The White Lion (Appellant) v James (Respondent) 2021 Court of Appeal
Mar 4 2021
Occupiers' Liability Act and obvious risksRead More
In Tuson v Murphy  EWCA Civ 1491, the Court of Appeal overturned a costs order made against the Claimant, who had been ordered to pay a proportion of the Defendant's pre-Part 36 offer costs when she accepted the offer after the relevant period had expired.
It was held that applying the default costs rule under CPR 36.13(5) was highly unlikely to be unjust to the Defendant, who had made an unconditional Part 36 offer with the knowledge that the Claimant's credibility was questionable and her evidence as to her ability to work following the accident was misleading.
In his latest article, James Manning summarises the key findings and highlights the alternative tactics the Defendant could have adopted in this case.
Summary of Facts
On 19 August 2010 Ms Tuson ("T") fell from a horse during a riding lesson at Ms Murphy's riding school ("M"). T sustained a broken arm and subsequently developed Obsessive Compulsion Disorder ("OCD").
Liability was admitted on behalf of M with T agreeing a 15% reduction for contributory negligence. T alleged that she was unable to return to work as a consequence of the accident and the pleaded value of her claim exceeded £1.5 million.
Sequence of Post-Accident Events
HHJ Harris ordered that M pay T's costs up to 1 April 2014 and T pay M's costs thereafter. The rationale underpinning the costs order, which was in essence a retrospective, punitive costs order imposed upon T, was that it would be unjust to M for a default costs order to be made under CPR 36.13(5) because T would not be punished in any way for misleading M as to the severity of her disability and ability to resume work after her accident.
On appeal, the Court found that:
The appeal was allowed and it was ordered that M pay T's costs up to 8 October 2015 with T paying M's costs from 8 October to 1 December 2015.
Persuading the Court to depart from the default costs rule under CPR 36.13(5) when a Claimant accepts a Part 36 offer after the relevant period has expired represents a formidable barrier for Defendants.
Careful consideration must be given as to the form and wording of the offer(s) where a Defendant has direct knowledge that elements of a Claimant's claim are tainted by dishonesty/exaggeration but elects to make an offer to settle that seeks to (i) impose conditions, limits or restrictions on a Claimant's costs and (ii) secure a costs order against a Claimant in respect of the dishonest/exaggerated elements of the claim.
As well as a conditional Calderbank offer, which was the approach recommended in Summers and endorsed in this case, a Part 36 offer can be made in relation to "a part of claim or an issue that arises from it" – CPR 36.5(d). Therefore M, rather than making a Part 36 offer to settle the whole of T's claim, could have made a Part 36 offer in respect of the genuine element(s) of T's claim and invited her to abandon the dishonest/exaggerated element(s). A Claimant who accepts a Defendant's conditional/issues-based Part 36 offer and discontinues the remainder of the claim within the relevant period will only be entitled to costs of the successful part of the claim, unless the Court orders otherwise – CPR 36.13(2).
Since the relevant period of M's Part 36 offer had expired, M could have, prior to T serving notice of acceptance, changed the terms of the Part 36 offer without the permission of the Court by reduced the sum offered to T in settlement of her claim – CPR 36.9 (1) and (4)(a). M would have still benefited from the costs protection of the "original" Part 36 offer that was advanced mid-September 2015 if T accepted or failed to beat the reduced/less advantageous Part 36 offer at trial - Burrett v Mencap  EW Misc B50(CC). It is, however, important to note that the CPR 36.17(3) costs benefits are lost if a Claimant beats a Defendant's reduced/less advantageous Part 36 offer at trial – CPR 36.17(7)(b).
Finally, M could have, again prior to T serving notice of acceptance, withdrawn the Part 36 offer without the permission of the Court under CPR 36.9 (1) and (4)(a), though it must be borne in mind that the CPR 36.17(3) costs benefits are lost entirely in these circumstances - CPR 36.17(7)(a).
If you would like to discuss this topic in more detail please contact James Manning