COSTS - WOP Offer with No time limit for Acceptance - OUCH!

MEF (A PROTECTED PARTY, BY HIS MOTHER & LITIGATION FRIEND, FEM) v ST GEORGE’S HEALTHCARE NHS TRUST (2020)

[2020] EWHC 1300 (QB)

QBD (Morris J, Master Haworth) 22/05/2020

CIVIL PROCEDURE - CONTRACTS - COSTS

ACCEPTANCE : CALDERBANK LETTERS : COSTS : DETAILED ASSESSMENT : REASONABLE TIME : SETTLEMENT

A costs offer, which did not set a time limit for acceptance, made in a Calderbank letter sent by the defendant's solicitors roughly one month before the detailed-assessment hearing did not lapse by the start of the hearing, and the claimant had been entitled to accept the offer part way through the hearing, when it became clear that things were not going well for him.

An NHS trust appealed against a decision of a costs judge that the respondent had validly accepted its latest offer, thereby compromising the detailed assessment of the respondent's costs.

The appellant had admitted liability in respect of the respondent's clinical negligence claim and an order had been made that it should pay his costs. The amount sought in his bill of costs was ￡621,455.57. Detailed-assessment proceedings began in April 2018. There followed a series of offers and counter-offers. In a letter from its solicitors dated 27 September 2018, the appellant offered to pay ￡440,000 in full and final settlement of the respondent's costs. That offer was reinstated on three occasions, including in an email from the appellant's solicitors dated 19 August 2019. The email stated: "We shall now proceed to the Detailed Assessment in September ... The Defendant's offer dated 27/09/18 is only capable of acceptance subject to the agreement of the Defendant's costs of Detailed Assessment incurred since that date". It was common ground that the email amounted to a reinstatement of the earlier offer, but subject to a variation that the respondent would pay the appellant's costs of the detailed assessment from 27 September 2018. There was no response to that offer. The detailed-assessment hearing began on 17 September 2019. It became clear by lunchtime on the second day of the hearing that the respondent would recover less than ￡440,000. By an email sent at 16.11 on 18 September, his solicitors sent an email to the appellant's solicitors in the following terms: "We write further to the offer in your letter of 27 September 2018 and to [your] email ... of [19] August 2019, reaffirming the offer, to confirm that the Claimant will accept that offer and will pay the Defendant's reasonable costs of Detailed Assessment". At a separate hearing, the costs judge concluded that the respondent had validly accepted the offer set out in the appellant's solicitors' email of 19 August 2019.

The appellant argued that the costs judge should have found that the August 2019 offer came to an end after the lapse of a reasonable time, which was no later than the start of the detailed-assessment hearing.

HELD: The issue of lapse of time was a question of fact. The factual and contractual context relevant to that issue was as follows:

First, the August 2019 offer was an offer to settle proceedings, more particularly detailed-assessment proceedings. In a detailed-assessment hearing, each party would almost certainly know, as the hearing progressed, how well or badly the hearing was going. They would be able to recalculate the bill from time to time as the costs judge made "mini-decisions" on individual issues. In that way, they might ascertain that the receiving party would recover more or less than an offer.

Second, the Part 36 procedure was available to be used in such proceedings; it was available to the appellant, which chose instead to use the different Calderbank offer approach. Part 36 was a statutory code with its own specific provisions. In particular, by express provision, a Part 36 offer could only be accepted once a hearing had commenced with the court's permission. However, Part 36 did not provide that the offer lapsed at the door of the court or impose an absolute bar on acceptance post-commencement. It was not possible to rely on the position under Part 36 to support the (stricter) contention that a Calderbank offer lapsed at the door of the court. There could be no direct "read across" from Part 36 procedure to the contractual position of a Calderbank offer.

Third, the course and content of the appellant's prior offers was highly relevant context. None of the earlier offers had an absolute time limit. Further, the appellant was aware throughout that it could withdraw the offer made, but consciously decided not to do so. In fact, the appellant's solicitor was working on the assumption (and was indicating to the respondent's solicitors) that the 27 September 2018 offer remained open throughout, and all the way until August 2019, even if, as a matter of contract law, his reminders amounted to the reinstatement of offers which had been rejected. Moreover, the fact that the ￡440,000 offer remained "open" and at the same level, despite the continuing weakening of the respondent's claim following service of replies to the points of dispute, indicated that the appellant was not necessarily concerned with the precise amount of the likely outcome. The foregoing context supported the costs judge's conclusion that the August 2019 offer did not lapse at the door of the court but remained open for acceptance. The respondent's solicitors' email dated 18 September 2019 constituted acceptance of the August 2019 offer and as a result gave rise to a contractually binding settlement of the detailed-assessment proceedings (see paras 32-37, 47 of judgment).

Appeal dismissed

Counsel: