Read v Edmed [2004] EWHC 3274 (QB) (08 December 2004)

Neutral Citation Number: [2004] EWHC 3274 (QB) Case No: HQ03X0347 IN THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION Royal Courts of Justice The Strand London WC2A 8 December 2004 B e f o r e : MR JUSTICE BELL ____________________ HETTY READ CLAIMANT - v - DARREN EDMED DEFENDANTS ____________________ Digital Transcription of Smith Bernal WordWave Limited, 190 Fleet Street London EC4A 2AG, Tel No: 020 7404 1400 Fax No: 020 7831 8838 (Official Shorthand Writers to the Court) ____________________ MR D THOMPSON (Instructed by Messrs Edward Davies, Bromley, Kent) appeared on behalf of the Claimant MR W FEATHERBY (Instructed by Messrs Burrells, London EC2) appeared on behalf of the Defendant ____________________ HTML VERSION OF JUDGMENT ____________________ Crown Copyright © MR JUSTICE BELL: On 24 November 2000 the claimant, Mrs Read, then aged 80, was injured in a road traffic accident in which she was knocked off her bicycle by a car driven by the defendant, Mr Edmed. She issued proceedings for damages for personal injury and consequential losses on 12 November 2003. The defence denied that the defendant had been negligent or that the claimant's injuries loss or damage were caused by any negligence on his part. It further or alternatively alleged that the accident was caused wholly or partly by the claimant's own negligence. Because of the effect of her injuries, the claimant conducted proceedings through a litigation friend, her daughter, Mrs Pamela Collins. On 25 May 2005, Master Yoxall ordered that the question of liability for the accident and any related issue of causation of the claimant's injuries should be tried as a preliminary issue, and that preliminary issue was tried by me on 24 November 2004. Despite a late start because of an earlier matter in the list, the matter was expeditiously conducted by Mr David Thompson for the claimant and Mr Williams Featherby for the defendant and the evidence, submissions and judgment were completed in the day, with judgment that the defendant had been in breach of duty and had thereby caused the claimant's injuries suffered in the accident, but that the claimant's own breach of duty had been equally responsible for the accident and her injuries, so that she should recover 50 per cent of her damages to be assessed if not agreed. There was then a short argument as to costs. Mr Thompson revealed that on 28 July 2003, prior to the issue of proceedings, the claimant's solicitors had written to the defendant's insurers as follows: "We are instructed to put forward an offer on liability pursuant to CPR Part 36. Please note that the Claimant is prepared to accept an apportionment of liability of 50:50 plus payment of her costs to be assessed if not agreed. This offer will remain open for acceptance within a period of 21 days from your receipt of this letter, after which it may only be accepted by agreement between the parties as to costs or with the permission of the court. … any settlement would need to be the subject of court approval." 21 days from 28 July 2003 ran to 18 August 2003. If the letter was received by the defendant's insurers the day after it was posted, the 21 days would expire on 19 August 2003. In any event, the insurers wrote on 19 August 2003: "Your Part 36 offer is noted and will not, of course, be accepted." On the strength of those matters, Mr Thompson referred me to CPR Part 36.21 and to the note at 36.21.1 of the White book, but not in the time available to the authorities. He asked for the claimant's costs to be assessed on a standard basis up to the time for accepting the Part 36 offer, but on an indemnity basis thereafter, together with interest on those costs at a rate not exceeding 10 per cent above base rate. He did so on the grounds that the basis of the claimant's Part 36 offer had proved well-founded and that the costs of the issue of liability since the offer had been made had been incurred by reason of the defendant's allegedly unreasonable failure to accept that offer. Mr Thompson also asked me to order that interest should be paid at a higher rate than normal on the claimant's eventual damages pursuant to CPR Part 36.21. Mr Featherby resisted that application. In the event I made an order for standard costs and directed that the question of interest on damages should be decided if not agreed at the conclusion of proceedings. I also refused the claimant permission to appeal against the costs order, the brief reasons being that the issue of liability lacked any complexity; that Part 36.21 appeared to apply to cases where the defendant was held liable for more than a claimant's Part 36 proposal; that there was no more than a discretion to order indemnity costs, and that the circumstances did not call for such an order. I said that the issue of interest should be decided by the judge who ultimately