piBlawg

the personal injury and clinical negligence blog

A collaboration between Rebmark Legal Solutions and 1 Chancery Lane

COSTS AFTER A SPLIT TRIAL-THE BLACK HOLE

1.      Just over five years ago, there was an unfathomable change to the Part 36 rules on split trials which, it turns out, gives a huge incentive to defendants to make a monetary Part 36 offer before any split trial that is ordered.   2.      Prior to 6th April 2007, the matter was dealt with by Part 36.19.  Part 36.19, entitled Restriction on disclosure of a Part 36 offer or a Part 36 payment, stated (2)   The fact that a Part 36 payment has been made shall not be communicated to the trial judge until all questions of liability and the amount of money to be awarded have been decided. (3)   Paragraph (2) does not apply-….. (c) where-(i) the issue of liability has been determined before any assessment of the money claimed and (ii) the fact that there has or has not been a Part 36 payment may be relevant to the question of the costs of the issue of liability   3.      That rule was interpreted in HSS Group plc v BMB Limited [2005] 1 WLR 3158.  In that case the First Defendant had made a Part 36 payment after the start of proceedings but before an order for a split trial.  At the split trial, the First Defendant was found liable and the trial judge ordered it to pay the costs on the issue of liability. Held: The trial judge should have reserved costs. The First Defendant’s Part 36 payment might affect the final costs order.   4.       On 6th April 2007 the old Part 36.19 became the present Part 36.13.  In the present rule, there is no reference whatsoever to split trials.  It is difficult to know why the draughtsmen of the new rule thought it fitting to drop the clear and helpful sub-rule in the old Part 36.19(3) dealing with split trials.  There is now a blanket ban on telling a trial judge about the fact of Part 36 offer except where the parties agree or in two other exceptional cases.   5.      It is not hard to agree with the thoughts of Henderson J in AB v CD [2011] EWHC 602 at paragraphs 16 to 20 who did not have to decide the matter but found the wording of Part 36.13(2) unsatisfactory and who observed that the party against whom a costs order was otherwise likely to be made would simply withhold their agreement to disclosure of the fact of a Part 36 offer.  He concluded: “ I will merely hazard the suggestion…that a possible solution might be to focus on the words “until the case has been decided” in rule 36.13(2), which are much less specific than the wording of the old rule 36.19(2)…It may be that in appropriate circumstances the new wording should be construed as referring to the conclusion of the first part of a split trial. But even then the difficulty would remain that the court may only be told about the existence of the Part 36 offer [and not its terms], so the question of the costs would in practice still have to be reserved for the reasons given by the Court of Appeal in the HSS Group case”.   6.      The learned judge may be right about the need to construe the rule, although construing it in that manner appears to be re-writing it to include that which the rules committee thought fit to leave out.   7.      Accordingly where a defendant has made no monetary Part 36 offer (or one that is plainly hopeless and could not conceivably be engaged), the Court will be able to make a costs order after a split trial on liability.  In all other cases, it should reserve costs.   8.      But why shouldn’t the Claimant have his costs on issues of liability up to the date of the Part 36 offer?   9.      This question was posed in The Jean Scene Limited v Tesco Stores Limited [2012] EWHC 1275.  The Court held that the default position is that costs should be reserved and since in this case the Part 36 offer had been made early and there were potential arguments about pre-action protocol matters, the default position ought to apply. Costs were reserved and no payment on account of costs was made.   10.  So the position after the date of Part 36 offer is clear.  Costs must be reserved.  I have my doubts whether defendants will be able to smother the claimant’s right to the costs on liability pre-dating the Part 36 offer simply by making a Part 36 offer a week or two before the split trial.  It needs to be made early.   11.  In the latest case on this subject, Ted Baker PLC v Axa Insurance & ors [2012] EWHC 1779, the court declined to make any immediate costs orders but ordered the defendants to pay the costs of the preliminary issues subject to any settlement issues that might arise at the end of the case. A contingent order like that is scarcely the solution.  One can but agree with Mr Justice Eder that there is an urgent need for Part 36.13 to be reviewed and reformulated to deal with the matter of split trials.        

