17 July, 2017
The Court has overturned a district judge's decision not to make the usual costs order following the late acceptance of a Part 36 offer by a claimant.
The claimant injured his foot in a workplace accident and brought a claim against his employer. He issued in January 2012 and disclosed an orthopaedic report with an unfavourable prognosis. In September 2012 the defendant made a Part 36 offer to settle the claim in the sum of £50,000. The claimant did not accept or reject the offer.
In May 2013 the case was stayed and the claimant underwent foot surgery. In April 2014 the stay was lifted and the claimant increased his damages claim to £248,000. A further orthopaedic report in October 2014 was still unfavourable though gave a slightly improved prognosis.
However, a joint experts report determined that the claimant would be able to work until retirement age. The matter was listed for trial in early 2015, but the claimant applied to vacate the trial in February 2015 and accepted the Part 36 offer from September 2012.
The claimant then successfully applied for an order under CPR r.36.13(5) that the defendant pay his costs up to 30 October 2014, despite the usual rule that he would have been liable for the defendant's costs after the expiry of the 21-day acceptance period. The district judge agreed with his submission that it would be unjust to apply the usual rule because the injury had not been resolved and the prognosis had been uncertain until the October 2014 orthopaedic report.
The Court of Appeal overturned the decision confirming that it was important not to undermine the purpose of Part 36 offers. The district judge had been wrong not to make the usual costs order following a personal injury claimant's late acceptance of the defendant's Part 36 offer, and held that the claimant should pay the defendant's costs following the expiry of the usual acceptance period. The fact that there had been uncertainty regarding the claimant's prognosis was part of the usual risks of litigation, and the purpose of Part 36 was to shift the risk to the offeree if he did not accept the offer.
The Court of Appeal has reiterated that the general rule under Part 36 is that if an offer is not accepted in time, the offeree should pay the costs of the offeror until the offer was accepted, unless the Court considers it unjust to do so.
We suspect that in this case the claimant may have been attempting to exaggerate his injuries, the Judgment stops short of saying this although the Judge did say that the progress of the litigation had been troubling. There was nothing to distinguish this case from others involving the usual risks of litigation.
The case sends out a clear warning to claimants and also serves as a timely reminder to defendants to make early realistic Part 36 offers to protect the costs position.