The Dekagram 12th December 2022

Articles, News

12/12/2022

It’s almost as if the team has the ear of the High Court; only the other day we were wondering amongst ourselves why people sometimes make Part 36 offers within 21 days of trial, and what the point of it might be, and no sooner had we done so than His Honour Judge Tindal, sitting as a High Court Judge, dealt with just such a conundrum. Meanwhile, just as we were reflecting on our burgeoning Gibraltarian and Channel Islands practice, the Court of Appeal was getting to grips with the Brussels Convention – and there we were, thinking that the recast Brussels Regulation was now old hat.

Consumer Contracts and Jurisdiction: Must the Contract be Performed outside the Jurisdiction?

There are practical reasons why a victim of an accident, or of illness sustained abroad, who lives in England and Wales, would wish to avoid bringing proceedings in a court outside the jurisdiction. In relation to most claims arising out of package tours it will be possible to bring a claim against a tour operator or other person domiciled in England and Wales under Regulation 15 of the Package Travel and Linked Arrangements Regulations 2018. Accordingly, the question of jurisdiction is generally unimportant in package tour claims. 

What though of the position where there is no ‘package’, and the consumer wishes to bring proceedings for breach of contract against a European hotel?

Prior to Brexit the starting point was section 1 Article 2 of Regulation (EC) No.1215/2012 (the recast Brussels Regulation), which provides that subject to the provisions of the Convention persons domiciled in a contracting state shall be sued in the Courts of that state.  The force of the section was tempered by Article 17 which, in general terms, allows for proceedings to brought in the state of a consumer’s domicile if a contract has been concluded within that state.  The purpose of Article 17 is to ensure that economically weaker and (legally) less experienced parties are not discouraged from suing by being compelled to bring proceedings in a foreign jurisdiction in circumstances where a trader has marketed their goods or services in the country where the consumer resides. 

Post Brexit these provisions have been preserved in the form of s.15B of the Civil Jurisdiction and Judgments Act 1982, about which we have previously written, most recently here: When cross border practitioners can get around Brexit (and when they can’t): Cooper v Freedom Travel Group and Bank of Scotland (Halifax) [2022] EWCA Civ 1557 – Deka Chambers – Barristers’ Chambers. Because s.15B is founded on the recast Brussels Regulation, itself founded on Regulation (EC) No.44/2001, caselaw in relation to those two instruments remains of relevance to the interpretation of the Act (and cf s.15E of the Act in this respect).

The recent case of Dooley & Others v Castle Trust & Management Services Ltd [2022] EWCA Civ 1569 is a rare example of a decision on the original Brussels Convention 1968, which was largely replaced by the Regulations and then the recast Regulations; the Convention still applies in relation to Gibraltarian entities. The Court of Appeal considered Article 13 of the Convention, the precursor to Article 17 of the recast Regulation, and reaffirmed its broad application by overturning an earlier decision that any case falling within Article 13 must first satisfy Article 5 (which allows for an alternative jurisdiction only if the contract was performed outside of the domicile of a contracting party). 

The Court of Appeal confirmed that Article 13 was an entirely separate and self-contained section of the Convention and, in the instant case, would allow the Appellants to pursue a claim for breach of contract in the domestic courts against a professional trustee company registered and domiciled in Gibraltar, whether or not the contract was to be performed outside the domicile of the contracting party.

Article 13 and its successors (including the Act) therefore remains a useful tool for claimants wishing to bring proceedings in their own jurisdiction.  Remember, however, that the default position remains that a defendant is entitled to be sued in the state of their domicile, and the burden of proof in establishing an alternative jurisdiction falls on the consumer – an issue which may prove controversial in itself and involve considerable time and expense.

About the Author

Called in 1991, Jeremy Crowther is listed in the Legal 500 for clinical negligence and personal injury. He co-authors Deka Chambers’ Practical Guide to clinical negligence claims andhe regularly advises in case of the highest value, involving catastrophic (and subtle) brain injury, fatal accidents, above knee amputations, chronic pain and nervous shock.

Late Part 36 Offers: What’s the Point?

“Of course, all Courts welcome all settlements. But some settlements are more welcome than others. This particular settlement, at the last possible moment, effectively wasted two days of valuable Court time which could not be used for other work. It also did not even resolve proceedings as it left costs wide open – and the parties were miles apart in written submissions…”

So said His Honour Judge Tindal by way of understandably exasperated introduction to his judgment on costs in Moradi v The Home Office [2022] EWHC 3125 (KB) last week. The parties had settled the claim for £15,000 just before 5pm on Friday 14th October, the working day before a two day trial in the High Court was listed to commence.

