Jean Mary Doris Haynes (Personal Representative of the Estate of Brian Haynes Deceased) v Department for Business Innovation and Skills

Hearing date: 28 th February 2014

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Introduction

This is an appeal brought by the claimant, Mrs Jean Haynes, against the Order of Master Simons, sitting in the Senior Court Costs Office on 29 ^th October 2013, whereby it was ordered that the eighth defendant, the Department for Business, Innovation and Skills, is liable only for the costs directly attributable to the action against that defendant, and one-tenth of the common costs. Permission to appeal was granted by Males J.

This appeal is limited to a review of Master Simons' judgment and Order. The Court will only intervene on an appeal of this nature if satisfied that the decision of the lower Court is "wrong": see CPR r.52.11(3).

Essential Factual Background

The claimant is the widow and personal representative of the estate of Mr Brian Haynes who died of lung cancer on 12 ^th March 2009. Exposure to asbestos dust was a material cause of death. Upon investigation, ten employers were discovered to have employed Mr Haynes, and proceedings were issued against all ten of them. As previously stated, the Department is the eighth defendant.

On 11 ^th June 2012 those acting for the claimant made what they described as a Part 36 offer to the Department to settle the claim in the sum of £18,000 plus costs. It is relevant to observe that the total value of the claim against all ten Defendants was placed at £195,000, and that liability could only be several, not joint and several. One might therefore draw the inference that the claimant's solicitors were hoping to recover just under 10% of the total value of the claim from the eighth defendant. I was told that Part 36 offers were also made to five other defendants, but that none of these was accepted.

Submissions were made to me on the wording of the offer. I therefore set out the terms in which the offer was made, as follows:

"We now have our client's instructions to put forward an offer to settle this claim against your client pursuant to Part 36 CPR in the sum of £18,000 plus standard costs. The amount is net of benefits in full and final settlement of her claim.

…

This offer is capable of acceptance for 21 days following receipt. After which this offer may only be accepted subject to agreement for costs."

On 3 ^rd July 2012, which was just on the cusp of the expiry of the 21 day period which was mentioned (although nothing turns on this), those acting for the Department accepted 'your client's Part 36 offer (dated 11 June and received on 12 June) of £18,000 in full and final settlement of the claim against my client. I note that this offer is net of benefits and I confirm that my client will pay your client's costs in pursuing my client to date to be subject to assessment if not agreed'.

The claims against the other nine defendants were then abandoned, proceedings having been issued but never served. The claimant lodged a bill of costs in the sum of £58,097.31.

That amount was disputed by the Department, and a preliminary issue appears to have crystallised as to the basis of its liability. The claimant's contention, in essence, was that she was entitled to all the reasonable costs she had incurred, and that they should not be disaggregated, apportioned, or divided. The Department's contention, in a nutshell, was that, given that liability for the injury was several, that principle should be conveyed into the proportion of the costs which were payable by it as admitted tortfeasor.

The matter first came before Costs Officer Lambert. I was informed that he carried out a full detailed assessment on all the papers. He accepted the Department's contentions. When the matter came before Master Simons on a rehearing, it appears that for whatever reason the claimant's solicitors had failed to lodge the relevant files; all that the SCCO had was the bill, the Points of Dispute etc (these have been included in the appeal bundle). Master Simons refused the claimant's application for an adjournment and proceeded to uphold Costs Officer Lambert's Order. A transcript of the Judgment is available. Master Simons based his decision on the divisible nature of the underlying condition (viz. asbestos-related lung disease, c.f. mesothelioma). He also rejected the claimant's subsidiary argument that she was entitled to a detailed assessment, effectively on a line-by-line basis, because that would be disproportionate, and in any event could not be achieved in view of the non-compliance with the Costs Practice Direction.

Relevant Provisions of the Civil Procedure Rules

CPR r.36.10 provides:

"(1) Subject to rule 36.10A and to paragraphs (2) and (4)(a) of this rule, where a Part 36 offer is accepted within the relevant period the claimant will be entitled to the costs of the proceedings up to the date on which notice of acceptance was served on the offeror.

[neither paragraph (2) nor (4)(a) is of any relevance here: the former, because the Defendant did not make a Part 36 offer; the latter, because the offer was not made less than 21 days before the start of the trial]

(3) Costs under paragraphs (1) and (2) of this rule will be assessed on the standard basis if not agreed."

CPR r.44.9 (the rule in force on 1 ^st April 2013: it was previously r.44.12) provides:

"(1) Subject to paragraph (2), where a right to costs arises under —

…

(b) rule 36.10(1) … (claimant's entitlement to costs where a Part 36 offer was accepted) …

a costs order will be deemed to have been made on the standard basis."

The Part 36 regime amounts to a self-contained code: see Gibbon v Manchester CC [2010] 1 WLR 2081 (CA). The effect of a deemed order is that the successful party becomes entitled to 100% of the costs found to be due and owing to him on a detailed assessment, and the Costs Judge has no power to vary the order: see Lahey v Pirelli Tyres Ltd [2007] 1 WLR 998 (CA).

The Rival Contentions of the Parties

Mr Ralph for the claimant submitted that in the particular circumstances of this case the Part 36 offer should be construed as an offer to settle the whole claim, by which he meant the claim against all ten defendants. His first alternative submission was that the term, "the costs of the proceedings" in r.36.10(1) should be interpreted as embracing the costs of proceeding against all ten defendants. His second alternative submission was that the effect of the deemed order, as generated by r.44.9, was that his client was entitled to an assessment of this defendant's costs liability which would fall to be determined with reference to considerations of reasonableness. In other words, if the claimant could show that it was reasonable to have issued proceedings against D1 or D10 or whoever, then as a matter of principle the Department should have to pay the costs referable to suing that defendant. Master Simons' approach was to view the matter through the wrong end of the metaphorical telescope or, put another way, to apply a rule of law which precluded recovery of the costs in issue on an ex ante basis. Mr Ralph repudiated the existence of such a rule of law, either generally or on the basis advanced by Master Simons, namely that this was a divisible harm case.

As for the general or common costs, Mr Ralph submitted that it was entirely arbitrary to apportion or divide these on the basis of a denominator equivalent to the number of defendants. What should have happened was that Master Simons should have examined the matter far more closely, and have arrived at conclusions on apportionment which were evidence-based and not mechanistic.

Mr Munroe for the Department submitted in the first instance that the claimant's offer did not comply with Part 36: it followed that this was a contractual arrangement reached outside the comprehensive, regulatory code mentioned in Court of Appeal authority. He relied on Master Simons' distinction between several, and joint and several liabilities. Mr Munroe contended that the term, "the costs of the proceedings", means, and can only mean, the costs of proceeding against this defendant. To contend otherwise would fly in the face of common sense and create unfair and unworkable results.

Mr Munroe also referred me to at least two first instance decisions (and one decision on appeal) which, he submitted, should be regarded as supporting the general rule that common or generic costs fall to be divided on a straightforward arithmetical basis. He submitted that, in any event, Master Simons had no option but to follow this approach: the claimant had failed to file evidence which might have supported a different conclusion.

Analysis

In my judgment, there are three issues, or series of issues, which fall to be considered in this appeal. The first issue is whether there is anything special or particular about the contractual documentation in this case which should disapply the ordinary rules regarding deemed orders, or (as the claimant has argued) should induce me to conclude that the claimant made an offer to settle the whole case, in other words the claims...