CLAIMANT BEATS THEIR OWN PART 36 OFFER: COMMISSIONER OF POLICE COPS FOR THE LOT…

In Bell v Commissioner of Police of the Metropolis (No. 2: Consequential Matters) [2024] EWHC 650 (KB) Mrs Justice Hill considered the consequences where the claimant had beaten their own Part 36 offers.  The defendant was ordered to pay an additional £54,675.58 in interest, and £10,439.95 as an additional payment.  Most of the costs will be paid on an indemnity basis.

 

 

“The Defendant’s intransigent conduct of these proceedings, contrary to the obligation on all parties to engage meaningfully with settlement possibilities, has compounded the failures that underpinned the Claimant’s claims. I have no difficulty in accepting that the Defendant’s conduct of the litigation has prolonged and exacerbated the Claimant’s distress. That is a relevant factor when the court is considering the use of compensatory powers in relation to interest.”

THE CASE

The claimant had earlier succeeded at trial in an action against the police following the abduction of his son.  He was awarded £137,999.49 in damages.  The judge was considering costs and Part 36 issues.

 

OFFERS TO SETTLE

The claimant had made offers to settle which were well below the damages awarded at trial.  The defendant had made no offers.

    1. I have now been provided with a comprehensive bundle of without prejudice correspondence.

 

    1. This makes clear that the Claimant made two Part 36 offers prior to the trial of his claims. These were made on 30 August 2019 (in the sum of £95,000) and 17 June 2020 (in the sum of £50,000).

 

    1. The correspondence also indicates that the Claimant invited the Defendant to consider sensible settlement of the claim on several occasions, but that the Defendant failed to engage in settlement in any meaningful way; and made no offers of his own.

 

  1. The Claimant became eligible for civil legal aid during the course of the proceedings. Accordingly both parties were publicly funded. The Defendant’s budgeted costs were £129,129.80; and the Claimant’s were £262,167.80, although both parties are likely to have exceeded these budgeted sums.

ENHANCED INTEREST ON DAMAGES

 

    1. Mr Simblet KC submitted that the payment of the maximum rate was merited in this case not simply pour encourager les autres, but because the Defendant’s conduct of the litigation merited it. Further, payment of such a rate was necessary in order to ensure a fair result for the Claimant, who has had the strain of the litigation hanging over him for many years and when it could have been brought to an end on more advantageous terms to the Defendant nearly five years ago.

 

    1. As to factor (a) in OMV, he calculated that the Defendant has had a very lengthy period between the deadline for accepting the first Part 36 offer and judgment, namely 1,616 days (4 years, 5 months and 2 days).

 

    1. As to factor (b), he submitted that the Defendant had continued to defend the Claimant’s claims without proper regard to the risks.

 

    1. The Defendant had persisted in litigation despite having destroyed documents he should have retained at the very outset. I agree, having already observed that the Defendant did not even attempt to explain to the court why such documents had been destroyed in apparent breach of the duty to preserve disclosable documents once litigation is contemplatedBell (No. 1) at [18].

 

    1. He argued that the Defendant had also continued to litigate the claim despite having no proper explanation for the absence of relevant witness evidence. Again, I agree, having already held that the absence of witness evidence provided by the Defendant was even “more stark” than the position in Wisniewski v Central Manchester Health Authority [1998] EWCA Civ 596[1998] PIQR 324Bell (No. 1) at [143].

 

    1. Mr Simblet noted that the Claimant succeeded on his case on the basis of the documentary evidence alone, despite my finding that adverse inferences could be drawn under the Wisniewski approach. This was entirely accurate: Bell (No. 1) at [144].

 

    1. He observed that the evidence of the Claimant on the representations of PC Abery, the evidence of Alison Shalaby OBE and the Claimant’s reliance on Hedley Byrne & Co. Ltd v Heller & Partners Ltd [1964] AC 465 and Al-Kandari v JR Brown & Co [1988] 1 QB 665 had been drawn to the Defendant’s attention at a very early stage. That much is apparent from the correspondence bundle with which I have now been provided.

 

    1. He contended that the Defendant had predicated much of his Defence on the assertion that the passport could not be retained. However, the Defendant had singularly failed to properly plead this issue in breach of CPR 16.5(2)(a) or address it in the Skeleton Argument before trial: Bell (No. 1) at [145] and [147].

 

    1. Finally, Mr Simblet relied on the Defendant’s failure to engage with the process of settlement, simply insisting in stark terms that the matter would go to trial. The second offer, of £50,000, in particular, was, he said, “now truly dwarfed by the combined recoverable damages and costs”. In my judgment that characterisation of the position is entirely fair.

 

    1. As to factor (c), it was plain to me that the Claimant has suffered profound and enduring distress due to the Defendant’s officers’ failings. The Defendant’s intransigent conduct of these proceedings, contrary to the obligation on all parties to engage meaningfully with settlement possibilities, has compounded the failures that underpinned the Claimant’s claims. I have no difficulty in accepting that the Defendant’s conduct of the litigation has prolonged and exacerbated the Claimant’s distress. That is a relevant factor when the court is considering the use of compensatory powers in relation to interest.

