Kerry Underwood

LATE ACCEPTING CLAIMANT ORDERED TO PAY INDEMNITY COSTS: TIME TO SCRAP LIBEL?

with 4 comments


In Optical Express Ltd & Others v Associated Newspapers Ltd [2017] EWHC 2707 (QB)

the Queen’s Bench Division of the High Court ordered a late accepting Claimant to pay indemnity costs from the period after the expiry of the Part 36 offer and also to pay standard costs for part of the period before the Part 36 offer was made.

The normal order under CPR 36.13(5) is that the Claimant receives standard basis costs up to expiry of the relevant period and the Defendant offeror receives standard basis costs from then on until date of acceptance.

The court must adopt such an approach unless it considers it unjust so to do.

The facts were highly exceptional and indeed the fact that the court ordered the Claimant to pay costs for a five month period before the Defendant’s Part 36 offer was even made, demonstrates that this case had more to do with the Claimant’s unreasonable behaviour than the technicalities of Part 36.

The Claim was for libel and was put at £21.5 million and during the case the Defendant asked how the claim was valued at that sum and the Claimant was extremely slow in providing the relevant information.

On 27 May 2016 the Defendant made a Part 36 offer of £125,000.00 which was rejected as “derisory”.

On 21 February 2017 the Claimant accepted that offer which it had described as derisory and thus accepted £125,000.00 as compared with their claim of £21.5 million.

The court had this to say:

 

“There is much that is outside the norm. The claim as pleaded was huge. The offer was a tiny proportion of the sum claimed. It was brusquely rejected as “derisory”, spurned for many months, and then accepted later on with no explanation. Nor has any explanation since been provided for the claimant’s volte face, or its eventual readiness to accept a sum so vastly less than the claim as pleaded. Sometimes there may be valid reasons for such a change of stance. Here, in the absence of any explanation, it is permissible to infer that the belated acceptance was prompted by a re-assessment of the claim which could and should have been made earlier; or by some external factor which meant that it happened to suit the claimant to bring an end to the claim at that time.”

 

The logic for awarding pre-Part 36 offer costs to the Defendant, albeit on a standard basis, was that had the Claimant given the requested information within a reasonable time, then the Defendant would probably have made its Part 36 offer in December 2015, rather than in May 2016.

Had that been the case, then the time for accepting the offer would have expired on 11 January 2016 and thus the court awarded the Defendant costs on the standard basis from that notional expiry date, and of course deprived the Claimant of its costs for that period.

Comment

I am not sure that I understand the logic of awarding the Defendant standard costs from January 2016 until the expiry of the actual offer and indemnity costs thereafter.

In reality this order has been made due to the Claimant’s unreasonable behaviour, and not for failure to beat a Part 36 offer, and therefore indemnity costs should have been ordered from the time when the Defendant would have made its offer had it been given the information that it requested.

This is essentially an unreasonableness case, rather than a Part 36 case.

Had I been deciding this matter I would have deprived the Claimant of all of its costs.

By my calculation the Claimant accepted an offer that was 0.58% of the sum claimed.

To put that in context, using lower figures, it is the equivalent of a Claimant in a personal injury claim pursuing damages of £100,000.00 but settling for £580.00.

Imagine the field day that the ABI, the Daily Mail etc. would have in such circumstances – and quite rightly so.

Everyone is familiar with my views on the whole issue of late acceptance, and I think that generally the law is biased against Claimants on this point.

However, the Claimant’s behaviour here is outrageous and deserving of an absolute hammering in costs.

This type of claim brings the law into disrepute.

Like virtually everyone of my generation I was brought up on the principle of “Sticks and stones may break my bones but words will never hurt me.”

That may be something of an oversimplification, but as we face Whiplash Tariff Reforms, as we already have a maximum award for unfair dismissal claims, is it not time that we put an absolute cap on defamation damages, of say £50,000.00?

The current Judicial College Board Guidelines for damages for loss of sight in one eye is £39,270 to £43,710.

Would you rather be libelled or lose an eye?

In some quarters this decision has been reported as being significant in the context of Part 36 and late acceptance.

