Pick and mix your Part 36?

JLE (A Child by her Mother and Litigation Friend, ELH) and Warrington & Halton Hospitals NHS Trust Foundation Trust [24.06.19]

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2019-07-10

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Locations

This case review was authored by Matthew Beech, Costs Draftsperson, Sheffield.

On a detailed assessment of costs, the High Court confirmed that whilst the courts have the power to award some but not all punitive cost measures in relation to Part 36 cost offers, this will be in the rarest of cases.

Background

This was a clinical negligence case where all issues other than costs had been resolved. The issue in this case was whether, pursuant to the rules in Part 36, and in the absence of unjustness, the available penalties were to be applied in full, or whether they were severable.

The claimant’s cost bill totalled £615,751.51 and the claimant made a Part 36 cost offer of £425,000, which was not accepted. The court assessed the costs at £431,813.05 and as such the claimant had beaten their own offer.

Pursuant to the rules, where a claimant obtains a judgment, which is at least as advantageous as their offer, the court must, unless it considers it unjust to do so, order that the claimant is entitled to:

  • Costs on the indemnity basis
  • Interest on those costs at a rate of not more than 10% above base rate
  • An additional uplift amount calculated based on 10% of the first £500,000.00 of the award and 5% of any award over £500,000.00 (capped at £75,000.00).

The defendant contended that it was unjust to award the additional uplift of 10% and that this punitive measure should be considered separately to the other penalties.

At first instance, the court decided that the punitive measures were severable and, whilst allowing indemnity costs and interest, elected not to award the claimant the additional 10% uplift. The decision was based on the very small margin by which the offer was beaten relative to the much greater size of the bill and that the large size of the 10% uplift relative to the margin by which the offer was beaten. As such, the court believed the award disproportionate.

The claimant appealed.

Decision

The High Court agreed that the courts do have jurisdiction to consider it unjust to award some but not all of the punitive measures relating to Part 36 offers, although they suggested that it would be an unusual case where this would happen.

As such, they believed the decision in this case to fail to allow the 10% uplift was incorrect. The court’s decision was because there was nothing in this case that was so unusual as to meet the high hurdle of proving injustice in allowing the 10% uplift and to allow such reasoning would give rise to further litigation.

Comment

Where the claimant beats their own Part 36 offer, the punitive measures available are severable from one another. However, such measures are likely to be recoverable in full, or not at all, save for ‘unusual’ circumstances, where sufficient good reason can be provided. As ever, consideration of your opponent’s Part 36 offers remains paramount - only in rare and unusual circumstances are paying parties likely to be able to show good reason so as to meet the test of unjustness.

This case review was authored by Matthew Beech, Costs Draftsperson, Sheffield.