Whether a successful defendant is entitled to all his costs where his Part 36 offer was not beaten


This was a professional negligence claim against a firm of solicitors who failed to advise the purchasers of a property that it did not have necessary planning consents. Hodge QC HHJ held that the solicitors had breached their duty by failing to inform their client after becoming aware of a potential risk to the client. However, the claimant’s case on causation was not made out and so the claim failed.  

During the course of the litigation, the defendant had made a Part 36 offer. The claimant failed to obtain a judgment more advantageous than that offer. Accordingly, CPR r36.14 provides that the defendant is entitled to his costs from the end of the relevant period together with interest on those costs. The issue here was whether the defendant was entitled to all his costs, since, had no Part 36 offer been made, the judge would have awarded the defendant only 80% of his costs.

The White Book refers to the case of Kastor Navigation [2003], in which it was held that the defendant was entitled only to those costs which he would have been awarded under CPR r44 (and so disregarding the Part 36 offer). However, it was argued that the recent Court of Appeal decision in F&C Alternative Investments v Barthelemy (see Weekly Update 23/12) left this issue open (it had been unnecessary to decide the point there, though, as no Part 36 offer had been made).

The judge saw some force in the argument that the making of a Part 36 offer should not entitle a party to run unreasonable points. On the other hand, the claimant here should have accepted the offer, given the difficulties which it had on causation. He concluded that: “The appropriate course, in the exercise of the court’s discretion as to costs, seems to me to be to award the defendant 90 per cent of its costs rather than the 80 per cent that I would have awarded without the Part 36 offer”.