LexisNexis Personal Injury A LexisNexis mini-mag helping personal injury lawyers stay up to date.

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1 LexisNexis Personal Injury A LexisNexis mini-mag helping personal injury lawyers stay up to date. Spring 2015 Lexis PSL Table of changes New Rule 36 v existing CPR 36 rules Lexis Calculate: Future Loss of Earnings What s the point of the Social Action, Responsibility and Heroism Act? David Gabell, Tees Law An offer you can t refuse? Chris Hoyer-Millar & Alex Fox Penningtons Manches

2 From the Editor Contents Welcome to the Lexis Nexis personal injury mini-magazine. In this edition we review the forthcoming Part 36 reforms and provide you with a handy guide to the new rule 36 v the existing CPR 36 rules. We also highlight interesting articles from our key publications including New Law Journal and our PI blog. The breadth of reform in the personal injury sector has been unparalleled over the last few years. At Lexis Nexis we are committed to providing practitioners with all the resources they need to keep abreast of these changes. As well as our extensive Lexis Library we also have our online guidance product PSL which includes a comprehensive suite of time saving calculators and up to the minute current awareness reports. Best wishes Karen O Sullivan Solicitor and Head of LexisPSL Personal Injury Lexis PSL Personal Injury 4 Meet the team 7 Table of changes: New Rule 36 v existing CPR 36 rules 11 Lexis Calculate: Future Loss of Earnings LexisNexis Free Content 5 Personal Injury blog content 6 What s the point of the Social Action, Responsibility and Heroism Act? David Gabell, Tees Law New Law Journal 12 An offer you can t refuse? Chris Hoyer-Millar & Alex Fox, Penningtons Manches Lexis Library 14 LexisLibrary Personal Injury 15 The Civil Court Practice 2015 Editorial Editor: Karen O Sullivan Production Editor: Rachel Buchanan Design: Creative Solutions Offices: Lexis House, 30 Farringdon Street, London, EC4A 4HH Tel: Reproduction, copying or extracting by any means of the whole or part of this publication must not be undertaken without the written permission of the publishers. This publication is intended to be a general guide and cannot be a substitute for professional advice. Neither the authors nor the publisher accept any responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this publication. 2

3 Lexis PSL Personal Injury Half the battle is keeping on top of the latest case law, legislation, precedents and forms. LexisPSL Personal Injury brings everything together for you online, in one place. So you can get up to speed faster, with more time to spend on your clients. Lexis PSL Our succinct practice notes and layered approach gives you more control over accessing the level of information you need. Short, concise practice notes help you find what you need more quickly, and provide direct links to relevant cases and legislation, including the All England Law Reports. A wide portfolio of expert commentary, includes Butterworths Personal Injury Litigation Service, Bingham & Berrymans Personal Injury and Motor Claims Cases, Munkman Employer s Liability, Redgrave s Health and Safety, and Munkman on damages. LexisPSL Personal Injury precedents include suites of precedents with detailed drafting notes, and direct links through to cases, legislation and relevant commentary. Lexis Smart Precedents also allow documents to be created from a single questionnaire, saving huge amounts of time in drafting and crosschecking, and reducing the risk of error. So you can be confident you re giving the right advice, even when you re outside your comfort zone. And you re free to spend more time focusing on rewarding work that makes a real difference. LexisPSL Personal Injury has thousands of quantum cases in one easyto search database, with new cases added every week. Plus over 20 quantum calculators that can run highly complex calculations for you in minutes (not hours). To find out more about LexisPSL Personal Injury, or to have a free trial, visit lexisnexis.co.uk/piba/psl 3

4 Lexis PSL Personal Injury: Meet the team Lexis PSL Karen O Sullivan Karen has 15 years of experience in all types of personal injury litigation and specialises in employer liability claims from union-funded claimants, occupational disease claims, and group actions as well as representing defendants. Karen trained at Nelsons solicitors before moving to Thompsons upon qualification (by client request) where she acted primarily for union GMB. Karen then became Head of Department at RSA Legal South managing and supervising a team handling over 2000 litigated cases on behalf of defendant companies. Karen joined the LexisNexis PSL Team in 2009 as the in-house expert and spokesperson for personal injury. She is also a regular contributor to the New Law Journal. Elizabeth Milbourn Elizabeth has ten years of experience in personal injury litigation. She studied science and law at the University of Adelaide in Australia and practised there for several years before relocating to London. She initially practised in insurance litigation dealing with product and public liability claims and then specialised in clinical negligence. She worked at Lovells and then at US Firm Howrey. Following that she transferred to Nabarro with her team to help establish the healthcare practice. Elizabeth managed a significant case load dealing with large and small value claims and several