Source: http://www.civillitigationbrief.com/2018/02/28/who-should-pay-what-when-a-part-36-offer-is-withdrawn-high-court-decision-costs-liability-does-not-run-from-the-date-of-an-offer-that-is-withdrawn/
Timestamp: 2018-06-18 01:56:16
Document Index: 361015229

Matched Legal Cases: ['ART 36', 'ART 36', 'art 36', 'art 36', 'art 36', 'art 36', 'art 36', 'art 36', 'art 36', 'art 36', 'art 44', 'art 36', 'EWCA ', 'art 36', 'art 36', 'art 36', 'art 36', 'art 36', 'art 36']

WHO SHOULD PAY WHAT WHEN A PART 36 OFFER IS WITHDRAWN? HIGH COURT DECISION: COSTS LIABILITY DOES NOT RUN FROM THE DATE OF AN OFFER THAT IS WITHDRAWN – Civil Litigation Brief
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In Ballard v Sussex Partnership NHS Foundation Trust [2018] EWHC 370 (QB) Mr Justice Foskett considered the impact of a Part 36 offer that had been withdrawn. He overturned an order that the claimant should pay the costs from the date of an earlier offer that had been withdrawn. The terms of the defendant’s second offer were important and should not have been ignored by the trial judge.
The claimant brought an action for damages for personal injury against the defendant. Liability was admitted.
In January 2016 the defendant made a Part 36 offer of £50,000.
That offer was withdrawn in February 2017.
A revised offer, to pay £30,000, was made in February 2017.
The matter proceeded to trial in September 2017. The claimant recovered a total of £23,315.13 in damages.
THE COSTS AWARD AFTER THE TRIAL
There was no issue that the claimant would have to pay the costs incurred after the offer in February 2017, from the 1st March 2017. However the judge also ordered the claimant to pay the defendant’s costs after the offer had been made in January 2016.
THE TERMS OF THE DEFENDANT’S SECOND OFFER
The precise wording of the Defendant’s offer is important.
“The second letter (which contained “the second offer”) was in these terms:
2. Pay to the Department of Works & Pensions (“the DWP”) recoverable benefits (if any), including deductible benefits (if any), paid to the Claimant up to the date of this offer; and
3. Pay the Claimant’s reasonable costs up until 01.03.17 or the date of acceptance of the Defendant’s offer, whichever is the earlier, such costs to be agreed or assessed on the standard basis in accordance with CPR Part 36.10. In addition, if approval is required by the Civil Procedure Rules, the Defendant will pay the Claimant’s reasonable costs of obtaining approval of the settlement.
The claimant appealed to the High Court judge. The claimant’s appeal was allowed.
It follows from the result recorded above (see paragraph 4) that the Claimant failed to beat the extant Part 36 offer (namely, the second offer) made by the Defendant. She also fell far short of beating the first offer which, of course, had been withdrawn in the circumstances referred to above.
It was not in issue that the Claimant would have to pay the Defendant’s costs after 1 March – in other words, the costs of the trial – nor was it in issue that the Claimant was entitled to her costs up until the expiry of the first offer. The issue was who should be responsible for the costs between the expiry of the first offer and the commencement of the trial. The Defendant argued that, although it was withdrawn on 8 February 2017, the court was entitled to take into account the existence of the first offer which, if accepted, would have saved the costs on both sides from 16 February 2016. The Claimant, through Mr Heap, argued that the terms of the second offer made it clear that “[for] the avoidance of doubt”, if she failed to obtain a judgment that was more advantageous than the offer made in the letter, then the only adverse consequence would be that the Defendant would seek an order that she should pay both parties’ costs from 1 March 2017. The letter was silent about the costs from 16 February 2016 and the letter, reasonably interpreted, meant that her costs until the expiry of the second offer would be met even if she failed to better the offer.
