Owners and/or Bareboat Charterers of SAMCO EUROPE v Owners of MSC PRESTIGE [2011] EWHC 1656 (Admlty)

The Claimant’s and Defendant’s vessels were involved in a collision. The Claimant made an offer to settle liability 60:40 in its favour, which offer was described as being made “in accordance with CPR Part 61.4(10)-(12) and/or Part 36”. Around 17 months later, and 2 months before trial, the Claimant withdrew the offer and instead offered to settle liability two-thirds / one-third in its favour. At trial, liability was apportioned 60:40 in favour of the Claimant.

In relation to costs, the Claimant argued that there should be cross-liabilities for those costs incurred before the offer was made in the same proportion as liability, but that the Defendant should pay the Claimant’s costs from 21 days after the original offer was made and should not recover any of its own costs after that date. The Defendant argued that there should be cross-liabilities for all costs in the same proportions as liability in the action, because the original offer had been withdrawn.  

In reaching its decision, the Court noted that there is a line of authority which indicates that where an offer which should have been accepted had been withdrawn, it would not be unjust to award the offeror all of its costs. This is because if the offer had been accepted, then no further costs would have been incurred thereafter. The mere fact that an offer has been withdrawn does not necessarily deprive the offer of effect on the question of costs. Where a defendant fails to accept an offer which it should have accepted, it should appreciate the costs risk and take protective steps by making a realistic Part 36 offer. However, the withdrawal of an offer might have an effect on the appropriate costs order. The key question is: what caused the costs to be incurred after the expiry of the 21 day period?  

In this case, the Claimant’s offer should have been accepted within the 21 day period after it was made. Had it been accepted, no further costs would have been incurred. The fact that it was withdrawn 2 months before trial did not make it unjust to order that the Claimant should receive all of its costs from 21 days after the offer was made. The Court ordered that the Defendant should pay 60% of the Claimant’s costs before that date, and the Claimant should pay 40% of the Defendant’s costs.