large scale group actions. Elizabeth joined the Lexis PSL team in January Consulting Editorial Board Robin de Wilde QC Clerksroom Simon Taylor QC Cloisters Professor Dominic Regan Legal Consultant Andrew Wilson Legal Consultant Mark Havenhand Irwin Mitchell Susan Brown Prolegal Sarah Padmore RSA Legal Sue Bright RSA Legal Stephen Garner Old Square Robert Hunter Devereux Chambers Theo Huckle QC Civitas Chambers Marcus Weatherby Pattinson & Brewer Contributing authors Andrew Ritchie QC 9 Gough Square James Sullivan 12 Kings Bench Walk Tom Pacey 12 Kings Bench Walk Louise Thomson 12 Kings Bench Walk Stephen Innes 4 New Square George McDonald 4 New Square Robert Hunter Devereux Chambers Alistair Hill Dundas & Wilson Marcus Weatherby Pattinson & Brewer Joel Donovan QC Cloisters Sarah Fraser Butlin Cloisters Catriona Stirling Cloisters Mike Hill Trinity To find out more about LexisPSL Personal Injury, or to have a free trial, visit lexisnexis.co.uk/piba/psl 4

5 News & Views: LexisNexis Free Content There is no escaping the fundamental changes that personal injury law is undergoing. To assist personal injury practitioners coping with this change, we provide freely available material, including the personal injury content on LexisNexis Dispute Resolution blog, Personal Injury Twitter feed and the LexisNexis hosted think tank, Halsbury s Law Exchange. LexisNexis Free Content Our free Personal Injury content sits within the Dispute Resolution blog in its own category, PI. Other parts of the Dispute Resolution blog may also be of interest to personal injury practitioners, especially the Jackson Reforms material and comment. Sign up to receive exclusive content sent to our subscribers on a monthly basis including access to a piece of bespoke content such as a practice note or checklist from LexisPSL The blog is a space for news and views on the latest developments, whether they are changes to the law or tips on building a thriving legal practice. We cover all CPR updates and include news and case analysis to keep our readers up to speed. We also post practical guidance, checklists and send our subscribers exclusive content in a monthly . The Dispute Resolution blog includes Personal Injury and Arbitration content as well as all aspects of Dispute Resolution. We write in-house with comments and guest posts from leading practitioners. To find out more, visit lexisnexis.co.uk/piba/blog 5

6 What s the point of the Social Action, Responsibility and Heroism Act? David Gabell, Tees Law PI Blog This post discusses the main features of the much-maligned act and considers whether it is likely to muddy the waters for judges when they are required to apply the legal tests of duty of care, liability and causation. SARHA 2015 applies when a court, in considering a claim that a person has been negligent or in breach of statutory duty, is determining whether that person met a standard of care. This means courts will take account of the fact an individual was acting for the benefit of society eg doing a good deed such as volunteering if something goes wrong. The Act applies to England and Wales only. What is the significance of SARHA 2015? The significance, in my view, is largely a negative one. It essentially provides more shades of grey where there really isn t any need. The Act means that those people who may otherwise have been the defendant in a claim for personal injury are now potentially safe from alleged liability, assuming they can convince a court that they were: acting for the benefit of society, and/or demonstrating a predominantly responsible approach towards protecting the safety or interest of others, and/or acting heroically by intervening in an emergency to assist an individual The purpose of the Bill was to reassure people, including employers, that if they demonstrate a predominantly responsible approach towards the safety of others, during a particular activity, the courts will take this into account in the event that proceedings are issued against them. The scope of the word predominantly is staggering. Does it mean, for example, that an employer can be irresponsible to a degree that an employee suffers an injury, but get away with it on the basis that they are responsible most of the time? In my view that is a peculiar way to administer justice for the injured party. SARHA 2015 has received a great deal of criticism from lawyers, are there any redeeming features? You have to appreciate the sentiment of an Act, which seemingly tries to afford protection to the brave passer-by who risks life and limb to rescue someone in peril but in reality that is not really what this Act achieves. All it does is muddy the waters for judges who already need to grapple with the often complex legal tests of duty of care, liability and causation. would be hugely risky and the chances of success are typically less than 50%, but if successful it would save this child s life. The surgeon could close up and discuss the findings with the child and the parents and discuss the options and risks, but to do so would waste valuable time and mean a further risky operation for the child. In this case the surgeon presses on, against the odds, and attempts to remove the tumour. In doing so the condition of the child deteriorates and she dies on the operating table. Some may say the surgeon acted heroically and therefore any claim that the family try to bring for clinical negligence ought to be defended on