A reminder of the potential pitfalls for failing to negotiate in a timely manner!
The case Moradi v Home Office is a useful reminder of the importance of putting forward reasonable settlement proposals in good time before Trial.
In this matter relating to a claim against the Home Office for unlawful detention, the parties had reached a settlement on Friday 14 October 2022, the last working day before Trial which was due to commence on Monday 17 October 2022, on terms that the Defendant pay the Claimant £15,000 in full and final settlement of her claim for damages.
The Claimant had made some effort to settle her claim at an earlier stage by proposing mediation on 27 May 2021, which ultimately proved unsuccessful. On 30 November 2021 the Defendant put forward a Part 36 Offer of £10,000, which expired on 21 December 2021. This Offer was not accepted and the Claimant did not put forward any counter-offer until some nine months later and less than one month before Trial, at which time the Claimant put forward a Part 36 Offer to settle for £40,000.00, which represented £10,000.00 more than the statement of value in the Claim Form.
As the Defendant’s final Part 36 Offer was made and accepted less than 21 days before the start of Trial, CPR 36.13(4)(a) applied and the Court was therefore required to determine the appropriate order for costs.
The Court concluded that it was appropriate to make some adjustment to the Claimant’s costs. The Claimant had provided no explanation for her failure to negotiate after the December 2021 offer for almost nine months, and the failure to negotiate had led to substantial costs being incurred by both sides.
It was noted that this was complex and important litigation where ‘proportionality’ could not be equated with the value of the claim. The Claimant had been entitled to consider she had good merits and an arguable case against the Defendant. However, when she did recommence negotiations in September 2022 it was with an inflated offer. This was neither ‘the most trivial nor most egregious case of failing to negotiate’.
The appropriate order was that the Defendant pay the Claimant’s reasonable costs up to 21 December 2021 and 66% of the Claimant’s reasonable costs thereafter.
This case provides some useful insight on the Court’s view on failures to continue negotiations, even where efforts have previously been made to engage in settlement discussions.
How can PIC help?
It is important to give consideration to costs consequences when considering any offers. This case also highlights the potential indirect costs consequences of failing to put forward timely and reasonable offers.
We are always happy to advise on any costs issue!