A 95% liability offer can be a valid Part 36

Jockey Club Racecourse v Willmott Dixon Construction Ltd

[2016] EWHC 167 (TCC)

PI_Nicola_Philipson By Nicola Phillipson

C made an application for indemnity costs following D’s failure to accept C’s Part 36 offer to settle liability at 95%. The offer had been made in a letter dated 30/1/15.  D conceded liability some time prior to 17/12/15.

This was not a case where there was any possibility of a reduction for contributory negligence. C was going to succeed 100% or would fail in the claim entirely; “The offer therefore does not reflect a possible outcome, but is purely commercial”.

In light of these facts, the court considered two related but different questions:

  • where the offer does not reflect an outcome the court can make, is it a “Part 36 offer” within the meaning of Part 36?
  • can an offer which comes close to requiring complete capitualtion be an offer at all?

In relation to question (b) the court considered AB v CD [2011] EWHC 602 and adopted Henderson J’s explanation of an offer;

The concept of an “offer to settle” is nowhere defined in Part 36. I think it clear, however, that a request to a defendant to submit to judgment for the entirety of the relief sought by the claimant cannot be an “offer to settle” within the meaning of Part 36. If it were otherwise, any claimant could obtain the favourable consequences of a successful Part 36 offer, including an order for indemnity costs, by the simple expedient of making an “offer” which required total capitulation by the defendant. In my judgment the offer must contain some genuine element of concession on the part of the claimant, to which a significant value can be attached in the context of the litigation. The basic policy of Part 36 is to encourage the sensible settlement of claims before trial, or even before the issue of proceedings . . . The concept of a settlement must, by its very nature, involve an element of give and take. A so-called “settlement” which was all take and no give would in my view be a contradiction in terms.”

The offer of 95% was not generous, but was not “all take and no give”. It was therefore held to be an offer.

In relation to question (a) it was noted all Part 36 Offers are tactical, and although the court has a discretion to refuse to award indemnity costs in a case where the offer is self evidently only tactical (eg, an offer to settle at 99.9%), the fact that the offer made was not an outcome which was available to the court was not a bar to it being a Part 36 offer.

Please click here to see the full judgment

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