Who's the winner?

Where the court is called upon to adjudicate between parties, the successful party will usually recover its costs from the unsuccessful party, i.e., the ‘loser’ pays. So how do you identify the winner? It is not always easy, writes Greg McEwen.

There is a long list of cases on the topic of which party ‘won’ for the purposes of determining the appropriate costs order. A recent entry in that list is the case of Medway PCT & another v Marcus [2011] EWCA Civ 750.

The case

The claimant was 31 when he began experiencing symptoms of lower limb ischaemia. He was assessed by GPs on several occasions but no urgent referral was made. By the time he was seen by the vascular surgeons some weeks later, he required a below-knee amputation.

The trial

The claimant alleged negligence for failure to refer him urgently to the vascular surgeons. It was specifically alleged that with timely referral and treatment the limb would have been saved.

Both defendants admitted breach of duty but contended that even with timely referral the limb would not have been saved. The value of the claim was agreed at £525,000 subject to liability, and the trial proceeded on the single issue of whether or not the claimant had actually suffered any injury as a result of the admitted negligence.

The trial judge heard expert evidence from three consultant vascular surgeons and a consultant vascular radiologist. He accepted the defendants’ vascular expert evidence and found that the limb was unsalvageable from the outset. Accordingly, the claimant’s main case failed. He was not entitled to recover damages for the loss of a limb.

However, an alternative case had been advanced late in the day by the claimant’s counsel. It was argued that the claimant suffered a short period of unnecessary pain during the delay in diagnosis and should therefore be entitled to damages for that period. He was awarded damages of £2,000 to reflect additional pain and suffering over a period of 28 days’ delay in treatment. This amounted to less than 1% of the sum claimed.

So who won? According to the trial judge, the claimant had. He had come to court to recover damages for a wrong and had succeeded in doing so. The defendants were writing the cheque, albeit a small one, having maintained a denial of liability and having failed to make any settlement offers. Therefore, the ‘losing’ defendants should pay costs to the ‘winning’ claimant.

The judge ordered the defendants to pay 50% of the claimant’s costs, which in total were estimated at over £400,000. Even the 50% awarded would therefore have been more than 100 times the damages award. The defendants appealed the costs order.

The appeal

The appeal was heard by three lord justices, including Lord Justice Jackson. Each party contended that they were the successful party at trial. The claimant relied on having obtained judgment and an award of damages, pointing out the absence of any Part 36 offers from the defendants. The defendants argued that the claim had failed. The claimant received a tiny proportion of the sum claimed, on the basis of a last-minute submission.

This was upheld, with Jackson LJ dissenting. The claim was about the requirement for amputation. Damages of £2,000 were insignificant in this context. The point on which the claimant succeeded was in truth a last-minute addition to salvage an action that the claimant had lost. The failure to make any Part 36 offers was of no consequence and a technical triviality.

The appeal was allowed. The costs order was substituted for an order that the claimant pay 75% of the defendants’ costs. The 25% deduction reflected the fact that the claimant succeeded to a very small extent and one defendant did not admit breach of duty until at a very late stage. It was specifically noted that no deduction was made for the absence of any Part 36 offers. It was of course open to either side to make an offer and not just the defendants.

Who won?

Both the trial judge and the Court of Appeal (CA) were at pains to point out that their judgments were of scant consolation to the claimant, who had suffered the loss of his leg. The costs incurred on both sides in securing the claimant’s £2,000 damages award were very significant.

The CA took a pragmatic view of the litigation and recognised that the last-minute change of tack by the claimant did not result in a ‘win’ and was simply a last-ditch attempt to salvage a losing case. In the absence of a protective offer, a party who ends up writing the damages cheque will usually bear the costs of the litigation. However, the court has a wide discretion and in the circumstances of the present case, that discretion would be exercised in favour of the defendants, who were the ‘winners’.

Implications for Part 36 and Calderbank offers

Marcus is just one of a number of recent decisions that have thrown open the debate over fairness versus certainty in this area. Amongst the issues to consider are:

• what happens when an offer is beaten by a small amount?
• what happens if an offer is incorrectly worded?
• do Part 36 offers override other rules?

Parties are understandably nervous about making Part 36 offers, and some judges appear to have endorsed the return of Calderbank offers as a way of avoiding falling foul of the rules. This approach may offer more scope for fairness, but potentially at the expense of certainty and the desire for certainty is something that Jackson LJ was keen to stress in Marcus, stating: “It was suggested in argument that the defendants could have obtained costs protection at an earlier stage by making a Calderbank offer … In my view such an offer would give the defendants no effective protection. Unless the defendants also offered to pay the claimant’s costs to date assessed on the standard basis [ie, a Part 36 offer in all but name], such an offer would for all practical purposes be of no benefit to the claimant.”

In other words, in order for the system to operate all parties need to know where they stand. If certainty is to prevail, the format of offers matters.

However, the court looked at the format of offers again in Howell and others v Lees-Millais and others [2011] EWCA Civ 786 and found that where there was doubt offers should be treated as Part 36 compliant where possible, provided the parties had treated them as such. A victory for fairness over certainty perhaps? The debate rumbles on.

Whatever new case law awaits, there will only be a brief period of calm if Lord Justice Jackson’s reforms are enacted in October 2012. This will bring a whole new round of challenges which will focus on the financial impact of offers. Hopefully the common sense stance that the courts are leaning towards will linger and the delicate balance of a reasonable damages settlement and reasonable costs protection can be achieved.

Greg McEwen is a partner in the healthcare team at national law firm Berrymans Lace Mawer LLP. He can be contacted by email at This email address is being protected from spambots. You need JavaScript enabled to view it..