COSTS AFTER LATE ACCEPTANCE OF A DEFENDANT’S PART 36 OFFER: CLAIM £21.5 MILLION, ACCEPT £125,000: THE IMPORTANCE OF CLEAR VISION ON DAMAGES FROM THE OUTSET

November 5, 2017 · by · in Applications, Conduct, Costs, Damages, Part 36

In Optical Express Ltd & Ors v Associated Newspapers Ltd [2017] EWHC 2707 (QB) Mr Justice Warby  considered arguments in relation to costs after late acceptance of a Part 36 offer.  On the facts of that case he ordered that the claimant only recover costs up to a date 5 months before the defendant’s Part 36 offer (except that certain costs relating to quantification of the claim could also be recovered). He also ordered that the claimant pay the defendant’s costs  on an indemnity basis after the expiry of the Part 36 offer.

“There is much that is outside the norm. The claim as pleaded was huge. The offer was a tiny proportion of the sum claimed. It was brusquely rejected as “derisory”, spurned for many months, and then accepted later on with no explanation. Nor has any explanation since been provided for the claimant’s volte face, or its eventual readiness to accept a sum so vastly less than the claim as pleaded. Sometimes there may be valid reasons for such a change of stance. Here, in the absence of any explanation, it is permissible to infer that the belated acceptance was prompted by a re-assessment of the claim which could and should have been made earlier; or by some external factor which meant that it happened to suit the claimants to bring an end to the claim at that time.”

THE CASE

The claimants issued proceedings over alleged libels by the defendant.  The defendant made a Part 36 offer of £125,000 on the 27th May 2016. The claimants accepted that offer on the 21st February 2017.  The claimants sought an order for the “usual” order for costs i.e. that the defendant pay the claimants’ costs up to 21 days after the offer, the claimants pay the defendant’s costs thereafter.  The defendant sought a different order as to costs.

FACTORS IN THIS CASE

  1. The claim was initially put at £21.5 million.
  2. During the action the defendant sought clarification of how the claim was valued. The claimant was extremely dilatory in providing this information.
  3. The offer of £125,000 was initially rejected as “derisory”.
  4. There was no explanation for the change of view – from claiming £21.5 million to accepting £125,000.
  5. The costs involved were some £549,070.24  for the claimant and £498,456.48 for the defendant.

PROVING THINGS

There was never any explanation from the claimants as to why they accepted £125,000 late when they had formulated a claim for £21.5 million. The overwhelming suspicion is that the claimants came to the conclusion that they could not prove their case for damages.  This case illustrates the need to consider at an early stage whether a claim for damages can be proven. As it is the adverse costs orders most probably mean that the £125,000 that the claimant’s will recover has been wiped out by costs.  Early attention to the issue of what could be proved may have prevented this.

THE PART 36 ISSUES

THE DEFENDANT’S APPLICATION

    1. The defendant’s application raises two main issues: should the court depart from the default position by
(1) awarding the defendant its costs from 5 February 2015 (the date when it made an Offer of Amends pursuant to the Defamation Act 1996) to 17 June 2016 (the end of the “relevant period”) (“The Pre-Offer Issue”) or alternatively making no order as to the costs incurred in that period, or reducing the claimants’ default entitlement to a proportion of their costs; and/or
(2) ordering that the costs to which the defendant is admittedly entitled from 18 June 2016 be assessed on the indemnity basis (“The Indemnity Costs Issue”).

THE RULES

The judge considered the relevant rules.

Applicable principles
    1. The costs consequences of late acceptance of a Part 36 offer are governed by CPR 36.13(4)(b) and (5) which provide as follows:
“(4) Where—
…

(b) a Part 36 offer which relates to the whole of the claim is accepted after expiry of the relevant period; …

… the liability for costs must be determined by the court unless the parties have agreed the costs.
(5) Where paragraph (4)(b) applies but the parties cannot agree the liability for costs, the court must, unless it considers it unjust to do so, order that—

(a) the claimant be awarded costs up to the date on which the relevant period expired; and

(b) the offeree do pay the offeror’s costs for the period from the date of expiry of the relevant period to the date of acceptance.”

  1. These provisions mean what they say: the court “has to” make the normal orders unless it considers it unjust to do so: SG v Hewitt [2012] EWCA Civ 1053 [2013] 1 All ER 1118 [22]. The burden is on the offeror to persuade the Court that the normal orders would be unjust: Tiuta Plc v Rawlinson & Hunter (A Firm) [2016] EWHC 3480 (QB) [14] (Andrew Baker J). This much is common ground. Hence, it was Mr Williams QC who addressed me first.

