Natasha Partos writes on the cost consequences of accepting late Part 36 offers

On 10th August 2017, Lawtel reported Lord Justice Gross and Mr Justice Asplin’s decision in the appeal of Briggs v CEF Holding CA (Civ Div).

In brief, the background to the case involved a claim for personal injury arising out of a work place accident in which the Claimant injured his foot. The Claimant’s initial medical report indicated a poor prognosis. In September 2012 the Defendant made a valid part 36 offer to settle the whole claim for £50,000. In accordance with CPR. 36.5 the offer expired 21 days later namely 9^th October 2012. The Claimant did not respond to the offer.

In May 2013 proceedings stayed and the Claimant underwent surgery to the foot. Thereafter in April 2014, the Claimant raised his claim for damages to £248,000 and the stay was lifted. A further single expert was instructed by the Claimant who again deemed the Claimant had a poor prognosis. However, in September 2014 a joint expert determined that the Claimant would, in fact, be able to return to work to retirement age.

In 2015 the matter was listed for trial, the Claimant vacated the trial date in February 2015 and on 2^nd June 2015 accepted the Defendant’s offer of £50,000 from September 2012.

At first instance, a District Judge accepted the Claimant’s argument that the usual cost consequences of Part 36 ought not to apply and that the Claimant ought to be able to recover its costs up to 30^th October 2014, on the basis that his prognosis had been uncertain until that point.

The Defendant appealed.

The court upheld the appeal. It was found that the District Judge had misapplied Part 36 and that his decision had been wrong in principle. The Court reflected on the general principles behind Part 36 which entitled Defendants to shift the risk of litigation onto Claimant’s by making early, time restricted offers.

The Court accepted that if a Claimant is able to show that an injustice would be caused over and above the usual cost consequences of Part 36, then this may create circumstances to depart from the general rules. However, in this case, simple uncertainty as to the Claimant’s likely outcome was not sufficient to show such an injustice.

Furthermore, in this specific case, the court acknowledged that the Claimant had not accepted the Defendants Part 36 offer on the basis of the joint report in September 2014 but had waited until some months later to accept it. Thus uncertainty of his prognosis could not have been the catalyst for accepting the Part 36 offer so late. The court held that had the Claimant accepted the part 36 offer promptly after the joint expert report it may have formed a different view.

For Claimant practitioners, the difficulties in advising clients with respect to Part 36 offers at the early stages of litigation are not novel. However, this case does highlight some of the potential arguments that a claimant may raise in support of a departure of the normal cost consequences of Part 36 if it accepts an offer well beyond the 21 day period. In such circumstances, the Claimant must act promptly and show that following the normal cost consequences of Part 36 would cause some injustice over and above normal litigation risks.