Part 36 Offer to Settle

A brief reminder as to any Part 36 Offer to settle, and the general rules governing them under Part 36 of the Civil Procedure Rules.  CPR 36.13 specifically provides the basis upon which a valid Part 36 Offer can be made and implications if one is accepted within the relevant period, and states:

• A Part 36 Offer must specify a period where the paying party is liable for the costs of the receiving party, and it must not be less than 21 days, known as the ‘relevant period’.
• An offer must specify whether it is made for the whole of the claim or part of the claim only.
• Such an offer can be withdrawn or changed by serving written notice.
• If a party accept the offer within the relevant period, Part 36 costs are to be assessed on the standard basis, up until the date of acceptance, with interest on those costs recoverable thereon at 8% above base rate.
• The party making the offer must pay the sum within 14 days of the date of acceptance.
• Making and accepting a Part 36 Offer to settle must be done so in writing.

Jones v Ministry of Defence [2020] Costs LR 993 

Jones v Ministry of Defence was a clinical negligence case where the Claimant recovered less at Trial than the Defendant’s Part 36 Offer to settle the claim. It is usually the rule that the Defendant is then entitled to their costs from the date of expiry of their offer. As for the costs running up to the date of the offer, it had to initially be decided who was the winning party as the Court had preferred the Defendant’s evidence and the Claimant’s damages awarded were only a small percentage of those claimed.

The Defendant had failed to diagnose the Claimant’s HIV in a timely manner, and for this reason, the Claimant’s claim had succeeded. The damages awarded at Trial were for that omission alone. The Defendant argued that it would not be justified to ask the Defendant to pay all of the Claimant’s legal costs, seeking an issue-based costs order under CPR 44.2(6)(f).

The Defendant argued that they were the successful party as the Claimant recovered only a small percentage of damages in comparison to those claimed and due to the Court’s preference of the Defendant’s evidence. For these reasons, the Defendant argued that Claimant should pay the Defendant the majority of their costs. Referring to the case of Medway Primary Care Trust v Marcus [2011] EWCA Civ 750, the Defendant argued that the Court should order the Claimant to pay 90% of the Defendant’s costs. Alternatively, they sought an issue-based costs order.

The Claimant argued that in fact, they were the successful party. It was submitted that whilst they recovered significantly less damages than claimed, it was still an amount which was significant. Furthermore, they argued the Defendant failed to admit parts of the claim until before Trial. The Claimant argued that pursuing this matter, even to Trial, led to expense that could have been avoided, and they also highlighted the Defendant’s failure to enter negotiations until shortly before Trial. The Claimant sought all their costs up to the date of the Part 36 Offer.

In resolving the cost dispute, three questions were asked: 

1. Who was the successful party?

The test set out in Roach v News Group Newspapers Limited [1998] EMLR 161 was used to determine this. Ultimately, the Court decided that the Claimant was the successful party to the claim. This was due to a number of reasons:

(i) The Claimant brought a claim for the Defendant’s failure to diagnose HIV in a timely manner. The Claimant was offered damages for this omission at Trial. It was not deemed unreasonable, therefore to pursue the case.

(ii) The Defendant admitted their omission to diagnose earlier, shortly before Trial. It was held that this impacted quantum.

(iii) The Defendant did not make a Part 36 Offer until very shortly before Trial even after admitting negligence. 

2. Should the Claimant be able to recover all their costs?

It was held that in order to depart from the general rule of the successful party recovering its costs, there must be a reason in departing, which is based on justice. Because the Judge preferred the expert evidence of the Defendant, which resulted in a significantly lower level of damages being awarded, it was found to be unjust to order the Defendant to pay 100% of the Claimant’s costs. 

3. What is the appropriate order to make?

The Judge refused to make an issue-based order as he deemed these to be a burden at detailed assessment. If the general rule was to be departed from, where the successful party would be able to recover all their costs, it was deemed better to make this type of order on percentage or time period terms. The Defendant was ordered to pay 60% of the Claimant’s costs.

In summary, it is imperative to note that simply because an offer is bettered at Trial, it does not necessarily mean that it follows that the offeror will be liable for the full costs of the offeree if significant findings are made at Trial against the receiving party.  Conversely however, had the Claimant in this matter made an early Part 36 Offer in reflection of any risks, that they would have beaten at Trial, they would have been entitled to indemnity costs from the date of expiry of their offer, as well as a 10% uplift in damages pursuant to CPR 36.17. 

How Can ARC Costs Assist?

ARC Costs are a team of expert Costs Draftsman and Costs Lawyers registered in England and Wales. We can provide assistance in preparing a Bill of Costs and in the process of recovering your costs via our Legal Costs Negotiators, who are able to provide expert legal advice on making effective Part 36 Offers. If you require any assistance, please contact us on 01204 397302, or email us at info@arccosts.co.uk.

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