Before: LORD JUSTICE WARD LORD JUSTICE WILSON and SIR PAUL KENNEDY Between: KEBABERY WHOLESALE LIMITED

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1 Case No: B3/2008/2810 Neutral Citation Number: [2009] EWCA Civ 1386 IN THE SUPREME COURT OF JUDICATURE COURT OF APPEAL (CIVIL DIVISION) ON APPEAL FROM THE HIGH COURT OF JUSTICE QUEEN S BENCH DIVISION (HIS HONOUR JUDGE HAWKSWORTH QC) Royal Courts of Justice Strand, London, WC2A 2LL Date: Thursday 22 nd October 2009 Before: LORD JUSTICE WARD LORD JUSTICE WILSON and SIR PAUL KENNEDY Between: SONMEZ - and - KEBABERY WHOLESALE LIMITED Appellant Respondent (DAR Transcript of WordWave International Limited A Merrill Communications Company 165 Fleet Street, London EC4A 2DY Tel No: Fax No: Official Shorthand Writers to the Court) Mr Simon Jonathan Brown (instructed by Levenes) appeared on behalf of the Appellant. Mr Richard A Hartley QC (instructed by DWF LLP) appeared on behalf of the Respondent Judgment (As Approved by the Court) Crown Copyright

2 Lord Justice Ward: 1. How does one apply the general rule that costs follow the event where the defendant in personal injury litigation admits primary liability, but then raises an issue of contributory negligence in which his Part 36 offers are closer than the claimant s to the eventual apportionment of liability made at the trial? 2. In this case HHJ Hawksworth QC, sitting as a judge of the Queen s Bench Division on 31 October 2008, having entered judgment for the claimant for 80% of his damages, to be assessed, nonetheless ordered the claimant to pay the defendant s costs of and relating to that trial of the issue of contributory negligence, which had been directed to be tried as a preliminary issue by the Master. 3. The claimant now appeals, with permission granted by Dyson LJ. It is necessary to capture the flavour of the trial by shortly recounting the facts. The claimant suffered very serious injuries on 8 July 2004 while he was working for the defendant. His job involved having to clean a large stainless steel bowl in which the meat and other ingredients were mixed in preparation for them being turned into doner kebabs. This was a large mixing machine, rotating on its base, within which two steel curved bars rotated around a central spindle. The bowl was covered by a steel lid and the machine should only have been operated when the lid was closed. 4. The interlock device on the lid became faulty and it was then possible to operate the machine with the lid open. The claimant began to carry out his cleaning of the bowl using a plastic scraper against the side of the bowl while it was turning and whilst the arms were spinning. His case was that his employer condoned this practice. He was thus engaged on the day in question when the arms began to turn more quickly. His arm became trapped and he was pulled into the machine, suffering the serious injury to his arm, which has since had to be amputated at the shoulder. It was a horrifying accident. 5. At the trial of this preliminary issue the judge heard four witnesses, all Turks. Only the owner of the business able to give evidence without an interpreter. None of these witnesses was satisfactory. The owner was described as unimpressive and his witness as being unable satisfactorily to explain inconsistent statements he had made earlier. The claimant himself was also not free from inconsistencies. His witness gave evidence which the judge could not regard as reliable or truthful. 6. The judge found in paragraph 12 of his judgment: I was not persuaded that the use of the spare key was either a rare or infrequent occurrence. It had a variety of uses, as admitted by [the defendant s witness], and I cannot accept that [the owner] was unaware of its use in mixing the meat with the lid open. The Claimant spoke of seeing it in use

