England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		21/12/2012

See Order at bottom.

The Honourable Mrs Justice Swift :

1. On 5 May 2009, I gave judgment in the claimant's favour on the issues of liability and limitation. On 9 November 2012, I handed down judgment on quantum and awarded the claimant damages in the sum of £54,923.03. The parties did not attend the hand down and subsequently made submissions on costs in writing, which I have now had the opportunity of considering.

The consequences of the defendants' Part 36 offer

The offer

2. On 4 June, 2009, shortly after my judgment on limitation and liability, the defendants sought to protect themselves against the very substantial costs of a quantum trial by making a Part 36 offer in the sum of £350,000. That offer was never withdrawn.
3. On 20 December 2011, the defendants made an increased Part 36 offer of £500,000. That offer was withdrawn on 23 January 2012. On 9 January 2012, the claimant made an offer in the sum of £1.25m. On 9 February 2012, his offer was reduced to £1m. The final award of damages was significantly less that the defendants' Part 36 offer of 4 June 2009.

The relevant provisions

4. CPR 36.14 applies where, upon judgment being entered, a claimant fails to obtain a judgment more advantageous than a defendant's Part 36 offer. CPR 36.14(2) provides that, in those circumstances, the court will, unless it considers it "unjust" to do so, order that the defendant is entitled to his costs from the date on which the relevant period (i.e. the period for acceptance of the offer) expired, together with interest on those costs.
5. CPR 36.14(4) provides that, in considering whether it would be unjust to make such an order, 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 was made, including in particular how long before the trial started the offer was made;

(c) the information available to the parties at the time when the Part 36 offer 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 to be made or evaluated."

The defendants' case

6. The defendants submit that the usual rule should prevail and that the claimant should pay their costs from 25 June 2009, that being the date of the expiration of the period for acceptance of the offer.

The claimant's case

7. The claimant argues that, in the circumstances of this case, it would be unjust for the usual order to be made. It is contended that, at the time the offer was made, the value of the claim could not reasonably have been assessed. The claimant himself held a sincere belief that the sexual abuse to which he had been subjected had been the cause of all the adverse events which had occurred in his employment and personal life and his legal advisers had no reason to doubt either his honesty or his reliability.
8. The claimant submits that detailed investigation of the issues relating to quantum was necessary after the limitation and liability trial. Experts had to be instructed and lay evidence gathered. This process was interrupted by the defendants' unsuccessful appeal to the Court of Appeal and their subsequent application for permission to appeal to the Supreme Court. It is submitted that it was not until December 2011, after the adult psychiatrists instructed by the parties had completed their second Joint Statement, that the claimant's advisers were in a position reasonably to assess the value of the claim. It is argued that it would be unfair if the claimant were to be deprived of the costs of investigating his claim properly. It is therefore contended that he should have his costs up to 20 December 2011 (i.e. two weeks after the second Joint Statement). It is conceded that he should pay the defendants' costs thereafter. Alternatively, the claimant contends that he should have his costs until 13 October 2010 and that there should then be no order for costs until 20 December 2011.
9. The claimant relies on the case of SG v Hewitt [2012] EWCA Civ 1053. In that case, the infant claimant had accepted a pre-action Part 36 offer which had been made two years previously. The judge at the approval hearing ordered that the claimant should pay the defendant's costs from the expiration of the period for acceptance of the offer. The Court of Appeal considered that the judge had erred in attaching too little weight to the fact that, at the time the offer was made, the claimant's medical prognosis was so uncertain that counsel could not properly have advised that the court's approval for a settlement of the claim should be sought. The claimant's advisers had, with the knowledge of the defendant, commissioned further expert evidence relating to the future prognosis. Meanwhile, the offer had not been rejected or withdrawn. When it became clear that the offer would more than compensate the claimant for his injuries, it was accepted. The Court of Appeal found that, on the facts of that case, it would be unjust for the claimant not to have his costs throughout.

Discussion and conclusions

10. In this case, the claimant was at all material times an adult with full capacity. Psychiatric evidence had been prepared in advance of the limitation and liability hearing and the differing positions of the adult psychiatrists, Dr Shapero and Professor Maden, on the issue of causation had been clearly defined by the time that the trial took place. They both gave evidence at the limitation and liability hearing in accordance with their Reports. Their views at that time were not materially different from those expressed at the quantum hearing three years later.
11. The claimant had given evidence at the limitation and liability hearing and, whilst I had accepted his evidence about the abuse, I had also made clear that, at the quantum hearing, issues about his reliability in relation to other matters would arise. This was inevitable in view of the evidence that had been given about his submission of false medical evidence to the Law Society in order to avoid re-sitting all his final examinations. Moreover, I alluded in my judgment to the difficulties that he would face, more than 35 years after the occurrence of the sexual abuse, in proving the necessary causal link between the abuse and his behaviour in adulthood. Those difficulties should have been evident to him and his advisers. By the time of the limitation and liability trial, the claimant's advisers already had a good deal of information about the claimant's various periods of employment with different solicitors' firms and the claimant himself had in his possession the appraisal and other documentation from those firms which cast considerable doubt on his assertions that his failure to attain partnership status at those firms had been solely attributable to a psychiatric condition caused by the abuse.
12. In short, by the time the Part 36 offer was made, the claimant and his advisers had ample information on which to make an assessment of the risks associated with the litigation. It must have been clear to them that, if the defendants' medical evidence were accepted, the damages would be very modest and well below the defendants' Part 36 offer of £350,000. On the other hand, if the claimant's medical evidence were accepted in its entirety, the damages would amount to several million pounds.
13. The facts of this case are very far from those in SG and, in my judgment, there can be no injustice in requiring the claimant to pay the defendants' costs from the date of the expiration of the time for accepting the Part 36 offer.

