Sale of land — Action for misrepresentation — Settlement — Payment into court — Appellant accepting payment after expiry of statutory time limit — Whether court having power to extend time retrospectively — Whether costs order properly made in favour of respondents — Appeal allowed
The appellant was a property development company that had purchased land from the defendant trustees, having been assured that it did not include a landfill site. It discovered that the land did contain such a site and claimed damages against the respondents for misrepresentation.
On 18 March 2004, prior to the commencement of proceedings, the respondents offered to pay the appellant £85,000, together with its reasonable costs to date, to settle the claim. However, they failed to make a payment into court (the Part 36 payment) within 14 days of the service of the claim form, as required by CPR 36.10(3)(a), to enable the court to take the offer into account when making an order for costs. On the following day, the appellant rejected the offer. In October 2004, it issued a claim form, although this was not served until February 2005.
The respondents served their defence to the claim on 9 March 2005 and gave notice to the appellant that they had paid £85,000 into court in settlement of the claim, albeit outside the specified time limit in CPR 36.10(3)(a). The appellant accepted that offer and the Part 36 payment was made to its solicitor within a matter of days.
Taking the view that the appellant could have accepted their offer and avoided additional expenses, the respondents applied for their costs of, and incidental to, the claim against them on an indemnity basis. The deputy master decided that the failure to make a payment into court within the specified time limit did not nullify their Part 36 payment. He exercised the court’s power to extend time within CPR 3.2(a), deemed the offer to be a valid Part 36 payment and granted the respondents’ application for costs from April 2004.
The appellant appealed, contending that the conditions in CPR 36.10(3)(a) had not been fulfilled because the respondents had failed to make their payment into court within the specified period. Thus, by virtue of CPR 36.13(1) and CPR 44.12(1)(b), the appellant was entitled to all its costs up to 31 March 2005 when it accepted the respondents’ offer
Held: The appeal was allowed.
The appellant was entitled to its costs up to 31 March 2005, when it served notice of its acceptance of the respondents’ Part 36 payment.
When accepting the offer, the appellant did so as of right and did not require the court’s permission. Since the respondents had failed to make the payment into court within the specified time, CPR 36.10 did not apply. They had not applied for an extension of time and none had been ordered.
Had the respondents made a payment into court on time, the appellant would have required the court’s permission prior to accepting the offer and permission would probably have been given on condition that the appellant paid the respondents’ costs as from April 2004. However, that was not what had happened, and the deputy master could not grant an extension of time retrospectively for the respondents to make their payment into court in order to bring the case within CPR 36.10.
Even if the deputy master had had jurisdiction to make the order that he made, extending the respondents’ time for payment under CPR 36.10(3)(a), it did not follow that he also had jurisdiction to deprive the appellant of a mandatory costs order in its favour.
Alexander Hutton (instructed by Brachers, of Maidstone) appeared for the appellant; Mark James (instructed by Goughs Solicitors, of Calne) appeared for the respondents.
Eileen O’Grady, barrister
