AN OFFER TO SETTLE FOR NO DAMAGES CAN STILL BE A VALID PART 36 OFFER: APPEAL AGAINST NO ORDER FOR COSTS ALLOWED (IN PART)

In MR v Commissioner of Police for the Metropolis [2019] EWHC 1970 (QB) Mrs Justice McGowan allowed an appeal as to costs in a issue relating to Part 36. She held that the trial judge had erred in making no order for costs in a case where the claimant had made a valid Part 36 offer to settle for no damages but with an admission of liability. The claimant was entitled to costs, and the relevant enhancements,  from the relevant date following the Part 36 offer.

THE CASE

The claimant brought an action for false imprisonment and assault.

In June 2017 the claimant made a Part 36 offer “that the matter be settled in the sum of nil pounds with an admission of liability plus reasonable costs, to be assessed if not agreed.”

At trial the claimant was awarded damages of £2,750.

The trial judge made no order as to costs.

The claimant appealed that order as to costs.

THE DECISION ON APPEAL

Mrs Justice McGowan allowed the appeal in part.  The decision to make no order for costs up to the relevant Part 36 offer was one that was within the discretion of the circuit judge and would not be interfered with.   However the Part 36 offer was a valid one. The judge should have made an order for costs after the expiry of the Part 36 offer.
  1. As a matter of principle, the implications of costs should never overwhelm the issue at the centre of litigation. That remains so, notwithstanding the huge impact costs currently has on the conduct of litigation. This Appellant wanted to ‘clear his name’, the Judge found that to achieve that aim he had to pursue the litigation to trial. He was never going to obtain the admission he wanted from the Respondent by pre-trial negotiation and settlement. At trial, his arrest was found to be unlawful, albeit on limited grounds. He was vindicated and the Judge described him as the ‘successful party’. In addition, he won limited financial compensation, even though it was less than a previous offer made by the Respondent.
  2. In the protracted course of the litigation the Appellant made an offer to forgo any financial remedy, if he could obtain the admission as to liability he sought, further that he would accept a reasonable order for costs by agreement or assessment, if agreement was not possible. Giving up any and all claim to a financial remedy is, in my judgment a significant concession and therefore is a genuine Part 36 offer. The Judge referred to it as such, rightly. That offer did engage the provisions of CPR 36.17 and accordingly does mean that the Appellant is entitled to his costs from the expiry of the relevant period, 14 August 2017. It is not unjust to apply CPR 36.17 in that way and to follow its provisions in the usual way, it would be unjust not to do so. The Appellant failed to respond to the offer of a without prejudice discussion and the criticism of that failure has merit, (not least as matter of courtesy). However remiss that was it does not seem to me to have had, or be capable of having, any direct effect on the course of the litigation. The Respondent was not going to make the admission sought; there was no realistic prospect of such a resolution.
  3. The Judge formed a view of the offers and counter offers made before 20 July 2017, that was entirely a matter within her discretion and no valid complaint can be made of that view. She was entitled to reach the decision she did as to the position before the making of a good and genuine Part 36 offer which was not accepted by the Respondent.
  4. Accordingly, the appeal succeeds in respect of that element of the costs incurred after the expiry of the relevant period on 14 August 2017 and the appellant is entitled to his reasonable costs on an indemnity basis, and the other entitlements set out in CPR Pt36.17(4) from that date, to be assessed, if not agreed. The part of the order as to no order for costs before that date remains unaltered. To that extent only, this appeal succeeds.