Part 36 offers - taking money off the table without losing your costs advantage
The decision of Foskett J in Ballard v Sussex NHS Foundation Trust will be of interest to defendants intending to make reduced Part 36 offers: take…
The decision of Foskett J in Ballard v Sussex NHS Foundation Trust will be of interest to defendants intending to make reduced Part 36 offers: take care that the terms of any later, lower offer do not deprive you of the potential costs benefits of an earlier, higher offer.
In Ballard, the defendant had made a Part 36 offer of £50,000 in January 2016. It withdrew that offer in February 2017 and made a new Part 36 offer of £30,000. The second offer stated that “if the claimant fails to obtain a Judgment more advantageous than the offer made in this letter then the defendant will seek an Order that the claimant should pay both Parties' costs from 01.03.17.”The claimant was awarded £23,315.13 at trial. The Judge awarded the defendant its costs from the date of expiry of the first offer in early 2016, attaching no weight to the wording of the second offer. On appeal, Foskett J disagreed, noting that:
“I do not consider that it is fair to the claimant to send a detailed letter to her solicitors, apparently spelling out the consequences of failing to beat the Part 36 offer and then to argue that something different was intended, particularly where, as here, the consequence of the additional argument would probably diminish the claimant's net return from the litigation very considerably.“The Judge was obviously very heavily influenced by the fact that the claimant could have saved a great deal of expense by accepting the first offer. It is undoubtedly true that such expense would have been saved, but I do not consider it was right to regard the second offer as "irrelevant" with the consequence, if the judge so treated it, that the precise terms of the offer were also regarded as irrelevant. In my judgment, the defendant cannot escape from the precise terms of the final paragraph of the second offer and as a result it is really the first offer that becomes irrelevant.”
When preparing reduced Part 36 offers, defendants and their legal representatives should reserve the right to seek costs from the expiry of earlier, higher offers with reference to CPR 44.2(4)(c).