COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
(MR JUSTICE EADY)
Strand, London, WC2A 2LL
Wednesday 20th June 2001
B e f o r e :
LORD JUSTICE CHADWICK
LORD JUSTICE LONGMORE
|- and -
|TIMES NEWSPAPERS LTD
(2) LIAM CLARKE
(3) ANDREW NEIL
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr James Price QC & Mr Matthew Nicklin (instructed by Bindman & Partners of London WC1X 8QF for the Respondent)
Crown Copyright ©
"(1) This rule applies where at trial –
(a) a defendant is held liable for more; or
(b) the judgment against a defendant is more advantageous to the claimant,
than the proposals contained in a claimant's Part 36 offer.
(2) The court may order interest on the whole or part of any sum of money (excluding interest) awarded to a claimant at a rate not exceeding 10% above base rate for some or all of the period starting with the latest date on which the defendant could have accepted the offer without needing the permission of the court.
(3) The court may also order that the claimant is entitled to –
(a) his costs on the indemnity basis from the latest date when the defendant could have accepted the offer without needing the permission of the court; and
(b) interest on those costs at a rate not exceeding 10% above base rate.
(4) Where this rule applies, the court will make the orders referred to in paragraphs (2) and (3) unless it considers it unjust to do so.
(5) In considering whether it would be unjust to make the orders referred to in (2) and (3) above, the court will take into account all the circumstances of the case including -
(a) the terms of any Part 36 offer;
(b) the stage in the proceedings when any Part 36 offer or Part 36 payment was made;
(c) the information available to the parties at the time when the Part 36 offer or Part 36 payment was made; and
(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer or payment into court to be evaluated.
(6) Where the court awards interest under this rule and also awards interest on the same sum and for the same period under any other power, the total rate of interest may not exceed 10% above base rate."
In that context - and for the purposes of paragraphs (2) and (3) of the rule - "the latest date [on which/when] the defendant could have accepted the offer without needing the permission of the court" is prescribed by CPR 36.12. Where the offer is made not less than 21 days before the start of the trial, it means the date not later than 21 days after the offer was made.
"1. A payment of £50,000 damages to our client for the hurt and distress caused by the article;
2. damages for the financial losses incurred by our client to be assessed if not agreed;
3. a retraction and apology to be placed prominently in the pages of the Sunday Times in appropriate terms to be agreed with us on our client's behalf;
4. a statement in open court;
5. an undertaking not to repeat the libel;
6. all costs incurred up to the date of receipt of notice of acceptance of the offer as per rule 36.14."
The letter concluded with a statement that those proposals were intended as a Part 36 offer; that the offer would remain open for acceptance for a period of 21 days; and that the offer related to the whole of the claim in the action. The period of 21 days from 21 December 1999 came to an end on 11 January 2000.
"It is traditionally the case that the jury's award in libel takes account of everything down to the moment of their verdict, including any aggravation caused by the defendant's conduct of the trial. Accordingly, it has never been the case that damages for libel carry interest.
It seems to me that it would be unjust to award interest on the sums fixed by the jury, whether from 13th January or at all. Special damages might well be treated differently in this respect, but that does not arise today."
He was satisfied, also, that it would be unjust to make an order under paragraph (3) of CPR 36.21 for indemnity costs. He referred to "the unique circumstances of this case". He expressed doubt whether, as a matter of construction, there was power under sub-paragraph (b) of paragraph (3) to make an order for the payment of interest on costs unless the costs themselves were the subject of an order under sub-paragraph (a) of that paragraph. But, if there were power to do so - that is to say, power to order the payment of interest on costs which were to be assessed on the standard basis - he did not think it appropriate to exercise that power.
"The question is whether in these unusual circumstances I consider that it would be unjust to follow the modern presumption in favour of indemnity costs, which still carries something of a stigma and is bound to be interpreted as an indication of the court's disapproval of the defendant's conduct."
That passage reflected an observation earlier in the judgment, at page 1 lines 11-12, that an order for indemnity costs "might be thought to carry punitive overtones."
"62. However, it would be wrong to regard the rule as producing penal consequences. An order for indemnity costs does not enable a claimant to receive more costs than he has incurred. Its practical effect is to avoid his costs being assessed at a lesser figure. When assessing costs on the standard basis the court will only allow costs "which are proportionate to the matters in issue" and [will] "resolve any doubt which it may have as to whether costs were reasonably incurred or reasonably proportionate in amount in favour of the paying party". On the other hand, where the costs are assessed on an indemnity basis, the issue of proportionality does not have to be considered. The court only considers whether the costs were unreasonably incurred or for an unreasonable amount. The court will then resolve any doubt in favour of the receiving party. Even on an indemnity basis, however, the receiving party is restricted to recovering only the amount of costs which have been incurred (see Part 44.4 and Part 44.5)
63 The ability of the court to award costs on an indemnity basis and interest at an enhanced rate should not be regarded as penal because orders for costs, even when made on an indemnity basis, never actually compensate a claimant for having to come to court to bring proceedings. The very process of being involved in court proceedings inevitably has an impact on a claimant, whether he is a private individual or a multi-national corporation. A claimant would be better off had he not become involved in court proceedings. Part of the culture of the CPR is to encourage parties to avoid proceedings unless it is unreasonable for them to do otherwise. In the case of an individual proceedings necessarily involve inconvenience and frequently involve anxiety and distress. These are not taken into account when assessing costs on the normal basis. In the case of a corporation, corporation senior officials and other staff inevitably will be diverted from their normal duties as a consequence of the proceedings. The disruption this causes to a corporation is not recoverable under an order for costs.
64. The power to order indemnity costs or higher rate interest is a means of achieving a fairer result for a claimant. If a defendant involves a claimant in proceedings after an offer has been made, and in the event, the result is no more favourable to the defendant than that which would have been achieved if the claimant's offer had been accepted without the need for those proceedings, the message of Part 36.21 is that, prima facie, it is just to make an indemnity order for costs and for interest at an enhanced rate to be awarded. However, the indemnity order need not be for the entire proceedings nor, as I have already indicated, need the award of interest be for a particular period or at a particular rate. It must not however exceed the figure of 10 per cent referred to in Part 36."
The guidance contained in those paragraphs was not available until the end of May 2000; in particular, it was not available to Mr Justice Eady on 30 March 2000, when he made his order in the present case.
"Had the defendants accepted the offer suddenly put before them on 21st December the overwhelming inference to be drawn from that by interested observers would be . . . that the supposed members of the committee did not have the resolve to come to court and face their accuser. That might have been reasonably thought by the Sunday Times to be unfair to the individuals concerned and also to be contrary to public interest in having a full and open resolution of these issues.
Fourthly, and of great significance, the offer of 21st December required the defendants to publish a retraction and apology in their newspaper and also to join in a statement in open court. In the light of the defendants' strongly held views about the programme and the evidence to be adduced at trial from the alleged committee members, it is inconceivable that they would have consented to take those steps."
LORD JUSTICE LONGMORE:
LORD JUSTICE SIMON BROWN: