PART 36 : THE COURT’S APPROACH FOLLOWING DISCLOSURE OF EXISTENCE OF AN OFFER

profile_pi_catherine_duffy1

By Catherine Duffy

INTERACTIVE TECHNOLOGY CORPORATION LTD V FERSTER [2017] EWHC 1510

Judgement  – 22 June 2017

CPR r36.16

Mr Justice Morgan held that the existence of Part 36 offers by the defendants meant that the costs after a preliminary hearing had to be reserved to the end of the case.   The fact that the offers were made meant that the costs of the preliminary trial were reserved, even though the judge did not know the terms of the offers.

FACTS

In a long running shareholder dispute, the claimant company sought its costs from the defendants. The defendants had made 3 Part 36 offers in respect of the claimants claim against them. The judge had determined a number of issues in a hearing in November 2016, however there were other remaining issues to be tried. The court was made aware of the fact, but NOT the content, of the offers.

LAW

CPR 36.16:-

“36.16.— Restriction on disclosure of a Part 36 offer

(1) A Part 36 offer will be treated as “without prejudice except as to costs”.

(2) The fact that a Part 36 offer has been made and the terms of such offer must not be communicated to the trial judge until the case has been decided.

(3) Paragraph (2) does not apply—

(a) where the defence of tender before claim has been raised;

(b) where the proceedings have been stayed under rule 36.14 following acceptance of a Part 36 offer;

(c) where the offeror and the offeree agree in writing that it should not apply; or

(d) where, although the case has not been decided—

(i) any part of, or issue in, the case has been decided; and

(ii) the Part 36 offer relates only to parts or issues that have been decided.

(4) In a case to which paragraph (3)(d)(i) applies, the trial judge—

(a) may be told whether or not there are Part 36 offers other than those referred to in paragraph (3)(d)(ii); but

(b) must not be told the terms of any such other offers unless any of paragraphs (3)(a) to (c) applies.”

 

Issue for the court: – What approach to take to the claimant’s application for costs in light of its knowledge of the offers and that they, at the least, may relate to the undecided issues?

HELD:

  • Costs were reserved;
  • Morgan J relied on the approach taken in HSS Group plc v BMB Ltd. (2005) – In anything other than an exceptional case, costs of the liability trial should be reserved pending determination of the quantum trial;
  • The offers did not relate only to issues that had been decided;
  • The Judge was aware of the existence of the offers but could not, and did not know what the terms of the offers were.

 

 

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