IEH v POWELL  EWHC 1037 (KB)
Market Insight 23 May 2023 23 May 2023
Insurance & Reinsurance
Following an infant claimant’s late acceptance of a defendant’s valid CPR, Part 36 offer, it was unjust to order the claimant to pay the defendant’s costs after expiry of the relevant period where the claimant’s medical evidence established that the long-term effects of a traumatic brain injury could not be known until the child reached adolescence, per SG v Hewitt  EWCA Civ 1053.
- Following an infant claimant’s late acceptance of a defendant’s valid CPR, Part 36 offer, it was unjust to order the claimant to pay the defendant’s costs after expiry of the relevant period where the claimant’s medical evidence established that the long-term effects of a traumatic brain injury could not be known until the child reached adolescence, per SG v Hewitt  EWCA Civ 1053.
 The claim was settled by acceptance of the Defendant's Part 36 offer made on 20 November 2020. The court was able to approve the settlement. The Part 36 offer was not accepted until 27 July 2022, so that the provisions of CPR 36.13.(4), (5) and (6) apply…
 The Claimant seeks his costs of the action. In order to obtain an order for his costs after the date of expiry of the Part 36 offer made on 20 November 2020 he must demonstrate that it would be unjust to make the order specified in CPR 36.13(5) (b). The Claimant accepts that he has the burden of making that case…
Factual and Procedural Background
 The Claimant is a child… He is now 14. He was involved in a road traffic accident on 1 September 2016 when he was 8 years old, and suffered multiple injuries, the most serious of which were a femoral fracture to his right leg and a traumatic brain injury…
 The Claimant lives in a relatively remote part of Morocco with his aunt, grandmother and siblings and attends school in Morocco… His parents continue to live and work in the UK, but his mother started to spend 6 months of the year in Morocco from 2013 when the children of the family were enrolled in school in Nador in Morocco. During term time they lived with and were cared for by the children's aunt and grandmother, and in the school holidays, primarily the summer school holidays, they returned to the UK…
The Claimant's mother has bipolar disorder, which was controlled by medication, but in about October 2021 she stopped taking her medication and was hospitalised. As a result of her mental health difficulties she was no longer able to act as Litigation Friend and, there being no other relative whom it was thought was suitable, the Official Solicitor agreed to act as Litigation Friend and was so appointed on 26 May 2022.
 The circumstances that are relevant to the consideration as to whether it would be unjust to make the order specified in rule 36.13 (5) in this case, are, in my judgment as follows:
i) the fact that the Claimant is a child;
ii) whether the litigation friend had sufficient evidence to enable an informed decision to be made in respect of the offer in November/December 2020;
iii) the particular factual circumstances relating to the Claimant, namely the fact that he lived and was being educated in Morocco, the effect of the pandemic and the necessity for appointment of a new litigation friend;
iv) whether the approach that the Claimant's solicitors took in responding to the offer was reasonable;
v) the Claimant's conduct in the litigation;
vi) the fact that the Part 36 costs regime is intended to encourage settlement and discourage disputes on costs.
 The fact that a Claimant is a child may not always be relevant to an issue under CPR 36.13(5), but in this case the relevance is as stated in the medical evidence, that the long term effects of a traumatic brain injury usually cannot be known until a child reaches and/or passes through puberty and adolescence.
 … It also, in my view, would point strongly in favour of injustice if the usual order as to costs were applied. This is because it is not the Claimant's fault that he sustained the accident when a child, and has to wait to pass through puberty before the long term effects of his injury can be assessed with more certainty, nor is it "a normal contingency of litigation". With regard to the reference to Arden LJ's comments in SG v Hewitt at , (cited above), it is also not the litigation friend's fault that this is the case, and the litigation friend, in exercising her duty to protect the child's interest, could not be expected to accept the offer in the light of the current medical evidence in November 2020 and the advice given by Leading Counsel.
 … Although I recognise the caution indicated in the authorities against applying the facts of one case to another, this was a factor, as was the requirement for approval to be obtained, that all members of the Court of Appeal in SG v Hewitt  EWCA Civ 1053 accepted amounted to circumstances which made it unjust not to depart from the general risk-shifting rule in Part 36: see Black LJ at  – , Arden LJ at  and Pill LJ at  – .
Whether the litigation friend had sufficient evidence to enable an informed decision to be made in respect of the offer in November/December 2020
 … The authorities make it clear that simply because a Claimant, or those advising them, has acted reasonably, is not sufficient, on its own, to make the usual order in CPR 36.13 (5) unjust, but it is of relevance when considering all the circumstances, see SG v Hewitt at .
 In my view it was appropriate for the Claimant to refuse to accept the Part 36 offer within 21 days on the evidence then available…
 I consider it extremely doubtful that the court would have been able to approve the Claimant's acceptance of the offer in late 2020, on the basis of the evidence as it was, and it would have been most likely that the approval hearing would have been postponed and directions given to obtain updated factual and expert evidence. That is not the only relevant factor, but as in SG v Hewitt, it is relevant to the question of injustice: see  –  where the court concluded that the judge below had erred in not treating this as a relevant factor.