3 frequently during this process and I accept that it was I believe [the claimant] when he says that, if he had been told not to work in this dangerous way he would not have done so 13. I cannot, however, hold that [the owner] went so far as to instruct the claimant to clean the bowl with the machine running. 14 I have come to the view that this method of cleaning was not followed once the spare key became available and that effectively, both [the defendant s witness] and [the owner] turned a blind eye to what the Claimant was doing. 15. In this case the Defendants had the statutory responsibility for ensuring that the safety of the operation being carried out by the Claimant was provided for by the effective working of the interlock device and proper instructions and supervision. On this they failed and failed over a period on the evidence of at least six months. In those circumstances the judge found that, although the claimant did not regard the slow-moving arm as dangerous, he knew that at some stage it would speed up and that he was contributorily negligent to the extent of 20%. 7. There followed an argument on costs. The judge was referred to correspondence which had passed between the parties. There was a series of letters, beginning with the claimant s solicitors writing to the defendant s solicitors on 22 May putting forward an offer, intended to have the consequences of Part 36 of the Civil Procedure Rules, in respect of liability alone as follows: that liability be agreed 100 per cent in our client s favour. 8. That met with an offer from the defendants on 1 September 2008 to settle the claim on a two-thirds/one-third basis, that offer being made pursuant to CPR Part 36. The claimant s response was curt: We write further to the above and confirm that your Part 36 offer is rejected. That remained the position until 15 October when the defendants wrote saying: It is incumbent upon us to do our best to settle this case, and in those circumstances we are now instructed to make an offer at 75/25 in the

4 Claimant s favour. You will doubtless have considered our recent offer and discussed liability with both Counsel and your client following exchange of witness evidence. In the circumstances the offer we make is available for seven days only, i.e. until 12 noon on 22 October 2008, at which point it is withdrawn. Although the letter hoped that the offer would have the consequences of Part 36, I doubt whether that would have been the case. 9. So the trial went ahead, with the claimant asserting full liability and the defendant, appearing by Mr Hartley QC, taking the position (in his skeleton argument at least) that liability should be apportioned at a rate between 50% and 75%. 10. The judge held as follows: 2. Somewhat unusually, though for reasons which I perfectly well understand, the claimant in this case took the view that his claim was only to be settled on a 100 per cent basis. In other words he did not concede any contributory negligence at all. 11. The judge then referred to the correspondence I have read: 3. As I have just observed to Mr Hillier [counsel who then appeared for the claimant], it seems to me that in those circumstances that what is sauce for the goose is sauce for the gander, and if in this case the defendants, as they have, have succeeded in establishing contributory negligence of any degree, and in this case my finding is 20 per cent, they have succeeded on the issue, which was for trial. The claimant put in issue just about every surrounding circumstances and called a witness to support his case, a witness whose evidence I rejected. The defendants took the stance that there was initially in their view a high degree of contributory negligence, 50 per cent, and they made an offer on that basis. 12. I interpolate the judge may not have got that absolutely accurately but it does not matter. I continue: They then made a reduced offer, eventually of 25 per cent. 4. However, as far as the claimant is concerned, as I say, the stance that he put forward was 100 per cent

5 or nothing and it seems to me in those circumstances Mr Hartley is right in saying that that conduct has to be taken into account in deciding where the cost of this preliminary issue or trying this preliminary issue must fall. 5. I take the view in all the circumstances that the defendant has succeeded on that issue and that costs should therefore follow the event in relation to the costs in this trial of the preliminary issue. 13. It is common ground that this court is always reluctant to interfere with orders for costs made in the exercise of the judge s discretion, but we can interfere (and it is trite law to state it) if the judge has erred in principle or if he has left out of account or taken into account some feature that he should or should not, as the case may be, have considered or his decision is outside the generous ambit within which there is room for disagreement. 14. Mr Simon Brown, who now appears for the claimant, submits that the judge erred in three respects. First, he misdirected himself in failing to characterise the issue before him as an apportionment of liability. Secondly, he failed to take into account that the claimant had to come to court to get his judgment. Thirdly, he left out of account the way in which a defendant can protect himself, namely by making a Part 36 offer more advantageous to the claimant than the judgment he obtains. Fourthly, he submits that the judge was wrong to take conduct into account. 15. As to the first point he is now able to rely on a recent decision of this court Onay v Brown [2009] EWCA Civ 775. That case concerned a road traffic accident where the defendant, driving his motor car in the opposite direction to the claimant on his motorcycle, turned right across the claimant s path, causing serious injuries, and contended that the claimant was contributorily negligent by driving significantly faster than the speed limit. So primary liability was admitted in that case, as in this. There the parties exchanged a series of Calderbank offers, the defendant opening with an offer of one third to two thirds, the claimant responding by indicating a willingness to accept that he was 10% to blame. The defendant s response was to come down to 25%. The claimant s next bid was to admit 15% responsibility but by then, the evidence having been exchanged, the claimant accepted the 75/25% split. 16. The parties in that case were successful in agreeing the degree of contributory negligence, but did not agree on the liability for costs. That was the issue that went before the circuit judge and in time came to this court. The order made was that the claimant should pay the defendant s costs of that issue. 17. The lead judgment was given by Goldring LJ. He recited the arguments that were put before him. In paragraph 16 of the judgment he records the claimant s submission as follows:

6 that a defendant admits a breach of duty that alleges contributory negligence does not mean that the trial of the issue contributory negligence is materially different to a trial where the court is considering the liability of both drivers. The issues of blameworthiness and causation are the same, the admitted breach of duty by the defendant merely removes one factor from ultimate determination; it does not remove issues relating to the defendant s negligence and the causative relevance of it. Contributory negligence will inevitably be intertwined with the defendant s liability for the accident. The court would have to apportion responsibility for the accident between him and the defendant. 18. Counsel went on to refer the court to the observations of Potter LJ (as he then was) in Fleming v Chief Constable of Sussex Police Force [2004] EWCA 643 at paragraph 35, where his Lordship said: the starting point is still an order for costs in favour of the successful party: see CPR 44.3(2). Put more generally, the successful party is the party who has really won at trial, by establishing the essentials of his case and his rights to a particular remedy or remedies sought, the time spent on the issues being broadly that reasonably necessary for the exploration and determination of the dispute. 19. Goldring LJ then recited the respondent s submissions, in paragraph 23 and 24 of his judgment, as follows: 23.In the proceedings as they remained the defendant had to prove causative negligence in respect of the alleged contributory negligence. That was the only burden, submits Mr Davis, upon him where primary liability was admitted and judgment had been entered. It was abundantly clear, he submits, that that was the only live remaining issue and upon it that the respondent succeeded in the circumstances. In the circumstances he was therefore the successful party. 24. The claimant s positive case that he was not guilty of contributory negligence failed. He was not therefore the winner on that issue, a reality which the judge recognised. 20. Goldring LJ, with whose judgment Toulson LJ and Carnwath LJ agreed, decided that the matter was concluded by an examination of the Part 36 offers

7 that had been made. Goldring LJ, having come to that conclusion, nevertheless turned to the exercise of the judge s discretion and analysed the position which is similar to that before us. He said this in paragraph 29: 3) In making his order for costs and in deciding which was the successful party it was necessary for the judge to have regard to the underlying realities of the position. 4) They seem to me to have been these: the defendant admitted in the defence that he was in breach of his duty of care to the claimant that he had been negligent Submitting to judgment he admitted not only a breach of duty but that he caused some of the claimant s damage. He did not, however, admit the extent of the damage he caused. That could have been anywhere between 10 and 90 per cent. That was to be decided by the trial which it was anticipated would take place. In that trial the judge would have had to assess the relative blameworthiness of both parties, as Mr O Sullivan rightly submits. In other words he would have had substantially to decide how the accident happened. I do not accept that such an exercise would be the simple one suggested by Mr Davis. The costs incurred in such an exercise would relate to the resolution of that dispute. That was the real issue in the trial of contributory negligence which the Deputy District Judge ordered. 5) The relative blameworthiness of the parties was compromised by the settlement between them at 75 per cent to 25 per cent. That might or might not have been the outcome of the trial. In the light of such an apportionment of blameworthiness, whether as a result of settlement or trial, it seems to me wholly artificial to describe the claimant as other than the winner, applying the approach of Potter LJ in Fleming to which I have referred. 6) Mr Davis is right when he says that the claimant did not accept any negligence at all. However, as it seems to me, the position in reality was this: it was the claimant who was injured and suffered damage, he had to bring proceedings to be compensated, it was reasonable for him to pursue those proceedings until he received a reasonable offer from the defendant. He did not until 5 September He then had 21 days in which to accept it. If he did not and was found 25 per cent or more to blame he