 

THE LAW RELATING TO WHETHER IT WOULD BE “UNJUST” TO APPLY THE USUAL ORDER

    1. CPR 36.13(6) requires the court, when considering whether it would be unjust to make the orders specified in r 36.13(5), to take into account all the circumstances of the case including five matters listed in r 36.17(5). These are:
“(a) the terms of any Part 36 offer;
(b) the stage in the proceedings when any Part 36 offer was made, including in particular how long before the trial started the offer was made;
(c) the information available to the parties at the time when the Part 36 offer was made;
(d) the conduct of the parties with regard to the giving or refusal to give information for the purposes of enabling the offer to be made or evaluated; and
(e) whether the offer was a genuine attempt to settle the proceedings.”
    1. In Smith v Trafford Housing Trust [2012] EWHC 3320 (Ch), Briggs J (as he then was) had to apply this “injustice test”, contained in what was then CPR 36.14. At paragraph [13] he derived the following principles from the authorities (“the Smith v Trafford principles”):
“a) The question is not whether it was reasonable for the claimant to refuse the offer. Rather, the question is whether, having regard to all the circumstances and looking at the matter as it affects both parties, an order that the claimant should pay the costs would be unjust: see Matthews v Metal Improvements Co. Inc [2007] EWCA Civ 215, per Stanley Burnton J (sitting as an additional Judge of the Court of Appeal) at paragraph 32.
b) Each case will turn on its own circumstances, but the court should be trying to assess “who in reality is the unsuccessful party and who has been responsible for the fact that costs have been incurred which should not have been.“: see Factortame v Secretary of State [2002] EWCA Civ 22, per Walker LJ at paragraph 27.
c) The court is not constrained by the list of potentially relevant factors in Part 36.14(4) to have regard only to the circumstances of the making of the offer or the provision or otherwise of relevant information in relation to it. There is no limit to the types of circumstances which may, in a particular case, make it unjust that the ordinary consequences set out in Part 36.14 should follow: see Lilleyman v Lilleyman (judgment on costs) [2012] EWHC 1056 (Ch) at paragraph 16.
d) Nonetheless, the court does not have an unfettered discretion to depart from the ordinary cost consequences set out in Part 36.14. The burden on a claimant who has failed to beat the defendant’s Part 36 offer to show injustice is a formidable obstacle to the obtaining of a different costs order. If that were not so, then the salutary purpose of Part 36, in promoting compromise and the avoidance of unnecessary expenditure of costs and court time, would be undermined.“
  1. The language reflects the fact that the Judge was making a costs decision after a trial at which the claimant had failed to recover more than the sum offered by the defendant under Part 36. The rule that applies in that situation is (in the current CPR), r 36.17(3). Subject to a qualification which is immaterial for present purposes, that rule provides that where the claimant fails to beat a Part 36 offer “… the court must, unless it considers it unjust to do so …” make certain specified orders in favour of the defendant. Rule 36.17(5) applies when the court is considering whether this would be unjust: the court must take into account all the circumstances, including the five specific factors cited above.

 

THE JUDGE’S APPROACH IN THIS CASE

The judge’s approach in this case was nuanced.  He held that the claimant should not recover costs from the date on which information as to damages should, reasonably, have been supplied.  However the costs of supplying that information was to be recoverable.

    1. I approach “the injustice test” on the basis that I should apply the Smith v Trafford principles, bearing in mind that I am doing so in the particular context of late acceptance of a Part 36 Offer. I agree with Andrew Baker J that this context is one of the circumstances to which the court should have regard when determining whether the specific default costs order at issue would be unjust. I agree that it makes the exercise a rather different one from the one that has to be undertaken after a trial, if the claimant has failed to beat a Part 36 offer. The exercise is different, not least because in this situation the defendant has decided that it is willing to pay the claimant’s pre-offer costs, as the price of settlement. The defendant has gone further and made an explicit commitment to the claimant that it will pay those costs, if the offer is accepted. The burden on the defendant at this stage is to show a reason why it would be unjust to make an order that gives effect to that decision and that offer. That is one good reason why the hurdle for the defendant is a formidable one here.
    2. In answer to this line of reasoning Mr Williams points out that the offer in this case is to pay costs to the date of acceptance if the offer of £125,000 is accepted within 21 days. The letter says nothing about what might happen about those costs after the 21 days have elapsed. He submits that there may be a host of good economic and practical reasons why a party might be willing to pay a given sum plus costs to date in order to achieve prompt settlement, but those reasons would not necessarily apply as time elapsed. Allowing the offer period to elapse without acceptance might lead to many months of wasted management time or other irrecoverable costs.
    3. I can see some force in this, but I see a number of better reasons for rejecting this line of argument. These include the following:
(1) This is an argument capable of general application. Its acceptance would seem to run counter to the logic of the default position so far as post-offer costs is concerned, and hence to undermine the certainty of the regime.

