When the norm is unjust
In light of Briggs v CEF Holdings Ltd, Louise Shaw considers when it is unjust to make the usual part 36 order for costs in the event of a late acceptance
In Briggs v CEF Holdings Ltd (2017) I represented the defendant through its insurers. This was an ordinary employer’s liability claim, which followed the typical, almost tedious, well-trodden path that personal injury practitioners know so well. Right up until it ended up in the Court of Appeal.
The claimant suffered a crushing injury, particularly to his second right toe, in an accident at work in January 2010. I am in no position to comment upon the claimant’s perspective of his claim, but I felt early on that there was a faint whiff of exaggeration about it.
In an effort to conclude the claim promptly, we made a part 36 offer of £50,000 on 18 September 2012. There were complications and uncertainties in connection with the claimant’s treatment and recovery and, by agreement, the case was stayed between May 2013 and April 2014. Following the stay, the claimant, in June 2014, served an updated schedule of loss increasing the claim for special damages from £72,000 to £248,000.
Behind the scenes, I had arranged covert surveillance on various days during March and April 2013 and also April and May 2014. The helpful surveillance evidence was served in August 2014. There is no doubt in my mind that it was this evidence (which coincided in a timely fashion with the claimant’s increased aspirations in his updated schedule) which irrevocably altered the complexion of this claim.
It’s important to note that the surveillance evidence was never judicially considered at any point; there was no trial as the case settled on late acceptance and its cameo appearance in the Court of Appeal bundle was as an exhibit to one of my witness statements, in the form of some stills. My take on the case, however, is that the surveillance strongly influenced and led the medical opinion.
By October 2014 the claimant’s medical expert’s opinion was slightly improved but still unfavourable, possibly because for some reason the claimant’s medical expert had not had access to the surveillance evidence. The November 2014 joint statement was a turning point and, significantly, the experts agreed that the claimant would work to normal retirement age.
It was not, however, until June 2015 that notice of acceptance was served, swiftly followed by an application to disapply the usual costs consequences of part 36, the defendant having refused to agree to anything other than the usual costs consequences, basically that the claimant pays the defendant’s costs from the expiry of 21 days after the part 36 offer.
Readers will be familiar with the self-contained offer/acceptance code that is part 36, which states that where an offer is accepted late, the liability for costs must be determined by the court unless the parties have agreed the costs position. Further, where the parties cannot agree the liability for costs, then the court must, unless it considers it unjust to do so, order that:
• The claimant be awarded costs up to the date on which the relevant period expired; and
• The offeree pay the offeror’s costs for the period from the date of expiry of the relevant period to the date of acceptance.
In considering whether it would be unjust to make the orders specified in paragraph 5, the court must take into account all the circumstances of the case, including the matters listed in rule 36.17(5):
“In considering whether it would be unjust to make the orders referred to in paragraphs (3) and (4), the court must take into account all the circumstances of the case including—
(a) the terms of any Part 36 offer;
(b) the stage in the proceedings when any Part 36 offer was made, including in particular how long before the trial started the offer was made;
(c) the information available to the parties at the time when the Part 36 offer was made;
(d) the conduct of the parties with regard to the giving of or refusal to give information for the purposes of enabling the offer to be made or evaluated; and
(e) whether the offer was a genuine attempt to settle the proceedings.”
The claimant successfully applied at first instance to disapply the usual costs consequences of part 36, and secured an order that the defendant pay the claimant’s costs up to 30 October 2014, which coincided with the claimant’s updated, and final, medical evidence.
The defendant took the view that the judge at first instance was wrong and that uncertainty as to the claimant’s prognosis and the resultant difficulty for the claimant’s solicitors to advise upon the part 36 offer until medical evidence was finalised should not render the usual costs consequences “unjust” within the scope of 36.17(5).
Further, the judge at first instance misunderstood the function of a part 36 offer, which was to place the claimant at a costs risk if he failed to beat the part 36 offer. The defendant successfully applied for permission to appeal.
There are not as many Court of Appeal decisions on this point as you may think, and the parties and indeed the court focused upon SG (A Child) v Hewitt (Costs)  EWCA Civ 1053, where it was found to be unjust to impose the normal order, and Matthews v Metal Improvements Co. Inc  EWCA Civ 215, where it was not. A case “each side of the line” if you like.
At the appeal, the injustice was analysed, with the court refraining from conducting a microscopic review of the conduct of the litigation and reiterating that each case is to be decided upon its own facts. It’s also a point to note that the Court of Appeal is reluctant to interfere with an order just in relation to costs – which is just what this was.
So what handy hints can we take from Briggs when it comes to late acceptance and costs consequences?
• The purpose of part 36 cannot be overlooked. The purpose is to enable a party to protect its position on costs.
• Cases such as SG, Matthews, and Briggs assist, but each case is to be decided on its own facts.
• Of course, it’s often difficult to work out which way a case will go. An uncertain prognosis might make it difficult to place a valuation upon a claim, but that’s just one of the usual risks of litigation and is not enough to unsettle the usual costs consequences following a late acceptance.
• Many injury cases involve an early medical opinion which contains an understandably guarded prognosis, especially where there’s a need for surgery, but even a guarded prognosis does not make for a reason to disapply the usual costs consequences of late acceptance.
• The burden of showing that it would be unjust for the usual costs consequences of part 36 to follow a late acceptance is upon the late accepter.
• Pro-forma “your offer is neither accepted nor denied” letters are unlikely to assist a late accepter. The letter needs to set out the whys and wherefores.
• A late accepter could assist themselves by making a prompt request for a stay, particularly if there’s a genuine reason to stay a claim to allow, for example, for recovery from surgery or to see how a treatment pans out.
• A late accepter does not, however, help themselves by continuing with the litigation when it’s clear that they are beyond the point when the offer should have been accepted.
• It’s not always easy, but we all know the benefits of open and honest communication throughout and the need to act reasonably.
What would I have done differently? Hindsight is a wonderful thing but, on this occasion, there’s little if anything I would like to change. I suppose I could have worn more comfortable shoes to the appeal. I’d like to say how grateful I am to my insurer client, Simon Espley of AIG, who proved himself to be a man, not a mouse, and who supported this case all the way. Also, thanks must go to our counsel, Michael Jones of Cobden House Chambers, who provided well-thought-out, robust, and, as it turns out, accurate advice throughout.
Louise Shaw is a partner at Plexus Law