Pankhurst v White and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jackson,Lord Justice Leveson,The Chancellor |
| Judgment Date | 15 December 2010 |
| Neutral Citation | [2010] EWCA Civ 1445 |
| Docket Number | Case No: A2/2010/0573 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 December 2010 |
[2010] EWCA Civ 1445
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
Mr Justice Macduff
Before: The Chancellor of the High Court
Lord Justice Leveson
and
Lord Justice Jackson
Case No: A2/2010/0573
HQ05X01706
Mr Gerard McDermott QC (instructed by Stewarts Law LLP) for the Appellant
Mr Richard Methuen QC and Mr Harry Steinberg (instructed by Berrymans Lace Mawer LLP) for the Respondent
Hearing dates : Thursday 25 th November 2010
Lord Justice Jackson:
This judgment is in six parts, namely:
Part 1. Introduction
Part 2. The Facts
Part 3. The Appeal to the Court of Appeal
Part 4. Ground 1. Did the Judge err in Failing to Award Interest on the Damages for Future Loss?
Part 5. Ground 2. Did the Judge err in Failing to Award Interest on Costs?
Part 6. Conclusion.
Part 1. Introduction
This is an appeal by a claimant who contends that he has received insufficient awards of interest under the Civil Procedure Rules Part 36, having obtained a larger amount of damages at trial than he had previously offered to accept in settlement.
In this judgment I shall refer to the Motor Insurers Bureau, which is second defendant and respondent to the appeal, as “MIB”. I shall refer to the Access to Justice Act 1999 as “the Access to Justice Act”. I shall refer to the Civil Procedure Rules Part 36 as “Part 36”.
Part 36 underwent substantial amendment with effect from 6 th April 2007. Prior to that date, rule 36.21 provided as follows:
“36.21 – (1) This rule applies where at trial –
(a) a defendant is held liable for more; or
(b) the judgment against a defendant is more advantageous to the claimant,
than the proposals contained in a claimant's Part 36 offer (including a Part 36 offer made under rule 36.2A).
(2) The court may order interest on the whole or part of any sum of money (excluding interest) awarded to the claimant at a rate not exceeding 10% above the base rate for some or all of the period starting with the latest date on which the defendant could have accepted the offer without needing the permission of the court.
(3) The court may also order that the claimant is entitled to –
(a) his costs on the indemnity basis from the latest date when the defendant could have accepted the offer without needing the permission of the court; and
(b) interest on those costs at a rate not exceeding 10% above base rate.
(4) Where this rule applies the court will make the orders referred to in paragraphs (2) and (3) unless it considers it unjust to do so.
(5) In considering whether it would be unjust to make the orders referred to in (2) and (3) above, the court will take into account all the circumstances of the case including –
(a) the terms of any Part 36 offer;
(b) the stage in the proceedings when any Part 36 offer or Part 36 payment was made;
(c) the information available to the parties at the time when the Part 36 offer or Part 36 payment was made; and
(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer or payment into court to be made or evaluated.
(6) Where the court awards interest under this rule and also awards interest on the same sum and for the same period under any other power, the total rate of interest may not exceed 10% above base rate.”
With effect from 6 th April 2007 the former rule 36.21 was substantially re-enacted within the new rule 36.14. Rule 36.14 (so far as material to the issues in this appeal) now provides as follows:
“36.14—(1) This rule applies where upon judgment being entered—
(a) a claimant fails to obtain a judgment more advantageous than a defendant's Part 36 offer; or
(b) judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant's Part 36 offer.
…….
(3) Subject to paragraph (6), where rule 36.14(1)(b) applies, the court will, unless it considers it unjust to do so, order that the claimant is entitled to—
(a) interest on the whole or part of any sum of money (excluding interest) awarded at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;
(b) his costs on the indemnity basis from the date on which the relevant period expired; and
(c) interest on those costs at a rate not exceeding 10% above base rate.
