Miss Mercel Hislop v Miss Laura Perde
| Jurisdiction | England & Wales |
| Judge | Lord Justice Longmore,Lady Justice King,Lord Justice Coulson |
| Judgment Date | 23 July 2018 |
| Neutral Citation | [2018] EWCA Civ 1726 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2017/2458 & A2/2017/2404 |
| Date | 23 July 2018 |
[2018] EWCA Civ 1726
Lord Justice Longmore
Lady Justice King
and
Lord Justice Coulson
Case No: A2/2017/2458 & A2/2017/2404
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Central London County Court
Her Honour Judge Walden-Smith
A27YP399
&
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Leicester County Court
District Judge Reed
C03YJ945
Royal Courts of Justice
Strand, London, WC2A 2LL
Matter of Hislop:
Mr Roger Mallalieu (instructed by Taylor Rose TTKW) for the Defendant/Appellant
Mr Nicholas Bacon QC (instructed by Winn Solicitors) for the Claimant/Respondent
Matter of Kaur:
Mr Andrew Post QC (instructed by Weightmans LLP) for the Defendant/Appellant
Mr Imran Benson (instructed by Affinity Law) for the Claimant/Respondent
Hearing dates: Wednesday 20th & Thursday 21st June 2018
Approved Judgment
Introduction
The issue that arises in these two appeals concerns the correct approach to costs in cases under the fixed costs regime in Section IIIA of Part 45 (low value road traffic accident (“RTA”) and employers' liability/public liability (“EL/PL”) claims), where the defendant eventually accepts, after they should or could have done, the claimant's offer under CPR Part 36. We are told that the issue is of some significance and will affect the costs outcome in many other cases. In addition to counsel's submissions, in completing this Judgment, I have taken into consideration detailed written submission by both the Association of Personal Injury Lawyers, and the Forum of Insurance Lawyers.
By reference to two earlier decisions of this court, the issue of principle can be delineated in this way. Where a Part 36 offer is accepted within 21 days, in a case governed by the fixed costs regime, neither party can recover more or less by way of costs than is provided for by that fixed costs regime: see Solomon v Cromwell Group PLC [2012] 1 WLR 1048. Conversely, where a claim that is subject to the fixed costs regime goes on to trial and, by way of judgment, the claimant recovers more than a Part 36 offer, he or she is entitled to indemnity costs from the date that the offer became effective: see Broadhurst v Tan [2016] EWCA Civ 94; [2016] 1 WLR 1928. That leaves what might be called the cases in the middle, where a defendant accepts the claimant's Part 36 offer many months after it was made, and the case does not then go on to trial. In those circumstances, does the case remain within the fixed costs regime, or can the claimant escape its confines and recover standard or even indemnity costs from the date that the offer became effective?
The Facts in Hislop
On 17 December 2013, Ms Hislop (the respondent in the first action and the appellant in the first appeal) was injured in a road traffic accident. She blamed Ms Perde (the appellant in the first action and the respondent in the first appeal).
On 7 April 2014, Ms Hislop served a Claim Notification Form under the pre-action protocol (“PAP”) for low value personal injury claims. Ms Perde did not respond on liability so the claim was removed from the PAP, although it remained subject to the fixed costs regime.
On 21 July 2014, Ms Hislop offered to accept £2,100. This was rejected by Ms Perde. On 18 September 2014, the claimant commenced proceedings. On 10 October 2014, Ms Perde offered £1,800, subject to liability. On the same day, Ms Perde offered a 50/50 split on liability. Ms Hislop rejected both offers, because she maintained that she was not responsible for the accident at all.
On 11 November 2014 Ms Hislop offered to accept £1,500. That was an offer in accordance with Part 36. There was no response to this offer until 9 January 2015, when Ms Perde rejected it. The proceedings continued: a trial date was fixed for 9 June 2016 and witness statements were exchanged in March 2016. On 20 May, Ms Perde offered £1,000 but this was rejected by Ms Hislop on 31 May.
Finally, on 2 June 2016, a week before trial, Ms Perde accepted Ms Hislop's offer of 11 November 2014 at £1,500. The claim was settled on this basis.
By then, Ms Hislop's costs were:
i) £2,372 by way of fixed costs up to 2 December 2014, when the offer should have been accepted;
ii) £5,534, being the costs actually incurred from 2 December 2014 onwards.
In the subsequent costs dispute, the claimant sought the sum of £5,534 by way of indemnity costs.
