Bent v Highways and Utilities Construction & Anor

This is the judgment of the court.

On 24 November 2011 we handed down judgments in the cases of Pattni v. First Leicester Buses Limited and Bent v. Highways and Utilities Construction and Allianz Insurance: [2011] EWCA Civ 1384. In the Pattni case the parties agreed all aspects of the consequential orders. In the Bent case the parties were also able to agree certain matters. However other aspects of the costs order that we should make remained at issue between the parties. This court ordered that submissions be made in writing on the outstanding questions. We have considered those submissions. This judgment sets out the conclusions of the court.

The following points are now agreed between the parties: (1) Highways and Utilities Construction and Allianz Insurance (“H&A”) should pay the costs of the proceedings in the county court, including the costs of the retrial before HHJ Plumstead. (2) H&A should pay the costs of the appeal before us. The basis of the assessment of those costs will depend on our view on the consequences of a Part 36 offer which was made by the claimant, Darren Bent, on 2 February 2009 which was, of course, rejected. (3) H&A should pay the sum of £60,000 on account of costs to the claimant, Darren Bent.

There are two principal issues which we have to decide. These are: (1) Who should pay the costs of the first appeal to this court: [2010] EWCA Civ 292? (2) Should effect be given to the Part 36 offer made by Mr Bent on 2 February 2009, and if so, how?

It will be recalled that H&A were successful on the first appeal to this court, in the sense that the court set aside the judgment of HHJ Yelton and ordered that there be a retrial of the issues concerning the Basic Hire Rate (“BHR”) which was recoverable by the claimant, Mr Bent. However the Court of Appeal reserved the costs of that appeal to the retrial judge. HHJ Plumstead adjourned the issue of costs generally. Their determination thus falls to this court, in the light of our decision to allow the appeal from HHJ Plumstead.

H&A submit that they were successful on the first appeal and that therefore they should either have the costs of that appeal or, at the least, that Mr Bent should not be entitled to have his costs of that appeal, which he opposed. On behalf of Mr Bent it is accepted that he did oppose the appeal, but it is noted that there was a Respondent’s Notice which sought to uphold Judge Yelton’s judgment on the basis that it was correct in the result despite any error in law that he might have made concerning which evidence he was entitled to consider.

In our view the question of costs on the first appeal must be determined in the light of subsequent events and the position overall. It will be recalled that, in advance of the trial before HHJ Yelton, Mr Bent had received an interim payment of £36, 618.76. The effect of Judge Yelton’s judgment was that Mr Bent was entitled to receive a further £24,788.14. The Part 36 offer made on 2 February 2009 was to settle for a further payment (on top of the interim payment) of £15,278. The result of our judgment on the second appeal is that we held that Mr Bent was entitled to receive a further £17,103.05 on top of the interim payment. But, as a result of our order Mr Bent will have to repay to H&A £7,687.09. Nevertheless, Mr Bent will still receive more than the total of the interim payment and his Part 36 offer. He will receive £1,823.05 more than those combined sums. Therefore, Mr Bent has been the overall “winner” in these protracted proceedings.

In our view justice will be done if we make an order that H&A should pay 50% of Mr Bent’s costs on the first appeal. Those costs will be paid on the standard basis because the Part 36 offer of 2 February 2009 was not repeated at any stage in respect of the two appeals.

With regard to the sum of £7,687.09 that it is accepted that Mr Bent must repay to H&A, it is also accepted that he must pay interest on that sum. H&A submit that interest should be at the Judgments Act rate of 8%. It is submitted on behalf of Mr Bent that he should pay simple interest at base rate plus 1% (i.e. at present 1.5%) which would give a total figure of interest on that principle sum of £269.82, up to 25 November 2011. In our view the proposal advanced on behalf of Mr Bent is the correct basis for awarding interest. In that way H&A will be recompensed for being kept out of money which is theirs at a proper commercial rate. There is no justification for awarding the much higher Judgments Act rate of 8%.

That brings us to the second principal question, which is whether effect should be given to the Part 36 offer and, if so, how. Part 36.14(1)(b) provides that the terms of Part 36.14 will apply where “judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant’s Part 36 offer”. The result of our judgment in the second appeal is that there will be judgment against H&A which will be more advantageous to Mr Bent (the claimant) than the proposals set out in his Part 36 offer of 2 February 2009. Accordingly the provisions in Part 36.14(3)(b) and (c) will apply to this case, unless the court considers it unjust to apply those provisions. (Part 36.14(3)(a) does not apply in this case, save to the limited extent referred to in [13] below, because Mr Bent has to repay the figure of £7,687.09 plus interest.) Part 36.14(3)(b) and (c) would entitle Mr Bent to his county court costs on an indemnity basis from the date on which the relevant period expired after the Part 36 offer was made by him and also interest on his costs at a rate not exceeding 10% above base rate.

It is submitted on behalf of H&A that it would be “unjust” to apply Part 36.14(3)(b) and (c) in this case. We are asked to take account of all the circumstances of the case and the specific matters identified in Part 36.14(4). It is submitted that Mr Bent has only achieved his overall win as a result of material that has come to light since the Pt 36 offer and, indeed, since the trial before HHJ Yelton. It is further submitted that, in the circumstances, H&A were justified in rejecting the 2 February 2009 Part 36 offer and we are reminded that H&A did win the first appeal.

In our view it would not be “unjust”, in all the circumstances, to apply Part 36.14(3)(b) and (c). H&A are experienced litigators in this field. They must have appreciated that there was a very serious risk that there would be a significant recovery above the interim payment, or they should have done. In our view they had enough information to evaluate the Part 36 offer which they rejected. If they had accepted it a great deal of expensive litigation would have been avoided. Despite the fact that H&A “won” the first appeal, it has not got them very far and Mr Bent has been the overall “winner”.

The consequences of applying Part 36.14(3)(b) and (c) were more or less agreed between the parties. Thus: (1) costs up to 23 February 2009 will be on the standard basis. (2) Costs thereafter in the county court will be on the indemnity basis. (3) Interest on costs will be as follows: (a) on disbursements at the rate of 1% per annum above base rate from the date of payment to the date on which interest under either CPR Part 36.14 (3)(c) or the Judgment Act 1838 becomes payable; and (b) on the costs of the proceedings in the county court, at the Part 36 rate, (which we fix at 5% above base rate, which at present is 0.5%) until the date or dates from which it is subsequently determined that interest under the Judgments Act should be payable. (4) Lastly, it is agreed that there should be enhanced interest on the damages between the effective date of the Part 36 offer (ie. 24 February 2009) and the respondents’ actual payment on 23 July 2009. That will be at the rate of 5.5%. The parties must agree a precise figure.

There is an outstanding argument as to the date from which interest on costs should be calculated at the Judgment Act rate. This issue arises in another case which is to be considered by the Court of Appeal in January 2012. The parties have sensibly agreed that all questions of Judgments Act interest be delegated to the Costs Judge who will have to consider the detailed assessment of Mr Bent’s costs and the Costs Judge will therefore rule on this particular issue in accordance with the judgment of the Court of Appeal. All issues on the assessment of costs should thus be listed together in the Senior Courts Costs Office list.

The parties should produce an agreed draft form of order to reflect this judgment, on the basis of which a formal order will be made when this judgment is handed down.