 

    1. Mr Simblet also relied on the “level of disruption” caused to the wider public by the Defendant’s conduct of the litigation. He argued that the lengthy internal police complaints procedure (which identified several key failings by the Defendant’s officers), the extensive involvement of the Defendant’s lawyers and the significant court time required to determine the claims meant that the expenditure of public resources on this litigation, was “truly eye-watering”. It is hard to argue with that assessment.

 

    1. He relied on the principle that there is no special rule for public authorities when conducting civil litigation: see, by analogy, R (on the application of Hysaj) v. Secretary of State for the Home Department [2014] EWCA Civ 1633 at [42].

 

    1. Overall, Mr Simblet contended that each of these matters taken on their own would justify the selection of a rate of interest close to the maximum, but that considered cumulatively, the case for such a rate was even greater.

 

    1. In my judgment these submissions are entirely sound. Having read them, I was minded to accept them in full. In fact, in responsive submissions, the Defendant conceded that the maximum enhanced interest rate of 10% should apply to all the Claimant’s damages, save for the award of “general” (non-pecuniary) damages. Accordingly, it appears that the Defendant accepts the force of the criticisms made of his conduct of the litigation, albeit providing no context or, as far as I am aware, apology to the Claimant, or indeed the court.

 

    1. However, the Defendant argued that only a 5% enhanced interest rate should apply to the £28,000 non-pecuniary loss award. Mr Clemens submitted that this reduced rate would properly reflect the fact that non-pecuniary damages are of a different kind to special or pecuniary damages, where a claimant has in fact expended a sum of money and been deprived of its use. This explained why the interest rate for general damages is flat at 2% rather than the variable special account rate, from the date of service of the claim form.

 

    1. I pause to observe that the introductory words to CPR 36.17(4) make clear that the court must order the enhanced interest rate on the Claimant’s damages under subsection (a) unless it considers it “unjust” to do so. Mr Clemens did not suggest in terms that payment of a rate of 10% enhanced interest on the non-pecuniary award would be “unjust” to the Defendant. Nor did the submissions he made address any of the discrete factors set out in CPR 36.17(5) which the court must take into account.

 

    1. In fairness to the Defendant I have assumed that Mr Clemens’ submission was intended to suggest that payment of the 10% interest rate would be unjust. I have also assumed that the point set out at [28] above is relevant to the overall “circumstances of the case” which must also be taken into account under CPR 36.17(5) (albeit that it could credibly be said that this is an argument of general application, and not in fact specific to the circumstances of this case).

 

    1. Having done so, I reject the argument. In my judgment all the considerations set out at [15]-[26] above, which relate the various factors discussed in OMV to the circumstances of this case, apply with equal force to the non-pecuniary damages award. I also agree with Mr Simblet that it is inaccurate for the Defendant to characterise the very significant anguish and distress the Claimant has suffered for over 10 years, from the date of ROC’s abduction in 2013 to the judgment in this matter, as “akin to future loss”.

 

    1. For these reasons I conclude that enhanced interest at the maximum rate of 10% should apply to the entire award, save for the £33,600 element of it which Mr Simblet was content to exclude from this calculation (as much of that figure relates to estimated future losses). That gives a damages figure of £104,399.48.

 

    1. Mr Clemens also argued that the enhanced raise of interest should only run from the date of service of the claim form, not the expiry of the relevant period. That submission reflects what would have happened if the Claimant had not beaten his Part 36 offer. However, as he did, he is entitled by CPR 36.17(4)(a) to “interest … for some or all of the period starting with the date on which the relevant period expired.” That approach reflects the fact that the Defendant chose not to accept an offer to settle the claims at an early stage, for both general and special damages. On that basis the enhanced interest rate runs from 19 September 2019.

 

  1. Accordingly, the Defendant is ordered to pay enhanced interest at a rate of 10% above base rate on damages in the sum of £104,399.48, from 19 September 2019. That gives a figure of £54,675.58.

THE ADDITIONAL SUM

    1. As noted above, CPR 36.17(4)(d) requires the payment of an additional sum, not exceeding £75,000, calculated by applying a prescribed percentage to the total sum awarded to the Claimant by the court. As the total sum awarded here was below £500,000, the appropriate percentage is 10%.

 

    1. The Defendant could not realistically resist the Claimant’s application for this sum and did not seek to do so.

 

  1. The Claimant was again content for the £33,600 element of the award to be excluded from this calculation. Accordingly the parties agreed the figure for this sum at £10,439.95, as 10% of £104,399.48, that being the amount awarded for general damages and past losses.

INDEMNITY COSTS

(3): Costs on the indemnity basis under CPR 36.17(4)(b) and interest on those costs and enhanced interest on those costs under CPR 36.17(4)(c)

    1. CPR 36.17(4)(b) provides that the Claimant is entitled to “costs (including any recoverable pre-action costs) on the indemnity basis from the date on which the relevant period expired”. As noted above, that period expired on 19 September 2019. CPR 36.17(4)(c) provides that the Defendant shall pay “interest on those costs at a rate not exceeding 10% above base rate”. Mr Simblet relied on the same factors as are set out under issue (2) above to contend that the enhanced interest rate on these costs should be 10% above base rate.

 

    1. The Defendant accepted both of these principles but contended that the Claimant was not entitled to costs on an indemnity basis, or enhanced interest on costs, insofar as they related to the £33,600 element of the award.

 

    1. Again, it is important to remember that the introductory words to CPR 36.17(4) make clear that the court must order the costs on an indemnity basis and enhanced interest on those costs under subsections (b) and (c) unless it is “unjust” to do so. Again, Mr Clemens did not address this test, or any of the factors in CPR 36.17(5).

 

    1. However, again, I am content to take his central argument as intending to do so. This was to the effect that that Claimant’s solicitor had “sat on” information about the £33,600 claim and failed to explain the position to the court, such that the Defendant had incurred additional costs in responding to that element of the claim.

 

    1. The information in question had not been “sat on” for any length of time: the letter which set out the details of the claim was received on 17 November 2023, the Friday before trial, and was provided to the Defendant as soon as realistically possible after taking instructions on it, a matter of days later. The trial was not unduly disrupted by it.

 

    1. It was agreed at trial that the timing of the letter was “unfortunate”. I have already found that the 17 November 2023 letter was “consistent with, and the final iteration of, the practice which the parties had hitherto adopted” for updating the Defendant as to increases in the Claimant’s pecuniary losses. The Defendant was afforded time to deal with it and so suffered no unfairness in respect of this claim: Bell (No. 1) at [277].

 

    1. Moreover, I have now seen without prejudice correspondence making clear that when the Part 36 offer was made on 30 August 2019, the Claimant’s solicitor advised the Defendant’s solicitor that the Claimant had incurred, or was in the process of incurring £87,000 in costs in the Brazilian proceedings. Further, the Claimant’s solicitor made plain that “if [the Claimant’s] current appeal fails (and we are advised that there is an 80% chance that it will) then further expenses of £105,000 are likely to be incurred”.

 

    1. This shows that back in August 2019, before the claim was issued, the Defendant was on notice of an overall claim relating to the Claimant’s pecuniary losses of £192,000 (that being the total of the figures of £87,000 and £105,000 quoted in the Claimant’s solicitor’s correspondence). In fact, the final claim advanced at trial was substantially lower, namely £109,999.49 (that being the total of the £76,399.49 claimed for past pecuniary losses and the £33,600 figure). In those circumstances the submission that the Defendant was somehow ambushed or surprised by the later claim is unsustainable.

 

    1. In those circumstances I accept Mr Simblet’s submission that the £33,600 sum claimed was just one of the “vicissitudes of litigation”, the possibility of which the Defendant could have avoided by accepting one of the Claimant’s Part 36 offers. As he pointed out, it was “bad luck” for the Defendant that this occurred, just as it would have been “good luck” for the Defendant if the Claimant had succeeded in the Brazilian proceedings, such that he had had not incurred costs as high as he did.

 

    1. For these reasons I do not consider that there is anything unjust in requiring the Defendant to pay indemnity costs in relation to this element of the Claimant’s costs.

 

  1. Accordingly, the Defendant is ordered to pay the Claimant’s costs up to 19 September 2019 on a standard basis, but on an indemnity basis thereafter under CPR 36.17(4)(b). Interest on the indemnity costs is to be paid at 10% above base rate under CPR 36.17(4)(c).

 

A REMINDER: INDEMNITY COSTS MEANS THE SUCCESSFUL PARTY IS NOT BOUND BY THE BUDGET

    1. The Defendant agreed that a payment on account of 90% of the Claimant’s budgeted costs of £262,167.80 was appropriate. This was a sensible concession. It is common to order payments of account of 90% of budgeted costs in cases subject to costs and case management: see, for example, the authorities cited in Puharic v Silverbond Enterprises Ltd [2021] EWHC 389 (QB) at [11].

 

  1. However, there is an even greater justification for such an order in this case given that the Claimant is entitled to his costs on an indemnity basis. This effectively means that his legal team may recover costs above and beyond those approved in the costs budget, as the limitations of CPR 3.18 no longer apply. It is likely that the Claimant’s actual costs are higher than those budgeted, not least because of the volume of post-trial submissions that have been required in this case.

THE RESULT

Conclusion

    1. Accordingly, in addition to the £137,999.49 the Defendant has already been ordered to pay the Claimant by way of damages, he must also pay the following within 14 days of the date of my order:

 

(i) £54,675.58 to the Claimant, that sum reflecting interest at a rate of 10% above base rate on £104,399.48 of his damages, from 19 September 2019, under CPR 36.17(4)(a);

(ii) £10,439.95 to the Claimant as an additional sum under CPR 36.17(4)(d); and

(iii) £235,951.02 plus VAT on account of costs to the Claimant’s solicitors, that being 90% of the Claimant’s approved costs budget.

  1. In addition, the Defendant is ordered to pay the Claimant’s costs up to 19 September 2019 on a standard basis, but on an indemnity basis thereafter under CPR 36.17(4)(b). Interest on the indemnity costs is to be paid at 10% above base rate from 19 September 2019 under CPR 36.17(4)(c).