Dispute Resolution analysis: Andrew Sutcliffe KC has provided a wide-ranging analysis of a number of aspects of costs principles in a consequentials hearing following a trial in which the Claimant succeeded on one of two parts to the claim and narrowly beat a Part 36 offer made shortly before trial.
Mate v Mate and others  EWHC 806 (Ch)
What are the practical implications of this case?
This judgment offers some useful analysis on a number of different costs issues. First, it has concluded that where a trial includes a day of pre-reading at the start at which parties are not required to attend, the trial begins on the first day on which the parties are required to attend, so far as the 21-day period in CPR r.36.13. Although that was the appropriate conclusion in this case, it is important to note the wording of the listing order at issue (set out below). It is unclear whether a different conclusion might have been reached if the listing order had expressly described the reading time as forming part of the trial window. Second, it confirms, consistent with many other authorities, that issue-based costs orders will rarely be appropriate and that it will more usually be appropriate to impose a percentage deduction on the costs ordered to be paid to the receiving party. Third, it demonstrates an approach taken by Courts should to the discretionary elements of Part 36, CPR where a Claimant narrowly beats a Part 36 offer made very shortly before trial, which favours discretion being exercised in favour of the receiving party. Fourth, it has endorsed an approach to the calculation of interim payments based on 50% of incurred costs (where costs are to be assessed on the standard basis) and 65% of incurred costs (where costs are to be assessed on the indemnity basis).
What was the background?
This is the judgment of a consequentials hearing by the Judge who determined the main claim at a trial on 10 February 2023  EWHC 238 (Ch). The consequentials hearing was required in order to determine a number of difficult costs arguments arising out of the nature of the Judge’s findings at trial and the late service of a Part 36 offer by the Claimant (“Julie”). At trial, the Judge dismissed Julie’s proprietary estoppel claim but ruled in her favour on her unjust enrichment claim, awarding her the sum of £652,500, assessed as the value of the services she provided. On 16 November 2021, the parties engaged unsuccessfully in a mediation, following which one of the Defendants (“Shirley”) ceased to instruct solicitors. On 10 May 2022, the two remaining Defendants (“Robert” and “Andrew”) were served with a witness statement from Shirley, indicating that she would be giving evidence on behalf of Julie. There then followed an exchange of Part 36 offers between, on the one hand, Julie and on the other hand Robert and Andrew which were not accepted and Shirley formally admitted the claim against her. At 17.22 on Friday 12 August 2022, Julie sent an offer by email in standard form N242A indicating that she would accept the sum of £650,000 in full and final settlement of her claims. This offer was not accepted. It was common ground that this offer was deemed served on Monday 15 August 2022. The trial itself was listed pursuant to an order which read “The trial of the above claim will take place at 10.30am on the 6th, 7th, 8th, 9th, 12th, 13th, 14th September 2022 with a time estimate of 7 days. Judicial reading has been allocated on the 5th September 2022 and the parties are not required to attend on this day.” It followed that if the trial started on 5 September 2022, Julie’s offer was made less than 21 days before trial. If the trial started on 6 September 2022, Julie’s offer was made more than 21 days before trial. In light of the above, the following six issues fell to be determined. (1) Subject to any consequences which may flow from Julie having made a valid Part 36 offer, what is the appropriate costs award in these proceedings and is an issue-based costs award appropriate? (2) If Julie is entitled to be paid her costs, should Shirley be a paying party alongside Robert and Andrew? (3) Was the offer of £650,000 made by Julie on 12 August 2022 a valid Part 36 offer? (4) If so, was the offer served in time to engage the provisions of CPR r.36.17? (4) If not, it is appropriate to abridge time retrospectively under 36.17(7)(c)? (5) If CPR 36.17(4) is engaged, what is the effect of that provision and is it unjust to apply some or all of the consequences? (6) If there is to be a payment on account of costs, what should it be?
What did the court decide?
The Court was satisfied that Julie was the successful party and did not consider it appropriate to make an issue-based costs order. Nevertheless, the Court awarded her 75% of her costs. This apportionment was intended to take account of the fact that Julie failed to obtain the declaration which was the primary ground of relief sought and to account for the fact that (despite considerable overlap) some costs would have been incurred in relation to the failed pursuit of the proprietary estoppel claim. Prior to 6 September 2022, those costs were to be assessed on the standard basis. After 6 September 2022, those costs were to be assessed on the indemnity basis. This latter conclusion reflected the Court’s conclusion that the Part 36 offer was valid and (the trial starting in fact on 6 September 2022) was made more than 21 days prior to the start of trial. Had the Judge reached a different conclusion on that point, he indicated that he would not have abridged time as there was no good reason for the lateness of the Part 36 offer being made so close to the prescribed deadline. Shirley was held not to be a paying party. Any costs attributable to the claim exclusively against Shirley (e.g. the reply to her defence) could be identified and excluded on a detailed assessment. The Court was content to impose each of the consequences set out in CPR r.36.17(4). Enhanced interest at 8% over base rate was imposed on the judgment sum. Interest on costs was also awarded at 8% over base rate, and an additional sum of £57,625 was also awarded. An interim payment of £268,993.83. This was based on 50% of the incurred costs incurred prior to 5 September 2022 and 65% of the costs incurred after 6 September 2022. Julie was awarded 75% of the costs of the consequentials hearing, assessed on the indemnity basis.
- Court: High Court of Justice, Business and Property Courts in Leeds, Property, Trusts and Probate List
- Judge: Andrew Sutcliffe KC (sitting as a High Court Judge)
- Date of judgment: 5 April 2023
Article by Phillip Patterson – first published by LexisNexis