Background
The claimant had brought a claim for personal injury and loss arising from an incident at work which took place in June 2012. The trial related to quantum only, liability having been admitted by the defendant. At trial, the claimant was awarded £17,000 general damages and £5,488.32 special damages which, together with interest totalled, £23,315.13.The defendant had made various offers in the claim; the first offer which had been made was on 25 January 2016 was a Part 36 offer for £50,000 gross. This offer was withdrawn by the defendant on 8 February 2017 and a second Part 36 offer of £30,000 gross was made by the defendant. The letter sent with the second Part 36 offer made it clear to the claimant that if the claimant failed to do better than that offer then the defendant would seek an order that the claimant should pay the costs from the expiry of that second offer.
At first instance, the judge held that the claimant was liable for costs from the date of expiration of the relevant period of the first offer, and that the second offer had no relevance to that. The withdrawal of the first offer was relevant only to the extent that the automatic provisions of Part 36 no longer applied but, in the judge's discretion it was still appropriate to award the defendant the costs from the date that the original Part 36 offer expired.
On appeal
The claimant appealed and in the appeal it was common ground that the claimant was liable for the costs from 1 March 2017 (the expiration of the relevant period applying to the second Part 36 offer), and that the claimant was entitled to her costs up until the expiry of the first offer. The issue for the court was what happened to the costs in between this period and who should pay them.In allowing the appeal Mr Justice Foskett commented that, with hindsight, the claimant should have accepted the first Part 36 Offer, but having withdrawn that offer the defendant could not seek costs protection from the expiration of the first relevant period. He noted the wording in the letter accompanying the second offer and said that he did not think it was fair on the claimant for the defendant now to be arguing for another position.
Comment
CPR 36.17(7)(a) makes clear that a defendant's ability to seek recover costs if a Part 36 Offer is not beaten does not apply where the Part 36 offer has been withdrawn. The judgment in the index case resolves some of the uncertainty left over from conflicting opinions given both pre and post the change in the Part 36 rules when they were re-written in April 2015.Most importantly the case highlights the implications of withdrawing Part 36 offers and the pitfalls of doing so. Part 36 offers are of course designed to be a tactical step taken by litigants to protect their positions and a case by case analysis is required to decide if that protection should be withdrawn, balanced against how the evidence in the case has developed.
Instead of withdrawing a Part 36 offer and sacrificing that protection, litigants may wish to assess whether the situation with which they are faced renders the offer best suited to being changed pursuant to CPR 36.9(1) where the second offer is lower than the first so as to preserve the costs protection from the original offer rather than withdrawing the offer and starting to build the costs protection afresh with a new Part 36 offer.
The law and practice around Part 36 offers has been added to by this judgment, but in all Part 36 scenarios of this type a careful review of the position in fact set against the rules and authorities arising out of them continues to be required.
