Case alert - [2017] EWHC 3152 (QB)

Defendant given its costs on the indemnity basis where Part 36 offer accepted after the relevant period

Where a Part 36 offer is accepted after expiry of the relevant period, the usual position is that the defendant will pay the claimant's costs of the proceedings up to the expiry date of the relevant period and the offeree will pay the offeror's costs from the expiry date of the relevant period to the date of acceptance on the standard basis. In this case, the defendant's Part 36 offer was accepted after the end of the relevant period and the usual allocation of costs was accepted by the parties. However, the defendant argued that it was entitled to its costs on the indemnity basis. Warby J agreed. He noted that although it is generally desirable for claimants to have confidence that acceptance of an offer will bring a close to matters, on the usual terms, the court "should be willing to examine the conduct of those who first refuse and then accept a Part 36 offer".

Prior caselaw has shown that a failure by the claimant to offer any explanation for late acceptance can be a proper basis for inferring unreasonable conduct (and hence for awarding indemnity costs). Here, there was an explanation by the claimant but it was "highly unreasonable": "the dominant reason for pressing on with her claim was in order to beat the Part 36 offer" and so avoid the risk of adverse costs consequences. Nor did it matter that she had acted on legal advice. The relevant issue is whether, as between the claimant and the defendant, the claimant's behaviour went outside the norm.