0370 270 6000

already registered?

Please sign in with your existing account details.

need to register?

Register to access exclusive content, sign up to receive our updates and personalise your experience on brownejacobson.com.

Privacy statement - Terms and conditions

Straker v Tudor Rose, Court of Appeal, 25 April 2007

24 May 2007
The issues

Costs – Part 36 payments – pre-action offers – whether failure to engage in negotiations should be reflected in a Costs Order.

The facts

The Claimant brought an action against Tudor Rose for Professional Negligence. The Defendant, prior to proceedings being issued, had made a Part 36 offer backed up after proceedings were commenced by a payment into Court under Part 36 of £9,000.00. After a 4 day Trial the Claimant was awarded £11,688.25 plus interest of £2,021.76. The Judge awarded the Claimant his costs up until a date some months prior to the commencement of the proceedings and no costs thereafter. The effect of the Judge’s Order was that the Claimant would receive none of the costs of the action and only limited pre-action costs.

The Claimant appealed.

The decision

Part 44.3 provided that the general Rule was that the unsuccessful party would be ordered to pay the costs of the successful party but that the Court might make a different Order. In deciding whether to make an Order about costs the Court had to have regard to conduct of the parties, whether a party succeeded on part of his case, and any payment into Court or admissible offer to settle.

Conduct by Part 44.3(5) included conduct before as well as during the proceedings and, in particular, the extent to which a party had followed a pre-action protocol; whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; the manner in which a party pursued or defended his case or a particular allegation or issue; and whether a Claimant who had succeeded in his claim, in whole or in part, had exaggerated his claim.

Whether or not a payment into Court or a Part 36 offer had been beaten formed an important starting point for considering at least who the successful party was, and to whom the general Rule should apply on the face of it. As to the proper approach where a Part 36 offer or payment had been made, Thomas J in Quorum AS v Schramm [November 21ST 2001 unreported] quoted the Judgment of Chadwick LJ in Johnsey Estates Ltd v Secretary of State for the Environment [2001] EWCA CIV 535 to the effect that the Rules provided a mechanism by which a party who thought that his opponent was not open to reason could protect himself from costs, ie by payment or an offer under CPR Part 36. The advantage of the mechanisms were that they removed speculation and avoided the necessity of a Court at the end of each Trial being led into potentially lengthy enquiries on incomplete material into “what would have happened if÷?”. Thomas J himself added “A payment under Part 36 or a Part 36 offer should be regarded as the best to which a party is prepared to go; if the Defendant goes no further and the Claimant recovers more, that should in the usual case be an end of it.”

Painting v University of Oxford was a case illustrating the fact that beating a payment in would not always have the consequence that the successful party would get an Order for Costs. Painting however was a case where the circumstances were extreme with a vastly exaggerated case supported by untruthful evidence from the Claimant.

Generally, the Court did not gain much assistance from other Court of Appeal decisions. In the area of costs, cases were different and fact specific and it was to the rules that the Court should go and by reference to the rules that the Court should test whether the Judge had gone wrong in any particular case. The questions in this case were whether the Judge had accurately analysed and kept in mind who was the successful party, whether he properly directed himself and / or whether his decision to dis-apply the general rule to the extent that he did was wrong and “exceeded the generous ambit within which reasonable disagreement is possible”. (Lord Fraser in G vG [1985] 1WLR647 at 652).

The Judge had ultimately found that the failure by the Claimant to engage in negotiations was a failure to comply with the pre-action protocol. He found that the Defendant had been so willing. The Claimant had not. Therefore the pre-action protocol had not been complied with. He also relied on the fact that the Claimant had pursued one issue in particular and lost it. (The “Two Property Issue”.) But at this stage he had failed to take into account the extent to which that factor had already, in his reasoning, reduced the Claimant’s entitlement to costs.

It did not come well from a Defendant who had paid money into Court to argue that if a Claimant had been more reasonable he would have offered more. An investigation by the Court as to how negotiations would have gone is precisely the form of investigation which should be avoided. In a case about money a Defendant had the remedy in his own hands where a Claimant was intransigent and could pay into Court the maximum sum he was prepared to pay.

The question was therefore, the two property issue, having taken into account the failure of the Claimant in respect of one issue and in respect of which the Judge had discounted the Claimant’s costs by one quarter or one third, a further reduction should have been made for the fact that the Claimant did not engage in accordance with the pre-action protocol.

The Court had to mark its disapproval of failures to comply. The Rule did not refer to unreasonable conduct – mere failure was enough.

However, to reduce the recovery of costs to nil for failure to comply with the protocol was wrong and so seriously wrong as to be outside a generous ambit within which reasonable disagreement was possible. The Court therefore had to exercise its discretion afresh. The Claimant should have 60% of his costs from the date of the Part 36 offer and all his costs as ordered by the Judge up until that date.

Comments

On the face of it a defeat for the Defendant. It is however an interesting instance of pre-action protocol non-compliance being taken into account – even allowing for the Court of Appeal’s warnings about relying on precedent in cases of costs. The additional reduction or penalty, assuming a reduction of between 25% to 33% in respect of the Claimant’s failure on the “two property issue” appears to be in the region of 15% to 7%.

focus on...

Legal updates

Contingent loss in negligence claims

Contingent loss is relevant to limitation; specifically, the date at which a claimant’s cause of action accrues for the purposes of a claim in the tort of negligence (as many claims against professional advisers are framed).

View

Legal updates

Legal and regulatory monthly update - September 2019

The latest update covering delegated authority, insurance product development, the senior insurance managers regime, data protection, operational control frameworks, Lloyds market, and horizon scanning.

View

Legal updates

Kuoni referred to the CJEU by Supreme Court for clarification - possible impact on breach of contract, vicarious liability and assumption of responsibility claims for sexual abuse and assault

We were hoping to be able to give you some interesting insights following the judgment of X v Kuoni Travel Ltd but that will have to wait for another day.

View

Legal updates

The disappearance of LIBOR

Companies should undertake a comprehensive review and audit to identify those products and legacy contracts that are LIBOR-linked and carry out an in-depth risk assessment of discontinuation. Where possible, companies should look at appointing an individual to oversee the programme.

View

The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

mailing list sign up



Select which mailings you would like to receive from us.

Sign up