(2) Secondly, it is hard to accept that the court’s decision on this issue should be affected by the fact that certain categories of loss or expense that may be incurred in practice are irrecoverable as litigation costs. Similarly, it would seem wrong to proceed on the basis that costs orders in respect of post-offer costs do not represent proper compensation. If such considerations are left out of account, it is not easy to see the logic of the contention that the just allocation of pre-offer costs should depend on post-offer costs and expenses. The allocation of costs during that later phase of the litigation is provided for separately by the Rules.

  • (3) Thirdly, a defendant who did wish to take account of such matters could do so by withdrawing the offer after the 21 days, or making a Calderbank offer, or a true nuisance payment offer. Offers of that kind can be shaped to reflect a willingness to pay a price which does not depend on any assessment of the merits, but is arrived at in order to cut short expensive litigation and free up the defendant’s time and resources. This offer letter did say that “both sides have better things to do with their time and money”. But the figure was not characterised as a “nuisance” payment. It was expressly stated that it “reflects the maximum sums our clients considers your client might be awarded…”

(4) Fourthly, and in addition, I note that the offer letter in this case did not advance any such arguments as Mr Williams now puts forward. It described the special damage claim as “outlandish” and “spurious”. But it did not suggest that the defendant might contend that pre-offer costs should be treated differently if its offer was accepted outside the 21 day period. On the contrary, the letter stated, without qualification, “The offer made in this letter is intended to have the consequences set out in Section 1 of Part 36 of the Civil Procedure Rules.” The claimants, who would be aware of the default position under Part 36, were given no warning or reason to believe that the defendant might argue for a different outcome if the offer remained on the table and was accepted later on. They were told, expressly, that the defendant would argue for a costs order in their favour if the claimants recovered a judgment for £125,000 but the allocation of that sum between special and general damages differed from the one adopted by the defendant. The defendant’s advisers had, as one would expect, thought carefully about the matter. There is, however, no evidence that they had in mind at the time the outcome on costs for which the defendant now contends.

    1. It is relevant, I think, to bear in mind that a party making a Part 36 offer is making a specific commitment, in return for specified benefits. As Andrew Baker J observed in Tiuta, a Part 36 offer can be looked at in the round as an offer to pay £X in damages plus £Y in costs. The pre-offer costs figures recently provided by the claimants would suggest that the sum the defendant was in fact committing itself to paying the claimants in the event of acceptance within 21 days was something between £250,000 and £650,000 (£125,000 + (£550,000 – reduction on assessment)).
    2. The defendant, with the benefit of expert advice, must have known at least in rough terms the scale of the commitment it was undertaking by making the offer. It may not have known the exact quantum of the claimants’ costs at that time; but the costs budgeting process, experience, and the fact that it would know its own costs must mean that it had a pretty fair idea. The defendant’s offer was made in the knowledge that its quantum was a fraction of the sum claimed, but that this would have no impact on costs if the offer was accepted within 21 days. It is not easy to see why there should be no award of costs or a (much) lower award, just because the offer was accepted later than that. Nor is it easy to see where the cut-off point would come. Would it be enough that acceptance was delayed by a week?
(ii) Success?
    1. I do not consider it right to describe the defendant as the successful party. First, the sum offered cannot fairly be characterised as a “nuisance” payment. That is not the basis on which it was calculated or arrived at, nor was it so described in the offer letter, nor does the amount fit that description. Similarly, to describe damages of £125,000 for libel as representing a “token” recovery is extravagant, as I suspect Mr Williams came to recognise in the course of his submissions.
    2. Damages awards for corporate libel claimants are rarely very large. Companies can only suffer financial loss. Business being a complex matter, it can be hard to prove that loss or reduction in profit has followed a libel, and even harder to prove the causation of such loss or profit reduction in the presence of multiple competing factors which might have caused them. The recovery of a seven figure sum at trial is I believe unheard of. Recovery of six figure sums is rare. I cannot regard the agreed compensation in this case as anything other than substantial damages in all the circumstances.
    3. Thirdly, the claimants recovered those substantial damages as a result of pressing on with their claim in the face of an offer of only £25,000 in general damages, and a refusal to admit the possibility that actual financial loss could be proved. On the defendants’ own case it was the service of the claimants’ Further Information that prompted the offer of an additional £100,000 by way of special damages. It is not unjust or unreal to regard the claimants as having been successful in procuring a five-fold increase in the defendant’s offer from a modest (though still not trivial) five-figure sum to a solid six-figure sum. The Part 36 offer was the first to include any special damages. Between the Offer of Amends and the Part 36 offer therefore the claimants succeeded in recovering a substantial sum by way of special damages. That, to paraphrase Lord Bingham in Roache v Newsgroup Newspapers Ltd [1998] EMLR 161, is something of value which the claimants could not have obtained without refusing the initial Calderbank offer and pressing on with the claim.
    4. These points are not undermined by the fact that the recovery was a fraction of the claim. What that means is that the defendant can also be said to have achieved success, in keeping the damages down to a fraction of the sum claimed (whether one takes the case as pleaded in the Particulars of Claim, or the later claim for £21.5m, or the £17m in the expert report.)
    5. There is therefore something to be said for the description of the defendant as the “more successful” party, so far as the pre-offer period is concerned. But that is not a term adopted in Factortame, nor does it feature in the Smith v Trafford principles. The term is taken from the judgment of Gloster LJ in the Walker Construction case (above). In that case, the defendant counterclaimed for some £169,000. The trial Judge gave judgment for the defendant in the sum of £10,035 plus interest. Having considered Part 36 and Calderbank offers made by each party the Judge ordered the claimant to pay the vast majority of the defendant’s costs, in a sum of approximately £350,000. The Court of Appeal allowed an appeal against that decision. It did so for six main reasons, set out in detail by Gloster LJ at [73]-[99]. The term “more successful party” appears at [73] as part of the Lady Justice’s account of the first reason, as follows:-
“73. First, in my view, the Judge, when considering the history of the matter and assessing the various offers, failed adequately to take into account the commercial reality of this litigation, how it was conducted on each side, its ultimate outcome, and who, on an objective basis, was the more successful party. These were matters to which he was obliged to give appropriate consideration under CPR Part 44.3(2), (4) and (5) . By failing to take into account these relevant matters, and simply focusing on the various offers, the Judge in my view adopted too mechanistic an approach, and failed to address the costs issues in their proper commercial context.”
    1. In the paragraphs that followed, Gloster LJ elaborated on this reasoning. Mr Williams focuses his argument on paragraphs [76]-[77] and [81]. Here, the Lady Justice observed that the outcome at trial represented a recovery of only 5.93% of the defendant’s original counterclaim. She considered it impossible that a proportionate or principled result in costs terms could be to subject the opposite party to a costs liability of £345,000. She held that would be disproportionate, and that at best the defendant should have been entitled to recover costs attributable to a counterclaim of £10,035. She summarised the position thus:
“The present case was essentially one where the exercise of the discretion to award costs had to reflect the reality that Quayside had substantially failed on its counterclaim, which on any basis was substantially exaggerated. Moreover consideration clearly had to be given to whether an issue based, or partial, costs order was appropriate.”
    1. It is to be noted that this line of reasoning is entirely independent of the offers that had been made by the parties. It depends exclusively on the proportion which the recovery bore to the claim. The reasoning is based on the principles laid down in CPR 44.3, and involves no reference to Part 36. I do not consider it assists in the very different circumstances of the present case.
    2. The relationship between the approach to costs under Part 44 and the approach under Part 36 has been the subject of much discussion in the authorities. In Fox v Foundation Piling Ltd (above) [36] this was deprecated by Jackson LJ: “A large number of authorities have accumulated around the provisions of Part 36 and their interrelationship with rule 44.3. This is not a welcome development, …” Moore-Bick and Ward LJJ agreed. The present case is one in which the claimants have recovered only a fraction of their claims, but they have done so by agreement pursuant to a highly structured stand-alone regime. It seems to me a recipe for confusion to treat the case as if the outcome was one achieved by going to trial, and to adopt the approach that might be appropriate in that event.
    3. Similar reasoning applies to Mr Williams’ alternative contentions that the “injustice test” should be applied in this case on the footing that there is no overall winner, or that the claimants have not achieved an unqualified success. That is not an approach consistent with the Part 36 regime, which this experienced defendant advisedly chose to exploit in preference to a Calderbank approach on the lines described in Medway v Marcus.