that basis. Indeed, in principle, such a defence would apparently be available to the surgeon under SARHA Others may say, not least the parents, that the surgeon s actions fell far below a reasonable standard and that he/she was negligent in failing to stop the procedure and discuss the risks and options with the parents. Defining heroism is a difficult task when the context is such that the hero has seemingly caused significant harm or loss to another. Does SARHA 2015 create any enforceable duties or obligations? Not on individuals, per se. There is no legal duty for passers-by to now intervene in order to protect someone else from apparent harm. However, now that the Bill has achieved Royal Assent, courts will be obliged to consider the provisions of SARHA 2015 when/if defendants seek to use its provisions in order to protect themselves from liability. To what extent must the court have regard to the provisions in SARHA 2015? In my view the court will, of course, have a duty to consider the provisions of the SARHA 2015 where applicable but in practice I expect the court will still ultimately be guided by the established legal principles of negligence (ie duty of care, liability and causation). I cannot realistically see a court finding in favour of a defendant where they have been shown to have breached their duty of care and caused harm, regardless of whether they were predominantly responsible in their approach and/or acting heroically. Are there concerns around the definition of heroism? The word hero conjures up all sorts of ideas about what a hero really is. A man in a cape and tights wearing their underpants over the top, or burly firemen running into a burning building to rescue the occupier. Both of which probably fit the bill for being a typical hero, but just what is heroic heavily depends on the circumstances and context of the case. Take the following example. A surgeon performing surgery on a child discovers, during the procedure, a life threatening tumour. To remove it That said, stranger things have happened in our courts of late, so anything is possible. Interviewed by Hannah Giles. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor. First published on Lexis PSL Personal Injury. Click here for a free trial of Lexis PSL. To find out more about LexisPSL Personal Injury, or to have a free trial, visit lexisnexis.co.uk/piba/psl 6

7 Table of changes: New Rule 36 v existing CPR 36 rules This Practice Note provides a summary analysis, in table format, of the New Rule 36 in force as of 6 April 2015 as against the existing CPR 36 rules (which remain in force until 5 April 2015). It shows you where to find the existing rules in the new Part as well as identifying wholly new provisions and amended provisions. Note: although the New Rule 36 applies in its entirety only to Part 36 offers made on/after 6 April 2015, as of that date certain of its provisions (New Rule 36.3: definitions, New Rule 36.11: acceptance of a Part 36 offer, New Rule 36.12: acceptance of a Part 36 offer in a split trial case and New Rule 36.16: restriction on disclosure of a Part 36 offer) will also apply to Part 36 offers made before that date where trial (whether of the whole claim or a part(s)/issue(s)) is due to commence on/after 6 April Lexis PSL Note: this table does not consider those provisions relating to Part 36 offers concerning low value RTA or EL/PL protocol cases. Nature of provision Existing (pre 6 April 2015) CPR 36 rule New Rule 36 (in force as of 6 April 2015) Has it changed much? Scope of Part New Rule 36.1 Confirms that Part 36 is a self-contained procedural code about offers to settle made pursuant to the procedure in Part 36. Scope of this Section (ie Section I) New Rule 36.2 Confirms that New Rule 36, Section I does not apply to an offer to settle to which New Rule 36, Section II applies. Confirms that you can still make an offer to settle in whatever way you wish but if the offer is not made in accordance with New Rule 36.5 it will not have the consequences set out in New Rule 36, Section I. Confirms that for a non-part 36 compliant offer the court will still be required, by virtue of CPR 44.2, to take into account an offer to settle which does not have Part 36 consequences. Counterclaims New Rule 36.2 Specific provision now that you can make a Part 36 offer in respect of the whole or any part or issue of a counterclaim or other additional claim. This deals therefore with the issue as it arose in F&C Alternative Investments. Appeals CPR 36.3(4) New Rule 36.2(3)(b) New Rule 36.4 CPR 36 definitions Requirements for a valid Part 36 offer Various throughout the existing CPR 36 New Rule 36.3 Confirmation can only make a Part 36 offer on an appeal from a trial (not an appeal from an interlocutory application). Relocation of the provision that Part 36 costs consequences of first instance proceedings do not extend to appeals, unless the Part 36 offer is being made in appeal proceedings. Check out the corresponding term table in New Rule 36.4 to guide you through using New Rule 36 if making a Part 36 offer in appeal proceedings. Key definitions are now located in one place, including definitions to cover split trial scenario. New definitions as to: trial : can mean a trial of all the issues or a trial only of liability, quantum or some other issue a trial is in progress : defined to mean from the time the trial starts until judgment is given/handed down a case is decided : when all the issues in the case have been determined, whether at one or more trials trial judge : includes the judge (if any) allocated in advance to conduct a trial relevant period : maintains essentially the same definition as under the existing CPR 36.3(1)(c) CPR 36.2 New Rule 36.5 Not much has changed but still important: you no longer need to state on the face of your offer that it is intended to have the consequences of Section I of CPR 36 rather, your offer must make clear that it is made pursuant to Part 36 a subtle but helpful distinction to deal with the so-called technicality issue as seen in cases such as Thewlis. Defendant s offer CPR 36.4 New Rule 36.6 Maintains essentially the same definition as under the existing CPR Part 36. When can a Part 36 offer be made? CPR 36.3(2) New Rule 36.2(3)(b) and New Rule 36.7 Reorganised the location but the basics remain the same: you can make a Part 36 offer before commencement of proceedings and you can make a Part 36 offer in appeal proceedings. 7

8 Lexis PSL Nature of provision Serving a Part 36 offer When and how to withdraw a Part 36 offer Seeking clarification of a Part 36 offer When and how to accept a Part 36 offer Accepting a Part 36 offer in split trials Existing (pre 6 April 2015) CPR 36 rule New Rule 36 (in force as of 6 April 2015) Has it changed much? CPR 36.7 New Rule 36.7 A Part 36 offer is made when it is served on the offeree. Although not new, the drafters resisted the temptation to further define what is meant by served on the offeree instead relying on the already set out concepts of service under CPR 6 which is now specifically referred to in New Rule CPR 36.3(5)- (7) and CPR 36.7 New Rule 36.9 and New Rule You can still vary or withdraw a Part 36 offer after expiry of the relevant period if it has not already been accepted without the court s permission (New Rule 36.9(4)(a)) and you are still required to serve notice to do so, such notice taking effect when it is served on the offeree (New Rule 36.9(2)(3)). Some new provisions, however: Now, where the terms of your Part 36 offer specify a time when it will expire if not already accepted (provided such time limit is not within the relevant period) then your offer will be treated as having been automatically withdrawn after expiry of the relevant period without you needing formally to serve a notice of withdrawal (New Rule 36.9(4)(b)). A welcome provision for Part 36 offerors as it will bring an end to overlooked but unwithdrawn Part 36 offers. For the first time there is express provision regarding varying a Part 36 offer so as to make it more advantageous to the offeree. Such variation may be made at any time and will not be treated as a withdrawal of the original offer, but as a new Part 36 offer with a new relevant period. Thus both the original and the new offer would remain open for acceptance. The effect of two such offers still being open comes in terms of costs consequences for unaccepted offers (New Rule 36.17). If you want to withdraw or adversely vary your Part 36 offer within the relevant period New Rule applies. You may do so but this does not prevent the offeree from still accepting the original offer if they do so within the relevant period. Where they do so then you can only withdraw/adversely vary your Part 36 offer by then applying (within seven days of the offeree s acceptance or earlier if trial is earlier) to the court for permission. Such permission will only be given if there has been a change of circumstance and it is in the interests of justice. If the offeree does not accept your original offer within the relevant period then your withdrawal/adverse variation of it takes effect on expiry of the relevant period (New Rule 36.10(2)(3)). This should now deal with issues as they arose in the Evans case. As before: The costs consequences for failing to accept a Part 36 offer as set out in New Rule 36.17(3)(4) do not apply where the Part 36 offer has been withdrawn (New Rule 36.17(7)(a)). If the offeree has beaten a Part 36 offer where the terms were varied so as to become less advantageous to the offeree then, again, the costs consequences of New Rule do not apply (New Rule 36.17(7)(b)). However, New Rule confirms that CPR 44.2 requires the court to consider an offer to settle that does not have the costs consequences set out in New Rule 36, Section I and so, presumably, such an offer may yet be capable of consideration under CPR 44.2 when it comes to costs. CPR 36.8 New Rule 36.8 No change. Provision is replicated in full in New Rule CPR New Rule The provisions are generally the same, with one key exception: under existing CPR 36.9(5) you cannot accept a Part 36 offer after the end of trial but before judgment is handed down unless the parties agree. This provision has been removed. Rather, it is now apparent from New Rule 36.3(d) and New Rule 39.11(3)(d) as to when a trial is in progress that, in order to accept a Part 36 offer after trial but before judgment is handed down/given, you would need the court s permission (not simply the parties agreement). It remains the case where the court s permission is required to accept a Part 36 offer that, unless the parties agree, the court must (rather than will, if there is a distinction to be drawn) make an order dealing with costs and may order that the costs consequences of accepting a Part 36 offer as set out in Part 36 (ie in New Rule 36.13) apply (New Rule 36.11(4)). New Rule This is an entirely new provision. It provides that where you have a split trial, you cannot accept a Part 36 offer in respect of an issue which has already been decided and that you cannot accept any other Part 36 offer until seven clear days after judgment has been handed down in the decided issue(s). This is to protect those Part 36 offerors who have made separate issue-based Part 36 offers and wish to withdraw those Part 36 offers made in respect of (as yet) undecided issues as a consequence of the judgment given in the already decided issues. 8

