Jopling v Leavesley & Anor

Where a Part 36 offer is accepted after the relevant period, Civil Procedure Rules Part 36.10(5) provides the starting point for the costs order, subject to the court’s discretion. That discretion must support Part 36’s purpose of encouraging settlement and minimising costs. The court should give effect to the offer’s express terms, should not assume how unresolved issues would have been decided at trial, and should not make delayed acceptance advantageous. An offer settling the whole claim and expressly including costs should ordinarily result in recovery of the costs of the whole claim.

The executor of Kenneth Smith brought claims against his stepdaughter and niece concerning money allegedly obtained by undue influence, including two cheques and ATM withdrawals. The claimant made identical Part 36 offers to each defendant, covering the whole claim for £25,000 plus interest and the claimant’s legal costs. The defendants accepted after the relevant period, but the parties did not agree the costs consequences.

His Honour Judge Behrens apportioned costs between the cheque and ATM claims. The appeal concerned whether that discretion had been exercised properly under Civil Procedure Rules Part 36.10.

1. Appeal allowed. The court unanimously allowed the appeal and exercised the costs discretion afresh.
2. Under Civil Procedure Rules Part 36.10(4)(b) and (5), late acceptance of a Part 36 offer gives rise to a discretionary costs order. The starting point is that the claimant receives the costs up to expiry of the relevant period, with the offeree liable for the offeror’s costs thereafter, subject to an order otherwise.
3. An appellate court may interfere with a discretionary decision where the judge misdirected himself in principle, omitted relevant factors, took irrelevant matters into account, or reached a decision no reasonable properly directed judge could have reached.
4. The first-instance judge failed to give effect to the express terms of the offers. They covered the whole claim and expressly provided for payment of the claimant’s costs. Acceptance therefore operated on the basis that the offers were accepted in full, including the costs term.
5. The judge also wrongly assumed that the defendants would have succeeded on the ATM claim. The outcome of that unresolved issue was unknown and could not properly justify altering the costs position.
6. The order made the defendants better off by delaying acceptance, contrary to Part 36’s purpose of encouraging settlement and minimising costs. The judge’s approach also gave no proper weight to the offer’s costs-shifting function.
7. There was no sufficient reason to depart from the default position. The defendants were therefore liable for the claimant’s whole costs up to the date of acceptance.

• Court of Appeal (Civil Division) — [2013] EWCA Civ 1605: allowed the appeal and substituted a costs order requiring the defendants to pay the claimant’s whole costs up to acceptance.
• High Court of Justice, Queen’s Bench Division — His Honour Judge Behrens exercised the discretion under Civil Procedure Rules Part 36.10 and apportioned costs between the claims.