Effect of a non-Part 36 offer


The claimant won at trial but did not better an offer made to him by the defendant. The trial judge found that the offer had been a Part 36 offer and so the usual costs consequences applied. However, the Court of Appeal has now held that the judge had been wrong to decide that it had been a Part 36 offer because it had been open for only 22 hours (rather than the 21 days specified in Part 36). Accordingly, the failure to accept the offer did not carry any “normal consequences”, and instead the offer was just one fact to be taken into account when deciding the appropriate costs order. A further problem was that the judge had been told about the content of “without prejudice” negotiations, and instead of putting that out of his consideration, it had formed a basis for his decision.

The costs order was therefore set aside and the Court of Appeal, deciding the issue itself, held that there should be no order as to costs. Neither side deserved credit for their attempts (or lack of them) to settle. Although the offer referred to above had been reasonable, and offered a fleeting window for settlement: “those who are really serious about achieving that do not make offers that are open for just 22 hours and should receive no credit for making offers that are so time-limited”.