9 Nature of provision Costs consequences of accepting a Part 36 offer The non-costs consequences of accepting a Part 36 offer Accepting a Part 36 offer made by one but not all defendants Disclosing the existence of a Part 36 offer Existing (pre 6 April 2015) CPR 36 rule New Rule 36 (in force as of 6 April 2015) Has it changed much? CPR New Rule No significant change although some points of clarification: Where a Part 36 offer is accepted within the relevant period the claimant is entitled to his costs of the proceedings and those are now specifically stated to include the claimant s recoverable pre-action costs (New Rule 36.13(1)). Where a defendant has made a Part 36 offer which relates to only part of the claim and the claimant accepts this and abandons the balance of the claim, under existing CPR the claimant is entitled to its costs of the proceedings up to the date of acceptance unless the court orders otherwise. Now New Rule 36.13(2) specifies that in such a case the claimant will only be entitled to its costs of such part of the claim (as was accepted under the Part 36 offer) and not costs of the proceedings more generally, again, unless the court orders otherwise. New Rule 36.13(3) clarifies that costs are to be assessed on the standard basis if not agreed unless the recoverable costs are fixed costs. New Rule 36.13(4) makes it clear that the court will determine the costs liability (unless the parties agree it) where: the Part 36 offer was made less than 21 days before trial is accepted, or the Part 36 offer relates to the whole of the claim is accepted after expiry of the relevant period, or the Part 36 does not relate to the whole of the claim and is accepted at any time Where the Part 36 offer relates to the whole of the claim and was accepted after expiry of the relevant period but the parties cannot agree the costs such that the court order them, New Rule 36.13(5) changes the wording subtly so, instead of talking about the claimant s entitlement and the offeree s liability, the language used instead is that the court must order that the claimant be awarded its costs up to the date of expiry of the relevant period and the court must order that the offeree do pay the offeror s costs from the date of expiry of the relevant period to the date of acceptance of the offer. In such case, although the costs consequences of accepting a Part 36 offer are, under the existing regime, to be ordered unless the court orders otherwise, New Rule 36.13(5)-(6) together impose a requirement that the court must make such order unless it considers it unjust to do so and, in considering whether it would be unjust, the court is required to take into account all the circumstances of the case including the matters listed in New Rule 36.17(5). This requirement under New Rule 36.13(6) is a new provision. CPR New Rule Under existing CPR where a defendant made an offer that was/included a single sum and that sum was not paid within 14 days of acceptance of the offer, the claimant was entitled to enter judgment for that sum. There was no corresponding provision where the offer to accept a single sum in settlement of the claim emanated from the claimant (rather than the defendant). This meant that an unscrupulous defendant could accept a claimant s Part 36 offer to settle on payment of a single sum and then not pay that sum, this did not give the claimant an automatic right to enter judgment on that sum. This lacuna has now been rectified in the provision appearing as New Rule 36.14(6)-(7). Otherwise the non-costs consequences of accepting a Part 36 offer remain as per the existing regime. CPR New Rule The New Rule maintains essentially the same definition as under the existing CPR without substantial change. CPR New Rule The key change here is to accommodate the situation where a Part 36 offer has been made in relation to one or more issue(s) in a case and there has been a split trial. In such case, it is now clear under New Rule 36.16(3)(d) and New Rule 36.16(4) that: You can disclose to the trial judge the existence and terms of a Part 36 offer which is limited to the issues which have been decided in the case However, if the Part 36 offer is a global offer or includes other issues that have not yet been decided, you can only disclose the existence of the offer to the trial judge but not its terms unless one of the criteria in New Rule 36.16(3)(a)-(c) applies This is a new provision to deal with the so-called Ted Baker issue. Lexis PSL 9

