Delay in Acceptance of a valid Part 36 Offer from the Defendant has Costs Consequences!

Reuben Glynn – Managing Director

If you are a civil litigator specialising in Multi Track personal Injury or Clinical Negligence you need to read Campbell v Ministry of Defence [2019] EWHC2121 (QB)

The High Court has considered the appropriate Costs Order in a claim arising from psychiatric injury, which settled by way of the Claimant’s late acceptance of the Defendant’s Part 36 offer. The offer had been made by the Defendant on 5 January 2018, and finally accepted by the Claimant over a year later on 22 March 2019.

The Case

The Claimant was a member of the armed forces. He had recovered damages for psychiatric injury as a result of his involvement in the “Voyager Incident” in 2014 when a Voyager aircraft flying from RAF Brize Norton to Afghanistan plummeted in the air as a result of pilot negligence.

The Defendant admitted liability for the incident in January 2016 before proceedings were issued. A claim was then issued on 20 January 2016 seeking damages for psychiatric injury, including a phobia of flying, and consequential loss. In its defence, the Defendant maintained its admission of liability for the incident and for the Claimant’s injuries, subject to proof of their nature, extent, and causation.

The Defendant made a Part 36 offer of £100,000 on 5 January 2018. The 21-day period for acceptance was extended by agreement to the 19 February 2018 but a further, seven-day, extension for acceptance of the offer was refused.

The Part 36 offer was finally accepted on 22 March 2019, over thirteen months after the time-limit for acceptance had expired.

The Issue

The issue the Court had to decide was, whether under CPR 36.13(5) the Court should award the Claimant his costs to 19 February 2018 only, with him bearing the costs thereafter, or whether, the Court should make some other order on the grounds that the usual rule would be unjust to the Claimant.

In considering whether the normal rule would produce an unjust outcome, the Court is required to take into account all of the circumstances of the case (CPR 36.13(6)) including the matters identified in CPR 36.17(5). Those are:

(a) the terms of the Part 36 offer;

(b) the stage in the proceedings when any Part 36 offer was made, including, in particular, how long before trial started the offer was made;

(c) the information available to the parties at the time when the Part 36 offer was made;

(d) the conduct of the parties in the provision of information for the purposes of enabling the offer to be made or evaluated; and

(e) whether the offer was a genuine attempt to settle the proceedings.

Lambert J decided:

“In my judgment the usual Costs Order should be made in this case: the Claimant should pay the Defendant’s costs from the last date of expiry of the Part 36 offer.”

“I accept that at the time when the offer expired, the evidence concerning the Claimant’s prospects of promotion was incomplete. However, in personal injury claims as in other litigation, offers to settle are often made at an early stage when the evidence is incomplete (either on liability or quantum or both). In these circumstances, it is the job of the Claimant’s advisors to weigh up the merits of the Part 36 offer and give the Claimant appropriate advice. I accept that the exercise involves judgement and experience, but, here, the Claimant had the benefit of specialist personal injury lawyers with a sub-specialisation in military claims. As such they were in as good a position as any advisor to evaluate the Claimant’s career prospects and to give him advice on the offer.”

PIC’s View

As Lambert J pointed out in the judgement:

“If, having considered matters, the Claimant’s advisors had concluded that his career prospects were so uncertain as to make any evaluation wholly speculative, then the appropriate course would have been to have made an application to the Court for the action to be stayed pending the outcome of the application to the Commission Board. Had an application for a stay been made, then the Court would have been able to consider prospectively the issues which have, many months later, been raised before me in this hearing and make an order which was fair to both sides. Importantly, had a stay been granted, then the Defendant would not have incurred costs after the time for acceptance of the offer had expired.”

PIC, couldn’t agree more, the correct course of action was to apply for a stay to protect against adverse costs.

The technical team at PIC are always available to advise on the cost consequences of Part 36 offers.  Please do not hesitate to get in touch.

Reuben Glynn  | Managing Director | Partners In Costs Ltd