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Carver v BAA Plc, Court of Appeal, 22 April 2008

28 April 2008
The issues

Costs – Part 36 – exaggerated claim – exaggeration – whether successful Claimant entitled to Order for costs.

The facts

The Claimant was an air hostess. When making her way to the airport terminal building at Gatwick on 31st March 2003 she stepped into a lift which had stopped some two feet below floor level due to a mechanical defect. She fell heavily on the left side of her body and injured her left ankle. She was away from work for about 4 weeks, having suffered a ligament injury. Liability was admitted in July 2003. The Defendant indicated a willingness to consider any reasonable claim. In November 2005 a Part 36 offer was made by letter in the sum of £3,486.00 in addition to a sum of £520.00 already paid by interim payment, making the total offer £4,006.00. The Claimant did not accept the offer and her advisors decided it was necessary to instruct another expert with a specialist knowledge of ankle injuries. In March 2006 the claim was issued with a value certificate of being more than £5,000.00 but less than £15,000.00. The new report served by the Claimant’s solicitors was of the view that the Claimant had suffered disruption of the lateral ligament complex of the left ankle which had healed with significant instability and that she would need reconstruction of the lateral ligament complex to restore stability followed by extensive physiotherapy. The Defendant made a Part 36 payment of the sum of £4,000.00 into Court in addition to the £520.00 already paid by interim payment. In September 2006 a Schedule of Loss was served amounting to more than £19,000.00 and the case was reallocated to the Multi-Track. The Defendant’s expert reported and diagnosed a mild sprain to the ankle resolving in 2 to 3 years and was unable to find any instability and did not recommend surgery. The experts met and the joint statement concluded that any ligament instability at the date of examination by the Claimant’s expert had been due to the Claimant’s pregnancy and that the effect of the injury was limited to 7 weeks off work. A revised Schedule was served bringing the Schedule back to a sum in excess of £2,700.00. There followed “acrimonious telephone calls between the solicitors, each of them refusing to budge”. The Defendants complained that no proposals whatsoever had been received from the Claimant. In May the Defendants wrote ‘without prejudice save as to costs’ expressing their willingness to offer the Claimant £20,000.00 in full and final settlement. On the same day the Claimant offered £12,500.00. The solicitors with conduct spoke; the Claimant’s solicitor withdrew the Part 36 offer and indicated a willingness to accept the £20,000.00 offer but no agreement was reached and the matter went to Trial. At Trial Judgment was entered for the Claimant in the sum of £4,686.26. The Claimant had therefore beaten the last valid Part 36 offer. The difference, taking into account interest, was £51.00. The Defendant submitted that the new Rules as to Part 36 permitted greater latitude as to costs and that this was a case where conduct should be taken into account to determine the appropriate Order. The Judge took the view that the Claimant had not succeeded in obtaining a Judgment more advantageous than the Defendant’s offer. He had regard to: the lack of response from the Claimant following the Part 36 offer; “the way in which the matter has been conducted between June 2006” and the date of the Trial; and the pre-issue offer of £4,006.00. Accordingly he made no Order for costsfor the period from the initial offer to the payment in, and ordered the claimant to pay the defendants costs from the last date on which the payment in could have been accepted.

The Claimant appealed

The decision

The primary question was whether the change in the language of Part 36 resulted in a change of approach. Under the old Rule the Claimant would have recovered costs. The purpose of the amendment to the Rule was to replace the old system of payment in with offers to settle and to apply to same costs consequences irrespective of whether the offer was for the payment of a sum of money or an offer of terms and conditions on which to settle non-money claims. The previous practice for the latter – the “more advantageous” approach – became the uniform approach for both.

It was quite clear that in non-money claims where there was no yard stick of pounds and pence by which to make the comparison, all the circumstances of the case had to be taken into account. Were, in the context of money claims, the concepts of bettering the Part 36 payment and obtaining a Judgment advantageous than the Part 36 offer synonymous? In the context of the new Part 36, where money claims and non-money claims are to be treated in the same way, the Court was able to make a more wide ranging review of all the facts and circumstances of the case in deciding whether the Judgment, which was the fruit of the litigation, was worth the fight. The Court should take account of the modern approach to litigation. Both sides were encouraged to make offers to settle. Compromise was seen as an object worthy of promotion, for compromise was better than contest, both for the litigants concerned, for the Court and for the administration of justice as a whole. Litigation was time consuming and came at an emotional and financial cost. These were appropriate factors to take into account in deciding whether the battle was worth it. Money was not the sole governing criterion.

The Judge had been right in looking at the case broadly. He was entitled to take into account that the extra £51.00 gained was more than off set by the irrecoverable cost incurred by the Claimant in continuing to contest the case. He was entitled to take into account the added stress to her as she waited for the Trial and the stress of the Trial process itself. No reasonable litigant would have embarked on such a campaign for a gain of £51.00. The Judge had not misdirected himself when he found that the Claimant had failed to obtain a Judgment more advantageous than the offer.

As for the Order that the Judge had made, no Order for costs for the period after the initial offer to settle, that was very much a matter for the Judge’s discretion and the Court would be loathe to interfere unless he had erred in principle or in the exercise of that discretion. The Judge would have taken into account conduct, both before as well as during the proceedings, which he was entitled to do, whether it was reasonable for a party to pursue a particular allegation or issue, and the manner in which the party had pursued the claim and whether or not the claim had, in whole or in part, been exaggerated. The offer in November 2005 had been relevant and was reasonable and not derisory. It met with no response or counter offer. The claim was pursued and although it was not the Claimant’s fault herself it became an exaggerated claim and she had to bear ultimate responsibility for the manner in which her claim was conducted on her behalf by the different professionals advising her. Her exaggerated claim had been withdrawn late in the day but still no counter proposals were forthcoming. The events of 25th May had bordered on the farcical with offer, counter offer, withdrawal of offer and purported acceptance of offer not even on the table.

This was a small claim in which the Defendants had admitted liability within months of the accident. To have incurred £80,000.00 in costs to contest a claim under £5,000.00 filled the Court with despair. The Judge had been fully justified in marking his displeasure by making no Order for costs for the first period and to make an order for the defendats costs for the period after the part 36 payment.

Appeal dismissed.

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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.

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