Is Broadhurst v Tan â€¨a step backwards?
Broadhust's impact is being felt as it incentivises claimants - and it is in the interests of claimants - to make early strong part 36 offers, writes Mukesh Kainth
The victory secured on behalf of the defendant industry and delivered via the Jackson reforms has, in some quarters, been eradicated by the decision in Broadhurst.
Master of the Rolls Lord Dyson considered that part 36 and part 45 were 'conceptually different', and claimants who beat their own part 36 offer are entitled to more than just fixed costs. He stated that parliament had not intended to create a scheme to penalise claimants when it had established a fixed costs regime. The explanatory memorandum to the 2013 amendment rules laid before parliament were referred to, which state that
if a defendant refuses a claimant's offer to settle and
the court awards the claimant damages that are greater than
or equal to the sum they were prepared to accept, 'the claimant will not be limited to receiving his fixed costs'.
The outcome is, in this situation, that the claimant would be awarded his fixed costs up to the last day the part 36 could have been accepted (relevant period) and then indemnity costs to assessment of damages.
It was envisaged that limiting claimants to fixed costs on fast-track cases was weighed up in part by the application of qualified one-way costs shifting (QOCS) and generally that the defendants would not be entitled to their costs, save in certain circumstances. The effect for practitioners is marked. The defendants in Broadhurst stressed that practical difficulties would arise if the claimants' interpretation was accepted. It cannot be overlooked that this represents a blow to the defendant industry where a hard-fought battle has been diluted by this recent decision.
Three months post-decision, has this affected the practicalities of case handling to a considerable extent? I believe it has had an impact, as clearly it has incentivised claimants - and it is in the interests of claimants - to make early strong part 36 offers. However, so soon after the Jackson reforms it should not alter the practitioners' approach to cases. We have returned to the pre-Jackson position, whereby claimants were rewarded for their correct determination of the claim by indemnity costs and an uplift on those costs.
While the mind must be more focused to avoid any pitfalls presented by Broadhurst, I would aver that the day-to-day job for us handlers has not altered. While we may err on the side of caution, this Court of Appeal decision reinforces what we should always do - carefully consider each offer made against the claim and available evidence and whether it places the parties at risk. This is an essential skill required for practitioners on each side of the 'fence'.
It remains to be seen if parliament will intervene, but surely it is preferable to have a position where the parties are scrutinising the part 36 offers thoroughly, together with the associated risks. If Broadhurst results in claimants actively making more offers and defendants paying greater heed, this should result in quicker settlements and less use of court resources, which is beneficial to the legal system as a whole.