concluded the case and the issue of damages and any interest thereon was not agreed. I should add that a notice of funding of case or claim at divider 5 of the trial bundle informed me that the claimant's claim was being funded by a conditional fee agreement dated 8 March 2004 which provided for a success fee, but that aspect played no part in the issue as to costs on 24 November, nor has it played any part today, rightly in my view. Almost immediately after making the order as to costs and refusing permission to appeal on 24 November, I had serious reservations about it. Arrangements were made for counsel to return to court on the morning of 25 November to present further argument in accordance with the jurisdiction approved by Pitalis v Sherafetin [1986] 1 QB 868 at 879D. It quickly became apparent that there was a question of principle meriting further argument and that in any event the age and condition of the claimant called for early directions as to the further conduct of the action, so the matter was listed today for a hearing as to costs and directions. I have given directions earlier this morning and this ruling relates to costs and any interest thereon. I am grateful to both counsel for their skeleton and additional short oral arguments this morning. It is necessary to say a little more about the history of the action, as it has now been revealed, before turning to the relevant provisions of the CPR and some case authority. Before the Part 36 offer was made on 28 July 2003, Mrs Collins had corresponded with loss adjusters and an interim payment of £5,000 was made. Her solicitors asked that a joint opinion from counsel be obtained on quantum and pointed out by letter dated 3 February 2003 that: "We are mindful of our client's advancing years and the fact that an early settlement does have benefits from her point of view. Obtaining a jointly instructed counsel's opinion on quantum could assist in achieving an earlier resolution than might otherwise be the case if the matter had to proceed to litigation." The matter was reviewed by the defendant's insurers and liability was firmly rejected by letter dated 27 March 2003 as follows: "We have recently reviewed this case and have discussed matters at length with our agent. … Having considered all the available evidence, we can only conclude that our insured was not negligent and accordingly we must repudiate all liability on his behalf." There was a strong case on the material available to both parties; representatives that the claimant had ridden her bicycle over "give way" lines into the path of the defendant's car, but it was part of her case that the defendant had been driving in excess of the 30 mile an hour limit with his head out of the driver's side window to get a view ahead because his windscreen was frosted or misted over. The defendant's insurers maintained that the defendant had not had his head out the window and was not driving at an unsafe speed. The claimant again questioned their analysis and reiterated the independent witnesses' evidence about the defendant's actions. On 15 May 2003, the insurers wrote: "In the circumstances, liability is formally denied and as you have instructions to proceed with the claim and issue proceedings, we will instruct solicitors to accept service upon our insured's behalf." That remained the defendant's position, his insurers finding encouragement in the claimant's inability to give evidence and the defendant's acquittal of an allegation of driving without due care and attention in the Magistrates' Court. The essence of my judgment on 24 November 2004 was that the claimant had failed to see the defendant's car as it proceeded along the major of two housing estate roads towards the junction with the minor road on which she was cycling; that she had ridden over the give way lines in the mouth of her minor street into his path, but that the defendant had indeed been driving with his head out of the side window of his car at an excessive speed for the location. I turn to the relevant provisions of the CPR. The overriding objective is stated in Rule 1.1: "(1) These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly. (2) Dealing with a case justly includes, so far as is practicable - … (b) saving expense…" The remaining provisions of the overriding objective stress the need to keep costs and resources in proportion to the claim insofar as this is possible. Rule 1.2 provides: "The court must seek to give effect to the overriding objective when it - (a) exercises any power given to it by the Rules; or (b) interprets any rule." CPR 36.1 provides: "(1) This Part contains rules about - (a) offers to settle and payments into court; and (b) the consequences where an offer to settle or payment into court is made in accordance with this Part. (2) Nothing in this Part prevents a party making an offer to settle in whatever way he