Walker Residential Ltd. v Davis & Anor

Where a claimant accepts a Part 36 payment without requiring the court’s permission, the entitlement to costs under rule 36.13(1) is automatic and mandatory. A later extension of the time for making a payment under rule 36.10(3)(a) cannot retrospectively convert the payment into one requiring permission, undo the claimant’s lawful acceptance, or remove the deemed costs order arising under rule 44.12(1)(b). The court’s procedural powers cannot be used to achieve those consequences without a proper jurisdiction to do so.

The claimant brought a misrepresentation claim concerning the sale of land. Before proceedings began, the defendants offered £85,000 plus costs, but the claimant rejected the offer. After proceedings were issued and served, the defendants paid £85,000 into court eleven days outside the period specified by rule 36.10(3)(a).

The payment was presented as an ordinary post-commencement Part 36 payment, and the claimant accepted it without permission within the period specified by rule 36.11(1). The Deputy Master later extended time under rule 3.1(2)(a) and ordered the claimant to pay the defendants’ costs from April 2004. The issue was whether that later order could displace the claimant’s automatic costs entitlement.

1. Appeal allowed. The claimant was entitled to its costs of the claim up to 31 March 2005, the date on which it served notice accepting the £85,000 payment.
2. A payment made after proceedings have begun, and accepted within the period prescribed by rule 36.11(1), may be accepted without permission. Rule 36.13(1) then gives the claimant an automatic entitlement to its costs up to the date of acceptance. The court has no discretion to withhold that entitlement.
3. The defendants’ failure to make the payment within the rule 36.10(3)(a) period was not an invalidating procedural error within rule 3.10. The payment made on 8 March 2005 remained a valid Part 36 payment.
4. The Deputy Master could, in principle, extend the time under rule 3.1(2)(a). That extension did not retrospectively alter the legal position when the payment was made and accepted. At that time the claimant was entitled to accept the payment without permission, had lawfully received the money, and had obtained a deemed standard-basis costs order under rule 44.12(1)(b).
5. The Deputy Master had not identified any jurisdiction to require repayment of the money, to impose permission retrospectively, or to set aside the deemed costs order. Rule 3.1(7) did not apply because the deemed order arose automatically under the rules rather than from an earlier exercise of judicial power. The inherent jurisdiction did not provide a general means of doing what the rules did not authorise.
6. Flynn v Scougall [2004] EWCA (Civ) 873, [2004] 1 WLR 3069 concerned a specialised clash between different Part 36 provisions and did not govern this case.

The judgment states that the claimant appealed from an order made by Deputy Master Behrens on 8 September 2005. Permission to appeal was granted by the Deputy Master. The High Court allowed the appeal.