In French v Groupama Insurance Co LTD (2011)4, it was decided that a defendant’s offer to settle, contained in privileged correspondence, and which had been rejected by the claimant, was not a Part 36 offer (thereby offering automatic protection on costs). The offer did not meet the requirements of Part 36 on many levels – it was made before proceedings began, it was time-limited and was not expressed to be a Part 36 offer.
In deciding what cost orders to make, the court took account the following factors:
- the defendant’s offer was higher than the figure the claimant received from the judgment of the court;
- the claimant had always been unrealistic about the extent of the defendant’s liability;
- the defendant failed to serve a formal Part 36 offer, although it had had the time to do so;
- the detail put forward in the defence and counter-claim had complicated the litigation unnecessarily and increased the length of the trial.
Taking all these factors into account, the court exercised its discretion under CPR 44.3 and ordered that the claimant was not liable to pay the defendant’s costs of litigation. The claimant was able to recover her costs, up to the expiry of the defendant’s offer.
In Sebastian Marcus v Medway Primary Care Trust & another5, the Court of Appeal overturned the trial judge’s costs order. The defendants had been ordered to pay 50% of the claimant’s costs. The Court of Appeal held that, having been awarded just 0.4% of the agreed value of the claim in damages, the claimant was not the winning party at trial. The claimant was instead ordered to pay 75% of the defendant’s costs.
The case concerned a below-knee amputation. The claimant alleged that he had not been referred for surgery quickly enough, but the trial judge agreed with the defendants that timely treatment would not have saved his leg in any event. He was awarded £2,000 for pain and suffering prior to the amputation.
The Court of Appeal held that the claimant’s award did not relate to the main causation issue, but to a peripheral point that had been brought before the court almost incidentally. Although no Part 36 offers had been made, it was clear that a low offer would have been rejected anyway. As such, the defendants were to be considered the successful party in the action, and the costs order should reflect that.
The two cases show that, in the absence of a Part 36, questions of costs will fall within the discretion of the court.