PI Brief Update

Silence did not amount to a failure to engage in ADR and Part 36 applied - Nancy Kelehar, Temple Garden Chambers

27/09/23. In this case, a separate judgment on costs was given by Master Marsh (sitting in retirement) following written submissions by the Claimant and the Third Defendant. The underlying action was a probate claim and the judgment on costs addressed three issues: (1) whether a letter marked ‘without prejudice’ was in fact sent on a without prejudice basis; (2) whether Part 36 consequences applied in probate claims; and (3) whether the Claimant had failed to engage in ADR such that it would be unjust to apply the consequences under CPR 36.17(4).

Decision 

In addressing the first issue, Master Marsh determined that despite the Claimant’s letter being marked ‘without prejudice’ it was in fact sent on an open basis and it was right for the court to have regard to it [15]. The Master considered the manner in which the letter was drafted, how a reasonably minded recipient would regard the letter, the chain of communications of which it formed part, and the fact that the letter did not contain an offer.

In relation to the second issue, the court considered whether the fact that CPR 36.14(1) provides that if a Part 36 offer is accepted then the claim will be stayed meant that Part 36 could not apply to probate claims which could not simply be stayed as this would leave an estate in limbo [23]. The Third Defendant submitted that the court should have no regard to the Part 36 offer as it was of no effect in probate proceedings. The Master observed that although probate claims “are not entirely on all fours with mainstream litigation”, he could not see any basis for concluding that Part 36 does not apply to probate claims [23]. Importantly, while there may be different steps that need to be taken in probate claims and Part 36 “primarily functions in money claims”, it is capable of operating in other claims and did in fact operate here [23(2)].

Finally, the Third Defendant sought to rely upon the letter (referred to above) and other correspondence to show that the Claimant failed to engage in ADR which thereby warranted a reduction to the costs recovered and factored into the consideration of whether it would be unjust to apply Part 36 consequences. However, the Master determined that while the Claimant’s “failure to engage more positively with ADR…without providing any explanation was surprising” [26], on the facts of this case it could not be said that silence amounted to refusal to undertake mediation or other form of ADR [27]. 

Comment

In concluding that the Claimant’s conduct was not such as to warrant any costs deduction, the Master took into consideration the fact that the Claimant had made a number of offers to settle, the Third Defendant’s conduct of the claim was very unsatisfactory, it was the Claimant who first raised the question of ADR, and the merits of the claim were weighted heavily in favour of the Claimant [25]. Therefore, although the Claimant had not responded when asked in writing about its unwillingness to attend mediation, the court may make the determination on this issue by looking at both of the parties’ conduct more broadly.

Additionally, it should be noted that paragraph 23 of the judgment provides useful guidance as to how Part 36 and Part 57 should be read together and applied in relation to probate claims.

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