chooses, but if that offer is not made in accordance with this Part, it will only have the consequences specified in this Part if the court so orders." Part 36.5 provides that a Part 36 offer must be in writing and it sets out its form and content. Part 36.10(1) provides that: "If a person makes an offer to settle before proceedings are begun which complies with the provisions of [rule 36.10], the court will take that offer into account when making any order as to costs." I stress the word "will". The remainder of the rule makes other provisions to the offer. It is accepted by the defendant that the offer made in this case on 28 July 2003 was a valid Part 36 offer. Part 36.12(1) provides that: "A defendant may accept a Part 36 offer made not less than 21 days before the start of the trial without needing the court's permission if he gives the claimant written notice of acceptance not later than 21 days after the offer was made." Part 36.21 provides: "(1) This rule applies where at trial - (a) a defendant is held liable for more; or (b) the judgment against a defendant is more advantageous to the claimant, than the proposals contained in a claimant's Part 36 offer... (2) The court may order interest on the whole or part of any sum of money (excluding interest) awarded to the claimant at a rate not exceeding 10% above base rate for some or all of the period starting with the latest date on which the defendant could have accepted the offer without needing the permission of the court. (3) The court may also order that the claimant is entitled to - (a) his costs on the indemnity basis from the latest date when the defendant could have accepted the offer without needing the permission of the court; and (b) interest on those costs at a rate not exceeding 10% above base rate. (4) Where this rule applies, the court will make the orders referred to in paragraphs (2) and (3) unless it considers it unjust to do so. (5) In considering whether it would be unjust to make the orders referred to in paragraphs (2) and (3) above, the court will take into account all the circumstances of the case, including - (a) the terms of any Part 36 offer; (b) the stage in the proceedings when any Part 36 offer or Part 36 payment was made; (c) the information available to the parties at the time when the Part 36 offer or Part 36 payment was made; and (d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer or payment into court to be made or evaluated…" In my judgment, applying CPR 36.21(5) to this case, were it applicable, there would be nothing unjust in making the orders referred to in paragraphs 2 and 3. In particular, the evidence currently available to the claimant and defendant in relation to liability for the accident was essentially the same at both the time of the Part 36 offer and refusal and at the time of the trial of liability. However, the first question is whether Part 36.21 applies to the situation in this case where the court's judgment on liability matched but was not more advantageous to the claimant than the claimant's Part 36 offer. Mr Featherby contended that the claimant had not "done better" than the Part 36 offer, nor had the defendant been "held liable for more" than the offer, nor was the judgment "more advantageous" than the offer. He compared the provisions of Part 36.21 to those of Part 36.20 where a claimant has to "fail to do better" than a Part 36 payment or fail to obtain a judgment which is more advantageous than a defendant's Part 36 offer. Thus costs penalties and other penalties apply against (a) a claimant who has failed to beat the offer and (b) a defendant where the claimant beat the offer. The policy, purpose and scheme of the legislation could not be clearer, Mr Featherby contended. The claimant must do better than its own Part 36 offer in order to reap the benefit of Part 36.21. Mr Featherby has been unable to find any analogous authority in which costs and other penalties have been awarded against a defendant where the claimant has matched but not beaten the defendant's offer. Mr Featherby said that in his experience it was the settled practice for litigators acting for claimants to make offers such as 49 per cent, 65 per cent, 74 per cent and so on, to guard against findings of one half, one third and one quarter and so on of contributory negligence because of the clear wording of Part 36.21. It was disputed by the complainant that there is a practice of litigators acting for complainants making offers such as 49 per cent etc., but there appears to be some support for the existence of that practice in Huck v Robson [2002] EWCA (Civ) 398 . Mr Featherby contended that Part 36.21 was worded as it is because, if it were not, in a case where the full liability of the defendant is clear, a claimant could make an offer to accept 100 per cent liability, and when there was inevitable judgment for full liability, then