http://www.bailii.org/ew/cases/EWHC/TCC/2016/167.html

The claimant beat its Part 36 offer in this case, but the defendant argued that it would be unjust to order the normal costs consequences because the offer was not a "genuine attempt to settle the proceedings". This is a new requirement added to the rules in April 2015, but there is also caselaw pre-dating that rule change in which a Part 36 offer has been held not to be valid because the offeror was not making a real concession.

In this case, the claimant offered to accept 95% of the damages which it was claiming (those damages were alleged to be £400,000 at the time of the offer, although that figure subsequently rose to £5 million). The claim itself was an "all or nothing" type claim. Edwards-Stuart J held that although damages of just 95% was not an "available outcome" from the litigation, that in itself did not prevent the offer being a valid Part 36 offer.

Reference was made to the 2003 Court of Appeal decision of Huck v Robson, in which the Court of Appeal allowed the normal costs consequences where the claimant had also offered to accept 95% of her claim. Although it had not been impossible in that case for the claimant to have achieved 95%, that outcome was not likely to result in practice, yet that did not mean the offer was not a Part 36 offer. Nor did it matter that that case was decided before the change of the Part 36 rules.

The claimant accepted that an offer of 98% might be difficult to defend. However, the judge held that the offer here, although very modest, could not be described as derisory:  95% of even £400,000 was still £20,000.

Although the defendant had not yet been told the claimant's entire case at the time of the offer, the defendant should have taken prompt steps to investigate the claim. Accordingly, indemnity costs were awarded from the earliest date by which the defendant could reasonably have put itself in a position to make an informed assessment of the strength of the claim on liability (ie four months from the date of the offer, on the facts).

COMMENT: As well as following Huck v Robson, this case also confirms that the approach adopted in Uren v Corporate Leisure (see Weekly Update 14/13) is correct ie it is appropriate to look not just at the percentage of the claim but also what that equates to in monetary terms. Only "extreme" offers are likely to fail. It is easy to see why claimants in an "all or nothing" type case are subject to scrutiny, since claimants only have to equal their Part 36 offer in order to obtain the enhanced Part 36 costs consequences (hence a claimant could be tempted to "offer" to accept 100% of its claim in such a case). However, where some concession is being made, it is arguable that, since this exercise is only being conducted because the offeror has achieved a better outcome than its offer, the offer cannot have been unreasonable in the first place.