Yentob v MGN Ltd [2015]

In Yentob v MGN Ltd [2015] EWCA Civ 1292 (17 December 2015) this matter came before Lady Justices Arden and Rafferty and Lord Justice Kitchin in the Court of Appeal. Lady Justice Arden in her judgment, with which Lady Justice Rafferty and Lord Justice Kitchin agreed, examined the issue of whether Mr Justice Mann had erred in ruling that the Respondent should not have to abide by the Normal Consequences of not accepting the Part 36 Offer made by the Appellant.

The Appellant made a renewed application for permission to appeal against a section of Mr Justice Mann’s order for costs of the 11th June 2015 and the Part 36 offer they had made in respect of the Respondent’s claim.

The proceedings had involved the misuse of private information through “hacking” and other wrongful activities” and an Appeal by the Appellant against the nine awards made, including that made to the Respondent.

The Respondent had been awarded £85,000 damages for misuse of his private information. The Appellant had made a CPR 36 Offer to the Respondent with the “the Normal Consequences” meaning that the Respondent would be ordered to pay the Appellant’s costs and interest from the last day of acceptance being the 13th January 2015.

Lady Justice Arden observed that the Judge was entitled to make another order if he considered it to be “unjust” for the Respondent to have to pay the Appellant’s costs. The Appellants considered this to be incorrect as:

“(1) he made no finding that the usual Order would be “unjust” and instead applied a flawed test of a balance of justice, and

(2) took into account MGN’s failure to make admissions and other matters which he should have excluded from his consideration of whether the Normal Consequences were unjust”.

Lady Justice Arden noted in her judgment that she would grant permission to appeal but would dismiss the appeal as Mr Justice Mann had been correct in taking into consideration all the circumstances.

She considered the argument was based on CPR 36.17. Mr Justice Mann had to decide a threshold issue (“the threshold issue”), had the Respondent’s award been more advantageous than the Appellant’s Part 36 Offer. Mr Justice Mann held that the Respondent had not beaten the award through the damages he was awarded. Counsel for the Respondent contended that it would be unjust for the Normal Consequences to apply.

Lady Justice Arden observed that Mr Justice Mann had, in accordance with CPR 36.17(5), examined all the circumstances and had decided that a comparison between the terms of the Offer and the terms of the judgment could be included. She observed there could be cases where parties were justified in continuing, despite a favourable offer being made. The Appellants had admitted hacking the Respondents mailbox for a much lesser time period than Mr Justice Mann had discovered.

Lady Justice Arden noted that Mr Justice Mann considered the case was exceptional since the Respondent did not know how seriously he had been hacked until the matter came to court,

“He could not recover his costs from MGN but justice did not, in those circumstances, require him to pay MGN’s costs: the outcome could be marked simply by making no order as to costs (Judgment, para. 45)”.

Lady Justice Arden set out her reasons for rejecting the Appellant’s arguments. She noted Lord Pannick for the Appellants suggested two errors of law in Mr Justice Mann’s decision.

Firstly, Mr Justice Mann did not, in accordance with CPR 36.17(3), make any finding that it would be “unjust” for the Normal Consequences to be applicable. Lady Justice Arden considered Mr Justice Mann had just struck a balance as to responsibility for the costs of the trial.

Secondly, Lord Pannick contended Mr Justice Mann was not entitled to rely upon the matters he did. He considered the award made to the Respondent was not “more advantageous” than the Offer and the terms and circumstances should have been left out of any decision made in accordance with CPR 36.17(5),

“the judge misdirected himself when he held that there might be cases where a party was justified in continuing to trial even though he had received a favourable offer. The object of CPR 36.17 is to provide an incentive to parties to make offers and to settle cases, and the judge’s interpretation of the rule is inconsistent with that object”.

Counsel for the Respondent examined the history of the proceedings, his Client was justified in pursuing his claim, the Appellants had only admitted to 2.5 years of hacking when Mr Justice Mann had discovered this to cover 7 years. One of the witnesses at the trial, a former employee of the Appellant, had revealed important evidence such as Private Investigator faxes and journalist notes were destroyed.

Lady Justice Arden considered it a mandatory obligation that all the circumstances be taken into account. She continued that it would not make any sense to exclude the terms and conditions of the offer

“Suppose that a person to whom a Part 36 offer had been made had asked for clarification or more relevant information and been refused it or the answer misrepresented the position. If that information was material and might reasonably have altered his view on whether to accept the offer, and was information within the offeror’s organisation, the court might well find that it would be unjust to order that the Normal Consequences should follow from non-acceptance”.

In her judgment she considered Mr Justice Mann was entitled to look at the whole circumstances in respect of the Offer. She noted what Lord Pannick had said that it was not sufficient for that party who fails to beat an offer just to demonstrate that it was a reasonable thing to do. He would have to demonstrate that it would not be fair if the Normal Consequences were applicable.

She continued that CPR 53 does provide for a statement in open court where there has been a misuse of private information. As well as accepting a Part 36, a party can apply for a statement in open court and invite the other party making the Part 36 Offer to join in it. Mr Justice Mann had in this case to consider that the Respondent did not invite the Appellant to agree to a statement in court. The Appellant considered him wrong to conclude they would not make a statement, they had made statements in other cases.

Lady Justice Arden noted that Respondent’s counsel had referred to the previous offer and it did not include any suggestion for a statement. She continued “MGN also submits that the judge had wrongly assumed that it mattered that a statement in open court would not match a favourable judgment. It submits that, if that were relevant, non-acceptance of a Part 36 offer where the making of a statement in open court was an option could never lead to the Normal Consequences of a Part 36 offer. In my judgment, that submission misses the point”.

She considered a joint statement made in open court is only appropriate

“if the party making the offer is willing and able to make a frank statement of its wrongdoing towards the party accepting the offer”.

She noted Mr Justice Mann was extremely familiar with the whole background to the case, in particular the late stage and vague admissions made by the Appellants, she considered he was entitled to reach the conclusions he did.

She concluded that Mr Justice Mann had decided that the Normal Consequences would not be fair which he had based on relevant considerations. There had been no error of law.

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