Widows and orphans

Sometimes a defendant makes a shrewdly judged part 36 offer, which is refused or ignored by the claimant or there is some reason for delaying acceptance beyond the 21 day period within which it may be accepted with impunity as to costs: there may be very good reason for doing so.

In the context of a personal injury case this may be because the claimant is a patient or a minor. It may be that the prognosis of the claimant’s injury is unclear or it is simply too early to say what the claim is worth.

The principles which determine the costs consequences are to be found primarily in the Civil Procedure Rules. Rule 36.13 CPR provides:

(4) Where—(a) a Part 36 offer which was made less than 21 days before the start of a trial is accepted; or

(b) a Part 36 offer which relates to the whole of the claim is accepted after expiry of the relevant period; or

(c) subject to paragraph (2), a Part 36 offer which does not relate to the whole of the claim is accepted at any time,

the liability for costs must be determined by the court unless the parties have agreed the costs.

(5) Where paragraph (4)(b) applies but the parties cannot agree the liability for costs, the court must, unless it considers it unjust to do so, order that—

(a) the claimant be awarded costs up to the date on which the relevant period expired; and

(b) the offeree do pay the offeror’s costs for the period from the date of expiry of the relevant period to the date of acceptance.

(6) 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).

The starting point then is that the court will order the accepting party to bear the costs after the 21 day period, unless it is “unjust” to do so. When considering whether that would be “unjust” the court looks at all the circumstances of the case including the matters listed in rule 36.17(5) CPR which are as follows:

(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 reason that the rule is framed in this way, is put into action a policy that part 36 exists to enable one party, in this context a defendant, to displace litigation risk onto the opposing party, so that the agony of decision with adverse consequences is placed on their shoulders. Such a policy whilst stark, is certainly not irrational, nor unfair. However in any type of claim there will be a residue of “hard cases” for which the court’s discretion can cater. In the personal injury context this will include those who lack capacity.

Perhaps the leading case on the application of these principles in the case of a claimant who lacks capacity, remains that of SG v Hewitt [2012] EWCA Civ 1053 where the Court of Appeal considered the application of the predecessor to the current rule, in the context of an injured child. Although Black LJ gave the leading judgment in allowing an appeal from a decision of Popplewell J, perhaps clearest reasoning lies in the concurring judgments of Arden LJ and Pill LJ.

Arden LJ noted:

75. In my judgment, Matthews v Metal Improvements Co. Inc. [2007] EWCA Civ 215 decides the following point. A Part 36 offer is designed to be a means whereby a party may normally throw the risk of having to pay the other side’s costs on to the other side if the other side fails to accept the offer within the 21-day period allowed, or to beat it at trial. The other side then has to satisfy the court that it is unjust for this consequence to follow and not to make some other order, that is, an order as to costs other than that he has to pay all the offeror’s costs.

76. To my mind, the power of the court in this regard is a deliberate and important safety valve. For a case to be within the safety valve, however, the judge will in general need to find that the case has features which take it out of the ordinary principle and which demonstrate that it is unjust to impose the normal shifting of the costs risk. I would therefore, as Lady Justice Black has done, interpret the existing CPR 36.10(4)(b) consistently with CPR 36.14(2) and thus as requiring the court to find that it is unjust not to order otherwise. Where those circumstances are present, however, the judge has a wide discretion as to the form of order that he substitutes.

77. 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. In my judgment, these are circumstances which make it unjust not to depart from the general risk-shifting rule in Part 36. In my judgment, this is, therefore, a case in which the court can be satisfied that it is unjust not to “order otherwise” under CPR 36.10(5).

78. I reach this conclusion without relying on the ways in which the law protects children in relation to litigation to enforce their rights. The fact that the claimant is a child is not in my judgment in general a strong enough factor of itself because the child has the protection of a litigation friend and approval by the court of any settlement. Thus the fact that the claimant is a child is not necessarily of itself sufficient to bring the case within the safety valve: see Abada v Gray & MIB Court of Appeal, 9 May 1997 unreported.

Pill LJ perhaps expressed himself in more trenchant terms:

82. In this case, the defendant negligently caused a severe head injury to a 6 year old claimant. The nature of the injury was such that it was clear from an early stage that a firm prognosis could not be given until the claimant had attained the age of 16 when the development of the frontal lobes of the brain was complete. Doubts about the prognosis continued after the Part 36 offer in the sum of £500,000 was made on 2 April 2009. Both the paediatric neurosurgeon and the educational consultant remained cautious about the long term prognosis. In such a situation, where a defendant injures an infant claimant in such a way that the damage he has caused cannot properly be assessed until the infant has matured, justice will frequently require that those advising the claimant should not be expected to settle the claim before then on an uncertain prognosis. It is not unjust for a defendant to be expected to wait.

