Dutton & ors v Minards & ors (2015)
An example of the changing face of Part 36…
The claimants made a Part 36 offer to settle proceedings for £18,000 which was accepted by the defendants one minute after expiry. In accepting after expiry the defendants avoided the automatic costs consequences contained in the ‘old’ Part 36.10(1) which states:
“where a Part 36 offer is accepted within the relevant period the claimant will be entitled to the costs of the proceedings up to the date on which notice of acceptance was served on the offeror.”
This provision is largely repeated in the ‘new’ Part 36.13(1).
The fall back position was set out in the old Part 36.10(5) which states that where paragraph (4)(b) applies (acceptance of a Part 36 offer after the expiry of the relevant period)
[…] unless the court orders otherwise –
- the Claimant will be entitled to the costs of the proceedings up to the date on which the relevant period expired; and
- the offeree will be liable for the offeror’s costs for the period from the date of expiry of the relevant period to the date of acceptance.
This provision clearly includes a presumption that the defendants would pay the claimants costs in these circumstances however there is also a clear and unfettered discretion for the court. The parties were unable to reach agreement on costs.
The defendants argued that the claimants ought to have accepted their previous Part 36 offer of £25,000, which had been made 15 months earlier, instead of perpetuating the proceedings.
The judge found that the defendants had chosen to accept the claimants offer rather than reminding the claimants of their previous offer. Furthermore, the full facts were not available to the claimants at the time of the previous offer because the defendants had not been willing to disclose the strengths and weaknesses of their case at that time. The claimants were therefore unable to put a value on the counterclaim at that time. The judge therefore considered it just to apply the presumption in 36.10(5).
The defendants appealed. The Court of Appeal held that the judge was required to make a value judgment about whether to apply the presumption. This was a discretionary matter and he had not strayed outside the ambit of his discretion.
It should be noted that the fall back position set out above has changed in the new Part 36. The equivalent provision is Part 36.13(5):
- Where paragraph (4)(b) applies but the parties cannot agree the liability for costs, the court must, unless it considers it unjust to do so, order that—
- the claimant be awarded costs up to the date on which the relevant period expired; and
- the offeree do pay the offeror’s costs for the period from the date of expiry of the relevant period to the date of acceptance.
The ambit of the discretion has therefore been significantly reduced and it is highly likely that, under the new Part 36, this decision would be the same.