The lion sleeps tonight

How quickly the year is passing. We are in the dog days of the year. Each day is a little shorter. Each night a little longer. The darkness grows and the cold starts to seep into your very bones. The pace of credit hire litigation remains unceasing however.

Trial by video, is not only commonplace but may represent the new normal. One solicitor told me of her early experience of a remote trial, logging into find the client sitting on his sofa wearing only his underpants, munching his way through a family bag of crisps. It had got lost in translation, that not only did the camera work both ways, but he was to have the starring role in his own reality TV show. But such teething problems are now in the past.

One recent development I have noticed arising with increasing frequency, is late settlement of credit hire claims. This year I have had two trials, where the defendants have accepted the claimant’s part 36 offer on the morning of the trial and a third where the defendant has attempted to do so, only to be pipped at the post by its withdrawal.

Vanity would tell me, that it is upon sight of my skeleton arguments, that the case settles, but the truth is far more mundane. There has simply been a failure to rigorously assess the claimant’s part 36 offer, until the second to last moment, and then it has been accepted at the last moment.

The wider issue behind such anecdotes, is how can a claimant ensure that the part 36 offer they make in a fixed costs case has real bite? I would venture to suggest that there are two options which spring readily to mind. The first in respect of late settlement after a well judged part 36 offer, is to rely upon the observations of Coulson LJ in the seminal case of Hislop v Perde [2018] EWCA Civ 1726:

55. I am anxious not to express detailed conclusions about the scope and extent of r.45.29J because, other than acknowledging that it provides a potential escape route in an appropriate case, I do not consider that its general ambit is directly relevant to this appeal: the point did not arise in the Hislop case at all (so was not argued before us) and, for the reasons set out in paragraphs 65-68 below, I consider that the reference to the rule by DJ Reed in the Kaur case was based on a false premise. However, two particular issues were raised as to the scope of r.45.29J, and I address each briefly.

56. First, I do not consider that a defendant’s late acceptance of a claimant’s Part 36 offer can always be regarded as an “exceptional circumstance”. On the contrary, I take the view that my reasoning in Fitzpatrick as to why there can be no presumption in favour of indemnity costs in these circumstances (see paragraph 37 above) is also applicable, at least in general terms, to the suggestion that there is a presumption that a late acceptance of a Part 36 offer is an exceptional circumstance for the purposes of r.45.29J. Again, what matters are the particular facts of each case. A long delay with no explanation may well be sufficient to trigger r.45.29J; a short delay with a reasonable explanation will not.

57. Secondly, I reject the argument advanced by Mr Post QC, in the Kaur appeal, that this provision would only come into play if it could be shown that the exceptional circumstances had caused the litigation to be more expensive for the claimant. In support of this proposition, he relied on r.29J and r.29K which are concerned with the circumstances in which a party seeks to recover more than fixed costs. The rules make that party liable for the costs consequences if the assessment gives rise to a sum which is less than 20% greater than the amount of the fixed recoverable costs.

58. I do not accept Mr Post’s gloss on r.45.29J. His suggestion that a claimant must demonstrate a precise causative link between the exceptional circumstances and any increased costs would, in my view, lead to an unnecessarily restrictive view of the rule. It goes without saying that a test requiring “exceptional circumstances” is already a high one. It is not a proper interpretation of the rules to suggest that there should be further obstacles placed in the way of a party who wishes to rely on that provision.

It must follow that if a part 36 offer is made after exchange of witness statements, and is met with silence, to accept it without explanation some 6 months later, on the morning of a trial, when nothing has changed, should give rise to potential arguments about exceptional circumstances costs.

But there is another costs point worthy of consideration that might generate costs arguments after late acceptance. Why don’t claimants offer mediation in relation to credit hire claims? In isolation, mediation in a credit hire claim may be thought to be a disproportionate step. But credit hire claims are dealt with in bulk by solicitors acting for claimants and who will have any number of cases against an insurance company. It should be possible to coral half a dozen cases, and suggest they be dealt with one after another in a day’s mediation.

If this invitation were not taken up, or worse, ignored, then swinging costs penalties are likely to be applied at any subsequent trial.

Recently there have been a string of first instance decisions where costs penalties have been applied to parties who refuse to engage in mediation: including DSN v Blackpool Football Club Limited (1) and BXB v Watch Tower and Bible Tract Society Ofpennsylvannia, Trustees of the Barry Congreation of Jehova’s Witnesses.

Both of these cases concerned allegations of sexual abuse: hitherto, it may have been thought that this was a type of case, where mediation had little prospect of success: whether the abuse occurred or not, would appear to be one of those issues forming a chasm between the parties. But in each case a failure to engage in mediation proved to be an expensive course.

Looking forward, it would appear that the move to ADR is part of a culture shift which is accelerating, not least because of the current demands on the court system, and also I suspect because of a generational shift amongst the judges.

It follows that genuine requests for mediation, have real force in relation to potential costs outcomes at the end of the case. That in turn means that those requests must be considered genuinely, and any letters written by either side, should be written, as ever on the premise, they may be read out in court, two years after they were written.

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