    4. This does not mean that the gulf between the claim and the recovery will fall to be ignored in the process of costs adjudication. Proportionality can and indeed must be taken into account at the detailed assessment stage. One of the factors the costs Judge is obliged to take into account is whether the costs being assessed are disproportionate. The factors to which the Court is obliged to have regard in making that assessment include “the amount or value of any money or property involved“: CPR 44.5(3)(b).
    5. It seems to me that the costs Judge in this case will have to consider how much of what was spent on assessing and formulating the enormous claim in this case would have been justified if the claim had been for a much lower sum, more easily reconcilable with a settlement at £125,000. That is an approach that finds support in Lahey v Pirelli Tyres Ltd [2007] EWCA Civ 91 [2007] 1 WLR 998. The claimant had claimed £150,000 but accepted a Part 36 offer for £4,000. The defendant sought unsuccessfully to persuade the costs Judge to make a preliminary order as to costs, disallowing 25% of the claimant’s costs on grounds of proportionality and conduct. The Court of Appeal dismissed the appeal on the basis that since the acceptance was in time the costs Judge had no jurisdiction to make such an order; but the Court went on at [24]-[25] to hold that there was no need for any such jurisdiction, because all the issues of proportionality and conduct that were relied on could have been raised in the course of the detailed assessment.
    6. Reverting to the factors specified in CPR 36.17(5) the defendant’s Part 36 offer was a genuine attempt to settle, made in clear terms, in good time before trial, on the basis of information that was adequate at the time it was made. There is nothing about these aspects of the matter that would make it unjust to adhere to the normal order as to the allocation of costs. Indeed, in all the circumstances of this case, a decision not to make the normal costs order on the grounds that the recovery falls far short of the claim would in my judgment be unjust. That leaves for consideration the matters of conduct that are relied on by the defendant
(iii) Conduct
  1. I shall take the defendant’s criticisms in chronological order.
  2. I reject as unrealistic the contention that the case would have settled promptly if only the claimants had made a realistic assessment of their claim. The article complained of seriously defamed the claimants in a way that was clearly liable to cause substantial financial loss. The claimants could hardly be expected to calculate that loss prospectively with any degree of accuracy at the very outset of the claim. The very existence and scale of any loss or reduction in profit were bound to take some time to identify. On the defendant’s own case there were multiple competing causes of loss which would have to be evaluated. There is nothing unreasonable about the claimants’ initial pleading of their case, in the claim form, in the immediate aftermath of the libel. Nor do I consider that they can fairly be criticised for the way the case was stated in the Particulars of Claim and its confidential schedule. This set out a coherent set of calculations, leading to a large figure for loss of profit. The claimants were entitled to reject the Calderbank offer of £25,000 in general damages, coupled with a denial of any financial loss. They secured five times as much, and a concession as to financial loss.
  3. The consequences of the claimants’ failings by way of disclosure of documents are substantially dealt with by the costs orders already made by Nicola Davies J. There may be aspects of these criticisms that can properly be pursued in the course of a detailed assessment. But it would be unjust for me to rely on those matters as a basis for reducing the proportion of the claimants’ costs that are in principle recoverable.
  4. There is however real force in the contention that the claimants failed to provide the defendant with a timely elaboration of their case on special damages. The promise made in the Particulars of Claim was that details of “further and continuing loss” would be provided once it had crystallised. In the event, nothing was volunteered in the 8 months that followed. The defendant then made its request for information of 29 October 2015. This was not satisfied until 8 May 2016, over 6 months later. True it is that during this period there was a 3 month hiatus due to the stay imposed by the Master, but I do not regard that stay as a prohibition on exploring the validity and extent of the claimants’ case on damages. On the contrary, the purpose of the stay was to facilitate discussions on costs. Those discussions were intimately and inextricably connected with the nature and scale of the claim. Even if the 3 months were ignored for this purpose, there would still be a period of over 14 months in which the claimants left the defendant very much in the dark as to the scale and formulation of their claims.
  5. I note that the defendant’s Part 36 offer followed shortly after service of the Further Information of 8 May 2016, and I accept that the Further Information was directly causative of the offer. It was reasonable for the defendant to await the information which it had been promised and which it had sought. I have been provided with no adequate explanation, still less justification, of the claimants’ delay. Rather the contrary. I note that the claimants’ solicitors wrote on 4 March 2015 that they would “shortly have available details of the financial loss suffered by our client in February 2015”, and suggested that these would be forwarded when available. It would appear that records and calculations were being kept and made on an ongoing basis. They were not disclosed for many months.
  6. Of course, it is one thing to keep records and calculations, and another to formulate a detailed claim in a statement of case. But making all reasonable allowances, I find that the claimants could and should reasonably have provided an elaboration of their case on quantum by October or November 2015 at the latest, on similar lines to the information provided the following May. Had they done so, the defendant would in all probability had made its offer some 3 weeks later, in November or December of that year. These are matters to which I am duty bound to have regard pursuant to CPR 36.17(5)(d). And for these reasons, I have been persuaded that the normal order as to costs would be unjust. It would be unfair in the circumstances to allow the claimants to recover costs right up to the expiry of the validity of the offer actually made.
  7. I have considered how these conclusions ought fairly to be implemented. One thing seems clear: the normal order for costs in favour of the defendant offeror should run from an earlier date than the rules provide. Doing my best to arrive at a fair point from which it ought to run, I arrive at 11 January 2016. This is on the basis that if the claimants had acted reasonably in the provision of information the defendant’s offer would have been made in late December 2015 and the time for acceptance would have expired 21 days later.
  8. It would be possible simply to order that the claimants should recover costs up to 11 January 2016 and no more, thus effectively shifting backwards by some 5 months the “pivot” point provided for by the default provisions of CPR 36.13(5). That, however, would have the potential to penalise the claimants unfairly for their delay. After 11 January 2016 they formulated and served their Further Information. It appears that expert advice on quantum was obtained by the claimants up to and in May 2016 for that purpose. To rely on their delay to set a cut-off point that automatically deprived them of the right to claim any of the costs of that advice would be too crude. The alternative, though also somewhat crude, is better. This is to qualify the defendant’s entitlement to costs after 11 January 2016 by awarding the claimants (subject to detailed assessment) the costs of and caused by the preparation and service of the Further Information of 8 May 2016. Those are categories of costs which the claimants would have incurred and been entitled, in principle, to recover had they acted promptly in providing full details of their claims thereby prompting an earlier Part 36 offer which they in due course accepted.

INDEMNITY COSTS

The judge awarded the defendant’s costs on the indemnity basis.  There was here, “much that is outside the norm”.

  1. Where costs are awarded on the indemnity basis, the requirement of proportionality is disapplied, and the burden of proof on the issue of reasonableness is reversed. These are departures from the norm. So costs are awarded on the indemnity basis rather than the standard basis only where there is something in the conduct of the action or the circumstances of the case in general which takes it outside the norm, in a way that justifies a non-standard order of this kind: Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hammer Aspden and Johnson [2002] EWCA Civ 879 (Waller LJ).
  2. The mere fact that a Part 36 offer is accepted out of time cannot be a basis on which to award costs on the indemnity basis. The default provisions of CPR 36.13(5) make that clear. That, however, is not the only feature of this case to which the defendant points as a justification for indemnity costs. There is much that is outside the norm. The claim as pleaded was huge. The offer was a tiny proportion of the sum claimed. It was brusquely rejected as “derisory”, spurned for many months, and then accepted later on with no explanation. Nor has any explanation since been provided for the claimant’s volte face, or its eventual readiness to accept a sum so vastly less than the claim as pleaded. Sometimes there may be valid reasons for such a change of stance. Here, in the absence of any explanation, it is permissible to infer that the belated acceptance was prompted by a re-assessment of the claim which could and should have been made earlier; or by some external factor which meant that it happened to suit the claimants to bring an end to the claim at that time.
  3. In any case, it is legitimate to describe the claimants’ conduct as highly unreasonable and such as to justify an order for assessment on the indemnity basis. The continued pursuit of the pleaded claim after time for acceptance of the Part 36 offer expired can properly be characterised as wholly disproportionate to the value of the claim. It is fair to say that the claimants have forfeited their right to the benefit of a proportionate assessment of the defendant’s costs, and to the benefit of the doubt on reasonableness.
  4. In the light of my above conclusions there might perhaps have been an argument for indemnity costs with effect from 11 January 2016, but in the event I uphold the application made which is for assessment on the indemnity basis from 17 June 2016.

 

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