8 would lose his costs from the date of the offer. If he was not, then the defendant would obtain his costs. 7) I do not think that detailed considerations of the rights and wrongs of the claimant s case in that litigation in the circumstances help. 8) In short it seems to me artificial to consider the proceedings in the narrow way in which the judge did. If he had had regard to the underlying realities he would in my view have been bound to come to a different conclusion in the exercise of his discretion. 9. As to the respondent s complaint that such an outcome means a defendant could not protect himself, I do not accept it. He can by making a sensible and early Part 36 offer. 21. Mr Hartley QC for the respondent valiantly rises to the challenge of distinguishing this case. His first point is that it was a woolly case in that, contributory negligence having been agreed, the only issue outstanding was costs. I cannot accept that as a distinguishing feature. I note that in paragraph 5 of the judgment I have just recited Goldring LJ said that the same would arise whether the result of a settlement or of a trial, so I cannot see how that tiny point of difference affects the point of principle arising from the case. Secondly, he points to the contrast between the genuine attempt in that case to compromise and what he calls the intransigence of the claimant in this case to put forward any Part 36 offer at all. Again that does not seem to me to undermine the ratio of the judgment, although it is an aspect to which I will return in a moment. 22. So, charming though the submissions were, they were, I regret, unpersuasive. For my part I cannot see how this case can be distinguished from Onay. I do not feel free to depart from it. I agree that the event in a case such as this is the apportionment of liability in the round, and the claimant succeeded to the extent of 80%. In a fully contested trial of liability I would not ordinarily expect that contributory negligence would be treated as a separate issue which one party won and the other party lost. It would be all bound up in the final result, namely that there be judgment for the claimant for 80% of the damages, to be assessed. In my view, although the judgment on this aspect was given on alternative grounds to the main ground on which Onay was decided, I for my part cannot depart from the reasoning. I agree with it. It binds us, it covers this case and, in my judgment, the result for this appeal is inevitable. It is no fault of the judge below because he did not have the advantage of this decision before him and cannot be blamed for misdirecting himself, but he was in error and I must allow the appeal accordingly. 23. It follows that I am able to exercise my own discretion. The general rule applies that costs follow the event and, as that event has now been clarified and determined, there should be costs for the claimant unless there are good

9 reasons not to allow him those costs. In my judgment there are none and the ordinary order should follow: that the claimant should have his costs. 24. The troublesome question is whether those costs should be reduced by reason of his conduct in this litigation. The rules are by now well known. CPR 44 recites the general rule I have applied, emphasises the court s discretion and provides in CPR 44.3 (4) that: (4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including -- (a) the conduct of all the parties; (b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and (c) any payment into court or admissible offer to settle made by a party which is drawn to the court s attention, and which is not an offer to which costs consequences under Part 36 apply. 25. Subparagraph (5) is also relevant. That provides: 5) The conduct of the parties includes -- (a) conduct before, as well as during, the proceedings (b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (c) the manner in which a party has pursued or defended his case or a particular allegation or issue; and (d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim. 26. Mr Hartley submits that the failure to make any Part 36 offer other than the naked assertion that the defendant is wholly to blame is intransigent and therefore not reasonable. In 2009, with increased emphasis on that part of the overriding objective which encourages co-operation and compromise, Mr Hartley submits that it is unfair to thrust the whole burden of attempting to settle the case on the defendant having to make the only offers under Part 36, leaving the claimant to go to court, knowing as claimants will from now on, that they will get their costs. He reminds us of what Jackson J, as he then was, said in Multiplex Construction UK Limited v Cleveland Bridge UK Ltd & Ors [2008] EWHC 2280 TCC, in paragraph 72 subparagraph (vi) and (vii): (vi) In considering the circumstances of the case the judge will have regard not only to any part 36 offers made but also to each party's approach to negotiations (insofar as admissible) and general conduct of the litigation.

