http://www.bailii.org/ew/cases/EWCA/Civ/2016/365.html

The first instance decision in this case was reported in Weekly Update 14/15. The claimant made a Part 36 offer covering her entire claim. It was rejected but she went on to beat it at trial. However, she lost on one issue. The judge held that, leaving aside the Part 36 offer, an issues-based costs order would have been appropriate in this case (the issue on which the claimant had failed having been a separate, self-contained and discrete claim). He then concluded that the fact that there has been a successful Part 36 offer does not mean that the court is unable to make an issues-based order. The claimant appealed and the Court of Appeal has now allowed that appeal.

It held that an issues-based costs order would not have been appropriate in any event in this case: it is not unusual for a claimant to succeed on some, but not all, allegations (particularly in a personal injury case such as this one) and there was nothing in this case to take it out the ordinary or to justify the claimant being deprived of her costs.

As to the issue of whether the claimant was entitled to all her costs after having beaten her Part 36 offer, reference was made to the earlier Court of Appeal decision of Kastor Navigation v AXA [2004]. InKastor, it had been held that it was necessary to determine, on the application of Part 44, to what costs the winning claimant was entitled and then to order the defendant to pay those costs on an indemnity basis (unless it was unjust to do so). The Court of Appeal distinguished Kastor, though, on the basis that it was decided on provisions of Part 36 and Part 44 which have now been materially altered. It held that, since Part 36 is a self-contained code, the court does not first exercise its discretion under Part 44 before deciding what costs order to make. The only discretion of the court is that conferred by Part 36 itself.

Although Part 36 does not preclude the making of an issues-based or proportionate costs order, a winning claimant should be deprived of all or part of its costs only if the court considers (having regard to all the circumstances of the case) that it would be unjust to make such an order. On the facts of the case, it would not be unjust to award the claimant all her costs. The defendant could have avoided all the costs of the trial by accepting the claimant's favourable Part 36 offer.