Kerry Underwood

PART 36: THREE NEW DECISIONS

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No Interim Costs Payment

In Finnegan v Frank Spiers (t/a Frank Spiers Licensed Conveyancers) [2018] EWHC 3064 (Ch) (27 June 2018)

the Chancery Division of the High Court held that the court has no power to order a payment on account of costs where a party has accepted a Part 36 offer.

The claimant accepted the defendant’s Part 36 offer and issued an application for an interim payment on account of costs.

The District Judge held that there was no power to make such an order and the Chancery Division upheld that decision.

By CPR 44.9(1) acceptance of a Part 36 offer deems that a standard basis costs order has been made.

CPR 44.2(8) provides that where the court has ordered a party to pay costs, it may order an amount to be paid on account before the costs are assessed.

Here the court held “that the place to find the court’s ability to make a payment on account order after acceptance of a Part 36 offer is in Part 36 itself. It is absent from there. There is no reason in my judgment, to read rule 44.2(8) to make a payment on account applicable when a Part 36 offer is accepted”. (Paragraph 30)

The court distinguished the case of

Barnsley v Noble [2012] EWHC 3822

where the court held that it had power to order a payment on account following discontinuance.

This was because the rule on discontinuance preserved the court’s discretion as CPR 38.6 provides that a claimant who discontinues is liable for costs “unless the court orders otherwise”.

There is no such discretion in Part 36.

 

CPR 44.9(1) reads:

 

“(1) Subject to paragraph (2), where a right to costs arises under –

(a) rule 3.7 or 3.7A1 (defendant’s right to costs where claim is struck out for non-payment of fees);

(a1) rule 3.7B (sanctions for dishonouring cheque);

(b) rule 36.13(1) or (2) (claimant’s entitlement to costs where a Part 36 offer is accepted); or

(c) rule 38.6 (defendant’s right to costs where claimant discontinues),

a costs order will be deemed to have been made on the standard basis.”

 

 

Part 36 Offer Only Covers the Claim When Made, Not the Claim When Accepted

In Bentley Design Consultants Ltd v Sansom [2018] EWHC 2238 (TCC) (29 August 2018)

the Technology and Construction Court, part of the Queen’s Bench Division of the High Court, held that a Part 36 offer made by a claimant could not be held to cover matters that the claimant added to the action after the Part 36 offer was made.

This was a professional negligence action in relation to a survey carried out on two properties, but when proceedings were issued they only related to one plot.

On 23 April 2015 the claimant made what was accepted to be a valid Part 36 offer in relation to that claim and it referred to the claim number, and it was common ground that at that stage it was an offer to settle the claim in respect of the first plot only as the only claim that had been made was in relation to that plot.

The offer was not accepted and later the Particulars of Claim were amended to plead a case in relation to Plot 2, which then formed part of the same claim, with the same claim number.

In November 2016 the defendant then purported to accept the Part 36 offer that had been made in April 2015 and the dispute was whether that acceptance covered both plots, or only the first plot, which was the only dispute in existence when the Part 36 offer was made.

The Circuit Judge held that the acceptance only covered the first plot, and here, on appeal, the High Court upheld that decision.

 

Comment

This decision is wrong. If a Part 36 offer is made in relation to the whole of a claim, and is not withdrawn, and is then accepted, the whole of the claim at that stage must be compromised.

Otherwise, for example, where a defendant decided to accept the offer because it looked as though the claimant’s damages might be higher – perhaps because of a longer than expected period of recovery in the personal injury case – then this logic would mean that the acceptance only covered the claim as formulated at the time of the offer.

Here, the claimant’s remedy was simple – it could have withdrawn the Part 36 offer once it added another claim by amending the Particulars of Claim.

On the logic of this decision, any amendment to any pleading at any stage means that any pre-amendment Part 36 offer can only be for part of the case.

 

Accepted Part 36 Offer Can Be Communicated To Judge, Even Though Case Continues

In Sir Cliff Richard v BBC and Chief Constable of South Yorkshire Police [2018] EWHC 2504 (Ch) (March 2018)

the Chancery Division of the High Court held that a Part 36 offer can be communicated to the trial judge where the Part 36 offer has been accepted, even if the case has not concluded.

CPR 36.16 provides that the existence and terms of a Part 36 offer must not be communicated to the trial judge until the case has been decided.

In a claim brought by Sir Cliff Richard against the BBC and the South Yorkshire Police, the two defendants had served contribution notices on each other under the Civil Liability (Contribution) Act 1978.

South Yorkshire Police subsequently made a Part 36 offer and settled with Sir Cliff.

The terms of that settlement were disclosed to the BBC.

At the pre-trial review, the BBC maintained that the terms of the settlement, particularly the settlement sum, would be material at trial.

South Yorkshire Police gave several reasons why the information should be withheld from the judge at trial, including the restrictions in CPR 36.16.

Noting that CPR 36.16 exists so that parties can make offers to each other without the risk that those offers will be held against them in the proceedings, the court found that, once there is a binding settlement agreement, those considerations fall away.

There is no longer a Part 36 offer but a binding agreement, and CPR 36.16 does not apply to that situation.

Although South Yorkshire Police was still a party to the contribution proceedings, the Part 36 offer had not been made in those proceedings but rather to settle Sir Cliff’s claim against South Yorkshire Police.

The court therefore rejected the argument that CPR 36.16 provided a basis for not referring to the settlement terms at trial.

The court nevertheless had a discretion to refuse disclosure, depending on the relevance of the information and the prejudice caused by its disclosure.

In that regard the prejudice would have to be very heavy to outweigh a case of relevance, especially a strong one.

Ultimately these matters would have to be dealt with at trial, once South Yorkshire Police had clarified in an amended contribution notice, how it could pursue its contribution claim against the BBC without reference to the settlement sum.

 

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Written by kerryunderwood

November 20, 2018 at 6:28 am

Posted in Uncategorized

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