Crooks v Hendricks Lovell Ltd

A defendant’s Part 36 offer expressed as a sum “net of CRU” and made without regard to liability for recoverable benefits is compared with the judgment award after deducting the final amount of recoverable benefits. The comparison must be between like sums and must assess their respective monetary value to the claimant.

The words “upon judgment being entered” in CPR rule 36.14 mean once judgment has been given, rather than only on the day of judgment. A court may therefore defer its costs decision where a subsequent review of recoverable benefits is needed to establish the true comparison. A revised certificate affects the net value of the judgment, but does not alter the terms of the Part 36 offer.

The claimant suffered neck and back injuries in an accident at work. The defendant admitted liability but disputed medical causation. Following trial in the County Court at Slough, the claimant obtained judgment for £29,550. The recorder deferred costs pending a review by the Compensation Recovery Unit of the certificate of recoverable benefits.

The revised certificate reduced the deductible benefits from £16,262.76 to £6,760.11. The recorder nevertheless held that the claimant had failed to beat the defendant’s Part 36 offer of £18,500 “net of CRU” and made a costs order in the defendant’s favour.

The claimant appealed. The principal questions were how the offer should be construed, whether the costs decision could await the CRU review, and whether the revised certificate meant that the claimant had obtained a judgment more advantageous than the offer.

1. Appeal allowed. The Part 36 offer was validly made under CPR rule 36.15(3)(a). There was no contradiction between describing the offer as “net of CRU” and stating that it was made without regard to liability for recoverable benefits. Because it was not an offer under rule 36.15(3)(b), it did not have to state the amount of gross compensation under rule 36.15(6)(a).

2. The natural meaning of “net of CRU” was the amount remaining after all necessary deductions for recoverable benefits. The offer was therefore for £18,500 payable to the claimant without reduction for the defendant’s separate liability for recoverable benefits. It did not incorporate or anticipate any particular gross sum or future CRU liability.

3. When such an offer is compared with a judgment under CPR rule 36.14, the court must compare like with like. The judgment award must be reduced by the final deductible benefits and the resulting net amount compared with the net offer. The comparison concerns the monetary advantage to the claimant, rather than the total cost of settlement to the defendant.

4. The words “upon judgment being entered” in rule 36.14(1) mean once judgment has been given, not only at the moment judgment is given. The recorder was entitled to defer costs until the CRU review had established the correct amount of recoverable benefits. The review depended upon the findings in the judgment, and proceeding on an obsolete certificate would not have reflected the true position. Such an adjournment will not invariably be necessary or appropriate.

5. The revised certificate changed the net value of the judgment but did not vary the offer. Deducting £6,760.11 from the award of £29,550 produced a net judgment of £22,789.89. That exceeded the unchanged net offer of £18,500 by £4,289.89. The claimant had therefore beaten the offer.

6. The recorder’s costs discretion rested on a flawed comparison. The Court of Appeal set aside his order and exercised the discretion afresh. The defendant was ordered to pay the claimant’s costs of the proceedings, subject to detailed assessment if not agreed. Arden and Moore-Bick LJJ agreed with Lindblom LJ.

1. Court of Appeal (Civil Division): The court unanimously allowed the appeal, set aside the recorder’s costs order and ordered the defendant to pay the claimant’s costs.

2. County Court at Slough: Mr Recorder Catford awarded the claimant damages of £29,550. After a CRU review, he held that the claimant had failed to beat the defendant’s Part 36 offer and ordered the claimant to pay the defendant’s costs after expiry of the relevant period.