The Court of Appeal has handed down judgment for the defendant in Attersley v UK Insurance Ltd, an important decision reinstating certainty for defendant insurers on the operation of Part 36 and the fixed recoverable costs (FRC) regime.
The claim began under the RTA Protocol and exited following a liability dispute. Part 7 proceedings were issued and the claim was later valued at £150,000. The defendant made a Part 36 offer of £45,000. Had the claimant accepted the offer within the relevant period she would have been entitled to no more than fixed recoverable costs. The case was later allocated to the multi-track before acceptance of the defendant’s Part 36 offer 16 months late.
The Court of Appeal was required to determine: did late acceptance of the Part 36 offer limit the claimant to FRC in accordance with the specific provisions of Rule 36.20 relating to claims commenced using the RTA Protocol; or was the claimant entitled to standard basis costs because the fixed costs regime no longer applied at the date of acceptance by reason of multi-track allocation and Rule 45.29B.
The Court held that fixed costs applied. The relevant period expired while the claim remained within Section IIIA of Part 45, as a claim originally started under the RTA Protocol. The fact that the claim was later allocated to the multi‑track did not alter the cost consequences:
1. Costs consequences apply in cases started but no longer continuing under the RTA Protocol, per CPR r. 36.20. “Where a defendant’s Part 36 offer is accepted after the relevant period… the claimant will be entitled to the fixed costs… applicable at the date on which the relevant period expired”.
2. Later allocation does not change the costs position. The specific rule at CPR part 36.20 takes precedence over the general rules in Part 45.29B dealing with the prospective consequences of multi-track allocation, and “there is no basis… for reading the allocation of the case to the multi-track as excluding the application of Rule 36.20. Allocation does not retrospectively remove a case from Section IIIA”.
3. Certainty. “The rule operates most effectively if defendants can be confident that their liability is capped at the amount of the claimant’s costs at the date of the expiry of the relevant period, without uncertainty… depending on later events”.
It was agreed that acceptance within the relevant period would have entitled the claimant to fixed costs only; and “it would be surprising if a claimant were to become entitled to a substantially greater amount of costs by accepting the offer after the expiry of the relevant period by reason of events occurring after the end of that period, and outside the parties’ control. Part 36 operates in part by placing the costs risk onto the claimant”.
The Court of Appeal described this interpretation variously as more “rational and coherent” than the alternative position advanced by the claimant, and consistent with the plain language of Rule 36.20, which required the court to adopt “a workable and straightforward” interpretation. It was not necessary for the court to engage in assessment under Rule 36.13 and Part 44, to consider if the claimant’s late acceptance was reasonable, and whether the costs claimed should be recoverable on a standard-basis assessment.
Claimants cannot benefit from delaying acceptance in the hope that allocation to the multi‑track will open the door to standard‑basis costs. Part 36 offers made in the wide range of claims covered by FRC are returned to having their full intended force, and insurers will once again be able to ‘anchor’ cost exposure to the fixed-costs regime by making early Part 36 offers designed to expire prior to track allocation.
For more information, please contact:
David Brown - Lead Lawyer, Costs Southampton
Yvonne Booth - Lead Lawyer, Costs Bolton
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