Is it a bird, is it a plane, is it a Part 36 offer?

The Claimant had commenced a clinical negligence claim against the Defendant in relation to their examinations of her on 24 December 2009, 30 September 2010 and 9 March 2017. The Claimant had attended hospital on these three occasions and the various clinicians who had examined her had failed to diagnose a prolapsed thoracic disc. The Claimant had undergone surgery in March 2017 but remained paraplegic following the same and it was alleged that this was due to the delay in diagnosis of the prolapsed disc.

On 22 December 2022, the Claimant had made a Part 36 offer to settle her claim for 90% of damages assessed on a 100% liability basis. The time for acceptance of this Part 36 offer expired on 13 January 2023. In May 2023 a liability-only trial had taken place and the judgment handed down had found the claims in respect of the examinations on 24 December 2009 and 30 September 2010 had succeeded. The judgment also found that there were no findings of contributory negligence in respect of those two claims. The claim regarding the examination on 9 March 2017 was dismissed.

The Claimant considered the May 2023 judgment meant her Part 36 offer had been successful and therefore the Defendant should pay her costs of the action, with all the benefits set out in CPR Part 36.17 – a Court must, unless it considers it unjust to do so, order that the Claimant is entitled to interest on the whole of any part of the sum awarded, at a rate not exceeding 10% above the base rate; costs on the indemnity basis; interest on those costs at a rate not exceeding 10% above the base rate; and an additional amount, which shall not exceed £75,000.00.

The Defendant disagreed that the Claimant’s December 2022 Part 36 offer was an effective Part 36 offer. The Court was requested to deal with the issue and both parties submitted written submissions to the Court.

The matter came before Mrs Justice Hill, who summarised the issues requiring determination as:

1. What general order should be made as to costs. The Claimant contends that the Defendant should pay her costs of the claim. The Defendant’s primary position is that there should be no order for costs; alternatively that the Defendant should be ordered to pay only a percentage of the Claimant’s costs.
2. Whether the Part 36 offer made by the Claimant on 22 December 2022 to settle her claim for 90% of damages assessed on a 100% liability basis was an effective Part 36 offer.
3. If it was an effective Part 36 offer whether it would be unjust in all the circumstances of the case to order Part 36 consequences under CPR 36.17.

Mrs Justice Hill also indicated that the appropriate costs order to be made needed to address the issue of costs pre and post the acceptance date for the Part 36 offer of 13 January 2023.

Mrs Justice Hill referred to CPR 44.2(2)

If the Court decides to make an about costs –

(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but

(b) the Court may make a different order.

She then referred to the liability judgment, in which the Claimant had succeeded on six of the seven key issues addressed. Mrs Justice Hill considered that this made the Claimant the successful party, and therefore, under CPR 44.2(2)(a), the Defendant, as the unsuccessful party, would be ordered to pay the costs of the Claimant.

Mrs Justice Hill then considered whether she should depart from that order under CPR 44.2(b).

She reviewed the legal framework detailed in Part 36.17, the nature of the Claimant’s 22 December 2022 and whether that offer was an effective one for Part 36 purposes.

The Defendant argued that the offer was not an effective Part 36 offer and referred to the judgment of Mundy v TUI UK Ltd [2023] EWHC 385 (Ch); [2023] Costs LR 153.  The Defendant submitted that an offer in this form was not an offer to settle the claim or a quantifiable part of or issue in the claim and therefore CPR 36.17 and the adverse costs consequences should not apply.

Mrs Justice Hill indicated that the factual context of Mundy was important but the making of both monetary and liability offers in that matter meant the analysis made by Collins Rice J was not applicable to this case.  In the Chapman matter the only offer made by either party was the Claimant’s 90/10 liability split offer. Further Mrs Justice Hill considered Mundy was distinguishable from this case because the manner in which the Claimant’s 90/10 offer applied to the causation issue had been made clear in correspondence and was reflected in the liability judgment.

For those reasons Mrs Justice Hill found that the Claimant’s 22 December 2022 offer was a valid one for Part 36 purposes. The question of whether it would be unjust for Part 36 consequences to flow from the Part 36 offer was then considered.

The Defendant argued that the very serious nature of the allegations made against ENP Nice and the fact that acceptance of the Claimant’s offer would have prevented any determination of the allegations, meant that it was reasonable and proper for the Defendant to fight the case at trial rather than to accept the offer. However, Mrs Justice Hill did not accept that those points met the formidable and high threshold for “unjust” and that therefore the Part 36 costs consequences were appropriate in this instance.

Interest was also considered, and Mrs Justice Hill decided that 5% above the base rate was the appropriate rate in this matter.

How can PIC help?

The importance of making a good Part 36 offer cannot be understated given the benefits that a successful offer will attract. If you require any assistance or advice on how to formulate your Part 36 offer, or if you have any questions regarding this article, please do not hesitate to get in contact with us.

Mike Fitsell, Costs Lawyer