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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Hislop v Perde [2018] EWCA Civ 1726 (23 July 2018) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2018/1726.html Cite as: [2019] WLR 201, [2019] RTR 18, [2018] EWCA Civ 1726, [2018] WLR(D) 465, [2018] 4 Costs LO 515, [2019] 1 WLR 201 |
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CIVIL
DIVISION)
ON APPEAL FROM Central London County Court
Her Honour Judge Walden-Smith
A27YP399
&
IN THE COURT OF APPEAL (CIVIL
DIVISION)
ON APPEAL FROM Leicester County Court
District Judge Reed
C03YJ945
Strand, London, WC2A 2LL |
||
B e f o r e :
LADY JUSTICE KING
and
LORD JUSTICE COULSON
____________________
A2/2017/2404 |
||
Miss Mercel Hislop |
Claimant/Respondent |
|
- and - |
||
Miss Laura Perde |
Defendant / Appellant |
|
And Between |
||
A2/2017/2458 |
||
Mrs Kundan Kaur |
Claimant / Respondent |
|
- and - |
||
Committee (for the time being) of Ramgarhia Board Leicester |
Defendant / Appellant |
____________________
Mr Roger Mallalieu (instructed by Taylor Rose TTKW) for the Defendant/Appellant
Mr Nicholas Bacon QC (instructed by Winn Solicitors) for the Claimant/Respondent
Matter of Kaur:
Mr Andrew Post QC (instructed by Weightmans LLP) for the Defendant/Appellant
Mr Imran Benson (instructed by Affinity Law) for the Claimant/Respondent
Hearing dates: Wednesday 20th & Thursday 21st June 2018
____________________
Crown Copyright ©
Lord Justice Coulson :
Introduction
The Facts in Hislop
i) £2,372 by way of fixed costs up to 2 December 2014, when the offer should have been accepted;
ii) £5,534, being the costs actually incurred from 2 December 2014 onwards.
In the subsequent costs dispute, the claimant sought the sum of £5,534 by way of indemnity costs.
"5. Notwithstanding the forcible submissions made by Ms Bedford, I am not satisfied that this is an appropriate case for an order for indemnity costs. I am not satisfied that there is anything here which really takes the case out of the norm. It would have clearly been better had the offer been accepted earlier on, but that is not really the point. That is not the criteria that I have to apply. It seems to me, in addition to the policy reasons adverted to by Mr Justice Coulson [in Fitzpatrick, referred to below], that it would be unfortunate if it became customary for late acceptances of Part 36 offers to attract applications for indemnity costs, which can themselves be, as in this case, quite complicated and time-consuming and costly.
6. I agree with Mr Hoe that, really, to make good an application for indemnity costs, there has to be a standout point that can be quickly drawn to the court's attention and which makes it obvious that the case has been conducted abnormally and that, exceptionally, an indemnity costs order is justified. My order, therefore, is that the order for costs should be the fixed costs and not the indemnity costs."
The Facts in Kaur
"5…It seems to me frankly perverse if the claimant is to be worse off in circumstances where a defendant makes a higher counter Part 36 offer and then where the defendant could have belatedly accepted the claimant's Part 36 offer, and where provision is provided for, for an application for enhanced costs. (sic).
6. I find it extremely uncomfortable to say that by design or by just unfortunate circumstances that the claimant is adversely affected by the way this case has proceeded. I cannot say that by making a higher Part 36 offer the defendants' approach has been cynical and amounts to almost misconduct, but the consequences are that on the defendant's case the claimant is worse off by their making a higher offer than the claimant had made in the first place, which could have been accepted. It just cannot, in my view, be right the rule will work out in that way.
…
9. It has been drawn to my attention that the provisions of Part 44.24 do give me an opportunity to look at the circumstances of this case, as indeed do Part 45.29J, and say the circumstances appear to be exceptional to, as it were, address what seems to be a lacuna in the rules and I think it is appropriate for that to be done."
