The Court of Appeal has refused permission to appeal a High Court decision that found a claimant was entitled to issue his claim solely in pursuit of costs.
Mrs Justice May found that the defendant “acted unfairly” by trying to settle pre-action but refusing to pay any costs.
In Ayton v RMS Bentley Jennison & Ors  EWHC 2851 (QB), upholding the claimant’s appeal, she ruled that, while the defendants were entitled to run the technical argument they did, “where costs must necessarily have been incurred in complying with the PAP, the defendants must have realised that the risk in adopting this course was that interest and costs would mount whilst they maintained that denial”.
The claimant issued proceedings and Senior Master Fontaine awarded him just under £120,000 (including interest) at trial, beating his part 36 offer.
However, the master decided that it would be unjust to apply the normal consequences of part 36, on the basis that the claimant had not been justified in issuing proceedings to obtain his pre-action costs in circumstances where an offer of the full amount of the claim had been made.
May J ruled that this decision could not stand.
In refusing permission for a second appeal, Lord Justice Lewison noted that May J had accepted that it was legitimate for Mr Ayton to have issued proceedings in the face of the refusal to pay his costs.
“From that starting point, it followed inevitably that the part 36 regime would apply to the litigation. The only question for the judge was whether it would be unjust for Mr Ayton not to recover his costs in accordance with part 36, having beaten the offer at trial,” he wrote in his order.
“The cases are unanimous in stating that the test of injustice is a high hurdle; and it is essentially a value judgment for the judge to make.
“In circumstances in which the point of the proceedings is to recover the costs, I find it hard to see how it could be unjust to deprive Mr Ayton of his costs. As the judge pointed out, it was always open to the defendants to accept the part 36 offer.”
Lewison LJ concluded that the appeal had no real prospect of success, nor did it raise an important point of principle or practice.
Sam Hayman, head of costs at London firm Bolt Burdon Kemp, who acted for the claimant, said: “The decision of Lord Justice Lewison provides much needed finality in this protracted litigation.
“The Court of Appeal has roundly adopted the claimant’s submissions against granting permission in response to the defendant’s application and gives further weight to the sound reasoning of Mrs Justice May at the first appeal.
“This should now put beyond doubt the widely held misconception that a party cannot issue for payment of their reasonable pre-action costs.”