Besford in Sutherland and the Deputy District Judge in the present case.”

That is a reference to Sutherland v Khan, Kingston-Upon-Hull County Court, Case number A81YM424

dealt with extensively in my blog PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE? 

Judge Wood said:

“59. … I have come to the conclusion that the decision of the deputy district judge should be upheld. His approach to the interpretation of Part 36 in the context of the Fixed Costs Regime cannot be impugned. If there are to be any additional and beneficial consequences to a Claimant arising from late acceptance in a fixed costs case, in my judgment these will have to be affirmed on a policy basis either by a higher court, or by reconsideration on the part of the rules committee. For now it may well be that precise fairness as to costs in individual cases is sacrificed on the altar of certainty which Part 45 has introduced.”

Comment

Take your pick:

  1. on late acceptance by a Defendant the Claimant gets indemnity costs (Sutherland v Khan);

 

  1. on late acceptance a Claimant gets standard, not fixed, costs (Richardson v Wakefield Council);

 

  1. on late acceptance the Claimant gets fixed costs (McKeown v Venton).

 

No case is currently proceeding to the Court of Appeal on this crucial and central point which will become much more important as the fixed costs scheme extends to most civil claims valued at £100,000.00 or less.

To make matters worse the courts are occasionally ordering a Claimant, who has been successful overall but has failed to beat a Defendant’s Part 36 offer, to pay indemnity costs from the date of expiry of the Defendant’s part 36 offer – See for example

Jordan v MGN Limited [2017] EWHC 1937 (Ch)

reported in my blog PART 36: CLAIMANT ORDERED TO PAY INDEMNITY COSTS ON LATE ACCEPTANCE.

This decision throws up another problem. Here the costs of appealing to a Circuit Judge alone were £12,000.00 on account and will presumably be much higher.

Obviously costs of appealing to the Court of Appeal would be much higher again.

Where a claim starts as a small claim and therefore cost free, it remains cost free throughout its appeal life, even if the matter goes to the Supreme Court.

There should be a similar system in relation to fixed costs cases, that is that there should be tightly controlled and relatively low fixed costs in any appeal arising from a fixed costs case.

Otherwise, and this is the potential problem with small claims, the party with the deeper pockets can simply take the matter to appeal to try and force the other party to settle.

PART 36 AND DISCOUNT RATE

In Marsh v Ministry of Justice, Costs, 31 July 2017,

the court held that where a Claimant beat its Part 36 offer only due to the change in the discount rate, made after the offer, it would be unjust for the Defendant to be ordered to pay Indemnity costs.

 

Also see:

PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE? 

PART 36: CLAIMANT ORDERED TO PAY INDEMNITY COSTS ON LATE ACCEPTANCE.

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Written by kerryunderwood

August 7, 2017 at 11:05 am

Posted in Uncategorized

21 Responses

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  1. Mark Friston commented at the ACLS annual conference this year that we have a precedential system and that Excelsior and Tyco are both still good law, and binding. With DJ Besford sat on the same stage as him at the time, he stopped short of actually saying Khan was wrongly decided, but he may as well have said so.

    Sarah Robson

    August 7, 2017 at 4:39 pm

    • Sarah

      Well, we actually have a Parliamentary system and precedent only comes in to play if the law is not clear. My view, as expressed in my book, is that the court at least has a discretion to award indemnity costs on late acceptance by a defendant, and that that is apparent from the rules, themselves approved by Parliament by way of statutory instrument. Excelsior and Tyco were both under the old Part 36. Also the public policy grounds – and that is what they purported to be on, have shifted in my view.

      Kerry

      kerryunderwood

      August 7, 2017 at 4:46 pm

      • Yes there is a discretion to do so. However, the rules do not make it automatic. If things have moved then the rules have not, and the rules are still in charge. 😉

        Sarah Robson

        August 7, 2017 at 4:55 pm

  2. But in the case reported here – McKeown v Venton the judge says that there is NO discretion, absent exceptional circumstances.

    kerryunderwood

    August 7, 2017 at 5:04 pm

  3. 🙂 So we agree? You won’t use your Black Belt skills on me 🙂

    kerryunderwood

    August 7, 2017 at 5:55 pm

    • Gosh only lawyers could nit pick like this. Lol. I mean there is a discretion but only because of conduct in the usual way. There is nothing in the rules to support indemnity costs just because of late acceptance (unless of course I’m representing a claimant as I occasionally do.) 😉

      Sarah Robson

      August 7, 2017 at 6:05 pm

  4. Sarah

    Two new cases have been drawn to my attention today where the courts awarded standard, not indemnity, but not fixed costs either, in such cases.

    That is something of a judgment of Solomon in my view as it appears to adopt a halfway position in fixed costs cases, but does nothing for a successful Part 36 claimant in a non-fixed costs case – where they get standard, not fixed costs in any event.

    Maybe us lawyers nit-picking, but in terms of hard cash, it is probably the single biggest issue in the law, given the vast number of cases subject to fixed costs.

    Kerry

    kerryunderwood

    August 9, 2017 at 4:34 pm

  5. I don’t see that the rules prescribe indemnity costs on late acceptance, and whether or not a claimant gets more in costs on late acceptance in a fixed costs world depends on when their offer is accepted – that’s part of the swings and roundabouts. I understand DJ Besford had another almost identical case coming up in the next month or two, and I think what will be particularly informative is how he deals with his previous decision when delivering that one.

    sarahjrobson

    August 10, 2017 at 10:52 am

    • What is the logic of a claimant definitely getting indemnity costs on late acceptance if judgment is entered, whether or not after a trial, but not otherwise? All this talk of saving costs of the trial etc., seen in many judgments, ignores the fact that CPR 36 was amended to provide for indemnity costs on late acceptance if judgment was entered. Swings and roundabouts are meant to apply to fixed costs, not Part 36.

      Kerry

      kerryunderwood

      August 10, 2017 at 11:00 am

      • Perhaps now we will see claimant’s applying for judgment on admissions more, with an amount to be decided.

        sarahjrobson

        August 10, 2017 at 11:25 am

      • Perhaps we will see Claimants applying for judgment on admissions more now, for an amount to be decided.

        sarahjrobson

        August 10, 2017 at 11:26 am

  6. Absolutely – already doing it if they have been on one of my courses 🙂

    kerryunderwood

    August 10, 2017 at 11:27 am

  7. This issue has gone to appeal Anderson v Ladler & Aviva Insurance Ltd (2017). Shocking decision. I have this scenario. Hopefully this case will be challenged. How can a Defendant get away with not accepting an offer then 2 weeks for Trial accept it and not have to pay indemnity costs when statements have been exchanged and you have prepared for Trial.

    David Jardine

    August 23, 2017 at 4:45 pm

    • Thank you. Have you any details concerning the appeal. Is it to High Court or Court of Appeal? Has it been listed- I can’t trace it.

      Kerry

      kerryunderwood

      August 23, 2017 at 4:55 pm

  8. Hi Kerry

    How do i register to attend the conference on 14 November, I have looked everywhere on line for this.

    Thanks Constance

    Constance Sibanda

    October 6, 2017 at 10:17 am


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