The end of 2017 saw a number of important decisions, which have important practical ramifications for the use of Part 36 offers in many commercial litigation cases.
Optical Express Ltd & Ors v Associated Newspapers Ltd  EWHC 2707 (QB)
This was a claim for libel. The particulars of claim were served on 24 February 2015 with details of the Claimants' (Cs') losses at that date with a statement that further loss was expected. Details of further loss were not provided until 8 May 2016 – they were in excess of £20m. Following this, the Defendants (Ds) made a Part 36 offer of £125,000, with a deadline for acceptance of three weeks. This offer was never withdrawn and was eventually accepted on 21 February 2017. By this point significant costs had been incurred due to disclosure and exchange of expert evidence.
The normal rule (CPR 36.13(5)) is that C will be awarded costs on the standard basis up to the end of the "Relevant Period" for acceptance of offer (the 21 day period within which the offer can be accepted with automatic costs consequences). D will usually be awarded costs on the standard basis from this date up to the date of acceptance.
In this case the court decided it would be "unjust" to apply the normal rule. Firstly, Cs were only awarded costs up to 11 January 2016, on the basis that they should have provided the further information no later than November 2015: the 8 May 2016 response was held to be a direct cause of the Part 36 offer, so the court held that Ds would have made a Part 36 offer sooner, had the additional details of loss been made available to them earlier. Ds could have made an offer with a Relevant Period which would have expired no later than 11 January 2016. Ds were therefore awarded their costs from 11 January 2016 on the indemnity basis. This was on the basis that Cs' conduct in relation to the offer, first rejecting it and then accepting it much later without explanation, was "highly unreasonable".
Claimants should avoid delay in providing details of loss, to enable defendants to make an appropriate offer.
Mohammed v Home Office  EWHC 2809 (QB)
This was a claim for unlawful detention. The Claimant (C) made a Part 36 offer that he would accept £70,000, which was rejected by the Defendant (D). D accepted liability the day before the trial, 8 months after rejecting the Part 36 offer. The judge awarded £78,500, a more advantageous result for C than its own Part 36 offer.
The normal rule (CPR 36.17(4)(a)) is that C will be awarded, in addition to its costs, "interest on the whole of the damages award at a rate not exceeding 10% above base rate". On this point, the judge considered the following factors; the time that had lapsed between the offer deadline and the trial; that C had conducted the litigation reasonably and that D should have conceded liability earlier, amongst others. The judge awarded enhanced interest at a figure of 6% above the base rate from the date of the deadline of accepting the offer to the trial judgment date.
Under CPR 36.17(4) (d) C was also entitled to an "additional amount, which should not exceed £75,000 calculated by applying the prescribed percentage" which here was 10% of the sum awarded to C as the claim was for less than £.5m. The judge queried the interpretation of "sum awarded". Was it:
- the damages award net of any interest
- the damages award plus any basic interest or
- the damages award plus all interest, including any enhanced interest awarded under CPR 36.17(4)(a)
The judge held that it should be "the damages award plus any basic interest" - the sum awarded to C, without the enhancement awarded under Part 36.
The Rules provide for very significant enhanced costs and damages awards for claimants who beat their own Part 36 offers. This is a rare example of a reported decision construing and applying the relevant Rule.