Part 36 trumps Part 45: Broadhurst v Tan

13 May 2016

As the Government recently reaffirmed its intention to press ahead with fixed costs for all claims worth up to £250,000.00 the Court of Appeal highlighted, in the case of Broadhurst v Tan, that such fixed costs did not apply in case where a Claimant has “beaten” its own offer at trial.

The Government has already announced its proposal to introduce fixed costs in claims worth less than £250,000.00, a move proposed by Lord Justice Jackson in February 2016, and it seems that such plans are already progressing. If such plans were to come into force Claimant solicitors would receive a fixed amount for their costs in all such claims.

James Braund, specialist personal injury solicitor at Trethowans LLP’s Poole Office highlights that “the concern amongst many Claimant personal injury solicitors is that such proposals may not take into account the complexity of the particular case or the conduct of the Defendant, both of which can mean that considerably more costs may be incurred than may be recoverable under any scheme which may come in. This raises the concern as to whether some firms may be forced to cut corners or look to recover any shortfall in their costs from the Claimant.”

However, in the recent case of Broadhurst v Tan the Court of Appeal determined that such fixed costs (which are currently in place for personal injury claims under £25,000.00) do not apply in cases (outside the low value claims portal) where a Claimant has beaten their own Part 36 Offer. In any personal injury case it is open to either party to make an offer to settle the claim (by way of Part 36 of the Civil Procedure Rules). There are already a number of consequences of a party “beating such an offer”, i.e. achieving a better result at trial than their offer would have been (had it been accepted), including penalty interest and a 10% uplift for the Claimant’s damages, and it was confirmed in this ruling that a further consequence for a Claimant in such a position would be to avoid the fixed costs regime.

James added that “the Broadhurst judgment is a welcome, but perhaps not completely unsurprising decision. It has long been established that indemnity costs flow from a Claimant beating their own Part 36 Offer and to alter this in fixed costs cases would significantly reduce the potency of a Claimant Part 36 Offer. If we do see an extension of the fixed costs regime it is likely that bullish Claimant offers early in cases may become more common.”