CLAIMANT’S PART 36 OFFERS AND LATE ACCEPTANCE: SOME JUDGES WILL, SOME JUDGES WON’T…

There have been numerous cases which have considered the appropriate approach of the courts when there is late acceptance by a defendant of a claimant’s Part 36 offer.   Some of these have been considered on this blog, but by no means all.  There has been no apparent judicial unanimity  I was planning a “review” post dealing with them all.   However, to a large extent this job has been done for me by HHJ Tindal in the comprehensive judgment in Parsa -v- Smith (a decision on the 8th September 2017) which was kindly sent to me by Matthew Hoe of Taylor Rose TTKW. The judgment is available here Parsa v Smith [2017]-2  .

“This is a clearly unsatisfactory state of affairs given that this point comes up routinely before District Judges and Circuit Judges …. In my view, it is a point in pressing need of consideration by a High Court Judge,”

THE ISSUE

There has been a considerable divergence of opinion as to whether a defendant faces any consequences when a claimant’s Part 36 offer has been accepted late.  The judgment considers that issue in detail and reviews many of the first instance decisions on the point. The judge in this case decided that the defendant faced no adverse consequences for late acceptance.

THE CASE

The judge was considering a case where the defendants had accepted an offer out of time. The judge rejected an argument that the claimant was entitled to indemnity costs because of the defendant’s conduct and that there were “exceptional circumstances”. He then went on the consider the arguments in relation to late acceptance.

 

”          The CPR 36.13/20 ‘late acceptance’ argument

 

 38.In the simplest of terms this argument is that CPR 36.13 assumes assessed costs (whether on the standard or indemnity basis) for late acceptance of a Part 36 Offer, and that is not modified by the Portal-specific provision in CPR 36.20. This argument is unquestionably the most difficult aspect of the case. There is no guidance above the level of Circuit Judge, and different Judges have taken contradictory approaches: HHJ Wood QC and RCJ Jenkinson in McKeown on 12th  June 2017 clearly rejected it, HHJ Gargan in Anderson v Ladler (08/05/17) awarded fixed costs but on one interpretation accepted the argument; and   HHJ  Gosnell  in  Richardson  v Wakefield Council (09/06/17) and most recently HHJ Walden-Smith in Hislop on 8th August 2017 accepted the argument. It was also accepted in April 2016 by DJ Besford in Sutherland v Khan, albeit as he simply refused to follow Tyco as outdated, his
approach has not been followed.
39. This is a clearly unsatisfactory state of affairs given that this point comes up routinely before District Judges and Circuit Judges (either on appeal as in all those cases, or at first instance as before me in this case and in a case previously). HHJ Walden-Smith noted that in Hislop at p.31, and it is why HHJ Wood QC sat with RCJ Jenkinson in McKeown (see p.3-4). In my view, it is a point in pressing need of consideration by a High Court Judge, and I am not aware that permission has yet been given. I therefore propose to grant permission to appeal myself, but of course I must first come to my own decision.

THE DECISION

The judge decided that fixed costs continue to apply in these circumstances.

“61. Pulling these three reasons together, as ‘costs’ in CPR 36.13(5) can either mean assessed costs or fixed costs, and CPR 36.13(3) does not require costs under CPR 36.13(5) to be assessed on the standard basis, and CPR 36.13(5) does not distinguish between the basis of ‘costs’ in (a) and (b), the logical interpretation of CPR 36.13(5) in a case to which fixed costs applies under CPR 45.29A/B (as here), is that ‘costs’ in CPR 36.13(5) means ‘fixed costs’. For the reasons discussed in Solomon and in Sharp quoted above, that would also be consistent with the purpose of the fixed costs regime and would avoid windfalls. It follows I also reject the second stage of Mr James’ third and final argument.
 62. I am not deterred from that conclusion by any the judgments of HHJ Gargan, HHJ Gosnell, or HHJ Walden-Smith in the cases to which I have referred. It was not really argued that ‘costs’ in CPR 36.13(5) could and should in this context mean ‘fixed costs’ Instead the argument they each considered and rejected following Tyco was any presumption of indemnity costs just for late acceptance, or that there was any basis for indemnity costs on the facts in their cases, so they awarded costs on the standard basis (except HHJ Gargan).”