Avoiding the set off trap
Ho v Adelekun (2021) UK SC 43
This is a useful case for those who have unfortunate claimants facing the possibility of accepting an offer out of time.
The case built upon the earlier case of Cartwright v Venduct Engineering. What both cases are saying is there is no general entitlement to set off defendant’s costs in such circumstances. The exception is where there is a judgment figure. Therefore the scenarios are as follows.
- Case settles generally. No set off.
- Case settled by a Part 36 offer. No set off.
- Case settled by a Tomlin order. No set off
- Claimant awarded judgment figure. Can be set off.
Practical Implications
It becomes less risky for a claimant to make interim applications. There is less of an incentive for a defendant to make or to oppose interim applications. It becomes more difficult for the Court to mark breaches by making an enforceable cost order. The defendants costs following late acceptance of Part 36 offers cannot be recovered. This potentially changes going to trial. An example could be as follows:
The defendant could make a very early Part 36 offer of £150,000. The claimant accepts it 3 years later (say the medical evidence has changed). The claimant’s costs up to the expiry of the offer are £60,000. The defendants costs after expiry of the offer are £60,000.
What does the claimant receive? The claimant receives damages and costs. The defendant receives nothing.
Potential for things to go wrong
Please check before you agree anything with the defendants. You have to make sure you check the wording of all proposed consent orders. You will still have to advise the claimant properly as to the consequences of accepting or not accepting a Part 36 offer. It will mean you can reassess whether an older Part 36 offer is now viable. Defendants are likely to want judgment to allow them to enforce their costs.
The future
It is highly likely this decision will be changed to allow the defendants costs to be recovered in such circumstances so it can be set off against the claimants damages. The prediction is this could be April next year.
Jason Claridge – Author of “Avoiding the set off trap” is a Director and Joint Head of the Personal Injury and the Clinical Negligence Team at Ward & Rider Solicitors