Shaw v Merthyr Tydfil County Borough
| Jurisdiction | England & Wales |
| Judge | Lord Justice Maurice Kay,Lord Justice Elias,Lord Justice Pitchford |
| Judgment Date | 24 June 2014 |
| Neutral Citation | [2014] EWCA Civ 1678 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | B3/2014/0507 |
| Date | 24 June 2014 |
[2014] EWCA Civ 1678
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CARDIFF COUNTY COURT
(DISTRICT JUDGE JENKINS)
Cardiff Civil and Family Justice Centre
2 Park Street
Cardiff
South Wales
CF10 1ET
THE VICE-PRESIDENT OF THE COURT OF APPEAL
( Lord Justice Maurice Kay)
Lord Justice Elias
Lord Justice Pitchford
B3/2014/0507
Mr Rivers (instructed by Hugh James Solicitors) appeared on behalf of the Applicant
Mr John (instructed by Dolmans Solicitors) appeared on behalf of the Respondent
Part 36 of the Civil Procedure Rules ("CPR") provides a procedure which is designed to facilitate the settlement of civil cases. It encourages the making of offers and counter offers and contains an approach to costs which will apply when an offer is accepted or when it is rejected but the offeror obtains an outcome at trial which is at least advantageous to him as his earlier Part 36 offer.
Not all settlements are engineered through the Part 36 process. It remains possible to negotiate and conclude a settlement outside its parameters, in which case the costs implications are less prescriptive. Part 36 only applies where the offer in question is properly categorised as a Part 36 offer. What is or is not a Part 36 offer has produced a degree of controversy ever since 1998 when the process was introduced by the CPR.
Subsequent amendments have served to intensify that controversy. So, for example, a claimant who succeeds at trial in securing an outcome which is at least as advantageous as his rejected Part 36 offer to settle may in some circumstances recover indemnity costs for the post offer period, together with significantly enhanced interest — see rule 36.4.
This appeal arises out of a fully contested tripping case. The claim pursuant to the Highways Act was relatively modest. However, litigation costs have reached a high level in proportion to the value of the claim, not least because the claimant was initially unsuccessful following a fast track trial before a district judge and only succeeded in obtaining judgment following an appeal to a circuit judge. The eventual damages award totalled £6,510.
The claimant's solicitors had sought to settle her claim even before the issue of proceedings. On 16 October 2009 they wrote a letter which has become central to this appeal. It was headed "Part 36 Offer". Its terms were as follows:
"Our client offers to accept the sum of £2,000 in full and final settlement for the claim for general and special damages, such sums to be inclusive of interest together with payment her reasonable costs to be detailed assessed in default of agreement. This offer remains open for a period of 21 days from the date of receipt of the offer, after which time the offer may only be accepted if the parties agree their liability in respect of costs or the court provides its permission for late acceptance."
When that letter did not produce a settlement, proceedings were issued on 23 February 2001. The fast track trial took place on 20 September 2012. Almost immediately after that the claimant was granted permission to appeal to a circuit judge. At that point a further offer to settle was made on her behalf on 12 November 2012, this time in the sum of £5,000. That, it seems, was indisputably in the correct form. When that was not accepted she made a yet further offer to settle — this time for £32,000 inclusive of costs. This again fell on stony ground. Her successful appeal on the issue of liability was heard on 7 December 2012. After that the defendant immediately sought to accept the original offer of 16 October 2009 to settle for £2,000. Two days later, on 9 December 2012, the claimant withdrew the £5,000 offer and on 11 December 2012 a new offer was made on her behalf for settlement in the sum of £7,250. When the damages were assessed on 16 May 2013 she failed to attain that sum.
The Judgment on Costs
The above chronology gave rise to a polarised dispute in relation to costs which came before District Judge Morgan Jenkins on 17 July 2013. The primary submission to the District Judge on behalf of the claimant was that she was entitled to costs by reference to Part 36 on the basis that she has significantly beaten her offer of 16th October 2009. Her alternative case was that, if that offer was not a proper Part 36 offer, she should still be awarded indemnity costs pursuant to the general provisions of rule 44.2, on the basis that the defendant's conduct should count against it, much as it would do under Part 36 if that were applicable.
The case for the defendant was that the letter of 16 October 2009 did not constitute a Part 36 offer. The costs fell to be considered simply by reference to rule 44, and that, having regard to the partial rejection of the claimant's special damages claim, the appropriate award to her would be 60% of her costs on the standard basis.
The District Judge found that the letter of 16 October 2009 was not a Part 36 offer. He came to this conclusion reluctantly because he felt bound to follow Thewlis v Groupama Insurance Company Ltd [2012] EWHC 3 TCC, which it is agreed is factually indistinguishable from the present case.
Applying general principles pursuant to rule 44, he awarded the claimant her costs on the standard basis save in relation to the hearing of 17 July 2013, in respect of which she was ordered to pay the defendant's costs on the standard basis.
Thereafter the claimant sought permission to appeal. On the 15 January 2014 His Honour Judge Seys-Llewellyn QC granted permission and transferred the case to the Court of Appeal because of the High Court authority of Thewlis, for which he and apparently some commentators have little affection.
The Provisions of Part 36
Rule 36.1 provides:
"(1) This Part contains rules about –
(a) offers to settle; and
(b) the consequences where an offer to settle is made in accordance with this Part.
(2) Nothing in this Section prevents a party making an offer to settle in whatever way he chooses, but if the offer is not made in accordance with rule 36.2, it will not have the consequences specified in rules 36.10, 36.11 and 36.14."
Rule 36.2 then provides:
"1) An offer to settle which is made in accordance with this rule is called a Part 36 offer.
(2) A Part 36 offer must –
(a) be in writing;
(b) state on its face that it is intended to have the consequences of Section I of 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 36.10 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…"
Rule 36.3 includes the following provisions:
"2) A Part 36 offer –
(a) may be made at any time, including before the commencement of proceedings…
(3) 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 stated under rule 36.2(2)(c) expires; or
(b) if rule 36.2(3) applies, a date 21 days after the date the offer was made…
(5) Before expiry of the relevant period, a Part 36 offer may be withdrawn or its terms changed to be less advantageous to the offeree, only if the court gives permission.
(6) After expiry of the relevant period and provided that the offeree has not previously served notice of acceptance, the offeror may withdraw the offer or change its terms to be less advantageous to the offeree without the permission of the court.
(7) The...
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