On 3 October 2016, at the County Court at Willesden, DDJ Lenon QC rejected the claim for indemnity costs. The approved note of his judgment makes clear that he did not reach this conclusion because of any interaction between the fixed costs regime and Part 36. This was unsurprising because, at that stage, it was accepted by both sides that he had the power to grant an order for indemnity costs pursuant to r.36.13. He refused to do so, saying:
“5. Notwithstanding the forcible submissions made by Ms Bedford, I am not satisfied that this is an appropriate case for an order for indemnity costs. I am not satisfied that there is anything here which really takes the case out of the norm. It would have clearly been better had the offer been accepted earlier on, but that is not really the point. That is not the criteria that I have to apply. It seems to me, in addition to the policy reasons adverted to by Mr Justice Coulson [in Fitzpatrick, referred to below], that it would be unfortunate if it became customary for late acceptances of Part 36 offers to attract applications for indemnity costs, which can themselves be, as in this case, quite complicated and time-consuming and costly.
6. I agree with Mr Hoe that, really, to make good an application for indemnity costs, there has to be a standout point that can be quickly drawn to the court's attention and which makes it obvious that the case has been conducted abnormally and that, exceptionally, an indemnity costs order is justified. My order, therefore, is that the order for costs should be the fixed costs and not the indemnity costs.”
Ms Hislop appealed. At the appeal hearing on 19 May 2017, it remained common ground that the judge could make an order under r.36.13. In a careful judgment dated 8 August 2017, Judge Walden-Smith overturned the District Judge's order, on the basis that he had erred in determining that the order for costs ought to have been fixed costs throughout. She did not interfere with his decision not to award costs on an indemnity basis, but ruled that the costs after 2 December 2014 would be assessed on the standard basis.
Ms Perde now seeks to appeal against that decision. It was only before this court that the point was taken on her behalf by Mr Mallalieu that the only costs that could be awarded were fixed costs because r.36.13 simply did not apply to fixed costs cases.
In addition, there was some debate in the skeleton arguments before us as to whether or not the approach taken by Judge Walden-Smith was open to her. Mr Mallalieu submitted that the argument about the standard basis had not been raised before her. Mr Bacon QC, on behalf of Ms Hislop, disputed that. As we indicated at the outset of the hearing, we thought that the judge was entitled to reach that conclusion on the basis of the argument before her and that, in any event, since both parties had come prepared to deal with the full range of issues, it would be unsatisfactory if we did not address all the relevant points.
The Facts in Kaur
On 25 January 2014, Mrs Kaur was injured at the Board's premises in Leicester. A Claim Notification Form under the PAP was sent on 7 February 2014. On 15 April, liability was denied and so the claim moved outside the PAP, although again the fixed costs regime remained in force.
On 8 January 2016, the proceedings were commenced. On 7 September 2016, Mrs Kaur offered to accept £2,000, in accordance with CPR Part 36. That offer was rejected on 15 September 2016.
In January 2017 there were further negotiations between the parties. A joint expert's report was produced, parts of which helped Mrs Kaur, and parts of which did not. The Board wanted to settle but was concerned that it might be penalised in costs if it belatedly accepted her offer of 7 September 2016. So, instead, on 6 February 2017, the Board made its own, higher Part 36 offer in the sum of £3,000. That offer was accepted by Mrs. Kaur.
Thereafter, the claimant sought indemnity costs from the date that her offer of 7 September 2016 could have been accepted until the date that she accepted the defendant's offer. The defendant said that only fixed costs could apply.
On 23 August 2017, District Judge Reed, sitting at the County Court at Leicester, decided that the claimant was entitled to £2,450 by way of fixed costs up to the date of allocation, and costs to be assessed on the standard basis thereafter. He concluded that, if the defendant had simply sought to accept the claimant's earlier Part 36 offer of £2,000 out of time, then the claimant would have been entitled to claim indemnity costs for the period of delay. In those circumstances, he concluded that the claimant should not be worse off simply because the defendant had got round that difficulty by making a higher offer months later. He said that such a result did not sit comfortably with the overriding objective and talked about a lacuna in the CPR. He also indicated (for the same reasons) that this was an exceptional case under r.45.29J, which justified a departure from the fixed costs regime in any event.
His reasoning is summarised in the following passages of his judgment:
“5…It seems to me frankly perverse if the claimant is to be worse off in...
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