English Civil Procedure Rules (CPR) allow both claimants and defendants to make formal offers to settle claims (“Part 36 Offers”). Making a Part 36 offer can lead to significantly more favourable costs awards against an opponent, as compared to ordinary “without prejudice save as to costs” offers, provided the offeror obtains a judgment “more advantegous” than the offer (Rule 36.14(1)). In particular, where a defendant beats their Part 36 offer (even if they are judged liable to some degree), then they are automatically entitled to their costs from 21 days after the defendant made the Part 36 offer (Rule 36.14(2)).

Carver v. BAA plc [2008] EWCA Civ 412 held that a judgment which was only marginally less advantageous than the offer might still lead to the more favourable costs consequences. This decision was criticised in Lord Justice Jackson’s costs reforms, and led to an amendment to the CPR by Rule 36.14(1A) that “more advantageous” means “better in money terms by any amount, however small”.

A recent case, Hammersmatch Properties (Welwyn) Ltd v. Saint-Gobain Ceramics and Plastics Ltd and another [2013] EWHC 2227 (TCC), considered facts similar to those in Carver v. BAA, and applied Rule 36.14(1A) to hold that where a claimant exceeded the defendant’s Part 36 offer by a very small margin, the defendant would not enjoy the favourable Part 36 costs consequences. The judge considered the court’s wide costs discretion under Rule 44.2(4) but refused to use this to replicate Part 36.