Mathieu v Hinds & Aviva: 60% Reduction in the Claimant’s Costs due to Failure to Beat a Calderbank Offer

Mathieu v Hunds & Aviva [2022] EWHC 1624 (QB)

Background

The matter involved a personal injury claim for damages, arising out of a serious road traffic accident that took place on 28 November 2015. The Second Defendant admitted liability on behalf of both Defendants and, following a 10 day quantum hearing, the Defendants were ordered to pay the Claimant £3,178,741.64 in damages. This was lower than two separate offers made by the Defendant in the run up to trial (£3,550,000 on 11 January 2022 and £4,000,000 on 5 February 2022). The Claimant had also sought provisional damages for the chance of developing dementia as result of his injuries. He was not successful on this point at trial.

The Defendants sought an order that the Claimant should only recovery 50% of his costs up until 31 January 2022 (21 days after the first of these two offers) and that the Claimant pay the Defendant’s costs thereafter. In the alternative, the Defendants submitted that there should be either no order for costs of that the Defendants should only pay a percentage of the Claimants costs from 1 February 2022 onwards.

The parties’ submissions

The Defendants submitted that the Court should utilise its discretion under CPR 44.2(2)(b) to disapply the general rule and make a different order. This was on the basis of the lack of success and conduct with regards to the dementia claim, the Claimant’s partial success overall and on the basis of the unreasonableness in bringing the claim for dementia.

The final sum awarded to the Claimant amounted to around 9.5% of the total damages claimed within the final Schedule of Loss. Therefore it was suggested that, as the Claimant only recovered a fraction of the damages claimed, he was arguably not the successful party (Brent London Borough Council v Davies & Ors [2018] EWHC 3129 (Ch)). With regards to the offers that the Defendants had made, the Defendants simply submitted that the Defendants should be considered to be the successful party from 1 February 2022 onwards.

The Claimant submitted that the dementia issue was not a truly discrete issue and that would be almost impossible to entangle the costs associated with it. Furthermore, the costs associated with the dementia issues amounted to a very small proportion of the costs, meaning it would impracticable and unfair to make an issue-based costs order due to this. The Claimant asserted that he had not acted unreasonably in bringing the claim given the supportive evidence that had been obtained and, if a percentage deduction was made for the dementia claim, no more than 5% would be appropriate.

Factors under CPR 44

Mr Justice Hill considered the discretion provided under CPR 44.2 and noted that the following issues required particular consideration:

· Costs orders in partial success

· The relevance of offers and conduct

Costs orders and Partial Success

The Court referred to the judgment of Pigot v The Environment Agency [2020] EWHC 1444 for guidance. It was noted that the mere fact that a party was not successful on every issue would not, in itself, justify an issue-based costs order however, it may well be justified it there is a discrete or distinct issue that has had the effect of increasing the overall costs. Where this applies, any order should reflect to which extent the costs were increased due to the raising of this issue.

Mr Justice Hill considered the matter of Brent, as raised by the Defendant, and concluded that, for the period up until 31 January 2022, it could not seriously be argued that the Claimant was not the successful party. The Claimant went on to win all the key factual disputes at trial and secured substantial damages in addition to provisional damages in relation to epilepsy. Therefore the starting point remained as per the general rule.

However Mr Justice Hill, concluded that the dementia claim was indeed suitable for departure from the general rule for the following reasons:

· The dementia claim was clearly a separate and distinct issue

· It was one of the most complex, significant and disputed issues

· It led to material additional costs

· Due to the parties’ positions, it was a significant barrier to settlement

· Whilst the Claimant was not unreasonable in bring the claim, the manner in which is was conducted was unreasonable

· An alternative order would be consistent with the overriding objective

In determining a suitable percentage of costs, Mr Justice Hill noted the following:

· The written evidence on dementia amounted to around 10% of the trial bundle

· The Claimant’s case summary noted this to be one of three key issues

· Around 5.5% of the total trial duration was devoted the dementia claim

· The issue occupied around 20-30% of closing submissions and 16% of the overall judgement.

Mr Justice Hill therefore concluded that a reduction of 15% should be applied to the Claimant’s costs up until 31 January 2022.

Offers and Conduct

The Court referred to Brit Inns Ltd (In Liquidation) v BDW Trading Ltd (Costs) [2012] EWHC 2489 (TCC) which provides that, whilst a Calderbank offer does not attract the strict provisions of Part 36, the offer will still be relevant in terms of conduct.

He noted that, it was quite clear that the Claimant had not in fact beaten the Defendants’ offers and therefore there was an argument that he was no longer the successful party. However, he concluded that the Claimant was ultimately successful at trial. Therefore it was necessary to consider the relevant factors under CPR 44.2(4) & (5).

He again noted that the Claimant had recovered less than 10% of the pleaded damages and considered the negotiation history between the parties. The Defendants appeared to have taken a realistic view of proceedings throughout, whereas the Claimant’s offers were much more ambitious. Mr Justice Hill considered that, whilst these factors were persuasive, they were not convincing enough to depart from the general rule to the extent that the Claimant pays the Defendants’ costs; particularly given the overall result this would have. He concluded that a 60% reduction to the Claimant’s costs would be appropriate in the circumstances and he confirmed that this also accounted for the 15% reduction due to the dementia issue.

Commentary

It is interesting to note the stark difference in the effect on costs where an offer is/is not made pursuant to Part 36. The second offer was made by the Defendants only 3 days prior to trial, meaning a Part 36 offer would not have been possible. However the first offer was capable of being made by way of Part 36. Therefore the writer wonders why the Part 36 provisions were not invoked at this time given that the Defendants would have automatically have obtained the sanctions that that they later sought.

On the other hand, this case does helpfully illustrate the importance of offers that are not made pursuant to Part 36 and the weight that the Court may place on these offers. Therefore, if a Part 36 is not an option for a party, all is not lost.