Mr Francis King v City of London Corporation
| Jurisdiction | England & Wales |
| Judge | Lord Justice Newey,Lord Justice Coulson,Lord Justice Arnold |
| Judgment Date | 18 December 2019 |
| Neutral Citation | [2019] EWCA Civ 2266 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2019/0161 |
[2019] EWCA Civ 2266
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COUNTY COURT AT CENTRAL LONDON
His Honour Judge Dight CBE
Claim No. A71YP285
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Newey
Lord Justice Coulson
and
Lord Justice Arnold
Case No: A2/2019/0161
Mr George McDonald (instructed by Pattinson & Brewer) for the Appellant
Mr Jamie Carpenter (instructed by BLM) for the Respondent
Hearing date: 19 November 2019
Approved Judgment
The main question raised by this appeal is whether an offer exclusive of interest can be made under CPR Part 36 either generally or at least in the context of proceedings for detailed assessment of costs under CPR Part 47. It is a matter on which Judges have taken divergent views. In the present case, His Honour Judge Dight CBE, upholding Deputy Master Campbell, concluded that an offer exclusive of interest cannot be a valid Part 36 offer. In contrast, in Horne v Prescot (No 1) Ltd [2019] EWHC 1322 (QB), [2019] 1 WLR 4808, Nicol J, dismissing an appeal from Master Nagalingam, held that, at least in the context of detailed assessment proceedings, an offer excluding interest can be an effective Part 36 offer. We were told that differing opinions have also been expressed by other Costs Judges.
Basic facts
On 15 February 2017, the parties agreed a consent order settling a claim by the appellant, Mr Francis King. The order provided for the respondent, City of London Corporation (“the City”), to pay Mr King £250,000 plus costs “to be assessed if not agreed on the standard basis”.
Mr King served his bill of costs and detailed assessment proceedings ensued. On 12 December 2017, Pure Legal Costs Consultants made a settlement offer on Mr King's behalf in a letter to the City's solicitors. The letter was headed “Part 36 offer” and said:
“The Claimant hereby offers to accept £50,000.00 in full and final settlement of the costs detailed within the Bill only.
This offer is made pursuant to CPR 36. The offer is open for 21 days from deemed service of this letter. If the offer is accepted in this time the Defendant shall be liable for the Claimants costs in accordance with CPR 36.13.
The offer relates to the whole of the claim for costs within the Bill and takes into account any counterclaim, but excludes interest.”
The City not having accepted that offer, there was a detailed assessment hearing before Deputy Master Campbell on 13 June 2018. Mr King's bill was assessed at £52,470 excluding interest.
On the basis that the £52,470 was more advantageous to him than the £50,000 he had offered to accept, Mr King argued that CPR 36.17 applied and, hence, that the costs consequences set out in CPR 36.17(4) should follow. The Deputy Master, however, concluded that the offer of 12 December 2017 was not a valid Part 36 offer and so that CPR 36.17 was not applicable. The Deputy Master explained as follows in his judgment:
“4. … [A]s it seems to me …, for [CPR 36.17(4)] to be engaged, the offer itself has to be a valid offer under Part 36.
5. The authority for that is James v. James [2018] 1 Costs LR 175, His Honour Judge Paul Matthews sitting as a Judge of the High Court. In that case the offer, as here, was expressed to be under Part 36. However, it contained terms which were inconsistent with the rule, namely, in that case that the acceptance period could be extended. The Judge held that the offer could not be valid under Part 36 because the additional words had introduced a term inconsistent with the rule.
6. That appears to be the situation here. Rule 36.5 states that the ‘offer must (a) be in writing’ – it was – ‘(b) make clear that it is made pursuant to Part 36’ – it was – ‘(c) specify a period of not less than 21 days’ and so on – it appears to have been. However, the rule then deals with interest and says that:
‘(4) A Part 36 offer which offers to pay or offers to accept a sum of money will be treated as inclusive of all interest until …’
7. However the offer of 12 th December 2017 states that it is full and final settlement of the costs detailed within the bill only and excludes interest.
8. So it seems to me that those terms are inconsistent with Rule 36.5 in its true form and, accordingly, it is not a valid Part 36 offer. So the benefits which otherwise would be payable under Rule 36.17(4) are not payable here.
9. Mr Farrow [costs lawyer for Mr King] has another string to his bow because he says the Practice Direction makes provision for an offer to deal with interest. But he also accepts, correctly, that the rule prevails over the Practice Direction and, as it seems to me, the provisions of CPR 36.5 prevail over the Practice Direction to that rule and, accordingly, he does not persuade me that the decision I have made is wrong on account of the different wording of the Practice Direction.”