10 Lexis PSL Nature of provision Costs consequences of not accepting a Part 36 offer Personal Injury claims for pecuniary loss Offer to settle a claim for provisional damages Costs consequences of acceptance where Section IIIA of CPR 45 applies Deduction of benefits and lump sum payments Costs budgeting and Part 36 Existing (pre 6 April 2015) CPR 36 rule New Rule 36 (in force as of 6 April 2015) Has it changed much? CPR New Rule The same basic provisions apply where a party fails to accept a Part 36 offer, ie certain specified costs consequences will apply where either the claimant obtains a judgment more advantageous than a defendant s Part 36 offer or the claimant obtains a judgment which is at least as advantageous as the proposals contained in its own Part 36 offer. There has been no change in terms of identifying what is more advantageous or at least as advantageous in this respect. The only key changes are: New Rule 36.17(3)(a) and New Rule 36.17(4)(b) make it clear that in ordering costs such costs are to include any recoverable pre-action costs. There has been a change from use of the word that the court will make such costs orders (unless unjust to do so) to it must make such orders (unless unjust to do so) although it is not obvious that there is necessarily any practical consequence in this difference in terminology. New Rule 36.17(4)(d) makes it clear that the additional amount that must be awarded where the claimant obtains judgment at least as advantageous as his own unaccepted Part 36 offer, can only be awarded if the case has been decided (ie all issues in the case have been decided) and there has not been a previous order of costs under New Rule 36.17(4) and also confirms that the additional amount applies to all cases, including those where the amount awarded by the court exceeds 1 million (by removing this upper threshold). New Rule 36.17(5)(e) is new and is possibly one of the most interesting of the new Part 36 provisions. In determining whether an order under New Rule 36.17(3) or New Rule 36.17(4) is unjust, the court must consider the factors listed in New Rule 36.17(5). New Rule 36.17(5)(e) is a newly added factor which requires the court to consider whether the unaccepted Part 36 offer was a genuine attempt to settle the proceedings. Its inclusion arose out of the issue of cynical claimant offers, ie those claimant offers that were made at such a level as to be almost impossible to accept as conferring no real benefit of settlement on the defendant and so were made with little inclination to settle but as a strategic attempt to recover on costs under the existing provisions of CPR when the defendant did not accept the offer. They were typified in cases such as Huck. Although personal injury claimant lawyers have argued that, in an open-and-shut claim, an offer to settle for 95% - ie a discount of 5% - can represent a significant concession of real value to the defendant. However, it was outside the remit of the Civil Procedure Rules Committee sub-committee s work on revising Part 36 to consider those specific types of case and, instead, it elected to include this genuine attempt to settle requirement as a means of preventing cynical claimant offers. Quite what tools will be available to the court to determine whether or not the unaccepted offer was a genuine attempt to settle remains to be seen. Otherwise the costs consequences of failing to accept a Part 36 offer remain unchanged. CPR 36.5 and CPR 36.6 New Rule The new provisions have moved to New Rule but we do not consider here the substance of those changes. CPR 36.6 New Rule The new provisions have moved to New Rule but we do not consider here the substance of those changes. CPR 36.10A New Rule and New Rule New Rule New Rule The new provisions have been moved to New Rule and New Rule but we do not consider here the substance of those changes. There is new provision at New Rule but we do not consider here the substance of these provisions. This is a new provision. It provides that in any case where the offeror is treated as having filed a costs budget limited to applicable court fees, or is otherwise limited in their recovery of costs to such fees, then the meaning of costs for the purposes of: New Rule 36.13(5)(b) (the offeree do pay the offeror s costs for the period from expiry of the relevant period to acceptance of the Part 36 offer, unless unjust so to order) New Rule 36.17(3)(a) (costs consequences where the claimant obtains a judgment more advantageous than the defendant s unaccepted Part 36 offer) New Rule 36.17(4)(b) (costs consequences where the claimant obtains a judgment at least as advantageous as the proposals in its own, unaccepted, Part 36 offer) means: (a) In respect of those costs subject to any such limitation, 50% of the costs assessed without reference to the limitation, together with (b) Any other recoverable costs The effect is intended to maintain the ability of an offeror to seek early effective settlement in the claim (ie some cost benefit to doing so) even where such offeror has been punished in respect of recoverable costs under the costs budgeting regime. 10

11 Lexis Calculate: Future Loss of Earnings This calculator is based on the Ogden tables 3-14 Education level The calculator adjusts for contingencies other than mortality Lexis PSL Results The calculation is undertaken to a precision of 4 decimal places ensuring greater accuracy than if the calculation had been undertaken manually More A full breakdown outlining the calculation can be displayed To find out more about LexisPSL Personal Injury, or to have a free trial, visit lexisnexis.co.uk/piba/psl 11