83. The law protects those who are under age. It protects them by providing that the limitation period for a minor to bring an action for damages will not expire until three years from the date when he ceases to be a minor (section 28 Limitation Act 1980). It protects them by the provision in CPR r.21.10 that, where a claim is made by or on behalf of a child, no settlement, compromise or payment and no acceptance of money paid into court shall be valid, so far as it relates to the claim by, or on behalf of the child, without the approval of the court.

84. The court can be expected to take its duties most seriously in such circumstances. That is demonstrated by the Practice Direction to Part 21 which provides, in so far as is material:

“5.1 Where a claim by or on behalf of a child or protected party has been dealt with by agreement before the issue of proceedings and only the approval of the court to the agreement is sought, the claim must, in addition to containing the details of the claim, include the following –

(6) in a personal injury case arising from an accident –

(a) details of the circumstances of the accident,

(b) any medical reports,

(c) where appropriate, a schedule of any past and future expenses and losses claimed and any

other relevant information relating to the personal injury as set out in Practice Direction

16, . . .

5.2(1) An opinion on the merits of the settlement or compromise given by counsel or solicitor acting for the child or protected party must, except in very clear cases, be obtained.

(2) A copy of the opinion and, unless the instructions on which it was given are sufficiently set out in it, a copy of the instructions, must be supplied to the court.”

The application in this case was appropriately heard by a High Court Judge.

85. The existence of this protection for minors in my judgment points strongly towards permitting those advising a claimant, and indeed the court, to wait until a firm prognosis is available before a claim is settled. Lawyers advising an infant claimant will often not be able properly to guide the court until then and it is not unjust for a defendant to be expected to wait.

86. The judge accepted, at paragraph 20, that the claimant, which in substance meant his legal advisers, had “acted reasonably throughout”. Where the difficulty of prognosis until maturity has been clear from the start, that in my judgment, is a very strong pointer to the injustice of an infant claimant who accepts upon reaching maturity to pay costs out of his damages. It was in my judgment an error of principle by the judge to state, at paragraph 21, that “the uncertainties of prognosis are contingencies which fall within the usual litigation risks of claims of this kind.”

He continued:

91. Two other statements of Stanley Burnton J are relied on by the defendant, first the statement, at paragraph 28 that, “in principle”, “the incidence of costs in the present case is not affected by the fact that the Claimant is a patient.” The second is the statement, at paragraph 32, that the reasonableness of the claimant’s conduct “while it may be relevant to the question whether it would be unjust to make the usual costs order, cannot be identified with it.”

92. Qualified in that way, as they are, I do not disagree with those statements but would respectfully say that, in their application, both require some explanation. To ignore the lack of capacity of the claimant and to down play the reasonableness of the conduct of his legal advisers as relevant factors will in this and many other cases divert the court from the requirement to do justice on the particular facts.

93. First, in practice, the protection afforded to infants by the law is such that it is material that the claimant is under a disability. The law requires those advising a claimant to satisfy a court of the reasonableness of the offer. The advisers know that, in circumstances such as the present, they cannot expect a court to act on an uncertain prognosis (unless of course the offer substantially meets the worst scenario, which the present offer did not). That has a bearing on what justice requires when acceptance of a payment in or offer is deferred. Secondly, while the reasonableness of the conduct of the advisers is not to be “identified” with justice as between the parties, it is an important factor, in circumstances such as these, when deciding what justice requires.

94. Justice between the parties required, in this infant case, that the claimant should have his costs until a clear prognosis could be offered to the court and a settlement recommended. That situation did not arise until 2011. It is necessary to exercise discretion afresh and I have no doubt that it should be exercised in the claimant’s favour. I agree that the appeal should be allowed.

In short, brain injured children (or indeed a patient) can expect to have their cases litigated with a reduced risk as to part 36 consequences. That is inherent in the nature of their claims. Conversely, mere litigation risk in the context of a claimant with capacity will not serve to displace the policy underpinning part 36: to enable a defendant to throw litigation risk onto a claimant, with a well judged part 36 offer. An example of this latter category of case can be found in the Court of Appeal decision of Briggs v CEF Holdings [2017] EWCA Civ 2363.

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