(4) In considering whether it would be unjust to make the orders referred to in paragraphs (2) and (3) above, the court will take into account all the circumstances of the case including—
(a) the terms of any Part 36 offer;
(b) the stage in the proceedings when any Part 36 offer was made, including in particular how long before the trial started the offer was made;
(c) the information available to the parties at the time when the Part 36 offer was made; and
(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated.
(5) Where the court awards interest under this rule and also awards interest on the same sum and for the same period under any other power, the total rate of interest may not exceed 10% above base rate.”
Some of the changes in wording between old rule 36.21 and new rule 36.14 have given rise to debate in other cases. However, those changes in wording are not material for present purposes.
The claimant's offer which falls for consideration in this appeal was made when Part 36 was in its original form. However, the judge had to determine the consequences of that offer after Part 36 had been amended. The transitional provisions contained in the Civil Procedure (Amendment No.3) Rules 2006 require that in such a case the court must apply the provisions of Rule 36.14 in its new form.
It will be necessary, as this judgment progresses, to consider how the provisions of Part 36 impact upon a case where one party has a conditional fee agreement with after-the-event insurance, thus triggering the operation of section 29 of the Access to Justice Act and section 58A(6) of the Courts and Legal Services Act 1990, as amended by the Access to Justice Act.
Having set out the relevant background, I must now turn to the facts of the present case.
Part 2. The Facts
On 7 th June 2003 the claimant was cycling along a country lane in Devon. He was struck on a bend by a vehicle driven by Lee White, an uninsured driver. The claimant suffered catastrophic injuries.
The claimant's solicitors, Messrs Stewarts, who are now Stewarts Law LLP, commenced proceedings on the claimant's behalf against Lee White as first defendant and MIB as second defendant. The first defendant has played no part in the proceedings, which have been fought out between the claimant and MIB.
On 30 th September 2005 the claimant obtained summary judgment on liability against the first defendant, subject to the future determination of the issue of contributory negligence. Master Fontaine subsequently ordered that issue to be tried on a date to be fixed in the Trinity Term of 2006.
On 4 th December 2005 (some two months after obtaining judgment on liability) the claimant entered into a conditional fee agreement with his solicitors. That agreement provided for a success fee of 22 1/2% if the action settled pre-trial, and a success fee of 100% if the action went to trial. These success fees included a 10% postponement fee to be paid by the client, unless recovered from MIB. Success was defined as any recovery of damages. In the circumstances of this case there was no risk whatsoever that the claimant's solicitors would not be paid their base costs in full. Yet the solicitors were charging a “success fee” on top of their base costs for running a non-existent risk. This makes a mockery of what is said to be the justification for the present conditional fee agreement regime. It is also highly relevant to the second issue in the appeal. I shall therefore return to this matter in Part 5 below.
On 23 rd May 2006, when contributory negligence remained a live issue, the claimant offered pursuant to Part 36 to accept £3.4 million (or a lesser capital sum plus periodical payments to achieve an equivalent overall value) in settlement of his claim. MIB rejected that offer on 31 st May 2006.
I interject at this point in the narrative to say that throughout the litigation many offers and counter-offers were made by both parties. However, only two of the offers are now relevant to the issues under appeal. Therefore I pass over the other offers in silence.
On 26 th June 2006 the trial of the issue of contributory negligence commenced before Wilkie J. On 27 th June 2006 Wilkie J gave judgment rejecting the allegations of contributory negligence and holding that the claimant was entitled to damages on the basis of full liability.
The claimant, having achieved a substantial victory on the issue of contributory negligence, made it clear that he was no longer willing to settle on the terms offered in May 2006. The parties then set about preparing for the trial on quantum. This process was (as the judge found on the evidence) affected by delays on the claimant's side.
On 28 th May 2008 MIB offered pursuant to Part 36 to pay £3 million plus periodical payments of £260,000 per year in settlement of the claimant's claim. The offer contained further provisions, the details of which are not relevant for present purposes. The value of that offer, if one...
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