SUCCESSFUL PART 36 OFFER BY CLAIMANT ATTRACTS INDEMNITY COSTS ONLY FROM THE DATE OF EXPIRY OF THE OFFER: A HIGH COURT CASE
In RXDX -v- Northampton Borough Council [2015] EWHC 2938 (QB) Sir Colin Mackay revised an order in relation to indemnity costs following a Part 36 offer.
THE CASE
On the 12th March 2015 the claimant offered to settle the issue of liability by accepting 80% of damages. The defendant did not accept the offer and the action proceeded to a trial on liability where the claimant was wholly successful. The judge invited written submissions as to costs and ordered that indemnity run throughout the case. The judge did not make an order under 36.(14)3(a) and (d) (additional interest and additional damages) as he felt it would be unjust.
KEY POINTS
- It was appropriate for a court not to order that all the provisions of CPR 36.14 apply if it felt it was unjust to do so.
- Indemnity costs should run from the date of the expiry of the offer and not throughout the action.
THE ARGUMENTS IN RELATION TO THE ORDER MADE
8. At the heart of this debate today has been Miss Hewells for the claimant arguing that I do not have power to take that course, that this is not only a complete code but it is, as it were, a menu all of whose courses must been delivered. I am not free to choose between the relevant features of subrule (3) or to find that to apply one would be unjust and to apply another would not.
9. Miss Rodway argues that I am required to consider the subparagraph and asked at each stage, would the application of this subparagraph to this case with its own particular circumstances, have been unjust. Reading the plain language of the rule as best I can, I have preferred Miss Rodway’s construction of this provision. I also consider that she is right to argue that its proper provision would prevent the indemnity basis of assessment being applied on any day prior to the end of the relevant period. It is to be noticed that, of course, had the defendant accepted the offer within the relevant period by 36.10(1) and then (3) then the claimant would be entitled to costs of up to a point but to be assessed on the standard basis. I do not consider that it was right to make the order I made.
10. Because I had not heard oral argument on this matter, I left it open to counsel if they wished to come back on the draft order I imposed, and that is what has happened today. The result of that is that I believe the order as drawn was wrong to the extent that the provision that the defendant pay the plaintiff’s costs relating to the issue of liability be assessed on an indemnity basis should be restricted expressly to the costs incurred or it coverable after the expiry of the relevant period, namely from 2 April 2015. So to that extent I agree the order must be amended.
RELATED POSTS
- Increased interest and costs after claimant beats its own Part 36 offer: Judgment for three times more than claimant’s offer. How relevant are Part 36 offers to issue based orders?
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- Knowing the risks and advantages for the claimant in the new Part 36.
- The costs consequences of Part 36 offers: do they always apply? The cases in detail.
- Costs consequences of Part 36 offers: some interesting examples
- Costs, conduct, Part 36 and the “Winning Party”.
- Interest and costs when a claimant beats their own Part 36 offer.
- Costs of £7 million: Part 36 bites hard on claimants who cleared a first hurdle but fell at the second.
- Claimant beats own Part 37 offer and receives an additional £75,000 in damages.
- The dangers of a Part 36 offer: Claimant pays three times more in costs than he receives in damages.
- Another example of a successful defendant not recovering all of its costs (and of the advantages of a Part 36 offer).
