Negligence – Settlement – Costs – Claimant mortgage lender claiming damages against defendant solicitors for negligent advice – Parties reaching settlement – Claimant seeking order for costs on standard basis – Whether claimant entitled to order for costs – Whether claimant acting unreasonably in respect of disclosure – Whether claimant failing to comply with Professional Negligence Pre-Action Protocol by unreasonable conduct in relation to disclosure – Claim allowed in part
The claimant, a company engaged in the business of residential mortgage lending, brought a claim in negligence against the defendant, a firm of solicitors, who advised in connection with the acquisition of some property with funds loaned by the claimant’s predecessor in title. The claimant alleged that it would not have made the loan if the defendant had not been negligent, and claimed damages accordingly. The case was settled pursuant to the acceptance of a Part 36 offer. The court was asked to make an appropriate order as to costs.
CPR Part 36.10(4) provided: “Where (a) a Part 36 offer that was made less than 21 days before the start of trial is accepted; or (b) a Part 36 offer is accepted after expiry of the relevant period, if the parties do not agree the liability for costs, the court will make an order as to costs”.
The claimant sought an order for its costs on the standard basis, contending that that was the normal order when Part 36 offers were accepted out of time and that there was nothing from which a conclusion could be drawn that it would be unjust to make such an order. The defendant contended that the claimant should have its costs up to 12 January 2011, when it made a request for disclosure of some documents, but the defendant should have its costs thereafter; alternatively the claimant should have its costs up to 21 days after the Part 36 Offer made on 17 May 2011 and the defendant should have its costs thereafter; alternatively that the claimant should have its costs up to 21 days after the Part 36 Offer and that there should be no order for costs thereafter. The defendant relied on the failure of the claimant to comply with the Professional Negligence Pre-Action Protocol (the protocol) by its unreasonable conduct in relation to disclosure.
Held: The claim was allowed in part.
(1) CPR Part 36 established the “normal order” where a Part 36 offer had been made but conferred upon the court a discretion to depart from it. A Part 36 offer was designed to be a means whereby a party might normally throw the risk of having to pay the other side’s costs on to the other side if the other side failed to accept the offer within the 21-day period allowed, or to beat it at trial. The other side then had to satisfy the court that it was unjust for that consequence to follow and not to make some other order as to costs. The judge would, in general, need to find that the case had features which took it out of the ordinary principle and which demonstrated that it was unjust to impose the normal shifting of the costs risks: Matthews v Metal Improvements Co Inc [2007] EWCA Civ 215, Lumb v Hampsey [2011] EWHC 2808 (QB) and SG v Hewitt [2012][ EWCA Civ 1053 applied.
In the present case, the normal order would be for the claimant to have its costs up to acceptance by the defendant of the 17 May 2011 offer; that there should not be a departure from that order unless the defendant satisfied the court that it would be unjust not to do so; that, in considering the matter, the court had to take all the circumstances of the case into account, including those expressly set out in CPR Part 36.14(4); and it was relevant, in the assessment of whether or not it would be unjust to depart from the normal order, whether there had been substantial compliance with the protocol or whether sanctions might be appropriate.
(2) A claimant, acting reasonably in the circumstances of this case, would have supplied copies of the files at an early stage and not merely extracts therefrom. Instead, the claimant had either refused without giving any good reason, or had failed to response at all to the letters of request. Such conduct was not in accordance with the protocol and had not been conducive to an early disposal of the case. The claimant’s conduct was not conduct designed to achieve early resolution of the dispute with a proportionate expenditure on costs. Accordingly, on the facts, the claimant’s non-compliance with the protocol made it unjust for the normal order under CPR Part 36.10(4) to apply and it would be unjust to require the defendant to pay any costs after 17 June 2011. In the circumstances, the fair order was that the claimant should have its costs up to 17 June 2011 but should pay the defendant’s costs incurred thereafter, all such costs to be assessed on the standard basis if not agreed.
James Laughland (instructed by Rosling King LLP) appeared for the claimant; Paul Parker (instructed by Fishburns LLP) appeared for the defendant.
