Margin By Which Party Beat Own Part 36 Offer Not Relevant In Determining Costs Consequences

The High Court has found that, where a claimant beat its own Part 36 offer by only a very small margin relative to the size of the claim, that was not a relevant factor in determining whether it would be unjust to award the claimant the Part 36 costs consequences in full: JLE v Warrington & Halton Hospitals NHS Trust [2019] EWHC 1582 (QB).

The judge referred to the widely criticised decision in Carver v BAA plc [2008] EWCA Civ 412, which meant that a party who beat an opponent's offer by only a small margin could be penalised in costs as if it had failed to beat the offer. That decision was effectively reversed by the Civil Procedure Rules Committee following a recommendation by Lord Justice Jackson, so that the rules now expressly provide that an offer will be beaten if the court's award is better in money terms by any amount, however small. In the present case, the court was keen not to re-introduce Carver - or in effect the flip-side of Carver - by depriving the offeror of the Part 36 costs consequences (or some of them) simply because it beat its own offer by only a small margin.

The decision re-emphasises the high hurdle required before the court will find that a party who makes a well-judged Part 36 offer will be deprived of the costs consequences that would otherwise follow: the test is whether it would be unjust to award the usual costs consequences (or any of them), and that is a stringent test.

Background

The claimant was successful in her clinical negligence action against the defendant and was awarded her costs. In the subsequent detailed assessment proceedings, she put forward a Part 36 offer of £425,000, in respect of a total claim for costs of some £615,000. She was awarded costs of almost £432,000. That meant she beat her Part 36 offer by just under £7,000.

Part 36 applies to detailed assessment proceedings, by virtue of CPR 47.20(4), with the receiving party treated as the claimant and the paying party the defendant for these purposes. Under CPR 36.17(4), where a claimant obtains a judgment that is more advantageous than its own Part 36 offer, the court must (unless it considers it unjust to do so) order that the claimant is entitled to:

under 36.17(4)(a)-(c), indemnity costs and enhanced interest on damages and costs (at up to 10% above base rate) from expiry of the relevant offer period; under 36.17(4)(d), an additional amount of up to £75,000, calculated as 10% of the first £500,000 awarded and 5% of the next £500,000...