COSTS CONSEQUENCES OF PART 36 OFFERS: ANOTHER INTERESTING EXAMPLE

Following the earlier post on Part 36 offers I am grateful to Marcus Davies from DWF for pointing me in the direction of the decision of Mrs Justice Andrews in Davison –v- Leitch [2013] EWHC 3092 (QB). This provides another interesting example of the court considering the costs consequences when a defendant fails to beat a Part 36 offer from a claimant.

 

THE FACTS OF DAVISON

Davison was an action for damages following clinical negligence. Liability was admitted. The only issue was quantum.

 

THE PART 36 OFFER

On the 11th September 2013 the claimant made an offer to settle at £900,000.   The claimant was awarded damages considerably higher than her own Part 36 offer. The award was higher than an earlier offer of £800,000 from the defendant.

 

THE FACTORS CONSIDERED BY THE JUDGE

The judge considered a number of factors:

1. The claimant had beaten her own offer by a significant margin.

2. The time when the offer was made

This was of particular importance on the facts of that case. The trial had been delayed because the claimant was not ready. If the trial had started on the first day of the trial window then the Part 36 offer had not been in time.

3. Conduct of the parties

Although not made express in the judgment the judge clearly considered the fact that:

(i) There had been delay by the claimant. The trial bundle had not been sent by the start of the trial window and there were no skeleton arguments.  Some of the experts had not met.

(ii) The defendant had been prepared to accept the offer of £900,000 on condition that the defendant’s costs were paid since the defendant’s own offer of £800,000. This was because when the defendant’s offer had been made the claimant did not have permission to rely on a significant witness statement.

4. Saving of costs

 “The length of time before trial started is a relevant and significant factor because if the offer is made less than 21 days before trial, unless the court has abridged the relevant period, these provisions do not apply. Since the Part 36 regime is designed to encourage parties to settle and to save costs, this makes sense: although significant costs (brief fees, etc.) are incurred in the run up to trial, the later the offer is made, the less the cost savings likely to be made by accepting it”

 

5. Saving of costs is not decisive

There were other factors the court had to take into consideration:

 

71. Costs savings are not the only important factor to take into consideration, however. In the present case, for example, acceptance of the Claimant’s part 36 offer would have avoided the need for Mrs Davison to leave a small baby, who has recently been very ill and in hospital, to travel from Hong Kong, and then undergo what (despite the commendable sensitivity of Mr McCullough’s cross-examination) must have been the deeply unpleasant and distressing experience of giving evidence about matters of a highly personal nature over the course of two days (with an interruption of two hours for the evidence of Mr Keneally). Moreover it would have avoided the considerable expense and inconvenience of having to arrange for Mr Keneally to give his evidence by video link from the USA, including a long-distance telephone call on Mr Mylonas’ mobile phone when the sound on the video link broke down.

 

72. At the time the offer was made, Mr Keneally’s evidence had been served and there was ample time to have evaluated that evidence. Mrs Davison’s second witness statement had also been served in July, and this deals in detail with the Defendant’s suggestion that her failure to return to work was a matter of lifestyle choice. She states in detail what she would have done in terms of working despite the various relocations and her subsequent pregnancies. Although that case was not formally pleaded until the Revised Schedule there was more than enough evidence to put the Defendant’s legal team on notice and to evaluate the Claimant’s case. The Claimant’s third witness statement and the statement of Mrs Broster had not yet been served, but Mrs Broster’s statement in the event added little of significance and I am not persuaded that anything new that emerged in Mrs Davison’s further statement would have had any significant bearing on the evaluation of the offer had it been available to the Defendant on 11th September. The Revised Schedule pleaded a claim for the costs of psychiatric treatment, but that, too was already in evidence.

 

73. Taking all these matters into account and paying due regard to the written submissions of both Counsel, I consider that it would not be unfair to the Defendant for some of the consequences of Part 36.14 to be visited on him but that it probably would be unfair for all of them to apply.”

 

THE PART 36 CONSEQUENCES IMPOSED

The judge awarded some of the advantages of a Part 36 offer:

1. Costs were awarded on the standard basis, not the indemnity basis.

2. However interest was payable on the costs to be paid to the claimant at 2% above base.

3. The additional £75,000 payable under Part 36 was awarded.

4.  However the court made no award for an uplift of interest on damages.

 

DISCUSSION

It appears to be a feature of the Part 36 offers considered so far that they were made relatively late.  Nevertheless for the Defendants in Davison this was an expensive experience. It demonstrates the need to take Part 36 offers very seriously.

RELATED POSTS

 

LINKS TO CASES

The Davison case can be found at http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/QB/2013/3092.html&query=davison&method=boolean

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