Court of Appeal tightens up on relief from sanctions

Jackson LJ considered case management decisions in his report on costs in civil litigation. He said:-   "...courts at all levels have become too tolerant of delays and non-compliance with orders. In so doing they have lost sight of the damage which the culture of delay and non-compliance is inflicting on the civil justice system. The balance therefore needs to be redressed."  Earlier this year, in Fred Perry v Brands Plaza Trading Limited [EWCA] 2012 Civ 224, the Court of Appeal agreed and applied CPR 3.9 in a way which attempted to redress that balance.   The Defendant had been in breach of a series of orders. Unless orders had been made, the Defendant had not complied and the defence was struck out. The Defendant applied for relief from sanctions. The Court of Appeal reiterated that the interests of the administration of justice - the first item on the CPR 3.9 checklist - requires that parties comply with court orders, and particularly so where the order in question is an Unless order. This is a welcome reminder that the interests of the administration of justice are not necessarily the same as the interests of justice.   The Court of Appeal was critical of the Defendant’s attempt to argue that the Unless should not have been made or was too onerous. It was inappropriate to make a collateral attack on the order in an application for relief from sanctions: if the Defendant did not like the order its remedy was to appeal, which it had not done. The judgment emphasised that the first instance judge has a wide discretion when considering an application for relief from sanctions. The Court of Appeal approved of the judge’s exercise of discretion, and noted that judges who made robust but fair case management decisions should be supported. Lord Justice Jackson was on the panel and made the further point that CPR 3.9 is due to change with effect from 1st April 2013. The familiar checklist is due to be replaced with the following:- "On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider the circumstances of the case, so as to enable it to deal justly with the application including the need – (a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and court orders."  Lord Justice Jackson commented that after 1st April 2013, “litigants who substantially disregard court orders or the requirements of the Civil Procedure Rules will receive significantly less indulgence than hitherto”.  

Mr 10%

Until recently “Mr 10 %” has probably best been known as a gaming app which can be bought and downloaded onto a smartphone or tablet. The aim of the game is, as an “agent to the stars”, to buy and sell celebrities and make enough profit as quickly as possible to lead the life of the rich and famous. For lawyers, however, “Mr 10 %” is Lord Justice Jackson who, in recommendation 10 out of 109 recommendations in paragraph 5.3 of chapter 10 of his Costs Review Final Report recommended that in personal injuries litigation the level of general damages for pain suffering and loss of amenity should be increased by 10%. Lord Justice Jackson explained his reasoning in a lecture in London on 29 February 2012 (the tenth lecture in his “Implementation Programme”) entitled “Why Ten Per Cent?” http://www.judiciary.gov.uk/NR/rdonlyres/51D3DBB3-E200-4EAC-930D-9FECCCC49FA3/0/ljjacksonspeechwhytenpercent29022012a.pdf In that lecture Lord Justice Jackson responded to the criticism that a 10% increase in general damages was not enough by stating “first, the forthcoming reforms to conditional fee agreements (“CFAs”) could quite properly be introduced without any increase in general damages. Secondly, the proposed increase of 10% has the consequence that most claimants will be better off under the package of reforms as a whole. Thirdly, it would not be proper to unpick this part of the package in an attempt to secure additional cash for claimants and their lawyers”. Yesterday (26 July 2012) in Simmons v Castle [2012] EWCA Civ 1039 the Court of Appeal handed down a judgment which implements that increase in general damages from 1 April 2013. http://www.judiciary.gov.uk/NR/rdonlyres/C81DE933-0D21-42CF-9200-C4885367115A/0/simmonsvcastle.pdf    Lord Judge, the Lord Chief Justice, giving the judgment of the court which also comprised the Master of the Rolls, Lord Neuberger and the Vice-President of the Court of Appeal, Lord Justice Maurice Kay, said that the increase was in line with Lord Justice Jackson's report on civil litigation costs. Lord Judge added that it was clear that the Court of Appeal “not merely has the power, but a positive duty, to monitor, and where appropriate to alter, the guideline rates for general damages in personal injury actions” – see [12] of the judgment. The court explained that early notice was being given of the 10% increase due to take effect in April 2013 to enable all parties engaged in or contemplating litigation to be aware of the impending change and to prepare accordingly.  In terms of how the new guidelines will be applied, the Court of Appeal ruled that the 10% increase should apply to all cases where judgment is given after 1 April 2013. The increase will also apply to defamation, nuisance and all other torts which cause suffering, distress or inconvenience to individuals. Whether this will bring “a windfall benefit to the majority of all personal injury claimants” as Lord Justice Jackson envisaged in his February lecture remains to be seen.     Image - http://www.freefoto.com