Kerry Underwood

PART 36: ERROR OF LAW TO CONSIDER HOW MUCH OFFER BEATEN BY

leave a comment »


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

JLE (a child by her mother and litigation friend, ELH) v Warrington & Halton Hospitals NHS Foundation Trust [2019] EWHC 1582 (QB)

the Queen’s Bench Division of the High Court, overturning a decision of Master McCloud, held that the amount by which a claimant beat its own Part 36 offer is irrelevant in considering whether it was unjust to make the additional 10% uplift on damages under CPR 36.17(4)(d), and to take that matter into account is an error of law.

Here the claimant served a bill of costs for £615,751 and then made a Part 36 offer to accept £425,000 and on assessment beat her offer by £7,000.

The Master awarded the sums provided for in CPR 36.17(4)(a)-(c) but held that it would be unjust to award the additional amount, that is the uplift on damages or, in this case, costs, under CPR 36.17(4)(d).

It was that decision which was overturned here by the High Court.

The High Court upheld the Master’s finding that, when considering injustice, the court may find it unjust to award some of the CPR 36.17(4)(a) – (d) bonuses, but not others.

In relation to the uplift the High Court said, in very clear terms, that it was not open to judges to take into account the amount by which a Part 36 offer had been beaten as this risked reintroducing the policy in

Carver v BAA Plc [2008] EWCA Civ 412,

which had been expressly reversed by Parliament.

Taking into account the large size of the 10% uplift relative to the margin by which the offer was beaten was an error of law. This additional amount was meant to include a penal element when a claimant had made an offer which it matched or beat, and looking at it as a bonus was an error of law.

The lack of disclosure in costs proceedings was irrelevant, and to consider the same was an error of law. Any pre-issue or pre-disclosure Part 36 offer in substantive proceedings would involve the same lack of disclosure.

The High Court also said, obiter, that the decision of Master Friston, not under appeal here, in

White & Anor v Wincott Galliford Ltd [2019] EWHC B6 (Costs) (28 May 2019)

where he said there was a power to award a lower percentage than the 10% prescribed by CPR 36.17(4)(d) was wrong, and that the clear language of CPR 36.17(4) makes it clear that the 10% uplift in damages is all or nothing.

That  finding, and a similar finding in

Bataillion v Shone [2015] EWHC 3177 (QB)

are wrong.

Here the High Court adopted in full the reasoning set out in my blog

SUCCESSFUL PART 36 CLAIMANT DENIED UPLIFT – A MAD DECISION

in relation to the fact that the 10% uplift must be all or nothing, the court here adopted the reasoning in my blog

UNJUST TO AWARD DAMAGES UPLIFT WHERE OFFER DEALT ONLY WITH HOURLY RATES ON ASSESSMENT

 This follows the Court of Appeal, in the case of

Calonne Construction Ltd v Dawnus Southern Ltd [2019] EWCA Civ 754 (03 May 2019)

adopting the reasoning in my blog –

PART 36: WHEN IS A CLAIM NOT A CLAIM?

 All of these decisions, and plenty more, are dealt with in my blog

PART 36: THE DIRTY BAKER’S DOZEN: 13 NEW CASES

 

The relevant parts of CPR 36.17 read as follows:

 

“Costs consequences following judgment

36.17 –

(1) … this rule applies where upon judgment being entered –

(a) …

(b) judgment against the [paying party] is at least as advantageous to the [receiving party] as the proposals contained in a [receiving party’s] Part 36 offer.

….

(2) For the purposes of paragraph (1), in relation to any money claim or money element of a claim, “more advantageous” means better in money terms by any amount, however small, and “at least as advantageous” shall be construed accordingly.

(4) … where paragraph (1)(b) applies, the court must, unless it considers it unjust to do so, order that the claimant is entitled to –

(a) interest on the whole or part of any sum of money (excluding interest) awarded, at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;

(b) costs (including any recoverable pre-action costs) on the indemnity basis from the date on which the relevant period expired;

(c) interest on those costs at a rate not exceeding 10% above base rate; and

(d) provided that the case has been decided and there has not been a previous order under this sub-paragraph, an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage set out below to an amount which is –

(i) the sum awarded to the claimant by the court; or

(ii) where there is no monetary award, the sum awarded to the claimant by the court in respect of costs –

Amount awarded by the court Prescribed percentage

Up to £500,000 10% of the amount awarded

Above £500,000 10% of the first £5000,000 and (subject to the limit of £75,000) 5% of any amount above that figure.

(5) In considering whether it would be unjust to make the orders referred to in paragraphs (3) and (4), the court must take into account all the circumstances of the case including –

(a) the terms of any Part 36 offer;

(b) the stage in the proceedings when any Part 36 offer was made, including in particular how long before the trial started the offer was made;

(c) the information available to the parties at the time when the Part 36 offer was made;

(d) the conduct of the parties with regard to the giving of or refusal to give information for the purposes of enabling the offer to be made or evaluated; and

(e) whether the offer was a genuine attempt to settle the proceedings.

(6) Where the court awards interest under this rule and also awards interest on the same sum and for the same period under any other power, the total rate of interest must not exceed 10% above base rate…”

Written by kerryunderwood

July 4, 2019 at 10:19 am

Posted in Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: