'Unjust' to impose Part 36 costs rule on brain-damaged boy

Appeal judges have decided not to apply the normal Part 36 costs rule to lawyers acting for a boy whose brain was damaged in a road accident.

SG was injured at the age of six, and sustained 'facial scarring and a severe head injury'. The court heard that the defendant made a Part 36 offer of £500,000 in 2009, when the boy was 12, which was ultimately accepted by the claimant two years later.

The defendant agreed to pay the claimant's costs until 21 days after the Part 36 offer was made, and the costs involved in approving the settlement.

After the offer, the claimant was advised by counsel that it was impossible to put a 'definitive value' on the claim at that stage. He advised that further investigations should be carried out, but the offer should not be rejected.

Delivering the leading judgment in SG v Hewitt [2012] EWCA Civ 1053, Lady Justice Black said: 'Following counsel's advice, the claimant's solicitors wrote to the defendant's solicitors inviting attention to the evidence that the claimant was still too young for final conclusions to be drawn, explaining that they were not able to advise on the reasonableness of the offer and setting out the further investigations they intended to carry out.

'They neither rejected the offer nor asked for the defendant's agreement to extend the time during which it would remain open for acceptance. Equally, the defendant did not withdraw it.'

Black LJ said that the court had to make the normal order for costs, 'unless it considered it unjust to do so' and, in deciding whether it was unjust, had to take into account all the circumstances of the case.

'The defendant submitted that in order to preserve the benefits of the Part 36 provisions it was important to confine the scope of the cases in which it was seen to be unjust to depart from the normal rule and that a court should be very slow to make exception to it,' she said.

'Indeed, whilst the defendant accepted that the situations in which the court may depart from the normal rule cannot be definitively prescribed, he submitted that they are principally likely to involve scenarios in which there has been an element of unreasonable or unconscionable conduct on the part of the defendant or a claimant has been misled in some way.'

Lady Justice Black concluded: 'The offer was not rejected and the defendant knew that further expert reports were being obtained as to the claimant's development. 'These were not designed to improve or expand the claimant's claim, merely to ascertain whether the deterioration that could occur with puberty/adolescence was in fact occurring or likely to occur.

'The defendant knew the nature of the variables intrinsic in the head injury that had the capacity to affect the quantum of damages and he knew the timescale that would render the claim more certain.'

Black LJ said the trial judge had acknowledged that the claimant had acted reasonably but not did not 'give weight to the particular features of this case' which were in the claimant's favour.

She set aside the trial judge's costs order and substituted one that would give the claimant his costs throughout.

Lady Justice Arden agreed, saying there must be a 'safety valve' in the normal rule.

'In this case, the time that elapsed between the date on which the Part 36 offer expired and the date on which that offer was accepted was needed to enable those advising the child to be satisfied that the offer could properly be accepted.

'This was because the prognosis for the claimant's injury could only accurately be determined by waiting until he neared or reached adolescence.'

Lord Justice Pill agreed, for his own reasons.