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SG v Hewitt, Court of Appeal, 2 August 2012

16 August 2012
The issues

Part 36 – child – minor – person under a disability – costs – whether a person under a disability should bear costs where they had failed to beat defendant’s Part 36 offer.

The facts

The power of the court in this regard was a deliberate and important safety valve

The claimant sustained scarring and a severe head injury with damage to the frontal lobes of the brain. Medical evidence was obtained but the experts felt unable to predict the consequences of the injury until the claimant matured. No proceedings were commenced. Limitation was due to expire in January 2018. In April 2009 the defendant made a pre-action CPR Part 36 offer of £500,000.00. That offer was never withdrawn. It was accepted by the claimant in 2011. Part 8 proceedings were issued in August 2011 seeking approval of the settlement. In December the High Court approved the settlement and was asked to resolve a dispute between the parties as to costs. It was not disputed that the costs of the Part 8 claim for approval should be borne by the defendant. It was also agreed that the defendant would pay the claimant’s costs of the main claim up and until twenty one days after the Part 36 offer was made. Each party argued however that the costs from that date except those of the Part 8 proceedings should be borne by the other party. The defendant relied on the normal costs rule in CPR Rule 36.10(5). The claimant said that there were particular circumstances in this case which should make the court order otherwise. The defendant relied upon the decision of the Court of Appeal in Matthews v Metal Improvements Company Incorporated whereby a party under a disability failed to persuade the Court of Appeal that notwithstanding the normal consequences of Part 36 they should escape them on account of the disability.

The decision

In Matthews the Court of Appeal had addressed three issues which were of importance in this case:

  1. The implications of the claimant being a patient within the meaning of what was then CPR Rule 21
    The Court of Appeal in Matthews did not dismiss the status of the claimant and the necessity of seeking court approval as being irrelevant in all cases. The mere fact that the proceedings were brought on behalf of a patient would not of itself always be sufficient to displace the costs protection normally available to a defendant from a Part 36 offer. That was not the same as saying the factor was irrelevant.
  2. The relevance of the reasonableness of the claimant’s conduct in relation to the Part 36 offer
    Reasonableness was relevant but not necessarily determinative. Everything would depend on the facts of the particular case.
  3. The problem of uncertainties in the value of the claim
    In Matthews, it was not just the contingencies of litigation that had led to the plaintiff being in the position he was in, but also the way in which his solicitors had responded to them. Costs decisions were fact sensitive and it was difficult to determine one case by comparing it with another. It was important that courts should not be condemned to intensive investigations in every Part 36 case as to how the parties should have approached an offer. Equally it was important to discourage a time consuming practice of citing authorities on costs for the purpose of persuading courts to follow decisions on the facts as if they were precedents.

Matthews v Metal Improvement Company Incorporated decided that a Part 36 offer was designed to be a means whereby a party might normally throw the risks of having to pay costs on to the other side if the other side failed to accept the offer within a twenty one day period or to beat at trial. They then had to satisfy the court that it was unjust for this consequence to follow and not to make some other order.

The power of the court in this regard was a deliberate and important safety valve. For a case to be within the safety valve, the judge would in general need to find that the case had features which took it out of the ordinary principle and which demonstrated that it was unjust to impose the normal shifting of the costs risk. The court was required to find that it was unjust not to order otherwise. When those circumstances were present the judge had a wide discretion as to the form of order that was to be substituted. The mere fact that approval was required was not definitive in the claimant’s favour but the implications of it needed to be put into the balance. Other relevant matters were that the offer had been made before the claimant had commenced proceedings, at a time when the prognosis was uncertain. Two stage process of the development of the consequences of the particular injury that the claimant suffered from and the resulting lack of a safe prognosis did not seem to fit easily under the rubric of ‘an ordinary contingency of litigation’. The offer had not been rejected and the defendant knew that further expert reports were being obtained that were designed not to improve or expand the claimant’s case but merely to ascertain whether the deterioration that could occur with the puberty/adolescence was in fact occurring or likely to occur. These were circumstances which made it unjust not to depart from the general risk shifting rule in Part 36. Appeal allowed.

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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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