The Relevant Parts of the CPR
"Costs consequences of acceptance of a Part 36 offer
36.13
(1) Subject to paragraphs (2) and (4) and to rule 36.20, where a Part 36 offer is accepted within the relevant period the claimant will be entitled to the costs of the proceedings (including their recoverable pre-action costs) up to the date on which notice of acceptance was served on the offeror.
(Rule 36.20 makes provision for the costs consequences of accepting a Part 36 offer in certain personal injury claims where the claim no longer proceeds under the RTA or EL/PL Protocol.)
(2) Where—
(a) a defendant's Part 36 offer relates to part only of the claim; and
(b) at the time of serving notice of acceptance within the relevant period the claimant abandons the balance of the claim,
the claimant will only be entitled to the costs of such part of the claim unless the court orders otherwise.
(3) Except where the recoverable costs are fixed by these Rules, costs under paragraphs (1) and (2) are to be assessed on the standard basis if the amount of costs is not agreed.
(Rule 44.3(2) explains the standard basis for the assessment of costs.)
(Rule 44.9 contains provisions about when a costs order is deemed to have been made and applying for an order under section 194(3) of the Legal Services Act 2007.)
(Part 45 provides for fixed costs in certain classes of case.)
(4) Where—
(a) a Part 36 offer which was made less than 21 days before the start of a trial is accepted; or
(b) a Part 36 offer which relates to the whole of the claim is accepted after expiry of the relevant period; or
(c) subject to paragraph (2), a Part 36 offer which does not relate to the whole of the claim is accepted at any time,
the liability for costs must be determined by the court unless the parties have agreed the costs.
(5) Where paragraph (4)(b) applies but the parties cannot agree the liability for costs, the court must, unless it considers it unjust to do so, order that—
(a) the claimant be awarded costs up to the date on which the relevant period expired; and
(b) the offeree do pay the offeror's costs for the period from the date of expiry of the relevant period to the date of acceptance.
(6) In considering whether it would be unjust to make the orders specified in paragraph (5), the court must take into account all the circumstances of the case including the matters listed in rule 36.17(5).
(7) The claimant's costs include any costs incurred in dealing with the defendant's counterclaim if the Part 36 offer states that it takes it into account."
"Costs consequences following judgment
36.17
(1) Subject to rule 36.21, this rule applies where upon judgment being entered—
(a) a claimant fails to obtain a judgment more advantageous than a defendant's Part 36 offer; or
(b) judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant's Part 36 offer.
(Rule 36.21 makes provision for the costs consequences following judgment in certain personal injury claims where the claim no longer proceeds under the RTA or EL/PL Protocol.)
…
(4) Subject to paragraph (7), where paragraph (1)(b) applies, the court must, unless it considers it unjust to do so, order that the claimant is entitled to—
(a) interest on the whole or part of any sum of money (excluding interest) awarded, at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;
(b) costs (including any recoverable pre-action costs) on the indemnity basis from the date on which the relevant period expired;
(c) interest on those costs at a rate not exceeding 10% above base rate; and
(d) provided that the case has been decided and there has not been a previous order under this sub-paragraph, an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage set out below to an amount which is—
(i) the sum awarded to the claimant by the court…"
"Costs consequences of acceptance of a Part 36 offer where Section IIIA of Part 45 applies
36.20
(1) This rule applies where—
(a)a claim no longer continues under the RTA or EL/PL Protocol pursuant to rule 45.29A(1); or
(b)the claim is one to which the Pre-Action Protocol for Resolution of Package Travel Claims applies.
(2) Where a Part 36 offer is accepted within the relevant period, the claimant is entitled to the fixed costs in Table 6B, Table 6C or Table 6D in Section IIIA of Part 45 for the stage applicable at the date on which notice of acceptance was served on the offeror.
(3) Where—
(a) a defendant's Part 36 offer relates to part only of the claim; and
(b) at the time of serving notice of acceptance within the relevant period the claimant abandons the balance of the claim,
the claimant will be entitled to the fixed costs in paragraph (2).