The whole point here is that there remains the highly charged issue of whether a late accepting Defendant should pay a Claimant indemnity costs and I have been one of the more vociferous in saying that Claimants should get indemnity costs in such cases, and pointing out that Defendants achieved costs on late acceptance by a Claimant, even though the Claimant has won and the penalty on a late accepting Claimant is that they are deprived of costs from the date of expiry and have to pay the Defendant’s costs from the date of expiry, even though they have won.

This decision has absolutely nothing to do with that, and as indicated above, it is too soft, if anything.

The real compensation culture, if there be such a thing, exists in defamation and commercial work much more than in personal injury and employment work.

To put this in context, had this been a personal injury claim then the Claimant would have lost completely, due to the provisions of Section 57 of the Criminal Justice and Courts Act 2015.

It is high time that that provision was extended to all civil litigation of all kinds.

Generally, the whole law of defamation and the ridiculous awards as compared with awards made in cases of people trafficking, slavery, discrimination, personal injury including extreme disability, are outrageous.

The costs in defamation and breach of privacy proceedings are so disproportionate and harmful to society generally that it is high time that costs following the event were scrapped in all defamation matters.

I do not begin to understand why success fees and ATE premiums remain recoverable in defamation and breach of privacy claims.

The law in this country is that for defamation and breach of privacy you can recover a success fee and an ATE insurance premium, whereas, with the exception of mesothelioma cases, these are not recoverable in any other proceedings.

In employment cases, generally there are no costs recoverable and in unfair dismissal claims there is a cap on damages.

Does anyone take seriously anything printed in the newspapers? We all know that all newspapers are liars.

Is it not time simply to abolish the whole concept of defamation?

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Written by kerryunderwood

November 16, 2017 at 7:17 am

Posted in Uncategorized

4 Responses

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  1. The costs of defamation cases are far too high, but some of your proposals would throw the baby out with the bathwater.

    False allegations can ruin lives: just ask the nursery nurses wrongly accused of child abuse by Newcastle City Council. It is right that the courts should afford a remedy to those wronged in this way. It is also in the interests of a healthy civil society that there should be some restraint on the power of the media to tell false stories, so that we are not forced to assume that ‘all newspapers are liars’ and that nothing can be taken at face value.

    Capping GDs at £50,000 would not be unreasonable, but if a claimant can prove financial loss as well, then he ought to be able to recover additional damages in the same way that the claimant who loses his eye may claim for loss of earnings.

    Leveson came up with some sensible proposals for tackling the problem of costs. Unfortunately, the media are a somewhat tougher target than PI and employment lawyers, and currently no one has the political capital to spare on implementation.

    Jon Heath

    November 20, 2017 at 3:26 pm

  2. Jon

    All good points – I was deliberately being a bit provocative for the reasons set out in your final paragraph. You are far more familiar with this area than me. Would it be practicable to make courts equate the general damages with a type of personal injury – and thus make parties plead it on that basis?

    Clearly specials flowing should be allowed, but likewise gross exaggeration should be punished in the same way as it is in personal injury work.

    Many thanks for your thoughtful comment.

    Kerry

    kerryunderwood

    November 20, 2017 at 4:03 pm

  3. Kerry

    I am just an ‘umble high street solicitor like yourself and I don’t pretend to have any specialist knowledge of defamation, but the courts have previously endorsed the use of PI damages as a check on the reasonableness of an award for GDs in defamation: see John v MGN Ltd [1995] EWCA Civ 23. A statutory cap for GDs would also be sensible.

    The difficulty the Defendant in this case faced when arguing costs is that it expressly disavowed any suggestion that the claim had been deliberately exaggerated. Once that concession had been made, the court’s decision to allow the Claimants their pre-offer costs was almost inevitable, or so it seems to me.

    Jon Heath

    November 21, 2017 at 11:47 am

  4. Jon

    Fair point – a somewhat surprising concession by the defendant given the facts and pleadings. The court did allow the defendant pre-offer costs for a period, but I accept that that was due to the claimant’s failure to provide information, and not because of any deliberate exaggeration.

    Many thanks for your comment 🙂

    Kerry

    kerryunderwood

    November 29, 2017 at 6:08 pm


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