The Judge heard argument on the issue from Mr Heap and Mr Loxton during a telephone hearing and he gave an ex tempore ruling. His conclusion was summarised in the final paragraph of the transcript of the ruling as follows:
“I cannot see the second offer has any relevance. The withdrawal of the first offer is relevant only to the extent that the automatic provisions of Part 36 no longer apply but, if an offer had been made without prejudice save as to costs which was not expected to be Part 36 and had been made for example before the proceedings had been issued, then that would be an important factor that the Court could take into account. In my judgment, although tactically the Claimant may well have been right not to accept the original offer and to hold out for more, that tactic unfortunately, with the benefit of hindsight, has not succeeded and the consequences, in my judgment, must follow. In my judgement the correct exercise of my discretion is to award the Defendant the costs from the date that the original Part 36 offer expired, which I think is the 16th February 2016 and the Claimant to have her costs up until that time or whatever the appropriate period is.”
Mr Heap contends that the Judge misled himself by saying that the second offer had no relevance. Mr Loxton has sought to argue that “it is clear that what he was saying was not that the [second offer] was completely irrelevant, only that it was an irrelevant factor in deciding whether to exercise his discretion to award the [Defendant] its costs from 16 February 2016 to 1 March 2017.” He submits that it is clear from the foregoing paragraph of the transcript that the Judge “weighed up the [second offer], in the sense that he did not ignore it, but considered that it had carried no weight in the balancing act of deciding what costs order to make.”
Whilst it could be said that the distinction between saying that the second offer was “irrelevant” and the way Mr Loxton seeks to characterise the Judge’s decision is merely a matter of emphasis, I do not consider that the interpretation of the passage in the ruling for which Mr Loxton contends is correct. It would require a re-writing of the Judge’s words. The Judge said unequivocally that he did not see that the second offer had any relevance and this reflects a provisional view he had expressed during the argument that he did not “quite see what the [second offer] adds to the equation.”
The first issue is whether he was right so to regard it. If he was wrong, then it would mean that he ignored a potentially relevant factor and that would require the setting aside of the exercise of his discretion and the substitution of the view of this court.
In relation to the question of whether the second offer was relevant, I am assuming that it was drawn to the Judge’s attention by the Defendant to demonstrate that there was an unwithdrawn Part 36 offer that the Claimant had failed to beat. Strictly speaking, it was not for the Claimant to draw it to the attention of the court because the “without prejudice” privilege was that of the offeror, namely, the Defendant. However, once it had been deployed by the Defendant, it was, of course, available for comment by the Claimant.
Since it was drawn to the attention of the Judge, I do not see how it could be regarded as irrelevant. It had the effect of the more or less automatic right of the Defendant to its costs of the trial: CPR 36.17(3)(a). Whatever the relevance of the first offer, it could not have that effect: CPR 36.17(7)(a).
The potential relevance of the first offer is derived from Part 44.2(4)(c) which provides as follows:
(c) any payment into court or admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.”
In Fox v Foundation Piling Ltd [2011] EWCA Civ 790, Jackson LJ, with whom Ward and Moore-Bick LJJ agreed, said two things of relevance to the current issue at [40] and [53] respectively:
(1) “Pankhurst v White …was a personal injuries action in which MacDuff J held that the claimant’s Part 36 offer retained its potency under Part 36 despite having been withdrawn. The case went to the Court of Appeal, but not on that issue. There were special features in Pankhurst and also that case was governed by the old version of Part 36 before the April 2007 amendments. In my view, Pankhurstis not authority for the proposition that a party which withdraws its Part 36 offer under what is now rule 36.3 (6) can reap the benefits of rule 36.14.”[1]
(2) “A Part 36 offer which is subsequently withdrawn ceases to attract the consequences set out in rule 36.14. Such an offer then constitutes an “admissible offer to settle” within rule 44.3 (4)(c).”[2]
The Judge was obviously very heavily influenced by the fact that the Claimant could have saved a great deal of expense by accepting the first offer. It is undoubtedly true that such expense would have been saved, but I do not consider it was right to regard the second offer as “irrelevant” with the consequence, if the judge so treated it, that the precise terms of the offer were also regarded as irrelevant. In my judgment, the Defendant cannot escape from the precise terms of the final paragraph of the second offer and as a result it is really the first offer that becomes irrelevant.
Whilst I differ from an experienced Judge in this field with some hesitation, I am satisfied that he misdirected himself about the relevance of the second offer and that, accordingly, he paid less attention to its precise terms than should have been paid.
The appeal will, therefore, be allowed and the Claimant will be entitled to her costs up to and including 1 March 2017, but that she should pay the Defendant’s costs of the trial.
Tags: Appeals, Offers, Part 36
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