Kerry Underwood

PART 36: UNJUST FOR CONSEQUENCES TO BE TRIGGERED

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Invista Textiles (UK) Ltd & Anor v Botes & Ors [2019] EWHC 1086 (Ch)

the Chancery Division of the High Court held that it was unjust to apply the costs consequences of Part 36 in circumstances where the claimant should not get all of the pre-Part 36 costs.

The case concerned the production of documents, and other matters, and the claimant was held to have lost on most matters and the Trial Judge ordered the claimants to pay the defendants 71% of costs to be assessed.

Nevertheless the claimants had beaten their own Part 36 offer.

Had the defendants accepted the offer, then they would have been liable for all of the claimants’ costs up to that point, as acceptance of a Part 36 offer is all or nothing as far as costs are concerned.

If it was otherwise, no certainty would be achieved and Part 36 would become largely pointless.

“41. Looking at it another way, if I stand at June 2018 and ask what would a court have ordered in terms of costs if the outcome of the case had been the same as the terms of that offer, would the costs order have been the defendants paying all or at least the majority of the claimants’ costs in those circumstances? The answer is a clear no. That demonstrates why this is very different from a low financial offer in a case purely about a sum of money. In my judgment, this is another factor to take into account.

42. Now, Invista says what the defendants should have done was come back and negotiate such as by offering a drop-hand on costs (that is no order as to costs). Now, after the Part 36 offer was made, as I have said, the defendants did come back and say that the relief was acceptable but not the costs and the parties did exchange further offers. The main point made repeatedly by the claimants is that the claimants offered to drop hands on costs, ie each party would bear its own, and the claimants criticise the defendants for not accepting it. In my judgment, there is no substance to this criticism. The refusal by the defendants to accept that they should shoulder the burden of all their costs of all these proceedings was legitimate in the circumstances and has been vindicated by the judgment.

43. Pulling all this together, I recognise that the hurdle is a formidable one. Nevertheless I find it would be unjust to enforce any of the consequences on the defendants. That is looking at all the circumstances. However, in particular, in my judgment, in the context in which it was made and given its terms, the Part 36 offer itself was not a genuine offer to settle. In fact, if anything, I think the offer has proved to be a barrier to settlement of this dispute because since the offer was made and not accepted and then the admissions were made, the claimants seem to have been approaching this case as if they were entirely protected as to costs.”

The judge, effectively reviewing his own decision due to errors of fact in relation to the first decision, upheld his original finding that the claimant do pay 71% of the defendants’ costs to be assessed.

There is no new law here and CPR 36.17(4) provides that the court must order the additional Part 36 benefits unless it considers it unjust to do so.

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Written by kerryunderwood

May 28, 2019 at 12:18 pm

Posted in Uncategorized

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