Money (That's (Not) What I Want)

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Part 36 of the Civil Procedures Rules is designed to give claimants and defendants various incentives for putting forward offers to settle litigation (including better costs recovery and higher rates of interest on damages). The majority of these offers involve offers to pay money but the Part 36 procedure isn't limited to such offers and judges are more than happy to form views on non-monetary offers, as a recent case clearly demonstrates.

In MR v Commissioner of Police for the Metropolis [2019], the claimant was arrested on suspicion of harassment, but he was later released without charge.  He brought a claim against the Police for false imprisonment and assault.

The claimant was well known in financial circles (he was granted anonymity in the proceedings for this reason) and he therefore often worked abroad. In certain countries he would have been required to declare the fact of his arrest even though it did not proceed to a prosecution. He was concerned about the potential consequences of this (indeed the trial judge found that the whole purpose of the litigation from the claimant's point of view was to establish that the arrest had been unlawful).

There were a number of offers made by both parties. These offers included payment of compensation and a letter of apology from the Police. The latter, was not good enough for the claimant, who eventually offered to settle on the basis that he would be paid his reasonable costs but would not be paid any other compensation. He did, however,  require an admission of liability for unlawful arrest. The defendant did not accept this and the matter proceeded to a trial.

Following a trial, the claimant was awarded £2,750 in damages but the court made no order as to costs. The best offer that the respondent had made was for £4,000 together with a letter of apology (and, as the offer was made under Part 36, the claimant would also have received his reasonable costs).  The best offer the claimant made was to accept nil damages but to require an admission of liability from the defendant. Both offers were expressed to be made under CPR Part 36. The trial judge decided that it would be harsh to apply the Part 36 rules to either offer, so decided that each side should bear their own costs. The case went to appeal on costs alone.

The appeal judge decided that that the claimant’s offer to accept nil damages but to require an admission of liabilty was a valid Part 36 offer and that the claimant had secured a more advantageous outcome following the trial. As a result the claimant should recover his reasonable costs of the claim on an indemnity basis from the expiry of the Part 36 offer. The appeal judge did however leave the costs order as it was for period before the expiry of the offer (so each party was left to bear its own costs).

What does this case mean for those involved in litigation. First, it shows that judges will exercise their discretion on costs and the days of assuming that the winning party will get its costs are long gone. Secondly, it demonstrates that judges are quite capable of forming views on non-monetary offers. One reason that most Part 36 offers involve money rather than anything else is that lawyers often think that it can be difficult, if not impossible, to compare non-monetary offers. This is clearly not the case. That said, this case involved two relatively simple offers - an apology versus an admission. The more complex the offers,  the more difficult it is likely to be for a judge to find that one beats the other.