10 (vii) If (a) one party makes an order offer under part 36 or an admissible offer within rule 44.3(4)(c) which is nearly but not quite sufficient, and (b) the other party rejects that offer outright without any attempt to negotiate, then it might be appropriate to penalise the second party in costs. 27. Those were certainly pertinent observations in that case, although it is, I think, also pertinent to observe, as Mr Wood has suggested, that the judge in paragraph 72 introduced his review of the authorities by observing that: (i) In commercial litigation where each party has claims and asserts that a balance is owing in its own favour, the party which ends up receiving payment should generally be characterised as the overall winner of the entire action. Mr Wood submits that complicated commercial litigation is of a different character to the ordinary run-of-the-mill personal injury claim. 28. I was reminded by Sir Paul Kennedy s observation in the course of argument that Smith LJ had said this in Hall v Stone [2007] EWCA Civ 1354 in paragraph 82: In these days where both sides are expected to conduct themselves in a reasonable way and to seek agreement where possible, it may be right to penalise a party to some degree for failing to accept a reasonable offer or for failing to come back with a counter offer. I have tried in my own way to say much the same thing and to encourage mediation wherever possible. 29. Whilst I therefore do not by any means eschew a practice of treating a failure to negotiate as a matter which can in the particular circumstances of the case be characterised as unreasonable conduct, each case must depend on its own facts and that causes me the difficulty in this appeal. We have not had the benefit of hearing the case. That was the judge s advantage. He expressed himself in paragraph 2, and I remind myself of it: Somewhat unusually, although for reasons which I perfectly well understand, the claimant in this case took the view that his claim was only to be settled on a 100 per cent basis. Taken by itself, it seems to be sympathetic towards the claimant s stance and it is not the language one would expect of a judge taking an unfavourable view. But then, in paragraph 4, as Wilson LJ pointed out, the judge says this:

11 the stance he put forward was 100 per cent or nothing and it seems to me in those circumstances Mr Hartley is right in saying that conduct has to be taken into account in deciding where the costs of this preliminary issue or trying this preliminary issue must fall. 30. The difficulty I have is that one has to acknowledge, as Chadwick LJ observed in Johnsey Estates Limited v SSE [2001] EWCA Civ 535 at paragraph 32: the rules of court provide the means by which a party who thinks that his opponent is not open to reason can protect himself from costs. He can make a payment in; he can make a Calderbank offer; now, under the Civil Procedure Rules 1998, he can make a payment or an offer under CPR Pt That is the defendant s protection, and, ordinarily, a litigant is entitled to conduct the litigation on the basis of those rules. Here I cannot forget that the claimant is a Turkish gentleman who had to give evidence through an interpreter, who was asserting a case that his employer had condoned the use of this bowl without the lid so that employees were putting their hands in the bowl whilst the machinery was turning and the judge, though not believing him in every respect, did accept his case to a considerable extent. He was clearly asserting that the owner of the business condoned this practice. If that was his firm evidence, then in the light of the fact, seen ex post facto, that the defendants were not wholly satisfactory in rebutting it, I conclude, though with reluctance, that it would not be reasonable to condemn this claimant for sticking by his guns and putting forward his case, which was clearly genuinely held. 32. Had his evidence been accepted it would in my judgment have led to the whole blame being attributed to the defendant so, not without hesitation, I conclude that, in the particular circumstances of this case, it was not unreasonable of him to stand by his conviction that his employers were wholly responsible for his horrendous injury. In those circumstances I would not find that his conduct in any respect fell within CPR 44.3 (5). 33. In the result I would allow the appeal, reverse the order of the judge and order that the defendant pay the claimant s costs to be assessed if not agreed. Lord Justice Wilson: 34. I agree. Sir Paul Kennedy: 35. I also agree. Order: Appeal allowed