The High Court has ordered a paying party to stump up for costs despite their insistence that they accepted a settlement offer outside the ‘relevant period’ as governed by Part 36 rules.
The claimant in Pallett v MGN Ltd, the actor Roxanne Pallett, had made a Part 36 offer to settle her claim against the publisher of the Mirror newspaper for infringement of privacy and specified that if accepted within 21 days the defendant would be liable for her costs.
Serious Failure
On the 22nd day the defendant accepted the offer to settle, but later said that as the offer was accepted outside the 21-day period, it was entitled to invite the court to consider its liability for costs.
Mr Justice Mann said the claimant’s conduct during the litigation was not enough to disallow the consequences of the late acceptance. He therefore found that the normal consequences should follow and that Pallett should have all the costs of proceedings.
The court heard both parties had made settlement offers until the claimant said she would accept £99,500 in October last year. It was agreed with no admission of liability by the defendant.
MGN argued that Pallett was culpable of a ‘serious failure’ to engage with the settlement process, without which the claim would have ended earlier. It was submitted the claimant waited for years to put forward an offer, wasting the chance of an earlier settlement.
The claimant’s lawyers said none of the defendant’s offers was adequate, and Pallett wanted to have disclosure before pitching an offer or deciding whether to accept one.
Mr Justice Mann said the claimant was not simply refusing to engage, but was indicating she could not sensibly engage until she had more information. He said: ‘The claimant had reasons, which cannot be dismissed as unreasonable, for not engaging in horse-trading over figures from the outset. In my view the claimant’s attitude of declining to negotiate until she was better informed was an entirely reasonable one.’
He added that the case had turned on its facts and should not be taken as a ‘green light’ for all claimants to decline to enter into negotiations before disclosure is complete. He stressed that any concerned defendants could seek to protect themselves by making early offers which were more generous and less combative than in this case, and cautioned that the claimant should not seek to apply this case too generally.
Depending on the circumstances of their case, English lawyers now have various group litigation tools at their disposal, including group litigation orders under CPR 19.11, representative proceedings under CPR 19.6, collective proceedings orders under the competition regime, claims under section 90 of the Financial Services and Markets Act 2000, in addition to the option of commencing proceedings in the usual way with an extended list of claimants.
The claimant had after-the-event (ATE) insurance to protect her from any adverse costs.