Mr King appealed, but Judge Dight, sitting with a Costs Judge as an assessor, dismissed the appeal. Judge Dight concluded that “it is not possible, in respect of ordinary substantive claims, to make an offer that is compliant with Part 36 but which excludes interest” (paragraph 17 of the judgment) and that the position is no different as regards offers made in detailed assessment proceedings. In the course of his judgment, Judge Dight said the following:
“14. In my judgment, Part 36.5(4) does contain a mandatory obligation but the obligation is not directed expressly at the offeror but at the offeree and at the Court. It is saying, in my judgment, that the recipient of the offer is to treat the offer as including all interest and that the Court is to deal with it, having the same approach or in the same way. It is, in my judgment, impossible to construe that provision consistently with sub-rule (1) if it allows an offeror to excise interest but requires the recipient to treat it as including it.
15. Reading the two provisions, therefore, together, it must mean in my judgment that an offer which contains an offer to pay a sum of money has to include interest, otherwise it will not be capable of being a Part 36 offer.
…
18. As to the Practice Direction in relation to assessment of costs there is an apparent conflict between the wording of Practice Direction 47, paragraph 19 and Part 36 as I have just construed it but it seems to me that the Practice Direction cannot be used, or is not sufficiently strong, if I can put it that way, to alter the proper construction of 36.5 in substantive proceedings, nor to modify 36.5 in costs proceedings themselves.
19. … The likelihood is, and I do not mean to criticise anybody, that Practice Direction paragraph 19 has been drafted without a sufficient eye on the proper construction of CPR 36.5 or on the issue which has arisen in the current proceedings and, in due course, I would invite the civil procedure rules committee to turn their mind to it again ….”
Turning to an argument that CPR 36.5(4) “means that whatever the wording used in the offer relating to interest, the party receiving the offer and the Court are to treat the offer as including interest” (paragraph 8(3) of the judgment), Judge Dight said in paragraph 25:
“It is, effectively, a construction argument that requires us to excise the last three words [viz. ‘but excludes interest’]. For those reasons, therefore, in my judgment, it is not open to the Court to treat an offer which purports to exclude interest as included and, therefore, render it a Part 36 compliant offer.”
Relevant rules
CPR Part 36
As is stated in CPR 36.1(1), CPR Part 36 contains a “self-contained procedural code” about offers to settle made pursuant to the procedure set out in it. “[G]eneral rules” about such offers are to be found in Section I of Part 36, comprising CPR 36.2 to 36. 23. CPR 36.2(2) explains that, while nothing in Section I prevents a party making an offer to settle in whatever way that party chooses, “if the offer is not made in accordance with rule 36.5, it will not have the consequences specified in this Section”. CPR 36.2(3) specifies that a Part 36 offer:
“may be made in respect of the whole, or part of, or any issue that arises in—
(a) a claim, counterclaim or other additional claim; or
(b) an appeal or cross-appeal from a decision made at a trial.”
CPR 36.5, which is headed “Form and content of a Part 36 offer”, provides as follows:
“(1) A Part 36 offer must—
(a) be in writing;
(b) make clear that it is made pursuant to Part 36;
(c) specify a period of not less than 21 days within which the defendant will be liable for the claimant's costs in accordance with rule 36. 13 or 36.20 if the offer is accepted;
(d) state whether it relates to the whole of the claim or to part of it or to an issue that arises in it and if so to which part or issue; and
(e) state whether it takes into account any counterclaim. …
(2) Paragraph (1)(c) does not apply if the offer is made less than 21 days before the start of a trial.
(3) In appropriate cases, a Part 36 offer must contain such further information as is required by rule 36.18 (personal injury claims for future pecuniary loss), rule 36.19 (offer to settle a claim for provisional damages), and rule 36.22 (deduction of benefits).
(4) A Part 36 offer which offers to pay or offers to accept a sum of money will be treated as inclusive of all interest until—
(a) the date on which the period specified under rule 36.5(1)(c) expires; or
(b) if rule 36.5(2) applies, a date 21 days after the date the offer was made.”
There follows a rule directed at offers by defendants. CPR 36.6(1) stipulates:
“Subject to rules 36.18(3) and 36.19(1), a Part 36 offer by a defendant to pay a sum of money in settlement of a claim must be an offer to pay a single sum of money.”
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