Eileen O’Grady, barrister
Negligence – Settlement – Costs – Claimant mortgage lender claiming damages against defendant solicitors for negligent advice – Parties reaching settlement – Claimant seeking order for costs on standard basis – Whether claimant entitled to order for costs – Whether claimant acting unreasonably in respect of disclosure – Whether claimant failing to comply with Professional Negligence Pre-Action Protocol by unreasonable conduct in relation to disclosure – Claim allowed in partThe claimant, a company engaged in the business of residential mortgage lending, brought a claim in negligence against the defendant, a firm of solicitors, who advised in connection with the acquisition of some property with funds loaned by the claimant’s predecessor in title. The claimant alleged that it would not have made the loan if the defendant had not been negligent, and claimed damages accordingly. The case was settled pursuant to the acceptance of a Part 36 offer. The court was asked to make an appropriate order as to costs.CPR Part 36.10(4) provided: “Where (a) a Part 36 offer that was made less than 21 days before the start of trial is accepted; or (b) a Part 36 offer is accepted after expiry of the relevant period, if the parties do not agree the liability for costs, the court will make an order as to costs”.The claimant sought an order for its costs on the standard basis, contending that that was the normal order when Part 36 offers were accepted out of time and that there was nothing from which a conclusion could be drawn that it would be unjust to make such an order. The defendant contended that the claimant should have its costs up to 12 January 2011, when it made a request for disclosure of some documents, but the defendant should have its costs thereafter; alternatively the claimant should have its costs up to 21 days after the Part 36 Offer made on 17 May 2011 and the defendant should have its costs thereafter; alternatively that the claimant should have its costs up to 21 days after the Part 36 Offer and that there should be no order for costs thereafter. The defendant relied on the failure of the claimant to comply with the Professional Negligence Pre-Action Protocol (the protocol) by its unreasonable conduct in relation to disclosure.Held: The claim was allowed in part. (1) CPR Part 36 established the “normal order” where a Part 36 offer had been made but conferred upon the court a discretion to depart from it. A Part 36 offer was designed to be a means whereby a party might normally throw the risk of having to pay the other side’s costs on to the other side if the other side failed to accept the offer within the 21-day period allowed, or to beat it at trial. The other side then had to satisfy the court that it was unjust for that consequence to follow and not to make some other order as to costs. The judge would, in general, need to find that the case had features which took it out of the ordinary principle and which demonstrated that it was unjust to impose the normal shifting of the costs risks: Matthews v Metal Improvements Co Inc [2007] EWCA Civ 215, Lumb v Hampsey [2011] EWHC 2808 (QB) and SG v Hewitt [2012][ EWCA Civ 1053 applied.In the present case, the normal order would be for the claimant to have its costs up to acceptance by the defendant of the 17 May 2011 offer; that there should not be a departure from that order unless the defendant satisfied the court that it would be unjust not to do so; that, in considering the matter, the court had to take all the circumstances of the case into account, including those expressly set out in CPR Part 36.14(4); and it was relevant, in the assessment of whether or not it would be unjust to depart from the normal order, whether there had been substantial compliance with the protocol or whether sanctions might be appropriate.(2) A claimant, acting reasonably in the circumstances of this case, would have supplied copies of the files at an early stage and not merely extracts therefrom. Instead, the claimant had either refused without giving any good reason, or had failed to response at all to the letters of request. Such conduct was not in accordance with the protocol and had not been conducive to an early disposal of the case. The claimant’s conduct was not conduct designed to achieve early resolution of the dispute with a proportionate expenditure on costs. Accordingly, on the facts, the claimant’s non-compliance with the protocol made it unjust for the normal order under CPR Part 36.10(4) to apply and it would be unjust to require the defendant to pay any costs after 17 June 2011. In the circumstances, the fair order was that the claimant should have its costs up to 17 June 2011 but should pay the defendant’s costs incurred thereafter, all such costs to be assessed on the standard basis if not agreed.James Laughland (instructed by Rosling King LLP) appeared for the claimant; Paul Parker (instructed by Fishburns LLP) appeared for the defendant.Eileen O’Grady, barrister
