This case concerned the issue of whether a Claimant was entitled to the benefits of a Part 36 offer where that offer did not reflect a possible outcome of the case.
The claim arose in relation to the construction of a roof that was damaged during heavy winds. The roof was unusual in that it was a sealed structure, which meant that the Claimant could only rectify the damage by replacing the entire roof at a cost of over £5 million. There was also no chance of any reduction for contributory negligence, and so the contractor would either be found liable for the full amount or would not be found liable at all. The Claimant’s Part 36 offer that the Defendant pay “95% of our client's claim for damages” was therefore not an outcome that could ever have been reached during trial.
The Defendant did not respond to the offer, but later conceded liability during a pre trail review. Edwards-Stuart J had to determine firstly whether it was a valid Part 36 offer, and secondly whether, despite being valid, it would be unjust to allow the Claimant to rely on the offer to gain indemnity costs.
Edwards-Stuart J considered that there was nothing in the authorities to prevent a Part 36 offer being valid on the basis that it was a purely commercial offer rather than one which was available to a prospective judge during a trial. So long as it was a genuine attempt to settle, there was no reason to hold that it was not a valid Part 36 offer even in circumstances where the offer was only for a very modest discount:
“I am persuaded by the authorities that the offer in this case was a valid offer within the meaning of Part 36 and that it was a genuine attempt to settle the claim. Whilst the discount was very modest, even in the context of a claim of some £400,000 it amounted to £20,000, which in my view cannot be described as derisory.”
The Claimant was therefore granted indemnity costs from the date at which the Defendant could reasonably have put itself in a position to make an informed assessment of the strength of the claim on liability, which in this case was later than the expiry of the relevant period.