Reasonableness of the Claimant's conduct…
 Thus, the factual and medical evidence available by the end of May 2022 demonstrated a significant improvement from what appeared originally to be a significant head injury, but there was still some uncertainty about the prognosis for the Claimant.
 My view is that it was reasonable for the Claimant solicitors to take the steps that they did after the Part 36 offer was made, given the Claimant's age at the date when the offer was made, and the uncertain prognosis in the medical reports available at that date.
It is not in dispute that the long term effects of traumatic brain injury suffered by young children are often not known until after the child has gone through puberty and that is confirmed by Dr McCarter's report of 2017, her draft report of May 2022 and Dr Berelowitz's report.
I do not accept that the Claimant's legal advisors would or should have known in November 2020 what the long term prognosis was likely to be at that date. Even if it were the case that the Claimant was not likely to recover further after November 2020, the Claimant's legal advisers were in no position to know that in November 2020, and not at all unless they obtained updated medical and factual evidence.
… It is apparent from the evidence above that the Claimant made a significant and (according to Dr Berelowitz and Dr McCarter) unexpected, improvement between the date of his last assessments in 2017 and mid 2021, when most of the further factual and medical evidence was available.
The Particular Factual Circumstances relating to the Claimant
 … There is evidence that the Claimant's performance at school had deteriorated in 2020 because of difficulties associated with the pandemic (email from Claimant's solicitors to Defendant's solicitors dated 4 December 2020 (Exhibit DY 1.4).
That supports the position that it would not have been realistic or sensible to obtain updated medical evidence in 2020.
In addition the Claimant was only 12 in 2020, and Dr McCarter had said in September 2018 that the earliest point for "assessing the trajectory of development, and for helping to predict long term outcome and future needs" would be at age 13, and that "in some cases the outcome remains unclear until some years thereafter."
In any event, in 2020/2021 the Claimant's solicitors were working towards the court ordered timetable for service of witness statements and further medical evidence by 11 March 2022.
 Rule 36.17(5)(d) contains one of the factors that the court must take into account when deciding whether it would be unjust to make the order in rule 36.13(5), namely:
"the conduct of the parties with regard to the giving of or refusal to give information for the purposes of enabling the offer to be made or evaluated;"
 Unfortunately, none of the information relating to steps taken and evidence obtained following the offer…, which was provided to the court in a privileged bundle for the approval hearing, was provided to the Defendant's solicitors, nor were any of these steps or evidence mentioned in Abrahams 3 or Leading Counsel's skeleton argument for the hearing of the application.
When I read the Defendant's evidence and their Leading Counsel's outline submissions on the day before the hearing I realised that the Defendant was unaware of this evidence…
 The result of this failure to disclose relevant evidence has been that the Defendant has approached the application without knowledge of crucial information. The failure of the Claimant's solicitors to provide this information to the Defendant's solicitors, both as a matter of reasonable conduct to keep the Defendant informed as to the steps being taken following receipt of the offer, and as a failure to serve such evidence in good time before the hearing of the application, is conduct that is relevant both to the decision I make on the application and to the costs of the application.
If the Claimant's legal advisors had concerns about disclosing privileged documents to the Defendant prior to the approval hearing they should have asked for the approval to be heard first, and separately, from the application to disapply rule 36.13 (5).
The Purpose of the Rule 36 Regime
 I take note of the importance of the normal rule in achieving certainty, as referred to by Black LJ in SG v Hewitt at . I also am cognisant of the caution advised in the authorities as to the high hurdle that is considered appropriate for a Claimant to come within the provisions of CPR 36.13 (5), described as a "formidable obstacle" in Smith v Trafford Housing Trust  EWHC 3320 (Ch) at [13(d)].
Nevertheless, the Part 36 regime recognises that the application of rule 36.13 (5) has the potential to cause injustice, and provides a mechanism for avoiding any injustice in rule 36. 13(6), in appropriate cases.
 … I have concluded that it would be unjust to the Claimant to make an order under rule 36.13 (5)(b). The costs incurred during the period of delay between September 2021 and May 2022 will be subject to the scrutiny of the Senior Courts Costs Office on detailed assessment.
 However, it may be appropriate to make an order that the Claimant should not receive all his costs for the entirety of the period following the expiry of the Part 36 offer, because of the effect of the conduct issues.
Because I have not heard full submissions from either party in relation to the conduct issues, I reserve my decision as to the extent to which such conduct should affect the terms of the order to be made, both as to the costs of the action following the expiry of the Part 36 offer, and the costs of the application, to the handing down of this judgment.
Author: Andrew Guirguis, Professional Support Lawyer