Harrison v University Hospitals of Derby & Burton NHS Foundation Trust
| Jurisdiction | England & Wales |
| Neutral Citation | [2022] EWCA Civ 1660 |
| Year | 2022 |
| Court | Court of Appeal (Civil Division) |
2022, Nov 24, Dec 16
Costs - Order for costs - Qualified one-way costs shifting - Claimant belatedly accepting defendant’s Part 36 offer to settle personal injury claim - Judge granting claimant permission to accept offer and awarding damages in claimant’s favour - Order for costs awards in favour of both claimant and defendant - Defendant seeking set-off of its liability for costs against amount awarded to claimant - Whether defendant permitted to set off costs - Whether order “for damages and interest made in favour of the claimant” -
The claimant brought a claim against the defendant for negligence during a surgical operation. The defendant made a Part 36 offer which included a stipulation pursuant to CPR r 36.22(3) that it was to include any deductible amounts by way of any social security benefits paid to the claimant between the date of offer and the date of its acceptance. After the time limit for acceptance of the Part 36 offer had expired, the defendant admitted liability and judgment was entered for the claimant with damages to be assessed. Prior to the trial of that issue, the claimant indicated her wish to accept the Part 36 offer. The parties continued to be unable to agree liability for costs. CPR r 36.22(9) permitted the court where it granted a claimant permission to accept a Part 36 offer to reduce the amount payable to the offeree by the amount equivalent to the deductible benefits paid to the claimant since the date of the offer. The judge granted the claimant permission to accept the Part 36 offer and, pursuant to r 36.22(9), directed that the social security benefits paid to the claimant since the negligence occurred were to be deducted from the net sum in damages due to the claimant. As to costs, the judge ordered the defendant to pay the claimant’s reasonable costs until the expiry date of the Part 36 offer with the claimant to pay the defendant’s reasonable costs incurred thereafter, but he ordered pursuant to rule 44.14 that the defendant could not set off or enforce that costs order against the claimant. By doing so, the judge preserved the claimant’s protection from qualified one-way costs shifting, which, subject to certain exceptions, prevented a claimant from being ordered to pay a defendant’s costs in a personal injury claim. The defendant appealed on the grounds that the order made by the judge following the claimant’s late acceptance of the Part 36 offer was “an order for damages and interest made in favour of the claimant” under CPR r 44.14(1) with the consequence that it might set off its costs incurred since the offer against the amount due to the claimant.
On the appeal—
Held, dismissing the appeal, that, where a case was concluded under the Part 36 procedure, the result was a settlement between the parties based on offer and acceptance; that a settlement between parties did not generally involve the court at all and it made no difference where the court’s permission was required to enable a claimant to accept a Part 36 offer because the court’s permission was simply a formal endorsement of the settlement between the parties; that determination by the court of deductible benefits also made no difference because it was simply the redirection of part of the offer to the Department of Work and Pensions, a procedural matter ancillary to the settlement reached by the parties, not the carrying out of any evaluation or assessment of what was due to be paid; that, accordingly, such a situation did not involve the making of “an order for damages and interest made in favour of the claimant” under CPR r 44.14(1); that, moreover, the contrary conclusion would elevate form over substance, would contravene wider policy considerations, and would be inconsistent with established authorities; and that, accordingly, the judge had reached the correct conclusion and his decision would be upheld (post, paras 21, 29–35, 37, 43, 45, 48, 50, 53, 54, 55).
