Costs: Successful Appeal To High Court's Better Judgment On Part 36

JLE v Warrington & Halton Hospitals NHS Foundation Trust [2019] EWHC 1582 (QB)

The High Court has overturned a decision which held that the Court may apply the 'injustice' test separately for each part of CPR 36.17(4).

Background

The Claimant presented a Bill of Costs in the sum of £615,751.51, and made a Part 36 offer of £425,000 inclusive of interest. The offer expired and at detailed assessment, the Claimant was awarded £431,813.05, therefore beating their offer.

During the assessment, the Claimant invited the Court to award the consequences of paragraphs (a), (b), (c) and (d) of CPR Part 36.17.

Applying paragraph (d) would have result in an additional 10% being awarded.

The Defendant argued that it would be unjust for the consequences of paragraph (d) to apply as the Claimant had only beaten its offer by a small margin of £7,000. Allowing the additional 10% would provide the Claimant an additional sum in excess of £40,000.

The Defendant submitted that the Court, when applying Rule 36.17(4), should deal with the question of whether it is 'unjust' to make an order under the Rule separately for each of the consequences set out in paragraphs (a)-(d). In other words; the Court has the power to award all, some, or none of the penalties. The Claimant disagreed that the Court should be entitled to disapply one of the penalties, that it was an 'all or nothing' approach.

Master McCloud adopted the Defendant's view, albeit expressing doubts, disapplying paragraph (d) and declining to award the additional 10%.

The Claimant appealed.

Outcome

The appeal was granted, and the additional amount of 10% was awarded.

There were two grounds of appeal:

There is a single test of unjustness so that all or none of the consequences of 36.17(4) should apply. If the test for unjustness can be applied to each sub-paragraph of 36.17(4) separately, the correct approach was still the application of all of the sub-paragraphs in most cases, save for "the most exceptional cases" - of which this claim was not one. First ground of appeal

Mr Justice Stewart concluded that it was not a single test of unjustness, as "there is nothing in the wording [of Rule 36.17] to suggest it should not be applied separately for each of those subparagraphs." In addition, the authorities considered contained nothing which would have been binding on the Court either way.

Second ground of appeal

The high threshold of proving injustice was not met, and therefore, the Claimant's submissions were...