Partner Article

Tactics in litigation - settlement offers

With Watson Burton LLP Law Firm

Court proceedings are governed by the Civil Procedure Rules and Part 36 of the CPR (in relation to offers to settle) was amended on 6th April 2007. Specifically, CPR 36.14 now confirms the costs consequences following judgment. The rule applies upon judgment being entered and where:

• (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.

This change of wording has resulted in the meaning of CPR 36.14 being interpreted in a different, and some may say surprising, new way when considering offers of settlement and costs consequences. As can be seen below, the judge in Carver v BAA Plc (2008) certainly took the view that cases should be looked at more broadly.

In Carver, the Claimant was an air hostess who injured her ankle whilst stepping into a defective airport lift. The Defendant, BAA, conceded liability and made offers of settlement, all of which were rejected by the Claimant and the last of which was £4,520 made on a Part 36 basis.

At Trial, the Claimant was awarded £4,686.26 and, under the old wording of CPR 36.14, should have been regarded as having ‘beaten’ the Defendant’s Part 36 offer. Had this been the case, the usual costs penalty would have applied to the Defendant. Unfortunately for the Claimant however, the judge refused to stand by the tradition that an offer could be beaten by as little as £1 and instead asked himself the question “who is the winner?” and considered the Defendant to be so. The judge ruled that the Claimant had not in fact succeeded in obtaining a judgment more advantageous than the Defendant’s Part 36 offer and ordered the Claimant to pay the Defendant’s costs.

The Court, in making its decision, concluded that the new wording of Part 36 was such as to treat money and non-money claims in the same way and that “more advantageous” was an “open textured phrase”. It was therefore necessary to consider whether the outcome of the litigation made the claim worth litigating in the first place.

The Claimant appealed but the decision was upheld by the Court of Appeal.

It should be noted that one of the deciding factors in this case was almost certainly the fact that the Claimant had, in her quest for more compensation, run up legal costs of £80,000 + VAT which was seen to be totally disproportionate given that her claim was always a minor one. The lesson here is to consider whether it is truly worthwhile putting yourself and others through the stress and emotional upset that a Trial can bring simply to secure a slightly higher award. Indeed, Claimants should note the case of Carver carefully and be wary of pursuing litigation for very little more compensation and face an adverse costs order in any event.

If you have any queries relating to this article, or any other Personal Injury matter, please contact Danielle Watson at Watson Burton LLP on 0191 2444465 or email danielle.watson@watsonburton.com.

This was posted in Bdaily's Members' News section by Ruth Mitchell .