LETTS v ROYAL SUN ALLIANCE PLC (2012) ~
A costs officer had acted perfectly legitimately in assessing the costs of the successful claimant in a case involving a low velocity rear end shunt, even though the costs far exceeded the damages accepted under a Part 36 offer, and despite the losing party indicating at the time of making the Part 36 offer that it was only prepared to pay predictive costs. There was no reason for predictive costs to operate as a cap on what was properly recoverable under a CPR Pt 44 assessment.
The defendant motor insurers (S) appealed against a costs award in favour of the claimant (L).
L had suffered a rear-end shunt on September 4, 2009, and S were the insurers of the vehicle which had run into her. One month after the accident, L notified S that she would be making a claim for whiplash injuries. S said that it was making enquiries, but would reply to her within the pre-action protocol period, which it calculated to expire on January 13, 2010. In November 2009, S accepted liability, but disputed causation on the basis of the collision having low velocity impact. It made a without prejudice offer of £500 in full and final settlement. Upon receipt of medical evidence in December, S offered £1300 for general damages, with no mention of special damages or costs. L did not reply, but on January 11, she sent a notice of her intention to issue proceedings. She submitted the proceedings to the court on the same day, and they were issued on January 13, the day on which the protocol period expired. Two weeks later she made a Part 36 offer of some £1800. On February 5, S indicated that it was treating the case as one of low velocity impact and offered to settle for £1560 plus L’s predictive costs and reasonably incurred disbursements. That offer was made into a Part 36 offer a week later. L accepted it.
By virtue of CPR r.44.12(1)(b), a costs order was deemed to have been made on the standard basis notwithstanding S’s assertion at the time of making the Part 36 offer that it would only pay predictive costs because of the premature issue of proceedings.
The costs officer was critical of the premature issue of proceedings, and disallowed post-issue costs “but not predictive costs”. He commented that S had not kept its promise to comply with the recognised timetable because it had indicated its intention to pursue the low velocity point argument. He considered the first offer derisory and treated the December offer as the first reasonable one. He assessed L’s costs at nearly £3,000.
S’s appeal against the costs award, which was conducted as a re-hearing, was dismissed, the costs judge finding that the proceedings had been “slightly premature” but that nothing would have changed if they had been issued a couple of days later.
The issues were
(i) whether L had issued her claim prematurely and unreasonably;
(ii) if so, whether her costs ought to have been limited to what she would have recovered if the assessment had proceeded under CPR Pt 45.
HELD: (1) The test was whether, within an ambit of generous appreciation accorded to a specialist judge exercising the costs function, it could be said that the decision of the costs judge was wrong. His decision had not been wrong and the costs award could not be interfered with.
(2) (Obiter) There was no reason for predictive costs to operate as a cap on what was properly recoverable under a Pt 44 assessment. Costs judges had to have regard to what could or could not have been recovered under a different process on the basis that that was a highly material circumstance. The costs officer had done that. By his words “but not predictive costs” he had declined an invitation to conduct the assessment in accordance with Pt 45, and had acted entirely legitimately.