Harris v Nandos Chickenland Ltd

This is a dispute over the costs of certain Part 8 proceedings which were issued on 20th November 2008 and were served on the defendant on 2nd December 2008, and the costs of the subsequent detailed assessment proceedings.

The dispute arises because of an offer to settle first made on 11th November 2008, that is nine days before the Part 8 claim was issued. The defendant then made an offer to settle on the basis that they would pay £9250 in respect of the costs, the detailed assessment of which might be otherwise sought. That offer was made subject to two paragraphs I want to read in full.

“This offer is made pursuant to Part 47.19 of the Civil Procedure Rules and excludes any interest and Part 8 and detailed assessment costs to which entitlement may later arise.”

No admission as to an entitlement to such costs and interest is made at this time.”

The claimant did not accept that offer and, as explained, later issued proceedings. An order for costs was obtained in those proceeding on 9th December 2008. After that, on 16th December, the claimant’s solicitors re-served their bill under a notice of commencement, and on 7th January 2009, the defendants repeated their offer in very similar terms.

I read from the letter of 7th January. The second paragraph states:

“We maintain our Part 47.19 offer of £9,250 in full and final settlement of costs as detailed in the bill of costs, but exclusive of interest, costs in respect of Part 8 and detailed assessment proceedings”.

That offer did not have a second sentence saying “no admission as to entitlement to costs and interest”.

The defendants’ offer of 7 January was served together with its points of disputes on the claimant’s bill. The claimant considered those points of dispute, reconsidered the offer and accepted it. In their letter of acceptance they sought small sums in respect of the costs of Part 8 proceedings and in respect of interest from the date of issue of the Part 8 order.

The defendant by this application is seeking an order that I should, in fact, order the claimant to pay all of the defendant’s Part 8 costs because they say, in the circumstances, the claimant should have accepted the offer dated 11th November 2008.

I find against the defendant on this application. It seems to me the two offers were by no means identical. The second offer was made at a time when either party could ask the court to exercise its discretion as to costs and as to interest if those topics were not agreed. The first offer would not have enabled the claimant to seek either interest or costs had she accepted it.

Both offers refer to the sums offered as being exclusive of certain things. In that respect both offers are identical. They are both saying the sum offered for the main proceedings, leaving aside any claim there is or may be for interest and costs, was £9250. The first letter contained this additional sentence: “No admission is made as to any entitlement”. That sentence was not repeated in the January letter and, indeed, could not sensibly have been repeated because once court proceedings had started the court would have had a discretion as to interest and as to costs, and, indeed, the defendant itself is now seeking the court to exercise its discretion as to costs, even though the offer has been accepted.

I accept the submission of Mr Scott for the claimant that the claimant’s conduct was reasonable in rejecting the offer when it was first made, since it was made on terms that they would not be able to recover any costs of the costs had they accepted it. Mr Scott seeks to support his submissions by saying Part 8 was already in the pipeline at that stage, and I accept his evidence on that. He further supports it by saying that the fact that Part 8 was in the pipeline was within the defendants’ knowledge when they made their offer. He says that in rejecting an offer over the telephone it was made clear that a claim under Part 8 would be made. I do not accept his evidence on that. I think his evidence on that is too weak for me to draw the inference that he wishes me to draw. It may well be that the telephone discussion was what produced the written offer only a couple of days later, perhaps to head off those Part 8 proceedings. In fact, they were not headed off; they had already started.

Nevertheless I find that the defendant ought not to get the benefit of its early offer and there is no benefit on interest or costs it can get if I ignore that earlier offer and look only at the offers made after the Part 8 claim was issued.

I accept that the application before me has been fought at some expense because of its importance. It is not important just for this case, with the sums involved being so small, but I would imagine the parties might well use it as a template for future cases. Both sides are represented by very experienced costs practitioners of high repute and I acquit both sides of seeking to argue solely about small sums of money. The sums of money here are as small as the sums argued over in the well-known Court of Appeal case Woollard v Fowler. In that case the argument was not really about the medical bills incurred by Mr Woollard. It was seeking to set a template for future cases, which, of course, it did.

Looking at this as a matter of principle, it seems to me that an offer to settle made by a paying party should usually be made on the basis that the offeror is willing to pay the offeree’s reasonable costs up to the date of the offer, and, perhaps, in more complicated cases than this, reasonable costs of obtaining advice and instructions as to the offer. That, of course, is what is normally provided for by Part 36 offers.

I also want to say this. If, in future cases, the defendants wish to obtain the result they sought in this application they ought to label their pre-issue offer to settle as an offer under Part 36. It seems to me that costs proceedings are wide open to Part 36, even if there is also a similar offer-to-settle system set forth in Part 47.19. In this case, had the defendants brought their pre-issue offer within Part 36, then the claimant would have been entitled to rely upon a deemed order for costs had they accepted that offer.

Therefore, I dismiss this application and order, subject to submissions, that the defendants should pay the claimant’s reasonable costs of these proceedings. By doing so I leave outstanding another topic: what are the claimant’s reasonable costs for the Part 8 proceedings and the vestigial detailed-assessment proceedings they have had? I do not want to compel the claimants to go to the trouble of requesting a detailed-assessment hearing and paying the court fee just for that. I think it would be simpler if I give the claimants liberty to apply to restore this appointment in order to make that claim for costs, if those costs cannot be agreed.

Now, as to what their reasonable costs of Part 36 and detailed-assessment proceedings are, I have spoken so far on the basis of a pre-issue offer, which I thought they were reasonable to move away from of 11th November and a later offer of 7th January, which they accepted on 8th January. In preparing to give this judgment I have come across a middle-date letter of 15th December 2008, which is very similar to the letter sent only three weeks later, after Christmas. If I were assessing the claimant’s costs of Part 8 and detailed-assessment proceedings I would want to know why her solicitors did not accept the 15th December letter.

Mr Scott has dealt with that to some extent by saying that, at that stage, they had not had sight of the points of dispute and, therefore, they did not know in detail which parts of their costs were being challenged. They did know that previously a very low offer had been made, but they did not know the details of that offer either. That may well be a really telling point. But, when comparatively small sums of costs are concerned, I think the proximity of the sum offered to the sum later accepted is of increased importance. If this were a multi-million-pound case, then I think people would be entitled to say, well, it is all very difficult to understand, to value a million-pound bill. But I think it is very much easier to value costs proceedings which are £13,000 or less.

But that is a matter for another hearing. What I ought to do now is award the claimants their costs of this application and I would like to do that summarily.