Thakkar and Another v Patel and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jackson,Lord Justice Briggs |
| Judgment Date | 25 January 2017 |
| Neutral Citation | [2017] EWCA Civ 117 |
| Date | 25 January 2017 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | B2/2014/4082 |
[2017] EWCA Civ 117
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT, QBD,
LEICESTER DISTRICT REGISTRY
(HH JUDGE ROGERS)
Royal Courts of Justice
Strand
London, WC2A 2LL
Lord Justice Jackson
Lord Justice Briggs
B2/2014/4082
Mr Stephen Taylor (instructed by RW Hemmings & Co.) appeared on behalf of the Claimants/Respondents
Mr Timothy Leader (instructed by Spearing Waite) appeared on behalf of the Defendants/Appellants.
This judgment is in four parts, namely part 1, Introduction, part 2, The Facts, part 3, The Present Proceedings, part 4, The Appeal to the Court of Appeal.
This is an appeal against a costs order. The principal issues in this appeal are the effect of a purported Part 36 offer which is withdrawn after 21 days and the consequences of failure to mediate. The subject matter of this litigation is a property in Leicester which the claimants leased to the defendants for a total of 18 years. Both parties achieved a measure of success in the subsequent litigation. The defendant tenants are aggrieved by the final costs order. They are the appellants in this court.
In this judgment I shall refer to the Civil Procedure Rules as "CPR". Part 36 of the CPR underwent substantial amendment on 6 April 2015. This appeal is concerned with the Rules as they stood in 2014. In 2014 Rule 36.14(2) set out the costs consequences where a claimant failed to beat the defendant's Part 36 offer. That provision was qualified, however, by Rule 36.14(6) which stated:
"Paragraphs (2) and (3) of this rule do not apply to a Part 36 offer —
(a) that has been withdrawn;
…
(Rule 44.2 requires the court to consider an offer to settle that does not have the costs consequences set out in this Part in deciding what order to make about costs)"
Rule 44.2 as it stood in 2014 provided as follows:
"(1) The court has discretion as to—
(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid.
(2) If the court decides to make an order about costs —
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order.
…
(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including —
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and
(c) any admissible offer to settle made by a party which is drawn to the court's attention and which is not an offer to which costs consequences under Part 36 apply."
The rule then sets out further guidance in relation to conduct. For present purposes, I need not read out those provisions. After these introductory remarks I must now turn to the facts.
The claimants are the owners of a building at 194 London Road, Leicester, to which I shall refer as "the Property". Between 1992 and 2010 the claimants demised the property to the defendants, who used it as a preparatory school. There were two leases; the first was dated 1992, the second lease was dated 2 February 1998.
In June 2009 thieves climbed on to the roof of the building and stole some of the lead. The defendants notified the claimant that the roof was no longer watertight. The claimants delayed for some months before repairing the roof. During that period of delay the school suffered water ingress and flooding. As a result, the defendants were unable to use the building as a school during the academic year 2009 to 2010.
The second lease came to an end in August 2010. The claimants took possession of the building. They intimated a claim for dilapidations. The defendants maintained that the claimants were liable to compensate them for the flood damage in 2009. The parties were unable to reach agreement on these matters. Accordingly, they embarked upon the present proceedings.
By a claim form issued in the Leicester District Registry of the Queen's Bench Division on 23 March 2011, the claimants claimed damages for dilapidations. In their particulars of claim, they quantified the claim at approximately £210,000 plus interest. On 26 May 2011, the defendants served their defence and counterclaim. By their defence they disputed almost the entirety of the dilapidations claim. In their counterclaim, the defendants claimed £41,875 in respect of rent paid to the claimants during the period when the property was unfit for occupation due to flooding.
In their respective allocation questionnaires, both parties requested a stay for ADR. There seems to have been a desire to settle on both sides. On 21 July 2011 the defendants' solicitors sent an offer of settlement of £30,000 plus costs on the basis that the defendants would drop their counterclaim. That offer was expressed to remain open for 21 days. The claimants did not accept that offer. Instead by their solicitor's letter dated 12 August 2011, the claimants made a Part 36 offer to accept £86,400 inclusive of VAT in settlement of the claim and counterclaim.
The defendants did not accept the claimants' offer or make any further offer. Instead, by letter dated 12 August 2011 the defendants' solicitors stated that their previous settlement offer was withdrawn. On 7 October 2011 District Judge Merriman made an order allocating the case to the multi-track. Thereafter nothing else happened in the litigation for a year; there was a stay to facilitate alternative dispute resolution.
Both parties expressed a willingness to mediate. The claimants were proactive in making arrangements for a mediation and identifying possible mediators for consideration by the defendants. The defendants, by contrast, were slow to respond to letters and raised all sorts of difficulties. Eventually, in a letter dated 22 August 2012 the claimants set out the history of their attempts to set up a mediation and concluded as follows:
"Our clients have made all reasonable attempts to arrange a mediation but have been thwarted by your clients' conduct. Since April 2012 countless weeks have been lost through having to chase for responses. When your client finally gave a clear window of availability we tried to fix a mediation within that period a variety of excuses have been given as to why that date could no longer go ahead.
Understandably, our clients no longer have any confidence that a mediation can be arranged given your clients' conduct and do not feel that it is reasonable that they should continue to have to amend their travel plans and work commitments of both themselves, their surveyor, and the writer, when the likelihood is that further 'circumstances' will arise that will lead to the postponement of any future date."
On 25 October 2012, District Judge Whybrow ordered the stay of proceedings to be lifted. He gave directions for exchange of witness statements, preparation of expert reports and related matters.
The trial of the action began in the Leicester County Court before His Honour Judge Rogers on 28 October 2013. After the hearing had continued for three days the evidence was still being called, but no further court time was available. The judge adjourned the case part-heard until March 2014.
By their solicitors' letter dated 24 February 2014 the claimants made a Part 36 offer to accept £40,000 in settlement of the claim and counterclaim. The defendants did not accept that offer. The trial resumed on 10 March 2014. It continued for a further four days. On 10 June 2014 the judge gave judgment. He awarded £44,933.52 to the claimants on their claim and £16,750 to the defendants on their counterclaim. That resulted in a balance of £28,183.52 due from the defendants to the claimants. The judge left over all questions of interest and costs for future argument. There was a further hearing to deal with interest and costs on 14 November 2014. The judge awarded interest at the rate of 4.5 per cent. After adding interest at that rate to both claim and counterclaim, the balance which the defendants owed to the claimants amounted to £32,083.18.
Turning to costs, the judge noted that the defendants' offer of £30,000 was "well judged", but it did not take effect under Part 36 because it had been withdrawn after three weeks. Nevertheless the judge accepted that the defendants' offer was still...
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