Litigation | Managing near misses

A recent decision by Mr Justice Ramsey, the judge in charge of '¨ Jackson implementation, has been seen as the final nail in the coffin of the Carver v BAA [2008] EWCA 412 ruling. In Hammersmatch Properties (Welwyn) Ltd v Saint Gobain Ceramics and Plastics Ltd & Anor [2013] EWHC 2227 (TCC), he accepted that since the introduction of CPR 36.14(1A) in October 2011 to counter Carver, the fact of beating an offer, by however small a margin, was enough.

Further, he held that CPR 44.2(4)(c), which allows the court when making a costs order to take into account offers that do not have Part 36 consequences, should not be allowed to introduce a "near miss" rule by the back door.

This principle is clearly important in the context of litigation generally but it remains to be seen to what extent the same will be applied to detailed assessment proceedings. For cases where detailed assessment proceedings were commenced before 1 April 2013, the old CPR 47.18 and 47.19 continue to apply. CPR 47.19(1), as was, states: "Where - (a) a party (whether the paying party or the receiving party) makes a written offer to settle the costs of the proceedings which gave rise to the assessment proceedings; and

(b) the offer is expressed to be without prejudice save as to the costs of the detailed assessment proceedings, the court will take the offer into account in deciding who should pay the costs of those proceedings."

This is clearly wide enough to allow the court to give weight to near misses and this is certainly something the courts do in practice. The old CPR 47.19 does not apply to detailed assessment proceedings commenced after 1 April 2013. The provisions of Part 36 now apply to such cases. To that extent there is a powerful argument that where a receiving party in detailed assessment proceedings beats a paying party's Part 36 offer, by however small an amount, there should be no '¨reason the general presumption provided by CPR 47.20(1) ("The receiving party is entitled to the costs of the detailed assessment proceedings except where'¦") should not apply. A "near miss" would therefore be irrelevant in the exercise of the court's discretion.

The complication that slips in is the wording on CPR 47.20(3) (which mirrors the pre-1 April 2013 wording of the old CPR 47.18): "In deciding whether to make some other order, the court must have regard to all the circumstances, including - (a) the conduct of all the parties; (b) the amount, if any, by which the bill of costs has been reduced; and (c) whether it was reasonable for a party to claim the costs of a particular item or to dispute that item."

Mr Justice Ramsey rejected the idea that, in the context of CPR 44.2(4), "all the circumstances" should give any weight to a "near miss" offer. However, CPR 47.20(3)(b) requires the court to consider "the amount, if any, by which the bill of costs has been reduced". There would appear to be reasonable scope for arguing that where the amount by which a bill has been reduced takes the figure very close to a Part 36 offer, that it one of the relevant "circumstances" for the court to take into account.

A related issue arises as to the costs to allow following a "near miss". It is interesting to note that Lord Justice Jackson was strongly in favour of reversing the Carver decision. He has also, of course, been instrumental in introducing the new approach to proportionality and the new CPR 44.3(2)(a) which states: "Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred."

A strange aspect of the Jackson reforms has been how little attention has been paid to the potential relationship between the reversal of Carver and the new proportionality test.

In Carver the Court of Appeal considered a case where there had been a Part 36 payment into court of effectively £4,520. '¨By making allowance for interest the judgment exceeded the payment in by £51. The judge at first instance held that the monetary judgment was not "more advantageous" than the Part 36 payment and therefore ordered the claimant to pay the defendant's costs after time for accepting the offer had expired. This was upheld by the Court of Appeal.

The interesting issue that arises post-Jackson is not whether a claimant in similar circumstances should be awarded her costs having beaten the offer by a small margin (the answer being "yes") but rather what level of costs would it be proportionate to incur to recover the additional £51? That is a problem the courts have yet to grapple with.