The Claimant claimed a sum limited to £30,000 in respect of an alleged unlawful detention. The complexity of her claim was reflected in the fact that her costs budget was approved in a sum of just under £95,000 and the Defendant’s budget was approved at very slightly over £70,500. The claim form had been issued on 8th October 2019 and the Defendant had denied the claim in its entirety. On 27th May 2021 the Claimant proposed mediation, the Defendant agreed to it, but its co-Defendant, the Ministry of Justice (which had made a partial admission in its Defence) refused to mediate. In the words of HHJ Tindal:

“No doubt it did not help that even though the MOJ admitted liability, it refused to mediate. Had the MOJ still been a party before me, it would have questions to answer about that.”

In any event, mediation was unsuccessful, and on 30th November 2021 the Defendant subsequently made a Part 36 offer to settle the claim in the sum of £10,000. This was not accepted, and the Claimant did not make a counter-offer until 23rd September 2022 –

“…nine months later and less than a month before trial on 17th October. The Claimant’s costs submissions do not explain why, having initially proposed settlement, she then did not pursue it for nine months. That fact is central to the costs issue in this case.”

On the same date she settled her claim against the MoJ for £1,000 damages and £1,250 in costs. On 30th September 2022 she offered to settle her claim against the Home Office in the sum of £40,000, which was more than the statement of value on the fact of the claim form. The Defendant rejected the offer. Thereafter,

“On 5th October, in a without prejudice discussion, the Claimant’s solicitor asked the Defendant’s solicitor whether they would be prepared to settle between £10,000 and £20,000 and the latter suggested the Claimant make an offer. However, the Claimant did not and so the Defendant prepared for trial. Had the matter settled then, not only would the Defendant have been spared that expense, there would have been sufficient time for the Court to place other work instead of the trial.”

On Thursday 13th October the Defendant made a Part 36 offer in the sum of £15,000, and the following day the Claimant offered to take £22,000, and then, when this offer was rejected, £18,000. She eventually took the £15,000 offer just after 5pm on Friday 14th October, with the trial due to start the following Monday.

Let us pause to take a moment to consider the feelings of trial counsel during this period of uncertainty. Presumably whilst these negotiations were ongoing they were preparing for a trial which they must have known would probably never take place.

In any event, the matter settled, but the parties were still at loggerheads as regards costs.

The Claimant contended that she had recovered more in damages than the Defendant had been prepared to offer, therefore she should recover her costs on a standard basis in the usual way.

The Defendant, on the other hand, submitted that the Claimant was guilty of unreasonable litigation conduct in failing to make any meaningful settlement attempt for nine months from December 2021 to September 2022. Had the Claimant behaved reasonably by negotiating in late 2021, the claim is likely to have settled, and if it had, costs would have been saved on both sides totalling over £70,000, set against an additional £5,000 in damages above the Defendant’s £10,000 offer back in November 2021. Indeed, the Defendant submitted, even in September-October 2022 the Claimant behaved unreasonably prior to accepting the £15,000 offer, initially by making an unreasonable offer to settle for more than the pleaded value of the claim, and then by settling the claim against the MoJ for a very small amount without really endeavouring to recover her costs against them.

CPR Part 36.13 states:

“(1) Subject to paragraphs (2) and (4)….where a Part 36 offer is accepted within the relevant period the claimant will be entitled to the costs of the proceedings… up to the date on which notice of acceptance was served on the offeror.

(3) Except where recoverable costs are fixed by these Rules, costs under paras (1) and (2) are…assessed on the standard basis if the amount of costs is not agreed.

(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)…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).”

Clearly, here the parties fell within Part 36.13(4)(a), meaning that the court had to determine the costs consequences of the late settlement. No further guidance is given in the Rules and, as the Judge said, the authorities are of little assistance. However, he did consider that his consideration of costs must be guided by the matters set out in CPR Part 44.2:

(2) If the court decides to make an order 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….

(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including

(a) the conduct of all the parties;

(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful, and

(c) any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.

(5) The conduct of the parties includes:

(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed…any relevant pre-action protocol;

(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(c) the manner in which a party has pursued or defended its case or a particular allegation or issue, and

(d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.

