PI Brief Update

Courts cannot future-proof orders: Tabbitt v Clark [2023] EWCA Civ 744 - Anisa Kassamali, Temple Garden Chambers

29/06/23. The Court of Appeal considered an application for a declaration that would have “future-proofed” the Claimant’s costs liability where he was late to accept the defendant’s Part 36 offer.

The Claimant was involved in a road traffic accident with the Defendant, resulting in serious personal injury to the Claimant. The claim was one to which qualified one-way costs shifting (“QOCS”) applied.

The Defendant’s insurers made a Part 36 offer in early 2022 which was only accepted in late 2022. The parties agreed that the Claimant could recover his costs to the date that the offer expired. The Defendant was entitled to his costs after the date of the offer expiring (although the provision of QOCS meant that these costs could not be enforced).

The Claimant sought a declaration in the Order as follows: “Pursuant to rule 44.14 CPR the Defendant is not permitted to enforce (including by way of setoff) the costs Order in paragraph 3 of this Order in his favour against the Claimant.” The purpose of that declaration was to “future proof” the Claimant’s potential liability for costs given his late acceptance of the Part 36 offer.

The Court of Appeal stated it thus at [6] – [9]:

“6. It was common ground that as the rules stood at the date of the judge's judgment (a) acceptance of a Part 36 Offer did not result in an award of damages and (b) any costs order in favour of the defendant could not be enforced either against the amount of the Part 36 Offer or against the order for costs made in [the Defendant’s] favour.

7. Since the costs had not been assessed or agreed, there was at the date of the judge's judgment no immediate prospect of enforcement of any costs order against [the Claimant]. .

8. But at the time of the judge's judgment changes to the QOCS rules were under active consideration by the Civil Procedure Rules Committee ("the CPRC"). On 7 October 2022 the CPRC approved an amendment to the rules which, as drafted, would permit enforcement by a defendant of a costs order against agreements to pay damages and other costs order. The text of the draft was quoted in Harrison v University Hospitals of Derby & Burton NHS Foundation Trust [2022] EWCA Civ 1660, [2023] 4 WLR 8 at [51].

9. [The Claimant] wished to guard against the possibility of a future rule change with potential retrospective effect. [The Defendant] (or rather his insurers) were willing to take their chances. Since the claim had been disposed of by agreement, it would have been open to the parties to have achieved [the Claimant’s] objective by agreement, perhaps by [the Claimant] making it a condition of acceptance of the Part 36 offer that no costs order would be enforced against him; or by offering to accept a lower sum in exchange for that agreement. But that was not done.”

Decision

The Court of Appeal upheld the decision which rejected the inclusion of this wording in the Order. It fell within the wide discretion of the first instance judge (see, in particular, [21]). Lewison LJ’s key reasoning was set out [15]:

“15. If, by the time that the question of enforcement were to arise, the rules had changed so as to entitle [the Defendant] to enforce his costs order against [the Claimant], that would have been because the CPRC (backed by Parliamentary approval of amending rules under the negative resolution procedure) had decided that the interpretation of the rules in the case law did not properly reflect the objectives of QOCS. If the CPRC were to have come to the conclusion that the rules as drafted were defective, and that the defect should be retrospectively cured, why should [the Claimant] be entitled to take advantage of that defect?”

The Court of Appeal went onto observe that the CPRC had in fact amended the rules in such a way that the Claimant’s position was still protected. The costs of pursuing the application were therefore wasted and “the unfortunate reality of this appeal” was that “so much money [had] been spent on pursuing both the original application and this appeal, which now far [exceeded] the amount of costs initially in issue” (see [23]).

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