claim the benefit of Part 36.21. In my view, the wording of Part 36.21(1) is plain and the rule does not apply where the court's judgment, as in this case, matches the claimant's offer but does not provide her with more than she offered to accept. Mr Thompson, having reflected on the matter since we were last in court, felt obliged to accept that. Mr Featherby contended that once it was clear that the terms of Part 36.21 did not expressly apply to the situation in this case, Part 36.21 should be put aside. What litigants want is certainty and that can be best achieved by simply deciding whether 36.21 applies or not. He said Part 36.21 does not distinguish between money offers and proportionate offers. There appear to me, however, to be difficulties if the issue as to indemnity or standard costs and interest is to rest on a simple decision as to whether CPR 36.21(1) applies in circumstances such as those of this case. First, although I appreciate that many claimants will be prepared to take marginally less than their entitlement by way of damages for the security of a settlement, as Tuckey LJ pointed out in Huck v Robson at paragraph 70, it does seem to me to be absurd if the wording of 36.21(1) has led to a practice of claimants offering to take marginally less than 75, 50, 33.3 or 25 per cent, or some other familiar fraction, simply to gain the benefit of Part 36.21. Tuckey LJ seems to have disapproved of any such practice as "merely a tactical step" (paragraph 71 of Huck v Robson ). Moreover, the perceived need for such a practice can work injustice, it seems to me. A one per cent or even a 0.1 per cent concession from a realistic apportionment can mean a four or five figure sum in the seven figure claims which are not uncommon today. Why should a claimant, perhaps a claimant under a disability, have to make such a concession to gain the literal benefit of Part 36.21? Neither counsel has been able to give me a convincing explanation of why Part 36.21 should have been drafted to exclude a claimant who persuades the court that her Part 36 offer on liability was exactly right. Perhaps the rule was drafted with monetary offers in mind, for, in the case of such offers, the court's judgment rarely matches a claimant's offer to the last penny. Perhaps 36.21 only related to situations where the claimant obtained more than his or her offer because only then was it thought that penal rates of interest might be appropriate. I know not. Secondly, and in any event, I can see no good reason why a claimant who has sensibly proposed one of the orthodox proportions of liability in an action for damages for personal injury and consequential losses, should be in any less favourable position that she would be under Part 36.21, fairly applied, simply because the court has found that her offer was "spot on". It seems to me that the answer lies in carrying the spirit of Part 36.21 into the application of other rules bearing on the award of costs. The spirit of 36.21 seems to me to be accurately summarised at the beginning of note 36.21.1 in the White Book as follows: "These provisions are designed as an incentive to encourage claimants to make and defendants to accept appropriate offers of settlement. Such incentive would be deprived of effect unless the non-acceptance of that which ultimately proves to have been a sufficient offer ordinarily will advantage the claimant in the respects set out in the rule." Moreover the approach which I have suggested has high authority to support it. In Petrotrade Inc v Texaco Limited [2002] 1 WLR 947 , the claimant had made a Part 36 offer which was lower than the amount of the judgment in its favour, so the facts were different to the facts of this case and the difference was of potentially material effect. However, at paragraph 55 of the report, Lord Woolf MR said: "Part 36 is one of the cornerstones of the reforms of procedure made by the CPR. Part 36 makes significant changes to the previous practice and procedure relating to payments into and out of court under what was RSC Ord 22. The first of these changes is that offers to settle can be made before as well as after the commencement of proceedings. In the case of both, the court is required to take into account an offer when making any order as to costs: see rule 36.10. Secondly, offers to settle can be made by any party to the proceedings. In particular, as in this case, they may now be made by a claimant." At paragraph 62 Lord Woolf said that rule 36.21 should not be regarded as producing penal consequences but merely a provision in the case of a claimant's offer to avoid the claimant receiving less costs than had been reasonably incurred. Then at paragraph 64, Lord Woolf said: "The power to order indemnity costs or higher rate interest is a means of achieving a fairer result for a claimant. If a defendant involves a claimant in proceedings after an offer