(4) Subject to paragraphs (5), (6) and (7), where a defendant's Part 36 offer is accepted after the relevant period—
(a) the claimant will be entitled to the fixed costs in Table 6B, Table 6C or Table 6D in Section IIIA of Part 45 for the stage applicable at the date on which the relevant period expired; and
(b) the claimant will be liable for the defendant's costs for the period from the date of expiry of the relevant period to the date of acceptance.
(5) Subject to paragraphs (6) and (7), where the claimant accepts the defendant's Protocol offer after the date on which the claim leaves the Protocol—
(a) the claimant will be entitled to the applicable Stage 1 and Stage 2 fixed costs in Table 6 or Table 6A in Section III of Part 45; and
(b) the claimant will be liable for the defendant's costs from the date on which the Protocol offer is deemed to have been made to the date of acceptance.
…
(10) Fixed costs shall be calculated by reference to the amount of the offer which is accepted.
(11) Where the parties do not agree the liability for costs, the court must make an order as to costs.
(12) Where the court makes an order for costs in favour of the defendant—
(a) the court must have regard to; and
(b) the amount of costs ordered must not exceed,
the fixed costs in Table 6B, Table 6C or Table 6D in Section IIIA of Part 45 applicable at the date of acceptance, less the fixed costs to which the claimant is entitled under paragraph (4) or (5)."
"Costs consequences following judgment where section IIIA of Part 45 applies
36.21
(1) Where—
(a) a claim no longer continues under the RTA or EL/PL protocol pursuant to rule 45.29A(1); or
(b) the claim is one to which the Pre-Action Protocol for Resolution of Package Travel Claims applies,
rule 36.17 applies with the following modifications.
(2) Subject to paragraphs (3), (4) and (5), where an order for costs is made pursuant to rule 36.17(3)—
(a) the claimant will be entitled to the fixed costs in Table 6B, 6C or 6D in Section IIIA of Part 45 for the stage applicable at the date on which the relevant period expired; and
(b) the claimant will be liable for the defendant's costs from the date on which the relevant period expired to the date of judgment…"
Current Rule Number | Pre-April 2015 Rule Number |
36.13 | 36.10 |
36.17 | 36.14 |
36.20 | 36.10A |
36.21 | 36.14A |
36.29 | 36.21 |
"Application of fixed costs and disbursements – RTA Protocol
45.29B
Subject to rules 45.29F, 45.29G, 45.29H and 45.29J, and for as long as the case is not allocated to the multi-track, if, in a claim started under the RTA Protocol, the Claim Notification Form is submitted on or after 31st July 2013, the only costs allowed are—
(a) the fixed costs in rule 45.29C;
(b) disbursements in accordance with rule 45.29I."
In respect of the EL/PL protocol, Rule 45.29D similarly provides as follows:
"Application of fixed costs and disbursements – EL/PL Protocol and Pre-Action Protocol for Resolution of Package Travel Claims
45.29D Subject to rules 45.29F, 45.29H and 45.29J, and for as long as the case is not allocated to the multi-track, in a claim started under the EL/PL Protocol or in a claim to which the Pre-Action Protocol for Resolution of Package Travel Claims applies, the only costs allowed are—
(a) fixed costs in rule 45.29E; and
(b) disbursements in accordance with rule 45.29I."
"(8) Where, in a case to which this Section applies, a Part 36 offer is accepted, rule 36.20 will apply instead of this rule.
(9) Where, in a case to which this Section applies, upon judgment being entered, the claimant fails to obtain a judgment more advantageous than the defendant's Part 36 offer, rule 36.21 will apply instead of this rule…."
"(1) If it considers that there are exceptional circumstances making it appropriate to do so, the court will consider a claim for an amount of costs (excluding disbursements) which is greater than the fixed recoverable costs referred to in rules 45.29B to 45.29H.
