Amber v Stacey

A written monetary settlement offer which is not supported by a payment into court does not acquire the prescribed costs consequences of a Part 36 payment. It remains relevant to the court’s general costs discretion, together with the parties’ conduct and the extent of their success.

Unreasonable commencement and pursuit of exaggerated litigation may justify depriving a partly successful claimant of costs and ordering payment of part of the defendant’s costs. The court must not, however, treat an ordinary written offer as the precise equivalent of a payment into court. The costs order must reflect all material circumstances, including issues on which the claimant succeeded.

The claimant contractor recovered £2,321.16 after claiming £7,579.86 for refurbishment work. The defendant’s counterclaim was dismissed. Shortly after proceedings began, the defendant had offered £4,000 plus VAT and costs but had not paid that sum into court. Later payments into court eventually exceeded the judgment.

Mr Recorder Clarkson QC ordered the claimant to pay the defendant’s costs from 1 October 1997, the date of the written offer, as well as from the date relevant to the later payment into court. The claimant appealed from the earlier part of that order.

The central issue was whether the court’s general costs discretion permitted the written offer to be given the same effect as a payment into court, notwithstanding the claimant’s unreasonable and exaggerated conduct.

1. Appeal allowed to a limited extent. Sir Anthony Evans, with whom Simon Brown LJ agreed, held that the Recorder had ample grounds to deprive the claimant of his costs between 1 October 1997 and 20 January 1999. The claimant had commenced proceedings precipitately, grossly exaggerated substantial items and refused a generous offer. The Recorder could find that reasonable conduct would have avoided the proceedings.

2. The Civil Procedure Rules 1998 applied when the costs order was made. The conduct occurring while the former rules remained in force could nevertheless be assessed in its contemporary procedural context. Under rule 44.3, the court had a wide discretion and was required to consider all the circumstances, including pre-action conduct, partial success, exaggeration and admissible settlement offers.

3. The defendant’s written offer did not carry the prescribed consequences of a Part 36 payment. Rules 36.2 and 36.3 required an offer settling a money claim to be supported by a payment into court before those consequences followed. The defendant had expressly contemplated making such a payment but did not do so at that time.

4. The Recorder therefore erred in principle by ordering costs as though the written offer were a payment into court and as though the defendant had succeeded on every issue. The claimant had defeated the counterclaim and the contention that the work was worthless. Those matters had to be reflected in the order.

5. The absence of a qualifying payment did not make the written offer or the claimant’s unreasonable conduct irrelevant under rule 44.3. Giving proper effect to the Recorder’s findings, the claimant was ordered to pay one half of the defendant’s costs for the relevant period.

6. Simon Brown LJ added that monetary settlement offers should be made by Part 36 payment where its costs protection is sought. Payment into court promotes certainty about genuineness, ability to pay, privilege and settlement terms. Written offers remain relevant but should not be treated as precise equivalents.

1. Court of Appeal: Allowed the claimant’s appeal to the limited extent that he was liable for one half, rather than all, of the defendant’s costs between 1 October 1997 and 20 January 1999.

2. Yeovil County Court: Mr Recorder Clarkson QC awarded the claimant £2,321.16, dismissed the defendant’s counterclaim and ordered the claimant to pay the defendant’s costs from 1 October 1997 and from the later date associated with the effective payment into court.