Fletchers Solicitors’ Assistant Litigation Executive, Tatevik Bagratyan takes a closer look at the complexities behind Holmes v West London Mental Health NHS Trust:
The Claimant was described as a ‘mentally fragile’ patient, who had been treated with a ‘cocktail of medications’ which included lithium, between 1994 and 2012.
Her health deteriorated and she developed ‘disturbing symptoms’, therefore she was admitted to Hammersmith Hospital in early 2012.
Tests found that the Claimant was suffering from lithium toxicity and she was admitted to intensive care for 19 days. She was so unwell that she remained in hospital as an inpatient for more than two months.
The Claimant issued a claim form against the Defendant in February 2015, claiming damages for medical negligence. Some preliminary negotiations took place, including the Defendant making a ‘drop hands’ offer, in which they asked the Claimant to discontinue proceedings and to agree a settlement under which the parties would agree to bear their own costs.
The Defendant then made several consecutive offers to accept 50%, 65%, 75%, and 85% liability, which the Claimant rejected.
In February 2017, the Claimant made a counter Part 36 offer to settle the claim at 95% of its full value, which was rejected by the Defendant in March 2017.
The Defendant then failed to respond to invitations to engage in alternative dispute resolution, including the Claimant’s requests for mediation. The Defendant was also late in serving witness statements and expert reports, as well as failing to agree to carry out a joint experts meeting.
The Defendant accepted the Claimant’s offer on 30th May 2018, which had originally been made in February 2017.
The offer was accepted on the condition that her legal costs were paid on the standard basis, meaning that the Claimant would have to prove that her costs were reasonable. The Claimant disputed the offer claiming that significant costs were incurred as result of the offer being accepted 15 months after it had been made.
The court’s decision
His Honour Judge Gore QC (HHJ Gore), referred to the case of Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hamer Aspden & Johnson (a firm) and another, as the best guidance to the parameters of his jurisdiction. The principle judgement of the Court of Appeal held that when ordering costs to be paid on an indemnity basis it was a ‘critical requirement’ for there to be ‘conduct or some circumstance which takes the case out of the norm’.
HHJ Gore, dismissed the Trust’s arguments, holding that the Defendant’s conduct took the case ‘out of the norm’, basing his decision on several factors, including:
- The failure of the Defendant to respond to invitations for ADR, despite being aware of the fact that the Claimant was mentally fragile;
- Late service of witness statements and expert reports;
- The failure to respond to requests for mediation and failure to agree to agendas required to carry out a joint experts meeting;
- The assigned master’s comments at the case management conference describing the case as ‘worse than hopeless’;
- The Defendant continuing its defence of the case despite a ‘damning’ serious untoward incident report;
- The Defendant’s ‘drip feeding’ of liability offers at a lower percentage than 95%;
- The Defendant’s expert’s failure of dealing with key issues on liability.
HHJ Gore held that it was ‘a little difficult to characterise the conduct of the defendant as reasonable pursuit of a defence when it eventually capitulates’. He determined that the Defendant’s letter of acceptance of the Claimant’s 95% offer could not be construed as a Part 36 offer, as it did not comply with the requirements. Therefore, it could only be construed as an acceptance of the Claimant’s offer and an offer as to costs.
HHJ Gore concluded that he was satisfied to use his wide discretion as to costs, to shift the burden of proof by ordering the costs in this case to be paid by the Defendant. He therefore, ordered the Defendant to pay costs on the indemnity basis from the date by which the Part 36 offer fell to be accepted.
What can we learn from this case?
This judgement supersedes an earlier decision from the case of Hislop v Perde, where the judge elected not to impose indemnity costs against a ‘slow-moving party’. This decision was held on the basis that the judge did not feel that the conduct of the party had triggered an ‘exceptional circumstances’ provision as set out in Civil Procedure Rules.
This case underlines that parties should be mindful of their conduct during litigation. The precedent set in the case is that a judge may decide to award costs on an indemnity basis where a party conducts itself in a way that suggests that it is maintaining a defence with negligible prospects of success whilst failing to accept requests for alternative dispute resolution.
The case upholds that Part 36 offers cannot be accepted subject to conditions; therefore Part 36 offers should either be accepted or rejected in full. If a party wishes to impose further conditions then they must make a separate Part 36 offer.
It should be noted however that indemnity costs are not awarded purely on the basis of a late acceptance of a Part 36 offer. The court did not look favourably upon the Defendant’s dilatory approach to progressing the case which included late issuing and service, an inordinate delay to serve their defence and a general demonstration of slow compliance with the agreed timetable. Practitioners should recognise the utility of early and viable Part 36 offers in low value cases to avert a disproportionate escalation of costs.
- Holmes v West London Mental Health NHS Trust  Lexis Citation 65