Jopling v Leavesley & Anor [2013] EWCA Civ 1605

Case No A3/2013/0254[2013] EWCA Civ 1605
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of JusticeDate Wednesday, 24 July 2013
Strand
London
WC2A 2LL
B e f o r e:
LORD JUSTICE ELIAS
LORD JUSTICE LEWISON
SIR DAVID KEENE
Between
JOPLINGAppellantv
Between
LEAVESLEY & ANRRespondent
DAR Transcript of the Stenograph Notes ofWordWave International LimitedA Merrill Communications Company165 Fleet Street London EC4A 2DYTel No: 020 7404 1400 Fax No: 020 7404 1424(Official Shorthand Writers to the Court)
Mr H Menon (instructed by Tilly Bailey & Irvine LLP) appeared for AppellantMr Gilberthorpe (instructed by Freeman Johnson) appeared for Respondent
J U D G M E N T
[1]Mr Jopling is the executor of the late Kenneth Smith. On 6 January 2012 he issued proceedings against Mr Smith's stepdaughter, Mrs Leavesley and his niece, Mrs Thompson. In his particulars of claim he alleged that each of them had obtained a cheque for £25,000 drawn on Mr Smith's bank account and that between them they had drawn £14,750 from ATMs with the use of Mr Smith's debit card. He alleged that those monies had been obtained by undue influence, were in excess for any amounts needed to provide for Mr Smith's care and that the estate was entitled to recover them.[2]On 22 May 2012 Mr Jopling's solicitors made what was described as a Part 36 offer to each of the two defendants. Each offer was in identical terms and said as follows:
"Take notice that the claimant offers to settle the claim against you. The offer is intended to have the consequences of section 1 of part 36 of the Civil Procedure Rules. The offer will remain open for 22 days after service of this notice on you and if you accept this offer within that time you will be liable for the claimant's costs in accordance with rule 36.10 of the Civil Procedure Rules. The claimant offers to settle the whole of his claim against you for £25,000 plus interest of £1,935 making a total of £26,935 together with his legal costs to be assessed if not agreed. This offer is intended to settle the whole of the claimant's claim against you only."
[3]After some correspondence, by an email dated 28 December 2012 the defendants' solicitors said that both defendants:
"Each accept the part 36 offers dated 22/5/2012 made by the claimant to each of the defendants."
[4]The date of acceptance was outside of the time for acceptance specified in the offer itself which forms what CPR Part 36 calls “the relevant period”. Despite the fact that the offer that the defendants had accepted included the term that they would pay the claimant's costs, the incidence of costs was apparently not agreed. It fell to His Honour Judge Behrens to decide what order to make.[5]No one argued that the offer was not a valid Part 36 offer, despite the fact that it contained its own terms about the costs. The rule under which the judge was required to make his decision was CPR part 36.10. That rule provides as far as material as follows:
"1. Subject to paragraph (2) and paragraph (4) (a) where a Part 36 offer is accepted within the relevant period the claimant will be entitled to the costs of the proceedings up to the date on which notice of acceptance was served on the offeror. 2 is irrelevant. 3. Costs under paragraphs (1) and (2) of this rule will be assessed on the standard basis if the amount of costs is not agreed... 4. Where (a), a Part 36 offer that was made less than 21 days before the start of trial is accepted or (b) a Part 36 offer is accepted after expiry of the relevant period, if the parties do not agree the liability for costs the court will make an order as to costs. 5. Where paragraph (4)(b) applies, unless the court orders otherwise (a) the claimant will be entitled to the costs of the proceedings up to the date on which the relevant period expired and (b) the offeree will be liable for the offeror's costs for the period from the date of expiry of the relevant period to the date of acceptance."
[6]This case is one which falls within Part 36.10(4)(b). It is clear from Part 36.10(5) that where a Part 36 offer is accepted late the starting point is that the offeree, here the defendants, will be liable for the offeror's costs but that the court may order otherwise.[7]The judge divided Mr Jopling's claim into two elements. The claim in respect of the cheques and what he called the ATM claim. Thus in paragraph 15 of his judgment he began by saying:
"In my view the parties have not agreed an order as to costs because there is no agreement as to the ATM costs."
[8]It was in that context that he approached CPR part 36.10(5). The nub of the judge's reasoning is to be found in paragraphs 19 and 20 of his judgment, which read as follows:
"19.The next question is if the court should make a different order in relation to the costs of the ATM claim. If this action had been fought at no doubt very considerable further expense and if the result had been the result in the offer then it is unlikely that the claimant would have been awarded his full costs because he would have succeeded on the undue influence claim but have lost on the ATM claim. The question arises whether that is sufficient for the court to make an order that he does not get the whole of his costs following the acceptance of the part 36 offer. 20. I certainly do not think it right that the claimant should pay any part of the defendants' costs but I do think in the circumstances that it is not fair that the defendants should have to pay the whole of the costs of the action. My difficulty in this case is assessing the costs as between the two issues which have arisen in this case."
He then went on to apportion costs.[9]It is common ground that the judge was exercising a discretion. This court therefore cannot interfere with the exercise of the judge's discretion simply because it would have exercised the discretion in a different way. An appeal court has to be satisfied that the judge misdirected himself in principle or left relevant factors out of account or took irrelevant factors into account or that he reached a decision that no reasonable judge properly directed could have reached.[10]In my judgment there are four flaws in the judge's exercise of discretion that satisfy this test. First, he left out of account the express terms of the Part 36 offer. In terms of strict contractual analysis, the judge may have been right to say that the costs were not agreed because the offer, in strict contractual terms, was only capable of acceptance within the 22 day period. But there is no doubt in my mind that the offer expressly related to the whole of the claimant's claim and said explicitly that the defendants would pay the claimant's costs, necessarily of the whole claim. When the defendants accepted that offer they must have done so on the basis that they were accepting the offer in full, including the term about costs.[11]Second, inherent in the judge's order is the assumption that the defendants would have succeeded at trial on what he called the ATM claim. But there is no reason to make that assumption. We simply do not know and nor did the judge whether the ATM claim would or would not have succeeded. It is only because the judge made that assumption, which in my submission was unjustified, that he was able to conclude that it was unfair to make the defendants pay all of the costs.[12]Third, the judge's judgment meant that the defendants were better off in delaying their acceptance of the Part 36 offer. Mr Gilberthorpe for the respondents says that the availability of discretion in a case of a late acceptance affords an escape route where the automatic provisions of CPR Part 36 would cause injustice.[13]It is perhaps possible that there might be a case in which there would be serious injustice caused but the whole point of Part 36 is to encourage settlement and to minimise costs. One effect of delay in accepting a Part 36 offer is that parties will continue to incur costs in preparation for trial. If parties genuinely think that they are better off by delaying acceptance, one of the purposes of Part 36 is undermined.[14]Fourth, in my view the judge's approach to what would have been the likely order for costs if the matter had gone to trial and if the claimant had only recovered judgment for the amount of the cheques gives no weight to the Part 36 offer at all. An order following trial depriving the claimant of half his costs would have been unexceptionable in the absence of a Part 36 offer. The point of a Part 36 offer is to transfer the costs risk from the offeror to the offeree. The judge's decision does not give effect to that underlying policy behind the rule.[15]In my judgment these flaws in the judge's discretion entitle the court to exercise that discretion afresh. I can see no reason to disapply the default rule that the defendants should pay the whole of the claimant's costs down to the date of acceptance.[16]Accordingly, I would allow the appeal.

SIR DAVID KEENE: I agree.

LORD JUSTICE ELIAS: I also agree.