A Right Carve Up!
Discussions around Part 36 often generate more heat than light, with interpretations of, and the discretion afforded by, this self-contained code generating sufficient inconsistency for some commentators to seemingly build careers talking about little more than this single issue.
Part 36 of course exists to encourage settlement and keep cases from running to trial, preventing scarce Court Service resources from being taken up by matters that the parties ought to be able to resolve through compromise, although in many cases its teeth are about to be drawn by the extension of fixed costs. Given that, two recent decisions around Part 36 offers could perhaps appear a little out of step with the apparent purpose of the Rule.
In Gohil -v- Advantage Insurance, a Claimant who had been successful in the underlying personal injury claim sought to resolve a claim for fixed costs. Fixed costs are supposed to bring an element of certainty and disputes were anticipated to be quite rare. As so often happens, the fixed costs were not simply paid. The Claimant made a Part 36 offer to accept very slightly less than what they believed was their entitlement (7 pence less, having rounded the sum down to the nearest pound). This result was bettered on assessment, the full amount being awarded, nevertheless, the Court refused to order payment of the additional sums under CPR 36.17.
Very shortly after the decision in Gohil began to be reported on blog posts (such as Gordon Exall’s excellent Civil Litigation Brief), the decision in Yieldpoint Stable Value Fund, LP -v- Kimura Commodity Trade Finance Fund Ltd [2023] EWHC 1512 (Comm) was handed down. In Yieldpoint, the Claimant had made a Part 36 offer to accept 96% of the value of the claim (arguably 99% at the point the offer was made, given that the Defendant was later successful in defeating a claim for compound interest). The Claimant succeeded at trial, but the Court found that so high an offer was not a genuine attempt to settle the claim and therefore was not prepared to allow payment of the additional sums under CPR 36.17.
Part 36 is, to quote what has become a trite phrase, a self-contained code. That code does not allow for a near miss. A Claimant either obtains a result that is “at least as advantageous” as their Part 36 offer or they do not. The emphasis of the rule was changed to ensure that decisions such as Carver -v- BAA Plc [2008] EWCA Civ 412 were no longer good law. The rule contains an element of discretion which allowed the Court in Gohil and Yieldpoint to reach the conclusions they did, but it seems to do so at the risk of resurrecting Carver by the back door, rather oddly in cases where the Claimants clearly had very strong cases.
Some cases are stronger than others and arguably merit a stronger line from the party bringing the claim. Some cases will be “all or nothing” and therefore the room for compromise is limited – as a matter of deliberate policy in cases dealing with fixed costs. Bizarrely, it seems that the stronger your case, the less chance of a persistent opponent being penalised under Part 36 for defending a claim to trial. With Court resources scare and seemingly unlikely to become more abundant anytime soon, it seems an odd time to bring the near-miss back into play.
How can PIC help?
We suspect that more cases, particularly costs cases, given the tactical approaches we have experienced in some provisional assessment and fixed costs cases, will fail to settle, with paying parties emboldened even further by cases like the above. These costs cases are where PIC can help, and our business development team would be happy to take your call. Adrian can be contacted on 07510 931471 or by email at adrian.hawley@pic.legal
The information provided in this article does not and is not intended to constitute legal advice and is provided for general information purposes only. It should not be relied upon or in any way treated as a substitute for specific advice relevant to the precise circumstances of a particular matter.
Andy Moroz, Legal Costs Service Manager
27.07.2023