THE JUDGMENT IN ALI -V- CHANNEL 5 2: CLAIMANTS FAILED TO BEAT PART 36 OFFER, NO GOOD REASON TO DEPART FROM NORMAL COSTS CONSEQUENCES

April 19, 2018 · by · in Conduct, Costs, Part 36

This is the second post about the decision on costs in Ali & Anor v Channel 5 Broadcast Ltd [2018] EWHC 840 (Ch). Here we look at the issue relating to Part 36.  The defendant had made a Part 36 offer. The Court held that (1) the fact that the offer was made to the claimants jointly did not make the offer defective; (2) the claimants had not beaten the offer and there was no good reason to depart from the normal costs consequences.

THE CASE

The claimants had succeeded in recovering damages of £10,000 each at trial. On the 27th September 2017 the defendants made an offer. The claimants failed to beat that offer at trial. On the 17th October 17 the defendant made an offer that the programme that featured the defendants would not be broadcast. The judge considered the issue of costs in relation to these two offers.

THE JUDGMENT

Costs from 18 October to 8 November 2017
    1. Although counsel for the Claimants did not address the incidence of costs during this period separately in his submissions, it was raised by counsel for Channel 5 in his submissions. As counsel for Channel 5 pointed out, on the premise that it would be unjust to make the order specified in rule 36.17(3) (as to which, see below), one possible order would be for the Claimants to recover their costs down to 8 November 2017 and for Channel 5 to recover its costs incurred thereafter. The significance of the date of 8 November 2017 is that it is 21 days after Channel 5’s offer of an undertaking not to rebroadcast the relevant part of the Programme in Lee & Thompson’s letter dated 17 October 2017.
    2. In my judgment the Claimants are entitled to their costs from 18 October to 8 November 2017 for two reasons. First, I consider that Lee & Thompson’s letter dated 17 October 2017 amounted to an improved Part 36 offer falling within rule 36.9(5) such that the 21-day period started to run again. This is because it offered an undertaking, which addressed for the first time the non-monetary relief sought by the Claimants in their claim form and Particulars of Claim, namely an injunction to restrain further broadcasting of the information complained of. Secondly, even if that is wrong, I consider that, even on the assumptions that (i) Wiggin’s letter dated 27 September 2017 was a valid Part 36 offer and (ii) it would not otherwise be unjust for the consequences specified in rule 36.17(3) to follow, it would be unjust for the Claimants not to recover their costs in respect of this period having regard to the offer of the undertaking.
Costs after 8 November 2017
    1. Turning to the costs incurred after 8 November 2017, there are two issues between the parties: (i) was Wiggin’s letter dated 27 September 2017 a valid Part 36 offer and, if so, (ii) would it be unjust for the consequences specified in rule 36.17(3) to follow given that the Claimants failed to obtain a judgment more advantageous than that contained in the letter dated 27 September 2017 (as improved in the letter dated 17 October 2017)?
Was the letter dated 27 September 2017 a valid Part 36 offer?
    1. The Claimants contend that the letter dated 27 September 2017 was not a valid Part 36 offer because it contained an offer to settle the Claimants’ claims by paying the Claimants jointly the sum of £X, whereas the Claimants had distinct individual claims. Accordingly, counsel for the Claimants submitted, the offer was not made in accordance with rule 36.5. That being so, it did not have the consequences specified in Section 1 of Part 36: see rule 36.2(2). In support of this submission, counsel for the Claimants relied upon rule 36.11(3)(c), which provides that the court’s permission is required to accept an offer where an apportionment is required under rule 41.3A, which concerns claims under the Fatal Accidents Act 1976 and the Law Reform (Miscellaneous Provisions) Act 1934.
    2. I do not accept this contention for two reasons. First, while I accept that the Claimants’ claims were technically distinct individual claims, they were parallel claims made by a married couple arising out of the same events. Although it is not necessarily the case that Mr Ali and Mrs Aslam were entitled to the same sum by way of damages, they presented a united front throughout the litigation and could have agreed the division of the sum between them. Thus, in the circumstances of this case, I do not consider that the mere fact that the sum was offered to them jointly meant that the offer was not made in accordance with rule 36.5.
    3. Secondly, and in any event, I do not consider that it is open to the Claimants to raise this objection. As can be seen, the letter dated 27 September 2017 stated that it was made in accordance with Part 36 and that it was intended to have the consequences specified in Section 1 of Part 36. It also said, “If you think that this offer is defective or non-compliant with Part 36, you must let us know promptly”. No suggestion was made by the Claimants that the offer was defective or non-compliant with Part 36 because the sum in question was offered to them jointly prior to 9 March 2018. On the contrary, paragraph 3 of Hamlins’ letter dated 19 October 2017 treated the offer as being a valid Part 36 offer.
    4. A similar issue arose in Seeff v Ho [2011] EWCA Civ 401, [2011] 4 Costs LO 443, where Thomas LJ delivering the judgment of the Court of Appeal said at [12]:
