Recent rulings suggest Assessed Costs Should Trump Fixed Costs

Danger Sign On Wet FloorPersonal injury victim claimants who find themselves in the process of a legal dispute could be affected by recent rulings in which it was decided that assessed costs should trump fixed costs where claimants secure more than they had offered to settle for.

The Law Gazette reports that claimants who beat their own Part 36 offer are entitled to more than just fixed costs – the Court of Appeal judgment is likely to be welcomed by claimant lawyers.

Part 36 and Without Prejudice Settlement Offers 

The procedural rules which apply in Personal Injury claims are the Civil Procedure Rules 1998. Each Rule is known as a Part of the Civil Procedure Rules and the relevant section namely, Part 36 of the Civil Procedure Rules 1998, applies to formal offers of settlement and Payments into Court which are made on a ‘without prejudice’ basis.

Part 36 provides a format for the parties to exchange formal offers of outright settlement and/or settlement of particular issues without any formal admissions of liability and this is why they are made on a ‘without prejudice’ basis. Details of the offers are therefore not made known to the Trial Judge until the conclusion of the claim.

Accordingly, Part 36 can be deployed as part of the negotiation process in bringing pressure to bear on the recipient of an offer. If at Trial, a Claimant fails to better a Part 36 Offer or fails to obtain a Judgement which is more advantageous than a Defendant’s Part 36 Offer, then unless the Court considers it unjust to do so, the Court will order the Claimant to pay any costs incurred by the Defendant after the latest date by which the Payment or Offer could have been accepted without needing the permission of the Court (usually 21 days after it is received).

Claimant’s Offer 

If the Claimant offers a sum of money (effectively, we make an offer to settle on your behalf) and at Trial, the Defendant is held liable for more, or the Judgement against a Defendant is more advantageous than the previous proposals contained in any previous Offer made by the Claimant, then, unless the Court considers it unjust to do so, will order that the Claimant is entitled to costs on an indemnity basis from the latest date by which the Defendant could have accepted the Claimant’s offer without needing the Court’s permission (again 21 days after it is received) and also interest, at a rate not exceeding 10% above base-rate, on those costs on the whole or part of any money payable to the Claimant.

By way of example, if you failed to beat another Solicitors offer of £2,000 at Trial and for example, the Court orders that a reasonable amount of damages was say, £1,000 (or if you receive nothing in the event of your case being unsuccessful!), you will have (or will be deemed not) to have not beaten the Defendant’s previous Part 36 Offer and therefore, you will be ordered to pay all of the Defendant’s costs from the time the Offer could have been accepted until the conclusion of the Proceedings at Trial.

Clearly, the ramifications are that such a Costs Order can have a drastic effect on the amount of damages which would be received and in some circumstances, can actually reduce the amount of damages due to the Claimant to zero providing such an amount of damages would have been awarded and on occasions, the Claimant can actually end up owing money to the Defendant if there are insufficient damages to cover the costs incurred.

Conversely, if you were to beat the offer then no such costs penalties will apply. However, if you make an offer of your own and such an offer transpires to be an appropriate level to the award which the Court makes in due course, then you will be awarded an enhanced rate of interest on your damages and also in respect of my firm’s costs.

For more information please call our personal injury team on 020 8891 6141, and they will be able to discuss the best action to ensure you receive the justice and treatment you deserve.