Cunningham v AST Express Ltd & Anor

A genuine and adequate settlement offer may place a claimant at risk on costs in the same way as a payment into court, even where it is made before proceedings. If it is clear, open for 21 days and capable of being satisfied, the offeror may become the successful party when the offer period expires. Under Civil Procedure Rules Part 44.3, the court must consider all the circumstances, including conduct and partial success. Medical support for an exaggerated claim, or a reasonable belief in its merits, may not justify departing from the usual costs order. An exaggerated claim may instead reinforce the offer’s costs consequences.

The claimant succeeded on liability in a personal injury action but recovered only modest damages. Before proceedings, the defendants offered £4,700, open for 21 days. The offer was not accepted, and the claimant later advanced a claim exceeding £180,000. After medical and surveillance evidence substantially reduced the apparent value of the claim, the matter proceeded to trial.

The Bolton County Court ordered the defendants to pay the claimant’s costs up to 31 August 2006 and half his costs until 15 November 2007, with the claimant paying the defendants’ costs thereafter. The defendants appealed, arguing that their offer should have had the effect of a Part 36 offer and that the claimant’s conduct did not justify departing from the usual order. The central issue was the proper costs consequence of the offer and the parties’ conduct.

1. Disposition. The appeal was allowed. The Recorder’s costs order was set aside. The defendants were ordered to pay the claimant’s costs up to 1 September 2006, and the claimant was ordered to pay the defendants’ costs thereafter.
2. Lady Justice Smith held that Civil Procedure Rules Part 44.3 required the court to consider who was the successful party at the relevant stages, while retaining discretion to make a different order having regard to all the circumstances. The relevant considerations included the parties’ conduct, partial success and settlement offers.
3. The £4,700 offer was adequate, made in good faith, open for 21 days and capable of being satisfied. Although it was made before proceedings and was not paid into court, it placed the claimant at risk on costs. The reasoning in Trustees of the Stokes Pension Fund v Western Power Distribution [2005] EWCA Civ 854 was applied. The defendants therefore became the successful party when the offer period expired on 1 September 2006.
4. The Recorder was entitled to consider conduct, but the conduct of the defendants was impeccable. The claimant had delayed commencing proceedings, failed to respond to the offer and advanced a greatly exaggerated claim. Even if the claimant had medical support and had not acted dishonestly, that did not provide a sufficient reason to deprive the defendants of the costs protection arising from the effective offer.
5. Lord Justice Wall agreed with the judgment.

• Court of Appeal (Civil Division) allowed the defendants’ appeal and substituted a costs order requiring the defendants to pay the claimant’s costs up to 1 September 2006, with the claimant paying the defendants’ costs thereafter.
• Bolton County Court (Mr Recorder Atherton) awarded the claimant costs up to 31 August 2006, half his costs until 15 November 2007, and the defendants’ costs thereafter.
• Permission to appeal was refused on paper but granted by Ward LJ on renewal.