THE REAL ADVANTAGES AND RISKS OF PART 36

By Catherine Duffy

 In Downing v Peterborough & Stamford NHS Foundation Trust [2014]EWHC 4216 (QB) heard by Sir David Eady on 12^th December 2014 the Claimant received an additional £75,000 in damages after beating its own Part 36 offer.

Summary

The Claimant claimed damages for personal injury and other losses arising from the clinical negligence of the defendant NHS trust. Liability was admitted. The Claimant made a Part 36 offer in the sum of £1,200,000 (inclusive of interest) plus costs. The total damages awarded were £1,508,524. The Claimant asked the court to apply the Part 36 cost consequences.

Part 36

Part 36 is clear, under r36.14 where a judgement against a defendant is “at least as advantageous to the claimant as the proposals contained in the Part 36 offer” the Part 36 cost consequences apply unless it is “unjust” to do so.

Judgement – in relation to Part 36

Sir David Eady stated that “it is now clear that judgement against the Defendant is ‘at least as advantageous to the claimant’ as the proposals made in the Claimant’s Part 36 offer.”

In accordance with CPR36.14(3)(b) and (c) the Claimant’s counsel asked for costs to be awarded on the indemnity basis from the relevant date and for interest on those costs at a rate not exceeding 10% above the base rate. The court is obliged to make such an order unless it considers it “unjust” to do so.

Counsel for the defendant referred to the indemnity costs provision as “punitive” in character. The Judge stated that “a decision was taken, as a matter of public policy, to impose sanctions in order to encourage and facilitate the settlement of litigation …Indemnity costs are, therefore, bound sometimes to be payable under CPR 36.14(3)(b) because an assessment of the merits proves not to be justified or simply because an informed guess as to the outcome turns out to be wrong.”

“It is elementary that a judge who is asked to depart from the norm, on the ground that it would be “unjust” not to do so, should not be tempted to make an exception merely because he or she thinks the regime itself harsh or unjust. There must be something about the particular circumstances of the case which takes it out of the norm.”…

In this case counsel for the defendant invited the Judge not to award costs on the indemnity basis because 1 of the experts appeared in the witness box to take a less optimistic view of the Claimant’s recovery prospects than that previously expressed in written evidence. The Judge accepted that “the experts in this case were all somewhat tentative and cautious as to the chances of significant improvement.” Sir David Eady concluded that “there is nothing here to justify a departure from the presumption in favour of indemnity costs. The Defendant’s advisers made a particular judgement call which turned out (at least at first instance) to have been wrong. Such an award does not carry with it any implied criticism of their professional skill or of their conduct. It is just one of the consequences imposed by the rules.” The Judge rules that costs should be assessed from the relevant date on the indemnity basis and, further, that there should be interest on those costs at 10% above base rate under CPR36.14(3)(c).

There is an additional provision under CPR 36.14(3)(d) for an additional sum, not exceeding £75,000, to be paid in accordance with a sliding scale. The Judge stated “I cannot see any reason why, under this regime, the Claimant should not receive the maximum figure.

Key Points

• It is notable here that even though the experts appeared to have some changes of mind, this did not make it “unjust” for the Claimant to receive the additional benefits of Part 36.
• It pays for parties to make prompt and realistic Part 36 offers and any such offers should be carefully considered.
• The ‘new’ Part 36 comes into force on 6^th April 2015. Please see the very useful link to Gordon Exall – http://civillitigationbrief.wordpress.com/

Tags: catherine duffy, claim, Claimant, Damages, Gordon Exall, Liability, NHS, Part 36, part 36 offer