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Marcus v Medway Primary Care Trust & Another, Court of Appeal, 29 June 2011

8 July 2011
The issues

Part 36 Payments – Proportionality – Costs

The facts

Mr Marcus had an unusual condition with his left lower leg resulting in an amputation below the knee in June 2005. This became necessary because the arteries in his left lower leg became blocked with embolisms derived from elsewhere causing painful ischaemia in the foot resulting in the death of tissue. The claim against the First Defendant was that the GP they employed diagnosed ischaemia but negligently failed to take appropriate steps to see that it was treated and that the Second Defendant, a locum GP, negligently failed to diagnose ischaemia. His claim was put at £731,255 plus General Damages. The appropriate quantum of the claim was agreed at £525,000 shortly before the liability trial.

There had been no pre-action protocol letter which was not the fault of the Claimant since much time had been spent obtaining medical notes and tracing the Second Defendant so that the limitation period was about to expire. The Defence was the first practical opportunity which the Second Defendant had to admit breach of duty. Neither Defendant had an earlier opportunity to admit breach or take steps to protect themselves from an adverse costs award. The Second Defendant denied that the breach of duty had caused the Claimant’s loss. The First Defendant’s Defence denied breach of duty. In the end, and on the basis of the expert evidence, to the effect that the amputation was inevitable regardless of the breach of duty, the Judge awarded the Claimant £2,000 in damages. The trial Judge awarded the Claimant 50% of the costs of the entire action. The Defendants appealed.

The decision

Neither Defendant had made a Part 36 offer. Had they done so for £2,000 at the first reasonable opportunity, i.e. when the Claim Form had been served, and the offer had been accepted, it would have entitled the Claimant to claim some £67,000 worth of costs plus a CFA uplift and ATE insurance premium which would have been likely to be in excess of £100,000 – palpably disproportionate. In these circumstances it would be quixotic if their failure to make such an offer were to have any real bearing on the eventual award.

In coming to his decision, the Judge had concluded that the Claimant was the successful party. He was wrong in principle. The award of £2,000 was insignificant in the context of the claim and the action as a whole. The action was about the cause of the need for the Claimant to have a leg amputation. The causation issue was advanced in the original Defences and it carried the day. The successful party were the Defendants and the starting point should therefore be a costs order in their favour. The question is whether it should be reduced and, if so, by what proportion. There should be a reduction for the fact that the Claimant succeeded to a small extent; that the First Defendant did not concede liability until a very late stage; and that one point run by the Defendants was not withdrawn until just before trial. There should not be a reduction because there was no Part 36 letter but the Court would take into account the fact that the Defendants might have written a Calderbank letter offering £3,000 plus costs proportionate to that recovery. It remained the fact that the real claim had failed and no rational person would have issued the proceedings which were issued to recover only £2,000. The Defendants should recover 75% of their costs from the Claimant. Appeal allowed.

Comments

Lord Justice Jackson notably delivered a strong dissenting judgment relying on the fact that the Defendants could and should have protected their position by making a Part 36 offer of £2,000-£3,000. He did not agree with the Chancellor who gave the main judgment that if that had been made and accepted that costs would have been disproportionate. The result would have been an assessment of costs on the standard basis which would have resulted in a sum which was no more than reasonable and proportionate. If the Defendants had offered £3,000 at the beginning and the offer had been refused, then the Defendants would have been entitled to recover all of their costs at the end of the litigation but that had not happened. Although the Chancellor had accepted that the Defendants could have made a Calderbank offer, in the view of Lord Justice Jackson such an offer would have given the Defendants no effective protection if they had offered a modest sum, say £5,000, in respect of costs. Unless the Defendants also offered to pay the Claimant’s costs to-date assessed on the standard basis, such an offer would, in his view, have been of no benefit for all practical purposes. He lamented the “morass of case law” which had developed concerning the effects of Part 36 offers which had revealed “an unwelcome and unnecessary degree of uncertainty. This is an area of law where all parties need to know where they stand and understand the cost consequences of their actions”. In his view the starting point always ought to be that where a Claimant had pursued a claim in a reasonable manner, recovered damages other than nominal damages and there was no or no sufficient Part 36 offers, then the starting point should be that the Claimant should recover his costs subject to whether any adjustment ought to be made to reflect the issues on which one or other of the parties had won within the litigation.

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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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