Tough Line on Late Acceptance

Briggs v CEF Holdings Ltd (2017) Court of Appeal – Gross LJ & Asplin J

This is another in a series of decisions concerning the entitlement to the costs incurred after the expiry of the ‘relevant period’ following the late acceptance of a Part 36 Offer.

More specifically this case appears (from the Lawtel report) to concern the Claimant’s attempt to distinguish its case from the decision in Matthews v Metal Improvements Co Inc [2007] EWCA Civ 215 where the Court of Appeal decided that unforeseen changes of circumstances, inherent in litigation, would not justify the court making an order other than the usual order under CPR36.20 (now CPR36.17) i.e. that the claimant should pay any costs incurred by the defendant after the latest date on which the payment or offer could have been accepted without needing the permission of the court. The facts in that case were that the onset of Lymphoma had reduced the claimant’s life expectancy, the consequence being a reduction in the level of damages he could expect to receive in respect of a minor head injury and consequent disabling psychiatric condition, resulting in his late acceptance of the defendant’s Part 36 Offer.

The claimant in Briggs, had suffered an injury to his foot in a workplace accident and an orthopaedic surgeon’s report filed with the proceedings in January 2012 contained an unfavourable prognosis. The defendant made a Part 36 offer in September that year in the sum of £50,000 with the relevant period for acceptance expiring on 9 October 2012. The offer was neither accepted or rejected. Thereafter, a stay of proceedings was granted in May 2013 during which the claimant underwent surgery.

The stay was lifted in April 2014 and the claimant increased his claim (£248,000). A further orthopaedic report in October 2014 had a better prognosis but was still unfavourable overall. However, a subsequent joint experts’ report was far more favourable and the claimant applied to vacate the trial listed for February 2015 and accepted the defendant’s September 2012 Part 36 offer on 2 June 2015.

The claimant then applied for, and obtained, an order that the defendant pay his costs up to 30 October 2014. The court accepted his submission that it would be unjust to apply the usual rule because the prognosis had been uncertain until the medical report of October 2014.

On appeal, the defendant submitted that the judge’s approach had been wrong, and that he should not have concluded that the uncertainty regarding the claimant’s prognosis meant that it was unjust under CPR rr.36.13(6) and 36.17(5) to apply the presumption that the claimant should pay the defendant’s costs.

The Court of Appeal considered the decision in SG (A Child) v Hewitt (Costs) [2012] EWCA Civ 1053 where it had found that the prognosis in respect of a child’s brain injury, at the time a Part 36 Offer had been made, was uncertain and the Claimant’s representatives could not have given a clear prognosis to the court for the purposes of an infant settlement approval hearing. The Court of Appeal in SG (A Child) had accepted the claimant’s argument that the situation was not the same as in the Matthews case. “The resulting lack of a safe prognosis do not seem to me to fit easily under the rubric “an ordinary contingency of litigation”…”.

In Briggs it was held that it was important not to undermine the salutary purpose of Part 36 offers. The decision in SG (A Child) was a clear case on the other side of the line from the instant case where, as a contingency of the litigation, it had simply been hard to work out how it might go. Cases were fact-specific but the general rule under Part 36 was that if an offer was not accepted in time, the offeree will bear the costs of the offeror from the date of expiry of the relevant period and it was up to the offeree to demonstrate that it would be unjust. It was not enough to show that it had been difficult to form a view on the likely outcome and there was nothing to distinguish this case from one involving the usual risks of litigation. The claimant’s decision to accept the offer had not come following the subsequent reports and he had continued with the case. However, the joint report had undermined his case and until that point, there had simply been the usual uncertainties and litigation risks.

Comment:

Its seems clear from these decisions that the issue is an entirely case-sensitive one. However, the common thread appears to be that the Court will find the general rule to be unjust only in exceptional cases, where offerees have been able to identify specific circumstances that, crucially, were beyond their control and which prevented them from making a reasonable assessment of the offer within the relevant period.

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