Costs News

06 August 2020
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‘Drop hands’ offer did not comply with part 36, High Court master rules

A ‘drop hands’ offer to end a claim did not comply with part 36, a High Court deputy master has ruled.

Deputy Master Henderson said the terms of the offer conflicted with the stay imposed on a claim where a part 36 offer is accepted.

He was considering costs after he ruled on preliminary issues in Akinola v Oyadare and Anor [2020] EWHC 2038 (Ch) that disposed of the claim.

As part of their argument for indemnity costs, the defendants’ counsel pointed to the claimant’s failure to accept a ‘without prejudice save as to costs’ offer. Couched as a part 36 offer, it invited the claimant to withdraw his claim on a 'drop hands' basis.

While the judge found that the offer met the technical requirements of CPR 36.5, he decided it was outside of part 36 “for a more fundamental reason”.

He explained: “The usual meaning of ‘drop hands’ is that the claim or claims should be discontinued with each side bearing its own costs. That would be inconsistent with part 36. Further, there is no procedure for ‘withdrawing’ a claim. The nearest relevant procedures are discontinuance the claim or the obtaining of an order dismissing or staying the claim.

CPR 36.14(1) provides that, if a part 36 offer is accepted, the claim will be stayed, while CPR 36.14(2) says that, in the case of acceptance of a part 36 offer which relates to the whole claim (as it did here), the stay will be on the terms of the offer.

Deputy Master Henderson said: “That leads to the difficulty that the offer is for the ‘withdrawal’ of the claim. In my judgment, it is not possible to construe ‘withdrawal’ of the claim in the context of the 14 August 2019 offer as including a stay. If there is a stay, the proceedings would continue to exist. If there was a ‘withdrawal’, whatever that might reasonably be thought to mean, the proceedings would cease to exist.

“This line of analysis is reinforced by the consideration that the usual meaning of ‘drop hands’ is that each side should pay its own costs. If that was what was intended by the offer, then there would be no problem with the proceedings ceasing to exist but, if the CPR 36.13 costs consequences were to follow from the acceptance of the offer, the proceedings would need to continue to exist so that there were proceedings in which Mr Akinola's costs could be assessed.”

The judge concluded that it was not a part 36 offer. “In my judgment, it is a factor of little weight on the question of whether I should order costs on the indemnity rather than the standard basis. In my judgment, Mr Akinola's failure to accept the offer should not be categorised as so unreasonable as to justify an order for indemnity costs.”

The claimant was represented by Richard Devereux-Cooke (instructed by OA Solicitors) until 6 July 2020 and thereafter in person. The first defendant was represented by Daria Gleyze (instructed by Grayfield Solicitors), and the second defendant by Richard Bowles (instructed by Palmers Solicitors).

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