“In our view the offer was compliant with Part 36; in any event the letter of 14 May 2010 made it clear that if the offer was in any way defective or non-compliant with Part 36, Mr and Mrs Ho’s solicitors were asked to let them know as soon as possible. It seems to us clear that, not only did the solicitors treat the offer as a Part 36 offer in the light of the hearing of the appeal, but they also accepted it as a Part 36 offer in their letter of 21 September 2010.”
    1. Although Thomas LJ did not express himself in this way, it appears to me that his reasoning was that Mr and Mrs Ho were estopped from challenging the validity of the Part 36 offer made by Mr and Mrs Seeff. In my judgment this reasoning is equally applicable to the present case.
Would it be unjust for the costs consequences specified in rule 36.17(3) to follow?
    1. The Claimants contend that, even if the letter dated 27 September 2017 was a valid Part 36 offer and even though the Claimants failed to obtain a more advantageous judgment than that offer (at least as improved on 17 October 2017), it would be unjust for the costs consequences specified in rule 36.17(3) to follow (namely, for the Claimants to be ordered to pay Channel 5’s costs from the date on which the improved offer expired).
    2. The principles to be applied in these circumstances were set out by Briggs J (as he then was) in a passage in Smith Trafford Housing Trust [2012] EWHC 3320 (Ch) at [13], which was approved by the Court of Appeal in Webb v Liverpool Women’s NHS Foundation Trust [2016] EWCA Civ 365, [2016] 1 WLR 3899 at [38]:
“(a) The question is not whether it was reasonable for the claimant to refuse the offer. Rather, the question is whether, having regard to all the circumstances and looking at the matter as it affects both parties, an order that the claimant should pay the costs would be unjust: see Matthews v Metal Improvements Co. Inc [2007] EWCA Civ 215 at [32], per Stanley Burnton J (sitting as an additional judge of the Court of Appeal). (b) Each case will turn on its own circumstances, but the court should be trying to assess ‘who in reality is the unsuccessful party and who has been responsible for the fact that costs have been incurred which should not have been’: see Factortame v Secretary of State [2002] EWCA Civ 22 at [27], er Walker LJ. (c) The court is not constrained by list of potentially relevant factors in [what was then rule] 36.14(4)] to have regard only to the circumstances of the making of the offer or the provision or otherwise of relevant information in relation to it. There is no limit to the types of circumstances which may, in a particular case, make it unjust that the ordinary consequences set out in [what was then rule] 36.14 should follow: see Lilleyman v Lilleyman (No 2) [2012] 1 WLR 2801 at [16]. (d) Nonetheless, the court does not have an unfettered discretion to depart from the ordinary cost consequences set out in [what was then rule] 36.14. The burden on a claimant who has failed to beat the defendant’s Part 36 offer to show injustice is a formidable obstacle to the obtaining of a different costs order. If that were not so, then the salutary purpose of Part 36, in promoting compromise and the avoidance of unnecessary expenditure of costs and court time, would be undermined.”
The list of potentially relevant factors to be considered is now set out in rule 36.17(5).
    1. Counsel for the Claimants relied upon two factors as meaning that it would be unjust to order the Claimants to pay Channel 5’s costs from the expiry of the (improved) offer. The first is Channel 5’s failure to disclose the viewing figures for the Programme, even on a without prejudice save as to costs basis until 17 October 2017. In my judgment this does not assist the Claimants for two reasons. First, the Claimants’ pleaded case in paragraph 10 of the Particulars of Claim was that they inferred that the Programme had been watched by 2 million or more people. The fact that it had actually been watched by 9.65 million people was and is relied upon by the Claimants as supporting a larger quantum of damages than I awarded. Thus the absence of this information does not justify the Claimants’ failure to accept the sum of £X offered. Secondly, and in any event, the information was disclosed by Channel 5 in the same letter as the undertaking was offered. Even if the previous failure to disclosure the information would have made it unjust to impose the ordinary costs consequences after 19 October 2017, the same does not apply after 8 November 2017.
    2. Secondly, counsel for the Claimants submitted that Channel 5’s failure to offer an apology or agree to a statement in open court made it unjust to impose the ordinary costs consequences of failing to beat the Part 36 offer. In support of this submission, he relied upon the decision of the Court of Appeal in Yentob v MGN Ltd [2015] EWCA Civ 1292, [2015] 6 Costs LR 1103. In that case MGN had offered Mr Yentob by way of Part 36 offer more than the £85,000 which Mann J awarded him. Even though Mr Yentob had failed to beat the Part 36 offer, Mann J held that it would be unjust to order him to pay MGN’s costs from the expiry of the offer, and instead made no order as to costs for reasons which Arden LJ explained in her judgment as follows:
“9. The judge said that he found the point a difficult one (judgment, para 41). His conclusion was that in the unusual circumstances of this case, where MGN had made limited admissions and had until shortly before the trial denied any liability, Mr Yentob had ‘some form of justification for pursuing the matter to trial’ (judgment, para 42). The judge explained in his main judgment at trial that the formal admissions were made as late as November and December 2013. I need not set out the detail of those admissions. The admissions were extensive but limited because, as the judge explained:

