PART 36 BENEFITS PAID TO A SUCCESSFUL CLAIMANT: THE ISSUES CONSIDERED: IT WAS NOT UNJUST FOR THE USUAL PART 36 CONSEQUENCES TO APPLY
We are returning to the judgment in Ashford Borough Council & Anor v Wilson  EWHC 988 (QB) Darryl Allen QC, sitting as a High Court judge. The earlier post looked at the issue of whether the defendant was bound by an agreement made by counsel. The judge went on to consider what costs order should be made if it transpired that the defendant was not bound by that agreement. This required a consideration of the consequences of a successful Part 36 offer made by the claimant and the appropriate approach where there was no monetary claim.
The claimants had been successful in litigation and beaten their own Part 36 offer. An order for costs had been drawn up and the judge had rejected an argument that the defendant was not bound by that agreement. However the judge went on to consider what order for costs would be made in any event.
THE JUDGMENT ON THIS ISSUE
(3) What order for costs should be made?
35.This issue only arises if I am wrong on issue (2). For completeness and in light of the fact that the Defendant has addressed this issue at length, I will give my decision as to what costs order I would have made had I been required to do so.
Defendant to pay the Claimants’ costs or no order for costs?
36.The Court has a discretion as to what order to make in relation to costs. That discretion is exercised taking all relevant circumstances into account. In this case those circumstances include the following:
i)The Claimants have succeeded on all of the key issues.
ii)The Claimants have obtained the relief they sought. The only relief not obtained was the additional restriction upon the Defendant issuing proceedings against the Claimants in the Magistrates Court without the permission of a High Court Judge. That was only sought at the hearing and did not form part of the original claim.
iii)The Claimants made a Part 36 Offer on 4th September 2020, by which they offered to accept undertakings restraining the Defendant from harassing the Claimants together with payment of their costs up to that date.
iv)Those undertakings mirrored the terms of the final injunction which the Claimants obtained following my judgment. The judgment and order obtained by the Claimants were at least as advantageous as the terms of their Part 36 Offer.
v)At that stage, the Claimants’ costs were estimated to be £56,000, with a prediction that they would be in the region of £126,000 at the conclusion of a trial.
vi)The Claimants’ letter of 4th September 2021, explained very clearly the potential consequences if the Defendant rejected the offer but the Claimants obtained a judgment which was equal to or more advantageous than their offer. The letter enclosed Part 36 of the Civil Procedure Rules and expressly encouraged the Defendant to take “immediate” legal advice about the offer.
vii)Prior to the commencement of proceedings the Claimants had repeatedly warned the Defendant that his conduct amounted to harassment and invited him to (i) end the harassment, and (ii) adopt the suggested single point of contact mode of communication. Had he done so then these proceedings and the legal costs would have been avoided. The Defendant unreasonably failed to agree to either proposal.
viii)The Claimants’ case was strong, clearly pleaded and fully explained from the outset.
ix)Although acting without solicitors, the Defendant instructed counsel to represent him at an early stage and at the final hearing. He has had the benefit of legal advice and representation during the proceedings.
x)As set out in my substantive judgment, the Defendant breached the terms of the interim injunction issued by HHJ Auerbach prior to and following the trial [see §105 and §114].
xi)The Defendant issued two applications which were deemed to have been totally without merit [see judgments and orders of Master Cook and Mr Justice Martin Spencer].
xii)The Defendant made no proposals to resolve the proceedings to avoid the cost of a trial.
xiii)The Defendant’s conduct of these proceedings has already resulted in two orders for indemnity costs against him [see judgments and orders of Master Cook and Mr Justice Martin Spencer];
xiv)The Defendant failed to pay the costs which Master Cook ordered him to pay.
37.The general rule is that unsuccessful party pays the successful party’s costs [see CPR 44.2(2)(a)]. Clearly the Claimants were the successful party. All of the factors and circumstances set out above strengthen the argument that the Defendant should pay the Claimants’ costs. However, the Defendant submits that he should not be required to do so; he says there should be no order for costs. His reasons are as follows:
i)The Claimants could have issued these proceedings out of the County Court at substantially lower cost.
ii)The case did not require the instruction of Leading Counsel.
iii)The proceedings were “motivated by spite and vexatious”.
iv)Preparation of the First Claimant’s case has been undertaken by Ms Clarke and, according to the Defendant, she is not allowed to charge for her work. He continues to make the allegation that Ms Clarke cannot conduct litigation and that it is a criminal offence for her to do so.
v)The Claimants cannot have considered these proceedings to be urgent given their delay in commencing them.
vi)The Claimants have taken “a Sledge-Hammer to knock in a Tin Tac”.
vii)Any order for costs should be stayed until after the appeal which he intends to bring.
38.The vast majority of the Defendant’s submissions go to the amount of costs, not what costs order should be made. In my judgment the Defendant’s submissions are without foundation. My findings are:
i)These proceedings were not “motivated by spite” or “vexatious”. They were perfectly proper proceedings designed and intended solely to protect the welfare of the First Claimant’s current and former officers, employees, councillors and agents.
ii)Had the Claimants not issued these proceedings then they could have been vulnerable to criticism or complaint from those officers, employees, councillors and agents for failure to take necessary action.
iii)The Claimants delay in issuing proceedings is to their credit rather than a criticism. They warned the Defendant on numerous occasions of their concerns about his behaviour and correspondence, they invited him to desist and offered a method for him to communicate with them using the single point of contact. They issued proceedings as a last resort, having failed to persuade the Defendant to stop.
iv)It is a significant step for a public body, particularly a local council, to seek an injunction restraining the behaviour of one of its residents. In my judgment it is was appropriate to issue proceedings in the High Court and to instruct Leading Counsel. In any event, those factors go to the level of costs, not the incidence of costs.
