Cycles in the sand?

In Best v Luton & Dunstable Hospital NHS Foundation Trust [2021] EWHC B2 (Costs), a clinical negligence case, the defendant accepted the claimant’s part 36 offer of £475,000 to settle the costs.

Costs of assessment were to be determined a month later on 10 November 2020. That hearing went ahead virtually before Master Leonard. At the conclusion of the assessment, the parties agreed that the resulting figure was £58,119.80. It is important to note that the assessment had not taken the whole of the allocated court time.

Shortly after the parties left the virtual hearing, Master Leonard received an email from the claimant’s representative, advising that there was an issue to be addressed. That issue being that the claimant had beaten her own part 36 offer on the costs of £52,000 made the month before. Consequentially, she now wished to claim the benefits of a part 36 offer. Master Leonard directed that the hearing be restarted.

The hearing was reconvened. The defendant objected to a new issue having been raised after the hearing had concluded. On the basis that there was insufficient time left to hear full arguments, particularly as Master Leonard drew the parties’ attention to the judgment he had given previously in the matter of Bourne v West Middlesex University Hospital NHS Trust ( SCCO Reference CL1702494, 2 October 2017). In that case, Master Leonard had concluded that a part 36 offer could not be made in relation to the costs of detailed assessment proceedings.

In his written judgment, in addressing the first issue, Master Leonard concluded that counsel for the claimant, quickly realising her omission, had re-instated a hearing which had not concluded as the parties were brought back into court within the allotted court time. He said that he was ‘assisted by the principles identified by the Supreme Court in Re L and B ( Children’s) [2013] UKSC 8’. In that case, the court considered a judge’s powers in relation to changing a decision at any time before the order is perfected. He concluded that he must apply the overriding objective to deal with the case justly, and consider if there were consequences from the claimant’s omission. In other words, had the other party suffered any prejudice as a result of that omission?

In these particular circumstances, he found that there had been no prejudice and that the application of the overriding objective meant that the claimant should be allowed to raise the issue of her part 36 offer.

The immediate reaction to Master Leonard’s decision to rule that a part 36 offer could not be made in relation to the cost of detailed assessment proceedings has to be to question whether the decision flies in the face of the CPR?

The starting point has to be the old rules as implemented by the Woolf reforms in April 1999.

In the beginning, there was ‘without prejudice’ correspondence and ‘without prejudice save as to costs’ correspondence. The CPR ushered in part 36 in respect of ‘without prejudice’ offers and part 47 in respect of the detailed assessment procedure and ‘without prejudice save as to costs’.

Via CPR 47, offers to settle in respect of detailed assessment costs were made under CPR47.19 and the supplementing practice direction 46. At that time, part 36 offers were not made in detailed assessment proceedings.

Then the world changed on 1 April 2013 when 47.19 was dropped, and replaced by 47.20(4) which applied the provisions of part 36 to the costs of detailed assessment. This was backed up by 47.20(7) which made detailed assessment proceedings an independent claim for the purpose of rule 36.17. This (36.17) refers to the costs consequences following judgment.

Straightforward enough, but crux of the matter is, as outlined by Master Leonard, the interpretation of CPR 36.2(2) (d) pre-2013.

Paragraph 37 of his judgment, says:

“…before the introduction of the Part 36 regime to detailed assessment proceedings in 2013, it was already possible to make an offer in respect of the whole, or part of, any issue that arose in a claim. The relevant wording appeared at wording of CPR 36.2(2)(d). If the issues arising on the detailed assessment of costs were issues in the claim for the purposes of CPR.2(2)(d), it would already have been possible to make a Part 36 offer in detailed assessment proceedings and it would not have been necessary, in 2013, to make specific provision to introduce the Part 36 regime to detailed assessment.”

I would agree that it was already possible to make an offer in respect of the whole, or part of, any issue that arose in a claim. In this case, the authority to assess was by way of the deemed order created by the acceptance of the part 36 offer made. Damages had been agreed and the deemed order is obviously silent as to any costs provisions. One has to ask the question – would Master Leonard’s approach be different if the authority to assess had been a Tomlin Order where the costs provisions were a condition of the settlement of the claim?

It is a reasonable assumption that it would already have been possible to make a part 36 offer in detailed assessment proceedings, if the issues arsing on the detailed assessment of the costs were issues in the claim. However, I do not believe that this was the driver for the 2013 provisions to introduce the part 36 regime to detailed assessment. Rather the driver was the desire to achieve less complexity and greater consistency in the rules regarding offers.

However, 47.20(4) cannot be ignored. As it stands, this judgment appears contradictory to that provision, not a new phenomenon to many readers I am sure. It is now clearly long past time that resources be directed into a review of the rules and practice directions to make them far more user friendly and to obliterate the anomalies which exist, not only in costs litigation but throughout the rules and regulations which steer the whole of the profession.

Master Leonard referred to an indefinite cycle of part 36 offers and new detailed assessment proceedings, each parasitic on the last. Common sense dictates that this cannot possibly be right and indeed would be wholly disproportionate, duplicative and unfair to the paying party.   

Without a change to the rules, how can that cycle be broken?       

This article, by Claire Green, chair, Association of Costs Lawyers first appeared in PRACTICAL LAW DISPUTE RESOLUTION BLOG  on 24 March 2021

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29 Mar 2021

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