England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION )
ON APPEAL FROM BOURNEMOUTH COUNTY COURT
(DISTRICT JUDGE WEINTROUB)

		Royal Courts of Justice Strand, London, WC2A 2LL
		16th July 2010

Lord Justice Longmore :

1. This is the last stage of an appeal from the decision of District Judge Weintroub, sitting in Bournemouth, an appeal brought with the permission of this court by Mr Kunaka in his litigation about Barclays Bank. It is unnecessary to say anything about the circumstances of that. The appeal has been settled but there is a dispute about costs.
2. The settlement occurred in the following way. On 15 March of this year Barclays Bank made an offer to Mr Kunaka, under Part 36 of the Civil Procedure Rules, of £35,000, which of course carried costs to date and for 21 days thereafter, which takes us up to 6 April. That offer was not accepted by Mr Kunaka. He made various counter-offers, and negotiations took place around the figures being offered and counter-offered.
3. On 6 July Barclays Bank rejected Mr Kunaka's latest counter-offer in a formal e-mail, in which the following passage occurs:

"…I confirm once again that the Bank is rejecting your offer to take £80,000 in full and final settlement of your claim against the Bank. I would, however, like to remind you that the Bank's offer (made under Part 36 of the CPR) for you to take £35,000 in full and final settlement of this claim, remains open for you to accept. If you would like to discuss that offer at any time before next week's Court of Appeal hearing, please contact me by telephone or email or fax at the numbers below."

That offer was then accepted by Mr Kunaka in an e-mail of 13 July, timed at 16.16 pm, in which he said to the bank:

"As you have rejected any and all of my counter offers, I wish to inform you that I firmly accept your offer of £35,000 as per Part 36 offer by way of damages and costs on top. I shall tally up my costs tonight and notify you of the amount in due course"

4. The Court of Appeal was informed that the case had settled, but it then emerged that there was a disagreement between Mr Kunaka and the bank as to the consequences of the acceptance and, in particular, as to whether costs consequences would take effect as from 5 July or, as Mr Kunaka would wish to say, they took effect 21 days after the date of the 6 April when the bank said that the offer "remains open for you to accept".
5. The position under Part 36 of the Civil Procedure Rules derives from Part 36.10, which says :

"Subject to paragraph (2) and paragraph (4)(a), where a Part 36 offer is accepted within the relevant period the claimant will be entitled to the costs of the proceedings up to the date on which notice of acceptance was served on the offeror."

It then in subparagraph (4) says:

"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."

In subparagraph (5) 36.10 continues:

"Where paragraph (4)(b) applies, unless the court orders otherwise –

(a) the claimant will be entitled to the costs of the proceedings up to the date on which the relevant period expired; and

(b) the offeree will be liable for the offeror's costs for the period from the date of expiry of the relevant period to the date of acceptance."

And so subparagraph (5) sets out the default position but provides that is "unless a court orders otherwise".

6. Mr Kunaka submits that the court should order otherwise, because he says that when he was informed that the offer remained open for him to accept, he assumed that the consequence of that would be that costs would be carried up to 21 days from the date of 6 July.
7. Mr Oliver, who appears for the bank, says that that is legally wrong because Part 36 operates as a code and is quite different from the rules of common law about offer and acceptance. There is thus no reason for the court to otherwise order pursuant to paragraph 5, so that Mr Kunaka should be liable for the bank's costs as from 6 April.
8. We have heard argument this morning as to that position and the conclusion we have come to is as follows. We think this is an exceptional case where the court should make an otherwise order. This is not litigation conducted as between solicitors or trained lawyers who can be expected to know that the ordinary rules of offer and acceptance do not apply to Part 36 offers, which have a rigid code of their own. For my part I consider that when the bank sent its email of 6 July reminding Mr Kunaka that the offer remained open for him to accept, they were doing rather more than just stating a matter of fact as Mr Oliver submits. They were pointing out to him that under the rules the offer was still open for him to accept, which is something the bank of course was perfectly entitled to do, but they did not of course point out to him that the consequences of that would be that he would only get costs as from 6 April and would be liable to the bank for their costs thereafter.
9. In the circumstances of this case, where the court has a discretion pursuant to 36.10(5), it is open to the court to assess what the fairness of the situation demands. I think that the fairness of this situation has to take into account the fact that Mr Kunaka is a litigant in person, albeit a litigant in person who has in the course of this litigation obviously learnt a lot about law. But I for my part would think it unfair that the full consequences of 36.10(5) should be visited on Mr Kunaka and that the court should therefore make an otherwise order. The question then is what otherwise order should be made. Mr Kunaka of course would like an order that the bank pay his costs up to 6 July or indeed 21 days thereafter. That seems to me to be going much too far, but I do think that he should not be liable for the bank's costs from 6 April onwards, and in all the circumstances of the case, as I have endeavoured to outline, it seems to me that the right order is that Mr Kunaka should have his costs of the appeal up to and including 6 April but that thereafter there should be no order as to costs.
10. After my brethren have said whether they agree with me or not, we will try to formulate an order. There appeared at one stage to be some question as to the costs of the lower court, but it has now been agreed that Mr Kunaka is to have the costs below, including his pre-litigation costs, on the standard basis, which will be subject to a detailed assessment if not agreed, and that he will also have the cost of that assessment of costs below subject to any Part 36 offer being made as to those costs, but on the general question of principle in relation to the costs of this appeal my view is as I have set out.

Lord Justice Wilson:

11. I do indeed agree with my Lord's judgment.

Sir John Chadwick:

12. I also agree.

Order: Application granted