(2) If the court considers such a claim to be appropriate, it may—
(a) summarily assess the costs; or
(b) make an order for the costs to be subject to detailed assessment…"
The Relevant Authorities
(a) The Comprehensive Nature of Part 45 and its Limited Exceptions
"14 Section IIIA of Part 45 provides almost as comprehensively for fixed recoverable costs in relation to claims which start within one of those Protocols, but no longer continue under them. I say 'almost as comprehensively' because there are a small number of limited exclusions and exceptions from the applicability of the fixed costs regime, to some of which I will refer in due course. With one exception, those exclusions were all expressly made. The exception consists of the very occasional RTA or EL/PL claim which, having ceased to continue under the relevant Protocol, is allocated to the Multi-track. The absence of an express exclusion for such cases was the result of a drafting error which has now been rectified: see Qader v Esure Services Limited [2016]EWCA
![]()
Civ
1109 at paragraphs 44ff, and the
Civil
Procedure (Amendment) Rules 2017, paragraph 8.
…
31 The starting point is that the plain object and intent of the fixed costs regime in relation to claims of this kind is that, from the moment of entry into the Portal pursuant to the EL/PL Protocol (and, for that matter, the RTA Protocol as well) recovery of the costs of pursuing or defending that claim at all subsequent stages is intended to be limited to the fixed rates of recoverable costs, subject only to a very small category of clearly stated exceptions. To recognise implied exceptions in relation to such claim-related activity and expenditure would be destructive of the clear purpose of the fixed costs regime, which is to pursue the elusive objective of proportionality in the conduct of the small or relatively modest types of claim to which that regime currently applies.
…
41 By contrast, to throw open PAD applications generally to the recovery of assessed costs would in my view be to risk giving rise to an undesirable form of satellite litigation in which there would be likely to be incentives for the incurring of disproportionate expense, which is precisely what the fixed costs regime, viewed as a whole, is designed to avoid. The fixed costs regime inevitably contains swings and roundabouts, and lawyers who assist claimants by participating in it are accustomed to taking the rough with the smooth, in pursuing legal business which is profitable overall."
(b) The Interaction between Part 36 and Part 45
"19. Section II of Part 45 is intended to provide a consistent outcome that is fair across a broad range of cases and obviously does not necessarily lead to an outcome in every individual case equivalent to that which would result from a detailed assessment on the standard basis. I think it is inescapable, therefore, that there is a degree of conflict between rule 36.10(3) and the fixed costs regime for which it provides. Although I accept that that regime does involve an assessment of some kind (particularly in relation to disbursements and cases where the court is satisfied that exceptional circumstances exist), I do not think that one can properly regard it as representing an assessment on the standard basis in those cases to which it applies.
20. Despite the unqualified terms of rule 36.10(3), however, I find it difficult to believe that the Rule Committee can have intended that a claimant in a low-value road traffic accident claim who accepts a Part 36 offer before proceedings have been commenced should be entitled to recover costs assessed on the standard basis, whereas a claimant who accepts an offer to settle made otherwise than under Part 36 should be limited to the costs prescribed by Section II of Part 45, insofar as they might be different. Nor is it easy to see why a claimant who proceeds under the simplified procedure in rule 44.12A should be subject to a more restrictive costs regime than one who starts proceedings to under Part 7 recover his costs. The whole purpose of introducing Section II of Part 45 was to impose a somewhat rough and ready system in a limited class of cases because the commercial interests behind the parties, who bear the burden of large numbers of such cases, considered that, taken overall, it was fair and saved both time and money. If the appellants' argument were correct, the acceptance of a Part 36 offer would always result in an order for costs on the standard basis in low-value road traffic accident cases. That would undermine the fixed costs regime and provide a powerful incentive for defendants not to make Part 36 offers in such cases. Moreover, rules 45.7 and 45.8 make it quite clear that the costs to be allowed in proceedings under rule 44.12A such as the present are those prescribed in Section II of Part 45, so if either party (perhaps the defendant) begins costs-only proceedings, there is no escape from the provisions of that Section. None of these consequences fits well with the broader scheme of the Rules which seeks to encourage settlement by the use of Part 36 and to control the costs of low-value road traffic accident claims in the manner described.
