The consequences of Part 36 can be punishing, but it is a separate question whether they are unjust. The justice of Part 36 is that decisions about litigation should be economically utilitarian: it actively discourages litigation on ‘points of principle’ by making litigation not fought on a commercial basis a high stakes activity.
CPR 36.17(4) applies where a Claimant beats its own Part 36 Offer in substantive proceedings bringing with it various rewards including a 10% uplift, enhanced interest and indemnity costs. The question to be addressed in this case was whether it applies equally to the costs of detailed assessment i.e. can you make a valid Part 36 Offer in respect of the costs of the detailed assessment proceedings and reap those same rewards if it is beaten? In other words, do the the costs of the detailed assessment proceedings, for the purposes of CPR 36.17(4), fall within “any issue that arises in the claim”?
This Court of Appeal decision concerned the circumstances in which the award to a Claimant who beats its own Part 36 Offer of some or all of the specified relief under CPR 36.17 may be considered to be unjust.
In this case Mr Justice Zacaroli determined that the Claimant’s Part 36 Offer to settle its claim in the sum of £48,290.00, which amounted to 99.7% of the amount claimed was a genuine offer to settle the proceedings
In this short judgment Mr Justice Cavanagh declined to make an issue-based costs order despite the claimant having been unsuccessful in two parts of his claim on the basis that the evidence which he had obtained and presented in support of these had not been wasted.
Another decision on indemnity costs arising from a failure to mediate.
There have been a number of cases recently dealing with the consequences under CPR 36.17(4) of a claimant beating its own offer. In this case the claimant beat its offer of £250,000 by over £200,000, being awarded approximately £458,500 at trial. The defendant argued that notwithstanding this fact, it would be unjust to visit the consequences set out in CPR 36.17 upon them.
Mr Justice O’Farrell rounded up the authorities on CPR 36.17 and found that a Claimant who had beaten its own Part 36 Offer of £875,000 by less than £5,000 was nonetheless entitled to the benefits conferred by the rule, including enhanced interest on damages and costs, indemnity costs from 21 days after the date of the offer and an additional amount of £65,123.77.
Allowing an appeal from a decision of HHJ Baucher in the Central London County Court Mrs Justice McGowan found than an offer to accept “nil pounds with an admission of liability plus reasonable costs, to be assessed if not agreed” made by a claimant in the course of an action against the police for false imprisonment and assault was a “significant concession” and therefore a genuine Part 36 offer.
This was an appeal against the decision of Master McCloud not to award the claimant a 10% ‘additional amount’ under CPR 36.17(4) on grounds that it would be disproportionate and unjust to do so where the claimant had beaten its own offer by just £7,000 on a bill assessed at £431,813.05.