(6) The orders which the court may make under this rule include an order that a party must pay

(a) a proportion of another party’s costs;

(b) a stated amount in respect of another party’s costs;

(c) costs from or until a certain date only;

(d) costs incurred before proceedings have begun;

(e) costs relating to particular steps taken in the proceedings;

(f) costs relating only to a distinct part of the proceedings, and

(g) interest on costs from or until a certain date, including a date before judgment….”

Failure to negotiate is plainly ‘conduct’ for these purposes.

Bearing these factors in mind, the judge concluded:

Ultimately, as the Claimant’s submissions argue…the Claimant recovered more than the Defendant was previously prepared to pay and so was the successful party under CPR 44.2 even if she did not recover what she had been previously prepared to accept or the full value of her claim. The Claimant had to bring a claim to recover damages which she has done in the settlement. In an unlawful detention where General and Aggravated Damages are assessed broadly, it is not surprising the Claimant was content to settle for £15,000 bearing liability was disputed and there was some litigation risk. Nor was any addition costs caused by her pleading her claim at £30,000 rather than £15,000…Moreover, as a claim in tort arising from personal liberty, there is also an analogy with personal injury claims where…partial recovery is not normally itself a reason to reduce a successful claimant’s costs…Up to December 2021, there is no proper basis to deprive her of any of her costs against the Defendant (the extent to which those costs were incurred on suing the Defendant rather than the MOJ is for detailed assessment and I cannot determine that now).

However, between 21st December 2021 and 14th October 2022 the Claimant had failed to engage in meaningful attempts at settlement and then offered to settle at more than the pleaded value of the claim. This failure was ‘moderately unreasonable’ and should sound in costs. However,

whilst the Claimant did unreasonably fail to negotiate for nine months, it is not as if the Defendant continued to raise its offer. When it did, it was accepted. That is not a criticism of the Defendant, but it contextualises its criticism of the Claimant. Moreover, by the time the Claimant accepted, she had also settled the MOJ claim and had plainly revised her expectations in the run-up to trial as so many litigants do. So, in my view it would be unreasonable to disallow all the Claimant’s costs in 2022.

The judge concluded that in the circumstances the Defendant should pay the Claimant’s costs in their entirety up until 21st December 2021 and 66% of her costs thereafter. This, he thought, best reflected the parties’ conduct in relation to settlement:

Of course mediation requires co-operation from both sides as the Claimant says, but the fact remains that the Defendant made an offer of £10,000 and the Claimant then did not make an offer for several months, settled for a low value with the MoJ (who had refused to mediate), then made an offer of £40,000 to the Defendant: four times its offer and nearly three times what the Claimant eventually accepted. Any development in the Defendant’s argument was one of the risks of litigation: if that changed the landscape of the case, the Claimant could have argued that the Defendant should not be permitted to take the point. She did not and settled for £15,000. Overall, that reveals the Claimant’s settlement strategy with the Defendant until then had been completely unrealistic and I find conduct which justifies a significant not token reduction.

This case is a reminder to all practitioners of the importance of engaging in meaningful settlement discussions throughout the litigation process; failure to do so is likely to be scrutinised by judges and can lead to adverse costs consequences, even where a settlement is eventually reached. It is also a reminder that although trial judges are usually delighted when parties settle, their joy is often tempered with exasperation where this occurs at the door of the court, when it could have been done some months previously, freeing up desperately needed judicial time. It is also extremely annoying for counsel, of course – but you know us, we never think of ourselves, only of our clients.

About the Author

Called to the Bar in 1997, Sarah Prager has been listed in the legal directories as a Band 1 practitioner in travel law for many years. Together with her colleagues at Deka Chambers, Matthew Chapman QC and Jack Harding, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. Last year she was named Best Lawyers’ Travel Lawyer of the Year 2020/2021 and the Lawyer Monthly Women in Law Awards 2020: Personal Injury, and she was a member of the Consultative Group of Experts to the UNWTO Committee for the Development of an International Code for the Protection of Tourists, and is a member of the Admiralty Court Users’ Committee. She undertakes purely domestic high value personal injury work as well as cross border work and has a wealth of experience of difficult and sensitive cases.

Featured Counsel

Sarah Prager KC

Call 1997 | Silk 2023

Jeremy Crowther

Call 1991

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