21. In my view the Rules must be read in accordance with the established principle that where an instrument contains both general and specific provisions, some of which are in conflict, the general are intended to give way to the specific. Rule 36.10 contains rules of general application, whereas Section II of Part 45 contains rules specifically directed to a narrow class of cases. Reading the Rules as a whole, I have no doubt that the intention is that Section II of Part 45 should govern the cases to which it applies to the exclusion of other rules that make different provision for the general run of cases. It is true that the procedure in rule 44.12A is not exclusive and that a claimant may start proceedings under Part 7 or Part 8 to recover costs under the terms of a settlement agreement; paragraph 17.11 of the Costs Practice Direction makes that clear. However, it is very doubtful whether he could recover more than the fixed costs for which Section II of Part 45 provides. It is unnecessary to decide that question in the present case, however, because both claimants issued proceedings under rule 44.12A. Accordingly, subject to any agreement between the parties to the contrary, neither can recover more or less by way of costs than is provided for under the fixed costs regime."
"23. If rule 45.29B stood alone, then subject to various rules in Part 45 which are immaterial, the only costs allowable in a section IIIA case to a claimant who was awarded costs following judgment in his favour would be "(a) the fixed costs in rule 45.29C and (b) disbursements in accordance with rule 45.29I". But rule 45.29B does not stand alone. The need to take account of Part 36 offers in section IIIA cases was recognised by the draftsman of the rules. Indeed, rule 36.14A is headed "costs consequences following judgment where section IIIA of Part 45 applies". Rule 45.29F (8) provides that, where a Part 36 offer is accepted in a section IIIA case, "rule 36.10A will apply instead of this rule". And rule 45.29F(9) provides that, where in such a case upon judgment being entered the claimant fails to obtain a judgment more advantageous than the claimant's Part 36 offer, "rule 36.14A will apply instead of this rule". Rule 45.29F does not, however, make provision as to what should happen where the claimant makes a successful Part 36 offer.
24. Mr Laughland submits that, since rule 45.29F makes no such provision, the basic or general rule in rule 45.29B that the only costs allowable are fixed costs and disbursements carries the day. But that is to ignore rule 36.14A which is headed "Costs consequences following judgment where section IIIA of Part 45 applies". Rule 36.14A(1) provides that in a section IIIA case "rule 36.14 applies with the following modifications". As we have seen, rule 36.14(3) provides that, where a claimant makes a successful Part 36 offer, the court will, unless it considers it unjust to do so, order that the claimant is entitled to four enhanced benefits including "(b) his costs on the indemnity basis from the date on which the relevant period expired.
25. The effect of rules 36.14 and 36.14A when read together is that, where a claimant makes a successful Part 36 offer, he is entitled to costs assessed on the indemnity basis. Thus, rule 36.14 is modified only to the extent stated by 36.14A. Since rule 36.14(3) has not been modified by rule 36.14A, it continues to have full force and effect. The tension between rule 45.29B and rule 36.14A must, therefore, be resolved in favour of rule 36.14A. I reach this conclusion as a straightforward matter of interpretation and without recourse to the canon of construction that, where there is a conflict between a specific provision and a general provision, the former takes precedence. As we have seen, there is disagreement as to which is the relevant general provision in the present context. Mr Williams submits that it is rule 36.14; and Mr Laughland submits that it is rule 45.29B. I do not find it necessary to resolve this difference.