12 An offer you can t refuse? Chris Hoyer-Millar, associate & Alex Fox, partner, Penningtons Manches New Law Journal Hindsight is a wonderful thing. Recent judgments have drawn attention to the failures of parties (and their advisers) to curb costs and reach settlement. Why did X embark on a doomed case at vast and irrecoverable expense? Why did Y leave disclosure until the last minute thereby causing costs to rocket? Why did Z not accept an offer to settle which it could never realistically hope to beat? Of course in the heat of battle, matters are rarely clear cut. However two recent cases provide guidance as to the court s developing approach to two potentially problematic areas which crop up time and again: Without Prejudice Save As To Costs Offers (Calderbank Offers) and Part 36 Offers. The Court of Appeal decision (concerning Calderbank offers) is perhaps clearer than the more nuanced (and very fact specific) judgment of the Commercial Court (concerning an unsuccessful defendant s Pt 36 offer). Coward v Phaestos The first case, Coward v Phaestos [2014] EWCA Civ 1256, [2014] All ER (D) 17 (Oct) arose out of what is currently thought to be the most expensive ever British divorce case (in terms of fees incurred), related intellectual property litigation and a subsequent costs appeal. The costs of the intellectual property (IP) litigation alone totalled 19m; 6m incurred by Dr Martin Coward, the claimant, and 13m incurred by the defendants (IKOS). IKOS ran a highly successful hedge fund based on quantitative trading computer programmes developed by Coward. The IP issues related to claims that Coward had taken very valuable proprietary software with him when he left IKOS. Having ruled that the software was owned by the partnership, Mrs Justice Asplin held that IKOS was substantially the successful party and therefore entitled to 85% of its costs. The Calderbank offer The central argument behind Coward s appeal related to a without prejudice save as to costs offer (the Calderbank offer), which he made part way through the proceedings by a letter dated 30 July Coward argued that the Calderbank offer offered IKOS substantially all that it achieved at trial and that Asplin J had therefore been wrong not to order either that the defendants pay his costs from the date of the Calderbank offer or at least that from that date onwards each side should bear its own costs. The Calderbank offer comprised: a declaration that IKOS software and databases were not the subject of any copyright or database rights owned by Coward; an order providing for the handover to IKOS or destruction of all copies of specified software; an order that Coward pay to IKOS the sum of 50,000 in settlement of its claims to financial relief, including interest; and an order that Coward pay IKOS costs of the proceedings up to acceptance of the offer or 21 days from the date of the offer, such costs to be assessed on the standard basis if not agreed. Critically, shortly after receiving the Calderbank offer, IKOS requested clarification of various terms contained within it. Coward s solicitors duly responded, stating that while they were prepared to engage in negotiations to settle all disputes in all jurisdictions, they considered their earlier letter to contain a clear and specific offer capable of acceptance. On 19 December 2012, IKOS solicitors made an offer (the IKOS Offer ), without prejudice save as to costs. The IKOS Offer, they said, reflected the terms proposed in the Calderbank offer, save that it required that Coward paid their costs to date (which had increased by 4m in the intervening five months). Coward rejected the IKOS Offer. The Court of Appeal It is not difficult to imagine that Coward and his advisers felt the Calderbank offer to be sufficient to settle the case: after all, the court only awarded IKOS 1,000 by way of financial relief, rather than the much more generous offer of 50,000 for financial relief contained in the Calderbank offer. However the Court of Appeal agreed with Asplin J s analysis that the order achieved by IKOS at trial was materially better than the terms advanced in the Calderbank offer. 12

13 The Court of Appeal paid particular attention to the fact that by Asplin J s order, IKOS obtained an undertaking from Coward not to make any use of certain key software. The court viewed this as a very significant improvement on the Calderbank Offer. IKOS had in fact sought an injunction: however, while they did not obtain an injunction, Coward did ultimately provide comparable relief by way of an undertaking on the same issue. Mr Justice David Richards explained the reasoning behind the Court of Appeal s decision thus: The omission of an offer of an injunction or undertaking in the Calderbankoffer must be seen in the context of the other terms of the offer.although [Coward] offered to deliver up or destroy all copies of the 2009 Software, he did not offer to cleanse his software of any content which involved use of the 2009 Software. Ultimately that issue was resolved on the eve of the trial by his agreement to cleanse his software of the Gardening Leave Code. No such offer was made in July Seen against that background, the injunction sought by IKOS was very important. How will the courts assess Calderbank offers? Coward makes it very clear that the courts will approach the question of costs differently where there has been a Calderbank offer rather than a Pt 36 offer. The starting point, Mr Justice David Richards said, was to recognise that Pt 36 and Pt 44 are separate regimes with separate purposes. Part 36 is a self-contained code dealing with offers of settlement made in