Effect of a Part 36 offer which was not beaten/”near miss” offers
The claimants’ claim for business interruption losses was upheld (see Weekly Update 39/14) and in this case the judge decided costs. One of the issues was the effect of the defendant’s Part 36 offer, which was not beaten at trial (but only narrowly missed the amount awarded by the judge) and hence fell to be considered under CPR r44 instead. The offer had been based on a figure for lost profit (GBP 600,000) which the defendant thought was some GBP 250,000 lower than its losses. Eder J held that it had not been reasonable for the claimants to pursue their claim for BI losses in the amount being sought, which he described as “very much exaggerated” (notwithstanding that the defendant had not chosen to make a separate Part 36 offer to settle the claim for BI losses). Accordingly, although the claimants were the winning party, they were not entitled to their costs from the end of the relevant period for the Part 36 offer.
The judge denied that he was re-introducing a “near-miss” rule by the back door (in Hammersmatch Properties v Saint Gobain Ceramics (see Weekly Update 28/13) the claimant narrowly failed to beat the defendants’ Part 36 offer at trial. The claimant had sought to rely on the decision in Multiplex Construction v Cleveland (see Weekly Update 40/08), in which Jackson J held that if a party makes a Part 36 offer which is “nearly but not quite sufficient” and the other party rejects the offer outright without any attempt to negotiate, then it might be appropriate to penalise the other party in costs. Ramsey J held that that was no longer a principle which applies to Part 36 offers and there is no special “near miss” rule under CPR r44).
Eder J held that: (1) this case was different from Hammersmatch because, unlike Ramsey J, he had the benefit of “full information” as to the negotiations between the parties; and (2) the Part 36 offer itself made it clear that it was based on the GBP 600,000 figure: “Although that offer was not rejected out of hand and there was no refusal to negotiate as such, the claimants’ response was one which, in effect, insisted unreasonably on a much higher figure”. Eder J added that he fully agreed with Ramsey J’s decision.