Background
On 20th February 2021, the Defendant's Employee's lorry was involved in a collision with Mr Ali's parked and unattended Volvo XC60. The Claimant's vehicle was damaged as a result of the collision and was sent for repair. Mr Ali entered into a credit hire agreement for a replacement vehicle and subsequently issued proceedings against the Defendant.
At first instance and upheld at the High Court appeal, the Credit Hire charges were dismissed on the grounds that, if the Claimant's car should not have been on the road due to a lack of MOT, there was no loss of use claim for the Claimant so the claim was dismissed on causation grounds. The Claimant took matters further to the Court of Appeal. The higher court overturned the previous decisions on the basis that the judge at first instance and Martin Spencer J in the High Court appeal were wrong to accept the causation defence and agreed with the Appellant that such a defence was "ex-turpi causa by another name but without the essential requirement of proportionality".
As reported previously, there were some crumbs of comfort for the Defendant community in that quantum could be reduced where it was found the Claimant's own vehicle should not have been on the road due to minor defects or lack of MOT or road tax. The appeal court then went on to decide the position on costs given the various Part 36 offers in the case.
Costs
Whilst there was agreement over costs in terms of the County Court proceedings and first appeal, plus the costs of the second appeal up to the 5th August 2024, the parties were not agreed as to the effectiveness and validity of a Part 36 offer made by the respondent on the 15th July 2024, after which the majority of the costs of the 2nd appeal would have been incurred.
The Defendant's submissions focused on the case not being turned in to a test case by the decision of Martin Spencer J, the first appeal being an appeal against an everday decision by a County Court recorder. The Claimant tried to develop the case into a case test, however, but the Defendant responded in open correspondence that the end insurer client was a foreign insurer with no wider interest in test case litigation – indeed, in the country of that foreign insurer, credit hire isn't something that impacts their insurance market at all.
The offer was not accepted, for the obvious reason that the Claimant Solicitors wanted to test the 'no MOT' point before the higher courts. Furthermore, the Civil Procedure Rules provide that the provisions of Part 36 are to apply with equal force to second appeals. There was nothing that took this case outside of the norm for second appeals and the usual consequences should follow. There was nothing unjust in the appellant bearing the costs of the decision not to accept the offer.
Decision
The Court of Appeal agreed with the respondent's submissions on the validity and effectiveness of the Part 36 offer made, with any costs of the second appeal from the 6th August 2024 onwards to be awarded to the respondent.
In an explanatory section of the costs order, it was explained that the case had not become a test case, so the parties were free to settle the appeal however they wanted to. The court could not come to the conclusion that the offer was not a genuine attempt to settle. Part 36 was therefore given its' usual effect. A link to the cost order if interested is here.
