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.
Does the existence of a genuine Part 36 offer prevent the Court from dealing with the costs of a liability trial prior to quantum being determined even when the “losing” party’s conduct has been egregious?
CPR 47.20 provides (so far as is relevant) that …
(1) The receiving party is entitled to the costs of the detailed assessment proceedings except where –
(b) the court makes some other order in relation to all or part of the costs of the detailed assessment proceedings.
(3) In deciding whether to make some other order, the court must have regard to all the circumstances, including –
(b) the amount, if any, by which the bill of costs has been reduced.
This case addressed two novel questions:
i) Where a protected party accepts a Part 36 offer is the other party subsequently able to withdraw that offer before approval of the settlement?
ii) When the court is asked to approve a settlement, on what grounds (if any) can a Part 36 offer be withdrawn?
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
Can a Part 36 Offer which excludes interest be validly made either generally or in the context of detailed assessment proceedings?
It is been an issue on which a number of judges have held diverging views.
In the present case, His Honour Judge Dight CBE, upholding Deputy Master Campbell’s first instance decision, had concluded that an offer exclusive of interest cannot be a valid Part 36 offer.
In contrast, in a matter we reported in May, Horne v Prescot (No 1) Ltd  EWHC 1322 (QB), Nicol J, dismissing an appeal from Master Nagalingam, held that, at least in the context of detailed assessment proceedings, an offer excluding interest can be an effective Part 36 offer.
So, what is the answer?
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.
Disagreeing with Judge Robert Owen QC in Potter v Sally Montague (Nottingham CC), HHJ Nicol found that a Part 36 Offer made in detailed assessment proceedings and expressed to be exclusive of interest was a valid Part 36 Offer.