The costs of and incidental to Professor Zeitlin's evidence

14. The claimant contends that, in any event, he should not be required to pay the costs of and incidental to Professor Zeitlin's evidence. He relies on criticisms that I made in my judgment about that evidence and the fact that I rejected it as confusing and unconvincing. The claimant's primary submission is that I should disallow, not only the disbursements payable to Professor Zeitlin, but also any costs incurred by the defendants in pursuing and arguing the various issues raised by Professor Zeitlin, in particular the issues relating to the influence of the claimant's family background on his behaviour in adulthood.
15. The evidence from the child psychiatrists was introduced at the insistence of the claimant and in the face of opposition from the defendants. The claimant's advisers were highly critical of the stance taken by Professor Maden in relation to the need for child psychiatric evidence and to the value of Dr Benians' evidence in particular. Professor Maden's stance was understandable in the light of the original terms of Dr Benians' Report and was wholly justified since, in the event, I found the evidence of the child psychiatrists of no assistance in resolving the issues in the case. I considered that Dr Benians was an extremely partial witness who had accepted the claimant's assertions without subjecting them to any proper analysis and was prepared to indulge in unfounded speculation if it assisted the claimant's case. I was even more critical of Professor Zeitlin's evidence. Both witnesses were very unsatisfactory and it does not seem to me that any real distinction between them can be drawn. Moreover, the defendants cannot be criticised for instructing a child psychiatrist despite their views as to the value of such evidence. It was reasonable for them to obtain expert evidence to counter that to be given by Dr Benians.
16. In the circumstances, I do not consider that it would be appropriate for me to make any special order in relation to the evidence of Professor Zeitlin.

Set Off

17. The defendants seek an order enabling them to set off the damages and costs payable by them to the claimant against the costs payable by the claimant to them in relation to the trial of quantum. For the claimant, it is argued that a set off is not appropriate. The claimant's legal advisers acted pursuant to a conditional fee agreement, with the result that the claimant will be entitled to payment of his damages, his solicitors will be entitled to the proceeds of any costs orders made against the defendants and the defendants' costs will be paid to them by the claimant's ATE insurers. The claimant suggests that the involvement of several funds would make the operation of a set off difficult. They point out that the involvement of the ATE insurers affords protection to the defendants. They argue that the claimant should not be kept out of his damages until the costs of the action have been resolved.
18. I do not think that it would be appropriate to order a set off, given the different parties involved in the payment and receipt of costs and damages and the time that might elapse until the issue of costs has been resolved.

Interim order for costs

19. The claimant concedes that, in principle, the defendants are entitled to an interim order for costs. However, the defendants' estimate of their costs in the sum of £420,000 is disputed, as is the defendants' application for an interim order in the sum of £250,000. Instead, the claimant contends for an interim order of between £150,000 and £200,000.
20. It seems to me on the limited information I have that, taking into account in particular the desirability of the defendants receiving a reasonable proportion of the final amount of their costs when assessed, together with the risk of awarding a sum larger than that final amount, an interim order in the sum of £200,000 is appropriate.

The costs of the issues determined at the start of the trial

21. The claimant seeks an order that the defendants should pay the costs of the two issues determined at the start of the trial, namely disclosure of the claimant's mother's medical records and the admissibility of the evidence of Mr Kevin Cooper. The parties made written and oral submissions in respect of those issues which were both resolved in the claimant's favour.
22. The defendants have responded, contending that the claimant is not entitled to the costs relating to these issues. They argue that, if he had accepted the Part 36 offer made in June 2009, the costs would never have been incurred. Furthermore, the costs relating to the disclosure of medical records resulted from the evidence of the child psychiatrists which they had always argued was unnecessary for the resolution of the issues.
23. These issues were relatively minor and I can see no reason to treat them differently from the remainder of the costs in the action incurred after the expiration of time for acceptance of the Part 36 offer.
__________________________________ ORDER __________________________________

Before the Honourable Mrs Justice Swift DBE sitting at the Birmingham Civil Justice Centre on Friday, 21 December 2012.

UPON reading the submissions of leading and junior counsel for the claimant and leading counsel for the defendant

IT IS ORDERED THAT:

1. The defendants shall pay to the claimant damages assessed in the sum of £54,923.03 inclusive of interest.

2. As regards the costs of and occasioned by the assessment of damages:

2.1 The defendants shall pay the claimant's costs (on the standard basis to be the subject of detailed assessment if not agreed) insofar as those costs were incurred up to and including 25 June 2009.

2.2 The claimant shall pay the defendants' costs (on the standard basis to be the subject of detailed assessment if not agreed) where those costs were incurred after 25 June 2009.

2.3 The claimant shall make a payment on account of the defendants' costs in the sum of £200,000 by 4.00 pm on 11 January 2013.

Dated this 21 day of December 2012