26. Rule 36.14A(8) provides further support for my conclusion. This provision states that in a section IIIA case the parties (i.e. claimant as well as defendant) are entitled to disbursements allowed in accordance with rule 45.29I in any period for which costs are payable to them. This reflects rule 45.29B(b). If, as Mr Laughland contends, rule 45.29B prevailed over rule 36.14A in any event, this provision would have been unnecessary. It is significant that rule 36.14A does not contain a provision which reflects rule 45.29B(a) and 45.29C. In my view, the fact that rule 36.14A contains provision for payment of disbursements in accordance with rule 45.29B(b), but not for payment of fixed costs in accordance with rule 45.29B(a) confirms that the interpretation that I have adopted above is correct."
(c) Indemnity Costs Generally
a) Indemnity costs are appropriate only where the conduct of a paying party is unreasonable 'to a high degree'. 'Unreasonable' in this context does not mean merely wrong or misguided in hindsight.
b) The court must therefore decide whether there is something in the conduct of the action, or the circumstances of the case in general, which takes it out of the norm in a way which justifies an order for indemnity costs.
(d) General Approach to Late Acceptance of Part 36 Offers
"21. Secondly, I consider that the court has to be very careful before inserting into a rule, which is silent on costs, a presumption of this kind, extracted from a different rule altogether. It seems to me that, on this point, Lord Woolf's remarks in Excelsior are of some relevance (although I acknowledge that he was dealing there with a contrast between the old r36.21 and the old r36.20.) He concluded that, in the absence of any reference to the indemnity basis, an order for costs which the court was required to make under the old r36.20 was an order for costs on the standard basis. It seems to me that precisely the same general reasoning would apply here to CPR 36.10(4) and (5).
…
23. Thirdly, I note that r36.10(3), which deals with the situation where the claimant's offer is accepted within the relevant period, expressly provides that costs will be assessed on the standard basis. If, therefore, there was a presumption that indemnity costs would apply under r36.10(5), when an offer was accepted outside the period, it seems to me that the rule would say so. It does not, and, in my judgment, that is not an oversight or an omission; it is because either standard or indemnity costs may be applicable where an offer is accepted after the relevant period, depending on the analysis under CPR 44.3.
24. Finally, I am not persuaded that, as a matter of policy, it would be appropriate to import an indemnity costs presumption into r36.10(4) and (5). A defendant is entitled to accept an offer beyond the period of acceptance. In a complex case such as this, a defendant should be encouraged continuously to evaluate and re-evaluate the claim and its own response to that claim, so that even if the defendant had originally concluded that it was not going to accept the offer, it should always be prepared to change its mind. The CPR should be interpreted in a way that encourages such constant re-evaluation.
25. All those of us involved incivil
litigation are conscious of the irony that a well-judged Part 36 offer by one party (whether claimant or defendant) at the outset of proceedings can often make a trial and a fight to the finish more, rather than less, likely, because there will often be instances where, by the time the offeree has belatedly realised that the offer was well-judged, he will have incurred considerable cost, and may feel that he has no option but to go on and fight the case through to the finish in the hope of bettering the offer. Such an outcome is not to be encouraged. There is a risk that, if a defendant belatedly changed its mind as to the acceptability of a claimant's Part 36 offer, the defendant would be discouraged from formally accepting that offer if it thought that it would have to pay indemnity costs in consequence. It would not be appropriate to construe the CPR in such a way, because that would, in my view, actively discourage late settlements and instead give rise to another reason for the offeree to push on to a trial."
The Proper Interpretation of the CPR
Conclusion in Hislop
Conclusion in Kaur
"2. This is an appeal brought…in relation to costs. As such it is overcast, from start to finish, by the heavy burden faced by any appellant in establishing that the judge's decision falls outside the discretion in relation to costs conferred upon him under rule 44.3(1) of theCivil Procedure Rules 1998. For reasons of general policy, namely that it is undesirable for further costs to be incurred in arguing about costs, this court discourages such appeals by interpreting such discretion very widely."
"We are pleased to confirm that my client has agreed to accept your Part 36 offer, which is subject to indemnity costs since the expiry of our Part 36 offer on 7th September 2016 in the sum of £2,000."
Lady Justice King :
Lord Justice Longmore :