Kaur v Committee for the time being of Ramgarhia Board Leicester

After beating their own initial offer prior to Trial, Claimant obtains order for costs to be assessed on a standard basis following the expiry of Part 36 offer, on a case governed by Section IIIA of Part 45

The issue surrounding Part 36 offers and their effect in cases which are covered under the fixed recoverable costs regime, specifically cases to which Part 45 s.IIIA applied, is one which is very much the hot topic of the legal costs world at present. The Particular aspect causing much controversy is, does the late acceptance of a Part 36 offer by a party, then entitle the other to an award of costs on the indemnity basis?

In the case of Kaur v Committee for the time being of Ramgarhia Board Leicester, Case No: C03YJ945, heard in Leicester County Court, MRN were recently faced with a somewhat similar scenario. In this case, rather than accepting the Claimant’s initial Part 36 offer in the sum of £2,000.00 made early in the litigation in September 2016; previously rejected by the Defendant, the Defendant chose instead to make an increased Part 36 offer in the sum of £3,000.00. This was made in February 2017, which the Claimant sought to accept in order to conclude matters, thus creating a situation analogous to CPR 36.17 absent the Judgment or Trial. MRN were successful in their application to obtain an order for the Claimant’s costs to be assessed on the standard basis following expiration of the offer

The case, not only unique by way of the facts surrounding settlement, was also unique in view of the facts of the substantive matter. The case involved an elderly Claimant, who had visited her local place of worship, when unfortunately the premises were hit by a bolt of lightning, causing part of the building to crumble, with debris striking the Claimant but fortunately causing only minor injuries.

The Claimant brought a claim for injuries by way of a Claims Notification Form submitted to the EL/PL portal. However liability was disputed, and the matter exited the portal and became subject to the costs provisions specified in Table 6C of CPR 45.29E.

Following settlement, the Claimant made an application for costs to be awarded partially on the fixed costs basis, up to the expiry of the relevant period and staging in the fixed costs table, and costs assessed on the indemnity basis thereafter. The Claimant’s application was based on a number of points, namely the Defendant’s unreasonable conduct in refusing to accept litigation risks at the time the Claimant’s Part 36 offer was made, and encouraging the Court to consider using its discretion to make an award pursuant to CPR 44.2. Additionally it was submitted that the behaviour of the Defendant was adverse to the intended effect of the overriding objective and had served only to increase costs by prolonging the litigation, an obligation the Claimant took seriously by making the well-judged early valuation Reliance was also placed on the rationale behind the decision of DJ Besford (Regional Costs Judge) in Sutherland v Khan, that being;

“…if there was no incentive or penalty there would be little point in a defendant accepting offers early doors as opposed to waiting immediately prior to trial. It also seems to me unsatisfactory that there should be penalties flowing if you do not beat an offer at trial, whereas if you settle before trial there are none. The position does not sit comfortably with the overriding objective of saving expense.”

The liability dispute surrounded whether there was any legal obligation on the Defendant to install a lightning conductor at the temple when they took over ownership, something which was denied throughout by the Defendant. Following the procuring of engineering evidence, it transpired that there was never any obligation on the Defendant to do so., However, had they done so, the incident would not have caused injuries , something the Claimant had maintained throughout. Liability continued to be denied by the Defendant following receipt of expert evidence, but then in spite of this, and towards the end of the current staging post, chose to advance offers in settlement alongside those denials. One which was lower than the Claimant’s initial offer, and one which was in excess, and subsequently accepted.

It was the Defendant’s submission that the case was one of standard offer and acceptance and there should be no entertainment of the Claimant’s submissions. Additionally, the Defendant submitted that the Court had no discretion to award any costs other than fixed costs, pursuant to the provisions of CPR 36.20. Had the Claimant wished to avoid the deemed order for costs created by acceptance of the Part 36 offer, the Defendant submitted she could have made a Calder bank offer dealing with the terms of costs within that offer. It was also suggested that the Claimant could have accepted the offer on the 21st day thus tipping the case into the next staging post and allowing a higher, perhaps more representative level of fixed costs recovery for the work done.

The Defendant’s latter submission was wholly refuted on the basis the same would be contrary to the intentions of the overriding objective and would not serve so as to save costs.

District Judge Reed, upon hearing submissions from both parties drew upon the rationale of DJ Besford in Sutherland v Khan, suggesting that there would be no benefit to parties making Part 36 offers in settlement, if there were to be no consequences of then beating such offers further on in the litigation. District Judge Reed did however stop short of making an award of indemnity costs in favour of the Claimant, instead ordering that the appropriate fixed costs be paid up until the expiration of the Claimant’s Part 36 offer, with costs to be assessed on the standard basis thereafter, and to be subject of detailed assessment if not agreed an outcome with striking resemblance to that of HJ Walden-Smith in Hislop v Perde, a decision made in the County Court at Central London.

District Judge Reed commented that the Defendant’s conduct regarding the Part 36 offers was unusual but he was not minded to go as far as to find that there had been litigation misconduct for the purposes of an indemnity award. However, there was clearly a lacuna in the rules which caused the Claimant to be in a worse position if a Defendant accepted a Claimant’s Part 36 offer out of time or, as in this case, the Claimant achieved a settlement at least as advantageous to its own where the matter did not proceed to trial.

Whilst the law surrounding this area remains unclear, it is MRN’s position, as successfully proven in this instance, that the decision reached is a just one in the circumstances of this case. It seems unfair that Defendant’s should take the benefits afforded by the introduction of the fixed costs regime; those being proportionate and lower costs, whilst litigating with impunity and suffering no consequence.

It is encouraging that Courts across the land appear to be acknowledging a common sense approach to apparent inconsistencies in the Rules, to ensure that parties achieve the benefits which the rules surely intended to provide when making well judged Part 36 offers. Such decisions are important, as in most of these sorts of cases, the last tool in a Claimant’s arsenal to avoid a trial is the Part 36 offer; with no teeth, receiving parties would be led to question the purpose and effect these offers can have in ensuring the parties remain focussed on the overall objectives of dispute resolution.d