Costs News

20 November 2019
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Narrowly beating part 36 offer enough to trigger usual consequences

Claimant who narrowly beat their part 36 offer were entitled to the usual consequences of doing so, the High Court has ruled.

In Hochtief (UK) Construction Ltd and Anor v Atkins Ltd [2019] EWHC 3028 (TCC), the claimants (called ‘the JV’ in the ruling) won damages and interest of £802,475, and the parties then agreed interest of £77,372.

Two years earlier, the JV had made a part 36 offer of £875,000, meaning they beat it at trial by £4,475.

Mrs Justice O’Farrell ruled that it would not be unjust to apply the consequences of beating the offer contained in CPR 36.17 in this case. “The terms of the offer were clear. The part 36 offer was made at a very early stage in the proceedings, after the letter of claim but before the issue of the formal claim.

“By that time, extensive investigations and remedial works had been concluded. The parties had sufficient information to make an informed judgment as to the merits of the case. The offer was at a level that indicated it was a genuine attempt to settle the dispute.”

With the judge deciding on an enhanced rate of interest of 6%, this all meant the JV was entitled to a further £65,123, with such costs as were ordered assessed on an indemnity basis.

The defendant argued that the court should make an issues-based or proportional costs award to reflect the narrow margin by which the JV beat the offer and that it won on a second claim.

O’Farrell J agreed that it would be unjust to require Atkins to pay the JV's costs of the second claim, as it was based on different factual, technical and expert issues.

She continued: “I have considered whether an issues-based order should be made. It would be possible to apportion the costs as between the two claims. However, that would not give sufficient weight to the fact that the JV's offer, which was an offer to settle both claims, was one that should have been accepted.

“A proportional costs order would be the fairest way of reflecting the relative success and failure of each party at trial, including the consequences of the JV's part 36 offer. For those reasons, I conclude that Atkins should pay 85% of the JV's costs, such costs to be subject to a detailed assessment on the indemnity basis.”

Suzanne Chalmers (instructed by Clyde & Co) represented the claimants, with Luke Wygas (instructed by CMS Cameron McKenna Nabarro Olswang) for the defendants.

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