The Court of Appeal on 22 April 2008 dismissed an Appeal by a Claimant which has potentially significant consequences upon all offers of settlement in litigation made by way of Part 36.
To set the background a small value personal injury claim was brought by Mrs Lisa Carver against BAA Plc. Prior to the matter coming to trial in the Central London County Court on 4 June 2007, BAA Plc had admitted liability and under the old Part 36 Rules (prior to April 2007) made a payment into Court in the sum of £4,520.00. Mrs Carver chose to reject this payment and made no offers of settlement herself. Subsequently the Defendant made a Calderbank Offer in the sum of £20,000.00 inclusive of interest, damages and costs. Likewise this offer was not accepted. In conclusion at trial Judge Knight QC found that:
- the Claimant had succeeded in her personal injury claim against the Defendant;
- damages were to be awarded in a sum which exceeded the payment into Court;
- damages were to be awarded in the sum of £4,686.26.
The payment into Court previously made by BAA was in the sum of £4,520.00 and accordingly Mrs Carver was only awarded a sum which exceeded that payment of £51.00 after the addition of interest. The Claimant sought to recover her costs on the basis that the award she received exceeded the amount of the payment into Court, those costs being in excess of £80,000.00. However Judge Knight QC ordered that the Claimant was to pay the Defendant’s costs after the time for accepting the Part 36 payment in had expired.
Mrs Carver appealed as to costs on the basis that she had been awarded a sum in excess of the payment into Court thus making her award more advantageous than the refused payment. Accordingly she should be awarded her costs and part 36.14 of the Civil Procedure Rule should not apply, which would see costs fall to be paid by her.
CPR 36.14 provides “(1) This Rule applies where upon Judgment being entered – (a) a Claimant fails to obtain a Judgment more advantageous than the Defendant’s Part 36 offer; or (b) Judgment against the Defendant is at least as advantageous to the Claimant as the proposals contained in a Claimant’s Part 36 Offer”, and causes the party which has not received a more advantageous award than an offer to bear costs from the last date that offer could have been accepted.
Delivering the leading Judgment in the Court of Appeal, Ward LLJ held that the new language of Part 36 embodied a change of approach to what was in fact a more advantageous result. In particular he held that a Judge was empowered under CPR Rule 36.14 (1) to adopt a wide ranging approach as to what was in fact a more advantageous result. In particular the Judge was not constrained to view purely the level of damages awarded when making such an assessment. In contrast Lord LJ held a Judge was permitted to undertake a much more wide ranging review of the entire facts and circumstances of a case in deciding whether the Judgment obtained at the conclusion of the litigation was worth the time, effort and costs incurred and so was genuinely more advantageous.
In this particular case the Judge was held to have been entitled to look at the case broadly on the facts. The extra £51.00 gained was more than offset by the irrecoverable costs incurred by the Claimant in continuing to contest the case for as long as she did; and it was appropriate that the Claimant should bear the costs from the last date when the offer could have been accepted. Further in view of the Claimant’s conduct of litigation no costs order should be made for the period prior to the last date that offer could have been accepted.
This is a decision which clearly shows that simply being awarded a higher figure in damages than the offer of settlement previously made will not provide costs protection. Obviously this is a decision in a personal injury case of relatively small value however there is no reason to believe that larger more complex litigation on a wide variety of causes of action would not be caught. Equally, there appears no logical reason why such a principle could not be applied to an offer made in settlement by a Claimant.
The Court of Appeal’s decision reflects even more clearly the prevailing attitude of the Courts that attempts at settlement of a claim are to be encouraged and any party which fails to negotiate a claim in good faith may expect to suffer the consequences of such actions.
