Kerry Underwood

PART 36 AND LATE ACCEPTANCE: EVEN MORE CHAOS

with 12 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!

This subject is dealt with in great detail in my book – Personal Injury Small Claims, Portals and Fixed Costs, running to three volumes and 1,300 pages and costing £80.00 and available from me here or Amazon here

In Kaur v Committee for the time being of Ramgarhia Board – Leicester County Court, case number: C03YJ945

the Claimant had made a Part 36 offer of £2,000.00 and the Defendant, concerned about the risk of paying indemnity costs on accepting late, subsequently made a Part 36 offer of £3,000.00, that is above the sum that the Claimant was seeking.

The Claimant’s Part 36 offer of £2,000.00 remained open for acceptance.

This scenario is now common.

The Claimant sought indemnity costs from date of expiry of their own offer, whereas the Defendants argued that the Claimant was simply entitled to fixed costs as they had accepted the Defendant’s Part 36 offer.

In what seems to be a developing Solomon-like trend Leicester County Court took the halfway position of ordering standard costs,  not indemnity, nor fixed, costs.

This case has the twist of the Defendant’s offer being higher than the Claimant’s offer.

It will be interesting to see what the courts do in the mirror position when a potentially late accepting Claimant makes a Part 36 offer lower than the Defendant’s offer to seek to avoid paying costs from the date of expiry of the defendant’s offer.

 

In Hislop v Perde, Central London County Court, Claim number: A27YP399

the court was considering the position on the more straightforward situation of late acceptance by a Defendant of a Part 36 offer in a fixed costs case.

Here, again, the court allowed standard costs rather than fixed costs or indemnity costs.

This was an appeal to a Circuit Judge from the decision of the Deputy District Judge who had awarded fixed costs, on the basis that there was no discretion to award standard costs, and that the case was not suitable for an award of indemnity costs.

HHJ Walden-Smith declined to interfere with the Deputy District Judge’s failure to award indemnity costs but made it clear that the court had discretion to award indemnity costs and that another District Judge may well have come to a different, and justified, conclusion on the same set of facts and could have awarded indemnity costs.

Just two days ago I posted – PART 36 AND INDEMNITY COSTS ON LATE ACCEPTANCE: THE CHAOS CONTINUES which looked at three different cases coming to three different conclusions, one allowing indemnity costs, one allowing standard costs and one allowing fixed costs.

Clarification by a superior court is vital.

The problems are not the fault of the courts; they are the fault of the Civil Procedure Rule Committee.

Firstly, the award of standard costs gives a Claimant no benefit outside the fixed costs system and thus gives a Claimant almost no incentive now to make a Part 36 offer.

True it is that if a Claimant beats its offer at trial, then it will get indemnity costs, but few matters go to trial and it means that a Defendant can unilaterally avoid the consequences of its action by settling just before trial.

This is comparable to Claimant unilaterally discontinuing, but not being liable for costs.

Secondly, the sums involved will become far greater as the Fixed Costs Scheme spreads to claims of £100,000.00 or less.

Lord Justice Jackson proposes a fixed uplift on fixed costs of 30% or 40% if a Claimant matches or beats its own Part 36 offer, but that still leaves unresolved the question of whether a Claimant would in fact be entitled to that uplift on late acceptance by a Defendant – see my post FIXED COSTS AND PART 36: POST 3.

I am grateful to Nicola Kitchener of Affinity Law re the Kaur case and Jonathan Frith of Winn Solicitors re the Hislop case.

 

Also see:

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

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

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

FIXED COSTS AND PART 36: POST 3.

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Written by kerryunderwood

August 10, 2017 at 9:39 am

Posted in Uncategorized

12 Responses

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  1. That is a hell of a set of speakers!

    martin hulston

    August 10, 2017 at 12:20 pm

  2. What benefit does a D have in deliberately ignoring a part 36 offer and accepting late on? Only if the offer was made post trial being listed (and most I see are listed at allocation stage so claimant sols are benefitting by jumping to the last stage – which needs to be addressed too as that can’t have been envisaged when drafting the fixed cost tables) would it mean a claimant gets no benefit. A D has better things to do and incurring costs of its own to deliberately accept offers late on.

    I also think you have caused this chaos with your blogs. It wasn’t an issue until you did and yes you do have that power. Claimants got standard coats plus a nice success fee and everyone was happy. Don’t thinks it’s good PR either for claimant sols to say standard costs isn’t enough and we want more! Punishment for d is paying by exhorbitant hourly rates post offer to settlement or the extra in fixed costs.

    David

    August 10, 2017 at 2:25 pm

    • I note reference to the case of Kaur v Committee for the time being of Ramgarhia Board – Leicester County Court. Is this case reported if so please can you point me in the right direction. Also see paragraph 31 of Broadhurst v Tan. I find it difficult to reconcile

      Para 31 – As we have seen, Judge Robinson considered that Parliament could not have intended that a claimant should recover indemnity costs in a section IIIA case because of the practical difficulties that such an interpretation would entail. I accept that there are bound to be some difficulties of assessment where the costs are partly fixed and partly assessed. But I also accept the submission of Mr Williams and the written submissions of Mr McQuater on behalf of the Association of Personal Injury Lawyers that these were overstated by Judge Robinson. Where a claimant makes a successful Part 36 offer in a section IIIA case, he will be awarded fixed costs to the last staging point provided by rule 45.29C and Table 6B. He will then be awarded costs to be assessed on the indemnity basis in addition from the date that the offer became effective. This does not require any apportionment. It will, however, lead to a generous outcome for the claimant. I do not regard this outcome as so surprising or so unfair to the defendant that it requires the court to equate fixed costs with costs assessed on the indemnity basis. As Mr Williams says, a generous outcome in such circumstances is consistent with rule 36.14(3) as a whole and its policy of providing claimants with generous incentives to make offers, and defendants with countervailing incentives to accept them.

