UK: Costs - Sense And Sensitivity

Last Updated: 23 April 2008
Article by David Knapp and John Palmer

Carver v BAA plc 2008 Court of Appeal. "The issue in this Appeal boils down quite simply to this: if a claimant beats a payment of money into court by a modest amount, even £1, has she obtained a judgment more advantageous than the defendant's Part 36 Offer or is the court entitled to look at all the circumstances of the case in deciding where the balance of advantage lies?"

So said Ward LJ pithily in giving the lead judgment delivered today in this case which concerned an appeal by the claimant in respect of costs orders made at trial. The claimant beat the Part 36 Offer by £51.

The Court of Appeal has now taken the opportunity to review the provisions of the new CPR Part 36 which came into force in April 2007 and, in particular, the costs consequences following judgment. The case is of great assistance to defendants and correctly places responsibility on claimant lawyers to think hard when a sensible Part 36 Offer is made. Should they fail to act in the spirit of the CPR, seriously adverse costs consequences may well follow.


The claimant's claim arose out of an accident which occurred on 31 March 2003 following a tripping accident at Gatwick Airport.

Following the claim being made, on 24 July 2003 BAA promptly conceded liability for the accident. On 17 November 2003, the claimant served a medical report with Schedule of Loss. On 9 February 2004, BAA made an interim payment of £520. In the summer of 2004, further medical evidence was obtained and referred to BAA. On 17 November 2005, BAA made a gross Part 36 Offer in settlement of £4,006.

The claimant was not content with the offer made and obtained further medical evidence. Proceedings were commenced in March 2006. On 6 June 2006, the defendant made a Part 36 Payment totalling £4,520 (gross of the interim payment). This offer was rejected. The claimant served a much increased Amended Schedule of Loss and the claim was reallocated from the fast track to the multi track. The defendant then obtained its own medical evidence (which was initially objected to by the claimant, refused by the lower court, but subsequently allowed on appeal) which was subsequently served upon the claimant. At a meeting of experts on 8 April 2007, the claimant's expert agreed with the defendant's expert, significantly reducing the value of the claimant's claim.

There then followed various communications between the claimant and defendant. On 22 May 2007, the defendant's solicitors wrote:

"Insofar as our client's payment into court is concerned, how far apart are we? Surely you must have valued your client's claim now and have some idea as to how much she seeks to recover - perhaps you would enlighten us. What value does your client place on general damages?".

The matter was heard by HHJ Knight QC on 4 June 2007 sitting in the Central London County Court. The claimant obtained judgment for £4,686.26 inclusive of interest. After allowing for interest, it was agreed that the judgment exceeded the Part 36 Payment by £51. After hearing argument on costs and conduct, it was ordered that the defendant pay the claimant's costs up to November 2005, that there be no order for costs between November 2005 and June 2006, and that the claimant pay the defendant's costs from June 2006. The claimant appealed.


Giving the lead judgment, Ward LJ considered the question of whether the change in the language of Part 36 results in a change of approach. For money claims as well as non-money claims, the same questions arise under CPR 36.14 (1) namely, under (a) whether the judgment is "more advantageous" than the offer and under (b) whether the judgment is "at least as advantageous" as the offer. The Court confirmed that in non-money claims all the circumstances of the case have to be taken into account.

This permits a more wide ranging review by the trial judge of all the facts and circumstances of the case to decide whether the judgment was worth the fight. This is the modern approach to litigation. Ward LJ commented that litigation is time consuming and comes at a cost, both emotional and financial. There are various factors to be taken into account when deciding whether the battle has been worth it. Money is not the sole governing criterion.

Ward LJ found that the judge was entitled to take into account that the extra £51 gained was more than offset by the irrecoverable costs incurred by the claimant in continuing to contest the case as long as she did. Ward LJ considered the added stress to the claimant as she waited for trial and the stress of the trial itself should also be taken into account. No reasonable litigant would have embarked upon this litigation for a gain of £51. The appeal was therefore dismissed.

For the period for which no order for costs was made (November 2005 to June 2006) the Court found that this was a matter for the judge's discretion. Ward LJ highlighted that the Court would be loath to interfere with the judge's discretion unless he had erred in principle or the exercise of that discretion. The Court of Appeal agreed the County Court judge's condemnation of the manner that the case had been litigated by the claimant. The Court found that the judge acted entirely within his discretion, having considered the conduct of the parties and the way in which the litigation had been pursued, to make the order he did.


This case highlighted the risks any party takes when not accepting a reasonable offer to settle.

It underlines the importance that all parties must act reasonably, both pre- and postissue of proceedings and that the court will take into account all the circumstances of the case, including the conduct of the parties when making costs orders.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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