’25. … these admissions … do not amount to any admission as to the scope of unlawful activities beyond the use of the word “substantial”.’

10. The judge accepted that it was not enough that Mr Yentob wanted to find out what had happened to him as many claimants would want to do that (judgment, para. 43). The case was exceptional because, until the trial took place, Mr Yentob would not know how badly he had in fact been hacked, it was unlikely that MGN would have agreed to make a statement [in open court] which matched the findings made at trial and because it was not apparent until trial that he could never get disclosure of the full extent of the hacking (judgment, para 44). He could not recover his costs from MGN but justice did not, in those circumstances, require him to pay MGN’s costs: the outcome could be marked simply by making no order as to costs (judgment, para. 45).”
The Court of Appeal upheld that decision.
  1. Counsel for Channel 5 submitted that the present case was to be distinguished from Yentob. I agree. Yentob was an exceptional case for the reasons explained by Arden LJ. In the present case, Channel 5 was not guilty of the kind of serious wrongdoing which MGN was guilty of in that case. Furthermore, Channel 5 did disclose the viewing figures for the Programme on 17 October 2017. Although Channel 5 can be criticised for not having disclosed the figures prior to then (and for only doing so upon an open basis on 23 November 2017), there has never been any dispute as to the accuracy of those figures. Moreover, as I have explained, the Claimants received those figures as part of Channel 5’s improved offer, and thus had 21 days in which to consider them prior to 8 November 2017.
  2. On the other hand, I do not agree that a further distinguishing factor is that Channel 5 did offer an apology on 27 September 2017. In my judgment that offer was impliedly withdrawn in Lee & Thompson’s letter dated 17 October 2017. In any event, it was explicitly withdrawn in their letter dated 20 October 2017.
  3. I do agree with counsel for Channel 5 that Channel 5’s failure to apologise or agree to a statement in open court does not justify the Claimants’ failure to accept the improved offer for three reasons. First, there is no settled practice that claimants in misuse of private information cases are entitled to an apology or agreed statement in open court. Secondly, the Claimants could have applied to make a unilateral statement in open court: see Murray v Associated Newspapers Ltd [2015] EWCA Civ 488, [2015] EMLR 21. Thirdly, damages for misuse of private information are compensatory, not vindicatory: see Weller v Associated Newspapers Ltd [2014] EWHC 1163 (QB), [2014] EMLR 24 at [190]-[191].
  4. Accordingly, I am not satisfied that it would be unjust to impose the ordinary costs consequences of failing to beat Channel 5’s improved Part 36 offer on the Claimants. I shall therefore order the Claimants to pay Channel 5’s costs after 8 November 2017. As sought by Channel 5, those costs will be set off against the costs which Channel 5 must pay the Claimants in respect of the period down to 8 November 2017 (but not against the Claimants’ damages). This is subject to the issues considered below.
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