horwich farrelly

Broadhurst v Tan: the impact six months on

September, 30, 2016

This article was published by PI Brief Update on 23 September 2016.

Claimant lawyers across the land rejoiced earlier this year following the Court of Appeal judgment in Broadhurst v Tan (2016) which ruled that assessed costs, rather than fixed costs, apply to cases where a claimant ‘beats’ a Part 36 offer.

However, whilst initially disappointing, as the defendant in the case we’ve been closely monitoring the impact of the ruling and have observed what appear to be a number of positive benefits for both sides.

Background

The case was one of two conjoined hearings – the other being Taylor v Smith – heard together as the judges in the respective earlier hearings had ruled in opposing ways.

Both cases concerned claims which had started under the Pre-Action Protocols for Lower Value Personal Injury claims which had subsequently left the Portal, and proceeded to final hearing.

CPR 45 IIIA introduced fixed costs for claims started under, but not continuing under, the Pre Action Protocol. The defendants’ case was that, pursuant to CPR 45.29A the only costs allowed were those provided for in CPR 45.29C even if the claimant beat a Part 36 offer (whilst entitled to indemnity costs in principle, those costs were fixed by CPR 45.29C)

The Court of Appeal rejected that interpretation finding that the fixed costs rules in CPR 45 do not stand alone from Parts 36 and that CPR36.21 created an exception to CPR 45.29A. Accordingly, where a claimant makes a Part 36 offer and is subsequently awarded damages in excess of that offer at trial, he is entitled to costs assessed on the indemnity basis from the date the offer became effective.

In such a situation, the costs would be determined in two stages.

Firstly, costs up to the date when the Part 36 offer became effective will be determined by reference to the fixed costs tariff for the stage reached at that point. Thereafter costs will be assessed on the indemnity basis for the work actually done, provided that the costs were incurred reasonably and are reasonable in amount.

Misinterpretations

In the days that followed the ruling, there were a number of varying misinterpretations which sought to overstate the consequences of the judgment.

These included suggestions that a claimant would be able to get fixed costs to trial and indemnity costs based on time spent from the date of expiry of the offer.

So what has changed?

Some seven months later the impact of the Broadhurst judgment is starting to trickle down in the cases defended by Horwich Farrelly and, despite what some naysayers suggested, there appears to be little confusion about interpreting the ruling in practice.

The most notable impact becoming evident in recent months is a change in claimant behaviour.

Previously, Part 36 was sorely utilised by claimants and certain ones would make no attempt to negotiate, simply proceeding to a final hearing. Since the Court of Appeals judgement the frequency of reasonable Part 36 offers received has increased and, those offers are more reasonable than pre-Broadhurst.

It’s encouraging that defendants now have the opportunity to negotiate settlements at an early stage of proceedings thereby reducing overall costs and, at a time when the MoJ is under significant financial pressures, reducing the burden on judicial resources.

Whilst it’s still early days it appears the CoA’s decision, despite initial concerns, is having a positive impact and could well be win-win for defendants and claimants alike.

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