has been made, and, in the event, the result is no more favourable to the defendant than that which would have been achieved if the claimant's offer had been accepted without the need for those proceedings, the message of rule 36.21 is that, prima facie, it is just to make an indemnity order for costs and for interest at an enhanced rate to be awarded." I stress, as did Mr Thompson in his argument, the words "no more favourable to the defendant". In McPhilemy v Times Newspapers Limited (No.2 ) [2001] EWCA (Civ) 933 [2002] 1 WLR 934 , the jury again awarded more than the claimant's offer. At paragraph 19, Chadwick LJ said: "It is plain, as Lord Woolf MR pointed out in the Petrotrade case, that paragraphs (2) and (3) of rule 36.21, in conjunction with paragraph (4), are intended to provide an incentive to a claimant to make a Part 36 offer. The incentive is that a claimant who has made a Part 36 offer (which is not accepted) and who succeeds at trial in beating his own offer stands to receive more than he would have received if he had not made the offer. Conversely, a defendant who refuses a Part 36 offer made by a claimant and who fails to beat that offer at trial is at risk of being ordered to pay more than he would have been ordered to pay if the offer had not been made." I stress, as did Mr Thompson in his argument, the words "fails to beat". The words which I have stressed in the judgments of both Lord Woolf and Chadwick LJ do not reflect the strict wording of CPR 36.21 but they do reflect its spirit in my respectful view. Rule 36.10 is a mandatory provision to take any Part 36 offer into account when making an order as to costs. Part 44.3 retains the court's wide discretion as to costs, and Part 44.3(3) obliges the court to have regard to any admissible offer to settle. In my judgment, as a matter of general principle, where in a relatively uncomplicated claim for damages for personal injury and consequential losses such as this, the claimant makes a valid Part 36 offer or other admissible offer to settle an issue of liability at a given proportion of his or her claim, and the defendant refuses that offer and the court gives judgment for precisely that proportion of the claim, the claimant should be entitled to the benefit of an award of indemnity costs from the time of expiry of the offer and some interest on those costs just as he or she would if Part 36.21 had applied to the matter, in order to ensure, so far as possible, that she is not out of pocket, unless there is some particular circumstance, for instance a significant change in the complexion of the case or some unreasonable conduct by or on behalf of the claimant, which would make that conclusion unfair. In any event, in the particular circumstances of this case where the circumstances relating to liability did not significantly change between offer and refusal on the one hand and judgment on the other, it seems to me right and just to exercise my discretion to award the claimant's costs on the issue of liability to be assessed on a standard basis up to 21 days after 28 July 2003, that is to 18 August 2003, but on an indemnity basis thereafter, with a view to the claimant getting as close as is reasonable to her actual costs incurred. I also, for the same reasons, award interest on those costs. Normally no interest is awarded on costs and there is no reason in this case to award it on the claimant's standard costs, but it seems to me only fair to award it on her indemnity costs to an extent which ensures that she is not out of pocket after her Part 36 offer elapsed. I originally had in mind that 2 per cent over base rate would achieve this end, but making such an award from the start date for the award of indemnity costs on all such costs, would mean interest on some costs before they were incurred, while an award of such interest accruing on each item of costs as it was incurred, would involve time consuming and therefore expensive assessment. Mr Featherby suggested that on the basis of an average base rate of 4.75 per cent, a rate of 6 per cent per annum, that is an uplift of 1.25 per cent from 18 August 2003, would be an acceptable broad brush approach to achieving my objective. I agree. I therefore order that the defendant pay the claimant's standard costs of the liability issue to 18 August 2003 and her indemnity costs thereafter, with interest of 6 per cent per annum on those indemnity costs until they are paid. The question of interest on damages is far less clear and will, in my view, only become sufficiently clear enough to make a fair decision when those damages are decided or agreed. I make no order at this stage in respect of interest on damages. If any such interest is not agreed as part of an overall settlement, the matter must be decided by the judge who makes the final order. - - - - - - BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII