Guernsey Law Reports 2009-10 GLR 120
BUCKLEY v. RONEZ LIMITED
ROYAL COURT (Collas, Deputy Bailiff): March 2nd, 2009
Civil Procedure—judgments and orders—interest on judgment debt—rate of interest—interest on special damages in personal injuries and clinical negligence cases calculated as one-half of rate payable on Short Term Investment Account in England (currently one-half of 6%) from date special damages incurred—Guernsey courts to continue to follow English practice to encourage certainty in settlement terms
Civil Procedure—judgments and orders—settlement of proceedings—offer to settle made “without prejudice as to costs”—no automatic rule that recovering less than offer to settle penalizes plaintiff in costs—court to consider which party, in substance and reality, has won—to take into account not only financial value of judgment but also any irrecoverable costs involved and stress and anxiety of pursuing action—plaintiff failing to obtain judgment overall “more advantageous” than offer rejected may be penalized
Civil Procedure—judgments and orders—settlement of proceedings—offer to settle made “without prejudice as to costs” less significant than payment into court or offer to settle made under Royal Court Civil Rules 2007, r.62—nevertheless, always important and court to consider what weight to give it in circumstances of case
The plaintiff obtained judgment against the defendant, his employer, in respect of personal injuries sustained when he was at work. He was awarded general and special damages.
Interest
Counsel agreed that interest on general damages should be paid at the rate of 2% per annum from the date proceedings began (February 2005) to the date of trial (December 2008). They disagreed as to the rate of interest to be paid on the special damages.
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The plaintiff submitted that it should be one-half of the rate at which post-judgment interest was awarded in Guernsey, currently one-half of 8%. The defendant proposed that it should be calculated on the English basis, namely at one-half of the rate of interest payable on money placed in the Short Term Investment Account, which was one-half of 6%.
Costs
The plaintiff’s claim in 2005 was originally for £275,000 plus interest and costs. Beginning in March 2008, the defendant made four separate offers “Without prejudice as to costs,” ranging from £10,000 to £60,000, which the plaintiff either rejected or to which he did not reply. An offer made in late November 2008 (of £45,000 inclusive of repayable benefits—a net sum of £43,618.15 plus reasonable costs) was rejected, following which the defendant made a payment of that net sum into court. A final informal offer of £60,000 (net £58,500 plus recoverable costs) was then made but, as it was to remain open for only three days and expire on December 1st (one week before the trial date), the plaintiff chose not to reply to it. At the trial, the court gave judgment for the plaintiff for some £150 less than the payment into court. With interest added, this award would be worth approximately £46,000, the plaintiff having succeeded on one of his two principal accident claims but having lost on several other collateral issues which significantly reduced the award.
The plaintiff submitted that, in the exercise of the court’s discretion, he should be awarded his costs since (a) the judgment he had obtained bettered the payment into court and the offer which immediately preceded it; (b) the informal offer of £60,000 just before the trial had not been made under the Royal Court Civil Rules 2007, r.62 and could not therefore confer on the defendant any beneficial consequences to which it would have been entitled if the offer had been made under the Rules; (c) that offer had been made on the same day as the payment into court, which was the “offer” that should be considered; (d) in any case, it had been open for acceptance for such a short time that it should not be considered as a serious offer; and (e) he considered that unhelpful and difficult tactics had been adopted by the defendant, especially when the proceedings were being conducted by its insurers and later by English solicitors—though he did not go so far as to suggest that it had behaved unreasonably or abused the process of the court.
The defendant submitted in reply that (a) the plaintiff should be denied his costs since he had not succeeded in obtaining significantly more than the sum paid into court or the offer which immediately preceded it, and obtained substantially less than the informal offer made just before the trial began; alternatively, (b) the precise sum he had obtained from the judgment was less important than his failing to obtain a judgment “more advantageous” than the pre-trial offers—in assessing which the court should take into account whether he had won anything of value which he could not have won without fighting the action through to the end; and (c) it had substantially denied the plaintiff what he had fought the action to
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win, considering not merely the size of the award but also any irrecoverable costs that might be involved and the stress and anxiety of pursing the action.
Held, making the following rulings:
Interest
(1) Interest would be payable on the general damages, as agreed between counsel, at the rate of 2% per annum from the start of the proceedings to the date of trial. In relation to the award of special damages, however, it was clear that the rate of interest to be applied should be the English rate. Not only was there higher authority indicating that the Royal Court should in general terms adopt the English principles governing the award of interest but for some time it had been the practice of Guernsey advocates to follow those principles when dealing with personal injury and clinical negligence claims—and it was important, for the sake of giving legal advice, that there should be certainty as to the terms on which claims would be settled. A rate of 3% (one-half of the English “special discount rate”) would therefore be applied to the sum awarded as special damages from the date they began to be incurred (paras. 8–10; para. 36).
Costs
(2) The plaintiff would be awarded all costs incurred by him up to and including December 1st, 2008, including any expenses for which he would have been liable even if he had accepted the offer on that date. He would also pay to the defendant its recoverable costs incurred after December 1st. There was no automatic rule that merely because the judgment obtained was less in value than a pre-trial offer or a payment into court, the plaintiff would be penalized in costs. The question to be asked was more general—had the plaintiff, having rejected the pre-trial offer, failed to obtain a judgment overall “more advantageous” than the offer (within the meaning of that phrase in the English Civil Procedure Rules, r.36.14(1)(a))? The question required the court to consider which party, as a matter of substance and reality, had won, taking into account not only the financial value of the judgment but also any irrecoverable costs that might be involved and the stress and anxiety of pursuing the action (paras. 18–20; paras. 34–35).
(3) An offer made “without prejudice as to costs” (popularly known as a Calderbank letter) did not carry with it the full consequences of a payment into court or an offer to settle under r.62 of the Royal Court Civil Rules 2007. It was nonetheless an important feature of litigation and the court should always consider, in the exercise of its discretion as to costs, how much weight to attach to it in the circumstances of the case. The fact that the offer of £60,000 in this case was not formally made under r.62 did not mean that it should be treated as not having been made at all; similarly, that it had only been open for a few days, or that it had coincided with the payment into court of a lesser sum, should not automatically lead to its being disregarded. These were two separate and distinct offers and either
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could have been accepted by the plaintiff had he been advised to do so—and, knowing that time was short and the difference between the parties considerable, more time could have been sought to weigh and consider the offers—but he chose to reject them both. It was doubtful whether the judgment in his favour had bettered the payment into court; it was certain, however, that it had not bettered the informal offer of £60,000 (paras. 19–20; paras. 27–30).
Cases cited:
(1) Carver v. BAA Plc, [2009] 1 W.L.R. 113; [2008] 3 All E.R. 911; [2008] C.P. Rep. 30; [2008] EWCA Civ 412, referred to.
(2) Douglas v. Gallienne, C.A., November 14th, 1990, unreported (noted at (1990), 10 GLJ 72 and 76), dicta of Le Quesne, J.A. applied.
(3) Roache v. News Group Newspapers Ltd., [1998] EMLR 161, dicta of Bingham, M.R. applied.
Legislation construed:
Judgments (Interest) (Bailiwick of Guernsey) Law 1985, as amended, s.1(1):
“In any proceedings in the Court for the recovery of any debt or damages, the Court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate as the Court thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment . . .”
s.2: “Every judgment debt of the Court shall carry interest at the rate of 8% per annum or such other rate as the Royal Court of Guernsey may from time to time by Rules of Court prescribe from the date of the judgment until the same shall be satisfied; and such interest may be recovered by the judgment creditor as part of such judgment.”
Royal Court Civil Rules 2007, r.62:
“(11) In any proceedings in which a payment into Court or offer to settle has been made, the Court shall take the fact, date and acceptance or non-acceptance of such payment into Court or offer to settle into account when considering the question of costs.”
Civil Procedure Rules, r.36.14:
“(1) This rule applies where upon judgment being entered—
(a) a claimant fails to obtain a judgment more advantageous than a defendant’s Part 36 offer; or
(b) judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant’s Part 36 offer.
(2) Subject to paragraph (6), where rule 36.14(1)(a) applies, the court will, unless it considers it unjust to do so, order that the defendant is entitled to—
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(a) his costs from the date on which the relevant period expired; and
(b) interest on those costs.”
L. Le R. Strappini for the plaintiff;
M.G.A. Dunster for the defendant.
1 COLLAS, DEPUTY BAILIFF:
Introduction
Following a trial in December 2008, the Royal Court awarded damages to the plaintiff in this matter in the total sum of £43,485.19 in respect of personal injuries suffered as a result of an accident at work when he was employed by the defendant. The decision of the court was handed down by Act of Court dated January 19th, 2009. The court reserved its decision in respect of interest and costs, subject to hearing submissions from counsel.
Interest
2 The court’s powers to award interest on a judgment debt are to be found in the Judgments (Interest) (Bailiwick of Guernsey) Law 1985, as amended. Section 1 of the 1985 Law deals with interest in respect of the period prior to judgment at the discretion of the court and s.2 deals with post-judgment interest which is recoverable on every judgment debt at a prescribed rate which is currently 8% per annum.
3 In the present matter, counsel initially disagreed as to the rate of interest that should be awarded in respect of both special damages and general damages. By the time of the hearing, they had agreed the rate in respect of general damages, but were disagreed as to the rate of interest to be payable in respect of special damages.
4 I was not referred to any decision of the Royal Court in which the court had been asked to consider the rate of interest to be applied but I drew the attention of counsel to a passage in the judgment of the Guernsey Court of Appeal in Douglas v. Gallienne (2), in which Le Quesne, J.A. said:
“It seems to me that it is very desirable that in future, when interest has to be awarded under the provisions of the Law of 1985, some guidance should be given to the Jurats of the proper method of calculating the interest. Some guidance should be given to them about the appropriate rates to be used for different periods and, if I may put the matter compendiously, attention should be paid to the various questions and the various authorities which will be found set out in the White Book in the notes to Order 6, rule 2. I refer in
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particular to what, in the 1988 edition, which is the latest edition available to me here, appears as note 16.”
The passage in 1 The Supreme Court Practice 1988, para. 6/2/16, at 40–41, appears to me to be largely similar to the passage which appears in 1 Civil Procedure 2008, para. 7.0.22, at 203–204.
5 As I said, by the time of the hearing before me, counsel had agreed the method of calculation of interest on the award of general damages, that is at the rate of 2% per annum from the date of service of the summons commencing the proceedings, which was February 16th, 2005, until the date of trial and I make an order in those terms.
6 In relation to special damages, the dispute between counsel boiled down to whether the rate of interest should be calculated on the English basis, namely at one-half of the “appropriate rate,” being the rate of interest allowed on money in court placed in the Short Term Investment Account, which I was told would be one-half of 6%. Or, whether it should be at the rate of one-half of the rate at which post-judgment interest is awarded in Guernsey, namely one-half of 8%. In arguing for the latter, Advocate Strappini, on behalf of the plaintiff, submitted:
“The correct approach in Guernsey is not to use the English ‘special discount rate,’ which has no application here, but to use the current judicial interest rate of 8%, which clearly has. After all, it was at all material times open to [the defendant] to pay [the plaintiff] his losses as they accrued, instead of which it maintained a denial of liability to the very end of the trial, thus keeping [the plaintiff] out of the compensation which was justly due to him.”
7 I have every sympathy for Advocate Strappini’s argument and I have no desire to import matters of English law and practice into Guernsey unless it is clearly proper to do so.
8 However, two facts have influenced my decision. First, I must of course have due regard to decisions of the Court of Appeal which are binding upon the Royal Court and, in my view, the Court of Appeal in Douglas v. Gallienne (2) was clearly directing the Royal Court to adopt, at least in general terms, the principles that govern the award of interest in England.
9 The second factor that influenced me was that it is my understanding from my days in private practice, and this understanding was confirmed by Advocate Dunster, that the practice of legal practitioners dealing with personal injury and clinical negligence claims is to follow the English principles. I consider it to be very important that there should be certainty in this area. The vast majority of such claims are, fortunately, settled by agreement without coming to trial. It is important that those who are
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advising parties as to the terms on which cases are to be settled should be in no doubt as to the method of calculation of interest.
10 Whilst it is often attractive to adopt a Guernsey solution to Guernsey cases, I believe that for me to depart from the Court of Appeal’s clear guidance might create confusion and thereby hinder, rather than assist, in achieving such settlements. I can see no need to adopt a separate practice in Guernsey and I therefore order that the rate of interest to be applied to the award for special damages is to be the same as would be awarded in England, namely a rate of 3% per annum. Counsel agreed that the period during which the interest is to accrue is to be the period during which the special damages have accrued which, in the present case, commenced in March 2004.
Costs
11 Counsel agreed that costs are at my discretion, as the trial judge—a discretion that I must of course exercise in a judicial manner. They also agreed that costs normally follow the event. That would normally mean that the plaintiff would recover his costs, having succeeded in being awarded damages. However, the position is not that simple because of offers made by the plaintiff prior to trial.
12 Advocate Strappini advised me that the first offer was received by the plaintiff in March 2008, three years and three months after proceedings were issued. He called it a derisory offer of £10,000 plus reasonable costs (I believe at that time the plaintiff’s claim was pleaded in the sum of £275,000 plus interest and costs). The plaintiff took exception, not only to the amount of the award, but also to certain allegations made in the letter which were not true and were not pursued at trial.
13 The next offer was in a letter dated July 2nd, 2008 marked “Without prejudice save as to costs.” The offer was for £40,000 inclusive of any benefits which can be offset from his compensation, plus the plaintiff’s reasonable costs. That offer was rejected by Advocate Strappini in a letter dated July 18th, 2008, also marked “Without prejudice save as to costs,” which contained a counter-offer of £281,502, plus costs. That was based upon the amount on which his claim was then pleaded, less a discount of 20% to allow for the uncertainties of litigation.
14 I was not told of any further negotiations or discussions until a letter dated November 12th, 2008, marked “Without prejudice save as to costs,” in which the defendant offered £45,000 inclusive of repayable benefits (worth £43,618.15) in respect of the plaintiff’s claim for damages and interest and, in addition, the defendants offered to meet the plaintiff’s reasonable costs. I believe the plaintiff did not respond to that offer and on November 27th, 2008, the defendant made a payment into court in the sum of £43,618.15, under r.62 of the Royal Court Civil Rules 2007.
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15 By letter also dated November 27th, 2008, but not sent until Friday, November 28th, 2008, the defendant made a further offer of £60,000 inclusive of benefits so, in effect, the offer was in the region of £58,500, plus recoverable costs. That offer was to remain open only until 10 a.m. on the following Monday, December 1st, 2008, which was one week before the trial was due to commence. The plaintiff did not respond to the offer and did not make any counter-proposals.
16 When interest has been calculated and added to the amount of the judgment, the plaintiff’s award will be worth in the region of £46,000. With the benefit of hindsight, it can now be seen that the defendant had a more realistic view of the value of the claim than the plaintiff. Indeed, with the exception of the initial “derisory” offer, I would not be surprised if the plaintiff now regrets that he did not accept any one of the offers put forward by the defendant.
17 In his written submission, Advocate Dunster referred to the case of Carver v. BAA Plc (1), in which a plaintiff beat the defendant’s payment into court by the sum of only £51. The Court of Appeal upheld the decision of the judge at first instance who found that the extra £51 gained was more than offset by the irrecoverable costs incurred in continuing to contest the case. So he concluded that the judgment award was not “more advantageous” than the offer for the purposes of r.36.14(1)(a) of the CPR.
18 In his judgment, Ward, L.J. quoted ([2009] 1 W.L.R. 113, at para. 27) the following observation of Bingham, M.R. in Roache v. News Group Newspapers Ltd. (3) ([1998] EMLR at 168–169):
“The judge must look closely at the facts of this particular case before him and ask: who, as a matter of substance and reality, has won? Has the plaintiff won anything of value which he could not have won without fighting the action through to a finish? Has the defendant substantially denied the plaintiff the prize which the plaintiff fought the action to win?”
19 Turning to the case before me, the plaintiff won on liability in respect of the second of the two accidents for which he sought to hold the defendant responsible. He lost on several other issues which Advocate Strappini described as “collateral issues” which were significant in the computation of his loss. I am prepared to accept that he has bettered the offer of £40,000 made on July 2nd, 2008, although that may be close run when one takes into account any irrecoverable costs he may have incurred, plus the stress and anxiety he endured thereafter.
20 It is more difficult to say that he has bettered the payment into court and the offer in the same amount which preceded it on November 12th, 2008. However, I am prepared to give the plaintiff the benefit of the doubt and to focus instead on the offer of £60,000 which is dated November
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27th (but was communicated to the defendant’s advocate verbally and in writing on November 28th) and was available for acceptance only until 10 a.m. on December 1st. The value of the court’s award clearly falls some way short of the value of that offer.
21 Advocate Strappini submitted that I should take no notice of the offer, essentially, for several reasons. He argued that, as it was not made under r.62 of the 2007 Rules, it should not confer on the defendant the beneficial consequences to which it would have been entitled if the offer had been made in accordance with the Rules. As the date of the letter is the same as the date of the payment into court, he argues the payment into court should be the one that is considered and the offer, or proposal as he called it, of £60,000 should be ignored. Secondly, he argues that the offer was open for acceptance for such a short period of time that it should not be treated as a serious offer.
22 Advocate Strappini also asked me to take account of the manner in which the proceedings had been conducted by the defendant, especially during the period when proceedings were being conducted on its behalf by insurers and later by a firm of English solicitors. (I should perhaps add that I was told what the insurance position is in relation to this claim. I do not propose in this judgment to refer to it as my decision will be the same whether or not the defendant is covered by insurance.)
23 Advocate Strappini referred to unhelpful and difficult tactics adopted by the defence team which he considers were designed to cause material disadvantage to the plaintiff. Such allegations were strenuously refuted by Advocate Dunster. I have given them further thought, as I said I would, and in particular I have re-read the appendix attached to Advocate Strappini’s skeleton argument in which these matters are set out in some detail. In my view, Advocate Strappini was right to conclude that they are not such as to enable him to argue that the defendant has conducted the matter unreasonably, scandalously, frivolously, vexatiously or has otherwise abused the process of the court in such a way as to invoke the court’s powers under r.83(2)(b) of the 2007 Rules to order full or partial indemnity costs.
24 Advocate Strappini also stopped short of alleging that his client was prejudiced by any inequality of arms and he did not seek to argue that the defendant’s conduct had prejudiced the plaintiff to the extent that he was not prepared for the trial of the case.
25 I can understand why the plaintiff feels aggrieved by the manner in which the proceedings were defended at times. However, I do not think there is anything in the conduct of the defence case in this matter that would justify a special costs order. Litigation can be a very painful, stressful and unpleasant experience, although it will be no consolation to the plaintiff to make that observation.
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26 The present proceedings commenced before the introduction of the 2007 Rules. I would hope that similar proceedings commenced after the introduction of those Rules would be dealt with differently, especially as all parties are required to help the court to further the overriding objective in r.1. I have not been told that any attempts were made to mediate the present case or to try to resolve it other than through the court and that is a disappointment. I cannot say that mediation would have been successful, but I am sure it would have given each of the parties a better understanding of how their opponent saw the issues and their respective merits.
27 I do not agree with Advocate Strappini’s argument that as the offer was not made under r.62 of the 2007 Rules, it should not be treated as if it were made under that rule. I am guided by the commentary in 1 Civil Procedure 2008 on Part 36: Offers to Settle and, in particular, a passage (loc. cit., para. 36.1.1, at 965) commenting on the new procedures for Part 36 offers:
“The need, therefore, to resort to a Calderbank letter . . . has been largely removed . . . However it should be noted that although the existence of a Calderbank type letter may be a very important consideration in the exercise of the Court’s discretion with regard to costs and is a fact which the Court is required to take into account when exercising such discretion (see CPR, r. 44.3) it is not to be equated with a Pt 36 offer.”
28 Similarly, I am of the view that although a Calderbank (2) or “Without prejudice save as to costs” offer in Guernsey does not carry with it the full consequences of a payment into court or offer to settle under r.62, nevertheless, it is an important consideration in the exercise of the court’s discretion with regard to costs. It is for the court, in the exercise of its discretion, to decide how much weight to attach to a Calderbank letter in the circumstances of the particular case with which the court is concerned.
29 In my view, it does not matter that the £60,000 offer made in the present case coincided with the date of the payment into court of a lesser amount. The two were separate and distinct and either one of them was open to acceptance by the plaintiff in accordance with its terms which, in the case of the £60,000 offer, meant it must be accepted prior to 10 a.m. on December 1st.
30 I have little sympathy with Advocate Strappini’s argument that the offer was only open for a short period of time. Having received two previous offers, he was aware that the defendant valued the claim at a substantially lower figure than the plaintiff was seeking. The parties were a week away from trial and in the exercise of his duties to his client he must, in my opinion, have formed a view as to what level of offer he would advise his client to accept, or at least seriously consider. He should
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not have needed much time to decide how to advise his client on the offer. If his client needed more time to consider the advice he could have asked for an extension of time. Or, if he felt the offer was close but not quite high enough he could have asked for more time. Instead, Advocate Strappini did not respond to the offer.
31 Quite properly, Advocate Strappini did not disclose what advice he gave his client in relation to the offer and I would not expect him to do so. He admitted communicating the offer to his client, as he was required to do under his professional duties. His client chose to reject the offer. He was close to trial; he had a good idea of the expenses that would be involved in pursuing a hearing to a conclusion. He knew the consequences of rejecting the offer if he was not successful in doing better at trial. In my view, he must bear those consequences.
32 I do not reach this decision lightly. I accept, as Advocate Strappini argued, that his client was an honest man who believed in the reasonableness of his claim and pursued it in good faith to trial. I do not believe for a moment that he unduly exaggerated his symptoms or his losses. He may have held an unrealistic view of his prospects but I am sure his views were honestly held. I am sure that the amount he has recovered is substantially lower than he had hoped for and he may now regret refusing the offers made and the costs that he has incurred in obtaining judgment.
33 Unfortunately, those are the consequences of litigation. These are the risks that a litigant faces. Indeed, if his advocate had not made a late amendment to plead a breach of statutory duty giving rise to strict liability, the claim might have failed totally and the costs consequences might have been even more adverse.
Conclusion
34 My order as to costs is that the plaintiff will recover all the costs incurred by him up to and including December 1st, 2008. Those costs include any expenses in respect of the trial for which he would have been liable even if the offer had been accepted on December 1st—for example, any cancellation fee he would have had to pay to his expert witness and the court fee for reserving a trial date shall be recoverable from the defendant.
35 The plaintiff shall pay to the defendant its recoverable costs incurred after December 1st, 2008. For the avoidance of doubt, the costs payable in respect of the defendant’s expert witness shall be the total costs payable in respect of his attending to give evidence in Guernsey less any cancellation fee that the expert would have been entitled to receive if the trial had been cancelled on December 1st.
36 As I have said, interest shall be payable on general damages at the rate of 2% per annum from February 16th, 2005 to the date of trial and on
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special damages at 3% per annum from the date they were incurred in March 2004. I hope counsel can agree the figures but if not, they may come back.
37 Each party shall bear its own costs in respect of the hearing on interest and costs.
Order accordingly.
2009
Law Report
None
Guernsey Law Reports 2009-10 GLR 120