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PI Practitioner, November 2020

16/11/20. Each issue a particular topic is highlighted, citing some of the useful cases and other materials in that area. You can also receive these for free by registering for our PI Brief Update newsletter. Just select "Free Newsletter" from the menu at the top of this page and fill in your email address.

Swift v Carpenter [2020] EWCA Civ 1467

[See the previous issue of PIBU for a summary of the original case.]

The Respondent made various submissions on the correct interest owed to the Appellant on her damages and interest following the Appellant beating her Part 36 offer.

The Respondent submitted that the appeal costs up to and including the adjournment of the appeal should not be caught by the Part 36 offer and the Appellant should bear the costs up to that point. They submitted that the successful basis of appeal was not formulated up to that point, and that the adjournment was necessary because the Appellant wished to reformulate her case.

The Appellant responded that the expert evidence advanced in the appeal would likely have been disallowed by a Queen's Bench Master and could not have been introduced below; that the issue of the reversionary interest approach was raised only at the July 2019 hearing; and that the Court made plain a desire to reach a properly informed conclusion so as to give enduring and workable guidance. Further, the Appellant had taken costs risks and made great effort to settle the appeal.

The following was found: the Appellant was successful in her appeal, had beaten her own without prejudice offer and the Respondent's part 36 offer. The adjournment had indeed added to costs and the reformulation of the case was necessary to provide relevant evidence. efforts to settle post-adjournment were not relevant to costs pre-adjournment. The argument that the Appellant might have succeeded on appeal at an earlier date on a different basis was rejected and found irrelevant to costs. However, it was accepted that the Appellant advanced a valid basis for distinguishing this case from Cheeseman v Bowaters [1971] 1 WLR 1773.
In light of the Appellant's without prejudice offer, the Respondent's without prejudice offer and the subsequent part 36 offer, the Appellant should have the costs of the appeal on a standard basis up to the date when the Appellant's part 36 offer took effect.

The Respondent further submitted that interest on damages should be proportionate, citing OMV Petrom SA v Glenmore International SG [2017] 1 WLR 3465 - factors including the length of time between the relevant offer and the judgment, whether the defendant took bad points or behaved reasonably in pursuing the defence, the level of disruption caused to the claimant, etc. 

It was found that there was a long period between the offer and the judgment and that the strain on the Appellant had been considerable. However, the Appellant had been able to purchase a house and the Respondent had not taken entirely bad points. Thus, the interest rate should be no greater than compensatory so as to foster settlement, 4.5% on additional damages being appropriate in this case.

The Respondent finally submitted that there should be a low interest rate on costs. The Appellant had not discharged her lawyers' costs, as they were acting under a CFA. The Appellant submitted that there was an inequality of arms; that they were a vulnerable person caught up in an expanding test case; that the Respondent had deep pockets as an institutional insurer; that the Respondent's offers may have been designed to split the Appellant from her legal team; and that the financial risks taken by the Appellant and her lawyers merit compensation at a maximum rate.

It was held that there was some validity in the arguments of both sides. The time period was long, but the Respondent's tactics were somewhat aggressive (though their own offers made clear they considered they faced a considerable litigation risk). 4.5% was again held as the appropriate rate to be applied.

There were some other more minor disputes regarding costs arising out of the Appellant's applications to call expert witnesses and to prevent the admission of one of the Respondent's witness's evidence. Finally, permission to appeal was refused (no reason given).

Paul Erdunast & Harry Peto
Temple Garden Chambers

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