      Richard

      August 10, 2017 at 7:34 pm

      • Richard

        The case of Kaur v Committee for the time being of Ramgarhia Board – Leicester County Court, case number: C03YJ945 – is not yet reported, and nor is the full judgment available.

        Once it is I will add it as a link to the blog.

        The difference between the various recent cases that I have been reporting and Broadhurst v Tan is that in Broadhurst v Tan judgment had been entered.

        There is no doubt that on judgment being entered without a trial, or after a trial, then a Claimant who matches or beats its own Part 36 offer is entitled to indemnity costs unless it would be unjust to make that award.

        Originally Part 36 specifically sanctioned indemnity costs for a Claimant after a trial and then the rule was amended to sanction specifically indemnity costs for a Claimant which matches or beats its own Part 36 offer and where judgment is entered.

        As the courts have made clear, the rules are silent as to what should happen when a Claimant matches or beats its Part 36 offer in the sense that the Defendant accepts that offer late, rather than there being any court ruling or judgment.

        In that sense I do not think that the Kaur decision is necessarily inconsistent with Broadhurst v Tan, as that case can be distinguished as judgment had been entered.

        It is ultimately a public policy decision, and as I have made clear, my criticism is not of the courts, who are having to grapple with an unintelligible rule, but rather with the Rules Committee for not making the situation clear.

        Kerry

        kerryunderwood

        August 11, 2017 at 10:11 am

      • Many thanks Kerry.

        Richard

        August 11, 2017 at 4:31 pm

      • Pleasure 🙂

        kerryunderwood

        August 11, 2017 at 4:35 pm

    • David

      It is not a question of a Defendant deliberately ignoring a Part 36 offer; it can be a deliberate policy decision to discourage Claimants generally, in personal injury work, from bringing claims.

      It is certainly not the case that most fixed costs cases are listed at allocation stage, although it is true that certain courts such as Birkenhead County Court do so, and that seems to me very wise and indeed I recommended to Lord Justice Jackson that the Civil Procedure Rules be changed to provide that in a fixed costs case the court should always list for trial on allocation.

      Bearing in mind that under the new regime, the court will have to decide the Complexity Band upon allocation, it should have sufficient information to list the matter for trial and thus shorten the overall procedure.

      If what you say is correct, then why are there so many instances of Defendants accepting late, rather than considering a Claimant’s Part 36 offer within the 21 days laid down by the Civil Procedure Rules?

      If Defendants were not deliberately choosing to delay accepting Part 36 offers, then there would be no problem would there? There would be no, or few, cases.

      I am not the only one who takes this view. District Judge Besford, the Regional Costs Judge, in Sutherland v Khan said:

      “… If there was no incentive or penalty there would be little point in a Defendant accepting offers early doors as opposed to waiting immediately prior to trial. It also seems to me unsatisfactory that there should be penalties flowing if you do not beat an offer at trial, whereas if you settle before trial there are none. So the position does not sit comfortably with the overriding objective of saving expense.”

      Adopting your logic, why should a Claimant have to pay the Defendants’ costs if a Claimant accepts late?

      Why would a Claimant deliberately accept late – why have Claimants not got “better things to do than incurring costs of its own to deliberately accept offers late on.”

      I am flattered to think that I have caused the chaos with my blogs, but the reality is that this whole issue has been one spotted by lawyers on both sides working in fixed costs cases and the fault is of the Civil Procedure Rules Committee in not clarifying the rules, in spite of what we all agree is chaos.

      Anyway, many thanks for commenting.

      Kerry

      kerryunderwood

      August 11, 2017 at 4:41 pm

  3. What would have happened if the Claimant did not accept and the court awarded £3000 in damages?

    John Hall

    August 10, 2017 at 3:39 pm

    • John

      Very good point. Claimant has beaten its own offer, but failed to beat defendant’s offer. Common sense would dictate that claimant gets indemnity costs from its own offer until defendant’s higher offer and defendant gets costs from its own higher offer onwards.

      Kerry

      kerryunderwood

      August 10, 2017 at 3:44 pm

  4. The difficulty in the Hislop case is that the offer was made some 14 months before it was actually accepted by the Defendant. The offer had been made extremely early in litigation – believe around Defence time if I remember correctly – and not accepted until 1 week prior to trial during which time a lot of work had been done to prepare for the trial that ultimately did not go ahead. I would also stress that nothing changed during the defence being filed and the eventual settlement i.e. no introduction of new evidence and no change of the version of events. Like Kerry states, if a Claimant can be penalised for late acceptance then the Defendant surely must be too. As we all say, it cannot have been the intention of the rules committee (or maybe it was!)

    Holly

    August 16, 2017 at 10:47 am

    • Holly
      I agree, except that I genuinely believe that the Rule Committee has no idea what it intended; if it did then it could have amended the rule or given guidance in the accompanying Practice Direction. I suspect that this was a compromise, but compromising never works with rules – it just leads to court cases. If there was ever anything unsuitable to be dealt with by a committee, it is the drafting of rules. Policy – yes – rules – never.
      Kerry

      kerryunderwood

      August 18, 2017 at 2:28 pm


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