Part 36 Offers And Costs Orders

Following trial and judgement in patent infringement proceedings relating to aircraft seats, the matter came to a hearing as to costs and, in particular, as to whether there should be disclosure of a Part 36 offer. The costs to be paid by the various parties were determined.

Floyd J had given judgement on substantive issues in July 2012, ([2012] EWHC 2153 (Pat)). Virgin v Jet Airways, Zodiac v Virgin, Premium v the Comptroller [2012] EWHC 3318 (Pat) deals with the costs issues.

Disclosure of Part 36 Offer

Virgin had made an offer to Contour (now Zodiac) under CPR Part 36 and the court had to decide whether it was appropriate for it to be shown that offer at this stage.

CPR Part 36.13 deals with restrictions on disclosure of Part 36 offers:

"(1) A Part 36 offer will be treated as 'without prejudice except as to costs'.

(2) The fact that a Part 36 offer has been made must not be communicated to the trial judge or to the judge (if any) allocated in advance to conduct the trial until the case has been decided.

(3) Paragraph (2) does not apply –

(a) where the defence of tender before claim has been raised;

(b) where the proceedings have been stayed under rule 36.11 following acceptance of a Part 36 offer; or

(c) where the offeror and the offeree agree in writing that it should not apply.

In Virgin's skeleton argument, they had disclosed the fact that a Part 36 offer had been made, and also one of the key terms of the offer. On this basis, Floyd J decided that it was appropriate for the court to be shown the Part 36 offer. This was on the basis that parties cannot pick and choose the terms of an otherwise privileged offer which they wish to bring to the court's attention. Virgin effectively waived the privilege in their offer by referring to one of its terms.

The offer and whether costs should be decided now

The existence of Virgin's Part 36 offer (which also referred to other proceedings) raised a question as to whether costs between Virgin and Zodiac should be dealt with at this stage, or should wait for the outcome of the other proceedings.

The judge did not accept that the existence of the offer was irrelevant. He did not accept the proposition that the only basis upon which a court could take account of an offer was if the party can be criticised for not accepting it.

Floyd J noted that if, in commercial terms, what is on offer is a solution to the litigation which is ultimately beaten by the claimant, it is arguable that the offer should...