How do you define whether your Part 36 offer to settle has been “successful” when monetary compensation isn’t the primary purpose of your litigation? The recent case of MR v Commissioner of Police for the Metropolisprovides some useful guidance.

Summary

Success” is not defined solely by reference to financial compensation. Other factors can be taken into account in defining success, particularly when it is clear that one of those other factors is the primary purpose of the litigation and financial compensation is very much a secondary objective.

Key facts

  • MR was arrested on suspicion of having committed an offence of harassment. He was released without charge.
  • MR issued a claim for false imprisonment and assault. MR’s primary purpose of the litigation was to clear his name, establish that the arrest had been unlawful and to ensure the removal of the arrest from police records so that he was able to travel for business purposes without the need to declare the arrest.
  • On 24 May 2011 the Commissioner made a Part 36 offer to settle the entire claim in the sum of £4,000 together with a draft letter of apology.
  • Various further Part 36 offers were made. The next key offer was made by MR on 20 July 2017. MR offered to settle the claim in the sum of nil pounds with an admission that his arrest had been unlawful plus reasonable costs to be assessed if not agreed.
  • On 6 December 2017, the Commission wrote to MR inviting him to attend a without prejudice discussion to resolve the case. MR did not respond to that invitation.
  • At trial, MR’s arrest was found to be unlawful and he was awarded damages of £2,750.

Questions at the costs hearing

  • Had MR failed to obtain a judgment more advantageous than the Commissioner’s Part 36 offer of 24 May 2011?
  • If so, should the normal Part 36 consequences apply?
  • If the answer to either of the above is no, was MR’s offer of 20 July 2017 a valid Part 36 offer?

Findings at the costs hearing

  • The judge was satisfied that MR was the successful party and the Commissioner was the unsuccessful party.
  • However, the judge also accepted, in part, the evidence of the Commissioner and place weight on the fact that the Commissioner had invited MR to a without prejudice meeting and MR had not responded. The judge noted that MR may have been offered the admission he sought at that without prejudice meeting and that that outcome that actually reflected the judgment he secured. As a result, the judge held that it would be unjust for MR to recover his costs or for the Commissioner to recover his costs. The judge therefore made no order as to costs.
  • The judge did not consider the third question.
  • MR appealed.

Findings on appeal

  • The implications of costs should never overwhelm the issue at the centre of litigation. Here, MR required an admission from the Commissioner.
  • Criticism of MR’s failure to respond to the offer of a without prejudice discussion has merit, even if it did not have any direct effect on the course of the litigation.
  • On the question of whether MR’s Part 36 Offer of 20 July 2017 was valid, the judge held that it was. The judge held that giving up any claim to a financial remedy is a significant concession and that concession was not cancelled out by the fact that the letter contained reference to claiming costs. MR’s offer of 20 July 2017 therefore engaged the normal Part 36 consequences.

Practical implications

  • “Success” is not defined solely by reference to financial compensation. Other factors can be taken into account in defining success, particularly when it is clear that one of those other factors is the primary purpose of the litigation and financial compensation is very much a secondary objective.
  • Keep in mind the primary purpose of the litigation when considering Part 36 offers: is the primary purpose monetary compensation? Vacant possession? Some form of apology or statement? Or something else?
  • Think very carefully before rejecting or ignoring a request for a without prejudice settlement discussion. MR was criticised for this at both the costs hearing and the appeal. In a worst case scenario, it may impact on your costs recovery ability.