Carver v BAA Plc

Under the amended Part 36 procedure, obtaining a monetary judgment marginally exceeding a defendant’s offer does not necessarily amount to obtaining a more advantageous judgment. The comparison extends to all the circumstances, including the irrecoverable financial cost of continuing the proceedings and the stress of awaiting and undergoing trial. Money is not the sole criterion. Where the claimant has failed to obtain a more advantageous judgment, the defendant ordinarily receives its costs after the acceptance period expires, unless that would be unjust.

The general costs discretion also permits account to be taken of reasonable settlement offers, failures to make counter-offers, exaggeration and the manner in which proceedings were conducted. A claimant bears responsibility for the conduct of the professionals pursuing the claim. Appellate interference with a trial judge’s costs discretion requires an error of principle or an exercise outside the permissible ambit.

Lisa Carver, an air hostess, injured her ankle when she stepped into a defective lift at Gatwick Airport. BAA Plc, which was responsible for airport safety, admitted liability. It subsequently offered £4,006 in settlement, including an interim payment, and later paid money into court bringing the total offered to £4,520.

The claimant pursued proceedings after receiving medical advice suggesting that surgery was required. Her claimed losses increased substantially, but the experts later agreed that the accident had caused a much more modest injury. Following trial, His Honour Judge Knight QC in the Central London County Court awarded £4,686.26 including interest. On the agreed interest comparison, this exceeded the payment into court by £51.

The judge nevertheless ordered the claimant to pay the defendant’s costs after the acceptance period expired. He also made no order for costs between the earlier settlement offer and the payment into court taking effect. The claimant appealed, challenging both costs decisions. The principal issue was whether the amended Part 36 required a purely monetary comparison or permitted a broader assessment of advantage.

The appeal was dismissed unanimously. Ward LJ gave the judgment, with which Rix and Keene LJJ agreed.

1. The amended Part 36 governed the costs consequences of the earlier payment into court through the transitional provision in the Civil Procedure (Amendment No. 3) Rules 2006. The amendment replaced the distinction between monetary payments and settlement offers with a uniform assessment of whether the judgment was more advantageous, or at least as advantageous, as the relevant offer (paras 21, 28–30).

2. The expression more advantageous permitted a broad review of the facts and circumstances. The court could consider whether the outcome was worth the financial and emotional cost of pursuing the litigation. Although a monetary comparison offered clarity, the amended rule required the same approach to money and non-money claims. The encouragement of settlement supported consideration of the time, expense and stress involved in continuing proceedings (paras 29–31).

3. The judge was entitled to conclude that the additional £51 was outweighed by the claimant’s irrecoverable costs and the stress of awaiting and undergoing trial. The claimant had therefore failed to obtain a more advantageous judgment. The judge’s erroneous formulation that it would be unjust to make the defendant pay costs had no causative effect. The order awarding the defendant its costs after the acceptance period expired was upheld (paras 32–33).

4. The earlier costs period fell within the general costs discretion. The appellate court would interfere only for an error of principle or an exercise outside the permissible ambit. The court could consider settlement offers, the parties’ conduct, the reasonableness of pursuing issues and exaggeration. The reasonable earlier offer had received neither a response nor a counter-offer. The claimant bore ultimate responsibility for the professionals’ conduct of her claim, although its exaggeration was not her personal fault. Its late reduction, the continued absence of counter-proposals and disproportionate expenditure justified making no order for that period (paras 34–36).

The costs orders were left undisturbed.

• Court of Appeal (Civil Division): In [2008] EWCA Civ 412 , dismissed the claimant’s appeal unanimously and upheld both challenged costs orders.
• Central London County Court: On 4 June 2007, His Honour Judge Knight QC awarded the claimant £4,686.26 including interest. He awarded her costs up to November 2005 on the fast track costs basis, made no order for costs between November 2005 and June 2006, and awarded the defendant its costs from 27 June 2006 on the standard basis.
• Permission to appeal: Granted by Sir Henry Brooke.