The Claimant has just beaten your part 36 offer at trial. So your client has to pay all the Claimant’s costs, right? Well as you probably know by now that’s no longer right according to Lord Justice Ward in Carver v BAA PLC (link – www.bailii.org/ew/cases/EWCA/Civ/2008/412.html)
Picture the scene. You are an independent neutral who has been asked to help a Claimant and a Defendant negotiate settlement of a personal injury claim. They both agree the Defendant has to pay compensation but, as so often, they can’t agree how much. Confidentially the Claimant tells you that she will accept £12,500 plus costs. Meanwhile the Defendant has told you, again confidentially, that it would be prepared to pay the Claimant £20,000 plus costs! Take a moment. What would you do?
Alas, there was no independent neutral in this case. Both sides made their respective offers by letter on the same day following an apparently lengthy hiatus in negotiation. (Offers? They’re like buses, none for ages and then two come along at once.) It appears the offers were unsurprisingly withdrawn in a subsequent phone call. The matter went to trial and the Claimant was awarded £4,686.26 which was £51 more than an offer the Defendant had made almost a year before. Costs claimed at around £80,000.
The Court of Appeal confirmed the judge’s approach that the Claimant must pay the Defendant’s costs from the date of the offer even though the Claimant had “beaten” it. The Defendant’s offer had to be interpreted under the revised part 36 and so the question is: “Has the Claimant got a more advantageous settlement than she was offered?” Answer : No!
In rejecting the simple mathematical measure of winning and losing Lord Justice Ward said: “The answer must, in my judgment, take account of the modern approach to litigation. The Civil Procedure Rules, and Part 36 in particular, encourage both sides to make offers to settle. Compromise is seen as an object worthy of promotion for compromise is better than contest, both for the litigants concerned, for the court and for the administration of justice as a whole. Litigation is time consuming and it comes at a cost, emotional as well as financial. Those are, therefore, appropriate factors to take into account in deciding whether the battle was worth it. Money is not the sole governing criterion.”
How does Carver affect the advice you give your clients on part 36 offers?
What factors apart from money are you taking into account?
What would the costs order have been if the Defendant had unreasonably refused the Claimant’s offer of mediation and is this how Claimants will deal with Carver? (See Halsey and Dunnett articles)
As ever I value your comments.
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