Fixed costs following late acceptance of a claimant’s Part 36 offer

Whalley v Advantage Insurance (Kingston Upon Hull, 5 October 2017) involved the late acceptance by the defendant of a Part 36 offer made by the claimant in a case to which fixed costs applies.

In the case of Whalley the claimant submitted a claim for personal injuries following a road traffic accident on 11 July 2014.

Proceedings were issued on 7 August 2015. The claimant made a Part 36 offer on liability on 7 December 2015, with the relevant period expiring on 30 December 2015. After the claimant’s witness evidence was considered the defendant subsequently accepted the claimant’s Part 36 offer on 29 January 2016, a month after the end of the relevant period. Quantum was already agreed.

The claimant stated that they were entitled to their costs from 30 December 2015 until acceptance on 29 January 2016 on an indemnity basis and therefore assessed costs on an hourly rate basis. The defendant argued that the claimant was not entitled to indemnity costs and therefore the costs were fixed in accordance with table 6B in CPR 45.

The delay in acceptance was of similar length to that in Sutherland whereby Besford DJ ordered indemnity costs for the costs incurred after the end of the relevant period.

Judgment

Besford DJ stated at para 91 of the judgment that the decision that he reached in Sutherland is not supported from a detailed analysis of the rules and case law which took place in Whalley. Unless there are ‘exceptional circumstances’ in accordance with CPR 45.29J or arguably, where there has been conduct ‘out of the norm’ to justify indemnity costs, the fixed costs regime applies to the circumstances within CPR 36.13(4)(b). Besford DJ included a comment from the case of McKeown v Venton (12 June 2017) from Wood HHJ that said:

“For now, it may well be that the precise fairness as to costs in individual cases is sacrificed on the altar of certainty which Part 45 has introduced.”

Keoghs Comment

Certainty is the important point of fixed costs. The courts appear to be taking the line of ensuring that there is certainty so that fixed costs are upheld. Certainty was referred to in the Court of Appeal decision of Qader v Esure. However, until a binding decision is handed down in relation to late acceptance for Part 36 offers, it is likely that there will continue to be decisions either way. Besford’s reversal of his stance however, is a definite positive and will assist arguments that fixed costs apply following late acceptance of a Part 36 offer.

The point is important to complex injury teams as fixed costs can apply to cases that started in the portal up until they are allocated to the multi-track. Where a claimant has made an earlier Part 36 offer it could be advantageous for a defendant to accept the offer out of time, as opposed to waiting for allocation to the multi-track, when hourly rate costs will then apply.

Dan Oldroyd
Associate
023 8190 7003
doldroyd@keoghs.co.uk