39.In my judgment the correct order for costs in this case is for the Defendant to pay the Claimants’ costs of the action.
Part 36 consequences
40.As set out above, the Claimants have obtained a judgment which is at least as advantageous as the terms of their Part 36 Offer dated 4th September 2021. CPR 36.17 provides that in those circumstances,
(4) Subject to paragraph (7), …. …, the court must, unless it considers it unjust to do so, order that the claimant is entitled to—
(a) interest on the whole or part of any sum of money (excluding interest) awarded, at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;
(b) costs (including any recoverable pre-action costs) on the indemnity basis from the date on which the relevant period expired;
(c) interest on those costs at a rate not exceeding 10% above base rate; and
(d) provided that the case has been decided and there has not been a previous order under this sub-paragraph, an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage set out below to an amount which is—
(i) the sum awarded to the claimant by the court; or
(ii) where there is no monetary award, the sum awarded to the claimant by the court in respect of costs—
|Amount awarded by the court||Prescribed percentage|
|Up to £500,000||10% of the amount awarded|
|Above £500,000||10% of the first £500,000 and (subject to the limit of £75,000) 5% of any amount above that figure.|
(5) In considering whether it would be unjust to make the orders referred to in paragraphs (3) and (4), the court must 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 was made, including in particular how long before the trial started the offer was made;
(c) the information available to the parties at the time when the Part 36 offer was made;
(d) the conduct of the parties with regard to the giving of or refusal to give information for the purposes of enabling the offer to be made or evaluated; and
(e) whether the offer was a genuine attempt to settle the proceedings.
41.CPR 36.17 states that the Court “must” make the specified order unless it considers it “unjust to do so”. In my judgment it would not be unjust to do so:
i)The Claimants’ Part 36 Offer was clear. The potential consequences of rejecting that offer were fully explained and the Defendant was encouraged to take independent legal advice.
ii)The offer was made well in advance of the trial at a time when the Defendant was fully aware of the strength of the case against him. The Claimants had already obtained the interim injunction from HHJ Auerbach.
iii)At no stage did the Claimants withhold, refuse or fail to give information which would enable the Defendant to consider the offer. In fact, the Claimants warned the Defendant of the potential costs which would be incurred if the case went to trial, which could be avoided if the offer was accepted.
iv)The offer was an entirely genuine attempt to settle the proceedings. Its only purpose was to reach an acceptable outcome which prevented the Defendant from harassing the Claimants.
v)All of the factors identified at §36 and §38 strengthen the argument that the consequences set out in CPR 36.17(4) should be applied.
vi)I see no basis upon which to criticise the conduct of the Claimants or their representatives.
42.For the reasons given, all of the consequences under CPR 36.17 apply in this case. They are:
i)Costs on the indemnity basis from 26th September 20201 [per CPR 36.17(4)(b)];
ii)Interest on those costs at a rate not exceeding 10% above base [per CPR 36.17(4)(c)];
iii)An additional amount of 10% of the sum awarded to Claimants in respect of costs [per CPR 36.17(4)(d)(ii)].
43.In my judgment the appropriate rate of interest would be 10% above base rate
44.Costs should be subject to detailed assessment. This is not a case in which a summary assessment is appropriate.
Interest on costs prior to 26 th September 2020
45.Enhanced interest under CPR 36.17 only applies to the costs to be paid on the indemnity basis from 26th September 2020 onwards. The Claimants seek an order for interest on costs incurred prior to that date, which are to be paid on the standard basis, at the judgment rate of 8% per annum.
46.I agree. The First Claimant is a public body. It has been required to fund this litigation and devote resources to them. The litigation has been brought about solely as a result of the Defendant’s conduct. As I have already found, he was given numerous opportunities to stop harassing the Claimants. He elected not to do so. In my judgment it is appropriate in this case to make an order for interest on the Claimants costs incurred prior to 26th September 2020 at a rate of 8% per annum.
47.Had it been necessary for me to do so, I would have made the same costs order as that which Mr Deakin agreed. In my judgment, the only areas which might have been the subject of discussion were (i) whether an order for interest on costs incurred prior to 26th September 2020 was appropriate, and (ii) the amount of the payment on account of costs. For the reasons given, I would have made the orders proposed by the Claimants which Mr Deakin agreed back on 15th September 2021.
Payment on account of costs?
48.Where the Court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, “unless there is good reason not to do so.” [see CPR 44.2(8)].
49.The Defendant has not provided a good reason as to why I should not make that order. In the light of my findings I cannot see any good reason why I should not do so. A payment on account of costs is appropriate.
50.I am told that the Claimants’ costs are approximately £170,000. I have no doubt that those costs reflect the manner in which the Defendant, rather than the Claimants, have conducted the litigation. That figure does not include the interest, the additional interest or the additional amount of 10% of the costs awarded which I have ordered are to be paid under CPR 36.17.
51.The Claimants argue that £125,000, just under 75% of their estimated costs of £170,000, represents a reasonable sum. I agree. The majority of the Claimant’s costs are to be assessed on the indemnity basis. Had it been necessary to do so I would have ordered a payment on account of costs in the sum of £125,000.
The Defendant’s request to stay any costs order pending appeal