accordance with and subject to the terms of Pt 36, which specifies particular consequences in the event that such offers are not accepted. That those consequences include features which go far beyond that which might be ordered by way of costs under Pt 44 only serves to underline that it is a separate regime from Pt 44. By contrast with the prescriptive terms of Pt 36, Pt 44 contains no rules as to the way in which the court is to have regard to offers. In particular, and most obviously, even in the case of a money claim, there is no provision equivalent to CPR (1A). The court should not therefore apply such a rigid test where Pt 44 is engaged. Instead the court should exercise its discretion as to the just order for costs, having regard to all the circumstances of the case, including those specified in 44.2(4). The Court of Appeal recognised that the discretionary nature of Pt 44 comes at the price of some uncertainty and some scope for argument as to costs. Sugar Hut Group v AJ Insurance Where Pt 36 offers are concerned, a miss is as good as a mile (in theory at least). In Sugar Hut Group Ltd & Ors v AJ Insurance [2014] EWHC 3775, [2014] All ER (D) 205 (Nov) Mr Justice Eder ordered that the claimants, operators of the well-known eponymous nightclub (which features in the television series The Only Way is Essex ), could recover damages (inclusive of interest) of 1,090, The claimants (whose claim related to losses arising out of a fire at the nightclub) were therefore the successful party. After the defendant s interim payments were taken into account, the outstanding balance was 277, As against this, the defendant had made a Pt 36 offer inclusive of interest of 250,000. The defendant s Pt 36 offer was therefore unsuccessful (but only just). As Eder J acknowledged at the subsequent costs hearing, the general rule (as contemplated by CPR 44.2(2)(a)) was that the loser should pay the winner s costs. While the defendants did not beat the offer made, the offer letter was still highly relevant as to how the court exercised its discretion as costs. Eder J therefore exercised his discretion under CPR 44(2)(2)(b) and reduced the claimants recoverable costs by 30% and further ruled that the claimants costs were only recoverable up until the expiry of the relevant period under the defendant s Pt 36 offer. Thereafter the defendant should receive its costs on the standard basis. It is clear Eder J was particularly riled by the claimants decision not to engage properly with disclosure and to pursue certain meritless or inflated claims (causing the defendant to incur considerable expense in the process). He stated: CPR 44.2(4)(a) requires the court to have regard to all the circumstances including the conduct of all the parties. Further CPR 44.2(5)(b) provides that the conduct of the parties includes whether it was reasonable for a party to pursue or contest a particular allegation or issue. Eder J stressed that his decision was not based on the near miss analysis referred to in Hammersmatch Properties (Welwyn) Ltd v Saint Gobain Ceramics and Plastics Ltd and another [2013] EWHC 2227 (TCC), [2013] All ER (D) 303 (Jul). Sugar Hut turned on very specific facts and as such Eder J concluded there was a very good reason for him to depart from the general rule about costs. It seems therefore that the court s discretion as to costs under CPR 44 may trump the confines of the usual rules (including, in narrow circumstances, under Pt 36) in order to see justice done between the parties. Practical points: Give careful thought to whether an offer should be made under Pt 36 or Pt 44 as a Calderbank offer (or both). If an offer is to be made without prejudice save as to costs, ensure that the client fully appreciates that this is a separate regime and one which provides the courts with a wide discretion. Remember that it may be difficult to assess what constitutes a better result where the offer is not a simple offer to accept/ pay a sum in settlement. Given the current emphasis on assessing costs, parties and their advisors must consider all potential areas of agreement (not just monetary ones) at the earliest stage. Make sure your offer is clearly drafted. If you are asked to provide clarification, think carefully about whether it is better to provide a short, prompt clarificatory response rather than risk rendering an offer ineffective (even if you suspect your opponent of adopting a tactical approach). Advise clients regarding the increasingly robust approach of the courts to meritless, long-winded, or over-inflated claims. A party whose conduct causes costs to escalate unjustifiably may expect to be penalised (even where they are the successful party). The safest course when making Pt 36 offers is to make them early and pitched at a level which offers maximum costs protection while still being acceptable to the client. Easy to say with hindsight New Law Journal, the leading weekly legal magazine, keeps you uptodate with news and change across case law, legislation and changes in procedure across core civil practice areas. Key developments are presented in an easily digestible format, together with analysis of their implications and practical advice for busy practitioners. Subscribers receive 48 issues per year, plus unlimited access to exclusive online and archived content at To find out more visit lexisnexis.co.uk/piba/nlj New Law Journal 13

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