Kerry Underwood

PART 36: WHAT HAPPENS WHEN ONE OF A NUMBER OF DEFENDANTS ACCEPTS A PART 36 OFFER?

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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.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

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

 

The position is that the costs payable by that Defendant will be limited to the cost of the proceedings against that Defendant, which will generally be costs attributable solely to that Defendant’s case plus their share of any generic costs.

The authority is

Hynes v Department for Business Innovation and Skills [2014] EWHC 643 (QB).

In that case offers were made to ten Defendants, but only one of them accepted and the Claimant then discontinued against the others, and the court found that the Claimant was not entitled to recover all reasonable costs without those costs being disaggregated, proportioned or divided.

The single paying party would pay its own individual costs, together with its share of the common costs.

In that case the court interpreted the relevant provision at the time, CPR 36.13 (1) and said:

 

“The … issue turns on what is meant by the term, the Cost of the Proceedings” … I have no hesitation in concluding that the term means, in this context, “the costs of proceeding against the Defendant against whom the deemed order has been made.” Any broader definition would achieve obvious injustice and violate the language of the rule as seen in its proper contextual setting.”

 

Otherwise, a Claimant could sue parties who were in no way responsible for the tort, or breach of contract or whatever, and then recover from the guilty party, who accepts the Part 36 offer, all of the costs of wholly wrongly brought, and entirely misconceived, actions against the innocent party.

In respect of generic costs, the court considered that there were two categories of such costs:

(i) those which are non-specific and would have been incurred regardless of the number of the Defendants, such as court fees, medical reports and travel expenses; and

(ii) specific costs which are capable of identification and division, for example a conference with counsel in relation to the liability of each defendant.

The court held that the Claimant was entitled to recover the non-specific costs, such as court fees etc. in full, but then held in relation to specific generic costs, that these should be identified and divided appropriately.

The court held that the Claimant’s offer, which was accepted, was only ever intended to be an offer to settle the claim against that particular Defendant, leaving open the possibility of pursuing other Defendants for the balance of the alleged loss, where the offer was to settle the whole of the claim against any and all of the Defendants.

There is some suggestion in the case law that, even within Part 36, the parties are free to agree to a different form of order, for example, that a single accepting Defendant will pay all of the costs, including the costs incurred against the non-accepting Defendants.

My view is that that is wrong, as Part 36 is a self-contained code and seeking to impose costs conditions outside those imposed by Part 36, takes the offer outside of Part 36.

There is nothing to stop a Claimant in such circumstances making a Calderbank offer on the basis that any single accepting Defendant would be liable for the Claimant’s costs against all of the Defendants and that avoids the automatic application of Part 36, which the courts have constantly held to be a self-contained code.

Written by kerryunderwood

August 5, 2020 at 2:22 pm

Posted in Uncategorized

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