APPEAL from Judge Sephton KC sitting as a High Court judge
In February 2019, the claimant, Ms Harrison, brought a claim against the defendant, University Hospitals of Derby & Burton NHS Foundation Trust, for negligence during a surgical operation in February 2016. On 6 December 2019 the defendant made an offer under CPR Pt 36 in the sum of £421,362.88, stipulating, under CPR r 36.22(3), that the amount offered was subject to deduction of any deductible amounts by way of benefits paid by the Department of Work and Pensions to the claimant between the date of the offer and the date of its acceptance. The expiry date for the offer, given under CPR r 36.3(g), was 27 December 2019 and it was stipulated that, if further deductible benefits had been paid, the claimant would require the court’s permission, pursuant to r 36.11(3)(b), to accept the offer. The defendant admitted liability on 14 January 2020. At a Costs and Case Management Conference on 27 January 2020, District Judge Hassall ordered that judgment be entered for the claimant with damages to be assessed and, amongst other things, required the defendant to make a payment on account of costs of £75,000. Experts’ reports were prepared and an updated schedule of loss was provided, dated 8 October 2021, in which the claimant sought damages to a maximum amount of £5.7m. The defendant then applied to adduce at trial evidence said to be inconsistent with the claimant’s account of the effect of the negligence upon her health and way of life. Permission to adduce that evidence was granted on 22 October 2021. On 3 November 2021 mediation was unsuccessful. On 8 November 2021, the claimant indicated that she wished to accept the defendant’s Part 36 offer made in December 2019. The parties were unable to agree liability for costs. On 7 March 2022 Judge Sephton KC, sitting as a High Court judge, gave the claimant permission to accept the defendant’s Part 36 offer and, under CPR r 36.22(19), directed that the amount deductible in respect of benefits paid by the Department of Work and Pensions to the claimant was £48,206·17, so that the net sum due to the claimant was £298,156·16. In respect of costs, the judge ordered that the defendant was to pay the claimant’s reasonable costs until 27 December 2019, and the claimant should pay the defendant’s reasonable costs from 28 December 2019 but he ruled that, pursuant to r 44.14 the defendant was not to set off or enforce the costs order against the claimant. In that way, the judge preserved the claimant’s QOCS protection.
The defendant appealed on the grounds that the order made by the judge following the claimant’s late acceptance of the Part 36 offer was “an order for damages and interest made in favour of the claimant” under CPR r 44.14(1) with the consequence that it might set off its costs incurred since the offer against the amount due to the claimant.
The facts are stated in the judgment of the court, post, paras 6–10.
Alexander Hutton KC and Nicholas Pilsbury (instructed by Browne Jacobson LLP) for the defendant.
Andrew Hogan (instructed by Potter Rees Dolan, Manchester) for the claimant.
Roger Mallalieu KC (instructed by Association of Personal Injury Lawyers) for the intervener, the Association of Personal Injury Lawyers.
The court took time for consideration.
16 December 2022. The following judgments were handed down.
COULSON LJ
Introduction1 This is another appeal about the operation of Qualified One-Way Costs Shifting (“QOCS”). The issue is a simple one. Was the order that the judge made following the respondent’s late acceptance of the defendant’s Part 36 offer “an order for damages and interest made in favour of the claimant”, as defined in rule 44.14(1)? If it was, the defendant could set off its own costs, incurred since the offer was made, against the (otherwise agreed) amount due to the claimant. If it was not an order for damages and interest made in favour of the claimant, then the defendant was not entitled to such a set-off.
2 As Vos LJ (as he then was) noted in Wagenaar v Weekend Travel Ltd (trading as Ski Weekend) (Serradj, third party) ]2014] EWCA Civ 1105: [
3 The only general exception to that position is CPR 44.14(1) which—in its current form—provides that:
It is that rule that contains the expression “any orders for damages and interest made in favour of the claimant” which lies at the heart of this appeal.“(1) Subject to rules 44.15 and 44.16 [the ‘conduct exceptions’], orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the claimant.”
4 It should be noted at the outset that this rule is the subject of a proposed amendment by the Civil Procedure Rules Committee (“CPRC”). If the amendment goes ahead in the form in which it is currently proposed, it may be that the whole basis on which the issue in this appeal rests—the distinction between orders of the court, on the one hand, and settlements between the parties, on the other—will cease to matter. I address the proposed amendment briefly in paras 51–53...
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Owen Tabbitt v Thomas Clark
...of a costs order against agreements to pay damages and other costs order. The text of the draft was quoted in Harrison v University Hospitals of Derby & Burton NHS Foundation Trust [2022] EWCA Civ 1660, [2023] 4 WLR 8 at 9 Mr Tabbitt wished to guard against the possibility of a future rul......