Rehill v Rider Holdings Ltd

A withdrawn Part 36 offer does not carry the automatic costs consequences applicable to a subsisting offer. It remains relevant to costs under the general discretion. The reasonableness of refusing it must be assessed by the information then available, including what the offeree actually knew rather than only what advisers or experts knew.

Costs incurred in advancing a dishonest claim are not reasonably incurred. A detailed-assessment judge may disallow them or require payment of the opponent’s resulting costs, while avoiding double recovery.

Mr Rehill was injured when struck by the respondent’s bus while crossing a road. At the liability trial, the Recorder found negligence by the driver and contributory negligence by Mr Rehill. A previous appeal altered the apportionment to equal responsibility.

The respondent had made settlement offers before proceedings, including an offer of £100,000 in November 2007 which was later withdrawn. Mr Rehill ultimately accepted £17,500. The Recorder held that he should bear the respondent’s costs only from July 2009, despite findings that he had exaggerated aspects of his claim.

The respondent appealed the resulting costs order. The central issues were whether refusal of the withdrawn 2007 offer was unreasonable and whether the order adequately addressed costs caused by dishonest exaggeration.

1. Appeal allowed. The Recorder’s order was varied. Mr Rehill was ordered to pay the respondent’s costs from 30 November 2007, 21 days after the November 2007 offer.
2. A withdrawn Part 36 offer does not attract the automatic consequences under CPR r 36.14. It must nevertheless be considered under CPR r 44.3. Applying Trustees of Stokes Pension Fund v Western Power Distribution South West PLC [2005] EWCA Civ 854, the relevant question was whether it was reasonable to refuse the offer when it was open. That assessment depended on information then available, including what Mr Rehill himself knew.
3. The Recorder’s assessment was vitiated by his failure to evaluate the agreed medical evidence, his own earlier findings about Mr Rehill’s mobility, and the financial significance of any remaining uncertainty. Mr Rehill could not reasonably refuse the November offer. By then he knew there was no genuine claim for the accommodation-adaptation costs which had materially inflated the claim. The April offer stood differently because material orthopaedic uncertainty remained.
4. The court rejected the second ground as an independent basis for allowing the appeal. It accepted that a costs order should not permit recovery of costs incurred in advancing a dishonest case. However, under CPR r 44.14 and the agreed reservation of conduct issues, the costs judge could disallow such costs or order payment of the respondent’s costs on detailed assessment. That conclusion accorded with Ultraframe UK Ltd v Fielding [2006] EWCA Civ 1660 and avoided double recovery.
5. In a postscript, the court held that neither party had complied with PD 44 para 13 by filing a costs schedule before the one-day appeal. Since that prevented summary assessment, the respondent was ordered to pay the costs of any detailed assessment in any event.

• Court of Appeal (Civil Division): Allowed the respondent’s appeal from the Recorder’s costs order and substituted an order requiring the claimant to pay the respondent’s costs from 30 November 2007.
• High Court of Justice, Queen’s Bench Division: On 22 April 2013, the Recorder ordered the respondent to pay the claimant’s standard-basis costs up to 1 July 2009, while applying later Part 36 consequences from 2 July 2009.
• Earlier proceedings: At the liability trial, the Recorder reduced damages by 30% for contributory negligence. A previous Court of Appeal decision in May 2012 altered the apportionment to equal responsibility.